April 17 - Morgan Stanley managed to boost fixed income revenue, lifting its profit but a drop in fixed income revenue sank Goldman Sach's results. Fred Katayama reports.
Morgan Stanley bucked the trend among bankers and brokers, significantly fattening its bottom line in the latest quarter. It managed to boost revenue from fixed income and commodities trading, a business that has slammed others like archrival Goldman Sachs and JPMorgan Chase. Morgan Stanley told the Wall Street Journal the extreme weather helped boost its commodities business. Deutsche Bank analyst Matt O'Connor raised an eyebrow, saying, "It's unclear how sustainable better fixed income and commodities trading are in our view given first quarter results were likely boosted by unusually cold weather and part of the commodities business may be sold." Also boosting Morgan Stanley's revenue: wealth management assets growing to a record level and a banner quarter in merger deals and underwriting. Morgan Stanley is returning some of those returns to shareholders, doubling its dividend and boosting its buybacks. Goldman Sachs, by contrast, relies on fixed income for a quarter of its income, so the sharp drop in trading hurt the bank. It tried to buffet that fall by cutting expenses. But profit and revenue fell. Still, investors drove up Goldman's stock in early trading because those results were better than expected. Morgan Stanley shot up even higher.