The narrative coming out of bank earnings this week isn’t about weakness in investment banking—it’s about where the strength concentrated.
JPMorgan’s 5% year-over-year decline in fourth-quarter investment banking fees caught the headlines and sent the stock down nearly 3% despite an overall earnings beat of $5.23 per share versus $5.00 expected. Wall Street’s largest bank had missed on the one metric that matters most for gauging corporate confidence.
But zoom out across the week’s results and a different picture emerges: Goldman Sachs and Morgan Stanley, the two firms most levered to capital markets activity, both posted investment banking fee growth exceeding 20% for the full year and 25% or more in Q4.
The deals didn’t disappear. They flowed to different banks—and some slid into 2026.
The Divergence
The split is too stark to dismiss as noise. Morgan Stanley’s Q4 investment banking revenues surged 47% year-over-year to $2.4 billion. Goldman’s rose 25% to $2.58 billion. JPMorgan’s fell 5%.
The culprit for JPMorgan was largely mechanical. A federal government shutdown froze SEC operations in late 2025, halting IPO approvals and forcing issuers to delay offerings that were otherwise ready to price. Year-end timing—always lumpy in investment banking—pushed M&A closings past December 31. Regulatory reviews on major transactions stretched beyond the quarter.
But Goldman and Morgan Stanley are disproportionately exposed to sponsor-backed M&A, technology and healthcare transactions, and complex capital markets activity—deal types that proved more resilient to the disruption. When the SEC shutdown hit routine approvals, it affected plain-vanilla deals harder than the structured transactions these firms specialize in.
Goldman’s Q4 breakdown reinforces this. Advisory—the purest expression of M&A activity—was up 41% to $1.36 billion on what the firm described as “a significant increase in completed mergers and acquisitions volumes.” That’s not a business line suffering from regulatory delays. That’s a business line capturing share in a market where deal complexity favors specialized expertise.
Morgan Stanley: The Integrated Firm Delivers
Morgan Stanley’s results demonstrated why its business model commands a premium valuation. Q4 net revenues of $17.9 billion and full-year revenues of $70.6 billion were both records. Net income hit $16.9 billion for the year. Earnings per share reached $10.21, up 28% from $7.95 in 2024. Return on tangible equity came in at 21.6%—comfortably above the firm’s 20% target and up from 18.8% a year ago.
The investment banking surge was broad-based. Advisory revenues rose 45% to $1.13 billion on higher completed M&A transactions across all regions. Fixed income underwriting nearly doubled to $785 million, benefiting from increased event-related activity. Equity underwriting grew to $494 million on strength in convertibles and IPOs, partially offset by a decline in follow-on offerings. For the full year, investment banking revenues hit $7.6 billion, up 23% from 2024.
The trading desks kept pace. Equities revenues rose 10% in Q4 to $3.67 billion on strong client activity across businesses and regions, plus higher financing revenues from growing prime brokerage balances. For the full year, equities generated a record $15.6 billion—up 28%—driven by derivatives, cash trading, and prime financing. Fixed income revenues declined 9% in Q4 to $1.76 billion on lower results in commodities and foreign exchange, though the full-year number still rose 4% to $8.7 billion.
But what truly differentiates Morgan Stanley is the $9.3 trillion in client assets sitting in its wealth and investment management businesses. These aren’t trading revenues subject to quarterly volatility—they’re fee-based streams that compound with markets and client acquisition.
Wealth Management delivered record net revenues of $31.8 billion for the year, up 12%. Q4 revenues hit $8.4 billion, up 13% year-over-year. Asset management revenues increased on elevated assets driven by higher markets and strong fee-based flows. Transactional revenues rose 17% excluding deferred compensation impacts, driven by higher client activity in equity-related products. Net interest income grew on the cumulative impact of lending growth.
The pre-tax margin reached 29.3% for the year and 31.4% for Q4—approaching the firm’s stated 30% target. The business added $356 billion in net new assets for the year, including $122 billion in Q4 alone—more than double the $56.5 billion added in Q4 2024. Fee-based flows totaled $160 billion for the year and $45.6 billion for the quarter.
Investment Management contributed $6.5 billion in net revenues, up 11%, on higher average assets under management. Long-term net inflows reached $34 billion for the year.
CEO Ted Pick framed the positioning clearly: “Morgan Stanley delivered outstanding performance in 2025. Our performance reflects multi-year investments which have contributed to growth and momentum across the Integrated Firm. Total client assets in Wealth and Investment Management grew to $9.3 trillion, supported by over $350 billion in net new assets. Our Institutional Securities business served as a trusted advisor to clients as investment banking activity accelerated and global markets remained strong.”
