Morgan Stanley(MS) - 2025 Q3 - Quarterly Results

Firm-wide Financial Overview The firm achieved strong financial results in 3Q25, marked by significant revenue and net income growth, improved profitability ratios, and robust balance sheet expansion, while maintaining strong regulatory capital Consolidated Financial Summary The firm reported strong financial performance in 3Q25, with net revenues increasing by 9% QoQ and 18% YoY to $18,224 million, and net income applicable to Morgan Stanley up 30% QoQ and 45% YoY to $4,610 million Consolidated Net Revenues and Net Income (3Q25 vs. Prior Periods) | Metric | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | % Change (QoQ) | % Change (YoY) | | :-------------------------------- | :------------------- | :------------------- | :------------------- | :-------------- | :-------------- | | Net revenues | $18,224 million | $16,792 million | $15,383 million | 9% | 18% | | Net Income applicable to Morgan Stanley | $4,610 million | $3,539 million | $3,188 million | 30% | 45% | Segment Net Revenues (3Q25 vs. Prior Periods) | Segment | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | % Change (QoQ) | % Change (YoY) | | :-------------------- | :------------------- | :------------------- | :------------------- | :-------------- | :-------------- | | Institutional Securities | $8,523 million | $7,643 million | $6,815 million | 12% | 25% | | Wealth Management | $8,234 million | $7,764 million | $7,270 million | 6% | 13% | | Investment Management | $1,651 million | $1,552 million | $1,455 million | 6% | 13% | - Firm net revenues, excluding mark-to-market gains and losses on deferred cash-based compensation plans (DCP), were $17,976 million in 3Q25, up from $16,415 million in 2Q25 and $15,144 million in 3Q24[3] Consolidated Financial Metrics, Ratios and Statistical Data Key financial metrics demonstrated strong performance in 3Q25, with diluted EPS reaching $2.80, a 31% QoQ and 49% YoY increase, and Return on average common equity improving to 18.0% Key Financial Metrics (3Q25 vs. Prior Periods) | Metric | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | % Change (QoQ) | % Change (YoY) | | :-------------------------------- | :------------------- | :------------------- | :------------------- | :-------------- | :-------------- | | Earnings per diluted share | $2.80 | $2.13 | $1.88 | 31% | 49% | | Return on average common equity | 18.0% | 13.9% | 13.1% | +4.1 pp | +4.9 pp | | Return on average tangible common equity | 23.5% | 18.2% | 17.5% | +5.3 pp | +6.0 pp | | Book value per common share | $62.98 | $61.59 | $58.25 | 2% | 8% | | Tangible book value per common share | $48.64 | $47.25 | $43.76 | 3% | 11% | Key Financial Ratios (3Q25 vs. Prior Periods) | Ratio | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | | :-------------------------------- | :------------------- | :------------------- | :------------------- | | Pre-tax margin | 33% | 28% | 27% | | Compensation and benefits as a % of net revenues | 41% | 43% | 44% | | Non-compensation expenses as a % of net revenues | 26% | 28% | 28% | | Firm expense efficiency ratio | 67% | 71% | 72% | | Effective tax rate | 22.8% | 22.7% | 23.6% | - Worldwide employees increased by 2% QoQ and 3% YoY to 82,398[6] Consolidated and U.S. Bank Supplemental Financial Information The consolidated balance sheet showed growth in total assets, loans, and deposits, with U.S. Bank assets and deposits also increasing, and Asia demonstrating the strongest regional net revenue growth Consolidated Balance Sheet Highlights (Sep 30, 2025) | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | % Change (QoQ) | % Change (YoY) | | :-------------------------- | :----------- | :----------- | :----------- | :-------------- | :-------------- | | Total assets | $1,364,806 million | $1,353,870 million | $1,258,027 million | 1% | 8% | | Loans | $277,307 million | $267,395 million | $239,760 million | 4% | 16% | | Deposits | $405,480 million | $389,377 million | $363,722 million | 4% | 11% | | Long-term debt outstanding | $324,128 million | $320,127 million | $291,224 million | 1% | 11% | | Common equity | $100,212 million | $98,434 million | $93,897 million | 2% | 7% | | Tangible common equity | $77,392 million | $75,517 million | $70,543 million | 2% | 10% | U.S. Bank Supplemental Financial Information (Sep 30, 2025) | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | % Change (QoQ) | % Change (YoY) | | :-------------------------- | :----------- | :----------- | :----------- | :-------------- | :-------------- | | Total assets | $471,733 million | $450,798 million | $420,923 million | 5% | 12% | | Loans | $263,296 million | $252,242 million | $224,276 million | 4% | 17% | | Deposits | $397,927 million | $382,580 million | $357,548 million | 4% | 11% | Consolidated Net Revenues by Region (3Q25 vs. Prior Periods) | Region | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | % Change (QoQ) | % Change (YoY) | | :-------------------------- | :------------------- | :------------------- | :------------------- | :-------------- | :-------------- | | Americas | $13,663 million | $12,347 million | $11,557 million | 11% | 18% | | EMEA | $1,939 million | $2,142 million | $1,828 million | (9%) | 6% | | Asia | $2,622 million | $2,303 million | $1,998 million | 14% | 31% | Consolidated Average Common Equity and Regulatory Capital Information The firm's average common equity increased by 1% QoQ and 6% YoY to $98.7 billion, while regulatory capital ratios remained strong, with CET1 capital ratios stable or slightly improved under both Standardized and Advanced Approaches Firm Average Common Equity (3Q25 vs. Prior Periods) | Metric | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | % Change (QoQ) | % Change (YoY) | | :-------------------------- | :------------------- | :------------------- | :------------------- | :-------------- | :-------------- | | Firm Average Common Equity | $98.7 billion | $97.5 billion | $92.7 billion | 1% | 6% | Regulatory Capital Ratios (3Q25 vs. Prior Periods) | Ratio | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | | :-------------------------------- | :------------------- | :------------------- | :------------------- | | Common Equity Tier 1 capital | $81.3 billion | $78.7 billion | $73.9 billion | | Tier 1 capital | $90.9 billion | $88.4 billion | $83.7 billion | | Standardized Approach CET1 ratio | 15.2% | 15.0% | 15.1% | | Advanced Approach CET1 ratio | 15.7% | 15.7% | 14.9% | | Tier 1 leverage ratio | 6.8% | 6.8% | 6.9% | | Supplementary Leverage Ratio | 5.5% | 5.5% | 5.5% | Segment Performance All segments demonstrated robust performance in 3Q25, with Institutional Securities, Wealth Management, and Investment Management each reporting significant revenue growth, improved profitability, and strong asset accumulation Institutional Securities Income Statement Information, Financial Metrics and Ratios The Institutional Securities segment delivered strong results in 3Q25, with net revenues increasing 12% QoQ and 25% YoY to $8,523 million, and income before provision for income taxes surging by 51% QoQ and 67% YoY Institutional Securities Net Revenues by Category (3Q25 vs. Prior Periods) | Revenue Category | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | % Change (QoQ) | % Change (YoY) | | :----------------------- | :------------------- | :------------------- | :------------------- | :-------------- | :-------------- | | Advisory | $684 million | $508 million | $546 million | 35% | 25% | | Equity | $652 million | $500 million | $362 million | 30% | 80% | | Fixed income | $772 million | $532 million | $555 million | 45% | 39% | | Underwriting | $1,424 million | $1,032 million | $917 million | 38% | 55% | | Investment banking (Total) | $2,108 million | $1,540 million | $1,463 million | 37% | 44% | | Equity (Trading) | $4,116 million | $3,721 million | $3,045 million | 11% | 35% | | Fixed income (Trading) | $2,169 million | $2,180 million | $2,003 million | (1%) | 8% | | Total Net Revenues | $8,523 million | $7,643 million | $6,815 million | 12% | 25% | Institutional Securities Key Financials and Ratios (3Q25 vs. Prior Periods) | Metric | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | % Change (QoQ) | % Change (YoY) | | :-------------------------------- | :------------------- | :------------------- | :------------------- | :-------------- | :-------------- | | Income before provision for income taxes | $3,182 million | $2,111 million | $1,911 million | 51% | 67% | | Net income applicable to Morgan Stanley | $2,468 million | $1,604 million | $1,436 million | 54% | 72% | | Pre-tax margin | 37% | 28% | 28% | +9 pp | +9 pp | | Return on Average Common Equity | 19% | 12% | 12% | +7 pp | +7 pp | Wealth Management Income Statement Information, Financial Metrics and Ratios The Wealth Management segment reported net revenues of $8,234 million in 3Q25, up 6% QoQ and 13% YoY, with income before provision for income taxes increasing by 14% QoQ and 21% YoY, and a pre-tax margin improving to 30% Wealth Management Net Revenues by Category (3Q25 vs. Prior Periods) | Revenue Category | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | % Change (QoQ) | % Change (YoY) | | :----------------------- | :------------------- | :------------------- | :------------------- | :-------------- | :-------------- | | Asset management | $4,789 million | $4,411 million | $4,266 million | 9% | 12% | | Transactional | $1,308 million | $1,264 million | $1,076 million | 3% | 22% | | Net interest income | $1,991 million | $1,910 million | $1,774 million | 4% | 12% | | Total Net Revenues | $8,234 million | $7,764 million | $7,270 million | 6% | 13% | Wealth Management Key Financials and