Morgan Stanley beats forecasts on dealmaking boom and record trading revenue

Morgan Stanley posted stronger-than-expected second-quarter results on July 15 as a surge in equities trading and a rebound in mergers and acquisitions pushed revenue to record levels. The bank’s numbers show Wall Street operating with far more risk appetite than the broader economy, even as executives, private-market buyers and public investors rushed back into large transactions and new listings.

Net revenue rose to $21.348 billion from $16.792 billion a year earlier, while net income applicable to Morgan Stanley climbed to $5.581 billion, or $3.46 per diluted share. That easily beat the $2.94 a share consensus cited by LSEG. Return on tangible common equity reached 26.6%, and the expense efficiency ratio improved to 65% from 71% a year earlier, underscoring how much operating leverage the firm captured from the market rebound.

The biggest lift came from institutional trading and advisory work. Institutional Securities produced a record $11.040 billion in revenue, driven by a record $6.300 billion in equities revenue, up 69% from a year earlier, and $2.455 billion in fixed-income revenue. Investment-banking revenue rose to $2.437 billion from $1.540 billion a year earlier, helped by Morgan Stanley’s role as financial adviser on Fertitta Entertainment’s $17.6 billion agreement to buy Caesars Entertainment, its lead underwriting role in SpaceX’s market debut, and its work on Cerebras’ New York IPO and Alphabet’s equity capital raise.

The dealmaking backdrop matters as much as the quarter itself. Announced mergers and acquisitions in the first half of 2026 reached $2.8 trillion, up 48% from a year earlier and the highest first-half total since 1980, reflecting a more permissive regulatory environment and stronger corporate confidence. Reuters also said Morgan Stanley expects global M&A to reach a record $6.4 trillion this year, a forecast that points to continued demand for advisory, financing and underwriting services if markets stay open.

Wealth management provided a steadier counterweight. Revenue in the division hit a record $8.856 billion, while wealth and investment management client assets reached the $10 trillion milestone Morgan Stanley had targeted for years. The business added a record $148.1 billion in net new assets, and fee-based client assets rose to $3.022 trillion. Ted Pick said “active markets and consistent execution across all three regions” drove the results, as the integrated firm deepens client ties across the United States, Asia and other markets.

Morgan Stanley also kept rewarding shareholders. On June 24, it raised its quarterly dividend to $1.15 a share from $1.00 and reauthorized a $20 billion multi-year share repurchase program. The bank ended the quarter with a standard common equity tier 1 capital ratio of 14.8%, leaving it well positioned if the current wave of trading, IPOs and M&A keeps running.