MORGAN STANLEY
For the period ended Dec 31, 2025. Filed Feb 19, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 19, 2026
MS$181.44-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-02-21.
0000895421-25-000304
IntroductionExecutive SummaryBusiness SegmentsInstitutional SecuritiesWealth ManagementInvestment ManagementSupplemental Financial InformationOther MattersAccounting Development UpdatesCritical Accounting EstimatesLiquidity and Capital ResourcesBalance SheetRegulatory RequirementsQuantitative and Qualitative Disclosures about RiskRisk ManagementMarket RiskCredit RiskCountry and Other RisksFinancial Statements and Supplementary DataReport of Independent Registered Public Accounting FirmConsolidated Income StatementConsolidated Comprehensive Income StatementCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-19.
0000895421-26-000086
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsIntroductionExecutive SummaryBusiness SegmentsInstitutional SecuritiesWealth ManagementInvestment ManagementSupplemental Financial InformationOther MattersAccounting Development UpdatesCritical Accounting EstimatesLiquidity and Capital ResourcesBalance SheetRegulatory RequirementsQuantitative and Qualitative Disclosures about RiskRisk ManagementMarket RiskCredit RiskCountry and Other RisksFinancial Statements and Supplementary DataReport of Independent Registered Public Accounting FirmConsolidated Income StatementConsolidated Comprehensive Income StatementThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 896 previous paragraphs and 899 current paragraphs.
669 unchanged; 173 reworded; 39 added; 33 removed; 21 previous and 18 current paragraphs rearranged.
Tables are not compared: 95 previous and 91 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (39)
Current report
•The Firm expense efficiency ratio was 68% compared to 71% in the prior year, demonstrating operating leverage while continuing to invest in our businesses.
Current report
•Institutional Securities net revenues of $33.1 billion, primarily reflecting strong performance in Equity on higher client activity and higher underwriting and Advisory revenues within Investment Banking.
Current report
•EMEA net revenues in 2025 increased 16% from the prior year, primarily driven by higher Equity revenues within the Institutional Securities business segment.
Current report
Net revenues of $7,619 million in 2025 increased 23% compared with the prior year, reflecting increases across regions and businesses, particularly in underwriting revenues.
Current report
Net revenues of $15,631 million in 2025 increased 28% compared with the prior year, reflecting an increase in Financing and Execution services.
Current report
•Financing revenues increased primarily due to higher average client balances and increased client activity.
Current report
Net revenues of $8,716 million in 2025 increased 4% compared with the prior year, reflecting an increase in Global macro and Credit products, partially offset by a decrease in Commodities.
Current report
•Global macro products revenues increased primarily due to increased client activity in rates and foreign exchange products.
Current report
•Credit products revenues increased due to increased client activity across products, primarily driven by securitization and lending activity, partially offset by lower results on inventory held to facilitate client activity.
Current report
The number of stock plan participants declined slightly in 2025, primarily as a result of the previously announced disposition of the Firm’s EMEA stock plan business.
Current report
Net interest revenues of $7,911 million in 2025 increased 8% compared with the prior year, primarily due to the cumulative impact of lending growth and changes in balance sheet mix, partially offset by the net effect of lower interest rates.
Current report
•Non-compensation expenses were relatively unchanged compared with the prior year as higher marketing and business development costs and increased technology spend were offset by lower amortization of intangible assets.
Current report
Non-interest expenses of $5,047 million in 2025 increased 7% from the prior year, as a result of higher Compensation and benefits expenses and Non-compensation expenses.
Current report
As of December 31, 2025, 2024, and 2023, Alternatives and Solutions includes Parametric Long-Term period-end AUM of $524 billion, $423 billion and $336 billion, respectively. Parametric Long-Term products generally have lower average fee rates than other Alternatives and Solutions products.
Current report
Consistent with the Firm’s strategic objective of ongoing growth of eligible assets at MSBNA, on February 14, 2026, the fixed income derivatives business of Morgan Stanley Capital Services LLC (“MSCS”) was merged into MSBNA.
Current report
•ASU 2025-06 - Internal-Use Software (Issued September 2025). This update introduces targeted improvements to the recognition and capitalization guidance for internal-use software costs. The update eliminates the prior “project stage” framework and instead requires capitalization of software development costs when (i) management has authorized and committed to funding the software project, and (ii) it is probable that the project will be completed and the software will be used to perform its intended function. In assessing the probability threshold, entities are required to evaluate whether significant development uncertainty exists, including whether the software contains novel or unproven functionality or whether significant performance requirements have not been identified or continue to be substantially revised. The update is effective for the Firm beginning January 1, 2028, with early adoption permitted. Transition may be applied prospectively, retrospectively, or under a modified approach. We are currently evaluating this accounting update.
