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Morgan Stanley profit rises as trading gains from market volatility
Equity markets swung sharply during the quarter after US President Donald Trump announced sweeping tariffs against major economies. The turbulence spurred trading as investors repositioned their portfolios and hedged risks, driving gains in Morgan Stanley's trading business.
In trading, equities revenue surged 23 per cent, while jumped 9 per cent in fixed income, Morgan Stanley said on Wednesday.
Institutional Securities, which houses the bank's Wall Street operations, posted revenue of $7.6 billion in the second quarter, compared with $7 billion, a year ago.
"Institutional Securities saw strength and balance across businesses and geographies. Wealth continues to deliver," said CEO Ted Pick said in a statement.
The investment bank posted net income of $3.5 billion, or $2.13 per share, for the three months ended June 30. That compares with $3.1 billion, or $1.82 per share, a year earlier.
Rival Goldman Sachs' profit jumped in the second quarter, as turbulent markets lifted equities trading revenue.
JPMorgan Chase also beat Wall Street estimates for second-quarter profit on strong investment banking results a day earlier. Citigroup also reported a windfall from trading and investment banking.
DEALS REBOUND
Dealmaking rebounded at the end of the quarter as some companies looked past tariff uncertainty and gained confidence to carry out IPOs, mergers and acquisitions.
Industry executives held up that optimism this week, anticipating that deals and stock market listings will pick up in the second half of the year.
Investment banking revenue declined 5 per cent in the quarter.
Advisory revenue slid to $508 million, compared with $592 million, a year ago.
Morgan Stanley CEO Ted Pick has maintained a positive view for the year, telling investors in June that deal discussions were persistent and ramping up.
It earned the fourth-highest investment banking fees among global banks in the first half of the year, according to Dealogic data.
Among prominent deals in the quarter, Morgan Stanley advised Elon Musk's xAI on a $5 billion debt raise and a separate $5 billion strategic equity investment. It also advised TJC on the $5 billion sale of Silvus Technologies to Motorola.
The concern about US tariff policies has also abated since Trump's initial "Liberation Day" announcement on April 2 spurred market volatility.
Morgan Stanley's equity underwriting surged 42 per cent to $500 million, while fixed-income underwriting decreased 21 per cent to $532 million.
It was the lead underwriter of fintech giant Chime's $864 million June IPO. The bank also led IPOs for Hinge Health, raising $437.3 million, and marketing tech firm MNTN, which raised $187.2 million, in May.
Shares of the bank were last flat following the results.
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