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From JPMorgan (JPM) to Goldman Sachs (GS) to Wells Fargo (WFC), it's been a year of record earnings for some of the biggest U.S. banks and investment firms. Not so for Morgan Stanley (MS), which reported its first quarterly profit in 12 months on Wednesday.

Higher fees from underwriting stock and bond issues and real estate investments that swung to a gain played a big part in helping Morgan Stanley post net income of of $757 million, or 38 cents a share, compared with a loss of $159 million, or $1.37 a share, a year ago, the company said in a statement.
Like its Wall Street peers, Morgan Stanley also posted strong results in fixed-income trading. And it's been the most prolific advisor on mergers and acquisitions through the first nine months of 2009, topping bigger rival Goldman Sachs for the first time in quite a while, according to data compiled by Thomson Reuters.

The results suggest that Morgan Stanley may be regaining its footing after a year of sweeping change for both the company and Wall Street.

A joint venture with Citigroup (C) bolstered its brokerage business, which posted a pre-tax profit of $197 million, up more than 90 percent compared with a year ago. And, though it's far too soon to register in its quarterly earnings, Morgan Stanley will eventually get about $1.5 billion from the sale of its Van Kampen mutual fund business to Invesco (IVZ).

All the while, Morgan Stanley's higher trading income suggests that much of the concern among analysts and investors over a strategy they feared would lead the company away from lucrative-yet-risky businesses may have been misplaced.

Indeed, Morgan Stanley's "value at risk," a much-debated financial metric that's supposed to give a reading of worst-case-scenario trading losses over a single day, rose in the quarter, according to the company's earnings statement. At the end of the third quarter, it stood at $118 million, compared with $113 million in the previous quarter and $98 million a year earlier.

It's clear that the company sees it as an opportunity: "Although we still have work to do in sales and trading, it offers our single biggest opportunity for growth as we build out our client flow business and pursue disciplined risk-taking," said John Mack, its outgoing CEO.

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