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Better-Than-Expected Trading Drives Morgan Stanley's Q2 Earnings
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Key Takeaways
MS reported Q2 EPS of $2.13 and net revenues of $16.79B, beating estimates and rising year over year.
Trading revenues surged on tariff-fueled volatility, with equity trading up 23% and fixed income up 9%.
Wealth Management revenues rose 14%, while IB fees fell 5% due to subdued deal-making and debt underwriting.
Morgan Stanley’s (MS - Free Report) second-quarter 2025 earnings per share of $2.13 handily surpassed the Zacks Consensus Estimate of $1.93. The figure also compared favorably with $1.82 per share reported in the prior-year quarter.
Additionally, Morgan Stanley’s net revenues of $16.79 billion were up 12% from the prior-year quarter and beat the Zacks Consensus Estimate of $15.92 billion.
The primary reason for Morgan Stanley’s impressive quarterly performance was better-than-expected trading revenues. The company’s trading business was buoyed by tariff-related market turmoil during the second quarter.
Stock markets experienced sharp swings during the quarter following President Donald Trump’s announcement of sweeping tariffs on major global economies. The move triggered heightened volatility and a surge in trading volumes, as investors rushed to reposition their portfolios and hedge against potential risks. However, markets stabilized toward the end of the quarter, helping to restore investor confidence and improve the business outlook.
Morgan Stanley’s Q2 Trading Performance
On the conference call following the earnings release, CEO Ted Pick said, “The second quarter unfolded with two distinct halves. The first half began with uncertainty and market volatility associated with the U.S. trade policy, and the second half ended with increasing engagement and a steady rebound in capital markets.”
Morgan Stanley’s strong trading business performance was propelled by higher client activity, with strength in equity trading. The company’s equity trading revenues jumped 23% year over year to $3.72 billion and fixed-income trading income was up 9% to $2.18 billion. We had projected equity and fixed-income trading revenues to be $3.03 billion and $2.12 billion, respectively.
This led Morgan Stanley’s Institutional Securities segment, which runs its capital markets operations, to post net revenues of $7.64 billion in the second quarter, up 9% year over year.
Similarly, the trading business led to windfall gains for Goldman Sachs (GS - Free Report) and JPMorgan (JPM - Free Report) . The volatile market lifted Goldman's net revenues in Equities by 36% year over year to $4.3 billion. Fixed income, currency and commodities trading revenues rose 9% to $3.5 billion.
For JPMorgan, markets revenues were impressive and exceeded management's expectations of growth in the mid-to-high single-digit range. The metric soared 15% to $8.9 billion. Specifically, fixed-income markets revenues jumped 14% to $5.7 billion, while equity trading numbers rose 15% to $3.2 billion.
Other Factors That Influenced Morgan Stanley’s Q2 Earnings
Apart from the trading business, Morgan Stanley’s wealth and investment management operations were impressive. Wealth Management revenues grew 14% to $7.76 billion in the second quarter, by adding new assets and collecting more fees.
Likewise, Investment Management posted net revenues of $1.55 billion, jumping 12%. Additionally, total client assets across both segments reached $8.2 trillion, bringing the firm closer to its longstanding $10 trillion asset management goal set by former CEO James Gorman.
However, Morgan Stanley’s investment banking (IB) business performance was weak. The company’s advisory fees declined 14% year over year as completed M&A transactions dropped. Further, lower non-investment grade issuances hurt fixed income underwriting fees, which decreased 21%. Meanwhile, equity underwriting income jumped 42%. On the whole, total IB fees (in the Institutional Securities division) fell 5% to $1.54 billion.
On the contrary, the IB business performance of Goldman and JPMorgan was impressive. Goldman’s IB fees jumped 26% year over year to $2.2 billion, led by strong advisory revenues in the Americas and EMEA. JPMorgan also beat expectations, with advisory and debt underwriting fees rising 8% and 12%, respectively. Despite a 6% drop in equity underwriting, total IB fees rose 7% to $2.51 billion.
