(Reuters) - Morgan Stanley MS.N reported record first-quarter profit on Wednesday thanks to a surge in trading activity, much like other Wall Street banks, but executives warned results through the rest of the year may not be quite as strong.

Capital markets flourished during the first few months of 2018 as major economies expanded around the globe and U.S. interest rates rose, with bouts of volatility proving generally positive for trading.

As investors flocked to stock, bond, commodity and currency markets to adjust their portfolios, Morgan Stanley’s broader institutional securities business reported its best results since 2007.

Trading revenue soared 26 percent to $4.4 billion, topping Morgan Stanley’s chief rival, Goldman Sachs Group Inc GS.N, in dollar terms.

However, the early days of the second quarter have been defined more by geopolitical tensions, trade conflicts and debates about the direction of yields, Chief Financial Officer Jonathan Pruzan said in an interview. That bodes less well for trading revenue, especially since the first quarter is seasonally the strongest.

“If Morgan Stanley’s strategy could be defined simply, it would be that we will do fine when the markets are tough and we would do well when the markets are good,” Chief Executive Officer James Gorman said on a call with analysts.

“There are others who might do better when the markets are good. That’s fine. What I care about is how we do when the markets are tough.”

Morgan Stanley can generate at least $7.5 billion in revenue in a worst-case scenario, Gorman said, thanks to steps he has taken to grow more consistent income streams, like wealth management.

Overall, Morgan Stanley’s quarterly profit rose 40 percent year-over-year to $2.6 billion, or $1.45 per share, easily topping analysts’ average estimate of $1.25 per share, according to Thomson Reuters I/B/E/S.

Total revenue rose 14 percent to $11.1 billion.

Analysts were generally positive on the results. In a report titled “Firing on All Cylinders,” Oppenheimer analyst Chris Kotowski said Morgan Stanley had beat estimates in nearly all of its businesses.

Morgan Stanley shares rose 0.8 percent to $53.65 in morning trading.

Its report followed similarly sunny earnings from JPMorgan Chase & Co JPM.N, Citigroup Inc C.N, Bank of America Corp BAC.N and Goldman Sachs.

The corporate logo of financial firm Morgan Stanley is pictured on the company's world headquarters in New York, U.S. April 17, 2017. REUTERS/Shannon Stapleton - RC1EEC5D8800

Unlike Morgan Stanley’s Pruzan, Goldman’s finance chief had said he believed the market trends that led to the blockbuster quarter were sustainable.

HIGHER TARGETS AHEAD?

Gorman, 59, joined Morgan Stanley in 2006 as head of wealth management. He became CEO in 2010, as the bank was still reeling from the financial crisis.

His tenure has been defined by reducing risk, exiting problematic businesses and emphasizing steadier ones that can generate reliable revenue.

During the call, Gorman made frequent references to how far Morgan Stanley has come since he took the helm, calling it a “different planet now.”

He noted that when he joined, the bank’s wealth business generated $1.25 million in quarterly revenue, a tiny fraction of the $4.4 billion it printed last quarter.

Overall, Morgan Stanley had been generating returns-on-equity of just 2 percent or so, compared with the annualized return of 14.9 percent last quarter.

That means it is well above the 10 percent minimum investors generally like to see, above the 10 percent to 13 percent target range Gorman set a few months ago, and close to Goldman Sachs, which reported a 15.4 percent return-on-equity in the first quarter.

Asked by analysts whether the target should be raised, Gorman said it would be “silly” to change so quickly, but that he would re-evaluate if Morgan Stanley generates returns above that range through the rest of the year.

“Philosophically, the target range is supposed to represent a normal set of outcomes under kind of tough market environment and a good market environment,” he said. “This was a very good market environment.”