The bank today posted a profit of US$4.3 billion, or US$2.60 per share, in the three months ended March 31.
That compares with a profit US$3.4 billion, or US$2.02 per share, a year ago and US$2.20, according to estimates compiled by LSEG.
US President Donald Trump’s decision to impose heavy tariffs on major economies and the launch of China’s generative AI model, DeepSeek, triggered a broad selloff in global markets.
The potential for a recession and the uncertainty over the Federal Reserve’s interest-rate trajectory have kept investors on edge.
Equity trading revenue rose as investors rebalanced their portfolios, boosting volumes, mainly in technology and industrial stocks.
Morgan Stanley’s total revenue rose to US$17.7 billion in Q1 compared with US$15.1 billion a year ago.
Its shares rose 1.9% in premarket trading after results.
The bank reported record equity net revenue, reflecting increases across business lines and regions, particularly in Asia, with outperformance in prime brokerage and derivatives.
Fixed income trading revenue increased, as renewed concerns about stagflation due to Trump’s tariffs led investors to hedge aggressively and reposition across credit and duration.
Wall Street’s investment banks face a murky dealmaking climate, as escalating trade tensions under a second Trump presidency rattle markets and delay transactions.
A rebound in Asia helped lift global M&A volumes in Q1, but US activity – a key revenue driver for firms like Morgan Stanley – slumped 13% amid growing uncertainty, according to Dealogic data.
Bankers and analysts warn the prolonged trade war, disappointing IPO debuts and weak follow-through on major deals could dampen investor sentiment and advisory pipelines in the second quarter (Q2).
Stable markets support deal activity by giving buyers and sellers more confidence around valuations, reducing execution risk and encouraging companies to move ahead with transactions.
Morgan Stanley ranked fourth globally in investment banking fees in Q1, according to Dealogic data.
The bank advised on several marquee transactions in the quarter, including Walgreens’ US$24 billion take-private deal with Sycamore Partners.
It also served as lead underwriter for AI cloud firm CoreWeave’s US$1.5 billion US initial public offering.
Investment banking revenue rose 8% in Q1.
Morgan Stanley’s Institutional Securities business, which houses investment banking and trading, reported revenue of US$9 billion compared with US$7 billion a year earlier.
JPMorgan Chase also topped Q1 profit estimates, driven by record equities trading and higher fees from debt underwriting and merger advisory.
Wells Fargo’s Q1 profit rose 6% as it collected more fees in wealth management and investment banking, even though its CEO warned of risks from US tariffs.
Morgan Stanley’s wealth management revenue – a key area of focus for Morgan Stanley – came in at US$7.3 billion, compared with US$6.9 billion a year ago.
Under former CEO James Gorman, Morgan Stanley expanded into wealth management to diversify the bank and generate more steady income in contrast to the volatility in trading and investment banking.