Morgan Stanley reported profit that beat analysts' estimates as a jump in trading and brokerage fees led to the biggest revenue increase among the six largest U.S. banks. The shares climbed in early trading.

Second-quarter net income fell 4.8% to $1.81 billion, or 85 cents a share, from $1.9 billion, or 92 cents, a year earlier, the New York-based company said Monday in a press release. Excluding an accounting gain, profit was 79 cents a share, topping the 74-cent average estimate of 23 analysts surveyed by Bloomberg.

Morgan Stanley posted the only increase in bond trading among the biggest U.S. banks and generated record profit in its wealth-management unit for the fourth time in five quarters. Chief Executive Officer James Gorman has used growth at the brokerage to avoid revenue declines that plagued other Wall Street firms.

"Capital markets were active this quarter, and we benefited from significant client engagement and client flows," Chief Financial Officer Jonathan Pruzan said in an interview. "Wealth management continues to be very, very consistent. We also saw nice improvement in the fixed-income business."

Revenue, excluding accounting adjustments known as DVA, rose 12% to $9.56 billion. The firm had a tax benefit of $609 million in last year's second quarter.

Book value per share climbed to $34.52 from $33.80 at the end of March. Return on equity, a measure of how well it reinvests earnings, was 9.1% for the quarter.

The investment-banking and trading division, led by Colm Kelleher, 57, generated $5.17 billion of revenue in the quarter, up 22% from a year earlier.

Revenue from fixed-income sales and trading, run by Michael Heaney, 51, and Robert Rooney, 48, with commodity trading co-heads Nancy King and Peter Sherk, climbed to $1.27 billion, excluding DVA. That topped estimates of $1.26 billion from Steven Chubak, an analyst at Nomura Holdings Inc., and $1.1 billion from Barclays Plc's Jason Goldberg.

Revenue from equities trading, headed by Ted Pick, 46, rose 27% from a year earlier to $2.27 billion, excluding DVA. That compared with $1.18 billion at Bank of America Corp. and $1.97 billion at Goldman Sachs Group Inc. Chubak estimated equities revenue of about $2.01 billion and Goldberg predicted $2.07 billion.

Goldman Sachs and JPMorgan Chase last week reported trading revenue that dropped more than 9%, with the latter's decline driven by unit sales. Bank of America and Citigroup Inc. also posted trading revenue declines.

Morgan Stanley's trading operations may benefit from a higher credit rating from Moody's Investors Service. Morgan Stanley's long-term issuer rating was the only one of the major banks that Moody's raised two levels in May, as the ratings company cited the firm's strengthened capital and lower earnings volatility.

Investment banking, led by Mark Eichorn and Franck Petitgas, 54, generated $1.44 billion in second-quarter revenue. That figure, up 1% from a year earlier, included $423 million from financial advisory, $489 million from equity underwriting and $528 million from debt underwriting.

The brokerage division, overseen by Greg Fleming, 52, posted net income of $561 million on net revenue of $3.88 billion as assets in fee-based accounts climbed. The unit had a 23% pretax margin, and the bank has said it can reach a margin of 22% to 25% by the end of this year even without help from higher markets or interest rates.

Compensation, the firms' biggest expense, climbed 5% to $4.41 billion in the second quarter. Morgan Stanley took a charge last year to speed up vesting of deferred awards so it would recognize less of the cost this year and in the future.

This earnings announcement is the first for Pruzan, 47, who replaced Ruth Porat as CFO after she left in May for Google Inc. Pruzan was previously co-head of the financial institutions banking group, the same role Porat, 57, held before she took the CFO job.

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