Banking giants ride investment banking rebound and asset growth to beat earnings forecasts
Morgan Stanley and Bank of America beat expectations in the third quarter, fueled by a rebound in investment banking and steady growth in wealth and mortgage businesses.
Both banks posted double-digit profit gains, thanks to strong dealmaking, rising asset flows, and solid consumer demand.
Investment banking and trading drive gains
Morgan Stanley reported net revenues of $18.2 billion, up 18% year-over-year, and net income of $4.6 billion, or $2.80 per diluted share.
The firm’s Institutional Securities division posted net revenues of $8.5 billion, reflecting a 44% jump in investment banking fees and a 35% increase in equity revenues, buoyed by a rebound in M&A and IPO activity.
Wealth management also delivered, with net revenues up 13% to $8.2 billion and net new assets of $81 billion.
Bank of America, meanwhile, posted net income of $8.5 billion, or $1.06 per share, up 31% from a year earlier, on revenue of $28.1 billion.
Net interest income rose 9% to $15.2 billion, reflecting higher loan balances and asset repricing. The bank’s investment banking fees topped $2 billion, up 43% year-over-year, echoing the industry-wide M&A revival.
Mortgage and wealth businesses remain resilient
Bank of America’s consumer banking division reported net income of $3.4 billion, with average loans and leases rising 2% to $320 billion. The bank maintained its leadership in US consumer deposits and small business lending, while digital engagement hit new highs.
Its wealth and investment management arm, which includes significant mortgage origination and servicing, saw net income of $1.3 billion and client balances climb to $4.6 trillion.
Morgan Stanley’s wealth management franchise continued to outpace peers, with a 30% pre-tax margin and $81 billion in net new assets, reflecting strong client activity and lending growth.
The third quarter saw global M&A volumes surge 40% year-over-year to $1.26 trillion, according to Dealogic, marking the second-highest Q3 total on record.
Both Morgan Stanley and Bank of America benefited from this rebound, with peers JPMorgan Chase, Wells Fargo, and Citigroup also posting strong results.
Despite the upbeat results, Bank of America’s stock, up 14%, has underperformed peers year-to-date, while Morgan Stanley’s shares are up 24% in 2025. Both banks flagged ongoing investments in technology and talent as key to sustaining growth amid shifting market conditions.
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