Key insights
- Morgan Stanley's Q1 profit rose due to increased dealmaking and trading revenue. Investment banking revenue climbed 36%, with equity and fixed income trading also surging. Peers like Goldman Sachs and JPMorgan reported similar trends. Geopolitical tensions and market volatility drove trading activity. The positive results and M&A outlook suggest a bullish signal for the financial sector and potentially broader market activity.
April 15 (Reuters) - Morgan Stanley reported a rise in first-quarter profit on Wednesday, buoyed by a dealmaking boost and a surge in revenue from its trading business.
After a bumper year for deals in 2025, top investment banks expect the M&A momentum to carry over this year as a friendlier regulatory environment could prompt cash-rich companies to bulk up their businesses through takeovers and mergers despite threats to the global economy from the Iran war.
Investment banking revenue climbed 36% to $2.12 billion, while revenue from equity trading rose 25% to $5.15 billion and that from fixed income jumped 29% to $3.36 billion.
Peers Goldman Sachs, JPMorgan and Citigroup also reported a surge in investment banking revenue in the latest quarter.
Deal volumes globally have already hit $1.38 trillion in the latest first quarter, according to data compiled by Dealogic, after a near record-breaking 2025 in which global M&A surpassed $4.81 trillion.
Global markets have also swung sharply in recent weeks as an escalating U.S.-Israeli conflict with Iran drove up oil prices and fueled worries that inflation could stay elevated for longer.
The volatility across asset classes has prompted investors to rebalance portfolios and increase hedging against potential losses, a trend that typically boosts activity at trading desks.
Shares of Morgan Stanley rose 2% in premarket trading.
INVESTMENT BANKING SHINES
Morgan Stanley was among the advisers to Unilever on the proposed merger of its food business with McCormick that will create a $65 billion global food behemoth.
Meanwhile, heightened tensions in the Middle East have unsettled equity markets and dampened risk appetite, weighing on the IPO market, though some companies, particularly in the industrials and defense sectors, have continued to pursue listings.
Morgan Stanley is among the bookrunners leading the deal on SpaceX's bumper IPO, where the Elon Musk-led firm could raise $75 billion at a potential valuation of $1.75 trillion.
Top bosses at investment banks have cautioned that the market for new listings has become more selective as a result of the economic uncertainty, but expect a rebound once conditions stabilize.
Total quarterly revenue at Morgan Stanley rose to $20.6 billion in the first quarter from $17.7 billion a year earlier.
The Wall Street investment bank's profit rose to $5.6 billion, or $3.43 per share, for the latest three-month period, compared with $4.3 billion, or $2.60 per share, a year earlier.
(Reporting by Utkarsh Shetti in Bengaluru; Editing by Anil D'Silva)