Current report
•ASU 2025-07 - Derivatives Scope Refinements and Share-Based Consideration from a Customer (Issued September 2025). This update introduces targeted refinements to the derivatives and revenue recognition accounting guidance. It expands an existing scope exception for derivative accounting to exclude certain non-exchange-traded contracts. The update also clarifies that share-based payments from a customer are treated as noncash consideration under the revenue recognition standard until the related performance obligations are fulfilled and the right to the consideration is unconditional. The update is effective for the Firm beginning January 1, 2027, with early adoption permitted. Transition may be applied prospectively, or under a modified retrospective approach. We are currently evaluating this accounting update; however, we do not expect a material impact on our financial statements upon adoption.
Current report
•ASU 2025-08 - Purchased Loans (Issued November 2025). This update expands the application of the “gross-up” approach for purchased credit deteriorated financial assets under Topic 326 to include purchased seasoned loans (excluding credit cards), measured at amortized cost that are not credit deteriorated. Purchased seasoned loans include loans obtained in a business combination or loans acquired at least 90 days after origination and the acquirer was not involved in the origination, either through an asset purchase or through consolidation of a variable interest entity. The gross-up approach requires recognition of an allowance for credit losses at acquisition with a corresponding increase to the amortized cost basis of the loan. The update is effective for the Firm beginning January 1, 2027, with early adoption permitted. Transition will be applied prospectively to loans acquired on or after the adoption date. We are currently evaluating this accounting update.
Current report
•ASU 2025-09 - Hedge Accounting Improvements (Issued November 2025). This update improves hedge accounting guidance by clarifying certain aspects and aligning hedge accounting more closely with the economics of an entity’s risk management activities. The ASU enables entities to apply hedge accounting to a greater number of highly effective economic hedges by making targeted improvements to several areas including, but not limited to, the similar risk assessment for cash flow hedges. The update is effective for the Firm beginning January 1, 2027, with early adoption permitted. The updates should be applied prospectively for all hedging relationships as of the date of adoption. We are currently evaluating this accounting update; however, we do not expect a material impact on our financial statements upon adoption.
Current report
•ASU 2025-10 - Government Grants (Issued December 2025). This update introduces guidance on the accounting for government grants, including recognition, measurement and presentation requirements to reduce diversity in practice and increase consistency among business entities. The guidance excludes transactions within the scope of ASC 740, Income Taxes, government guarantees and the benefit of below-market interest rate loans. Grants related to an asset or to income will be recognized when it is probable that an entity will comply with the conditions attached to the grant, the grant will be received and the related expenses that the grant is intended to compensate have been incurred. For grants related to an asset, entities may elect either a deferred income approach or a cost accumulation approach. The update is effective for the Firm beginning January 1, 2029, with early adoption permitted. Transition may be applied on a modified prospective approach, a modified retrospective approach or on a full retrospective approach. We are currently evaluating this accounting update.
Current report
•ASU 2025-11 - Interim Reporting (Issued December 2025). This update improves the navigability of interim disclosure requirements and clarifies when that guidance is applicable. The amendments also add a principle for disclosing material events since the last annual reporting period, which aligns U.S. GAAP interim financial statement requirements with SEC regulations for registrants. The amendments do not expand or reduce existing disclosure requirements, rather they provide clarity on existing interim reporting requirements. The update is effective for interim periods beginning January 1, 2028, with early adoption permitted. Amendments may be applied prospectively or retrospectively. We are currently evaluating the disclosure impact of this accounting update; however, we do not expect a material impact on our financial statements upon adoption.
Current report
During 2025, the Federal Reserve proposed revisions to the SCB, CCAR and supervisory stress testing frameworks and, on February 4, 2026, the Federal Reserve indicated that it does not expect to adopt final versions of the proposed stress test models prior to conducting the 2026 supervisory stress test. As a result, the Federal Reserve has announced that it expects the Firm will continue to be subject to its current SCB requirement of 4.3% until October 1, 2027, at which time a new SCB requirement may apply based on the results of the supervisory stress test conducted in 2027. If relevant, the Firm
Current report
will provide updated information on applicable regulatory capital standards in response to a final rulemaking. See “Regulatory Developments and Other Matters—Proposed Changes to Capital Requirements” and “Regulatory Developments and Other Matters—Supervisory Stress Testing” herein.
