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MS

MORGAN STANLEY (MS)·Q3 2025 Earnings Summary

Executive Summary

  • Record quarter: net revenues $18.22B, diluted EPS $2.80, ROTCE 23.5%. Results beat S&P Global consensus by ~9% on revenue ($18.22B vs $16.67B*) and ~35% on EPS ($2.80 vs $2.07*) .
  • Broad-based strength: Institutional Securities revenue $8.52B (Equity $4.12B; IB $2.11B; FICC $2.17B), Wealth Management revenue $8.23B with 30.3% pre-tax margin and $81.0B of NNA; Investment Management revenue $1.65B with $16.5B long-term net inflows .
  • Capital and returns: CET1 (Std) 15.2%; Fed reduced MS’s SCB to 4.3% effective Oct 1, implying an 11.8% aggregate CET1 requirement; $1.09B buybacks in Q3; $1.00 dividend declared .
  • Outlook: CFO sees a modest sequential gain in Wealth NII in Q4; IB pipelines are “healthy”; management stresses integrated-firm operating leverage but notes macro/geopolitical risks that could pause activity .

What Went Well and What Went Wrong

  • What Went Well

    • Equities franchise outperformed: Equities revenue rose 35% YoY to $4.12B, with record prime brokerage results and strong client engagement across regions .
    • Investment Banking rebound: IB revenue up 44% YoY to $2.11B; Advisory +25% to $684M; Equity underwriting +80% to $652M; FI underwriting +39% to $772M; management cited “record-breaking post-Labor Day issuance” and a stronger pipeline .
    • Wealth momentum and efficiency: WM revenue $8.23B, pre-tax margin 30.3%; NNA $81.0B; fee-based flows $41.9B; management highlighted workplace funnel and integration as key drivers .

  • What Went Wrong

    • FX softness within Macro: FICC revenue growth (+8% YoY) was partially offset by “lower results in foreign exchange” amid reduced volatility; commodities strength partly mitigated .
    • DCP impact on WM margin: CFO noted deferred cash plan effects reduced WM margin by ~100 bps this quarter, even as underlying leverage expanded .
    • Expense pressures and CRE charge-offs: Compensation and non-comp expenses increased YoY; net charge-offs of $46M, primarily CRE, though largely previously provisioned .

Financial Results

MetricQ3 2024Q2 2025Q3 2025Wall St. Consensus (Q3 2025)
Net Revenues ($B)$15.38 $16.79 $18.22 $16.67*
Diluted EPS ($)$1.88 $2.13 $2.80 $2.07*
ROTCE (%)17.5% 18.2% 23.5% —
Pre-tax Margin (%)27% 28% 33% —
Expense Efficiency Ratio (%)72% 71% 67% —
Values with * from S&P Global consensus via GetEstimates.

Segment revenues

Segment Net Revenues ($B)Q3 2024Q2 2025Q3 2025
Institutional Securities$6.82 $7.64 $8.52
Wealth Management$7.27 $7.76 $8.23
Investment Management$1.46 $1.55 $1.65

Institutional Securities detail

ISG Detail ($B)Q3 2024Q2 2025Q3 2025
Investment Banking$1.46 $1.54 $2.11
— Advisory$0.55 $0.51 $0.68
— Equity Underwriting$0.36 $0.50 $0.65
— FI Underwriting$0.56 $0.53 $0.77
Equities$3.05 $3.72 $4.12
Fixed Income$2.00 $2.18 $2.17

KPIs (Wealth & IM)

