MORGAN STANLEY

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Management’s Discussion and Analysis

Executive Summary

Overview of Financial Results

Consolidated Results—Three Months Ended September 30, 2025

•The Firm reported net revenues of $18.2 billion and net income applicable to Morgan Stanley of $4.6 billion reflecting strong results across business segments and regions.

•The Firm delivered ROE of 18.0% and ROTCE of 23.5% (see “Selected Non-GAAP Financial Information” herein).

•The Firm’s expense efficiency ratio was 67% for the third quarter and 69% for the year-to-date.

•At September 30, 2025, the Firm’s Standardized Common Equity Tier 1 capital ratio was 15.1%, and its Supplementary Leverage Ratio was 5.5%.

•Institutional Securities reported net revenues of $8.5 billion reflecting strong performance in Equity on higher client activity anda rebound in Investment Banking.

•Wealth Management delivered a pre-tax margin of 30.3%. Net revenues of $8.2 billion reflect higher Asset management and Transactional revenues and higher Net interest income. The business added net new assets of $81 billion and fee-based asset flows were $42 billion.

•Investment Management results reflect net revenues of $1.7 billion, primarily driven by asset management fees on higher average AUM.

Net Income Applicable to Morgan Stanley

Earnings per Diluted Common Share

We reported net revenues of $18.2 billion in the quarter ended September 30, 2025 (“current quarter,” or “3Q 2025”), which increased by 18% compared with $15.4 billion in the quarter ended September 30, 2024 (“prior year quarter,” or “3Q 2024”). Net income applicable to Morgan Stanley was $4.6 billion in the current quarter, which increased by 45% compared with $3.2 billion in the prior year quarter. Diluted earnings per common share was $2.80 in the current quarter, which increased by 49% compared with $1.88 in the prior year quarter.

We reported net revenues of $52.8 billion in the nine months ended September 30, 2025 (“current year period,” or “YTD 2025”), which increased by 16% compared with $45.5 billion in the nine months ended September 30, 2024 (“prior year period,” or “YTD 2024”). Net income applicable to Morgan Stanley was $12.5 billion in the current year period, which increased by 29% compared with $9.7 billion in the prior year period. Diluted earnings per common share was $7.53 in the current year period, which increased by 31% compared with $5.73 in the prior year period.

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Management’s Discussion and Analysis

•Compensation and benefits expenses of $7,442 million in the current quarter increased 11% from the prior year quarter, primarily due to an increase in the formulaic payout to Wealth Management advisors on higher revenues, higher expenses related to outstanding deferred compensation and higher salary expenses.

•Compensation and benefits expenses of $22,153 million in the current year period increased 11% from the prior year period, primarily due to an increase in the formulaic payout to Wealth Management advisors and higher discretionary incentive compensation within Institutional Securities, both on higher revenues, and higher expenses related to outstanding deferred compensation.

During the current year period, as a result of a March employee action, we recognized severance costs associated with a reduction in force of $144 million, included in Compensation and Benefits expense. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Summary” in the Form 10-Q for the quarter ended March 31, 2025.

•Non-compensation expenses of $4,754 million in the current quarter and $14,077 million in the current year period increased 9% and 10%, respectively, compared with the prior year periods, primarily due to higher execution-related expenses and increased technology spend.

The Provision for credit losses on loans and lending commitments was $0 million in the current quarter, reflecting portfolio growth in corporate loans and secured lending facilities and provisions for certain specific commercial real estate loans, offset by improvements in the macroeconomic outlook. The Provision for credit losses on loans and lending commitments in the prior year quarter was $79 million, primarily related to provisions for certain specific commercial real estate and corporate loans and growth across loan

portfolios, partially offset by improvements in the macroeconomic outlook.

The Provision for credit losses on loans and lending commitments of $331 million in the current year period was primarily related to portfolio growth in corporate loans and secured lending facilities and provisions for certain specific commercial real estate loans. The Provision for credit losses on loans and lending commitments in the prior year period was $149 million, primarily related to provisions for certain specific commercial real estate and corporate loans and growth across certain loan portfolios, partially offset by improvements in the macroeconomic outlook.

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

Business Segment Results

Net Revenues by Segment 1

Net Income Applicable to Morgan Stanley by Segment 1

1. The amounts in the charts represent the contribution of each business segment to the total of the applicable financial category and may not sum to the total presented on top of the bars due to intersegment eliminations. See Note 19 to the financial statements for details of intersegment eliminations.

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Management’s Discussion and Analysis

•Institutional Securities net revenues of $8,523 million in the current quarter and $25,149 million in the current year period increased 25% and 21%, respectively, compared with the prior year periods, primarily reflecting higher results in Equity driven by higher client activity and higher underwriting revenues within Investment Banking.

•Wealth Management net revenues of $8,234 million in the current quarter and $23,325 million in the current year period increased 13% and 11%, respectively, compared with the prior year periods, primarily reflecting higher Asset management revenues on higher market levels and the cumulative impact of positive fee-based flows, and higher Transactional revenues on higher client activity.

•Investment Management net revenues of $1,651 million in the current quarter and $4,805 million in the current year period increased 13% and 14%, respectively, compared with the prior year periods, primarily reflecting higher Asset management and related fees driven by higher AUM on higher market levels and higher Performance-based income and other revenues.

Net Revenues by Region 1

1. For a discussion of how the geographic breakdown of net revenues is determined, see Note 22 to the financial statements in the 2024 Form 10-K.

