Business

Retail brokerage helps Morgan Stanley profit beats estimates

Morgan Stanley posted stronger-than-expected fourth-quarter results, as its retail brokerage and asset management businesses won more assets from clients and benefited from rising stock markets.

The bank’s retail brokerage business, which manages money for wealthy clients, reached the company’s target for profit margins, and Morgan Stanley raised that forecast for the coming years.

The bank’s shares Friday rose more than 4 percent, to $33.33, their highest level since November 2009.

The results underscored how Morgan Stanley, the second-largest US investment bank, has retooled itself since it came uncomfortably close to failing in 2008.

It now earns more revenues from brokerage and asset management than traditional investment banking businesses like underwriting stock offerings.

“They’re doing what they set out to do, and I think it’s a better direction to go in,” said Ralph Cole, portfolio manager at Ferguson Wellman Capital Management in Portland, Ore.

Chief Executive James Gorman still has work to do. The investment banking businesses were a drag on results in the quarter, and helped pull down Morgan Stanley’s profit.