Morgan Stanley posted record first-quarter revenue on Wednesday and a 29% jump in profit as its trading desks cashed in on Wall Street’s volatile start to the year.
The New York banking giant reported net income of $5.57 billion, or $3.43 per share, easily topping the $3.02 analysts expected.
Revenue surged 16% to a record $20.58 billion, blowing past forecasts of $19.74 billion.
Equities trading — the Wall Streeters who handle stocks, derivatives, and prime brokerage — hit a record $5.15 billion, up 25% from a year ago, while fixed-income trading across bonds, currencies, and commodities jumped 29% to $3.36 billion.
Together, those desks helped to push total institutional securities revenue to a record $10.72 billion.
Shares in Morgan Stanley were up nearly 5% in midday trading Wednesday. The stock is up nearly 70% over the past year.
The results capped a bumper week for major U.S. investment banks, proving again that while choppy markets spook everyday investors, they can rake in fat profits for Wall Street trading desks.
Morgan Stanley’s haul helped lift total trading revenue across the industry toward a projected $40 billion-plus quarter for the five biggest US lenders, according to estimates compiled by Bloomberg.
The other four are JPMorgan, Citi, Bank of America, and Goldman Sachs.
Chief Financial Officer Sharon Yeshaya noted market volatility created a lucrative opening for traders, as energy-price swings and Middle East tensions kept clients repositioning their portfolios.
Investment banking also rebounded. Advisory fees for mergers and acquisitions soared, driving a 36% revenue increase in the division to $2.12 billion.
Among the notable deals in the quarter, Morgan Stanley was one of the advisers to Unilever on the proposed merger of its food business with McCormick that will create a $65 billion global food behemoth.
While trading delivered explosive growth, Morgan Stanley’s wealth management division posted its own record. The unit generated $8.52 billion in net revenue, a 16% increase, and pulled in $118.4 billion in net new client assets. Fee-based flows hit $53.7 billion.
Chairman and CEO Ted Pick said the quarter validates the bank’s strategy of pairing high-octane trading profits with reliable wealth-management fees.
“These results affirm the capabilities of our integrated firm as we deliver a higher plane of operating performance,” he said.
The lone weak spot was investment management, where revenue slipped 4% to $1.54 billion due to lower performance fees from private funds, though total assets under management grew to $1.87 trillion.
Analysts praised the beat, reaffirming the strength of the bank’s diversified model.
“Against a strong backdrop, Morgan Stanley continues to fire on all cylinders,” Morningstar equity analyst Sean Dunlop wrote in a research note following the release.
“The firm’s approach of demonstrating durable operating performance through cycles rather than chasing short-term highs is working,” added Glenn Schorr, an analyst at Evercore ISI who regularly tracks the bank’s performance.