Current report
On April 17, 2025, the Federal Reserve proposed revisions to the SCB and CCAR frameworks applicable to us, aimed at reducing the volatility of the capital requirements stemming from the Federal Reserve’s annual stress test results. Under the proposal, our SCB would be based, in part, on the average of the post-stress capital decline embedded in the Federal Reserve’s stress test results over two consecutive years. Additionally, the proposal would shift the annual effective date of the revised SCB from October 1 to January 1 of the following year and modify certain elements of the Federal Reserve’s CCAR program.
Current report
Final Rulemaking on Changes to the Enhanced Supplementary Leverage Ratio
Current report
On November 25, 2025, the U.S. banking agencies adopted a final rule modifying eSLR standards applicable to U.S. G-SIBs and their U.S. IDI subsidiaries. Under the final rule, the eSLR buffer applicable to U.S. G-SIBs equals 50% of each
Current report
BHC’s Method 1 G-SIB capital surcharge, applied above the 3.0% minimum SLR requirement. The eSLR buffer applicable to U.S. G-SIBs’ IDI subsidiaries has the same form and calibration as the BHC-level standard but is capped at 1.0%, applied above the 3.0% minimum SLR requirement. The final rule also included conforming modifications to total leverage exposure calculations in U.S. G-SIBs’ TLAC and LTD requirements. The effective date of the final rule is April 1, 2026, with optional early adoption on January 1, 2026.
Current report
The Firm and its U.S. Bank Subsidiaries elected to early adopt the final rule as of January 1, 2026. Because our Method 1 G-SIB capital surcharge is 1.0%, the Firm and its U.S. Bank Subsidiaries will be subject to a 3.5% SLR standard (inclusive of a 0.5% eSLR buffer) for the quarter ended March 31, 2026, as compared with the prior standards, which imposed a 5.0% SLR standard on the Firm (inclusive of a 2.0% eSLR buffer) and a 6.0% SLR standard on its U.S. Bank Subsidiaries (inclusive of a 3.0% eSLR buffer).
Current report
On October 24, 2025, the Federal Reserve proposed revisions to its supervisory stress testing framework through two related proposals. The first proposal would modify the timeline and operation of the annual supervisory stress test, including through revisions to the Federal Reserve’s supervisory stress testing policy statements, and solicits comment on the Federal Reserve’s supervisory stress testing models. The second proposal solicited comment on the Federal Reserve’s proposed scenarios for the 2026 supervisory stress test. On February 4, 2026, the Federal Reserve finalized the second proposal, and in addition announced that it expects the Firm will continue to be subject to its current SCB requirement of 4.3% until October 1, 2027. We continue to monitor developments related to the open proposal.
Current report
The allowance for credit losses for loans and lending commitments increased since December 31, 2024, primarily related to portfolio growth in corporate loans and secured lending facilities and provisions for certain specific commercial real estate loans. Charge-offs in 2025 were primarily related to commercial real estate loans within the Institutional Securities business segment.
Current report
Table of Contents
Removed paragraphs (33)
Previous report
•The Firm expense efficiency ratio was 71% compared to 77% in the prior year, reflecting higher revenues and expense discipline. In the prior year, the ratio was negatively impacted by specific severance costs of $353 million, integration-related expenses of $293 million, an FDIC special assessment of $286 million and higher legal expenses related to a $249 million settlement in connection with resolutions of investigations into the Firm’s blocks business. (See “Expenses” herein for more information).
Previous report
•Institutional Securities net revenues of $28.1 billion reflect higher results across businesses and regions on higher client activity and improved market conditions.
Previous report
In 2023, Compensation and benefits expenses included severance costs of $353 million, primarily associated with a specific Firmwide reduction in workforce during the second quarter of 2023. We recorded severance costs of $220 million in the Institutional Securities business segment, $105 million in the Wealth Management business segment, and $28 million in the Investment Management business segment for 2023.
Previous report
In 2023, integration-related expenses were $293 million, of which $201 million related to the integration of ETRADE within the Wealth Management business segment and $92 million related to the integration of Eaton Vance within the Investment Management business segment. In 2022, integration-related expenses were $470 million, of which $357 million related to the integration of ETRADE within the Wealth Management business segment and $113 million related to the integration of Eaton Vance within the Investment Management business segment. Integration-related expenses primarily included non-compensation expenses such as information technology expense related to the consolidation of platforms, and professional fees related to changes in legal entity structures and the integration of clients, within both Wealth Management and Investment Management business segments. Integration-related activities were substantially completed as of December 31, 2023.
Previous report
•EMEA net revenues in 2024 increased 19% from the prior year, primarily driven by higher results across businesses within the Institutional Securities business segment.
Previous report
Net revenues of $6,170 million in 2024 increased 35% compared with the prior year, reflecting an increase in underwriting and Advisory revenues.
