Morgan Stanley’s fourth-quarter profit exceeded analysts’ expectations, driven by a significant increase in investment banking revenue. The bank reported a 47% jump in investment banking revenue, reaching $2.41 billion, compared to $1.64 billion in the same quarter the previous year. This surge was largely attributed to a flurry of dealmaking activity, with global mergers and acquisitions surpassing $5.1 trillion in the past year.
The surge in dealmaking was fuelled by optimism surrounding artificial intelligence and anticipated interest rate cuts by the Federal Reserve. Morgan Stanley CFO Sharon Yeshaya noted an accelerating pipeline in M&A and IPOs, particularly in the healthcare and industrials sectors. She also highlighted increased activity from sponsors, who now have the option of selling through M&A transactions or IPOs.
Morgan Stanley, a leading global financial services firm, provides investment banking, securities, wealth management and investment management services. The company posted a profit of $2.68 per share, surpassing Wall Street expectations of $2.44. Total annual revenue reached a record high of $70.65 billion. Looking ahead, CEO Ted Pick expressed optimism for 2026 but cautioned about geopolitical risks and a complicated macroeconomic environment.
The bank’s wealth management division also performed strongly, with revenue rising 13% to $8.43 billion. This growth was supported by rising markets, which helped the unit achieve record revenue for the year. Morgan Stanley is nearing its long-term goal of $10 trillion in client assets managed by the wealth division, ending the fourth quarter with $9.3 trillion under management. Shares in Morgan Stanley rose more than 4% following the earnings announcement.
