Morgan Stanley (MS 0.36%), a global financial services provider known for its investment banking, wealth management, and trading operations, posted second quarter results on July 16, 2025. The company reported earnings per share of $2.13, outpacing analyst expectations of $1.98, and revenue of $16.8 billion versus an anticipated $16.07 billion. Profitability and revenue climbed 17 % and 12 %, respectively, compared with the same period last year. The quarter’s results exceeded expectations, highlighted by solid performance in Wealth Management and Institutional Securities, despite pockets of weakness in investment banking and increased credit costs. Overall, the quarter showed both strong segment results and continued commitment to returning capital to shareholders.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $2.13 | $1.98 | $1.82 | 17.0 % |
| Revenue (GAAP) | $16.8 billion | $16.07 billion | $15.0 billion | 11.9 % |
| Net Income Applicable to Morgan Stanley | $3.5 billion | $3.1 billion | 15.1 % | |
| Return on Average Tangible Common Equity | 18.2 % | 17.5 % | 0.7 pp | |
| Net Revenues – Wealth Management | $7.8 billion | $6.8 billion | 14.3 % | |
| Net Revenues – Institutional Securities | $7.6 billion | $7.0 billion | 8.6 % |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Strategic Focus
Morgan Stanley provides a range of financial services. Its major business lines include wealth management for individuals and institutions, investment banking (helping companies raise capital or merge), and securities trading like equities and fixed income. In recent years, it has increased its focus on growing its wealth management platform, delivering technology-driven solutions, and deepening client relationships.
The company’s key priorities revolve around five factors: staying competitive against other banks and fintech companies, adapting to changing financial regulations, advancing its technology, managing and developing its workforce, and applying strong risk controls. These efforts support Morgan Stanley’s ability to attract new client assets, maintain operational resilience, and grow returns. Successful asset gathering, technology investments, and disciplined cost management are critical to achieving its goals.
Quarter Highlights: Drivers, Segments, and Noteworthy Events
Morgan Stanley’s quarter saw broad revenue growth across business segments. Wealth Management delivered a 14 % rise in net revenues as client engagement and new asset flows surged. The division brought in $59.2 billion in net new assets, up 63 % from the prior year, and saw notable strength in fee-based flows, supporting more stable, recurring revenue. Pre-tax margin rose to 28.3 %, even as expenses increased, thanks to business scale.
Within Institutional Securities, revenue increased 8.6 %. Equity trading saw a standout rise of 23 % from the previous year, as higher client activity and robust results in prime brokerage platforms pushed results higher. Fixed Income trading revenues rose by 9 %, benefiting from volatility and greater client trading. Despite strong trading activity, Investment Banking revenues dipped 5 %, primarily from a decline in advisory fees linked to fewer completed mergers and acquisitions. Equity underwriting was one area of strength, rising 42 %, while fixed income underwriting continued to lag due to muted market activity.
The Investment Management segment posted revenue growth of 12 %. Assets under management reached $1.71 trillion, driven by positive long-term client inflows and better market levels. Pre-tax income surged 46 % as higher asset management and performance-based fees offset operating costs. The division reported $10.8 billion in positive long-term net flows, contrasting last year’s outflows.
Expenses grew across units. Total company compensation and benefits expenses rose 11 % year over year. Non-compensation expenses went up 9 %. Credit loss provisions more than doubled, reaching $196 million, linked to loan growth and a “moderately weaker macroeconomic outlook.” The company continued repurchasing its own shares, buying back $1 billion in stock, and announced a new $20 billion multi-year repurchase program. Morgan Stanley also raised its quarterly dividend to $1.00 per share, an 8 % increase. There were no reported one-time or nonrecurring events affecting earnings beyond the continued impact of deferred compensation costs and a previously announced workforce reduction.
For key product families: the firm’s equities business centers on stock and options trading and prime brokerage services for institutional clients. Fixed income involves trading government bonds, corporate debt, and related derivatives. Wealth Management includes advisory services, digital investment platforms (like E*TRADE), and lending for high-net-worth clients. Investment Management covers mutual funds, private alternatives, and institutional asset management solutions.
Looking Ahead: Guidance and Investor Priorities
Morgan Stanley’s leadership did not provide formal numeric guidance for upcoming quarters or the full year. Management described an outlook marked by ongoing strong activity across its core platforms, supported by robust client engagement and asset flows. However, the company highlighted potential headwinds, noting the need to monitor sustained credit losses, continued regulatory developments, higher compensation costs, and the pace of recovery in investment banking.
Investors should track future developments in investment banking pipelines, which management described as “pause, not delete,” and closely watch trends in credit loss provisions and expense management. The recent increase in the dividend and expanded share repurchase authorization points to ongoing capital returns, but there was no major change in guidance on capital allocation. Higher credit provisions, persistent cost pressures, and regulatory shifts will remain key items to watch in coming periods.
The quarterly dividend was raised 8 % to $1.00 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
