Wall Street bank Morgan Stanley's (MS) quarterly earnings more than doubled, beating market estimates, as stronger performances by its investment banking and wealth management businesses more than made up for a fall in revenue from bond trading.
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Net income attributable to common shareholders rose to $1.86 billion, or 94 cents per share, in the second quarter from $803 million, or 41 cents per share, a year earlier.
The bank's net income figures exclude accounting adjustments to reflect the changing value of Morgan Stanley's own debt.
According to adjusted figures calculated by Thomson Reuters I/B/E/S, the company earned 60 cents per share, beating the average analyst estimate of 55 cents.
Morgan Stanley's shares were up 2 percent at $33.15 before the opening bell on Thursday. Up to Wednesday's close, the stock had risen 3.6 percent since the start of the year, just outperforming the KBW Bank Index <.BKX>.
Including an accounting adjustment, the bank said net revenue rose 1 percent to $8.61 billion.
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"We are seeing momentum across our businesses, with particular strength in investment banking, equity sales & trading and wealth management ...," said Chief Executive James Gorman, who described the operating environment as "muted."
Revenue from fixed-income, currency and commodities (FICC) trading fell 12.3 percent to $1 billion as a lack of volatility discouraged trading during the quarter.
Goldman Sachs Group Inc <GS.N>, JPMorgan Chase & Co <JPM.N> and Citigroup Inc <C.N> earlier reported that their revenue from FICC trading fell by 10-15 percent in the quarter.
Bank of America Corp <BAC.N>, alone among the big U.S. banks, reported an increase in revenue from the business, helped by a slight pickup in activity late in the quarter.
Morgan Stanley, ranked No. 2 globally in mergers-and-acquisitions, benefited from a strong equities market in the quarter. Advisory revenue rose 26 percent to $418 million.
Revenue from equity underwriting rose 50 percent to $489 million, while debt underwriting revenue rose 26 percent to $525 million.
Revenue from the bank's fast-growing wealth management business rose 5 percent to $3.72 billion.
Unlike Goldman Sachs, its biggest rival, Morgan Stanley decided years ago to rely less on bond markets as a profit engine and focus instead on managing money for the wealthy.
The bank took its biggest step into the business by taking full control of brokerage Smith Barney from Citigroup, a process started in 2009 and completed a year ago.
Helped by cost cuts, pretax profit margins in the business increased to 21 percent in the second quarter, from 18.5 percent in the same quarter of 2013. Gorman aims to deliver margins of 22-25 percent by the end of 2015 if interest rates stay low.
Revenue from asset management fees rose 11 percent to $2.1 billion.
Revenue from stock trading was flat at $1.8 billion. Goldman Sachs' revenue from that business fell 13 percent to $1.61 billion.