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MS Q2 Earnings Beat on Trading & IB Strength, Client Assets Top $10T
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Key Takeaways
Morgan Stanley's Q2 earnings rose 62.4% as net revenues climbed 27.1% to $21.35 billion.
Record equity revenues and a 58.2% jump in investment banking revenues drove the quarter.
Client assets topped $10 trillion, while the dividend rose 15% and buybacks were reauthorized.
Morgan Stanley’s (MS - Free Report) second-quarter 2026 earnings were $3.46 per share, which easily outpaced the Zacks Consensus Estimate of $2.89. The bottom line surged 62.4% from the prior-year quarter.
Net income applicable to Morgan Stanley was $5.58 billion, rising 57.7% year over year.
Behind Morgan Stanley’s Headline Numbers
Results benefited from robust client engagement and strength in investment banking (IB) and trading activities. IB revenues climbed 58.2% to $2.44 billion. Advisory revenues increased 57.1% on higher completed merger and acquisition transactions, while equity and fixed-income underwriting revenues soared 70.2% and 48.1%, respectively.
Equity revenues reached a record $6.30 billion, increasing 69.3% year over year. Results reflected strong performance across businesses and regions, with notable strength in Asia amid robust client engagement and favorable market conditions.
Fixed-income revenues rose 12.6% to $2.46 billion, driven by stronger credit results and continued lending growth in securitized products. These gains were partly offset by a $152 million loss in other revenues, primarily due to mark-to-market losses on corporate loans, including hedges.
The performance of the company’s wealth management business was impressive, driven by higher asset management revenues and robust levels of client activity. Total client assets across Wealth and Investment Management segments touched the $10 trillion milestone. This, along with higher net interest income (NII), supported Morgan Stanley’s quarterly performance.
MS Revenues Rise as Market Activity Accelerates
Net revenues of $21.35 billion topped the consensus estimate of $19.60 billion by 8.9% and increased 27.1% year over year. Record equity revenues, stronger IB activity and robust Wealth Management asset growth drove the performance.
Total non-interest revenues increased 28.5% year over year to $18.57 billion. Trading revenues jumped 41.7% to $6.72 billion, while IB revenues advanced 61.3% to $2.65 billion.
NII rose 18.4% to $2.78 billion, supported by growth in interest income that outpaced the increase in interest expense.
Morgan Stanley's Expenses Increase on Higher Activity
Total non-interest expenses were $13.90 billion, up 16.1% year over year. Compensation and benefits expenses rose 13.9% to $8.19 billion, mainly reflecting the impact of higher revenues.
Non-compensation expenses increased 19.5% to $5.72 billion. Higher brokerage, clearing and exchange fees, technology-related costs, marketing expenses and other costs contributed to the rise.
Morgan Stanley’s Segmental Quarterly Performance
Institutional Securities' net revenues surged 44.4% year over year to a record $11.04 billion. Pre-tax income more than doubled to $4.26 billion, while the segment's pre-tax margin expanded to 39% from 28%.
Wealth Management net revenues increased 14.1% year over year to a record $8.86 billion. Pre-tax income rose 22.6% to $2.70 billion, resulting in a pre-tax margin of 30.5%.
Total client assets reached $8.08 trillion, up 24.5%. Net new assets were $148.1 billion, with slightly more than half reflecting inflows related to certain client initial public offerings in the Workplace channel. Fee-based client assets increased 22% to $3.02 trillion. U.S. Bank loans rose 15.9% to $195.7 billion, while deposits advanced 13.8% to $436 billion.
Investment Management net revenues increased 6.1% year over year to $1.65 billion. Pre-tax income rose 25.1% to $404 million, aided by higher asset management fees and improved performance-based income.
As of June 30, 2026, assets under management or supervision reached $2 trillion, up 17%. Long-term net inflows were $7.5 billion, reflecting positive flows in fixed income and alternatives and solutions, partly offset by equity outflows.
Morgan Stanley Boosts Shareholder Returns
Morgan Stanley repurchased $1.5 billion worth of shares during the quarter. The board also reauthorized a multi-year share repurchase program of up to $20 billion, beginning in the third quarter of 2026.
MS announced a quarterly dividend of $1.15 per share, representing a 15% hike from the prior payout. The dividend will be paid out on Aug. 14 to shareholders on record as of July 31.
Our View on Morgan Stanley
The solid performance of the IB business and an impressive deal-making pipeline are expected to support Morgan Stanley’s financials. Efforts to become less dependent on capital markets-driven revenues and inorganic expansion/strategic alliances will boost top-line growth. However, elevated expenses due to expansion efforts and volatile trading revenues pose a concern.
The Goldman Sachs Group, Inc.’s (GS - Free Report) second-quarter 2026 earnings per share of $20.98 topped the Zacks Consensus Estimate of $14.47. The metric surged 92% from $10.91 a year ago.
Driven by the volatile market, Goldman posted record net revenues in Equities, while its fixed income, currencies and commodities intermediation business revenues also rose. A solid dealmaking activity led to robust growth in IB fees. The company’s Asset & Wealth Management division posted solid revenue growth. However, a rise in expenses was an undermining factor.
JPMorgan (JPM - Free Report) posted second-quarter 2026 adjusted earnings of $6.14 per share, which beat the Zacks Consensus Estimate of $5.59 by 9.8%. The bottom line was up 17.2% from $5.24 reported a year ago.
Strong Markets and IB activity powered core growth, while NII got support from decent loan demand. Lower provisions also offered support. However, an increase in operating expenses was the undermining factor for JPMorgan.
