Morgan Stanley held its second quarter 2025 financial results conference call, starting off with a disclaimer on records, risk statements, and non-GAAP measures. The conference was then passed on to the chairman and CEO for further discussions.

In the second quarter of 2025, Morgan Stanley achieved strong performance in the market volatility and trade policy uncertainty, with total revenue reaching $16.8 billion, earnings per share of $2.13, and a tangible asset return rate of 18.2%. In the first half of the year, total revenue was $34.5 billion, earnings per share were $4.73, and tangible asset return rate was 20.6%. The company made significant progress in global client asset management, exceeding a total of $8.2 trillion and moving towards a target of $10 trillion. Wealth management and investment management businesses performed well, with institutional securities revenue of $7.6 billion, benefiting from global footprint and technology investments. The company is actively responding to market volatility, creating value for shareholders through organic growth, capital deployment, and progress in regulatory reform.

After experiencing a temporary stagnation, investment banking business regained momentum in the second half of May, benefiting from the rise in asset levels and the rebound in the IPO market. Investment banking revenue reached $1.5 billion. Equity underwriting business was particularly strong, while debt underwriting and advisory services showed steady performance, especially in the Asia-Pacific region. Although M&A activities were affected by market volatility, a healthy product portfolio supported the overall performance. In addition, the equity market business showed strong performance, and fixed income business was driven by macroeconomic product performance, showing overall growth momentum.

The wealth management department has performed excellently on key indicators, including strong net asset growth, outstanding fee base flow, and healthy loan growth, achieving revenue of $7.8 billion. Pre-tax profit reached a record $22 billion, with the asset management department's revenue increasing by 11% to $44 billion, mainly benefiting from an improvement in market levels and steady fee base flow. Customers continue to shift assets from advisor-led brokerage accounts to fee-based accounts, while the company continues to invest in education, technology, and product innovation to facilitate asset migration. Trading revenue increased by 17% to $13 billion, with retail client engagement particularly strong during market volatility.

In this quarter, the bank's loan balance increased to $169 billion, mainly driven by securities lending, demonstrating progress in deepening customer relationships and providing comprehensive solutions. At the same time, total deposits increased to $383 billion, with net interest income of $1.9 billion remaining stable. The investment management business performed well, with revenue growing by 12% to $1.6 billion and assets under management reaching a record $1.7 trillion. The solidity of the business model and the continued growth of customer assets (reaching $8.2 trillion) lay a solid foundation for the development of the next quarter. Additionally, the company announced an increase in the quarterly dividend, with a dividend of $1 per share, and expects a tax rate of around 24% for the second half of the year.

In this discussion, the bank executives elaborated on how banks can enhance capital return through global business integration and effective capital deployment in the current regulatory environment, especially in the areas of investment banking, wealth management, and market business growth strategies. At the same time, they also discussed macroeconomic fluctuations, such as tariff policies, and their impact on businesses and market activities, as well as how to maintain and enhance the profitability of banks in such an environment.

Morgan Stanley emphasizes that its acquisition strategy will focus on complementary or small transactions, aimed at enhancing its core strategy of providing clients with services for raising, managing, and distributing capital. Despite having a track record of integration, the company does not blindly pursue acquisitions, but rather places importance on internal organic growth opportunities, especially in areas such as wealth management, investment management, and investment banking. The company stated that they are actively considering 'tuck in' acquisition opportunities that can increase operational leverage without diluting their strategic execution.

The discussion provided a detailed presentation of the company's current investment strategy and asset flow situation, with a particular emphasis on steady growth amidst asset price fluctuations, as well as continuous improvement in efficiency ratios and investment returns. At the same time, the recruitment background and effectiveness of new consultants were thoroughly explored, highlighting the growth of consultant strength seen across all three channels, as well as new asset flows from the workplace, demonstrating that the company's investments in marketing and business development are paying off. Additionally, strong performance in self-directed channels and fee-based flows were mentioned, overall indicating the comprehensive success of the company's strategy.

The discussion mainly focuses on the potential impact of stablecoin legislation and changes in market structure on Morgan Stanley, as well as how to evaluate market activity and institutional realignment in the face of tariffs and geopolitical factors in the second quarter. At the same time, efforts to increase market share, brand brokerage business, and the evolution of the market background were also discussed.

The conversation emphasized the importance of investing and expanding markets globally, specifically mentioning significant progress made in the EMEA and Asian regions. Through continued investment in different regions, market share has increased and customer repositioning has been achieved, not only in institutional business but also in retail business. Additionally, the discussion pointed out the increase in liquidity flows to the market and capital expenditure, indicating efforts to rebalance and reposition the market throughout the quarter.

The conversation primarily discussed the increasing costs of operating securities businesses globally and how to maintain competitiveness by achieving operational leverage and market returns. It particularly mentioned the significant achievements in the securities business in Europe and Asia, as well as the continued growth and stable performance of fixed income business. Additionally, it emphasized the importance of integrating internal culture and fully utilizing resources within the company to enhance overall competitiveness.

In the discussion, the importance of asset management and capital deployment was mentioned, especially why asset management is not included in potential capital deployment. In addition, the significant achievements in the field of investment management were emphasized, including a large amount of capital inflow and Parametric's continued growth, as well as the numerous acquisition opportunities in the asset management field. It was pointed out in the discussion that cautious use of capital and the expectation for growth in the asset management business, while mentioning past experiences with investment management mergers.

The dialogue mainly revolves around Morgan Stanley's strategic direction and business development, emphasizing the importance of strategies that align with the company's culture and client needs. At the same time, it discusses how the company can respond to customer demands in the current interest rate environment by increasing capital and resources, as well as the potential changes in loan balances and cash flows the company may face when interest rates decline.

The conversation mainly discussed the trend of banks lending more through their capital markets departments, emphasizing the impact of regulatory changes on this trend. The discussion pointed out that while banks used to directly lend to commercial clients in the past, they now do so more through non-bank financial entities, in part due to regulatory restrictions. With the possible normalization of the regulatory environment, large, well-capitalized global investment banks will have the opportunity to regain their share in core corporate products and mid-market spaces. At the same time, private credit products have become institutionalized and continue to grow, playing a role in the boutique space and sponsor community. The discussion also emphasized the core role of large financial institutions in corporate and sponsor capital markets, including financing, structuring, and distribution functions. As the regulatory environment evolves, banks will focus more on risk architecture, aiming for stable growth and a tangible asset return of 20%.

This conversation mainly discussed the importance and priority of bank deposits in the company's strategic plan, as well as how to further optimize business through organic and inorganic growth opportunities. Participants emphasized the need for sustained growth and a diverse deposit base to support the continuous growth of qualified assets. Additionally, the discussion also touched on how to leverage existing strategies and resources to enhance market share and business capabilities through continuous investments and selectively exploring inorganic growth opportunities.