How did Morgan Stanley's earnings compare with last year and last quarter?

Versus 3Q25, net income applicable to Morgan Stanley rose 6% to $4.9 billion and diluted EPS rose 8% to $3.03. Sequentially, both fell about 12% from the second quarter, which benefited from stronger Institutional Securities and Investment Banking results.

What drove the growth in Institutional Securities?

Equity revenues were the main driver, rising 41% year over year on strong client engagement and Asia strength. Advisory revenues rose 30% on higher completed M&A in the Americas. Fixed Income declined 7%, and equity underwriting fell on fewer IPOs and blocks.

Is the higher credit loss provision a concern?

The provision rose to $148 million from zero a year ago, mainly from growth in corporate and secured lending, and included $105 million of charge-offs largely reserved in prior quarters. The total allowance for credit losses is $2.07 billion, so the increase reflects loan growth rather than a deterioration disclosed in the release, though investors should monitor it as lending expands.

Why did capital ratios decline and should investors worry?

The Standardized CET1 ratio slipped only modestly to 14.9% from 15.1%, and the Advanced CET1 ratio improved to 16.3%. The leverage-based measures fell more noticeably, with the Tier 1 leverage ratio at 5.9% versus 6.8% and the SLR at 4.8% versus 5.5%, mainly because the balance sheet grew to $1.69 trillion in total assets, up 24% year over year. Capital remains well above typical requirements, but the trend is worth tracking.

MORGAN STANLEY 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed October 14, 2026. Cited figures are marked; the original filing is the authoritative source.

Morgan Stanley reported third-quarter 2026 results (quarter ended September 30, 2026) with net revenues of $20.3 billion^a, up 12% year over year, and net income applicable to Morgan Stanley of $4.9 billion, up 6%.

Diluted EPS was $3.03^b versus $2.80 a year ago, and ROTCE was 22.6% versus 23.5%. Pre-tax income rose 7% to $6.5 billion, though it fell 12% sequentially from a stronger second quarter. Results were driven by Equity trading strength in Institutional Securities and record Wealth Management revenues, while Fixed Income declined 7% year over year and Investment Management revenues fell 12% on a carried interest reversal.

The quarter's growth was broad but uneven. Institutional Securities revenues rose 18% to $10.0 billion^c, led by Equity (up 41%) and Advisory (up 30%), though both sequentially and in some lines the picture was weaker. Wealth Management delivered record revenues of $9.1 billion, a 10% increase, with a 30.4% pre-tax margin and record net new assets of $232 billion, just over half linked to IPO-related flows.

Expenses rose 12% year over year, and the provision for credit losses increased to $148 million^d from zero, reflecting loan growth and $105 million of charge-offs. Capital remained strong, with a Standardized CET1 ratio of 14.9%, though it was flat-to-slightly-down year over year and the leverage-based ratios declined (Tier 1 leverage 5.9% versus 6.8%; SLR 4.8% versus 5.5%) as the balance sheet expanded.

The firm repurchased $1.5 billion of stock and declared a $1.15 quarterly dividend. Investors will want to watch the sequential revenue decline, the rising loan book and credit provisions, and the leverage ratio compression as the balance sheet grows.

02—Key points

Key Highlights

Net revenues of $20.3 billion, up 12% year over year but down 5% sequentially; EPS of $3.03 versus $2.80 a year ago and $3.46 last quarter
ROTCE of 22.6%, down from 23.5% a year ago and 26.6% in the prior quarter; book value per share rose to $68.59 from $62.98
Equity revenues rose 41% year over year to $5.8 billion, while Fixed Income fell 7% to $2.0 billion
Wealth Management posted record net revenues of $9.1 billion, record pre-tax income of $2.8 billion, and record net new assets of $232 billion; total client assets reached $8.4 trillion
Provision for credit losses rose to $148 million from zero a year ago, driven by corporate and secured lending growth and $105 million of charge-offs
Standardized CET1 ratio of 14.9% (versus 15.1%); Tier 1 leverage ratio fell to 5.9% from 6.8% and SLR to 4.8% from 5.5%
Repurchased $1.5 billion of common stock and declared a $1.15 quarterly dividend payable November 13, 2026

03—Questions

Frequently Asked Questions

How did Morgan Stanley's earnings compare with last year and last quarter?
Versus 3Q25, net income applicable to Morgan Stanley rose 6% to $4.9 billion and diluted EPS rose 8% to $3.03. Sequentially, both fell about 12% from the second quarter, which benefited from stronger Institutional Securities and Investment Banking results.
What drove the growth in Institutional Securities?
Equity revenues were the main driver, rising 41% year over year on strong client engagement and Asia strength. Advisory revenues rose 30% on higher completed M&A in the Americas. Fixed Income declined 7%, and equity underwriting fell on fewer IPOs and blocks.
Is the higher credit loss provision a concern?
The provision rose to $148 million from zero a year ago, mainly from growth in corporate and secured lending, and included $105 million of charge-offs largely reserved in prior quarters. The total allowance for credit losses is $2.07 billion, so the increase reflects loan growth rather than a deterioration disclosed in the release, though investors should monitor it as lending expands.
Why did capital ratios decline and should investors worry?
The Standardized CET1 ratio slipped only modestly to 14.9% from 15.1%, and the Advanced CET1 ratio improved to 16.3%. The leverage-based measures fell more noticeably, with the Tier 1 leverage ratio at 5.9% versus 6.8% and the SLR at 4.8% versus 5.5%, mainly because the balance sheet grew to $1.69 trillion in total assets, up 24% year over year. Capital remains well above typical requirements, but the trend is worth tracking.

04—Continue

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