Wall Street giant Morgan Stanley (NYSE: MS) reported record profit and revenue for its fiscal first quarter on Wednesday, with net income rising more than 60 percent from the previous quarter, giving the firm’s shares a nearly 7 percent boost for the day.

The second largest Wall Street investment bank by market value said net profit from continuing operations for the quarter was $2.56 million, up from $1.6 million in the first quarter of 2006. The company earned $2.40 diluted earnings per share, compared with $1.51 the previous year. Net reported revenue was $11.0 billion, 29 percent higher than a year earlier.

The results beat expectations. A poll of analysts by Thompson Financial had predicted an EPS of $1.88.

“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 John J. Mack, Morgan Stanley’s Chairman and CEO.

The results helped to dispel fears that a recent downturn in the subprime mortgage sector could have affected the firm’s bottom line. Shares in Morgan Stanley closed up 6.86 percent, or $5.22, to $81.33 in trading on the New York Stock Exchange.

Institutional Securities achieved 37 percent revenue growth, reaching $7.6 billion. Pre-tax income rose 71 percent to $3.0 billion, led by strong results in fixed income and equities. Revenues for fixed income and equities were $3.6 billion and $2.2 billion respectively.

Morgan Stanley’s wealth management group reported a pre-tax net income of $220 million, compared to $15 million a year ago. The division had $1.5 billion in net revenue.

Asset management pre-tax income was up 37 percent to $236 million on $905 million in net revenue.

The company’s Discover card division, which is set to spin off as its own company later this year, earned $372 million in pre-tax income, a drop of 22 percent compared to last year’s first quarter. Revenue also dropped 6 percent.