Skip to content
    MS
    Earnings call· Sep 2025(Q3 FY25)

    MORGAN STANLEY MS

    Oct 15, 2025 Source

    Executive summary

    Morgan Stanley Q3 FY25 — Record Performance Driven by Capital Markets Rebound and Wealth Management Growth

    Morgan Stanley delivered record Q3 FY25 results, driven by a strong rebound in capital markets activity and sustained growth across Wealth and Investment Management. The firm's integrated model is demonstrating operating leverage, with strategic investments in AI and platform enhancements supporting future productivity and client engagement. Management remains focused on organic growth opportunities and capital deployment while navigating geopolitical and economic uncertainties.

    Highlights

    5

    • Generated record revenues of $18.2 billion and EPS of $2.80.

    • Achieved a robust return on tangible equity (ROTCE) of 23.5%.

    • Investment Banking revenues increased to $2.1 billion, with equity underwriting up 80% year-over-year.

    • Wealth Management delivered record revenues of over $8 billion and a 30% margin, adding $81 billion in net new assets and $42 billion in fee-based flows.

    • Total client assets reached $8.9 trillion, marking a $1.3 trillion increase over the last year.

    Concerns

    3

    • Fixed income macro revenue declined year-over-year due to decreased volatility in foreign exchange markets.

    • DCP negatively impacted Wealth Management margin by approximately 100 basis points this quarter.

    • Net charge-offs totaled $46 million, primarily driven by commercial real estate loans.

    Guidance & targets

    4
    CategoryTargetConfidence
    Net Interest Income (NII)
    modest sequential gain
    medium materiality
    Medium
    Quarterly tax rate
    approximately 24%
    low materiality
    High
    Total client assets
    advancing through $10 trillion
    high materiality
    High
    Investment Banking product category
    generally up and to the right
    high materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Institutional Securities
    Revenues were a standout, driving powerful operating leverage. The Americas led year-over-year growth, with clients active globally. Investment Banking activity significantly improved, with capital markets reopening and supporting underwriting issuance across debt and equity products. Equities affirmed its #1 position, propelled by broad-based performance. Fixed income showed consistency, driven by credit and commodities, partially offset by lower foreign exchange results.
    Investment Banking revenues: $2.1 billionEquity underwriting revenues: $652 millionEquity underwriting: up 80% YoYAdvisory revenues: $684 millionFixed income underwriting revenues: $772 millionEquities revenue: $4.1 billionFixed income revenue: $2.2 billionISG provisions: $1 millionNet charge-offs: $46 million
    		$8.5 billion——powerful operating leverage
    Wealth Management
    The franchise is growing with sustained momentum, reinforcing its industry-leading position. Record revenues and continued operating leverage drove margins to 30.3%. Strong net new assets and robust fee-based flows illustrate the power of the funnel and client base scale. Workplace assets continue to migrate into adviser-led channels. Investments in platforms like Power E*TRADE Pro support transactional revenue.
    Total client assets: $7 trillionNet new assets: $81 billionFee-based flows: $42 billionClient relationships: over 20 millionBank lending balances: $174 billionBank lending balances: up $5 billion sequentiallyTotal end-period deposits: $398 billionNet interest income: $2 billion
    		$8.2 billion——30.3%
    Investment Management
    The business continues to perform well, with momentum for secular demand in Parametric solutions and expanding global reach in fixed income. Investments have supported growth to a record $1.8 trillion in total AUM. Over half of long-term net inflows were driven by Parametric, including a large partnership with a third-party investment adviser.
    Total AUM: $1.8 trillionLong-term net inflows: $16.5 billionLiquidity and Overlay Services inflows: $24.8 billionPerformance-based income and other revenues: $117 million
    		$1.7 billion13%——

    Operational metrics

    12
    Return on Tangible Common Equity (ROTCE)
    23.5%
    Q3 FY25

    Robust returns on tangible of 23.5% reflect the operating leverage of the integrated firm.

    Efficiency ratio
    69%
    YTD FY25

    The year-to-date efficiency ratio was 69%.

    Diluted EPS
    $2.80
    Q3 FY25

    EPS of $2.80. Sequential EPS results: $2.02, $1.82, $1.88, $2.22, $2.60, $2.13 and now $2.80.

    Standardized CET1 ratio
    15.2%
    Q3 FY25

    Our standardized CET1 ratio stands at 15.2%.

    Excess CET1 capital
    over 300 basis points
    Q3 FY25

    Our excess CET1 capital stands at over 300 basis points. Later refined to '250 plus' as a comfortable buffer.

    Share buyback
    $1.1 billion
    Q3 FY25

    We opportunistically bought back $1.1 billion of common stock in the quarter.

    Quarterly tax rate
    23.6%
    Q3 FY25

    Our quarterly tax rate was 23.6%, excluding $50 million of net discrete tax benefits.

    Total spot assets
    $1.4 trillion
    Q3 FY25

    Total spot assets grew to $1.4 trillion.

    Standardized RWAs
    $536 billionincreased sequentially
    Q3 FY25

    Standardized RWAs increased sequentially to $536 billion as we actively supported clients.

    Total client assets
    $8.9 trillionup $1.3 trillion over the last year
    Q3 FY25

    Total client assets across Wealth and Investment Management are up $1.3 trillion over the last year and have reached $8.9 trillion.

