Goldman Sachs & Morgan Stanley Beat Q4 Expectations: Strength in Banking & Asset Management

Goldman Sachs and Morgan Stanley emerged as clear winners in the Q4 2025 bank earnings season, leveraging favorable capital markets, strong deal pipelines, and resurgence in trading activity. while both firms exceeded expectations, their performance drivers and outlooks diverge in ways that carry important strategic implications.

Goldman Sachs reported net earnings of $4.62B, or $14.01 per diluted share—up 12% YoY—and an annualized return on common equity (ROE) of 16.0%. Net revenue for the quarter came in at $13.45B, down 3% YoY, largely reflecting a $2.26B markdown tied to the Apple Card business transfer and associated credit losses under the Platform Solutions segment. ([goldmansachs.com](https://www.goldmansachs.com/pressroom/press-releases/2026/2026-01-15-q4-results?utm_source=openai)) However, its Global Banking & Markets revenues saw a 22% increase YoY, boosted by equities financing, portfolio financing, derivatives, and intermediation, plus advisory and underwriting achieving solid results. ([sec.gov](https://www.sec.gov/Archives/edgar/data/886982/000088698226000008/a4q25gsearningsresults.htm?utm_source=openai)) Goldman’s strategy of refocusing away from consumer finance toward core banking and markets appears to be paying off, even as the Apple Card exit imposes short-term revenue volatility.

Morgan Stanley had a broader base in terms of growth: net revenues rose to $17.90B (up ~10% YoY), with EPS of $2.68 beating expectations. ([investing.com](https://www.investing.com/news/earnings/morgan-stanley-beats-q4-expectations-shares-rise-on-strong-results-4449397?utm_source=openai)) Investment banking revenues surged 47% YoY, equity trading grew, but fixed income revenues declined ~9%. ([investing.com](https://www.investing.com/news/earnings/morgan-stanley-beats-q4-expectations-shares-rise-on-strong-results-4449397?utm_source=openai)) In wealth and investment management, the firm reported $9.3T in total client assets and over $350B in net new assets for 2025, demonstrating strong fee-based earnings potential. ([investing.com](https://www.investing.com/news/earnings/morgan-stanley-beats-q4-expectations-shares-rise-on-strong-results-4449397?utm_source=openai))

BlackRock posted a 23.4% revenue rise in Q4 to ~$7.01B, adjusted EPS of $13.16 (+10.3% YoY), and record high AUM of $14.04T. ([zacks.com](https://www.zacks.com/stock/news/2818245/blackrock-beats-on-q4-earnings-as-revenues-aum-increase-yy?utm_source=openai)) Net long-term inflows were strong in Q4 ($268B) and over 2025 the company raised its dividend 10%. However, expenses rose faster (~48%), which compressed net GAAP earnings despite the top-line strength. ([zacks.com](https://www.zacks.com/stock/news/2818245/blackrock-beats-on-q4-earnings-as-revenues-aum-increase-yy?utm_source=openai))

Strategic Implications:

• Both investment banks are riding a capital markets momentum benefiting from elevated M&A and underwriting activity; Goldman is navigating strategic transitions like the Apple Card move, while Morgan Stanley amplifies its wealth and asset management footprint.
• Efficiency and margin retention appear superior at Goldman in capital markets segments; Morgan Stanley’s diversified businesses are delivering scale and recurring revenue but face pressure in fixed income and rising compensation/expense base.
• The rise in fee-based and asset management businesses (as seen in Morgan Stanley and BlackRock) points to investor preference for stable earnings and cost overhangs, though regulatory risks around credit card interest caps and macro stress (e.g. loan losses) must be monitored closely.([ft.com](https://www.ft.com/content/13582131-ee66-4733-a6d2-45354c87d53a?utm_source=openai))
• Asset managers like BlackRock are benefitting from heightened market valuations and large inflows, especially in ETFs and alternatives, but GAAP earnings volatility and expense growth could dampen upside if macro conditions reverse.

Open Questions:

• How materially will the Apple Card transfer impact Goldman’s future revenues and risk metrics in consumer credit?
• Can Morgan Stanley maintain its net new asset growth in wealth/investment management against fee compression and competition?
• What are the sensitivity of both banks’ investment banking pipelines to potential regulatory shifts (e.g., interest rate policy, credit card rate caps)?
• How will macroeconomic stress (inflation, employment, regulatory environment, credit quality) influence non-Interest income and provisions in 2026?