Wall Street Surge Lifts Morgan Stanley and New CEO Ted Pick

(Yahoo! Finance) - Profits rose at Morgan Stanley (MS) during the first quarter as the Wall Street giant benefited from pickups in investment banking, trading and asset management.

The results offered a boost to new CEO Ted Pick, who started the top job in January.

Net income was $3.4 billion, up 14% from the year-earlier period and up 125% from the fourth quarter. Revenues of $15.1 billion were up 4% from a year ago and up 17% from the fourth quarter.

The performance was better than expected. Analysts had expected net income to fall and net revenue to be flat.

Its investment banking and trading also exceeded what analysts predicted. Morgan Stanley's investment banking fees rose 19% from a year ago, driven mostly by equity and fixed income underwriting as work on IPOs and bond issuances picked up.

Analysts expected investment banking fees to rise by half as much.

"The pipeline is clearly growing," Pick told analysts, and Wall Street is in the "early innings of a multi-year M&A cycle."

Its stock was up by more than 3% in early trading Tuesday.

One weak spot was advisory work. Those fees were down from a year ago "on lower completed M&A transactions."

Its equity and fixed income trading was up slightly compared to a year ago, also beating expectations it would fall.

Wall Street has been waiting two years for dealmaking to turn around, and the evidence of a revival is starting to emerge in the first-quarter results from big banks.

Morgan Stanley rival Goldman Sachs (GS) even showed an increase in M&A as part of its own first-quarter performance.

It reported Monday that an investment banking surge included a 24% rise in advisory fees, as well as a 38% jump in debt underwriting, and a 45% increase in equity underwriting fees.

"I've said before that historically depressed levels of activity wouldn't last forever," Goldman CEO David Solomon told analysts Monday, adding that "it's clear that we're in the early stages of a reopening of capital markets."

David Hollerith - Senior Reporter


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