01—Abstract
Summary
Summary of the 8-K filed April 15, 2026. Cited figures are marked; the original filing is the authoritative source.
Morgan Stanley reported a record first quarter 2026, with net revenues of $20.6 billiona (up 16% year over year from $17.7 billion), pre-tax income of $7.0 billion (up 26%), and net income applicable to Morgan Stanley of $5.6 billion.
Diluted EPS rose to $3.43b from $2.60, and return on average tangible common equity reached 27.1% versus 23.0% a year earlier. The expense efficiency ratio improved to 65% from 68%, showing operating leverage even as the firm absorbed $178 million of severance costs tied to a March workforce action affecting about 2% of its global workforce. Growth was broad-based.
Institutional Securities revenues rose 19% to a record $10.7 billionc, led by Equity (up 25% to $5.1 billion, a record) and Fixed Income (up 29% to $3.4 billion), while Investment Banking grew 36% on higher advisory and underwriting activity. Wealth Management delivered record net revenues of $8.5 billion (up 16%) with a 30.4% pre-tax margin, net new assets of $118 billion, and fee-based asset flows of $54 billion. Investment Management was the relative laggard, with revenues down 4% to $1.5 billion and pre-tax income down 13%, and it recorded negative equity flows.
Capital and shareholder returns remained strong. The Standardized CET1 ratio was 15.1% (versus 15.3% a year ago), the firm repurchased $1.75 billiond of common stock, and the Board declared a $1.00 quarterly dividend payable May 15, 2026. Balance sheet growth was notable, with total assets up 22% year over year to $1.58 trillion and loans up 18%.
The Tier 1 leverage and SLR ratios declined year over year, reflecting the larger balance sheet, and the effective tax rate fell to 19.6% from 21.2%, partly helped by share-based payment benefits. Investors should note that the quarter included methodology changes, including the discontinuation of non-GAAP DCP adjustments and a restatement of Investment Management flows and AUM classifications that excluded distributions.
02—Key points
Key Highlights
- Record net revenues of $20.6B (+16% YoY) and record pre-tax income of $7.0B (+26% YoY); diluted EPS of $3.43 vs. $2.60 a year ago
- ROTCE of 27.1% vs. 23.0% in 1Q25; expense efficiency ratio improved to 65% from 68%
- Institutional Securities record revenues of $10.7B (+19%), with Equity at a record $5.1B (+25%), Fixed Income up 29% to $3.4B, and Investment Banking up 36% to $2.1B
- Wealth Management record revenues of $8.5B (+16%) with a 30.4% pre-tax margin, $118B net new assets, and $54B fee-based asset flows
- Investment Management revenues fell 4% to $1.5B and pre-tax income fell 13%; equity outflows of $11.6B weighed on the segment
- Capital returned: $1.75B of buybacks in the quarter and a $1.00 quarterly dividend payable May 15, 2026; CET1 ratio of 15.1% (Standardized)
- $178M of severance costs from a March workforce action; capital ratios and leverage ratios declined YoY as the balance sheet grew 22% to $1.58T
03—Questions
Frequently Asked Questions
Was this a strong quarter for Morgan Stanley compared with last year?
Yes. Net revenues rose 16% to $20.6B, pre-tax income rose 26% to $7.0B, and diluted EPS increased 32% to $3.43. ROTCE expanded to 27.1% from 23.0%, and results were driven by Institutional Securities trading and Investment Banking strength alongside record Wealth Management revenues.
What drove the improvement in profitability and efficiency?
Revenue growth outpaced expense growth. Non-interest expenses rose 12%, below the 16% revenue increase, and the expense efficiency ratio improved to 65% from 68%. Higher volatility boosted Markets revenues, and Investment Banking grew 36%, although compensation rose 14% and included $178M of severance costs.
Are there any one-time items or accounting changes investors should understand?
Yes. The quarter included $178M of severance from a March workforce action affecting roughly 2% of staff, which the company says was not a strategic change. Beginning in 1Q26, the firm stopped presenting non-GAAP results excluding DCP mark-to-market effects, because DCP hedges moved to derivatives. Investment Management flows also now exclude distributions, and prior periods were recast, so year-over-year comparisons should be read with these changes in mind.
How is the capital position and shareholder return profile?
The Standardized CET1 ratio was 15.1%, down from 15.3% a year ago but roughly flat sequentially, and the advanced-approach CET1 ratio was 16.0%. The firm repurchased $1.75B of stock at an average price of $169.15 and declared a $1.00 quarterly dividend. The Tier 1 leverage ratio (6.1%) and SLR (5.0%) fell year over year as total assets grew, which is a point investors may watch as balance sheet growth continues.
04—Continue