01—Abstract
Summary
Summary of the 10-Q filed May 5, 2026. Cited figures are marked; the original filing is the authoritative source.
Morgan Stanley reported strong financial results for the first quarter of 2026, demonstrating robust performance across its key business segments.
Net revenues increased by 16% year-over-year to $20.6 billiona, while net income applicable to common shareholders rose by 29% to $5.4 billion. Diluted earnings per share also saw a significant increase, up 32% to $3.43. The firm's Return on Equity (ROE) improved to 21.0% and Return on Tangible Common Equity (ROTCE) to 27.1%, reflecting effective capital utilization.
The Institutional Securities segment was a key driver of this growth, with net revenues up 19% driven by strong performance in the Markets business and increased Investment Banking revenues, particularly in Advisory. Wealth Management also posted solid gains, with net revenues up 16% and a healthy pre-tax margin of 30.4%, supported by strong asset management revenues and net interest income. Investment Management's net revenues saw a slight decline of 4%, mainly due to lower carried interest, but still contributed positively with $3.3 billionb in long-term net flows.
Operationally, the firm maintained an expense efficiency ratio of 65%c, indicating effective cost management alongside continued investment. The firm's capital position remains strong, with a Standardized Common Equity Tier 1 capital ratio of 15.1%.
During the quarter, Morgan Stanley repurchased $1.75 billiond of its common stock and announced a quarterly dividend of $1.00 per share. The firm also made a strategic move by completing the acquisition of Morgan Stanley Europe SE by MSBNA, aimed at integrating operations and enhancing its U.S. banking capabilities.
02—Key points
Key Highlights
- Net revenues increased 16% year-over-year to $20.6 billion, driven by strong performance in Institutional Securities and Wealth Management.
- Net income applicable to Morgan Stanley common shareholders increased 29% to $5.4 billion, with diluted EPS rising 32% to $3.43.
- ROE improved to 21.0% and ROTCE to 27.1%, showcasing enhanced capital efficiency.
- Institutional Securities net revenues grew 19% to $10.7 billion, led by the Markets business and strong Advisory activity in Investment Banking.
- Wealth Management net revenues increased 16% to $8.5 billion, benefiting from higher asset management fees, net interest income, and transactional revenues, with $118 billion in net new assets.
- The firm maintained a solid Common Equity Tier 1 capital ratio of 15.1% (Standardized).
- The expense efficiency ratio stood at a healthy 65%.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed May 5, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Net Income | $5.57B$4.32B | +29.0% |
| EPS (Basic) | $3.47$2.62 | +32.4% |
| EPS (Diluted) | $3.43$2.60 | +31.9% |
| Shares Outstanding (Basic) | 1.56B1.58B | −1.5% |
| Shares Outstanding (Diluted) | 1.58B1.60B | −1.5% |
05—Questions
Frequently Asked Questions
What was the primary driver of Morgan Stanley's revenue growth in Q1 2026?
The primary driver of Morgan Stanley's revenue growth in the first quarter of 2026 was the Institutional Securities segment, which saw a 19% increase in net revenues. This growth was largely attributed to strong performance in the Markets business and a significant rise in Investment Banking revenues, particularly within the Advisory services.
How did Wealth Management perform in the first quarter?
Wealth Management demonstrated strong performance with a 16% increase in net revenues to $8.5 billion. This growth was fueled by higher asset management revenues due to increased market levels and positive fee-based asset flows, alongside an increase in net interest income and higher transactional revenues. The segment also attracted $118 billion in net new assets.
What is the firm's capital position and how is it managing capital?
Morgan Stanley maintained a strong capital position, with a Standardized Common Equity Tier 1 capital ratio of 15.1%. The firm actively manages its capital through share repurchases, having bought back $1.75 billion of common stock in the quarter, and by declaring a $1.00 per share dividend. These actions, along with robust profitability (ROE of 21.0% and ROTCE of 27.1%), indicate effective capital management.
What impact did the workforce management action have on expenses?
The firm recognized $178 million in severance costs during the quarter due to a workforce management action aimed at improving operational efficiency. These costs were spread across all business segments, with the majority impacting Institutional Securities and Wealth Management.
06—Continue