Morgan Stanley Profit Climbs in Quarter

Morgan Stanley, Dean Witter & Co.’s earnings soared beyond analyst estimates in the latest quarter on strong trading activity, fees from mergers and acquisitions, and growth in its Discover credit card unit. The biggest U.S. securities firm said its net income jumped 50% to $1.04 billion from $691 million a year earlier, as per-share earnings grew 60% to $1.76 from $1.10, triple the growth rate expected by analysts in a First Call Corp. poll. Net revenue climbed 33% to $5.35 billion. “This was a great quarter, right on the heels of an excellent performance in 1998 when the environment was much tougher,” Philip J. Purcell, Morgan Stanley chairman, and John J. Mack, the company’s president, said in a joint statement. The New York-based firm handled nearly $2 billion in initial public offerings in the quarter, nearly 13 times the amount a year ago, and its investment bank advised on $198.7 billion of corporate marriages, up 67%. Investment banking revenue was up 20%, while commission revenue gained 22%. Trading revenue surged 87%. Morgan’s return on equity, a key measure of profitability, was 29.5%, up from 20.1% a year ago. The credit and transaction services division, which includes the Discover credit card business, posted a 36% increase in profit to $135 million, on a 23% jump in net revenue. Morgan shares rose $5.50 to close at $103.88 on the New York Stock Exchange.