Morgan Stanley (MS) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates strong financial performance with record AUM and durable management fee revenues. The Q&A session reveals a focus on long-term growth and cautious optimism about AI and trading opportunities. Despite not raising targets immediately, management's emphasis on compounding earnings and strategic investments suggests a positive outlook. The lack of a market cap implies a moderate response, leading to a 'Positive' sentiment rating.
Key Financial Performance
Total Client Assets $9.3 trillion, no year-over-year change mentioned.
Earnings Per Share (EPS) $10.21, record EPS, no specific year-over-year percentage change mentioned.
Return on Tangible Common Equity (ROTCE) 21.6%, no specific year-over-year percentage change mentioned.
Full Year Revenues $70.6 billion, record revenues, no specific year-over-year percentage change mentioned.
Fourth Quarter Revenues $17.9 billion, no specific year-over-year percentage change mentioned.
Institutional Securities Full Year Revenues $33.1 billion, record revenues, no specific year-over-year percentage change mentioned.
Investment Banking Full Year Revenues $7.6 billion, reflecting year-over-year growth across products and regions.
Fourth Quarter Investment Banking Revenues $2.4 billion, increased 47% from the prior year, driven by a record in debt underwriting and strong advisory results.
Equity Full Year Revenues $15.6 billion, record revenues, driven by increased client engagement and dynamic risk management.
Fixed Income Full Year Revenues $8.7 billion, no specific year-over-year percentage change mentioned.
Wealth Management Full Year Revenues $31.8 billion, record revenues, with 29% margins, no specific year-over-year percentage change mentioned.
Net New Assets in Wealth Management $356 billion for the full year, no specific year-over-year percentage change mentioned.
Fee-Based Flows in Wealth Management $160 billion for the full year, no specific year-over-year percentage change mentioned.
Fourth Quarter Wealth Management Revenues $8.4 billion, record revenues, with a reported margin of 31.4%.
Bank Lending Balances $181 billion, grew $7 billion sequentially, no specific year-over-year percentage change mentioned.
Total Period Deposits $408 billion, grew $10 billion sequentially, no specific year-over-year percentage change mentioned.
Net Interest Income (NII) $2.1 billion, no specific year-over-year percentage change mentioned.
Investment Management Full Year Revenues $6.5 billion, durable management fee revenues reaching all-time highs, no specific year-over-year percentage change mentioned.
Assets Under Management (AUM) $1.9 trillion, record AUM, no specific year-over-year percentage change mentioned.
Long-Term Net Inflows $34 billion for the full year, no specific year-over-year percentage change mentioned.
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Operating Highlights
AI adoption: Morgan Stanley is embedding AI tools across the enterprise and client base to enhance efficiency and effectiveness.
EquityZen acquisition: Morgan Stanley acquired EquityZen to broaden access for investors to private companies and enhance its public and private ecosystems.
Global footprint expansion: Morgan Stanley has 30,000 employees outside the U.S., with 25% of revenues from international markets. EMEA revenues grew by 40% and Asia by 50% over the last two years.
Institutional Securities share gains: Gained 100 basis points of wallet share in investment banking and markets, reflecting strength in the integrated investment bank and global franchise.
Wealth Management growth: Net new assets of $356 billion in 2025, with $1.6 trillion added over five years. Fee-based flows doubled, and pretax margins reached 31% in Q4.
Investment Management growth: Achieved $1.9 trillion in AUM, with six consecutive quarters of positive long-term net flows. Parametric and fixed income strategies drove growth.
Efficiency improvements: Full-year efficiency ratio improved to 68.4%, reflecting disciplined execution and prioritization of investments.
Integrated Firm strategy: Morgan Stanley focuses on integrating Wealth, Institutional Securities, and Investment Management to deliver holistic client solutions and compound earnings efficiently.
Capital allocation strategy: Prioritizes dividend growth, client investments, and technology, while maintaining a high bar for acquisitions.
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Risk or Challenges
Geopolitical uncertainties: The presentation highlighted the 'geopolitical swirl' and ongoing global uncertainties as potential risks that could impact the firm's operations and strategic objectives.
Higher asset prices: The firm acknowledged the risk of overreaching in the context of higher asset prices, which could pose challenges to sustainable growth.
Macroeconomic complexities: The macroeconomic backdrop was described as 'complicated,' with both tailwinds and headwinds, indicating potential challenges in navigating economic conditions.
