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Goldman Sachs and Morgan Stanley reported bumper earnings for the final quarter of 2025, capping Wall Street’s best year for investment banking in four years.
Four of the five big US investment banks this week reported an increase in quarterly fees from advisory work, adding to bankers’ optimism that the Trump administration’s deregulatory agenda will deliver a boom for the industry.
Goldman chief executive David Solomon said the bank had its largest backlog of deals since the pandemic, as companies seek to capitalise on looser US regulations.
“I think CEOs and boards are looking and saying, OK, we’ve got a window here of a handful of years where the opportunity to consider big, strategic, transformative things is certainly possible.”
Results from Goldman and Morgan Stanley on Thursday underlined how renewed appetite for dealmaking and rising stock markets have buoyed their core Wall Street businesses.
Goldman reported net income of $4.6bn for the quarter, a 12 per cent increase from a year earlier, while at Morgan Stanley, profits rose 18 per cent to $4.4bn.
Shares in both Goldman and Morgan Stanley hit record highs, with Morgan Stanley up about 5.7 per cent and Goldman up 4 per cent on Thursday afternoon.
Investment banking and equities trading were the twin drivers of the banks’ earnings, with a 45 per cent increase in fees from dealmaking at Morgan Stanley helping it leapfrog rival JPMorgan Chase in financial advisory revenues.
Morgan Stanley chief executive Ted Pick said corporate America was coming out of a “stuck boardroom mentality” with executives more willing to borrow and make big acquisitions as interest rates ease. “Now there is really no more time to waste,” Pick said.
However, Morgan Stanley’s Pick couched his optimism with a warning that the “macro backdrop is complicated” and said that now “is not the time to over-reach”, as he left the bank’s medium-term financial targets unchanged.
JPMorgan, which reported earnings on Tuesday, was alone among the top five Wall Street banks in posting a decline in fees from investment banking in the final quarter of 2025, with a 5 per cent decrease year on year.
Bank of America eked out a 0.7 per cent gain, while Citigroup’s turnaround showed progress with a 35 per cent increase in investment banking fees.
Equities traders across the five banks posted a record $60bn in revenues for 2025, as stock markets performed strongly and some investors repositioned away from the US.
Bank’s trading businesses, which were unloved for years after the 2008 financial crisis, became a useful crutch when revenues from dealmaking collapsed in 2022.
In 2025, both businesses flourished in parallel. Goldman posted $4.3bn of revenues from equity trading in the final quarter of the year — a record for any bank — surpassing Morgan Stanley’s $3.7bn.
In asset management, into which the banks have expanded to provide ballast to their more volatile investment banking and trading businesses, Morgan Stanley’s client assets exceeded $9tn for the first time in the fourth quarter.
This brought the Wall Street bank closer to its target to oversee $10tn at its wealth and asset management businesses. The bulk of these funds is in wealth management.
Goldman set new “medium-term” targets for its asset and wealth management business, including a goal of reaching $750bn in alternative assets under supervision by 2030.
Asset management giant BlackRock reported its biggest ever quarterly inflows, pushing assets under management above $14tn for the first time.
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