Morgan Stanley, the US investment bank. today reported that fiscal first quarter profit fell 43%, but they topped Wall Street's forecasts, providing more positive news for investors after the better than expected results Tuesday from Goldman Sachs Group and Lehman Brothers Holdings.

The performance was driven by Morgan Stanley's trading arm, which turned in its third-best quarter ever despite the turbulent market and another $2.3 billion in losses on mortgages and loans to junk-rated companies.

The trading success offset weaker results in Morgan Stanley's asset management business, accounting for 75% of the bank's net revenues for the quarter and 96% of its income before taxes.

Net income fell to $1.55 billion, or $1.45 a share, from $2.67 billion, or $2.51 a share, a year earlier. The results included $1.1 billion in losses from marking down loans and loan commitments, as well as another $1.2 billion loss on mortgage bets in which Morgan Stanley risked its own cash.

Net revenue fell 17% to $8.32 billion.

John J. Mack, Chairman and CEO, said, "Despite turbulent markets, Morgan Stanley achieved strong performance across many of our businesses this quarter - delivering a Firmwide ROE of 20 percent - and continued taking important steps to position the Firm for growth as we move forward in 2008. We achieved strong results across our equities and fixed income sales and trading businesses this quarter, as we effectively capitalized on market opportunities and aggressively managed our positions. We also delivered another solid quarter in investment banking and wealth management. While many of our businesses are facing challenging market conditions that we expect to continue in the months ahead, we are satisfied with how Morgan Stanley navigated the ongoing market turbulence. Our people remain intensely focused on continuing to serve our clients, building out our global franchise and executing our growth plans in order to create long-term value for Morgan Stanley's shareholders."

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