Previous report
While Investment Banking results improved from the prior year, we continue to operate in a market environment with lower completed M&A activity relative to longer-term averages.
Previous report
Net revenues of $12,230 million in 2024 increased 22% compared with the prior year, reflecting an increase in both Execution services and Financing, particularly in Asia and the Americas.
Previous report
•Financing revenues increased primarily due to higher client activity and lower funding and liquidity costs.
Previous report
Net revenues of $8,418 million in 2024 increased 10% compared with the prior year, reflecting an increase across businesses, particularly in Credit and Global macro products.
Previous report
•Global macro products increased primarily due to lower losses on foreign exchange products and higher gains on rates products, on inventory held to facilitate client activity.
Previous report
•Credit products revenues increased primarily due to higher lending and securitized products revenues and lower losses
Previous report
on inventory held to facilitate client activity in corporate credit products.
Previous report
Net interest revenues of $7,313 million in 2024 decreased 10% compared with the prior year, primarily due to lower average sweep deposits, partially offset by higher yields on our investment portfolio and lending growth.
Previous report
•Non-compensation expenses decreased, primarily driven by lower professional services and legal expenses and lower FDIC special assessment cost, partially offset by higher technology spend.
Previous report
Includes $75 billion of fee-based assets acquired in an asset acquisition in the first quarter of 2022, reflected in Separately managed.
Previous report
Non-interest expenses of $4,724 million in 2024 increased 4% from the prior year, as a result of higher Non-compensation and Compensation and benefits expenses.
Previous report
We are currently evaluating the following accounting updates; however, we do not expect a material impact on our financial condition or results of operations upon adoption:
Previous report
•Income Tax Disclosures. This update enhances annual income tax disclosures primarily to further disaggregate disclosures related to the income tax rate reconciliation and income taxes paid. For the income tax rate reconciliation, this update requires (1) disclosure of specific categories of reconciling items (where applicable), and (2) providing additional information for reconciling items that meet a quantitative threshold. For income taxes paid (net of refunds), this update requires disclosure of amounts disaggregated by (1) federal, state, and foreign taxes; and (2) individual jurisdictions that meet a quantitative threshold. Additionally, the update requires disclosure of (1) income (or loss) before income taxes, disaggregated between domestic and foreign; and (2) income tax expense disaggregated by federal, state and foreign. The update is effective for annual periods beginning January 1, 2025, with early adoption permitted.
Previous report
CECL Deferral. Beginning on January 1, 2020, we elected to defer the effect of the adoption of CECL on our risk-based and leverage-based capital amounts and ratios, as well as our RWA, adjusted average assets and supplementary leverage exposure calculations, over a five-year transition period. The deferral impacts began to phase in at 25% per year from January 1, 2022 and were phased-in at 75% from January 1, 2024. The deferral impacts were fully phased-in from January 1, 2025.
Previous report
Basel III Endgame and G-SIB Surcharge Proposals
Previous report
On July 27, 2023, U.S. banking agencies proposed revisions to risk-based capital and related standards applicable to us and our U.S. Bank Subsidiaries (“Basel III Endgame Proposal”). We continue to monitor developments related to this rulemaking as well as the proposed revisions to the G-SIB capital surcharge framework.
Previous report
The prior period has been revised to conform to the current period presentation.
Previous report
The allowance for credit losses for loans and lending commitments was relatively unchanged since December 31, 2023, reflecting provisions for certain specific commercial real estate loans and growth in the corporate loan portfolio, offset by charge-offs related to commercial real estate lending, mainly in the office sector, and improvements in the macroeconomic outlook.
Previous report
Institutional Securities Event-Driven Loans and Lending Commitments
Previous report
Additional Information—Top 10 Non-U.S. Country Exposures
Previous report
Collateral Held Against Net Counterparty Exposure 1
Previous report
The benefit of collateral received is reflected in the Top 10 Non-U.S. Country Exposures at December 31, 2024.
Previous report
Primarily consists of cash and government obligations of the countries listed.
Reworded paragraphs (173)
Previous wording
Morgan Stanley is a global financial services firm that maintains significant market positions in each of its business segments—Institutional Securities, Wealth Management and Investment Management. Morgan Stanley, through its subsidiaries and affiliates, provides a wide variety of products and services to a large and diversified group of clients and customers, including corporations, governments, financial institutions and individuals. Unless the context otherwise requires, the terms “Morgan Stanley,” “Firm,” “us,” “we” or “our” mean Morgan Stanley (the “Parent Company”) together with its consolidated subsidiaries. See the “Glossary of Common Terms and Acronyms” for the definition of certain terms and acronyms used throughout this Form 10-K. For an analysis of 2023 results compared with 2022 results, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the annual report on Form 10-K for the year ended December 31, 2023 filed with the SEC.
