MORGAN STANLEY

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Management’s Discussion and Analysis

Institutional Securities

Investment Banking

Investment Banking Volumes

Source: LSEG Data & Risk Analytics (formerly known as Refinitiv) as of July 1, 2025. Transaction volumes may not be indicative of net revenues in a given period. In addition, transaction volumes for prior periods may vary from amounts previously reported due to the subsequent withdrawal, change in value or change in timing of certain transactions.

1. Includes transactions of $100 million or more. Based on full credit to each of the advisors in a transaction.

2. Based on full credit for single book managers and equal credit for joint book managers.

3. Includes Rule 144A issuances and registered public offerings of common stock, convertible securities and rights offerings.

4. Includes Rule 144A and publicly registered issuances, non-convertible preferred stock, mortgage-backed and asset-backed securities, and taxable municipal debt. Excludes leveraged loans and self-led issuances.

Investment Banking Revenues

Net revenues of $1,540 million in the current quarter decreased 5% from the prior year quarter, reflecting lower Fixed Income underwriting and Advisory revenues, partially offset by higher Equity underwriting revenues.

•Advisory revenues decreased primarily reflecting fewer completed M&A transactions

•Equity underwriting revenues increased on higher volumes, particularly in follow-on offerings, convertible issuances and initial public offerings.

•Fixed Income underwriting revenues decreased primarily due to lower non-investment grade issuances compared with elevated results in the prior year quarter.

Net revenues of $3,099 million in the current year period increased 1% from the prior year period, primarily reflecting higher Equity underwriting revenues.

•Advisory revenues were relatively unchanged compared with the prior year period.

•Equity underwriting revenues increased primarily on convertible issuances and private placement offerings, partially offset by lower secondary block share trades.

•Fixed Income underwriting revenues decreased primarily reflecting lower bond and investment-grade loan issuances, partially offset by higher non-investment grade loan issuances.

While Investment Banking results have shown improvement in recent quarters, we continue to operate in a market environment with lower completed M&A activity relative to longer-term averages. The current economic environment may continue to delay expectations of increased M&A activity.

See “Investment Banking Volumes” herein.

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Management’s Discussion and Analysis

Equity, Fixed Income and Other Net Revenues

Equity and Fixed Income Net Revenues

1. Includes Commissions and fees and Asset management revenues.

2. Includes funding costs, which are allocated to the businesses based on funding usage.

3. Includes Investments and Other revenues.

Equity

Net revenues of $3,721 million in the current quarter and $7,849 million in the current year period increased 23% and 34%, respectively, compared with the prior year periods, reflecting an increase in Execution services and Financing amid heightened market volatility.

•Financing revenues increased primarily due to increased client activity and higher average client balances.

•Execution services revenues increased primarily due to higher gains on inventory held to facilitate client activity and increased client activity in derivatives and cash equities.

Fixed Income

Net revenues of $2,180 million in the current quarter increased 9% from the prior year quarter, reflecting an increase in Global macro and Credit products amid heightened market volatility, partially offset by a decrease in Commodities.

•Global macro products revenues increased in rates and foreign exchange products, primarily due to increased client activity and gains on inventory held to facilitate client activity.

•Credit products revenues increased primarily due to increased client activity in corporate credit and securitized products, partially offset by higher losses on inventory held to facilitate client activity in corporate credit products.

•Commodities products and other fixed income revenues decreased primarily due to losses compared with gains in the prior year quarter on inventory held to facilitate client activity in power and gas, and lower client activity in structured transactions.

Net revenues of $4,784 million in the current year period increased 7% from the prior year period, reflecting an increase in Global macro products, partially offset by a decrease in Commodities and Credit products.

•Global macro products revenues increased in foreign exchange and rates products, primarily due to gains on inventory held to facilitate client activity and increased client activity.

•Credit products revenues decreased primarily due to losses compared with gains on inventory held to facilitate client activity, partially offset by increased client activity in corporate credit products and higher secured lending.

•Commodities products and other fixed income revenues decreased primarily due to lower gains on inventory held to facilitate client activity.

Other Net Revenues

Other net revenues were $202 million in the current quarter, compared with $346 million in the prior year quarter, primarily reflecting lower net interest income and fees on corporate loans.

Other net revenues were $894 million in the current year period, compared with $588 million in the prior year period, primarily reflecting gains on the sale of corporate loans held-for-sale compared with mark-to-market losses, inclusive of hedges, in the prior year period, partially offset by lower net interest income and fees on corporate loans.

The Provision for credit losses on loans and lending commitments of $168 million in the current quarter was primarily related to portfolio growth in corporate loans and secured lending facilities and a macroeconomic outlook reflecting slower GDP growth. The Provision for credit losses on loans and lending commitments of $54 million in the prior year quarter was primarily related to provisions for certain specific commercial real estate loans, mainly in the office sector, and modest growth in the corporate loan portfolio.

The Provision for credit losses on loans and lending commitments of $259 million in the current year period was

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Management’s Discussion and Analysis

primarily related to portfolio growth in corporate loans and secured lending facilities and a macroeconomic outlook reflecting slower GDP growth. The Provision for credit losses on loans and lending commitments of $56 million in the prior year period was primarily related to provisions for certain specific commercial real estate loans, mainly in the office sector, and modest growth in certain corporate loan portfolios, partially offset by improvements in the macroeconomic outlook.

For further information on the Provision for credit losses, see “Credit Risk” herein.

Non-interest expenses of $5,364 million in the current quarter increased 10% compared with the prior year quarter reflecting higher Non-compensation expenses and Compensation and benefits expenses.

•Compensation and benefits expenses increased primarily due to higher expenses related to deferred compensation awards.

•Non-compensation expenses increased primarily due to higher execution-related expenses and increased technology spend.

Non-interest expenses of $10,975 million in the current year period increased 15% compared with the prior year period reflecting higher Non-compensation expenses and Compensation and benefits expenses.

•Compensation and benefits expenses increased primarily due to higher discretionary incentive compensation on higher revenues and higher expenses related to outstanding deferred compensation.

•Non-compensation expenses increased primarily due to higher execution-related expenses and increased technology spend.