Morgan Stanley Q3 Earnings Soar on Strong Institutional, Wealth Growth

Ticker: MS-PL · Form: 10-Q · Filed: Nov 3, 2025 · CIK: 895421

Sentiment: bullish

Topics: Financial Services, Investment Banking, Wealth Management, Earnings Report, Capital Markets, Q3 2025, ROE

Related Tickers: MS, GS, BAC, JPM, WFC

TL;DR

MS is crushing it, with a 45% net income jump and zero credit loss provision – time to buy the dip if you haven't already.

AI Summary

Morgan Stanley reported robust financial results for the quarter ended September 30, 2025, with net revenues increasing by 18% to $18.2 billion compared to $15.4 billion in the prior year quarter. Net income applicable to Morgan Stanley surged by 45% to $4.6 billion, up from $3.2 billion. Diluted earnings per common share also saw a significant rise of 49% to $2.80. The firm achieved an impressive Return on Equity (ROE) of 18.0% and Return on Tangible Common Equity (ROTCE) of 23.5%. Institutional Securities led the growth with net revenues of $8.5 billion, a 25% increase, driven by higher client activity in Equity and a rebound in Investment Banking. Wealth Management contributed $8.2 billion in net revenues, up 13%, with a pre-tax margin of 30.3% and added $81 billion in net new assets. Investment Management's net revenues grew 13% to $1.7 billion, primarily from higher asset management fees. Compensation and benefits expenses increased 11% to $7.442 billion, mainly due to higher payouts to Wealth Management advisors and deferred compensation. The provision for credit losses was $0 million in the current quarter, a notable improvement from $79 million in the prior year quarter, reflecting an improved macroeconomic outlook despite portfolio growth.

Why It Matters

Morgan Stanley's strong Q3 2025 performance, particularly the 45% jump in net income and 23.5% ROTCE, signals a healthy financial sector and improved market conditions, which could boost investor confidence across the board. The significant growth in Institutional Securities and Wealth Management suggests that both corporate and individual clients are actively engaging in capital markets and seeking financial advisory services, potentially indicating broader economic optimism. This competitive edge, especially in attracting $81 billion in net new assets for Wealth Management, positions Morgan Stanley favorably against rivals like Goldman Sachs and Bank of America, potentially leading to increased market share and sustained profitability. Employees in these segments may see continued strong compensation, while customers benefit from a robust and active financial partner.

Risk Assessment

Risk Level: low — The risk level is low due to a $0 million provision for credit losses in the current quarter, a significant improvement from $79 million in the prior year quarter, indicating a healthier loan portfolio and improved macroeconomic outlook. Additionally, the firm's Standardized Common Equity Tier 1 capital ratio of 15.1% and Supplementary Leverage Ratio of 5.5% at September 30, 2025, demonstrate strong capital adequacy.

Analyst Insight

Investors should consider Morgan Stanley a strong buy given its robust Q3 2025 performance, particularly the 45% increase in net income and 23.5% ROTCE. The zero provision for credit losses and strong capital ratios suggest financial stability and effective risk management, making it an attractive long-term holding in the financial sector.

Financial Highlights

revenue
$18.2B
net Income
$4.6B
eps
$2.80
revenue Growth
+18%

Revenue Breakdown

SegmentRevenueGrowth
Institutional Securities$8.5B+25%
Wealth Management$8.2B+13%
Investment Management$1.7B+13%

Key Numbers

Key Players & Entities

FAQ

What were Morgan Stanley's net revenues for the quarter ended September 30, 2025?

Morgan Stanley reported net revenues of $18.2 billion for the quarter ended September 30, 2025, marking an 18% increase compared to $15.4 billion in the prior year quarter.

How did Morgan Stanley's net income change in Q3 2025?

Net income applicable to Morgan Stanley increased by 45% to $4.6 billion in the quarter ended September 30, 2025, up from $3.2 billion in the prior year quarter.

What was Morgan Stanley's diluted earnings per common share for Q3 2025?

Morgan Stanley's diluted earnings per common share was $2.80 in the quarter ended September 30, 2025, representing a 49% increase from $1.88 in the prior year quarter.