Regulatory capital framework: The firm noted that while regulatory capital requirements have normalized, there is still a need to monitor potential regulatory changes that could impact capital allocation and operations.
Market volatility in Fixed Income: The Fixed Income segment experienced lower volatility in foreign exchange and weaker performance in credit corporates, which could pose challenges to revenue stability.
Commodities revenue decline: The firm reported a decline in commodities revenues, particularly in power and gas, which could impact overall financial performance.
Integration of acquisitions: The firm emphasized the challenges of integrating acquisitions like Smith Barney, Solium, E*TRADE, and Eaton Vance, noting the significant focus and energy required for successful multiyear integration.
Elevated asset valuations: The firm mentioned that many asset classes, both private and public, are trading at elevated levels, which could limit acquisition opportunities and impact investment decisions.
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Guidance & Outlook
2026 Market Conditions and Strategy: The company anticipates a mix of tailwinds and headwinds in 2026, with expectations to execute at or above firmwide goals in favorable conditions and achieve higher lows in challenging environments. The focus is on compounding earnings in a capital-efficient manner.
Wealth Management Growth: Morgan Stanley plans to continue scaling its Wealth Management business, leveraging Financial Advisors, Workplace, and E*TRADE channels. The business achieved $32 billion in revenues and 29% margins in 2025, with net new assets of over $350 billion. Future growth is embedded in the business with 20 million wealth relationships and a focus on adviser-led assets.
Institutional Securities Outlook: The company expects continued growth in Institutional Securities, supported by a recovery in Investment Banking and a focus on capital efficiency and operating leverage. The integrated investment bank is positioned for the global investment banking and capital market cycle in 2026 and beyond.
Investment Management Expansion: Morgan Stanley aims to benefit from secular growth in investing solutions and the democratization of alternatives. Parametric, a leader in tax-efficient investing, and the alternatives platform, which has doubled in five years, are key growth drivers. Investments in technology and global distribution will support this expansion.
Global Presence and Revenue Growth: The firm plans to leverage its global footprint, with 25% of revenues currently coming from outside the U.S. EMEA and Asia have shown significant growth, and the company aims to maintain leadership in key regions like Japan, the EU, and the U.K.
Capital Allocation and M&A Strategy: Morgan Stanley will prioritize prudent dividend growth, ongoing investments in clients and technology, and opportunistic stock buybacks. The bar for acquisitions remains high, with a focus on core business growth and client needs.
AI Integration: The company plans to embed AI tools across the enterprise to enhance efficiency and effectiveness in business units and infrastructure.
Investment Banking Pipelines: Healthy, global, and diversified pipelines are expected in 2026, with strategic activity accelerating. The reopening of the IPO market and increased capital access for growth investments are anticipated to create additional opportunities.
Net Interest Income (NII) Projections: NII is expected to remain flat in Q1 2026 but trend higher throughout the year, driven by incremental loan growth and deposit mix projections.
Tax Rate for 2026: The expected tax rate for 2026 is between 22% and 23%, with some quarterly volatility anticipated.
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Shareholder Return Plan
Quarterly Dividend Increase: Morgan Stanley has raised its quarterly dividend by $0.075 for 4 consecutive years, now reaching $1 per share.
Dividend Growth Priority: Prudent dividend growth is emphasized as the first priority for excess capital allocation.
Stock Buyback Program: Morgan Stanley will continue to opportunistically buy back stock as part of its capital allocation strategy.
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Key Q&A
Q:Why is there no change in the targets despite strong results?
A:The decision to not change the targets was based on a robust discussion, but ultimately it was an easy decision. The management believes in demonstrating the ability to compound earnings through the cycle and achieving higher lows during challenging times. They aim to revisit the targets later in the year and consider raising them if they are clearly surpassed. The focus is on long-term compounding of earnings rather than chasing short-term targets.
Q:What are the drivers of margin growth in the Wealth Management business?
A:The drivers include scaling and growth of the business, building out fee-based revenues and assets, and investments in technology like AI. Efficiency improvements through technology, such as LeadIQ, are also contributing to margin growth. Additionally, the Workplace initiative is helping integrate corporate and personal wealth into a broader funnel.
Q:How is the management framing the targets and managing the business?
