On July 16, Morgan Stanley announced its Q2 2025 financial report. The company exceeded market expectations across multiple key business lines, demonstrating the robust effectiveness of its &#34;integrated platform&#34; strategy. Notably, wealth management and equity trading became the dual engines of profit, offsetting the continued drag from the sluggish investment banking business.
<h2>Key Financial Data Highlights:</h2>
<ul>
<li>
Net Revenue: $16.79 billion, exceeding market expectations of $16.04 billion, a year-on-year increase of 12%.
</li>
<li>
Earnings Per Share (EPS): $2.13, higher than the expected $1.89.
</li>
<li>
Return on Tangible Common Equity (ROTCE): 18.2%, well above the market expectation of 16.7%, indicating strong earnings quality.
</li>
<li>
Return on Equity (ROE): 13.9%, expected to be 12.7%.
</li>
</ul>
<h2>Wealth Management Business Remains Strong</h2>
Morgan Stanley's wealth management business achieved revenue of $7.76 billion, a year-on-year increase of 14%, exceeding market expectations of $7.35 billion, with a pre-tax profit of $2.2 billion and a pre-tax profit margin of 28.3%.
<ul>
<li>
Net New Assets reached $59.2 billion, setting a new record, with Fee-Based Asset Inflows of $42.8 billion.
</li>
<li>
Asset Management Revenue grew by 10.6% year-on-year to $4.41 billion, primarily benefiting from the increase in client asset scale.
</li>
<li>
The total client assets managed by the company have reached $8.2 trillion, with fee-based assets amounting to $2.48 trillion.
</li>
</ul>
The continuous expansion of this segment highlights Morgan Stanley's successful transformation towards a &#34;high stickiness + stable income&#34; model.
<h2>Equity Sales and Trading Business Significantly Exceeds Expectations</h2>
In the institutional securities business, Equity Sales and Trading Revenue was $3.72 billion, far exceeding market expectations of $3.53 billion, with a year-on-year increase of 23%, setting multiple sub-business line growth records.
<ul>
<li>
Prime Brokerage and derivatives trading demand saw significant increases, driving trading activity.
</li>
<li>
The company noted that &#34;comprehensive growth across different regions and business lines, with high client trading activity&#34; was one of the highlights of the quarter.
</li>
</ul>
In contrast, Fixed Income, Currency, and Commodities (FICC) Business revenue was $2.18 billion, slightly above market expectations of $2.11 billion, with a year-on-year increase of 9%.
<h2>Investment Banking Business Still Under Pressure, but Some Underwriting Highlights Are Clear</h2>
Overall revenue from the investment banking business was $1.54 billion, a year-on-year decrease of 5%. Among them:
<ul>
<li>
Advisory Revenue was $508 million, slightly below the expected $530 million.
</li>
<li>
Equity Underwriting Revenue reached $500 million, significantly exceeding the expected $383 million, benefiting from the recovery of IPOs and convertible bond issuances.
</li>
<li>
Fixed Income Underwriting Revenue was $532 million, slightly below the expected $541 million, primarily due to a decrease in high-yield bond issuances
Overall, Morgan Stanley has demonstrated stronger resilience in underwriting compared to its competitors.
</li>
</ul>
<h2>Cost and Capital Management</h2>
<ul>
<li>
Non-interest expenses were $11.97 billion, higher than the market expectation of $11.51 billion, mainly due to increased compensation and DCP (Deferred Compensation Plan) expenses.
</li>
<li>
Provision for bad debts was $196 million, exceeding the expected $131 million, reflecting increased uncertainty in the macro environment.
</li>
<li>
Effective tax rate was 22.7%, lower than the expected 23.7%.
</li>
<li>
The company announced an increase in the quarterly dividend to $1.00 and initiated a share repurchase program of up to $20 billion.
</li>
</ul>
Updating

- On July 16, Morgan Stanley reported its Q2 2025 earnings, exceeding market expectations across key business lines, showcasing the effectiveness of its "integrated platform" strategy.  
- Key financial highlights include net revenue of $16.79 billion, surpassing expectations of $16.04 billion, and a strong wealth management segment with revenues of $7.76 billion, up 14% year-over-year.  
- Despite a 5% decline in investment banking revenue, the firm demonstrated resilience in underwriting, with notable gains in equity underwriting driven by a recovery in IPOs and convertible bond issuances.

Wallstreetcn

Morgan Stanley

Morgan Stanley Q2 net revenue increased by 12% year-on-year, with strong growth in wealth management and trading income, while investment banking remains under pressure | Earnings Report Insights