KPIQ3 2024Q2 2025Q3 2025
WM Total Client Assets ($T)$5.97 $6.49 $7.05
WM Net New Assets ($B)$63.9 $59.2 $81.0
WM Fee-based Flows ($B)$35.7 $42.8 $41.9
WM U.S. Bank Loans ($B)$155.2 $168.9 $173.9
WM Deposits ($B)$358 $383 $398
WM Deposit Cost (Period End)2.99% 2.83% 2.72%
IM AUM ($T)$1.60 $1.71 $1.81
IM Long-term Net Flows ($B)$7.3 $10.8 $16.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
WM Net Interest IncomeQ4 2025“Around recent levels,” subject to policy rate (Q2 commentary) Modest sequential gain expected Raised
Effective Tax RateQ4 2025~24% for 2H25 (Q2) ~24% for Q4 Maintained
Common DividendQ4 2025$1.00/share (post Q2 increase) $1.00 declared for Nov 14, 2025 Maintained
Share RepurchasesQ3 2025$1.0B in Q2 $1.085B in Q3 Increased
SCB (Fed Stress Capital Buffer)Effective Oct 1, 20255.1% (pre-reconsideration)4.3% (revised), aggregate Std CET1 requirement 11.8% Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
AI/Technology initiativesFocus on platform and productivity; stablecoins/tokens under evaluation (Q2) Early AI use cases gaining traction: DevGen AI (developer efficiency), Parable (data analysis), LeadIQ (advisor lead matching) Expanding deployment
Capital markets cycle/IB pipelineQ1: Record Equities; Q2: IB acceleration late-quarter; dividend to $1.00 Flywheel “taking hold”; strong pipelines, post–Labor Day surge; optimism tempered by macro/geopolitics Improving with caveats
Wealth funnel/workplaceQ1–Q2: Workplace feeding advisor-led flows; fee-based migration IPO reopen boosts Workplace-to-advisor migration; $81B NNA; E*TRADE Pro launch supports self-directed engagement Sustained momentum
Partnerships/private marketsQ2: Parametric scale, alternatives demand Expanded Carta partnership; building digital assets (Zero Hash) Broadening
Regulatory/capitalQ2: Strong CET1 (15.0%), constructive reform SCB reduced to 4.3%; CET1 15.2%; “250+ bps” excess buffer; disciplined buybacks More flexibility

Management Commentary

  • “Our Integrated Firm delivered an outstanding quarter with strong performance in each of our businesses globally... record revenues of $18.2 billion, EPS of $2.80, and a ROTCE of 23.5%.” — Ted Pick, CEO .
  • “Our leading equities franchise generated $4.1 billion in revenue, propelled by broad-based performance... prime brokerage revenues drove results.” — Sharon Yeshaya, CFO .
  • “We added $81 billion of net new assets... fee-based flows were exceptionally strong, exceeding $40 billion for the second consecutive quarter.” — Sharon Yeshaya, CFO .
  • “Whether we are entering a golden age in investment banking remains to be seen... the flywheel is taking hold... the pipeline looks very good across all three regions.” — CEO on IB outlook .
  • “Our excess CET1 capital stands at over 300 basis points... the buyback has been opportunistic.” — CEO on capital deployment .

Q&A Highlights

  • Sustainability of WM 30% margin: Management will keep investing in the funnel (advisors, E*TRADE Pro, workplace, digital assets); margin is an output of growth and leverage, not a fixed target .
  • NNA drivers across channels: Strong contributions from self-directed, advisor-led, and Workplace; IPO reopen accelerating Workplace-to-fee-based migration .
  • Market-cycle positioning: Optimism on multi‑year IB upcycle with global breadth; markets businesses tied to asset prices and spreads; discipline on risk and capital emphasized .
  • Capital buffer and uses: Excess buffer ~$250 bps+; priority remains sustainable dividend growth and tactical buybacks; organic investments favored over inorganic .
  • Product/tech: AI use cases to drive both efficiency and revenue; continuing to enhance digital platforms and alternative access (Parametric, Carta, Zero Hash) .

Estimates Context

Q3 2025Consensus*ActualSurprise
Revenue ($B)$16.67*$18.22 +9%
Diluted EPS ($)$2.07*$2.80 +35%
# of Estimates (Rev / EPS)11* / 13*——
Values marked * from S&P Global consensus (GetEstimates).

How estimates may adjust: Outperformance in ISG (Equity, IB) and WM operating leverage likely drive upward revisions to FY revenue/EPS trajectories; CFO flagged modest Q4 WM NII uplift and healthy IB pipelines, supporting constructive revisions absent macro shocks .

Key Takeaways for Investors

  • Integrated firm operating leverage is delivering: record revenues, higher ROTCE, and improved efficiency (67% ratio) while investing for growth .
  • ISG momentum appears durable with share gains in Equities and a broadening IB recovery; watch FICC mix (FX softness vs credit/commodities strength) .
  • Wealth engine continues to compound: $81B NNA, healthy fee-based flows, lending growth, and deposit-cost tailwinds; Q4 WM NII guided modestly higher .
  • Capital return capacity increased post‑SCB reduction; CET1 remains robust with buybacks opportunistic and dividend at $1.00 .
  • Near-term catalysts: sustained IB issuance/M&A, continued WM asset migration, and stability in rates supporting NII; risks center on geopolitics and market drawdowns impacting financing and trading .
  • Medium-term thesis: durable earnings from diversified fee and activity-based lines, with AI and platform investments enhancing productivity and revenue capture across cycles .

S&P Global consensus disclaimer: Values denoted with * are retrieved from S&P Global.