Summary of Morgan Stanley's Q4 2025 Earnings Call

1Key Financial Results and Metrics

Full Year 2025 Results:

Revenues reached a record $70.6 billion.

Earnings per share (EPS) were $10.21 with a return on tangible common equity (ROTCE) of 21.6%.

Q4 2025 Results:

Revenues totaled $17.9 billion.

EPS for the quarter was $2.68 with ROTCE at 21.8%.

Efficiency ratio improved to 68.4% for the full year.

2Strategic Updates and Business Highlights

Wealth Management:

Achieved record revenues of $31.8 billion and margins of 29%.

Net new assets totaled $356 billion for the year, with significant contributions from financial advisers and E*TRADE.

Institutional Securities:

Full-year revenues reached $33.1 billion, with Q4 revenues of $7.9 billion.

Investment banking revenues grew 47% year-over-year in Q4, driven by strong debt underwriting and advisory services.

Investment Management:

Revenues were $6.5 billion with a record $1.9 trillion in assets under management (AUM).

Continued strong inflows in fixed income and alternatives.

Global Presence:

25% of revenues came from outside the U.S., with significant growth in EMEA (40%) and Asia (50%) over the past two years.

3Forward Guidance and Outlook

Morgan Stanley expects to maintain strong performance in 2026, leveraging a healthy investment banking pipeline and ongoing client engagement.

The firm aims to compound earnings efficiently, targeting continued growth in wealth management and institutional securities.

Management is cautious about overreaching on targets, emphasizing the importance of demonstrating consistent performance through various market conditions.

4Bad News, Challenges, or Points of Concern

Geopolitical and Economic Headwinds: Management acknowledged the complexities of the macroeconomic environment, including geopolitical uncertainties that could impact market performance.

Market Volatility: Concerns were raised about potential volatility in trading revenues due to changing market conditions and asset prices.

Regulatory Environment: While capital levels are strong, there is ongoing uncertainty regarding regulatory changes that could affect capital requirements.

5Notable Q&A Insights

Targets and Performance: Executives clarified their conservative approach to setting performance targets, indicating a preference for demonstrating consistent earnings growth rather than raising targets prematurely.

Wealth Management Margins: There is potential for further margin improvement through scaling and efficiency gains, particularly in fee-based revenues and technology investments.

AI Opportunities: Management highlighted the integration of AI tools to enhance efficiency and effectiveness across business units, with expectations for ongoing productivity gains.

Investment Banking Outlook: The firm sees a healthy investment banking pipeline and anticipates continued growth in client activity, particularly in M&A and capital raising. Overall, Morgan Stanley reported strong financial results for Q4 2025 and the full year, with a positive outlook for 2026 while remaining cautious about external challenges and market conditions.