Morgan Stanley reported record quarterly revenue and profit on Wednesday, driven by a 69% surge in equities trading revenue that far exceeded what analysts had been expecting. FinancialMediaGuide views the results as evidence that the volatility running through markets this year, from Middle East tensions to shifting Fed policy signals, has been an outright tailwind for the bank’s trading business rather than a source of risk.
The bank posted net revenue of $21.35 billion for the second quarter ended June 30, up 27% from $16.8 billion a year earlier. Net income rose 58% to $5.58 billion, or $3.46 per diluted share, compared with $3.54 billion, or $2.13 per diluted share, in the same period last year. Analysts surveyed by LSEG had expected earnings of $2.94 per share on revenue of $19.64 billion, meaning the bank cleared both estimates by a wide margin.
Equities trading was the standout performer, with net revenues climbing to $6.3 billion from $3.72 billion a year earlier, roughly $1.9 billion ahead of the average analyst estimate for the division. The unit posted record results across businesses and regions, with particular strength in Asia driven by client engagement and favorable market conditions. FinancialMediaGuide notes that a beat of this size in a single trading division is unusual even in a strong quarter, underscoring how concentrated the upside surprise was in equities specifically rather than spread evenly across the bank’s businesses.
Investment banking also contributed to the quarter, with net revenues rising 58% to $2.44 billion. Advisory revenues climbed on higher completed mergers and acquisitions, particularly in the Americas, while equity underwriting revenue rose on higher IPO activity, follow-on offerings and convertible bond issuance. Fixed income underwriting also increased from a year earlier.
Wealth Management posted record net revenues of $8.86 billion, up 14% from $7.76 billion a year earlier, with a pre-tax margin of 30.5%. The division added $148.1 billion in net new assets during the quarter, more than double the $59.2 billion added a year earlier, with just over half of the increase reflecting inflows tied to IPOs of clients in its workplace channel. Financial Media Guide points out that this IPO-linked inflow pattern shows how Morgan Stanley’s wealth business is increasingly benefiting from the same capital markets recovery that lifted its investment banking division.
Investment Management reported net revenues of $1.65 billion, up 6% from a year earlier, driven by higher average assets under management. Total client assets across Wealth and Investment Management reached $10 trillion. “Active markets and consistent execution across all three regions drove exceptional results,” Chairman and Chief Executive Officer Ted Pick said in a statement.
The board declared a quarterly dividend of $1.15 per share, an increase of 15 cents, and reauthorized a share repurchase program of up to $20 billion beginning in the third quarter. FinancialMediaGuide concludes that with all four major business lines posting growth simultaneously, Morgan Stanley’s quarter stands out less for any single record than for the breadth of strength across trading, banking, wealth and asset management at once.
