Morgan Stanley reported record fourth quarter profits, although net income was down a little for the full year.

Net income for the fourth quarter ended November 30, came in at US$1.8 billion, up 49% from the fourth quarter of 2004. Net revenues were US$7 billion, 28% above last year’s fourth quarter.

For the full year, the firm also enjoyed record net revenues of US$26.8 billion, up 13% from last year. Net income for the fiscal year was US$4.26 billion, a decline of 5% compared with last year. Income from continuing operations was US$5.2 billion for the year, an increase of 13% from last year.

“Morgan Stanley achieved record revenues for 2005 and record earnings for the fourth quarter. Through focus and commitment, the people of Morgan Stanley have delivered two straight quarters of improving results. Our performance this year was particularly strong in institutional securities, where we saw record revenues in fixed income, record revenues in prime brokerage and significant increases across our equities and investment banking businesses. We achieved #2 positions in global announced M&A and IPOs and #3 in global equity,” John Mack, chairman and CEO, said.

“Even with record revenues for the year, we have work to do to achieve the full performance that this franchise is capable of delivering,” Mack added. “We have a clear strategy for improving our performance; we have put in place the right leadership for each of our businesses; and we have continued to strengthen our corporate governance and add outstanding new directors to our board. In short, we have made significant progress, but know there is a great deal of work ahead of us and are intensely focused on the execution of our strategy to create shareholder value.”