    Workplace migration (historical)
    $60 billionexceeding those numbers from a full year basis
    annual

    Historically, the firm has seen about $60 billion of workplace migration per year, and is exceeding those numbers from a full year basis 3 quarters into the year.

    AI use cases
    —
    Q3 FY25

    Early AI use cases include DevGen AI (developer efficiency), Parable (data analysis), and LeadIQ (AI-powered lead distribution platform).

    Product announcements

    2
    ProductTypeDetails
    Power E*TRADE Prolaunch
    Digital assets wallet (with Zero Hash)roadmap

    Deals & partnerships

    2
    CartaExpanded collaboration in private markets to offer advice-based services to private company employees.

    Deepening competitive moats through expanded collaboration with Carta in private markets. The partnership now includes offering advice-based services to employees of private companies, beyond just founders and top providers.

    Zero HashPartnership for digital assets to build out a full wallet.

    Announced partnership with Zero Hash to build out capabilities in digital assets, including a full wallet, expected to be ready by 2026.

    Risks & headwinds

    3
    Geopolitical and economic uncertaintytransition from the post-pandemic period

    Periods of economic and geopolitical uncertainty were to be expected

    Mitigation: Morgan Stanley will continue to capture opportunities around the world through cycles, staying close to clients as they raise, manage and allocate capital.

    Fixed income macro revenue declineQ3 FY25

    Macro revenue declined versus the prior year

    Mitigation: Driven by decreased volatility in foreign exchange markets across developed market currencies, leading to reduced client activity and trading opportunities.

    Commercial real estate loan charge-offsQ3 FY25

    Net charge-offs totaled $46 million

    Mitigation: Primarily driven by commercial real estate loans that had largely been provisioned for in prior quarters.

    What to watch in Q4 FY25

    5

    Wealth Management NII trajectory

    Q4 FY25
    Current$2 billion
    Targetmodest sequential gain

    Why it matters

    NII is a significant component of Wealth Management revenue, and its trajectory in a changing rate environment is key to profitability.

    Looking ahead to the fourth quarter, we expect to see a modest sequential gain in NII.

    Q&A highlights

    8

    Can the current strong Investment Banking trends be sustained, considering the backlog and diversity, and how does it compare to prior periods?

    Management is optimistic about the Investment Banking product category being 'up and to the right' over the next couple of years, driven by industry groups, regions, a favorable regulatory backdrop, and the need to defease AI costs. They acknowledge geopolitical uncertainty but see significant pent-up demand.

    “But generally speaking, the investment banking product category over the next couple of years should be generally up and to the right.”

    asked by Dan Fannon · answered by Ted Pick

    2 min read6 chapters

    Detailed Narrative

    01

    Capital Markets Rebound and Investment Banking Strength

    Morgan Stanley reported a significant rebound in its Institutional Securities business, with revenues of $8.5 billion. Investment Banking revenues surged to $2.1 billion, marking one of the strongest quarters in recent years, driven by broad-based strength. Equity underwriting revenues increased 80% year-over-year to $652 million, fueled by IPO activity and strength across equity products. Advisory revenues also rose to $684 million, reflecting higher completed activity. The firm noted that the 'capital markets flywheel is taking hold,' with robust pipelines across all three regions.

    02

    Wealth Management Momentum and Client Asset Growth

    Wealth Management achieved record revenues of over $8 billion and a reported margin of 30.3%. Total client assets reached a record $7 trillion, contributing to the firm-wide total of $8.9 trillion. The business added $81 billion in net new assets and $42 billion in fee-based flows. Workplace channel migration continues to be a powerful asset acquisition tool, exceeding historical annual rates of $60 billion. Bank lending balances grew $5 billion sequentially to $174 billion, and net interest income increased to $2 billion.

    03

    Strategic Investments in AI and Technology

    The firm highlighted its early AI use cases, which are showing progress in driving both efficiency and productivity. Examples include DevGen AI for enhancing developer efficiency, Parable for interactive data analysis and summarization, and LeadIQ, an AI-powered lead distribution platform designed to match workplace and self-directed relationships with financial advisers. These investments are laying the foundation for future productivity and revenue generation across the firm.

    04

    Integrated Firm Strategy and Global Reach

    Morgan Stanley emphasized the power of its global integrated firm, leveraging its scale and connectivity across Wealth Management, Investment Management, and Institutional Securities. The strategy focuses on raising, managing, and allocating capital for clients globally, capturing opportunities through economic cycles. The firm is actively investing in its platform, including workplace, E*TRADE, and investment banking, to deepen competitive moats and enhance client service capabilities.

    05

    Capital Management and Regulatory Environment

    The firm's standardized CET1 ratio stands at 15.2%, with excess CET1 capital noted at over 300 basis points. Management indicated a comfortable buffer of '250 plus' basis points. Morgan Stanley opportunistically bought back $1.1 billion of common stock in the quarter. The firm expressed appreciation for the Fed's reconsideration of CCAR results and looks forward to ongoing dialogue, anticipating a more balanced and transparent regulatory approach that could prudently lower the required buffer size over time⏳.

    06

    Investment Management Performance and Parametric Growth

    Investment Management continued to perform well, reaching a record $1.8 trillion in total AUM. Long-term net inflows were $16.5 billion, with over half driven by Parametric solutions and strength in fixed income. Liquidity and Overlay Services also saw significant inflows of $24.8 billion. Revenues for the segment increased 13% year-over-year to $1.7 billion, supported by higher average AUM and performance-based income from infrastructure, private equity, and real estate.

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