Morgan Stanley's profit rose in the fourth quarter, fueled by a 47% jump in investment banking revenue as dealmaking surged and debt underwriting fees nearly doubled.
A flurry of large transactions propelled global mergers and acquisitions past $5.1 trillion last year as exuberance over AI and rate cuts by the Federal Reserve encouraged CEOs to pursue buyouts.
Morgan Stanley's investment banking revenue rose to $2.41 billion in the quarter from $1.64 billion a year earlier.
Equity markets surged to record highs late last year despite volatility in the first half from US President Donald Trump's tariff policies.
The earnings mirror those of Wall Street rivals including Citigroup, which benefited from a surge in M&As and initial public offerings (IPOs).
Morgan Stanley posted a profit of $4.40 billion, or $2.68 per share, for the three months ended December 31, it said today. That compares with $3.71 billion, or $2.22 per share, a year earlier.
Advisory revenue surged 45% to $1.13 billion in the quarter.
Morgan Stanley CEO Ted Pick said in a statement that "investment banking activity accelerated and global markets remained strong."
Advisor to big IPOs
Despite a bumper IPO market being disrupted by the longest-ever US government shutdown late last year, soaring valuations and falling interest rates emboldened companies to pursue follow-on equity offerings and convertible bond deals.
Morgan Stanley's debt underwriting revenue surged nearly 93% to $785m, driven by higher issuance volumes. Its equity underwriting revenue jumped 8.6%, after more than doubling in the year-ago quarter.
The bank was among the joint book-running managers on big initial public offerings late in the quarter, including electric aircraft maker BETA Technologies, tax advisory firm Andersen Group, and medical supply giant Medline, the biggest IPO of 2025.
The bank also served as the exclusive advisor to Meta on the tech giant's joint venture with Blue Owl Capital to develop the Hyperion data centre campus in Louisiana.
Equities trading remained a bright spot as clients rebalanced their portfolios amid volatile markets whipsawed by shifting monetary policy expectations and concerns about an AI bubble.
Morgan Stanley landed key roles in marquee deals during the quarter, including advising data infrastructure company Confluent on its $11 billion deal to be bought by IBM.
Revenue from wealth management rose 13% to $8.43 billion in the quarter, buoyed by rising markets.
Total client assets across wealth and investment management reached $9.3 trillion in the quarter, inching closer to the bank's long-standing target of managing $10 trillion in client assets.
Morgan Stanley has focused on wealth management's stable, fee-based revenues, to cushion itself against more volatile businesses like trading and investment banking.
The business further stands out as the US economy increasingly moves into what economists call a "K-shaped" economy, in which affluent and wealthy consumers continue to drive spending as their assets appreciate in value.
Morgan Stanley's wealth unit attracted net new assets of $122.3 billion in the quarter, while fee-based asset flows were $45.6 billion.
