How strong was Morgan Stanley's Q2 2026 profitability compared with a year ago?

Very strong. Net income applicable to Morgan Stanley was $5.6B ($3.46 diluted EPS) versus $3.5B ($2.13) in Q2 2025. Pre-tax income rose 59% to $7.3B, ROTCE expanded to 26.6% from 18.2%, and the expense efficiency ratio improved to 65% from 71%, showing operating leverage.

What drove the revenue growth?

Mostly Institutional Securities. Equities revenues rose 69% to a record $6.3B on strong activity across regions, especially Asia. Investment Banking rose 58% on higher advisory, equity underwriting, and debt underwriting. Wealth Management grew 14%, supported by asset management fees on higher markets and fee-based flows, transactional activity, and net interest income.

Are there any concerns in the quarter's results?

Some items warrant monitoring. Non-compensation expenses rose 16% sequentially to $5.7B, mainly from execution-related costs and higher marketing and other spending. Fixed Income revenues fell 27% from Q1, and Investment Management recorded continued Equity fund outflows of $12.5B. Capital ratios also declined year over year, though they remain well above typical requirements.

What does the new buyback and dividend increase mean for shareholders?

The Board reauthorized a multi-year repurchase program of up to $20B with no set expiration, starting in Q3 2026, and raised the quarterly dividend to $1.15 from $1.00, payable August 14, 2026 to holders of record on July 31, 2026. The company repurchased $1.5B in Q2 at an average price of about $197.64, and the share count fell 1.7% year over year to 1,572 million. Continued buybacks depend on capital levels, which were 14.8% CET1 under the standardized approach.

Are the reported figures final?

Not entirely. The capital ratios are described as estimates as of July 15, 2026 and are subject to change in the Form 10-Q for the quarter ended June 30, 2026. The earnings figures are unaudited in this release and are subject to the formal quarterly filing process.

MORGAN STANLEY 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed July 15, 2026. Cited figures are marked; the original filing is the authoritative source.

Morgan Stanley reported second-quarter 2026 results on July 15, 2026 that were record-level on several fronts.

Firm net revenues rose 27% year over year to $21.3 billion^a (up 4% sequentially), net income applicable to Morgan Stanley reached $5.6 billion, and diluted EPS was $3.46 versus $2.13 a year earlier. Return on average tangible common equity was 26.6%, and the expense efficiency ratio improved to 65% from 71%. Pre-tax income of $7.3 billion was up 59% year over year.

Growth was broad-based across segments: Institutional Securities revenues rose 44% to a record $11.0 billion^b, led by Equities (+69%) and Investment Banking (+58%), while Wealth Management revenues rose 14% to a record $8.9 billion, with record net new assets of $148 billion and total client assets of $10 trillion across Wealth and Investment Management. Capital and shareholder returns remained strong, though some metrics moved modestly lower. The Standardized CET1 ratio was 14.8%, down from 15.0% a year ago and 15.1% in the prior quarter, while the Tier 1 leverage ratio and SLR declined to 6.0% and 4.9%.

Book value per share rose to $67.80 and tangible book value per share to $53.18^c. The Board reauthorized a multi-year buyback of up to $20 billion beginning in the third quarter of 2026 and raised the quarterly dividend by 15 cents to $1.15. The company repurchased $1.5 billion of stock in the quarter.

Share count fell to 1,572 million from 1,598 million a year earlier. Investors should note several watch items. Provision for credit losses was flat sequentially at $98 million^d, but non-compensation expenses rose 16% sequentially to $5.7 billion, driven by execution-related costs, marketing, and other expenses.

Fixed Income revenues fell 27% sequentially, and Investment Management's Equity net outflows widened. Figures are preliminary, and capital ratios are estimates subject to revision in the Form 10-Q. The 8-K furnishes the earnings release and financial supplement; it does not contain a formal guidance update.

02—Key points

Key Highlights

Record Firm net revenues of $21.3B (+27% YoY) and pre-tax income of $7.3B (+59% YoY); diluted EPS of $3.46 vs. $2.13 a year ago
ROTCE of 26.6% (vs. 18.2% in 2Q25) and expense efficiency ratio improved to 65% from 71%
Institutional Securities record revenues of $11.0B (+44% YoY): Equities $6.3B (+69%, record), Investment Banking $2.4B (+58%), Fixed Income $2.5B (+13%)
Wealth Management record revenues of $8.9B (+14% YoY) with a 30.5% pre-tax margin; record $148B net new assets and $3.0T fee-based client assets
Capital returns: $1.5B repurchased in the quarter; new up-to-$20B multi-year buyback from Q3 2026; quarterly dividend raised 15 cents to $1.15
Capital ratios remain strong but eased YoY: Standardized CET1 14.8% (vs. 15.0%), Tier 1 leverage 6.0% (vs. 6.8%), SLR 4.9% (vs. 5.5%)
Sequential watch items: non-compensation expenses up 16% QoQ to $5.7B, and Fixed Income revenues down 27% QoQ to $2.5B

03—Questions

Frequently Asked Questions

How strong was Morgan Stanley's Q2 2026 profitability compared with a year ago?
Very strong. Net income applicable to Morgan Stanley was $5.6B ($3.46 diluted EPS) versus $3.5B ($2.13) in Q2 2025. Pre-tax income rose 59% to $7.3B, ROTCE expanded to 26.6% from 18.2%, and the expense efficiency ratio improved to 65% from 71%, showing operating leverage.
What drove the revenue growth?
Mostly Institutional Securities. Equities revenues rose 69% to a record $6.3B on strong activity across regions, especially Asia. Investment Banking rose 58% on higher advisory, equity underwriting, and debt underwriting. Wealth Management grew 14%, supported by asset management fees on higher markets and fee-based flows, transactional activity, and net interest income.
Are there any concerns in the quarter's results?
Some items warrant monitoring. Non-compensation expenses rose 16% sequentially to $5.7B, mainly from execution-related costs and higher marketing and other spending. Fixed Income revenues fell 27% from Q1, and Investment Management recorded continued Equity fund outflows of $12.5B. Capital ratios also declined year over year, though they remain well above typical requirements.
What does the new buyback and dividend increase mean for shareholders?
The Board reauthorized a multi-year repurchase program of up to $20B with no set expiration, starting in Q3 2026, and raised the quarterly dividend to $1.15 from $1.00, payable August 14, 2026 to holders of record on July 31, 2026. The company repurchased $1.5B in Q2 at an average price of about $197.64, and the share count fell 1.7% year over year to 1,572 million. Continued buybacks depend on capital levels, which were 14.8% CET1 under the standardized approach.
Are the reported figures final?
Not entirely. The capital ratios are described as estimates as of July 15, 2026 and are subject to change in the Form 10-Q for the quarter ended June 30, 2026. The earnings figures are unaudited in this release and are subject to the formal quarterly filing process.

04—Continue

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