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Morgan Stanley Q4 Earnings Beat on IB Strength, Decent Trading Gains
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Key Takeaways
MS Q4 earnings rose 21% to $2.68 per share, beating estimates on strength in investment banking.
IB fees surged 47% on strong M&A activity and higher equity and fixed income underwriting revenues.
Wealth Management revenue climbed 13% as client assets hit $7.38T, up 19% year over year.
Morgan Stanley’s (MS - Free Report) fourth-quarter 2025 earnings of $2.68 per share easily outpaced the Zacks Consensus Estimate of $2.41. Also, the bottom line jumped 21% from the prior-year quarter.
Unlike its Wall Street peers, Morgan Stanley’s investment banking (IB) business gained from a frenzy of deal-making activities and IPOs. Advisory fees soared 45% year over year as completed M&A transactions rose. Further, higher issuances supported the company’s fixed income underwriting fees, which jumped 93%. Moreover, equity underwriting income grew 9% as higher convertibles and IPOs offered support. Hence, total IB fees (in the Institutional Securities division) surged 47% to $2.41 billion.
Similarly, MS posted a decent trading performance. Equity trading revenues climbed 10% year over year to $3.67 billion, while fixed-income trading income was down 9% to $1.76 billion.
The performance of the company’s wealth management and investment management businesses was impressive, driven by a rise in client assets and assets under management. Morgan Stanley’s net interest income (NII) increased, given the improved lending activities. On the other hand, an increase in total non-interest expenses was the undermining factor.
Net income applicable to common shareholders was $4.25 billion, increasing 19% from the year-ago quarter.
Morgan Stanley’s Revenues Rise, Expenses Up
Quarterly net revenues were $17.89 billion, growing 10% from the prior-year quarter. The top line handily beat the Zacks Consensus Estimate of $17.32 billion.
NII was $2.86 billion, up 12%. Total non-interest revenues of $15.03 billion increased 10%.
Total non-interest expenses were $12.11 billion, up 8%.
Provision for credit losses was $18 million compared with $115 million in the prior-year quarter.
Morgan Stanley’s Segment Quarterly Performance
Institutional Securities: Pre-tax income was $2.66 billion, up 9% from the prior-year quarter.
Net revenues were $7.93 billion, rising 9% year over year. The upside resulted from increased equity trading revenues and higher IB net revenues, partially offset by lower fixed income trading income.
Wealth Management: Pre-tax income totaled $2.64 billion, surging 29% year over year.
Net revenues were $8.43 billion, up 13%, driven by higher asset management revenues, transactional revenues and NII.
Total client assets were $7.38 trillion as of Dec. 31, 2025, up 19% year over year.
Investment Management: Pre-tax income was $468 million, climbing 13% from the year-ago quarter.
Net revenues were $1.72 billion, growing 5%. The improvement was attributable to a rise in asset management and related fees, partially offset by performance-based income and other revenues.
As of Dec. 31, 2025, total assets under management or supervision were $1.9 trillion, up 14% year over year.
Morgan Stanley’s Capital Position Solid
As of Dec. 31, 2025, book value per share was $64.37, up from $58.98 in the corresponding period of 2024. The tangible book value per share was $50, up from $44.87 as of Dec. 31, 2024.
Morgan Stanley’s Tier 1 capital ratio (advanced approach) was 18% compared with 17.8% in the year-ago quarter. The common equity Tier 1 capital ratio was 16.1% compared with 15.7% a year ago.
Update on Morgan Stanley’s Share Buyback Plan
In the reported quarter, Morgan Stanley repurchased 9 billion shares for $1.5 billion.
Our Viewpoint on Morgan Stanley
The solid performance of the IB business and an impressive deal-making pipeline are expected to support Morgan Stanley’s financials. Efforts to become less dependent on capital markets-driven revenues and inorganic expansion/strategic alliances will boost top-line growth. However, elevated expenses due to expansion efforts and volatile trading revenues are concerns.
Jefferies Financial Group’s (JEF - Free Report) fourth-quarter fiscal 2025 (ended Nov. 30) adjusted earnings from continuing operations of 96 cents per share grew 5.5% year over year. The Zacks Consensus Estimate for earnings was 83 cents.
JEF’s results were aided by strong performance and sustained momentum in Investment Banking and Equities, partially offset by lower net revenues in Fixed Income and Asset Management. However, higher expenses remain a spoilsport.
Solid trading performance and higher NII drove JPMorgan’s (JPM - Free Report) fourth-quarter 2025 adjusted earnings of $5.23 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $5.01.
JPM’s markets revenues exceeded management's expectations and grew 17% year over year. Further, the company recorded an increase in NII, driven by higher yields and 11% year-over-year jump in total loans. However, weak IB performance and higher operating expenses and provisions weighed on the results.
