Wall Street investment bank Morgan Stanley reported a much stronger-than-expected rise in first-quarter profit, boosted by higher revenue from trading bonds and equities.
The bank's trading business, like those of its main rivals, got a boost in the quarter after the Swiss central bank scrapped a cap on the franc, the European Central Bank announced its quantitative easing programme and the US Federal Reserve took steps toward tightening monetary policy.
Global stocks have also generally performed strongly since the start of the year.
"This was our strongest quarter in many years with improved performance across most areas of the firm," chief executive James Gorman said in a statement on Monday.
Net income applicable to Morgan Stanley’s common shareholders rose to $2.31 billion, or $1.18 per share, in the quarter, from $1.45 billion, or 74 cents per share, a year earlier.
Excluding items, the bank reported earnings of $1.14 per share. Adjusted earnings according to calculations by Thomson Reuters I/B/E/S worked out to 85 cents per share. On that basis, analysts had expected per-share earnings of 78 cents.
Net revenue excluding items rose 10.3 per cent to $9.78 billion, beating the average estimate of $9.17 billion.
Adjusted revenue from equities sales and trading rose by a third to $2.27 billion - a strong performance, but not enough to beat Goldman Sachs Group, which reported revenue of $2.32 billion.
Morgan Stanley’s shares were up 2.2 per cent at $37.55 in premarket trading.
Morgan Stanley, the last big US bank to report for the quarter, is focusing less on bond markets and more on managing money for the rich as a way to free up capital and comply with stricter regulatory requirements since the financial crisis.
Revenue in the bank’s wealth management business rose 6.2 per cent to $3.83 billion, accounting for 39 per cent of total revenue.
Excluding special items, revenue from trading fixed-income securities, currencies and commodities (FICC) rose 15 per cent to $1.90 billion.
Goldman and JPMorgan Chase & Co also reported higher revenue from the business.
The wealth unit’s contribution to revenue jumped to nearly 45 per cent last year from less than 20 per cent in 2006. In the same period, FICC revenue fell to about 12 per cent of revenue from more than a third.
The bank’s adjusted average return-on-equity was 10.1 per cent in the quarter, above the 10 per cent Mr Gorman has set as a minimum as the bank focuses more on returns than revenue.