A:The management is focusing on long-term organic growth and compounding earnings through the cycle. They aim to achieve higher lows during challenging times and are cautious about raising targets prematurely. The focus is on demonstrating consistent performance and gaining market share rather than setting aggressive short-term goals.
Q:What is the outlook for institutional trading and the trajectory of the wallet?
A:The management is optimistic about the tailwinds in institutional trading, driven by the equitization of markets, AI adoption, and the institutionalization of private credit. They expect the wallet to grow by 5-10% per annum, supported by global themes and consolidation in the market. The focus is on gaining durable market share and leveraging their global footprint.
Q:What is the management's view on the trading business and AI opportunities?
A:The trading business is seen as being in the middle innings, with potential for lower performance during risk-off periods. AI is viewed as a significant opportunity, with applications in both revenue generation and cost efficiency. However, there will be challenges in integrating AI into the business, and the management is cautious about the associated risks and costs.
Q:What is the philosophy around operating leverage and margin improvement?
A:The management expects ongoing operating leverage if markets are conducive and execution is strong. They aim to achieve efficiency gains through investments in technology, including AI, and focus on compounding earnings. The efficiency ratio is targeted at 70%, with potential for further improvement during strong performance periods.
Q:Where is the company investing to build moats and improve margins?
A:Investments are being made in talent acquisition, secured lending, equity derivatives, digital assets, and alternatives. The focus is on ROE-accretive opportunities across the enterprise, including Wealth Management, Investment Banking, and Investment Management. The management is also exploring adjacencies and new customized solutions.
Q:What is the management's approach to capital allocation given the surplus?
A:The management is comfortable with a capital surplus and is in no rush to deploy it aggressively. They are focused on finding ROE-accretive opportunities within the business and maintaining a prudent approach to acquisitions. The surplus provides flexibility for future investments and potential capital returns.
Q:What is the outlook for international growth and contributions to the business?
A:International growth is expected to compound nicely, with significant contributions from Investment Management and global capital markets. Fixed income flows and equities businesses are seeing strong international distribution, and the management is optimistic about the global franchise's potential.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer on the specific timeline or conditions under which they would raise the targets. They also used vague language when discussing the potential impact of AI and the exact nature of investments in digital assets and adjacencies.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Banking
Culture
Financial Advisors
Financial Strength
Institutional Securities
Integrated Firm
Parametric
Securities Investment
Slide Institutional
Slide Morgan
Stanley result
Wealth Institutional
acquisition
alternative
banking market
capital client
capital way
client asset
core business
dividend
economy
firm asset
franchise Slide
goal
integration
investment technology
plane
presence
scale
share gain
strength investment
tailwind headwind
tax investing
team
unit
update
view
wallet share
year firm
MS Transcript
Morgan Stanley (MS) Q4 2025 Earnings Call Transcript
Positive1-15
The earnings call summary indicates strong financial performance with record AUM and durable management fee revenues. The Q&A session reveals a focus on long-term growth and cautious optimism about AI and trading opportunities. Despite not raising targets immediately, management's emphasis on compounding earnings and strategic investments suggests a positive outlook. The lack of a market cap implies a moderate response, leading to a 'Positive' sentiment rating.
Morgan Stanley (MS) Q3 2025 Earnings Call Transcript
Positive10-15
The earnings call summary indicates strong financial performance, strategic partnerships, and growth in various sectors like investment banking and wealth management. The Q&A section reveals analysts' positive sentiment towards these strategies, with concerns addressed adequately. The company's expansion efforts, efficiency gains, and optimistic guidance further support a positive outlook. However, some uncertainty remains due to regulatory factors and economic conditions, slightly tempering the overall sentiment. Despite this, the positive elements outweigh the negatives, leading to a positive sentiment rating.
Morgan Stanley (MS) Presents At Barclays 23rd Annual Global Financial Services Conference Transcript
Neutral9-10
Morgan Stanley (MS) Q2 2025 Earnings Call Transcript
Positive7-16
The earnings call highlighted strong financial performance, record AUM, and strategic capital deployment, supported by positive Q&A insights on strategic activity and M&A flows. Despite some uncertainties in macro conditions, management's focus on organic growth, strategic acquisitions, and shareholder returns suggests a positive outlook. The stable NII and record revenue further bolster confidence. While management was cautious on stablecoins, the overall sentiment remains favorable, indicating a likely positive stock price movement.
MS Slides
MS Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
