Goldman’s equity financing nearly doubles as Morgan Stanley’s equity revenue rises 41%

Goldman Sachs and Morgan Stanley reported a strong third quarter for their equities franchises, with Goldman’s record financing income showing how much of the business now comes from supporting clients’ positions. Goldman released its results on 13 October and Morgan Stanley followed on 14 October; both reports cover the three months ended 30 September 2026. Their disclosures point to substantial demand for equity services, with different revenue mixes and cost outcomes.[2][3]

Financing supplies most of Goldman’s incremental equity revenue

Goldman’s financing share of equities revenue rose from 45.9% to 52.2%, calculated by dividing the financing line by total equities revenue in each quarter. Financing added $1.649 billion of the $2.705 billion year-on-year equities increase, or about 61%. The calculation identifies the contribution of the reported revenue category; it does not measure growth in the amount clients borrowed.[1]

The firm attributes its financing increase to prime financing and portfolio financing. Its intermediation increase came principally from derivatives. The sequential comparison is revealing: financing rose 3% from the second quarter, while intermediation fell 26%. The financing business therefore supported the quarter even as the pace of execution and market-making revenue eased from the previous three months.[2]

Prime financing encompasses several ways of supporting a position. Goldman’s business description includes loans secured by cash or securities, securities lending that enables institutional short sales, and swaps that deliver exposure to securities or indices. Portfolio financing sits alongside these activities. These services generate a continuing relationship around collateral, funding and exposure after a client’s initial trade.[5]

The infrastructure is broader than a loan book. Goldman’s Prime Services offering includes clearing and portfolio support, while its agency lending programme lends clients’ securities on a fully collateralised basis to approved counterparties. That combination helps explain why an equities franchise can earn from clients maintaining and financing positions as well as from their decisions to buy or sell.[6]

Morgan Stanley’s gains were broader, with a visible cost offset

Morgan Stanley attributes its equity increase to strong activity across businesses and regions, particularly client engagement and Asia. It publishes a single equity revenue line, so its 41% increase cannot be allocated to prime financing using these results. Its fixed-income decline reflected weaker credit performance in securitised products and lower structured activity in commodities.[3]

Institutional Securities revenue rose 18%, but non-compensation expenses increased 30% to $3.784 billion. Morgan Stanley identifies execution-related expenses and technology spending as the main drivers. Credit provisions in the division also increased to $141 million from $1 million, primarily reflecting growth in corporate and secured lending portfolios. Those are divisional figures, rather than costs or credit losses attributed solely to the equity business.[3][4]

The result was a 9% increase in the division’s pre-tax income, to $3.472 billion. Dividing pre-tax income by revenue gives a margin of 34.6%, against 37.3% a year earlier. Morgan Stanley’s equity revenue was also 8% below the second quarter. Strong annual growth and a softer sequential quarter can coexist; neither comparison should stand in for the other.[4]

The competitive question is the return on the whole relationship

For institutional intermediaries, the two reports illustrate complementary revenue sources: executing a trade, supplying securities or financing, and maintaining the systems that connect them. Financing can make revenue less dependent on the timing of individual transactions, but it brings funding, collateral and counterparty exposures. Goldman’s own financing description shows why cash, securities and swaps require different resources even when they all appear within one revenue line.[5]

The useful comparison is therefore how much revenue each client relationship produces after the resources needed to support it. Goldman’s record financing contribution demonstrates one route to growth; Morgan Stanley’s expense and margin figures show why higher equity revenue alone is an incomplete measure of the economics.[2][4]

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