Morgan Stanley's Investment Banking Revenue Drops 5% Amid Global Turmoil

Morgan Stanley's investment banking revenue declined 5% YoY to $1.6 billion in Q2, amidst market turmoil and trade war uncertainty. Advisory revenue fell due to lower completed M&A transactions.

Morgan Stanley's investment banking revenue declined 5% year-over-year (YoY) to $1.6 billion in the second quarter of 2025, amidst market turmoil and trade war uncertainty. The firm's advisory revenue, which includes mergers and acquisitions (M&A) and debt underwriting, fell due to lower completed transactions. This decline contrasts with the robust performance of the firm's equity trading and wealth management units, which benefited from volatile markets and high receptivity to new initial public offerings (IPOs).

The bank's investment banking revenue was impacted by a 5% decrease, while advisory revenue dropped to $508 million from $592 million a year ago [2]. Despite this, the equity underwriting segment surged 42% to $500 million, driven by higher follow-on and convertibles deals, as well as IPOs [2]. Morgan Stanley led several notable IPOs during the quarter, including fintech giant Chime and marketing tech firm MNTN [2].

The investment banking revenue decline was partially offset by a 23% increase in equities trading revenue, which reached $3.72 billion, and a 9% increase in fixed income trading revenue [1]. The wealth management unit also performed strongly, with net new assets of $59 billion and fee-based asset flows of $43 billion, contributing to the overall revenue growth of $16.8 billion in the second quarter [4].

CEO Ted Pick noted that the second quarter was characterized by two distinct halves, with the first half marked by uncertainty and market volatility due to U.S. trade policy, and the second half ending with increasing engagement and a steady rebound in capital markets [2]. The firm's efficiency ratio remained at 71% for the quarter, in line with its goal [1].

Morgan Stanley's stock price was down 1.99% at 9:50 a.m. in New York following the earnings release, reflecting the mixed performance of the investment banking segment [1]. Despite the decline in investment banking revenue, the firm's overall performance was strong, driven by robust trading and wealth management results.

References:
[1] https://www.bloomberg.com/news/articles/2025-07-16/morgan-stanley-stock-traders-deliver-windfall-on-tariff-turmoil
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3TD0VR:0-morgan-stanley-profit-beats-estimates-as-traders-shine-but-investment-banking-revenue-falls/
[3] https://www.ctvnews.ca/business/article/morgan-stanley-shares-fall-despite-earnings-beat-as-investment-banking-revenue-shrinks/
[4] https://www.nasdaq.com/articles/morgan-stanley-q2-revenue-hits-168-billion