Morgan Stanley beats expectations

21 September 2006

Morgan Stanley has reported that its profits for the third quarter of 2006 have exceeded expectation.

The investment banking giant has announced that stronger investment banking and trading, coupled with lower tax and compensation, raised net income over the three months to $1.85 million.

Earnings from continued operations over the quarter surged by 59 per cent compared with the same period of 2005 and rose slightly on the second quarter of 2006. Revenue over the three months rose by 15 per cent to $7.99 billion, compared with $6.95 billion for the third quarter of 2005, in advance of analysts' expectations.

The Boston Globe reports that Morgan Stanley chief financial officer, David Sidwell, told reporters: "These are clearly difficult market conditions, and we normally see a seasonal slowdown at this time, but we performed so well in that environment."

The company's institutional securities unit saw pre-tax profit up by 55 per cent during the quarter to $2 billion, with revenue up by 20 per cent over the year.

Analysts have welcomed the latest Morgan Stanley figures following the appointment of chairman and chief executive John J Mack last year and the company's shares leapt following the release of the trading statement.

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