Morgan Stanley’s MS first-quarter 2026 earnings were $3.43 per share, which outpaced the Zacks Consensus Estimate of $3.06. The bottom line jumped 32% from the prior-year quarter.
Shares of Morgan Stanley have rallied more than 2.5% in pre-market trading on impressive advisory and trading performance.
Results benefited from robust client engagement and strength in investment banking (IB) and trading activities. Advisory revenues surged 74% year over year to $978 million as completed M&A transactions increased, particularly in the Americas. Equity underwriting revenues climbed 24% to $396 million on higher IPO and convertible offerings, while fixed income underwriting revenues rose 10% to $742 million, supported by higher investment-grade issuances tied to event-related activity. Total investment banking revenues in the Institutional Securities division soared 36% to $2.12 billion.
Similarly, MS posted a strong trading performance. Equity revenues climbed 25% year over year to a record $5.15 billion, while fixed-income revenues jumped 29% to $3.36 billion, driven by strong client activity and volatility in energy markets.
The performance of the company’s wealth management business was impressive, driven by higher asset management revenues and robust levels of client activity. This, along with higher net interest income (NII), supported Morgan Stanley’s quarterly performance.
Net income applicable to Morgan Stanley was $5.57 billion, rising 29% year over year.
Morgan Stanley’s Revenues Rise, Expenses Up
Quarterly net revenues were a record $20.58 billion, growing 16% from the prior-year quarter. The top line beat the consensus estimate of $19.85 billion.
Total non-interest revenues were $17.88 billion, up 16% year over year, while NII was $2.70 billion, up 15%.
Total non-interest expenses were $13.47 billion, up 12%. Of this, compensation and benefits expenses rose 14% to $8.54 billion, while non-compensation expenses increased 9% to $4.93 billion.
Provision for credit losses was $98 million compared with $135 million in the prior-year quarter.
Morgan Stanley’s Segmental Quarterly Performance
Institutional Securities: Pre-tax income was $4.16 billion, up 27% from the prior-year quarter. Net revenues were a record $10.72 billion, rising 19% year over year. The upside resulted from higher IB revenues, record equity revenues and stronger fixed-income performance, partially offset by lower other revenues.
Wealth Management: Pre-tax income totaled $2.59 billion, surging 33% year over year. Net revenues were a record $8.52 billion, up 16%, driven by higher asset management revenues, transactional revenues and NII.
Total client assets were $7.35 trillion as of March 31, 2026, up 22% year over year. Fee-based client assets were $2.79 trillion, up 19%, while U.S. Bank loans rose 15% to $186.3 billion, and deposits increased 12% to $419 billion.
Investment Management: Pre-tax income was $280 million, down 13% from the year-ago quarter. Net revenues were $1.54 billion, declining 4%. The fall reflected lower performance-based income and other revenues, partially offset by higher asset management and related fees.
As of March 31, 2026, total assets under management or supervision were $1.87 trillion, up 13% year over year. Long-term net flows were $3.3 billion in the quarter.
Morgan Stanley’s Mixed Capital Position
As of March 31, 2026, book value per share was $66.18, up from $60.41 in the corresponding period of 2025. The tangible book value per share was $51.58, up from $46.08 as of March 31, 2025.
Morgan Stanley’s Tier 1 capital ratio (advanced approach) was 17.9% compared with 17.7% in the prior-year quarter.
Update on Morgan Stanley’s Share Buyback Plan
In the reported quarter, Morgan Stanley repurchased 10 million shares for $1.75 billion.
Our View on Morgan Stanley
The solid performance of the IB business and an impressive deal-making pipeline are expected to support Morgan Stanley’s financials. Efforts to become less dependent on capital markets-driven revenues and inorganic expansion/strategic alliances will boost top-line growth. However, elevated expenses due to expansion efforts and volatile trading revenues are concerns.
Morgan Stanley Price, Consensus and EPS Surprise
Morgan Stanley price-consensus-eps-surprise-chart | Morgan Stanley Quote
Currently, Morgan Stanley carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Morgan Stanley’s Peers
The Goldman Sachs Group, Inc.’s GS first-quarter 2026 earnings per share of $17.55 topped the Zacks Consensus Estimate by 7.4%. The metric also rose 24.3% from $14.12 a year ago.
Driven by the volatile market, Goldman posted record net revenues in Equities, while its fixed income, currencies and commodities intermediation business revenues fell. A solid dealmaking activity led to robust growth in IB fees. The company’s Asset & Wealth Management division posted solid revenue growth. However, a rise in expenses and provision for credit losses were headwinds.
JPMorgan JPM posted first-quarter 2026 earnings of $5.94 per share, up 17.2% from $5.07 in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $5.49 by 8.2%.
Quarterly results were powered by a record markets performance, robust IB business and higher NII. Lower provisions also offered support. However, an increase in operating expenses was the undermining factor for JPMorgan.
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This article originally published on Zacks Investment Research (zacks.com).