Hank Paulson, chairman and chief executive of Goldman Sachs, and Philip Purcell, his counterpart at Morgan Stanley, were bullish in their outlook for 2004 after both banks reported sharp rises in annual profits.

Full year profits at Morgan Stanley, were up 28% on 2002 at $3.8bn (€3.1bn). Overall revenues rose 9% to $20.9bn. Goldman Sachs reported a 42% rise in annual profits to more than $3bn.