Current wording
Morgan Stanley is a global financial services firm that maintains significant market positions in each of its business segments—Institutional Securities, Wealth Management and Investment Management. Morgan Stanley, through its subsidiaries and affiliates, provides a wide variety of products and services to a large and diversified group of clients and customers, including corporations, governments, financial institutions and individuals. We operate as an Integrated Firm whereby we serve clients holistically across our business segments. Unless the context otherwise requires, the terms “Morgan Stanley,” “Firm,” “us,” “we” or “our” mean Morgan Stanley (the “Parent Company”) together with its consolidated subsidiaries. See the “Glossary of Common Terms and Acronyms” for the definition of certain terms and acronyms used throughout this Form 10-K. For an analysis of 2024 results compared with 2023 results, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the annual report on Form 10-K for the year ended December 31, 2024 filed with the SEC.
Previous wording
A description of the clients and principal products and services of each of our business segments is as follows:
Current wording
A description of the clients and principal products and services of each of our business segments is below. Through the Integrated Firm some of our clients may use the products and services of more than one of our business segments.
Previous wording
Institutional Securities provides a variety of products and services to corporations, governments, financial institutions and ultra-high net worth clients. Investment Banking services consist of capital raising and financial advisory services, including the underwriting of debt, equity securities and other products, as well as advice on mergers and acquisitions, restructurings and project finance. Our Equity and Fixed Income businesses include sales, financing, prime brokerage, market-making, Asia wealth management services and certain business-related investments. Lending activities include originating corporate loans and commercial real estate loans, providing secured lending facilities, and extending securities-based and other financing to clients. Other activities include research.
Current wording
Institutional Securities provides a variety of products and services to corporations, governments, financial institutions and ultra-high net worth clients. Investment Banking services consist of capital raising and financial advisory services, including the underwriting of debt, equity securities and other products, as well as advice on mergers and acquisitions, restructurings and project finance. Our Markets business, which comprises Equity and Fixed Income, provides sales, financing, prime brokerage, market-making, and Asia wealth management services and holds certain business-related investments. Lending activities include originating corporate loans and commercial real estate loans, providing secured lending facilities, and extending securities-based and other financing to clients. Other activities include research.
Previous wording
Wealth Management provides a comprehensive array of financial services and solutions to individual investors and small to medium-sized businesses and institutions. Wealth Management covers: financial advisor-led brokerage, custody, administrative and investment advisory services; self-directed brokerage services; financial and wealth planning services; workplace services, including stock plan administration; securities-based lending, residential and commercial real estate loans and other lending products; banking; and retirement plan services.
Current wording
Wealth Management provides a comprehensive array of financial services and solutions to individual investors, including high and ultra-high net worth individuals, and businesses and institutions. Wealth Management supports clients through three channels: Advisor-Led, Self-Directed and Workplace. Wealth Management includes: financial advisor-led brokerage, investment advisory, custody, cash management, and administrative services; self-directed brokerage services; financial and wealth planning services; workplace services, including stock plan administration; securities-based lending, residential and commercial real estate loans and other lending products; banking; and retirement plan services.
Previous wording
The results of operations in the past have been, and in the future may continue to be, materially affected by: competition; legislative, legal and regulatory developments; and other risk factors. These factors also may have an adverse impact on our ability to achieve our strategic objectives. Additionally, the discussion of our results of operations herein may contain forward-looking statements. These statements, which reflect management’s beliefs and expectations, are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of the risks and uncertainties that may affect our future results, see “Forward-Looking Statements”, “Business—Competition”, “Business—Supervision and Regulation”, “Risk Factors” and “Liquidity and Capital Resources—Regulatory Requirements” herein.
Current wording
The results of operations in the past have been, and in the future may continue to be, materially affected by: competition; legislative, legal and regulatory developments; market and economic conditions; and other risk factors. These factors also may have an adverse impact on our ability to achieve our strategic objectives. Additionally, the discussion of our results of operations herein may contain forward-looking statements. These statements, which reflect management’s beliefs and expectations, are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of the risks and uncertainties that may affect our future results, see “Forward-Looking Statements”, “Business—Competition”, “Business—Supervision and Regulation”, “Risk Factors” and “Liquidity and Capital Resources—Regulatory Requirements” herein.
Previous wording
•The Firm reported net revenues of $61.8 billion and net income of $13.4 billion, reflecting strong results across our business segments.
