01—Abstract
Summary
Summary of the 10-Q filed August 4, 2026. Cited figures are marked; the original filing is the authoritative source.
Morgan Stanley reported a strong second quarter of 2026, driven by robust performance across its business segments.
Net revenues increased significantly to $21.3 billiona, a 27% rise year-over-year, with net income applicable to Morgan Stanley common shareholders growing 58% to $5.6 billion. Diluted earnings per share saw a substantial increase of 62% to $3.46. The Institutional Securities segment was a key contributor, with net revenues up 44% driven by strong performance in Equity and Investment Banking.
Wealth Management also demonstrated solid growth, with net revenues up 14%b, supported by higher asset management revenues, increased net interest income, and greater client activity. Investment Management reported a 6% increase in net revenues, largely due to higher average Assets Under Management (AUM) driven by market levels and positive net flows. The firm maintained a strong capital position, with a Standardized Common Equity Tier 1 capital ratio of 14.9%.
Profitability metrics were also impressive, with Return on Equity (ROE) at 20.7%c and Return on Tangible Common Equity (ROTCE) at 26.6%, exceeding the firm's 20% ROTCE goal. The expense efficiency ratio remained stable at 65%, indicating effective cost management amidst continued investment.
02—Key points
Key Highlights
- Net revenues surged 27% year-over-year to $21.3 billion, driven by strong performance across all business segments.
- Net income applicable to Morgan Stanley common shareholders increased by 58% to $5.6 billion, resulting in diluted EPS of $3.46.
- Institutional Securities segment saw a 44% increase in net revenues, boosted by strong Equity and Investment Banking results.
- Wealth Management reported a 14% increase in net revenues, driven by higher asset management fees, net interest income, and client activity.
- Investment Management delivered a 6% increase in net revenues, benefiting from higher average AUM and positive net flows.
- Profitability remained strong with ROE at 20.7% and ROTCE at 26.6%, surpassing the firm's 20% ROTCE target.
- The firm maintained a robust capital position with a Standardized Common Equity Tier 1 capital ratio of 14.9%.
03—Questions
Frequently Asked Questions
What were the main drivers of Morgan Stanley's revenue growth in Q2 2026?
Revenue growth was primarily driven by strong performance in the Institutional Securities segment, particularly in Equity and Investment Banking, and by higher asset management revenues, increased net interest income, and greater client activity in the Wealth Management segment. The Investment Management segment also contributed positively due to higher average Assets Under Management (AUM) and positive net flows.
How did Morgan Stanley's profitability metrics perform in Q2 2026?
Morgan Stanley demonstrated strong profitability, with a Return on Equity (ROE) of 20.7% and a Return on Tangible Common Equity (ROTCE) of 26.6%. These figures exceed the firm's stated ROTCE goal of 20%, indicating effective operational leverage and strong performance relative to capital.
What is the firm's current capital position?
The firm maintains a strong capital position, reporting a Standardized Common Equity Tier 1 (CET1) capital ratio of 14.9% as of June 30, 2026. This ratio is well above regulatory minimums and reflects the firm's commitment to capital strength.
How did expenses trend in the quarter?
Total non-interest expenses increased by 11.9% year-over-year to $13.9 billion. This increase was driven by higher compensation and benefits expenses, primarily reflecting higher revenues and discretionary incentive compensation, and by increased non-compensation expenses, largely due to higher execution-related expenses and technology spending. Despite the rise in expenses, the firm maintained a 65% expense efficiency ratio, indicating disciplined cost management.
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