•Americas net revenues increased 18% and 14% in the current quarter and in the current year period, respectively, compared with the prior year periods, driven by higher results across all business segments.

•EMEA net revenues increased 6% and 15% in the current quarter and in the current year period, respectively, compared with the prior year periods, primarily driven by higher results in Equity, partially offset by lower results in Investment Banking compared with strong results in the prior year periods, within the Institutional Securities business segment.

•Asia net revenues increased 31% and 29% in the current quarter and in the current year period, respectively,

compared with the prior year periods, primarily driven by higher results in Equity and Investment Banking within the Institutional Securities business segment.

Selected Financial Information and Other Statistical Data

1. The expense efficiency ratio represents total non-interest expenses as a percentage of net revenues.

2. ROE and ROTCE represent annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity and average tangible common equity, respectively.

3. Represents a non-GAAP financial measure. See “Selected Non-GAAP Financial Information” herein.

4. Pre-tax margin represents income before provision for income taxes as a percentage of net revenues.

5. For a discussion of Liquidity resources, see “Liquidity and Capital Resources—Balance Sheet—Liquidity Risk Management Framework—Liquidity Resources” herein.

6. Includes loans held for investment, net of ACL, loans held for sale and also includes loans at fair value, which are included in Trading assets in the balance sheet.

7. Book value per common share and tangible book value per common share equal common equity and tangible common equity, respectively, divided by common shares outstanding.

8. Client assets represents the sum of Wealth Management client assets and Investment Management AUM. Certain Wealth Management client assets are invested in Investment Management products and are therefore also included in Investment Management’s AUM.

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Management’s Discussion and Analysis

9. For a discussion of our capital ratios, see “Liquidity and Capital Resources—Regulatory Requirements” herein.

Economic and Market Conditions

Client and investor confidence and market sentiment have improved in the third quarter of 2025. The quarter was characterized by increased momentum in capital markets activity and lower interest rates. The rate of economic growth, ongoing geopolitical uncertainty, as well as the timing and pace of further central bank actions have impacted and could continue to impact capital markets and our businesses.

For more information on economic and market conditions, and the potential effects of geopolitical events and acts of war or aggression on our future results, refer to “Risk Factors” and “Forward-Looking Statements” in the 2024 Form 10-K.

Selected Non-GAAP Financial Information

We prepare our financial statements using U.S. GAAP. From time to time, we may disclose certain “non-GAAP financial measures” in this document or in the course of our earnings releases, earnings and other conference calls, financial presentations, definitive proxy statements and other public disclosures. A “non-GAAP financial measure” excludes, or includes, amounts from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. We consider the non-GAAP financial measures we disclose to be useful to us, investors, analysts and other stakeholders by providing further transparency about, or an alternate means of assessing or comparing our financial condition, operating results and capital adequacy.

These measures are not in accordance with, or a substitute for, U.S. GAAP and may be different from or inconsistent with non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we will also generally define it or present the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, along with a reconciliation of the differences between the U.S. GAAP financial measure and the non-GAAP financial measure.

We present certain non-GAAP financial measures that exclude the impact of mark-to-market gains and losses on DCP investments from net revenues and compensation expenses. The impact of DCP is primarily reflected in our Wealth Management business segment results. These measures allow for better comparability of period-to-period underlying operating performance and revenue trends, especially in our Wealth Management business segment. By excluding the impact of these items, we are better able to describe the business drivers and resulting impact to net revenues and corresponding change to the associated compensation expenses. For additional information, see“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Other Matters” in the 2024 Form 10-K.

Tangible common equity is a non-GAAP financial measure that we believe analysts, investors and other stakeholders consider useful to allow for comparability to peers and of the period-to-period use of our equity. The calculation of tangible common equity represents common shareholders’ equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction. In addition, we believe that certain ratios that utilize tangible common equity, such as return on average tangible common equity (“ROTCE”) and tangible book value per common share, also non-GAAP financial measures, are useful for evaluating the operating performance and capital adequacy of the business period-to-period, respectively. The calculation of ROTCE represents annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average tangible common equity. The calculation of tangible book value per common share represents tangible common equity divided by common shares outstanding.

The principal non-GAAP financial measures presented in this document are set forth in the following tables.

Reconciliations from U.S. GAAP to Non-GAAP Consolidated Financial Measures

1. Net revenues and compensation expense are adjusted for DCP for both Firm and Wealth Management business segment.

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Management’s Discussion and Analysis

Non-GAAP Financial Measures by Business Segment

1. Average common equity and average tangible common equity for each business segment is determined using our Required Capital framework (see “Liquidity and Capital Resources—Regulatory Requirements—Attribution of Average Common Equity According to the Required Capital Framework” herein). The sums of the segments’ Average common equity and Average tangible common equity do not equal the Consolidated measures due to Parent Company equity.

2. The calculation of ROE and ROTCE by segment uses net income applicable to Morgan Stanley by segment less preferred dividends allocated to each segment, annualized as a percentage of average common equity and average tangible common equity, respectively, allocated to each segment.

Return on Tangible Common Equity Goal

We have an ROTCE goal of 20%. Our ROTCE goal is a forward-looking statement that is based on a normal market environment and may be materially affected by many factors.

See “Risk Factors” and “Forward-Looking Statements” in the 2024 Form 10-K for further information on market and economic conditions and their potential effects on our future operating results.

ROTCE represents a non-GAAP financial measure. For further information on non-GAAP measures, see “Selected Non-GAAP Financial Information” herein.