Additionally, Morgan Stanley’s net interest income jumped 14% to $2.34 billion. Further, non-interest expenses increased during the quarter. The metric was $11.97 billion, up 10% from the prior-year quarter. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
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Better-Than-Expected Trading Drives Morgan Stanley's Q2 Earnings
Key Takeaways
Morgan Stanley’s (MS - Free Report) second-quarter 2025 earnings per share of $2.13 handily surpassed the Zacks Consensus Estimate of $1.93. The figure also compared favorably with $1.82 per share reported in the prior-year quarter.
Additionally, Morgan Stanley’s net revenues of $16.79 billion were up 12% from the prior-year quarter and beat the Zacks Consensus Estimate of $15.92 billion.
The primary reason for Morgan Stanley’s impressive quarterly performance was better-than-expected trading revenues. The company’s trading business was buoyed by tariff-related market turmoil during the second quarter.
Morgan Stanley Price, Consensus and EPS Surprise
Morgan Stanley price-consensus-eps-surprise-chart | Morgan Stanley Quote
Stock markets experienced sharp swings during the quarter following President Donald Trump’s announcement of sweeping tariffs on major global economies. The move triggered heightened volatility and a surge in trading volumes, as investors rushed to reposition their portfolios and hedge against potential risks. However, markets stabilized toward the end of the quarter, helping to restore investor confidence and improve the business outlook.
Morgan Stanley’s Q2 Trading Performance
On the conference call following the earnings release, CEO Ted Pick said, “The second quarter unfolded with two distinct halves. The first half began with uncertainty and market volatility associated with the U.S. trade policy, and the second half ended with increasing engagement and a steady rebound in capital markets.”
Morgan Stanley’s strong trading business performance was propelled by higher client activity, with strength in equity trading. The company’s equity trading revenues jumped 23% year over year to $3.72 billion and fixed-income trading income was up 9% to $2.18 billion. We had projected equity and fixed-income trading revenues to be $3.03 billion and $2.12 billion, respectively.
This led Morgan Stanley’s Institutional Securities segment, which runs its capital markets operations, to post net revenues of $7.64 billion in the second quarter, up 9% year over year.
Similarly, the trading business led to windfall gains for Goldman Sachs (GS - Free Report) and JPMorgan (JPM - Free Report) . The volatile market lifted Goldman's net revenues in Equities by 36% year over year to $4.3 billion. Fixed income, currency and commodities trading revenues rose 9% to $3.5 billion.
For JPMorgan, markets revenues were impressive and exceeded management's expectations of growth in the mid-to-high single-digit range. The metric soared 15% to $8.9 billion. Specifically, fixed-income markets revenues jumped 14% to $5.7 billion, while equity trading numbers rose 15% to $3.2 billion.
Other Factors That Influenced Morgan Stanley’s Q2 Earnings
Apart from the trading business, Morgan Stanley’s wealth and investment management operations were impressive. Wealth Management revenues grew 14% to $7.76 billion in the second quarter, by adding new assets and collecting more fees.
Likewise, Investment Management posted net revenues of $1.55 billion, jumping 12%. Additionally, total client assets across both segments reached $8.2 trillion, bringing the firm closer to its longstanding $10 trillion asset management goal set by former CEO James Gorman.
However, Morgan Stanley’s investment banking (IB) business performance was weak. The company’s advisory fees declined 14% year over year as completed M&A transactions dropped. Further, lower non-investment grade issuances hurt fixed income underwriting fees, which decreased 21%. Meanwhile, equity underwriting income jumped 42%. On the whole, total IB fees (in the Institutional Securities division) fell 5% to $1.54 billion.
On the contrary, the IB business performance of Goldman and JPMorgan was impressive. Goldman’s IB fees jumped 26% year over year to $2.2 billion, led by strong advisory revenues in the Americas and EMEA. JPMorgan also beat expectations, with advisory and debt underwriting fees rising 8% and 12%, respectively. Despite a 6% drop in equity underwriting, total IB fees rose 7% to $2.51 billion.
Additionally, Morgan Stanley’s net interest income jumped 14% to $2.34 billion. Further, non-interest expenses increased during the quarter. The metric was $11.97 billion, up 10% from the prior-year quarter. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
At present, Morgan Stanley carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.