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Morgan Stanley Q4 Earnings Beat on IB Strength, Decent Trading Gains
Key Takeaways
Morgan Stanley’s (MS - Free Report) fourth-quarter 2025 earnings of $2.68 per share easily outpaced the Zacks Consensus Estimate of $2.41. Also, the bottom line jumped 21% from the prior-year quarter.
Unlike its Wall Street peers, Morgan Stanley’s investment banking (IB) business gained from a frenzy of deal-making activities and IPOs. Advisory fees soared 45% year over year as completed M&A transactions rose. Further, higher issuances supported the company’s fixed income underwriting fees, which jumped 93%. Moreover, equity underwriting income grew 9% as higher convertibles and IPOs offered support. Hence, total IB fees (in the Institutional Securities division) surged 47% to $2.41 billion.
Similarly, MS posted a decent trading performance. Equity trading revenues climbed 10% year over year to $3.67 billion, while fixed-income trading income was down 9% to $1.76 billion.
The performance of the company’s wealth management and investment management businesses was impressive, driven by a rise in client assets and assets under management. Morgan Stanley’s net interest income (NII) increased, given the improved lending activities. On the other hand, an increase in total non-interest expenses was the undermining factor.
Net income applicable to common shareholders was $4.25 billion, increasing 19% from the year-ago quarter.
Morgan Stanley’s Revenues Rise, Expenses Up
Quarterly net revenues were $17.89 billion, growing 10% from the prior-year quarter. The top line handily beat the Zacks Consensus Estimate of $17.32 billion.
NII was $2.86 billion, up 12%. Total non-interest revenues of $15.03 billion increased 10%.
Total non-interest expenses were $12.11 billion, up 8%.
Provision for credit losses was $18 million compared with $115 million in the prior-year quarter.
Morgan Stanley’s Segment Quarterly Performance
Institutional Securities: Pre-tax income was $2.66 billion, up 9% from the prior-year quarter.
Net revenues were $7.93 billion, rising 9% year over year. The upside resulted from increased equity trading revenues and higher IB net revenues, partially offset by lower fixed income trading income.
Wealth Management: Pre-tax income totaled $2.64 billion, surging 29% year over year.
Net revenues were $8.43 billion, up 13%, driven by higher asset management revenues, transactional revenues and NII.
Total client assets were $7.38 trillion as of Dec. 31, 2025, up 19% year over year.
Investment Management: Pre-tax income was $468 million, climbing 13% from the year-ago quarter.
Net revenues were $1.72 billion, growing 5%. The improvement was attributable to a rise in asset management and related fees, partially offset by performance-based income and other revenues.
As of Dec. 31, 2025, total assets under management or supervision were $1.9 trillion, up 14% year over year.
Morgan Stanley’s Capital Position Solid
As of Dec. 31, 2025, book value per share was $64.37, up from $58.98 in the corresponding period of 2024. The tangible book value per share was $50, up from $44.87 as of Dec. 31, 2024.
Morgan Stanley’s Tier 1 capital ratio (advanced approach) was 18% compared with 17.8% in the year-ago quarter. The common equity Tier 1 capital ratio was 16.1% compared with 15.7% a year ago.
Update on Morgan Stanley’s Share Buyback Plan
In the reported quarter, Morgan Stanley repurchased 9 billion shares for $1.5 billion.
Our Viewpoint on Morgan Stanley
The solid performance of the IB business and an impressive deal-making pipeline are expected to support Morgan Stanley’s financials. Efforts to become less dependent on capital markets-driven revenues and inorganic expansion/strategic alliances will boost top-line growth. However, elevated expenses due to expansion efforts and volatile trading revenues are concerns.
Morgan Stanley Price, Consensus and EPS Surprise
Morgan Stanley price-consensus-eps-surprise-chart | Morgan Stanley Quote
Currently, Morgan Stanley carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Morgan Stanley’s Peers
Jefferies Financial Group’s (JEF - Free Report) fourth-quarter fiscal 2025 (ended Nov. 30) adjusted earnings from continuing operations of 96 cents per share grew 5.5% year over year. The Zacks Consensus Estimate for earnings was 83 cents.
JEF’s results were aided by strong performance and sustained momentum in Investment Banking and Equities, partially offset by lower net revenues in Fixed Income and Asset Management. However, higher expenses remain a spoilsport.
Solid trading performance and higher NII drove JPMorgan’s (JPM - Free Report) fourth-quarter 2025 adjusted earnings of $5.23 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $5.01.
JPM’s markets revenues exceeded management's expectations and grew 17% year over year. Further, the company recorded an increase in NII, driven by higher yields and 11% year-over-year jump in total loans. However, weak IB performance and higher operating expenses and provisions weighed on the results.