Ratios (3Q25 vs. Prior Periods) | Metric | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | % Change (QoQ) | % Change (YoY) | | :-------------------------------- | :------------------- | :------------------- | :------------------- | :-------------- | :-------------- | | Income before provision for income taxes | $2,499 million | $2,200 million | $2,060 million | 14% | 21% | | Net income applicable to Morgan Stanley | $1,889 million | $1,700 million | $1,568 million | 11% | 20% | | Pre-tax margin | 30% | 28% | 28% | +2 pp | +2 pp | | Return on Average Common Equity | 25% | 23% | 21% | +2 pp | +4 pp | | Return on Average Tangible Common Equity | 45% | 41% | 39% | +4 pp | +6 pp | - Wealth Management net revenues excluding DCP were $8,028 million in 3Q25, and compensation expenses excluding DCP were $4,166 million[15][16] Wealth Management Financial Information and Statistical Data Wealth Management client assets grew significantly, reaching $7,054 billion in 3Q25, a 9% QoQ and 18% YoY increase, with strong net new assets and increased deposits Wealth Management Key Metrics (3Q25 vs. Prior Periods) | Metric | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | % Change (QoQ) | % Change (YoY) | | :-------------------------- | :------------------- | :------------------- | :------------------- | :-------------- | :-------------- | | Total client assets | $7,054 billion | $6,492 billion | $5,974 billion | 9% | 18% | | Net new assets | $81.0 billion | $59.2 billion | $63.9 billion | 37% | 27% | | U.S. Bank loans | $173.9 billion | $168.9 billion | $155.2 billion | 3% | 12% | | Deposits | $398 billion | $383 billion | $358 billion | 4% | 11% | Annualized Weighted Average Cost of Deposits | Period | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :------------------- | :----------- | :----------- | :----------- | | Period end | 2.72% | 2.83% | 2.99% | | Period average | 2.88% | 2.81% | 3.19% | - Self-directed client assets increased by 13% QoQ and 24% YoY to $1,639 billion[17] - Daily average revenue trades (DARTs) increased by 3% QoQ and 24% YoY to 1,012 thousand[17] Investment Management Income Statement Information, Financial Metrics and Ratios The Investment Management segment's net revenues grew 6% QoQ and 13% YoY to $1,651 million in 3Q25, driven by increases in asset management and performance-based income, leading to a 13% QoQ and 40% YoY rise in income before provision for income taxes Investment Management Net Revenues by Category (3Q25 vs. Prior Periods) | Revenue Category | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | % Change (QoQ) | % Change (YoY) | | :-------------------------------- | :------------------- | :------------------- | :------------------- | :-------------- | :-------------- | | Asset management and related fees | $1,534 million | $1,434 million | $1,384 million | 7% | 11% | | Performance-based income and other | $117 million | $118 million | $71 million | (1%) | 65% | | Total Net Revenues | $1,651 million | $1,552 million | $1,455 million | 6% | 13% | Investment Management Key Financials and Ratios (3Q25 vs. Prior Periods) | Metric | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | % Change (QoQ) | % Change (YoY) | | :-------------------------------- | :------------------- | :------------------- | :------------------- | :-------------- | :-------------- | | Income before provision for income taxes | $364 million | $323 million | $260 million | 13% | 40% | | Net income applicable to Morgan Stanley | $266 million | $245 million | $192 million | 9% | 39% | | Pre-tax margin | 22% | 21% | 18% | +1 pp | +4 pp | | Return on Average Common Equity | 10% | 9% | 7% | +1 pp | +3 pp | | Return on Average Tangible Common Equity | 105% | 97% | 68% | +8 pp | +37 pp | Investment Management Financial Information and Statistical Data Investment Management's total Assets Under Management or Supervision (AUM) reached $1,807 billion in 3Q25, a 5% QoQ and 13% YoY increase, with total net flows of $41.3 billion driven by strong inflows in Fixed Income and Alternatives and Solutions Investment Management Net Flows by Asset Class (3Q25 vs. Prior Periods) | Asset Class | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | % Change (QoQ) | % Change (YoY) | | :-------------------------- | :------------------- | :------------------- | :------------------- | :-------------- | :-------------- | | Equity | $(6.1) billion | $(2.8) billion | $(5.6) billion | (118%) | (9%) | | Fixed Income | $8.4 billion | $6.8 billion | $4.4 billion | 24% | 91% | | Alternatives and Solutions | $14.2 billion | $6.8 billion | $8.5 billion | 109% | 67% | | Long-Term Net Flows | $16.5 billion | $10.8 billion | $7.3 billion | 53% | 126% | | Liquidity and Overlay Services | $24.8 billion | $(27.3) billion | $9.3 billion | * | 167% | | Total Net Flows | $41.3 billion | $(16.5) billion | $16.6 