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MS Q2 Earnings Beat on Trading & IB Strength, Client Assets Top $10T
Key Takeaways
Morgan Stanley’s (MS - Free Report) second-quarter 2026 earnings were $3.46 per share, which easily outpaced the Zacks Consensus Estimate of $2.89. The bottom line surged 62.4% from the prior-year quarter.
Net income applicable to Morgan Stanley was $5.58 billion, rising 57.7% year over year.
Behind Morgan Stanley’s Headline Numbers
Results benefited from robust client engagement and strength in investment banking (IB) and trading activities. IB revenues climbed 58.2% to $2.44 billion. Advisory revenues increased 57.1% on higher completed merger and acquisition transactions, while equity and fixed-income underwriting revenues soared 70.2% and 48.1%, respectively.
Equity revenues reached a record $6.30 billion, increasing 69.3% year over year. Results reflected strong performance across businesses and regions, with notable strength in Asia amid robust client engagement and favorable market conditions.
Fixed-income revenues rose 12.6% to $2.46 billion, driven by stronger credit results and continued lending growth in securitized products. These gains were partly offset by a $152 million loss in other revenues, primarily due to mark-to-market losses on corporate loans, including hedges.
The performance of the company’s wealth management business was impressive, driven by higher asset management revenues and robust levels of client activity. Total client assets across Wealth and Investment Management segments touched the $10 trillion milestone. This, along with higher net interest income (NII), supported Morgan Stanley’s quarterly performance.
MS Revenues Rise as Market Activity Accelerates
Net revenues of $21.35 billion topped the consensus estimate of $19.60 billion by 8.9% and increased 27.1% year over year. Record equity revenues, stronger IB activity and robust Wealth Management asset growth drove the performance.
Total non-interest revenues increased 28.5% year over year to $18.57 billion. Trading revenues jumped 41.7% to $6.72 billion, while IB revenues advanced 61.3% to $2.65 billion.
NII rose 18.4% to $2.78 billion, supported by growth in interest income that outpaced the increase in interest expense.
Morgan Stanley's Expenses Increase on Higher Activity
Total non-interest expenses were $13.90 billion, up 16.1% year over year. Compensation and benefits expenses rose 13.9% to $8.19 billion, mainly reflecting the impact of higher revenues.
Non-compensation expenses increased 19.5% to $5.72 billion. Higher brokerage, clearing and exchange fees, technology-related costs, marketing expenses and other costs contributed to the rise.
Morgan Stanley’s Segmental Quarterly Performance
Institutional Securities' net revenues surged 44.4% year over year to a record $11.04 billion. Pre-tax income more than doubled to $4.26 billion, while the segment's pre-tax margin expanded to 39% from 28%.
Wealth Management net revenues increased 14.1% year over year to a record $8.86 billion. Pre-tax income rose 22.6% to $2.70 billion, resulting in a pre-tax margin of 30.5%.
Total client assets reached $8.08 trillion, up 24.5%. Net new assets were $148.1 billion, with slightly more than half reflecting inflows related to certain client initial public offerings in the Workplace channel. Fee-based client assets increased 22% to $3.02 trillion. U.S. Bank loans rose 15.9% to $195.7 billion, while deposits advanced 13.8% to $436 billion.
Investment Management net revenues increased 6.1% year over year to $1.65 billion. Pre-tax income rose 25.1% to $404 million, aided by higher asset management fees and improved performance-based income.
As of June 30, 2026, assets under management or supervision reached $2 trillion, up 17%. Long-term net inflows were $7.5 billion, reflecting positive flows in fixed income and alternatives and solutions, partly offset by equity outflows.
Morgan Stanley Boosts Shareholder Returns
Morgan Stanley repurchased $1.5 billion worth of shares during the quarter. The board also reauthorized a multi-year share repurchase program of up to $20 billion, beginning in the third quarter of 2026.
MS announced a quarterly dividend of $1.15 per share, representing a 15% hike from the prior payout. The dividend will be paid out on Aug. 14 to shareholders on record as of July 31.
Our View on Morgan Stanley
The solid performance of the IB business and an impressive deal-making pipeline are expected to support Morgan Stanley’s financials. Efforts to become less dependent on capital markets-driven revenues and inorganic expansion/strategic alliances will boost top-line growth. However, elevated expenses due to expansion efforts and volatile trading revenues pose a concern.
Morgan Stanley Price, Consensus and EPS Surprise
Morgan Stanley price-consensus-eps-surprise-chart | Morgan Stanley Quote
Currently, Morgan Stanley carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Morgan Stanley’s Peers
The Goldman Sachs Group, Inc.’s (GS - Free Report) second-quarter 2026 earnings per share of $20.98 topped the Zacks Consensus Estimate of $14.47. The metric surged 92% from $10.91 a year ago.
Driven by the volatile market, Goldman posted record net revenues in Equities, while its fixed income, currencies and commodities intermediation business revenues also rose. A solid dealmaking activity led to robust growth in IB fees. The company’s Asset & Wealth Management division posted solid revenue growth. However, a rise in expenses was an undermining factor.
JPMorgan (JPM - Free Report) posted second-quarter 2026 adjusted earnings of $6.14 per share, which beat the Zacks Consensus Estimate of $5.59 by 9.8%. The bottom line was up 17.2% from $5.24 reported a year ago.
Strong Markets and IB activity powered core growth, while NII got support from decent loan demand. Lower provisions also offered support. However, an increase in operating expenses was the undermining factor for JPMorgan.