Morgan Stanley - Profits Unsustainable ?

The Financial Times reports that Morgan Stanley reported a 7% increase in first quarter profits as 'robust' gains in fixed income compensated for falling revenues in equities and M&A.

Net income in the first quarter came in at $905m. Fixed income sales rose 48% to $1.7bn compared to 12 months ago, but these figures are considered by many to be unsustainable. Revenues from equity underwriting fell 60% and M&A numbers fell 43% to $166m from a year ago.

Chief executive Philip Purcell said that the firm's performance 'was accomplished in an exceedingly challenging environment characterised by a slumping global economy, declining consumer confidence, and a market consumer by prospect of war in Iraq.' Many analysts were surprised by the numbers, which came in higher than expectations.

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