Which business segment contributed most to Morgan Stanley's revenue growth in Q3 2025?

The Institutional Securities segment reported net revenues of $8.5 billion in Q3 2025, increasing by 25% compared to the prior year period, primarily driven by higher client activity in Equity and a rebound in Investment Banking.

What was the pre-tax margin for Morgan Stanley's Wealth Management segment in Q3 2025?

Morgan Stanley's Wealth Management segment delivered a pre-tax margin of 30.3% in the quarter ended September 30, 2025, with net revenues of $8.2 billion.

How much in net new assets did Morgan Stanley's Wealth Management business add in Q3 2025?

The Wealth Management business added net new assets of $81 billion in the quarter ended September 30, 2025, reflecting strong client engagement.

What was Morgan Stanley's provision for credit losses in Q3 2025?

The provision for credit losses on loans and lending commitments was $0 million in the quarter ended September 30, 2025, a significant decrease from $79 million in the prior year quarter, reflecting an improved macroeconomic outlook.

What are Morgan Stanley's key capital ratios as of September 30, 2025?

As of September 30, 2025, Morgan Stanley's Standardized Common Equity Tier 1 capital ratio was 15.1%, and its Supplementary Leverage Ratio was 5.5%, indicating strong capital adequacy.

How did compensation and benefits expenses change for Morgan Stanley in Q3 2025?

Compensation and benefits expenses increased by 11% to $7,442 million in Q3 2025, primarily due to an increase in the formulaic payout to Wealth Management advisors on higher revenues, higher expenses related to outstanding deferred compensation, and higher salary expenses.

What is Morgan Stanley's strategic outlook based on the Q3 2025 filing?

Morgan Stanley's strategic outlook appears positive, with strong performance across all business segments, particularly in Institutional Securities and Wealth Management, driven by increased client activity and improved market sentiment. The firm's robust capital position and zero credit loss provision suggest continued stability and growth potential.

Risk Factors

Industry Context

Morgan Stanley operates in a highly competitive global financial services landscape, facing pressure from large diversified banks, specialized investment firms, and asset managers. The industry is characterized by significant regulatory oversight, technological disruption, and sensitivity to macroeconomic conditions. Recent trends show a rebound in investment banking activity and continued growth in wealth management, driven by client demand for advisory and asset management services.

Regulatory Implications

The firm must continuously comply with stringent capital adequacy requirements, such as the Common Equity Tier 1 ratio (15.1% reported), and evolving regulations across its global operations. Changes in monetary policy and financial market regulations can impact trading revenues, lending activities, and overall profitability.

What Investors Should Do

  1. Monitor expense management, particularly compensation and technology spend, to ensure continued efficiency gains.
  2. Assess the sustainability of revenue growth drivers, especially in Institutional Securities and Wealth Management.
  3. Evaluate the firm's risk appetite and credit quality given the $0 provision for credit losses.
  4. Observe the firm's ability to maintain strong ROE and ROTCE metrics in a potentially normalizing interest rate environment.

Key Dates

Glossary

ROE
Return on Equity, a measure of profitability relative to shareholders' equity. (Reported at 18.0% for Q3 2025, indicating strong profitability relative to equity.)
ROTCE
Return on Tangible Common Equity, a profitability metric that excludes intangible assets and goodwill from equity. (Reported at 23.5% for Q3 2025, showing high returns on the firm's tangible equity base.)
AUM
Assets Under Management, the total market value of assets that a financial institution manages on behalf of clients. (Higher AUM, driven by market levels and net new assets, positively impacted Investment Management and Wealth Management revenues.)
CET1 Ratio
Common Equity Tier 1 capital ratio, a measure of a bank's core capital strength relative to its risk-weighted assets. (Stood at 15.1% as of September 30, 2025, indicating a strong regulatory capital position.)
Pre-tax margin
Profitability metric calculated as earnings before taxes divided by net revenue. (Wealth Management achieved a strong 30.3% pre-tax margin, contributing to overall firm profitability.)
Provision for credit losses
An expense set aside by a financial institution to cover potential loan defaults and uncollectible debts. (The $0 million provision in Q3 2025, compared to $79 million in the prior year, reflects an improved macroeconomic outlook and better credit quality.)

