Morgan Stanley posts record 1Q profit, helped by trading

NEW YORK — Morgan Stanley’s first-quarter profits hit a record high, helped by a lower tax bill and a boost in revenue from last quarter’s volatile markets.

The New York investment bank reported a profit Wednesday of $2.67 billion, or $1.45 per share, compared with a profit of $1.93 billion, or $1.00 a share, in the same period a year earlier. Analysts expected Morgan Stanley to earn $1.26 per share, according to FactSet.

Like its major competitors, Morgan Stanley saw its tax bill drop sharply in the quarter. While pre-tax profits rose 22 per cent from a year earlier, its tax bill fell by 12 per cent. The company paid roughly a 21 per cent effective tax rate in the quarter, compared with previous years when it paid roughly 30 per cent.

Morgan Stanley’s traders and investment bankers had a very strong quarter. The bank’s institutional securities division had net revenues of $6.1 billion compared with $5.2 billion a year earlier. Most of that gain came from stock sales and trading.

The firm’s wealth management business also had a strong quarter, reporting pre-tax profits of $1.2 billion compared with $973 million a year earlier. The firm was able to increase assets under management in the quarter, despite the more volatile markets. Wealth management is a business that Morgan Stanley Chief Executive James Gorman has been emphasizing for years now, since it tends to be a more steady business than the choppy, market-impacted parts of the bank like trading.

Total net revenues at Morgan Stanley were $11.1 billion in the quarter, a record, up from $9.7 billion in the same period a year earlier.