By Utkarsh Shetti and Tatiana Bautzer
April 15 (Reuters) – Morgan Stanley beat Wall Street expectations for first-quarter profit on Wednesday, as the investment bank benefited from a surge in dealmaking and raked in record revenue from its equities trading business, sending its shares up about 6%.
Heightened M&A activity in a friendlier regulatory environment and extreme volatility in stock markets triggered by the recent software selloff and the Iran war have bolstered investment banking and trading businesses at big Wall Street banks.
Morgan Stanley’s investment banking revenue soared 36% to $2.12 billion, boosted by a rise in advisory fees. Revenue from its equities trading business also jumped 25% to a record $5.15 billion, while that from fixed income surged 29% to $3.36 billion.
“Institutional Securities benefited from robust client engagement and strength globally. Wealth Management demonstrated continued momentum…,” CEO Ted Pick said in a statement.
Morgan Stanley wrapped up a strong quarter for big banks as peers Goldman Sachs, JPMorgan, Citigroup and Bank of America also reported a surge in investment banking and trading revenue.
Deal volumes globally have already hit $1.38 trillion in the latest first quarter, according to data compiled by Dealogic, after a near record-breaking 2025 in which global M&A surpassed $4.81 trillion.
Among the notable deals in the quarter, Morgan Stanley was one of the advisers to Unilever on the proposed merger of its food business with McCormick that will create a $65 billion global food behemoth.
IPO MARKET IMPACTED BY WANING RISK APPETITE
Global markets have swung sharply in recent weeks as the Iran war drove up oil prices and fueled worries that inflation could stay elevated for longer.
The volatility across asset classes has prompted investors to rebalance portfolios and increase hedging against potential losses, a trend that typically boosts activity at trading desks.
However, dampening risk appetite has impacted the IPO market, though some companies, particularly in the industrial and defense sectors, are still pursuing listings.
Morgan Stanley CFO Sharon Yeshaya told Reuters in an interview that IPOs had slowed in the quarter, adding she expects some delays but not cancellations in the market for fresh issues.
The firm’s revenue rose 24% to $396 million from equity underwriting and 9.6% to $742 million from debt underwriting.
The bank is among the lead bookrunners on SpaceX’s bumper IPO, where the Elon Musk-led firm could raise $75 billion at a potential valuation of $1.75 trillion.
WEALTH MANAGEMENT BUSINESS POSTS RECORD REVENUE
Morgan Stanley, which is focusing on its wealth business for steadier returns, reported record revenues of $8.5 billion from the division. Investment management revenue, however, fell 4.2% to $1.54 billion.
The Wall Street giant limited redemptions at one of its private credit funds last month, after investors sought to withdraw almost 11% of shares outstanding, joining other managers as investors soured on the asset class.
The multi-trillion-dollar private credit industry is facing a wave of redemptions as investors become wary about lending standards and outsized exposure to an AI-threatened software sector, pushing some firms to limit withdrawals.
Total quarterly revenue at Morgan Stanley rose to a record $20.6 billion in the first quarter from $17.7 billion a year earlier.
The Wall Street investment bank’s profit came in at $3.43 per share, surpassing the $3 per share expected by analysts, according to data compiled by LSEG.
Bank of America also beat analyst expectations for first-quarter profit earlier on Wednesday.
(Reporting by Utkarsh Shetti in Bengaluru and Tatiana Bautzer in New York; Editing by Anil D’Silva)
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