Morgan Stanley beat first-quarter profit estimates on record equity trading and strong wealth management results, sending its shares up 1.9% before the bell on Friday.
The bank reported record equity net revenue, reflecting increases across business lines and regions, particularly in Asia, with outperformance in prime brokerage and derivatives.
The bank on Friday posted a profit of $4.3 billion, or $2.60 per share, in the three months ended March 31. That compares with a profit $3.4 billion, or $2.02 per share, a year ago and $2.20, according to estimates compiled by LSEG.
U.S. President Donald Trump’s decision to impose heavy tariffs on major economies and the launch of China’s generative AI model, DeepSeek, triggered a broad selloff in global markets.
The potential for a recession and the uncertainty over the Federal Reserve’s interest-rate trajectory have kept investors on edge.
Equity trading revenue rose as investors rebalanced their portfolios, boosting volumes, mainly in technology and industrial stocks.
Fixed income trading revenue increased, as renewed concerns about stagflation due to Trump’s tariffs led investors to hedge aggressively and reposition across credit and duration.
Morgan Stanley expects no rate cuts from the Fed this year
Morgan Stanley’s total revenue rose to $17.7 billion in the first quarter compared with $15.1 billion a year ago.
Wall Street’s investment banks face a murky dealmaking climate, as escalating trade tensions under a second Trump presidency rattle markets and delay transactions.
A rebound in Asia helped lift global M&A volumes in the first quarter, but U.S. activity — a key revenue driver for firms like Morgan Stanley — slumped 13% amid growing uncertainty, according to Dealogic data.
Bankers and analysts warn the prolonged trade war, disappointing IPO debuts and weak follow-through on major deals could dampen investor sentiment and advisory pipelines in the second quarter.
Stable markets support deal activity by giving buyers and sellers more confidence around valuations, reducing execution risk and encouraging companies to move ahead with transactions.
Morgan Stanley ranked fourth globally in investment banking fees in the first quarter, according to Dealogic data.
The bank advised on several marquee transactions in the quarter, including Walgreens’ $24 billion take-private deal withSycamore Partners. It also served as lead underwriter for AI cloud firm CoreWeave’s $1.5 billion U.S. initial public offering.
Investment banking revenue rose 8% in the first quarter.
Morgan Stanley’s Institutional Securities business, which houses investment banking and trading, reported revenue of $9 billion compared with $7 billion a year earlier.
JPMorgan Chase also topped first-quarter profit estimates, driven by record equities trading and higher fees from debt underwriting and merger advisory.
Wells Fargo’s first-quarter profit rose 6% as it collected more fees in wealth management and investment banking, even though its CEO warned of risks from U.S. tariffs.
Morgan Stanley’s wealth management revenue - a key area of focus for Morgan Stanley - came in at $7.3 billion, compared with $6.9 billion a year ago.
Under former CEO James Gorman, Morgan Stanley expanded into wealth management to diversify the bank and generate more steady income in contrast to the volatility in trading and investment banking.
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