Morgan Stanley Beats on Wealth Management Gains

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Strong gains in its global wealth management and securities units helped Morgan Stanley (MS) swing to a profit in the first quarter, the firm reported on Thursday, beating Wall Street's expectations.

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Morgan Stanley headquarters in New York, May 12, 2010. REUTERS/Shannon Stapleton/Files

The sixth largest U.S. bank reported that earnings excluding items came in at 61 cents per share, which reversed a six cent share loss in the year-earlier period. Including the impact of Morgan's debt-related credit spreads, income from continuing operations checked in at 50 cents per diluted share.

Revenue improved to $8.475 billion from $6.94 billion a year ago. Analysts had expected the company to report earnings excluding items of 57 cents a share on $8.35 billion in revenue, according to a consensus estimate from Thomson Reuters.

The results suggest that Morgan Stanley is making headway in regaining the ground it's lost to competitors on Wall Street, after being waylaid by the 2008 crisis. In recent years, the bank has struggled with lackluster results and subpar investor returns. Late last year, some investors called on Morgan Stanley to improve governance and reform its compensation practices.

The bank cited strong performance in its global wealth management group, where net revenue rose to $3.5 billion and pre-tax profit margins came in at 17 percent. Client assets in the group were $1.8 trillion, with assets in fee-based accounts coming in at $621 billion. Compensation expenses for the quarter edged higher, to $2.1 billion, even as the number of Morgan Stanley's wealth management advisers dipped slightly.

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"In global wealth management, our operating pre-tax profit was the highest in our history, and we look forward to completing the acquisition of the remaining 35 percent of our wealth management joint venture once we have obtained full regulatory approval," James P. Gorman, chairman and chief executive officer, said in a statement.

Institutional securities, excluding the impact of its credit spreads, were boosted by underwriting, equity sales and trading - helped in part by the surge in stock markets that recently drove major benchmarks to new historical highs. However, Morgan Stanley also saw lower volumes in its fixed income and commodities units.

(See CNBC's complete earnings coverage at Earnings Central.)

The Wall Street bank's shares rose before the opening bell, following the news. (Click here to get the latest quotes for Morgan Stanley: MS)

Earnings season has been a mixed bag for large Wall Street banks. This week Bank of America (BAC) earnings fell short of Wall Street expectations while Citigroup (NYSE:C) beat on both profit and revenue. Wells Fargo (WFC) beat on earnings last week but revenue was light, and JPMorgan Chase (JPM) topped profit forecasts though net revenue fell.


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