In another sign profits at the major investment banks were unaffected by subprime woes, Morgan Stanley reported this morning that its first-quarter profit rose 70% on trading gains and a jump in investment-banking fees. By the numbers, net income surged 70%, including a $109 million divestiture gain from the sale of Quilter Holdings. Profit came in at $2.67 billion, good for EPS of $2.51, versus $1.57 billion (EPS of $1.48) in the year earlier period. Revenue increased 29% YoY to $11 billion. Sans one-time gains, EPS was still $2.40 a share. Thomson Financial consensus estimates projected EPS of $1.88 on revenue of $9.42 billion. Steve Roukis, analyst at Matrix Asset Advisors, viewed Morgan's results as proof "the industry's healthy." According to CEO and Chairman John Mack, "This strong performance was in large part the result of effective, disciplined risk-taking by our team in Institutional Securities." Shares are higher by $2.24, or 2.94%, to $78.35 in pre-market action.
Sources: Press Release, Bloomberg, Wall Street Journal, TheStreet.com
Commentary: FedEx, Morgan Stanley Preview: A Look At Past Performance On Earnings Days • Morgan Stanley to Open First Vietnam I-Bank • Major I-Banks Near 'Junk' Status -- Bloomberg
Stocks/ETFs to watch: Morgan Stanley (NYSE:MS). Competitors: Goldman Sachs (NYSE:GS), Bear Stearns (NYSE:BSC), Merrill Lynch (MER), Morgan Stanley (MS), Lehman Brothers (LEH). ETFs: iShares Dow Jones US Broker-Dealers Ind. (NYSEARCA:IAI), Vanguard Financials (NYSEARCA:VFH), Financial Select Sector SPDR (NYSEARCA:XLF), iShares Dow Jones US Financial Svc. (NYSEARCA:IYG)
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