Year-Over-Year Comparison

Morgan Stanley demonstrated significant year-over-year improvement in its Q3 2025 results compared to Q3 2024. Net revenues increased by 18% to $18.2 billion, and net income applicable to Morgan Stanley surged by 45% to $4.6 billion. Diluted EPS saw a substantial 49% increase. Profitability metrics like ROE and ROTCE improved considerably, from 13.1% to 18.0% and 17.5% to 23.5%, respectively. The provision for credit losses decreased from $79 million to $0 million, reflecting an improved economic outlook. Expense efficiency also improved, with the ratio dropping from 72% to 67% for the quarter.

Filing Stats: 4,388 words · 18 min read · ~15 pages · Grade level 13.2 · Accepted 2025-11-03 16:09:09

Key Financial Figures

Filing Documents

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations I 2 4 Introduction 4 Executive Summary 5 Business Segments 9 Institutional Securities 10 Wealth Management 13 Investment Management 16 Supplemental Financial Information 18 Accounting Development Updates 18 Critical Accounting Estimates 18 Liquidity and Capital Resources 19 Balance Sheet 19 Regulatory Requirements 22

Quantitative and Qualitative Disclosures about Risk

Quantitative and Qualitative Disclosures about Risk I 3 28 Market Risk 28 Credit Risk 30 Country and Other Risks 36 Report of Independent Registered Public Accounting Firm 38 Consolidated Financial Statements and Notes I 1 39 Consolidated Income Statement (Unaudited) 39 Consolidated Comprehensive Income Statement (Unaudited) 39 Consolidated Balance Sheet (Un audit ed at September 30, 2025 ) 40 Consolidated Statement of Changes in Total Equity (Unaudited) 41 Consolidated Cash Flow Statement (Unaudited) 42

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 43 1. Introduction and Basis of Presentation 43 2. Significant Accounting Policies 44 3. Cash and Cash Equivalents 44 4. Fair Values 44 5. Fair Value Option 50 6. Derivative Instruments and Hedging Activities 51 7. Investment Securities 54 8. Collateralized Transactions 56 9. Loans, Lending Commitments and Related Allowance for Credit Losses 58 10. Other Assets 62 11. Deposits 62 12. Borrowings and Other Secured Financings 63 13. Commitments, Guarantees and Contingencies 63 14. Variable Interest Entities and Securitization Activities 67 15. Regulatory Requirements 69 16. Total Equity 71 17. Interest Income and Interest Expense 73 18. Income Taxes 74 19. Segment, Geographic and Revenue Information 74 Financial Data Supplement (Unaudited) 77 Glossary of Common Terms and Acronyms 78

Controls and Procedures

Controls and Procedures I 4 79 Other Information II

Legal Proceedings

Legal Proceedings II 1 79

Risk Factors

Risk Factors II 1A 79 Unregistered Sales of Equity Securities and Use of Proceeds II 2 79 Other Information II 5 79 Exhibits II 6 79

Signatures

Signatures 79 2 Table of Contents Available Information We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission ("SEC"). The SEC maintains a website, www.sec.gov , that contains annual, quarterly and current reports, proxy and information statements, and other information that issuers file electronically with the SEC. Our electronic SEC filings are available to the public at the SEC's website. Our website is www.morganstanley.com . You can access our Investor Relations webpage at www.morganstanley.com/about-us-ir . We make available free of charge, on or through our Investor Relations webpage, our proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended ("Exchange Act"), as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. We also make available, through our Investor Relations webpage, via a link to the SEC's website, statements of beneficial ownership of our equity securities filed by our directors, officers, 10% or greater shareholders and others under Section 16 of the Exchange Act. You can access information about our corporate governance at www.morganstanley.com/about-us-governance. Our webpages include: Amended and Restated Certificate of Incorporation; Amended and Restated Bylaws; Charters for our Audit Committee, Compensation, Management Development and Succession Committee, Governance and Sustainability Committee, Operations and Technology Committee, and Risk Committee; Corporate Governance Policies; Policy Regarding Corporate Political Activities; Policy Regarding Shareholder Rights Plan; Equity Ownership Commitment; Code of Ethics and Business Conduct; Code of Conduct; and Integrity Hotline Information. Our Code of Ethics and Business Conduct

