Morgan Stanley analysts think European banks had a fine quarter, but that US banks' was finer
Morgan Stanley analysts may have indirectly cast aspersions on Deutsche Bank's ability to meet the cost of capital in its investment bank, but they are all for DB all the same. In a note out today, Morgan Stanley's financial researchers say Deutsche Bank is their top European pick for equities investors. Barclays is second.
This does not mean, however, that Deutsche Bank or Barclays have outperformed US rivals.
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The chart below summarises the Morgan Stanley researchers' thinking. In US$ terms, they think US banks have outperformed most Europeans in Q2. In local currency terms, they think the same. Morgan Stanley's own performance is not included in this appraisal.
The exception to the rule above is UBS, which the Morgan Stanley researchers think outperformed US banks in Q2. However, UBS is not an investment favourite because of its capital and litigation issues, plus the researchers think performance and likely share buybacks are already priced in.
Beyond individual banks, Morgan Stanleys' analysts think Q2 was good for equities traders especially, with equities revenues up 19% versus only 9% in fixed income currencies and commodities (FICC). The chart below suggests Q2 was particularly good for equities traders in Asia. It looks even better for ECM bankers in the US.
Source: Bloomberg, Thomson Reuters, CME, Dealogic, Morgan Stanley Research estimates. Data as of 30th June 2026
The second chart below shows Morgan Stanley researcher's collected data on potential revenue influences across banks' businesses in Q2. It looks good, except maybe for FX desks. For the full heatmap chart, click here.
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