Morgan Stanley shares climbed 5% on Wednesday after the bank delivered a standout first quarter performance, driven by a resurgence in global dealmaking and record-breaking revenue in its equities trading business.
The bank capitalized on a favorable regulatory shift and heightened market volatility, fueled in part by a major software sector selloff and geopolitical tensions. These factors catalyzed a 36% jump in investment banking revenue to $2.12 billion, largely due to a sharp recovery in M&A advisory fees. Equities trading also reached a historic high of $5.15 billion, while fixed income revenue rose 29% to $3.36 billion as energy market swings boosted commodities trading.
A cornerstone of the quarter was role in the massive Unilever-McCormick merger, which aims to create a $65 billion global food giant. Despite these wins, CFO Sharon Yeshaya noted a slowdown in IPOs, likening the current lull to the tariff-related pause seen during the Trump administration’s earlier policies, though she remains optimistic that these transactions are merely delayed rather than canceled.
Market Reaction
At 1:12 p.m. EDT, shares of Morgan Stanley were trading higher by $8.05, or 4.39%, at $191.39. So far this year, the stock is up 5.18%.
Additional highlights from the report include:
- Revenue from equity underwriting rose 24% to $396 million, while debt underwriting grew nearly 10% to $742 million. “Private credit is having a learning, an adolescent moment,” Morgan Stanley CEO Ted Pick said during the earnings call.
- The wealth management division continued its streak of stability with record revenues of $8.5 billion.
- The firm maintained a conservative stance on private credit, with exposure remaining below 1% of total assets. “Well under $20 billion,” Pick said.
- The investment management was a rare soft spot, with revenue dipping 4.2% to $1.54 billion.
As spreads widened, institutional investors became interested in transactions where private credit vehicles raise capital.
“We’ve seen in the last week a number of the top asset managers have underwritten, and we’ve been very happy to act as underwriter, on some benchmark issuances,” the CEO said.
Overall, Morgan Stanley’s total quarterly revenue hit a record $20.6 billion, up from $17.7 billion a year ago. The firm’s earnings of $3.43 per share significantly outperformed the $3 estimate anticipated by Wall Street analysts.
Morgan Stanley wrapped up a strong quarter for big banks as peers Goldman Sachs, and Bank of America also reported a surge in investment banking and trading revenue.