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations Introduction Morgan Stanley is a global financial services firm that maintains significant market positions in each of its business segments—Institutional Securities, Wealth Management and Investment Management. Morgan Stanley, through its subsidiaries and affiliates, provides a wide variety of products and services to a large and diversified group of clients and customers, including corporations, governments, financial institutions and individuals. Unless the context otherwise requires, the terms "Morgan Stanley," "Firm," "us," "we" or "our" mean Morgan Stanley (the "Parent Company") together with its consolidated subsidiaries. See the "Glossary of Common Terms and Acronyms" for the definition of certain terms and acronyms used throughout this Form 10-Q. A description of the clients and principal products and services of each of our business segments is as follows: Institutional Securities provides a variety of products and services to corporations, governments, financial institutions and ultra-high net worth clients. Investment Banking services consist of capital raising and financial advisory services, including the underwriting of debt, equity securities and other products, as well as advice on mergers and acquisitions, restructurings and project finance. Our Markets business, which comprises Equity and Fixed Income, provides sales, financing, prime brokerage, market-making, Asia wealth management services and certain business-related investments. Lending activities include originating corporate loans and commercial real estate loans, providing secured lending facilities, and extending securities-based and other financing to clients. Other activities include research. Wealth Management provides a comprehensive array of financial services and solutions to individual investors and small to medium-sized businesses and institutions. Wealth Management covers: financial advisor

Management's Discussion and Analysis

Management's Discussion and Analysis Executive Summary Overview of Financial Results Consolidated Results—Three Months Ended September 30, 2025 The Firm reported net revenues of $18.2 billion and net income applicable to Morgan Stanley of $4.6 billion reflecting strong results across business segments and regions. The Firm delivered ROE of 18.0% and ROTCE of 23.5% (see "Selected Non-GAAP Financial Information" herein). The Firm's expense efficiency ratio was 67% for the third quarter and 69% for the year-to-date. At September 30, 2025, the Firm's Standardized Common Equity Tier 1 capital ratio was 15.1%, and its Supplementary Leverage Ratio was 5.5%. Institutional Securities reported net revenues of $8.5 billion reflecting strong performance in Equity on higher client activity and a rebound in Investment Banking . Wealth Management delivered a pre-tax margin of 30.3%. Net revenues of $8.2 billion reflect higher Asset management and Transactional revenues and higher Net interest income. The business added net new assets of $81 billion and f ee- based asset flows were $42 billion. Investment Management results reflect net revenues of $1.7 billion, primarily driven by asset management fees on higher average AUM. Net Revenues ($ in millions) Net Income Applicable to Morgan Stanley ($ in millions) Earnings per Diluted Common Share We reported net revenues of $18.2 billion in the quarter ended September 30, 2025 ("current quarter," or "3Q 2025"), which increased by 18% compared with $15.4 billion in the quarter ended September 30, 2024 ("prior year quarter," or "3Q 2024"). Net income applicable to Morgan Stanley was $4.6 billion in the current quarter, which increased by 45% compared with $3.2 billion in the prior year quarter. Diluted earnings per common share was $2.80 in the current quarter, which increased by 49% compared with $1.88 in the prior year quarter. We reported net revenues of $52.8 billion in the nine months ended September 30, 2025 ("c