Current wording
•The Firm reported net revenues of $70.6 billion and net income applicable to Morgan Stanley of $16.9 billion reflecting strong results across our business segments and demonstrating the strength of our Integrated Firm.
Previous wording
•The Firm delivered ROE of 14.0% and ROTCE of 18.8% (see “Selected Non-GAAP Financial Information” herein).
Current wording
•The Firm delivered ROE of 16.6% and ROTCE of 21.6% (see “Selected Non-GAAP Financial Information” herein).
Previous wording
•The Firm accreted $5.6 billion of Common Equity Tier 1 capital while supporting clients and returning capital to shareholders. At December 31, 2024, the Firm’s Standardized Common Equity Tier 1 capital ratio was 15.9%.
Current wording
•At December 31, 2025, the Firm’s Standardized Common Equity Tier 1 capital ratio was 15.0%, and its Supplementary Leverage Ratio was 5.4%.
Previous wording
•Wealth Management delivered net revenues of $28.4 billion, reflecting higher Asset management and Transactional revenues. The pre-tax margin was 27.2%. Fee-based asset flows were $123 billion and the business added net new assets of$252 billion.
Current wording
•Wealth Management delivered net revenues of $31.8 billion, primarily reflecting higher Asset management revenues on higher market levels and the cumulative impact of strong fee-based flows. The pre-tax margin was 29.3%. Fee-based asset flows were $160 billion and the business added net new assets of$356 billion.
Previous wording
•Investment Management reported net revenues of $5.9 billion, primarily driven by asset management revenueson higher average AUM.
Current wording
•Investment Management reported net revenues of $6.5 billion, primarily reflecting higher asset management fees driven by higher average AUM on higher market levels.
Previous wording
•We reported net revenues of $61.8 billion in 2024, which increased by 14% compared with $54.1 billion in 2023. Net income applicable to Morgan Stanley was $13.4 billion in 2024, which increased by 47% compared with $9.1 billion in 2023. Diluted earnings per common share was $7.95 in 2024, which increased by 53% compared with $5.18 in 2023.
Current wording
•We reported net revenues of $70.6 billion in 2025, which increased by 14% compared with $61.8 billion in 2024. Net income applicable to Morgan Stanley was $16.9 billion in 2025, which increased by 26% compared with $13.4 billion in 2024. Diluted earnings per common share was $10.21 in 2025, which increased by 28% compared with $7.95 in 2024.
Previous wording
•Compensation and benefits expenses of $26,178 million in 2024 increased 7% from the prior year, primarily due to an increase in the formulaic payout to Wealth Management representatives and higher discretionary incentive compensation, both on higher revenues, partially offset by lower severance costs.
Current wording
•Compensation and benefits expenses of $29,216 million in 2025 increased 12% from the prior year, 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 salary expenses.
Previous wording
In 2022, Compensation and benefits expenses included severance costs of $133 million, associated with a specific Firmwide reduction in workforce during the fourth quarter of 2022. We recorded severance costs of $88 million in the Institutional Securities business segment, $30 million in the Wealth Management business segment, and $15 million in the Investment Management business segment for 2022. These specific reductions in workforce occurred across the Firm’s business segments and geographic regions, impacted approximately 4% and 1% of the Firm’s global workforce in 2023 and 2022, respectively, and resulted from the Firm’s review of its global workforce, operating expenses and the business environment following the acquisitions of ETRADE Financial Corporation (“ETRADE”) and Eaton Vance Corp. (“Eaton Vance”), rather than a change in strategy or exit of businesses. These costs were primarily incurred in the Americas and EMEA, with the majority in the Americas.
Current wording
In 2025, as a result of a March workforce management action, we recognized severance costs of $144 million, included in Compensation and benefits expense. The workforce management action was related to performance management and the alignment of our workforce to our business needs, rather than a change in strategy or exit of businesses. The workforce management action occurred across our business segments and geographic regions and impacted approximately 2% of our global workforce at that time. We recorded severance costs of $78 million in the Institutional Securities business segment, $50 million in the Wealth Management business segment, and $16 million in the Investment Management business segment. These costs were incurred across all regions, with the majority in the Americas.
Previous wording
•Non-compensation expenses of $17,723 million in 2024 increased 3% from the prior year, primarily driven by higher execution-related expenses and increased technology spend, partially offset by lower legal expenses and lower FDIC special assessment cost.
Current wording
•Non-compensation expenses of $19,126 million in 2025 increased 8% from the prior year, primarily due to higher execution-related expenses and increased technology spend.
