By Tomi Kilgore and Steve Gelsi
Equities-trading revenue at Goldman climbs 36% to $4.3 billion, while Morgan Stanley’s profit climbs but its investment-banking revenue dips
Shares of Goldman Sachs Group Inc. reversed course and rose, while Morgan Stanley lost ground Wednesday as the banks both reported stronger-than-expected profits.
Goldman Sachs said it was encouraged by the current economic climate, as it beat second-quarter profit and revenue expectations by wide margins amid a surge in trading during the quarter.
Goldman Sachs’s stock (GS) rose 0.8% after dropping earlier in the session. The stock is now up 12.6% in the past month.
“While [its] Global Banking & Markets beat was strong, we believe this was anticipated and expect stock reaction to be somewhat modest,” said Citi analyst Keith Horowitz, who reiterated a neutral rating on the stock.
Wall Street banks benefited from frenetic trading in April around President Donald Trump’s “liberation day” tariff plans, but the economic picture has become more stable so far in the third quarter.
“At this time, the economy and markets are generally responding positively to the evolving policy environment,” Goldman Sachs Chief Executive David Solomon said. “But as developments rarely unfold in a straight line, we remain very focused on risk management.”
Looking ahead, Solomon said investment-banking activity by private-equity firms and corporations looking to buy or sell companies continues to pick up steam.
“There’s a confidence level on the part of CEOs that significant scaled industry consolidation is possible,” Solomon said. “The elevated level of dialogue is in a much different place than it was three to six months ago. And so we’re encouraged.”
Goldman Sachs said its second-quarter earnings rose to $3.47 billion, or $10.91 a share, from $2.89 billion, or $8.62 a share, in the same period a year ago, to beat the average analyst EPS estimate compiled by FactSet of $9.69.
Total revenue grew 14.5% to $14.58 billion, above the FactSet consensus of $13.58 billion, as investment-banking fees jumped 26% to $2.19 billion and equities revenue climbed 36% to $4.3 billion.
Provision for credit losses increased to $384 million from $282 million, reflecting charge-offs related to the bank’s credit-card portfolio and growth in credit cards.
Goldman Sachs also boosted its dividend to $4 a share from $3 a share. Shareholders of record as of Aug. 29 will be paid the dividend on Sept. 29.
Assets under supervision rose to a record $3.29 trillion, including $17 billion in long-term net inflows during the quarter.
KBW analyst Christopher McGratty reiterated a market-perform rating on Goldman and said the bank’s strong revenue performance was partly offset by lower equity and debt investments, as well as higher expenses.
Goldman Sachs’s assets under management in its asset-management business and its incentive fees also beat KBW’s estimates.
Morgan Stanley’s wealth unit books $6.49 trillion in client assets
Morgan Stanley’s stock (MS) declined 1.3% after it reported a drop in investment-banking revenue, although it beat Wall Street’s overall earnings and revenue estimates.
Morgan Stanley said its second-quarter net income rose 15% to $3.39 billion, or $2.13 a share, from $2.94 billion, or $1.82 a share, in the year-ago quarter. The figure of $2.13 a share soundly beat the FactSet consensus estimate of $1.99 a share.
CEO Ted Pick said Morgan Stanley “delivered another strong quarter,” making for six sequential three-month periods of “consistent” earnings thus far.
Summing up the action during the 12 weeks ended March 31, Pick said, “The first half [of Q2] began with uncertainty and market volatility associated with the U.S. trade policy and the second half ended with increasing engagement and a steady rebound in capital markets.”
The bank’s total client assets in its wealth-management unit increased by 14% to $6.49 trillion.
Second-quarter revenue increased to $16.79 billion from $15 billion in the year-ago quarter, well ahead of analysts’ estimates of $16.07 billion.
Institutional-securities revenues rose to $7.6 billion from $7 billion as a reflection of increases in the bank’s markets unit on higher client activity, with “notable strength” in equity trading.
Within the bank’s overall revenue boost, equity revenue increased to $3.7 billion from $3 billion in the year-ago quarter, while fixed-income net revenue rose to $2.18 billion from $1.99 billion in the year-ago quarter.
Investment-banking revenue dropped to $1.54 billion from $1.62 billion.
“The M&A backlog continues to build across regions with a thematic focus on growth, supported by healthcare and technology,” Morgan Stanley Financial Chief Sharon Yeshaya said.
-Tomi Kilgore -Steve Gelsi
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07-16-25 1609ET
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