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    MS
    Earnings call· Mar 2026(Q1 FY26)

    MORGAN STANLEY Q1 FY26 earnings call MS

    Apr 15, 2026 Source

    Executive summary

    Morgan Stanley Q1 FY26 — Record Revenues and EPS Driven by Integrated Model Strength

    Morgan Stanley delivered a record quarter, showcasing the strength of its integrated model with robust performance across Wealth Management, Institutional Securities, and Investment Management. The firm maintains a strong capital position and is focused on strategic investments, including AI adoption and client acquisition funnels, while navigating geopolitical uncertainties and market volatility with measured confidence.

    Highlights

    5

    • Generated record revenues of $20.6 billion and record EPS (ex DVA) of $3.43.

    • Achieved a strong Return on Tangible Common Equity (ROTCE) of 27.1%.

    • Wealth Management delivered $118 billion in net new assets and a record $54 billion in fee-based flows.

    • Institutional Securities reported record revenues of $10.7 billion, including record Equities revenues of $5.1 billion and post-crisis record Fixed Income revenues of $3.4 billion.

    • Maintained a robust capital position with a CET1 ratio of 15.1%, exceeding the 11.8% requirement by over 300 basis points.

    Concerns

    3

    • Management noted increased geopolitical uncertainty and ongoing military conflict in the Middle East.

    • The firm remains vigilant regarding higher asset prices, tight credit spreads, and interest rate path uncertainty.

    • The Q1 efficiency ratio of 65% included $178 million of severance charges.

    Guidance & targets

    3
    CategoryTargetConfidence
    Net Interest Income (NII)
    build over the course of the year, modest increase in Q2 vs Q1
    medium materiality
    Medium
    Effective Tax Rate
    between 22% and 23%
    medium materiality
    High
    Wealth Management Pre-Tax Margin
    30%
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Institutional Securities
    Delivered record revenues, with broad-based strength across asset classes, banking, and markets, and in all regions. Investment banking pipelines remain steady.
    Investment Banking revenues: $2.1 billion (YoY increase)Advisory revenues: $978 million (+74% YoY)Equity underwriting revenues: $396 millionFixed income underwriting revenues: $742 millionEquities revenues: $5.1 billion (record)Prime brokerage revenues: increased YoY (driven by higher average balances)Cash equities results: increased YoY (driven by higher volumes)Derivative results: up YoY (driven by robust client activity)Fixed Income revenues: $3.4 billion (post-crisis record)Micro results (Fixed Income): increased meaningfully YoY (driven by securitized products and credit corporates)Macro results (Fixed Income): solid (reflecting declines in foreign exchange)Commodities results: increased significantly YoY
    		$10.7 billion———
    Wealth Management
    Achieved record revenues and robust margins, driven by strong client engagement, successful client acquisition funnel, and growth in bank lending balances.
    Net new assets: $118 billionFee-based flows: $54 billion (record, excluding prior acquisitions)Transactional revenues: $1.1 billionDaily average trades: second highest level on recordBank lending balances: $186 billion (+$5 billion QoQ)Household penetration of lending products: 18% (up from 14% 5 years ago)Total period end deposits: $419 billion (sequential growth)Net interest income: $2.2 billion (sequential increase)
    		$8.5 billion——30.4% PBT margin
    Investment Management
    Solid revenues, with asset management fees up year-over-year, offset by declines in accrued carried interest. Strong demand for Parametric solutions and fixed income strategies drove long-term net flows.
    Asset management and related fees: up 3% YoYLong-term net flows: $3.3 billionTotal AUM: $1.9 trillion
    		$1.5 billion———

    Operational metrics

    13
    Return on Tangible Common Equity (ROTCE)
    27.1%
    Q1 FY26

    Evidences the operating leverage of Morgan Stanley's business model.

    Efficiency Ratio
    65%
    Q1 FY26

    Reflecting strong operating leverage and disciplined execution, includes severance charges.

    Capital Accreted
    $15 billion
    Last 9 quarters

    Over the last 9 quarters, the firm has accreted this amount of capital.

    Effective Tax Rate
    19.6%
    Q1 FY26

    Lower rate driven by share-based award conversions, which largely take place in the first quarter.

    Assets moved to US entity (German bank reorg)
    >$100 billion
    Q1 FY26

    Moved over the course of the quarter, allowing for more effective funding and increased competitiveness, with P&L benefits expected from 2027.

    Private Credit Exposure (Wealth Management)
    1%
    Q1 FY26

    Part of the 5% total alts in wealth management.

    Private Credit Exposure (Investment Management)
    <1%
    Q1 FY26

    Modest exposure within Investment Management's total AUM.

    Adviser-led assets sourced from Workplace and E-TRADE
    >$1.2 trillion
    Since 2020

    Illustrates the scale of the client acquisition funnel.

    Total Assets
    $1.6 trillion
    Q1 FY26

    Total balance sheet assets.

    Common Stock Buyback
    $1.75 billion
    Q1 FY26

    Opportunistically bought back common stock during the period.

    NII Growth Drivers
    Supported by lending balances and higher average sweeps
    Q1 FY26

    Explaining the sequential increase in NII.

    CET1 Ratio
    15.1%
    Q1 FY26

    Standardized CET1 ratio against capital requirement.

