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Morgan Stanley (MS +2.4%) is trading higher after reporting healthy EPS upside with its Q2 report this morning. The beat was not as large as Q1, but MS has reported back-to-back double-digit EPS beats for the first time since Q2-Q3 of 2021. Revenue grew a robust 11.6% yr/yr to $15.02 bln, which also was better than expected. This was Morgan Stanley's first double-digit yr/yr revenue growth quarter since 3Q21, led by strength in equity and a notable pickup in investment banking.

• What really drove the quarter was its Institutional Securities segment as revenue grew an impressive 23.5% yr/yr to $6.98 bln, reflecting strong performance across the franchise, with notable strength in Equity, driven by higher client activity, and in investment banking (IB) on robust debt underwriting results. Equity subsegment revenue rose 18% yr/yr to $3.02 bln, reflecting strong performance across business lines and regions, particularly in Asia.
• The star of the show as IB revenue jumping 51% yr/yr to $1.62 bln, a notable improvement from 16% growth in Q1. Advisory revenue was boosted by a higher number of completed M&A transactions. Also, equity underwriting revenue was driven by private placements, IPOs and convertible offerings. Fixed income underwriting revenue increased significantly yr/yr primarily driven by higher non-investment grade issuances.
• A bit less impressive was its Wealth Management segment, where revenue rose just 2% yr/yr to $6.79 bln. This followed 5% growth in Q1. In fairness to MS, a big reason for the tepid growth was consumers shifting funds into accounts that offer higher interest rates. As a result, WM segment net interest fell 17% yr/yr to $1.8 bln. Its Asset Mgmt subsegment actually posted a record quarter with revenue growing 16% yr/yr to $3.99 bln.
• Its final segment is Investment Management, but it's the company's smallest by far. IM segment revenue grew 8% yr/yr to $1.39 bln. Asset management fees increased on higher average AUM driven by higher market levels.

Overall, this was a good quarter for Morgan Stanley. The headline numbers were quite good, especially the top line growth. MS said that the resilience of the US economy, and a more stable near term outlook on rates supported conviction amongst clients. What really jumped out was the huge growth in investment banking revs as more M&A takes place and IPOs picked up.

Finally, the stock has been slowly trending higher since late October, when the Fed started signaling possible timeframes for rate cuts. The stock has traded above the $100 level in recent months as investors appear bullish on the company's prospects and the overall rate environment. This Q2 report continues the recent share price action of slowly trending higher.