Management's Discussion and Analysis

Management's Discussion and Analysis Non-Interest Expenses ($ in millions) Compensation and benefits expenses of $7,442 million in the current quarter increased 11% from the prior year quarter, primarily due to an increase in the formulaic payout to Wealth Management advisors on higher revenues, higher expenses related to outstanding deferred compensation and higher salary expenses. Compensation and benefits expenses of $22,153 million in the current year period increased 11% from the prior year period, primarily due to an increase in the formulaic payout to Wealth Management advisors and higher discretionary incentive compensation within Institutional Securities, both on higher revenues, and higher expenses related to outstanding deferred compensation. During the current year period, as a result of a March employee action, we recognized severance costs associated with a reduction in force of $144 million, included in Compensation and Benefits expense. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Executive Summary" in the Form 10-Q for the quarter ended March 31, 2025. Non-compensation expenses of $4,754 million in the current quarter and $14,077 million in the current year period increased 9% and 10%, respectively, compared with the prior year periods, primarily due to higher execution-related expenses and increased technology spend. Provision for Credit Losses The Provision for credit losses on loans and lending commitments was $0 million in the current quarter, reflecting portfolio growth in corporate loans and secured lending facilities and provisions for certain specific commercial real estate loans, offset by improvements in the macroeconomic outlook. The Provision for credit losses on loans and lending commitments in the prior year quarter was $79 million, primarily related to provisions for certain specific commercial real estate and corporate loans and growth across loan portfo

Management's Discussion and Analysis

Management's Discussion and Analysis Institutional Securities net revenues of $8,523 million in the current quarter and $25,149 million in the current year period increased 25% and 21%, respectively, compared with the prior year periods, primarily reflecting higher results in Equity driven by higher client activity and higher underwriting revenues within Investment Banking. Wealth Management net revenues of $8,234 million in the current quarter and $23,325 million in the current year period increased 13% and 11%, respectively, compared with the prior year periods, primarily reflecting higher Asset management revenues on higher market levels and the cumulative impact of positive fee-based flows, and higher Transactional revenues on higher client activity. Investment Management net revenues of $1,651 million in the current quarter and $4,805 million in the current year period increased 13% and 14%, respectively, compared with the prior year periods, primarily reflecting higher Asset management and related fees driven by higher AUM on higher market levels and higher Performance-based income and other revenues. Net Revenues by Region 1 ($ in millions) 1. For a discussion of how the geographic breakdown of net revenues is determined, see Note 22 to the financial statements in the 2024 Form 10-K. Americas net revenues increased 18% and 14% in the current quarter and in the current year period, respectively, compared with the prior year periods, driven by higher results across all business segments. EMEA net revenues increased 6% and 15% in the current quarter and in the current year period, respectively, compared with the prior year periods, primarily driven by higher results in Equity, partially offset by lower results in Investment Banking compared with strong results in the prior year periods, within the Institutional Securities business segment. Asia net revenues increased 31% and 29% in the current quarter and in the current year period, respectively, co

Management's Discussion and Analysis

Management's Discussion and Analysis 9. For a discussion of our capital ratios, see "Liquidity and Capital Resources—Regulatory Requirements" herein. Economic and Market Conditions Client and investor confidence and market sentiment have improved in the third quarter of 2025. The quarter was characterized by increased momentum in capital markets activity and lower interest rates. The rate of economic growth, ongoing geopolitical uncertainty, as well as the timing and pace of further central bank actions have impacted and could continue to impact capital markets and our businesses. For more information on economic and market conditions, and the potential effects of geopolitical events and acts of war or aggression on our future results, refer to "Risk Factors" and "Forward-Looking Statements" in the 2024 Form 10-K. Selected Non-GAAP Financial Information We prepare our financial statements using U.S. GAAP. From time to time, we may disclose certain "non-GAAP financial measures" in this document or in the course of our earnings releases, earnings and other conference calls, financial presentations, definitive proxy statements and other public disclosures. A "non-GAAP financial measure" excludes, or includes, amounts from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. We consider the non-GAAP financial measures we disclose to be useful to us, investors, analysts and other stakeholders by providing further transparency about, or an alternate means of assessing or comparing our financial condition, operating results and capital adequacy. These measures are not in accordance with, or a substitute for, U.S. GAAP and may be different from or inconsistent with non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we will also generally define it or present the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, along with a reco

View Full Filing

View this 10-Q filing on SEC EDGAR

View on Read The Filing