updated 3/21/2007 8:50:56 AM ET 2007-03-21T12:50:56

Morgan Stanley Inc., the second-biggest investment bank on Wall Street, said Wednesday its fiscal first-quarter profit soared 69 percent on robust trading and strong advisory fees from stock and bond underwriting.

Profit after paying preferred dividends rose to $2.66 billion, or $2.51 per share, in the three months ended Feb. 28 from $1.57 billion, or $1.48 per share, in the year-ago period. Excluding a gain on the sale of Quilter Holdings, the company posted profit from continuing operations of $2.56 billion, or $2.40 per share, in the latest period.

Revenue rose 29 percent to $11 billion from $8.55 billion a year earlier.

Results surpassed Wall Street projections for earnings of $1.88 per share on revenue of $9.42 billion, according to analysts polled by Thomson Financial.

"This strong performance was in large part the result of effective, disciplined risk-taking by our team in institutional securities, which helped deliver record results across our sales and trading businesses," said Chairman and Chief Executive John Mack in a statement.

The New York-based firm becomes the last of the four major Wall Street investment banks that report on a fiscal year to release earnings _ and all surpassed analysts' expectations. Merrill Lynch, which reports on a calendar year, is expected to report earnings in late April.

The investment banks that reported on an earlier schedule avoided the market swoon on Feb. 27. The quarter also closed before mortgage brokers began to report troubles with their subprime portfolios, which also could impact investment banks' results.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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