billion | * | 149% | Investment Management AUM by Asset Class (Sep 30, 2025) | Asset Class | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | % Change (QoQ) | % Change (YoY) | | :-------------------------- | :----------- | :----------- | :----------- | :-------------- | :-------------- | | Equity | $329 billion | $327 billion | $316 billion | 1% | 4% | | Fixed Income | $224 billion | $212 billion | $188 billion | 6% | 19% | | Alternatives and Solutions | $683 billion | $636 billion | $591 billion | 7% | 16% | | Total AUM | $1,807 billion | $1,713 billion | $1,598 billion | 5% | 13% | Balance Sheet and Credit Information The firm's consolidated loans and lending commitments expanded significantly, while the Allowance for Credit Losses remained stable with a $0 million provision in Q3, reflecting sound credit quality Consolidated Loans and Lending Commitments Consolidated loans and lending commitments increased by 6% QoQ and 17% YoY to $479.4 billion, with growth in both Institutional Securities and Wealth Management segments Consolidated Loans and Lending Commitments (3Q25 vs. Prior Periods) | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | % Change (QoQ) | % Change (YoY) | | :-------------------------------- | :----------- | :----------- | :----------- | :-------------- | :-------------- | | Institutional Securities Loans | $103.4 billion | $98.4 billion | $84.0 billion | 5% | 23% | | Institutional Securities Lending Commitments | $183.7 billion | $165.4 billion | $151.9 billion | 11% | 21% | | Wealth Management Loans | $173.9 billion | $168.9 billion | $155.3 billion | 3% | 12% | | Wealth Management Lending Commitments | $18.4 billion | $19.5 billion | $18.4 billion | (6%) | —% | | Consolidated Loans and Lending Commitments | $479.4 billion | $452.2 billion | $409.6 billion | 6% | 17% | - Within Institutional Securities, secured lending facilities loans increased by 6% QoQ and 34% YoY to $66.1 billion[23] - Within Wealth Management, securities-based lending and other loans increased by 3% QoQ and 14% YoY to $103.1 billion[23] Consolidated Loans and Lending Commitments Allowance for Credit Losses (ACL) As of September 30, 2025, the total Allowance for Credit Losses (ACL) for consolidated loans and lending commitments was $1,997 million, with a Q3 provision for credit losses of $0 million Allowance for Credit Losses (ACL) as of Sep 30, 2025 | Category | Loans and Lending Commitments (Gross) | ACL | ACL % | | :-------------------------------- | :-------------------------------- | :---- | :------ | | Corporate (HFI) | $7,839 million | $239 million | 3.0% | | Secured lending facilities (HFI) | $63,610 million | $200 million | 0.3% | | Commercial and residential real estate (HFI) | $7,853 million | $364 million | 4.6% | | Institutional Securities - HFI | $82,788 million | $822 million | 1.0% | | Wealth Management - HFI | $174,288 million | $391 million | 0.2% | | Total Held For Investment Loans | $257,076 million | $1,213 million | 0.5% | | Lending Commitments | $202,141 million | $784 million | 0.4% | | Consolidated Loans and Lending Commitments | $480,612 million | $1,997 million | N/A | Q3 Provision for Credit Losses (Sep 30, 2025) | Category | Q3 Provision | | :-------------------------------- | :----------- | | Corporate (HFI) | $(22) million | | Secured lending facilities (HFI) | $25 million | | Commercial and residential real estate (HFI) | $3 million | | Institutional Securities - HFI | $5 million | | Wealth Management - HFI | $1 million | | Total Held For Investment Loans | $6 million | | Lending Commitments | $(6) million | | Consolidated Loans and Lending Commitments | $0 million | Allowance Rollforward for Loans and Lending Commitments (3Q25) | Metric | Institutional Securities | Wealth Management | Total | | :-------------------------------- | :----------------------- | :---------------- | :---- | | Beginning Balance - Jun 30, 2025 (Loans) | $865 million | $406 million | $1,271 million | | Net Charge Offs (Loans) | $(46) million | $(17) million | $(63) million | | Provision (Loans) | $5 million | $1 million | $6 million | | Ending Balance - Sep 30, 2025 (Loans) | $822 million | $391 million | $1,213 million | | Beginning Balance - Jun 30, 2025 (Lending Commitments) | $772 million | $18 million | $790 million | | Provision (Lending Commitments) | $(4) million | $(2) million | $(6) million | | Ending Balance - Sep 30, 2025 (Lending Commitments) | $769 million | $15 million | $784 million | | Total Ending Balance - Sep 30, 2025 | $1,591 million | $406 million | $1,997 million | Definitions and Supplemental Information This section clarifies key financial definitions, non-GAAP measures, and performance metrics, providing supplemental quantitative details and a legal notice for comprehensive understanding of the financial report Definition of U.S. GAAP to Non-GAAP