Morgan Stanley shares up 13% in 5 days, equity trading volume rises 45% in Q1 amid portfolio rebalancing

Morgan Stanley share price: Shares of Wall Street investment bank Morgan Stanley rallied 13 per cent in the last five sessions despite broader volatility in the US stock market, amid a robust sentiment following a strong financial performance in the first quarter. The bank reported high trading volumes.

However, shares of the banking major have tanked 14 per cent year-to-date (YTD) after the escalating global trade war pushed financial markets into a tailspin. On Friday, shares of Morgan Stanley settled 1.44 per cent higher at $108.12 apiece on the benchmark New York Stock Exchange (NYSE).

Morgan Stanley Q1 Results: Key Metrics

Morgan Stanley beat first-quarter profit estimates on Friday, helped by record equity trading and strong wealth management results. The bank's CEO expressed more optimism about dealmaking than his counterparts.

The investment bank reported record equity trading revenue, a 45 per cent jump from a year earlier. This reflected increases across businesses and regions, particularly in Asia, where brokerage and derivatives saw the biggest gains.

As uncertainty over sweeping US tariffs roiled markets, some transactions in Morgan Stanley's deal pipeline were paused, the bank's CEO Ted Pick told analysts. Still, companies have not given up on them, he said. "We are still, I will call it 'cautiously optimistic' that we won’t go into recession," said Pick.

Morgan Stanley CFO Sharon Yeshaya added that the bank's pipeline of potential transactions remains strong and has not been reduced. According to the CEO, corporations may look at potential tax cuts and deregulation and decide to proceed with deals even as volatility rises.

The bank earned $4.3 billion, or $2.60 per share, in the three months ended March 31. That compares with a profit of $3.4 billion, or $2.02 per share, a year ago. Morgan Stanley's investment banking revenue rose eight per cent from last year, boosted by higher advisory and fixed-income underwriting revenue.

Morgan Stanley's advisory biz

Morgan Stanley's wealth management revenue - a key area of focus - came in at $7.3 billion, compared with $6.9 billion a year ago. Equity trading revenue rose as investors rebalanced their portfolios, boosting volumes, mainly in the technology and industrial-related stocks.

The bank advised on several big transactions in the first quarter, including Walgreens' $24 billion take-private deal with Sycamore Partners. It served as lead underwriter for AI cloud firm CoreWeave's $1.5 billion US initial public offering.

Morgan Stanley's Institutional Securities business, which houses investment banking and trading, reported revenue of $9 billion compared to $7 billion a year earlier. The bank led the syndicate of lenders, which included Bank of America, Barclays, BNP Paribas, MUFG, Mizuho, and Societe Generale, that kept the $13 billion in loans on their balance sheets for over two years.

According to news agency Reuters, the profit was booked as other revenue in the bank's Institutional Securities division, which reached $692 million, more than doubling the $242 million in revenue from a year ago.