What drove Morgan Stanley's strong third-quarter 2025 earnings?

Growth was led by Institutional Securities, where Equity revenues rose 35% on robust client activity and record prime brokerage results, and Investment Banking revenues rose 44% on higher M&A advisory, equity underwriting, and fixed income underwriting. Wealth Management also contributed through higher asset management revenues and transactional activity, and Investment Management grew on higher average AUM and carried interest.

Did Morgan Stanley's expense discipline improve in the quarter?

Yes. The firm's expense efficiency ratio improved to 67% from 72% a year earlier, as net revenues grew 18% while non-interest expenses rose 10%. Compensation expense increased 11%, while non-compensation expenses rose 9%, so revenue growth substantially outpaced cost growth, demonstrating operating leverage.

How does the Stress Capital Buffer change affect Morgan Stanley's capital position?

On September 30, 2025, the Federal Reserve reduced the firm's Stress Capital Buffer from 5.1% to 4.3%, effective October 1, 2025, after Morgan Stanley requested reconsideration of its preliminary SCB. Combined with other regulatory framework features, this results in an aggregate U.S. Basel III Standardized CET1 requirement of 11.8%, while the firm's actual Standardized CET1 ratio was 15.2%, leaving a substantial capital cushion and potential flexibility for shareholder returns.

Are there any one-time or non-GAAP items investors should note?

The company presents non-GAAP measures excluding mark-to-market effects on deferred cash-based compensation (DCP). Adjusted net revenues were $17.98 billion versus $18.22 billion reported, and adjusted compensation expense was $7.14 billion versus $7.44 billion reported. The DCP impact is mainly in Wealth Management and largely offsets over time, though timing differences can affect reported segment ratios. Q1 2025 included $144 million of RIF-related severance costs, which is not a factor in the current quarter.

What did Morgan Stanley return to shareholders this quarter?

The firm repurchased $1.085 billion of common stock in the third quarter, buying about 7 million shares at an average price of $145.77, and ended the quarter with 1,591 million period-end shares outstanding, down from 1,612 million a year earlier. The Board declared a $1.00 quarterly dividend per share, payable November 14, 2025 to shareholders of record on October 31, 2025.

MORGAN STANLEY 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed October 15, 2025. Cited figures are marked; the original filing is the authoritative source.

Morgan Stanley reported third-quarter 2025 results on October 15, 2025 that were strong across the board.

Net revenues reached a record $18.2 billion^a, up 18% year over year from $15.4 billion, and net income applicable to Morgan Stanley rose 45% to $4.6 billion. Diluted EPS was $2.80 versus $1.88 a year ago, and return on average tangible common equity (ROTCE) expanded to 23.5% from 17.5%. Provision for credit losses was zero, compared with $79 million a year earlier, and the expense efficiency ratio improved to 67% from 72%, reflecting operating leverage as revenue growth outpaced expense growth.

Growth was broad-based. Institutional Securities revenue rose 25% to $8.5 billion^b, led by Equity (up 35%) and a rebound in Investment Banking (up 44%), with record prime brokerage results. Wealth Management revenue grew 13% to $8.2 billion with a 30.3% pre-tax margin, $81 billion of net new assets, and fee-based client assets of $2.65 trillion.

Investment Management revenue rose 13% to $1.7 billion^c, and AUM reached $1.8 trillion with $16.5 billion of long-term net inflows. Capital remained strong, with a Standardized CET1 ratio of 15.2%, and the Federal Reserve lowered the firm's Stress Capital Buffer from 5.1% to 4.3% effective October 1, 2025, bringing the aggregate U.S. Basel III Standardized CET1 requirement to 11.8%.

Capital return remained active: the firm repurchased $1.1 billion^d of common stock in the quarter and declared a $1.00 quarterly dividend payable November 14, 2025 to holders of record on October 31, 2025. The results were reported under U.S. GAAP, with non-GAAP adjustments excluding mark-to-market effects on deferred cash-based compensation plans presented as supplemental measures.

02—Key points

Key Highlights

Record quarterly net revenues of $18.2 billion, up 18% year over year; EPS of $2.80 versus $1.88 a year ago (up 49%).
ROTCE of 23.5%, up from 17.5% a year earlier, with pre-tax income of $6.0 billion (up 43%).
Institutional Securities net revenues rose 25% to $8.5 billion, driven by Equity (+35%) and Investment Banking (+44%); Equity net revenues reached $4.1 billion.
Wealth Management net revenues grew 13% to $8.2 billion, with a 30.3% pre-tax margin, $81 billion in net new assets, and $2.65 trillion in fee-based client assets.
Zero provision for credit losses this quarter, versus $79 million a year ago, reflecting improved macroeconomic scenarios.
Standardized CET1 ratio of 15.2%; Stress Capital Buffer reduced to 4.3% from 5.1%, lowering the aggregate Basel III Standardized CET1 requirement to 11.8%.
Returned capital through $1.1 billion of share repurchases and a $1.00 quarterly dividend per share payable November 14, 2025.

03—Questions

Frequently Asked Questions

What drove Morgan Stanley's strong third-quarter 2025 earnings?
Growth was led by Institutional Securities, where Equity revenues rose 35% on robust client activity and record prime brokerage results, and Investment Banking revenues rose 44% on higher M&A advisory, equity underwriting, and fixed income underwriting. Wealth Management also contributed through higher asset management revenues and transactional activity, and Investment Management grew on higher average AUM and carried interest.
Did Morgan Stanley's expense discipline improve in the quarter?
Yes. The firm's expense efficiency ratio improved to 67% from 72% a year earlier, as net revenues grew 18% while non-interest expenses rose 10%. Compensation expense increased 11%, while non-compensation expenses rose 9%, so revenue growth substantially outpaced cost growth, demonstrating operating leverage.
How does the Stress Capital Buffer change affect Morgan Stanley's capital position?
On September 30, 2025, the Federal Reserve reduced the firm's Stress Capital Buffer from 5.1% to 4.3%, effective October 1, 2025, after Morgan Stanley requested reconsideration of its preliminary SCB. Combined with other regulatory framework features, this results in an aggregate U.S. Basel III Standardized CET1 requirement of 11.8%, while the firm's actual Standardized CET1 ratio was 15.2%, leaving a substantial capital cushion and potential flexibility for shareholder returns.
Are there any one-time or non-GAAP items investors should note?
The company presents non-GAAP measures excluding mark-to-market effects on deferred cash-based compensation (DCP). Adjusted net revenues were $17.98 billion versus $18.22 billion reported, and adjusted compensation expense was $7.14 billion versus $7.44 billion reported. The DCP impact is mainly in Wealth Management and largely offsets over time, though timing differences can affect reported segment ratios. Q1 2025 included $144 million of RIF-related severance costs, which is not a factor in the current quarter.
What did Morgan Stanley return to shareholders this quarter?
The firm repurchased $1.085 billion of common stock in the third quarter, buying about 7 million shares at an average price of $145.77, and ended the quarter with 1,591 million period-end shares outstanding, down from 1,612 million a year earlier. The Board declared a $1.00 quarterly dividend per share, payable November 14, 2025 to shareholders of record on October 31, 2025.

04—Continue

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