Morgan Stanley Q1 profit tops expectations at $1.41 billion

Morgan Stanley said on Wednesday its first-quarter profit surged to $1.41 billion on strong results from its trading operations. The investment bank comfortably topped analysts' expectations.

Morgan Stanley said its earnings, which compare with a loss of $578 million a year ago, also came on a jump in its retail brokerage business. That's a sign that individual investors might be getting more comfortable with returning to the stock market.

The investment bank, which was criticized last year for being too conservative as markets recovered, said it had $4.1 billion in sales and trading revenue, almost triple the $1.4 billion of a year earlier. Other banks with large trading operations, including JPMorgan Chase & Co and Goldman Sachs Group Inc, also used trading profits to beat earnings' forecasts.

Banks have been profiting from continuing low interest rates that allow them to borrow money cheaply and put it into higher-yielding investments such as stocks.

During the second half of last year, Morgan Stanley's top executives vowed to expand the banks trading operations to avoid lagging behind competitors.

Chief executive James Gorman, who took over from John Mack at the beginning of the year, said in a statement that the expansion of the sales and trading business "is beginning to pay off".

Morgan Stanley's profit after payment of preferred stock dividends came to 99 cents per share on revenue of $9.08 billion. Earnings also got a boost from a special $382 million tax benefit. The benefit lifted earnings by 21 cents per share.