Morgan Stanley misses profit forecasts but beats Goldman

Morgan Stanley became the latest Wall Street bank to miss profit forecasts today, though it did manage to show arch-rival Goldman Sachs a clean pair of heels.

The Wall Street giant had revenue of $1.76 billion (£1.1 billion) in the fourth quarter, ahead of Goldman's $1.5 billion.

But although profits jumped by more than a third to $836 million, that was still less than investors had been expecting.

The figures and those from Goldman yesterday suggest clients are still reluctant to do deals in the wake of a financial crisis that threw a light on Wall Street skulduggery.

Morgan, which employs 7000 in London, is setting aside $4 billion to pay staff salaries and bonuses for 2010, making the average pay $265,000 (£166,000), up from last year's $235,000. In reality the average pay figure is somewhat misleading, as a small handful of staff pocket many millions of dollars.

Goldman unveiled its fourth-quarter figures yesterday. Although the profits and revenues fell it is still paying staff much more than does Morgan Stanley. Its average pay figure is $430,000.

Morgan Stanley boss James Gorman has been under fire lately for a risk-averse strategy that seems to have hit the share price.

He wants to rely less on trading and more on traditional investment-banking activities to move the business forward.

That is reflected in a fall in trading revenue reported today. Morgan was the top underwriter of equity placings and the top mergers and acquisitions adviser last year.