Colin Barr

Following the money in banking, economics, and Washington

Morgan Stanley profit surges

January 20, 2011: 7:56 AM ET

Morgan Stanley (MS) posted a stronger-than-expected fourth quarter, breaking ranks with big rivals whose numbers disappointed Wall Street.

The New York-based investment bank made $1.1 billion, or 43 cents a share, from continuing operations. That's up from $653 million, or 18 cents a share, on a comparable basis a year ago and ahead of the 35-cent analyst consensus estimate.

Out of favor?

Revenue rose 14% from a year ago to $7.8 billion, beating the $7.4 billion analyst target. Revenue rose 12% in institutional securities and 7% in global wealth management. Within institutional securities, principal transactions trading revenue fell 27% from a year ago.

"Despite this year's challenging markets, we delivered strong results in Investment Banking enhancing our leadership positions in M&A, global equity and IPOs based on the strength of our banking, capital markets and equities teams," said CEO James Gorman. "While we made progress in building out our fixed income business through investments in both people and technology, there is more to be done to drive revenue and market share growth."

The latest quarter included a 36-cent-a-share loss on the mark-to-market consequences of the firm's tightening debt spreads, which hit earnings by increasing the value of Morgan Stanley's liabilities. The quarter also included a 17-cent gain on the sale of the firm's stake in China International Capital Corp., or CICC.

The report comes on the heels of a weak trading report from rival Goldman Sachs (GS) and mixed quarterly performances by other big banks, all of which are struggling with rising expenses at a time of soft revenue.

Morgan Stanley shares, up 2% so far this year, were unchanged in early trading Thursday.

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About This Author
Colin Barr
Colin Barr
Senior Writer, Fortune

Colin Barr has covered finance for Fortune.com since November 2007. Previously he was a writer and editor for TheStreet.com, winning a 2006 Society of American Business Editors and Writers award for "The Five Dumbest Things on Wall Street," and for Dow Jones Newswires. He is a 1991 graduate of Penn State and lives in Port Washington, N.Y., with his wife Meena Bose and their two kids.

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