Morgan Stanley on Tuesday said its fourth-quarter earnings rose 49 percent, exceeding expectations, as rising investment banking and trading income and a one-time tax benefit outpaced higher credit card losses and expenses related to management turmoil earlier this year.

New York-based Morgan Stanley said net income rose to $1.79 billion, or $1.68 a share, in the three months ended November 25, from $1.20 billion, or $1.09, in the year-earlier period. Net revenue rose 28 percent to $7.0 billion from the year-ago period.

The company's shares rose almost 3 percent to $58.30 before the bell.

The record quarterly results included an income tax benefit of $280 million, or 26 cents a share, resulting from the firm's repatriation of about $4 billion of overseas earnings.

Even if the gain were excluded, Morgan Stanley trounced Wall Street's lowered expectations. Analysts on average forecast profit of $1.09 a share on revenue of $6.72 billion, according to Reuters Estimates.

The results offer a happy ending to a tumultuous year at Morgan Stanley, which despite an overhaul in senior management and dozens of high-profile defections, managed to post record full-year revenue with all-time high revenue from institutional securities, fixed income sales and trading, prime brokerage and the highest financial advisory revenue in five years.

Still, on a full-year basis, profit fell 5 percent to $4.26 billion, marred by a series of management and legal woes, even as rivals Goldman Sachs Group and Lehman Brothers reported record profit and revenue.

Morgan's shares, which closed Monday trading at $56.67, have climbed 2 percent this year, lagging the 28 percent advance by the AMEX Broker-Dealer Index. The stock currently trades at about 11 times next year's projected earnings.

Earlier Tuesday, Morgan Stanley agreed to pay a 175 million pound ($308.7 million) premium for the Goldfish credit card business of U.K. bank Lloyds TSB (LLOY.L), expanding a business the firm in April had seriously considered shedding.

The deal would add 800 million pounds ($1.41 billion) worth of balances to its existing 1.5 billion pound ($2.65 billion) book of business in the United Kingdom and increase accounts by 47 percent to over 2.3 million.