Previous wording
The Provision for credit losses on loans and lending commitments of $264 million in 2024 was primarily related to certain specific commercial real estate loans and growth in the corporate loan portfolio, partially offset by improvements in the macroeconomic outlook. The Provision for credit losses on loans and lending commitments of $532 million in 2023 was primarily related to credit deterioration in the commercial real estate sector, including provisions for certain specific loans, mainly in the office portfolio, and modest growth in certain other loan portfolios.
Current wording
The Provision for credit losses on loans and lending commitments of $349 million in 2025 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 of $264 million in 2024 was primarily related to certain specific commercial real estate loans and growth in the corporate loan portfolio, partially offset by improvements in the macroeconomic outlook.
Previous wording
•Institutional Securities net revenues of $28,080 million in 2024 increased 22% from the prior year, reflecting higher results across businesses, particularly in Equity and underwriting results within Investment Banking.
Current wording
•Institutional Securities net revenues of $33,080 million in 2025 increased 18% from the prior year, primarily reflecting higher results in Equity driven by increased client activity and higher average client balances, and higher underwriting and Advisory revenues within Investment Banking.
Previous wording
•Wealth Management net revenues of $28,420 million in 2024 increased 8% from the prior year, primarily reflecting higher Asset management revenues and Transactional revenues, partially offset by lower Net interest income.
Current wording
•Wealth Management net revenues of $31,754 million in 2025 increased 12% from the prior year, 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.
Previous wording
•Investment Management net revenues of $5,861 million in 2024 increased 9% from the prior year, primarily reflecting higher Asset management and related fees and higher Performance-based income and other revenues.
Current wording
•Investment Management net revenues of $6,525 million in 2025 increased 11% from the prior year, primarily reflecting higher Asset management and related fees driven by higher AUM on higher market levels and higher Performance-based income and other revenues.
Previous wording
•Americas net revenues in 2024 increased 13% from the prior year, primarily driven by higher Asset management revenues within the Wealth Management business segment and higher results across businesses within the Institutional Securities business segment.
Current wording
•Americas net revenues in 2025 increased 13% from the prior year, driven by higher results across all business segments.
Previous wording
•Asia net revenues in 2024 increased 19% from the prior year, primarily driven by higher results from Equity and Investment Banking within the Institutional Securities business segment.
Current wording
•Asia net revenues in 2025 increased 23% from the prior year, primarily driven by higher results in Equity and Investment Banking within the Institutional Securities business segment.
Previous wording
ROE and ROTCE represent earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity and average tangible common equity, respectively.
Current wording
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.
Previous wording
Client assets represent 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.
Current wording
Client assets represents the sum of Wealth Management client assets and Investment Management AUM. Certain Wealth Management client assets, totaling $350 billion as of December 31, 2025, are invested in Investment Management products and are therefore also included in Investment Management’s AUM.
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The economic environment, client and investor confidence and overall market sentiment improved in 2024. While interest rates declined in recent months, elevated inflation, geopolitical risks including ongoing tensions in the Middle East, uncertainties surrounding government and policy developments in the markets we operate in and the timing and pace of further interest rate actions present ongoing risks to the economic environment. These factors have impacted, and could continue to impact capital markets and our businesses, as discussed further in “Business Segments” herein.
Current wording
The economic environment was resilient in 2025, as client and investor confidence and market sentiment improved and markets rebounded from early-year uncertainty. The year 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 any further central bank actions have impacted and could continue to impact capital markets and our businesses, as discussed further in “Business Segments” herein.
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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.”
Current wording
For more information on economic and market conditions, and the potential effects of geopolitical events on our future results, refer to “Risk Factors” and “Forward-Looking Statements” herein.
Previous wording
We present certain non-GAAP financial measures that exclude the impact of mark-to-market gains and losses, net of financing costs on DCP investments from net revenues. We also exclude the impact of mark-to-market gains and losses on DCP from compensation expenses. The impact of DCP investments and DCP are 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. By excluding the impact of these items, we are better able to describe the business drivers and resulting impact to net revenues and
Current wording
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 on DCP, refer to “Other Matters” herein.
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Substantially all of our operating revenues and operating expenses are directly attributable to our business segments. Certain revenues and expenses have been allocated to each business segment, generally in proportion to its respective net revenues, non-interest expenses or other relevant measures. See Note 22 to the financial statements for segment net revenues by income statement line item and information on intersegment transactions.
Current wording
Substantially all of our operating revenues and operating expenses are directly attributable to our business segments. Certain revenues and expenses have been allocated to each business segment, generally in proportion to its respective net revenues, non-interest expenses or other relevant measures. See Note 22 to the financial statements for segment net revenues by income statement line item, segment expenses, and information on intersegment transactions.
