Unsurprisingly, Morgan Stanley Reports Trading Profits

Morgan Stanley is the final big US bank to report a profitable Q1 2010. Like Citi, Goldman Sachs, BofA, and Chase, Morgan Stanley made the bulk of its revenues from trading. The Wall Street Journal has more:

Morgan Stanley said a jump in fixed-income trading revenue helped drive first-quarter earnings that easily beat analysts’ forecasts, as the investment bank reported results for its first period with James Gorman as chief executive.

The bank, earlier criticized for pulling back on trading at the wrong time, racked up $4.1 billion in sales and trading revenue during the quarter, compared with $1.4 billion in the year-earlier period. The strong results come after Morgan Stanley hired hundreds of traders late last year to help regain market share lost when it scaled back risk during the financial crisis.

Morgan Stanley reported net income of $1.85 billion, or 99 cents a share, for the three months to March 31, compared with a year-earlier loss of $17 million, or 57 cents a share. Earnings were $1.03 a share on a continuing-operations basis and included a $382 million benefit associated with prior-year undistributed earnings of some subsidiaries that were reinvested abroad.

At Morgan Stanley’s institutional securities business, which includes capital markets and investment banking, revenue more than tripled while the segment swung to a $2.07 billion profit from a $464 million loss.

Those investment profits don’t make Morgan Stanley infallible. They just lost big on a casino stake, and had to pay Discover Financial Services a handsome settlement. Still, with 400 or so new traders, Morgan Stanley has upped its odds of making up for any losses–as long as that crucial Fed-engineered interest rate spread stays in place.