Morgan Stanley shares jump 8% on results

Morgan Stanley shareholders cheered the strategic overhaul and better than expected fourth-quarter results unveiled yesterday.

The shares jumped 8 per cent to an 18-month high in early trading after the bank said it had swung to a profit in the final quarter of 2012.

Net income of $481 million, compared with a $275 million loss a year earlier, equated to earnings of 25 cents a share, much higher than the 10 cents forecast by analysts.

Under the leadership of James Gorman the bank has been trying to retool its business model by relying less on volatile trading and more on its steadier retail brokerage and wealth management business.

Yesterday the bank said it would further tweak its businesses in order to make them more efficient under new rules that oblige banks to hold more capital.

Mr Gorman, chief executive, said: “Our firm is now poised to reach the returns of which it is capable.”

Investors in the bank saw the first glimmers of the results of his strategic vision after improved trading activity and the lack of any big one-off charges boosted profits.

Revenue in the institutional securities division, where the bank trades on behalf of clients, rose 43 per cent to $2.9 billion in the period. Wealth management and brokerage revenues rose 8 per cent to $3.46 billion.

But with some of its businesses, the bank still faces an uphill battle. – Copyright The Financial Times Limited 2013