The expense efficiency ratio improved to 68% from 71% a year ago, demonstrating operating leverage while the firm continued investing in its businesses. The Standardized Common Equity Tier 1 capital ratio stood at 15.0%—comfortably above the 11.8% requirement, providing roughly 320 basis points of excess capital.
The firm repurchased $4.6 billion of stock during the year at an average price of $141.33 and declared a $1.00 quarterly dividend, up from $0.925 a year ago.
Goldman Sachs: The Pure-Play Powerhouse
Goldman posted Q4 investment banking fees of $2.58 billion, up 25% year-over-year. Advisory surged 41% to $1.36 billion. Debt underwriting rose 18% to $700 million on significantly higher revenues from asset-backed activity. Equity underwriting edged up 4% to $521 million.
For the full year, investment banking fees hit $9.34 billion—up 21% from 2024. Advisory revenues reached $4.73 billion, up 34%, reflecting what the firm described as “a significant increase in completed mergers and acquisitions volumes.” Debt underwriting totaled $2.83 billion, up 12%, on strength in asset-backed and investment-grade activity. Equity underwriting came in at $1.78 billion, up 6%, driven by IPOs and convertibles partially offset by weaker secondary offerings.
Critically, Goldman noted that its investment banking fees backlog “increased significantly” compared to year-end 2024 and rose again compared to Q3. The deals are there. They’re waiting to close.
The equities franchise delivered its own statement quarter. Q4 revenues reached $4.31 billion, up 25% year-over-year, with Equities financing surging on significantly higher prime financing and portfolio financing revenues and Equities intermediation rising on strength in derivatives. For the full year, equities revenues hit $16.54 billion—up 23%—establishing Goldman alongside Morgan Stanley as the dominant players in global equity markets.
FICC posted solid results: Q4 revenues of $3.11 billion, up 12%, driven by significantly higher results in interest rate products and commodities, partially offset by lower revenues in currencies, mortgages, and credit products. FICC financing grew on higher revenues from mortgages and structured lending. Full-year FICC revenues reached $14.52 billion, up 9%.
The combined Global Banking & Markets segment generated $41.45 billion for the year, up 18% from 2024. Q4 alone produced $10.41 billion, up 22%. These are numbers that reflect share gains, not just market improvement.
Goldman’s headline Q4 net revenues of $13.45 billion—down 3% year-over-year—obscure the underlying strength because of accounting noise from the Apple Card exit. The firm took a $2.26 billion markdown on the credit card portfolio as it transferred the Apple Card loans to held-for-sale status and recorded contract termination obligations. This was more than offset by a $2.48 billion reserve release in provision for credit losses, producing a net benefit to earnings but creating chaos in the revenue line.
Platform Solutions reported negative net revenues of $1.68 billion for the quarter. Strip out that segment entirely and Goldman’s core businesses performed exceptionally.
Asset & Wealth Management contributed $16.68 billion in net revenues for the year, up 2%. Management and other fees rose 11% to $11.54 billion on higher average assets under supervision. Private banking and lending revenues increased 16% to $3.35 billion, reflecting interest payments on a previously impaired loan and higher net interest margin from lending. Incentive fees rose 24% to $489 million.
The segment absorbed a 50% decline in investment revenues to $1.31 billion as Goldman continued reducing its balance sheet exposure to private equity and debt investments. This is intentional—the firm is trading volatile principal gains for stable fee income, accepting lower near-term revenues in exchange for a higher-quality earnings stream.
Assets under supervision reached $3.6 trillion, up $469 billion from year-end 2024. Q4 net inflows totaled $116 billion, including $66 billion into long-term assets. Alternative investments AUS grew to $420 billion from $350 billion a year ago.
Full-year net earnings hit $17.18 billion, up 20% from 2024. Diluted EPS reached $51.32, up 27% from $40.54. Return on equity was 15.0% for the year and 16.0% annualized for Q4. Book value per share grew 6.2% to $357.60.
Operating expenses rose 11% to $37.54 billion, primarily on higher compensation reflecting improved performance and higher transaction-based expenses. The efficiency ratio was 64.4%, up from 63.1% in 2024. Headcount increased 2% during the year to 47,400.
Goldman returned $16.78 billion to shareholders during 2025, including $12.36 billion in share repurchases at an average price of $654.45 and $4.42 billion in dividends. The board raised the quarterly dividend to $4.50 per share from $4.00—a 12.5% increase.
