- Morgan Stanley beat Q4 estimates with EPS of $2.68 on $17.89B revenue, driven by a 47% jump in investment-banking fees alongside solid equities and wealth results.
- Goldman Sachs also topped expectations, posting Q4 EPS of $14.01 and full-year revenue of $58.28B with gains in advisory and equities, partly offset by Apple Card portfolio-transfer markdowns.
- Across big banks, dealmaking and equity markets strengthened while fixed income remained a softer spot and credit and cost pressures persisted.
- A DOJ criminal probe into Fed Chair Jerome Powell over Fed headquarters renovation testimony is adding political and regulatory uncertainty for the sector.
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The fourth quarter of 2025 capped off a robust year for many leading Wall Street banks, led by Morgan Stanley and Goldman Sachs, with dealmaking and equities trading standing out as key revenue drivers. Morgan Stanley’s 47% surge in investment banking revenue reflects a recovery in underwriting and advisory work, notably in equity and fixed income issuance. The advisory arm alone grew ~45% YoY, and fixed income underwriting nearly doubled. These strengths, paired with solid equities trading and wealth management growth, suggest the bank is successfully executing a diversified strategy.
Goldman Sachs also saw meaningful gains. Full-year net revenues rose 9% YoY to $58.28 billion, despite a ~3% Q4 decline vs Q4 2024—largely due to markdowns tied to transferring its Apple Card portfolio. Excluding those, Global Banking & Markets revenues were significantly higher. Investment banking fees climbed ~25%, led by advisory. Equity trading saw even more outsized gain (~25%), while FICC trading was up about 12%.
Other large banks posted mixed results. Citigroup’s profits were hit by costs and the exit from Russia, though adjusting for exceptional items EPS was better than expected (~$1.81). Bank of America saw strength in consumer lending and trading but relatively flat deal-fees. JPMorgan delivered record full-year profits but saw Q4 profits decline due to acquisition-related charges and reserve builds.
The political and regulatory landscape adds risk: the DOJ’s opening of a criminal investigation into Jerome Powell—focused on statements he made to Congress regarding Fed renovation costs—spotlights potential future friction between the executive branch and financial regulators. President Trump is also pushing proposals like capping credit card rates, which threaten banks’ net interest income streams. Such broad policy pressure could weigh on sentiment and margins across the sector despite strong recent earnings.
Looking ahead, strategic implications include: banks with strength in capital markets and underwriting are being rewarded, but sustainability depends on cost discipline and ability to maintain advisory pipelines. Regulatory risks, especially those tied to policy shifts or direct political influence, are likely to cost in reputational and compliance terms. Fixed income remains the weak link; its recovery, or lack thereof, could materially affect future earnings. Lastly, margin pressure from interest rate cap proposals, combined with credit quality developments, demand close monitoring.
Supporting Notes
- Morgan Stanley’s Q4 2025 net revenue was $17.89 billion, EPS $2.68 vs expected $2.44; full-year 2025 net revenue rose to $70.6 billion from $61.8 billion in 2024.
- Its investment banking revenue grew 47% YoY; advisory revenue up ~45%, fixed-income underwriting nearly doubled; equity underwriting up ~8-9%.
- Goldman Sachs full-year net revenue (2025) was $58.28 billion (up ~9% YoY), full-year net earnings $17.18 billion; Q4 net revenues $13.45 billion, Q4 net earnings $4.62 billion; Q4 EPS $14.01 (vs $11.95 in Q4 2024). Advisory fees, equities revenue, and Global Banking & Markets saw double-digit growth.
- Fixed income revenues for Morgan Stanley in Q4 declined ~9%; for Goldman, FICC revenues rose but were offset by weaknesses in some platform divisions (e.g. Apple Card transfer).
- Citigroup saw a net income decline of ~13%, bringing its adjusted EPS to ~$1.81 excluding Russia-related losses; revenue growth was modest (~2%) overall.
- The Fed Chair, Powell, was subpoenaed by the DOJ over $2.5 billion Fed headquarters renovation, with criminal investigation tied to his congressional testimony.