    Basel III G-SIB Bucket Buffer (New Framework)
    2.2%vs 3.5% (old framework)
    Future

    Expected G-SIB buffer under the new Basel III framework, as proposed.

    Industry KPIs

    2
    MetricValueDetails
    AUM$1.9 trillionUSD
    Fundraising inflows$3.3 billionUSD

    Product announcements

    1
    ProductTypeDetails
    Digital Asset Pilotlaunch

    Deals & partnerships

    1
    Equity Zenacquisition

    Acquisition closed during the quarter, enhancing capabilities in private credit markets.

    Risks & headwinds

    4
    Increased geopolitical uncertainty and ongoing military conflictongoing

    not quantified

    Mitigation: approach of measured confidence; prepared to tactically pivot on ongoing military disruption

    Higher asset prices, tight credit spreads, and interest rate path uncertaintycurrent period

    not quantified

    Mitigation: remain vigilant

    Cyber risk from accelerating AI adoptionongoing

    not quantified, but described as an 'increasing threat broadly'

    Mitigation: continue to act as a stalwart defense; get our gloves up and take it to another level; world-class technology, world-class cyber defense

    Private credit market 'adolescent moment'current period

    not quantified, but implies potential for winners and losers among asset managers

    Mitigation: emphasizing resiliency of underlying product, structures, and terms; selective capital deployment across alternative selections; diversification and manager selection

    Q&A highlights

    6

    Asked for Ted Pick's perspective on the private credit market, its 'learning moment,' and how it influences Morgan Stanley's business, particularly distribution through retail wealth channels.

    Ted Pick described private credit as having an 'adolescent moment' but emphasized its resiliency as credit performs when the economy is strong. He noted Morgan Stanley's modest exposure (1% of wealth alts, <1% of IM AUM) and highlighted net buying by sophisticated institutional clients in Q1, indicating continued interest at the right price.

    “But the reality is it's credit and credit is going to broadly perform when the economy is in the kind of good shape it's in right now.”

    asked by Ebrahim Poonawala · answered by Ted Pick

    2 min read7 chapters

    Detailed Narrative

    01

    Integrated Business Model Strength

    Morgan Stanley's integrated model, combining a leading wealth and asset manager with a global investment bank, proved critical in Q1 FY26, generating record revenues of $20.6 billion and EPS of $3.43. This performance, alongside a 27.1% ROTCE, demonstrates the firm's operating leverage and ability to deliver strong results across varied market backdrops. The firm's consistent execution over the past nine quarters has built $15 billion in capital.

    02

    Strategic Capital Deployment and Regulatory Environment

    The firm strategically deployed leverage-based capital to support client activity, leading to an increase in standardized RWAs. Morgan Stanley ended the period with a strong standardized CET1 ratio of 15.1%, significantly above the 11.8% requirement. Management expressed encouragement regarding enhanced regulatory transparency and balance as Basel III rulemaking progresses, anticipating a capital-neutral to modestly positive impact from the new framework, with the G-SIB buffer potentially reducing from 3.5% to 2.2%.

    03

    Wealth Management Client Acquisition Funnel

    Wealth Management continued its strong momentum, driven by an unrivaled client acquisition funnel. Net new assets reached $118 billion, with fee-based flows of $54 billion. The Workplace channel is increasingly contributing to new client engagement and asset retention, with over $1.2 trillion in adviser-led assets sourced from Workplace and E-TRADE since 2020, representing approximately 20% of total adviser-led assets.

    04

    Investment Banking and Markets Resilience

    The Investment Bank delivered record revenues of $10.7 billion, with broad-based strength across asset classes and regions. Advisory revenues surged 74% year-over-year to $978 million, driven by higher completed activity in the Americas. Equity underwriting was solid at $396 million, and fixed income underwriting reached $742 million. Investment banking pipelines remain steady, supported by strategic activity and capital formation needs from both corporates and sponsors.

    05

    Asia Growth and Global Strategy

    Asia contributed significantly to the firm's sequential revenue improvement, driven by integrated efforts between banking and sales & trading, a strong relationship with MUFG in Japan, and targeted investments in regions like Korea, Taiwan, and India. The firm's strategy involves doubling down on key growth areas while maintaining a disciplined risk-managed approach, focusing on raising, managing, and allocating capital for institutions and individuals.

    06

    AI Adoption and Cyber Resiliency

    Morgan Stanley views AI as a beneficial technology, actively investing in its development and exploring applications for efficiency and effectiveness across its businesses, from wealth management co-piloting tools to electronic trading platforms and core infrastructure. While acknowledging the increasing cyber risk associated with advanced AI models like Claude Mythos, the firm emphasizes its commitment to world-class cyber defense and continuous improvement in security measures.

    07

    Private Credit Market Perspective

    Management characterized the private credit market as undergoing an 'adolescent moment,' where underlying products and structures are being carefully evaluated. Despite recent attention, the firm believes private credit will perform as the economy performs, noting its modest exposure (1% of wealth management alts, <1% of IM AUM). The market has seen institutional bids and net buying in Q1, indicating continued interest at the right price and with the right managers.

    AI-generated summary of the company’s earnings call. Not investment advice.