Morgan Stanley (MS) Thursday joined the ranks of banks exceeding expectations for first quarter earnings. Excluding special charges, the firm posted a profit of $1.2 billion or 61 cents a share—above analysts’ expectations of 57 cents.

Brad Hintz, banking analyst at Sanford C. Bernstein & Co., says Morgan Stanley’s earnings show “very good operating performance in Q1,” beating on revenues, cutting expenses and meeting margin targets in wealth management.

Still, Morgan Stanley CEO James Gorman might want to hold off on celebrating this good earnings news.

At market open, Morgan Stanley shares were trading 4% below Wednesday’s close--a decline much larger than the overall market's. Investors may be worried about the company's future.

The firm has shifted its focus from investment banking and trading to wealth management, which yielded a record pre-tax profit and underpinned the firm’s stronger first quarter earnings. But the wealth management business in general “probably isn’t going to pick up until 2014,” Hintz tells The Daily Ticker.

“That will hurt Morgan Stanley, Schwab (SCHW), Ameritrade (AMTD) and Bank of America(BAC) [which bought Merrill Lynch]," he says.

The banking sector that is doing well, says Hintz, is investment banking. “We have an investment banking cycle. Equity underwriting volumes are up by 30%, Mergers and acquisitions…are up over 20%.”

Hintz says this season’s bank earnings are good, but going forward only certain businesses will boom. “Investment banking looks like it will be booming and asset management looks like it will be the next business to come back.”

An investment boom will help Goldman Sachs and boutique firms like Lazard (LAZ) and Greenhill (GHL), says Hintz.

Goldman Sachs and Citigroup were the only major banks reporting in the last week that had stronger revenues. Revenues at Wells Fargo, Bank of America and JPMorgan—the three major mortgage lenders—fell. “Mortgage business financing is slowing,” says Hintz. “Loan demand is relatively limited.”

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