Measures This section defines various non-GAAP financial measures, including Tangible Common Equity and Return on Average Tangible Common Equity (ROTCE), and explains adjustments for deferred cash-based compensation plans (DCP) to enhance comparability - Non-GAAP financial measures provide transparency and an alternate means of assessing financial condition, operating results, and capital adequacy, but are not substitutes for U.S. GAAP[27] - Tangible common equity represents common shareholders' equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction[27] - Adjustments for DCP (Deferred Cash-Based Compensation Plans) are made to net revenues and compensation expenses to improve comparability of underlying operating performance and revenue trends, particularly in the Wealth Management segment[27] Definitions of Performance Metrics and Terms This section provides detailed definitions for various performance metrics and terms used throughout the financial supplement, including provision for credit losses, net income applicable to Morgan Stanley, EPS, ROE, pre-tax margin, and regulatory capital ratios - Provision for credit losses represents the provision for credit losses on loans held for investment and unfunded lending commitments[29] - Return on average common equity represents annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity[29] - Liquidity Resources are comprised of high quality liquid assets (HQLA) and cash deposits with banks, actively managed considering various factors including debt maturity, balance sheet, funding needs, and regulatory requirements[29] - Wealth Management's 'Net new assets' represent client asset inflows (including interest, dividends, acquisitions) less outflows, excluding business combinations/divestitures and fees/commissions[32] - Investment Management's 'Performance-based income and other' includes performance-based fees (carried interest), investment gains/losses, hedge gains/losses on seed capital, and net interest/other revenues[32] Supplemental Quantitative Details and Calculations This section provides detailed quantitative breakdowns and calculations, particularly for non-GAAP adjustments related to Deferred Cash-Based Compensation Plans (DCP) for both firm-wide and Wealth Management net revenues and compensation expenses, and details the firm's non-interest expenses by category Firm-wide Non-GAAP Adjustments for DCP (3Q25 vs. Prior Periods) | Metric | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | | :-------------------------------- | :------------------- | :------------------- | :------------------- | | Net revenues (GAAP) | $18,224 million | $16,792 million | $15,383 million | | Adjustment for mark-to-market on DCP | $(248) million | $(377) million | $(239) million | | Adjusted Net revenues (non-GAAP) | $17,976 million | $16,415 million | $15,144 million | | Compensation expense (GAAP) | $7,442 million | $7,190 million | $6,733 million | | Adjustment for mark-to-market on DCP | $(300) million | $(371) million | $(276) million | | Adjusted Compensation expense (non-GAAP) | $7,142 million | $6,819 million | $6,457 million | Firm Non-Interest Expenses by Category (3Q25 vs. Prior Periods) | Expense Category | Sep 30, 2025 (3Q25) | Jun 30, 2025 (2Q25) | Sep 30, 2024 (3Q24) | | :-------------------------------- | :------------------- | :------------------- | :------------------- | | Compensation and benefits | $7,442 million | $7,190 million | $6,733 million | | Brokerage, clearing and exchange fees | $1,141 million | $1,188 million | $1,044 million | | Information processing and communications | $1,119 million | $1,089 million | $1,042 million | | Professional services | $685 million | $711 million | $711 million | | Occupancy and equipment | $473 million | $459 million | $473 million | | Marketing and business development | $280 million | $297 million | $224 million | | Other | $1,056 million | $1,040 million | $856 million | | Total non-compensation expenses | $4,754 million | $4,784 million | $4,350 million | | Total non-interest expenses | $12,196 million | $11,974 million | $11,083 million | - The number of stock plan participants in Wealth Management declined slightly in 3Q25 due to the previously announced dispositions of the Firm's EMEA stock plan business, expected to complete in 4Q25[40] Legal Notice This section serves as a legal notice, stating that the financial supplement contains financial, statistical, and business-related information, and should be read in conjunction with the firm's third-quarter earnings press release issued October 15, 2025 - The Financial Supplement provides financial, statistical, and business-related information, including business and segment trends[45] - The information should be read in conjunction with the firm's third-quarter earnings press release issued October 15, 2025[45]