Volatility pays off: Morgan Stanley sees record Equities revenue

Overview

Morgan Stanley delivered a strong first quarter in 2025, achieving record net revenues and a solid return on tangible equity. Growth was broad-based across all business segments, with standout performance in Institutional Securities, particularly in Equities.

CEO Ted Pick emphasized the success of the firm’s integrated strategy, stating: “These results demonstrate the consistent execution of our clear strategy to drive durable growth across our global footprint.”

Q1 2025 vs. Q1 2024:

• Net income grew to $4.3bn (+26% YoY), with EPS of $2.60 (compared to $2.02 in Q1 2024).
• Net revenue rose to $17.7bn (+17% YoY), reflecting a record quarterly performance.
  • International Securities revenue recorded a value of 9.0bn (+28% YoY), with record Equity revenues of $4.1bn (+45% YoY), driven by robust client activity and trading volatility, particularly in Asia.
    • Investment Banking revenue was $1.6bn (+8% YoY), led by higher advisory and fixed income underwriting.
    • Fixed Income revenue was $2.6bn (+5% YoY), with strength in FX and securitized products offsetting weaker credit performance.
    • Other revenues was boosted by gains from loan sales, reversing mark-to-market losses from the prior year.
  • Wealth Management revenue increased to $7.3bn (+6% YoY), with strong asset management fees and increased client activity.
    • Net new assets recorded a value of $94bn, while fee-based flows were $30bn.
    • Pre-tax margin was 26.6%, stable with historical levels.
    • Net interest income grew, but was partially offset by lower average sweep deposits.
  • Investment Management revenue rose to $1.6bn (+16% YoY), driven by higher AUM and improved carried interest.
    • Assets under management (AUM) were $1.65tn, with $5.4bn in positive long-term net flows.
    • Pre-tax income was $323m (+34% vs. Q1 2024).
• Return on Equity (ROE) was 17.4% (vs. 14.5% in Q1 2024), while Return on Tangible Common Equity (ROTCE) recorded a value of 23% (compared to 19.7% in Q1 2024).
• The Firm expense efficiency ratio was 68% for the Q1 2025.
• Morgan Stanley repurchased $1.0bn of its common stock and maintained a quarterly dividend of $0.925 per share, unchanged from the prior year.
• CET1 capital ratios stood at 15.3% under the Standardized Approach and 15.7% under the Advanced Approach, underscoring the firm’s strong capital position and disciplined capital management strategy.

While management highlighted the strength of the firm’s diversified model, they also acknowledged macroeconomic headwinds, including potential market volatility and the evolving impact of trade policies. Nonetheless, Morgan Stanley remains focused on growth through its integrated platform, resilient business mix, and continued client engagement across segments.

As expected, Morgan Stanley is also among the companies most affected by the imposition of trade tariffs, with MS shares trading at a lower price by -12.5% ​​since the beginning of this year. In addition, the stock price is below the 50-day moving average since mid-February, which shows a continued negative sentiment from investors on Wall Street. However, the week of the announcement of the results of the first quarter of this year brought an appreciation of the shares on the market, they increased by approximately +6.6% in the last trading week, after the results that exceeded the main analysts’ estimates.

Author: Ionuț-Adrian Lazar