The firm’s CET1 ratio under the standardized approach was 14.4%, down from 15.0% a year ago as the balance sheet grew. Global core liquid assets averaged $466 billion for the year, up from $429 billion in 2024.
Wells Fargo: Finally Unconstrained
Wells Fargo’s results told a story less about the quarter and more about what comes next. Earnings per share of $1.76 beat estimates of $1.65, and net income came in at $5.4 billion. Revenue of $21.3 billion missed slightly, but the miss was overshadowed by a bigger headline: the Fed’s asset cap is finally gone.
The asset cap, imposed in 2018 following the bank’s fake accounts scandal, had limited Wells Fargo’s ability to grow its balance sheet for nearly seven years. Its removal represents a turning point.
CEO Charlie Scharf didn’t hide his enthusiasm: “Strong financial performance, removal of the asset cap imposed by the Federal Reserve, termination of multiple consent orders, and stronger growth in both our consumer and commercial businesses make me proud of our 2025 results. We are excited to now compete on a level playing field.”
The underlying metrics supported optimism. Net interest income rose 4% to $12.3 billion. Average loans grew 5%. Credit performance improved, with net charge-offs declining 13% from a year ago. The bank repurchased $5 billion in stock during the quarter alone—a signal of confidence in forward earnings power.
The Pipeline Ahead
If the Q4 investment banking softness at JPMorgan reflected weakening demand, we’d expect to see it in forward indicators. Instead, the 2026 pipeline looks packed.
Global M&A volume hit $5.1 trillion in 2025, up 42% year-over-year. The IPO market had its best showing since 2021, with traditional offerings raising $33.6 billion. Goldman described its backlog increase as “significant” compared to year-end 2024. Morgan Stanley’s Pick noted that M&A and IPO backlogs are “accelerating.”
The pipeline includes potential blockbuster offerings from SpaceX, OpenAI, Anthropic, and Kraken—names that would rank among the most consequential offerings in years. Many issuers that encountered the Q4 regulatory logjam have simply shifted their timelines into the first half of 2026.
PwC noted in its capital markets outlook that “many issuers shifted their plans into 2026, which is expected to meaningfully increase activity—particularly in the first half of the year.”
Morgan Stanley’s wallet share in institutional securities has risen from roughly 14.3% in 2020 to an estimated 15.5% in 2025. The firm’s “Integrated Firm” model—connecting workplace clients to wealth management, corporate advisory clients to capital markets, and institutional clients to asset management—creates cross-selling opportunities that compound over time.
Goldman has similarly positioned itself to capture the coming wave, with its dominant M&A advisory franchise, leading equities business, and growing alternatives platform in asset management.
The Return Profiles
The comparison in returns tells its own story. Morgan Stanley delivered 21.6% return on tangible equity for 2025. Goldman posted 15.0% ROE and 16.0% annualized in Q4.
Both firms maintain substantial capital buffers. Morgan Stanley’s CET1 ratio of 15.0% sits roughly 320 basis points above its 11.8% requirement. Goldman’s 14.4% standardized CET1 ratio provides similar flexibility. These are businesses generating returns well above their cost of capital with excess liquidity to fund continued investment and shareholder distributions.
The divergence from JPMorgan—which traded down on its results despite an earnings beat—reflects the market’s recognition that the investment banking specialists were better positioned for Q4’s particular conditions and carry stronger momentum into 2026.
The Read
Investment banking revenue matters because it reflects corporate confidence. Executives don’t pursue acquisitions, take companies public, or raise capital unless they believe conditions will justify the cost and complexity. A decline driven by evaporating demand would be a warning sign. A decline driven by timing and regulatory logistics—concentrated at banks with broader deal-type exposure while Goldman and Morgan Stanley posted record results—is a different story entirely.
The evidence points to the latter. JPMorgan retained its #1 global investment banking ranking despite the miss. Goldman and Morgan Stanley both reported growing backlogs. Wells Fargo is finally unconstrained. The SEC is back online. Consumer spending, credit quality, and loan growth all look healthy across the big banks.
CEO commentary has turned explicitly bullish. Morgan Stanley’s Pick highlighted “growth and momentum across the Integrated Firm.” Goldman’s management pointed to a significantly expanded backlog. Wells Fargo’s Scharf is “excited to now compete on a level playing field.”
The deal backlog has to clear somewhere. That somewhere is Q1.