“We continue to expect our annual tax rate to be between 22% and 23%, which similar to prior years, will exhibit some quarterly volatility.”

In context

“Sharon Yeshaya: Thank you. Good morning. In the second quarter, the firm produced record revenues of $21.3 billion and record EPS ex-CVA of $3.46. Our ROTCE was 26.6%. Institutional and retail client engagement remained strong throughout the quarter, and the integrated firm consistently delivered trusted advice and market access, responding to ongoing client demand. The firm's year-to-date efficiency ratio was 65%. Top-line growth and disciplined execution drove operating leverage through the first half, more than offsetting higher execution-related costs and continued strategic investments across the firm. Higher technology-driven spend relates to investments to support our infrastructure, AI-enabled efficiencies, and ongoing business growth. To the businesses. Momentum in institutional securities continued in the second quarter. Clients remained highly engaged. The segment delivered record revenues of $11 billion and record pre-tax profit of $4.3 billion. Results were driven by our leading equities franchise and supported by investment banking. Our longstanding global footprint and our investments in talent, technology, and research positions us well to advise clients. That strength was evident in every region contributing to the year-over-year revenue growth. Investment banking revenues were $2.4 billion. The 58% increase from the prior year reflected strength across products as momentum built across capital raising and strategic activity. Advisory revenues increased year-over-year to $798 million on higher completed activity. Revenues remain diversified across sectors, including top contributions from industrials, technology, and healthcare. Equity underwriting revenues were strong at $851 million. The significant increase versus the prior year was supported by a robust IPO market and strong follow-on and convertible activity. Fixed income underwriting revenues were a record $788 million, driven by bond issuance across non-investment grade and investment-grade companies. Issuers took advantage of favorable spread environment and an increase in strategic activity-supported results. The investment banking outlook is constructive. Pipelines are healthy. Client dialogue is broad-based across sectors, and while year-to-date activity has been led by the Americas, global activity is building. Large corporates are executing on their strategic objectives. The need for solutions and capital continues to grow. Sponsor monetization is selectively gaining momentum. To equities. Our franchise delivered an exceptional quarter, with revenues reaching a record of $6.3 billion, driven by increases across all products and regions. Asia was strong, with the breadth of activity extending across the region. Active markets and technology trends serve as tailwinds, and our multi-year investments in our global franchise allowed us to prosecute greater levels of client engagement. Prime brokerage revenues rose versus the prior year, driven by higher average client balances and strong activity in Asia. Cash results were strong, led by active client engagement and higher market volumes in the Americas compared to the prior year. Results in derivatives were also very strong versus the comparative period. Investments in technology centered on building scale and dynamic risk management tools are paying off. The business was well-positioned to capture global activity. Fixed income revenues were $2.5 billion, demonstrating balance across products. The cumulative growth of our secured lending business and trading discipline resulted in solid performance. Macro results were roughly flat versus the prior year. Resilience in rates offset declines in foreign exchange, where volatility traded near historic lows. Micro results increased year-over-year, driven by strong performance in credit corporates on the back of improved inventory management and robust primary issuance. Additionally, the cumulative growth of lending balances in securitized products further contributed to results. Commodities results improved versus the prior year, supported by higher client activity and structured transactions. Activity moderated sequentially following an exceptionally strong first quarter that benefited from energy market volatility. Other revenues reflected a loss of $152 million, largely driven by mark-to-market losses on corporate loans held for sale, inclusive of hedges. Turning to wealth management. The business generated a record of $8.9 billion in revenues, and total client assets stand at $8 trillion. The execution of our strategy, particularly our sustained investment in our client acquisition funnel, allowed us to reach more clients and deepen existing relationships. We remain the industry leader, with record net new assets of $148 billion and strong fee-based flows of $39 billion. Our financial advisors, our culture of continued innovation, our ability to provide unique capabilities and products are the foundation of our business. Together, they underpin a scaled, differentiated platform with $3 trillion in fee-based assets. The connectivity of our integrated firm sets us apart, positioning us to deliver for our clients. Revenues of $8.9 billion and pre-tax profit of $2.7 billion were both a record, supported by rising asset levels and robust retail engagement. The pre-tax margin was 30.5%, a reflection of the scale of our business and the intentional strategic investments for our future. Asset management revenues were $5.3 billion, driven by expanding markets and the cumulative impact of strong fee-based flows. Transactional revenues were $1.2 billion, up 20% year-over-year, excluding the prior year's positive impact from DCP. Results reflect highly engaged retail clients across both advisor-led and self-directed channels. Loan growth remained strong in the second quarter, with balances growing $9 billion. In a quarter with tax obligations, we saw an increase against lending of equity portfolios. Sequentially, deposits grew to $436 billion, and net interest income increased to $2.3 billion. NII outperformed on higher than expected sweep balances and strong loan growth. For the third quarter, we expect a modest sequential increase in NII. Net new assets were a record of $148 billion. Stock plan IPO flows represented just over half of the overall NNA this quarter, more than offsetting seasonal taxes, illustrating the strength of the workplace channel as a strong contributor to the top of the funnel. With strong capital markets, the power of our client acquisition funnel is becoming increasingly evident. Workplace brings relationships and assets onto the platform, and we are well-positioned to support these new relationships. Our investments are extending our runway for growth. We continue to deliver advice and solutions to new and existing relationships, supporting the build in our fee-based assets. We are investing from a position of strength and believe these capabilities set us apart. Turning to investment management. AUM now stands at a record $2 trillion. Long-term net inflows were $7.5 billion for the quarter, driven by ongoing demand for alternatives and solutions, including Parametric, as well as our fixed income strategies. Parametric remains a key differentiator, with over $760 billion in AUM today. Continued education initiatives and ongoing client demand have supported financial advisor adoption across our suite of Parametric custom solutions. Revenues of $1.6 billion increased 6% compared to the prior year. Results reflect higher asset management and related fees, driven by higher average AUM. Performance-based income and other revenues were $130 million. The current quarter primarily reflects net mark-to-market gains in our private funds. As we look ahead, our ongoing investments in technology, distribution, and product innovation position our diversified franchise to better serve our global client base. Turning to the balance sheet. Consistent performance has generated strong capital accretion and strengthened the firm's financial position. Total spot assets grew to $1.7 trillion, and standardized RWAs grew to $590 billion, supporting increased client activity. We repurchased $1.5 billion of common stock, and our standardized CET1 ratio ended the quarter at 14.8%. Reflecting the strength of our capital position, we announced a quarterly dividend increase of $0.15, bringing the quarterly dividend per share to $1.15. While the Fed's most recent stress test does not impact our current capital requirements, it serves as further recognition of the durability of our business model. Our quarterly tax rate was 23.1%. We continue to expect our annual tax rate to be between 22% and 23%, which similar to prior years, will exhibit some quarterly volatility. We enter the second half of the year with $10 trillion of total client assets across wealth and investment management. Together, with a strong capital position and building backlogs. The integrated firm is well-positioned to provide advice and to support clients in an increasingly complex environment. With that, we will now open the lineup to questions.”