Previous wording
Within the Institutional Securities business segment, Trading revenues arise from transactions in cash instruments and derivatives in which we act as a market maker for our clients. In this role, we stand ready to buy, sell or otherwise transact with customers under a variety of market conditions and to provide firm or indicative prices in response to customer requests. Our liquidity obligations can be explicit in some cases, and in others, customers expect us to be willing to transact with them. In order to most effectively fulfill our market-making function, we engage in activities across all of our trading businesses that include, but are not limited to:
Current wording
Within the Institutional Securities business segment, Trading revenues arise from transactions in cash instruments and derivatives in which we act as a market maker for our clients. In this role, we stand ready to buy, sell or otherwise transact with customers under a variety of market conditions and to provide firm or indicative prices in response to customer
Previous wording
Investments revenues are composed of realized and unrealized gains and losses derived from investments, including those associated with employee deferred compensation and co-investment plans. Estimates of the fair value of the investments that produce these revenues may involve significant judgment and may fluctuate significantly over time in light of business, market, economic and financial conditions, generally or in relation to specific transactions.
Current wording
Investments revenues are composed of realized and unrealized gains and losses derived from investments, including those associated with carried interest arrangements and co-investment plans. Estimates of the fair value of the investments that produce these revenues may involve significant judgment and may fluctuate significantly over time in light of business, market, economic and financial conditions, generally or in relation to specific transactions.
Previous wording
Within the Investment Management business segment, Investments revenues are primarily from performance-based fees in the form of carried interest, a portion of which is subject to reversal, and gains and losses from investments. The business is entitled to receive carried interest when the return in certain funds exceeds specified performance targets. Additionally, we consolidate certain sponsored Investment Management funds where revenues are primarily attributable to holders of noncontrolling interests.
Current wording
Within the Investment Management business segment, Investments revenues are primarily from performance-based fees in the form of carried interest, a portion of which is subject to risk of reversal, and gains and losses from investments. The business is entitled to receive carried interest when the return in certain funds exceeds specified performance targets. Additionally, we consolidate certain sponsored Investment Management funds where revenues are primarily attributable to holders of noncontrolling interests.
Previous wording
associated with fee-based assets, account service and administration, as well as distribution of products. These revenues are generally based on the net asset value of the account in which a client is invested.
Current wording
Within the Wealth Management business segment, Asset management revenues are related to advisory services associated with fee-based assets, account service and administration, as well as distribution of products. These revenues are generally based on the net asset value of the account in which a client is invested.
Previous wording
Within the Institutional Securities business segment, Net interest is a function of market-making strategies, client activity, and the prevailing level, term structure and volatility of interest rates. Net interest is impacted by market-making, lending and financing activities as we generally earn interest on securities held by the Firm, Securities borrowed, Securities purchased under agreements to resell, Loans and margin loans, while Borrowings, Securities loaned and Securities sold under agreements to repurchase generally incur interest expense.
Current wording
Within the Institutional Securities business segment, Net interest is a function of market-making strategies, client activity, and the prevailing level, term structure and volatility of interest rates. Net interest is impacted by market-making, lending and financing activities. We generally earn interest on securities held by the Firm, Securities borrowed, Securities purchased under agreements to resell, Loans and margin
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Following is a description of the revenue-generating activities within our equity and fixed income businesses, as well as how their results impact the income statement line items.
Current wording
The following is a description of the revenue-generating activities within our equity and fixed income businesses, as well as how their results impact the income statement line items.
Previous wording
Equity—Execution services. A significant portion of the results for this business is generated by commissions and fees from executing and clearing client transactions on major stock and derivative exchanges, as well as from OTC transactions. We make markets for our clients principally in equity-related securities and derivative products, including those that provide liquidity and are utilized for hedging. Market-making also generates gains and losses on inventory held to facilitate client activity, which are reflected in Trading revenues. Execution services also includes certain Investments and Other revenues.
Current wording
and derivative exchanges, as well as from OTC transactions. We make markets for our clients principally in equity-related securities and derivative products, including those that provide liquidity and are utilized for hedging. Market-making also generates gains and losses on inventory held to facilitate client activity, which are reflected in Trading revenues. Execution services also includes certain Investments and Other revenues.
Previous wording
•Global macro products. We make markets for our clients in interest rate, foreign exchange and emerging market products, including exchange-traded and OTC securities and derivative instruments. The results of this market-making activity are primarily driven by gains and losses from buying and selling positions to stand ready for and satisfy client demand and are recorded in Trading revenues.
Current wording
•Global macro products. We make markets for our clients in interest rate and foreign exchange products across emerging and developed markets, including exchange-traded and OTC securities and derivative instruments. The results of this market-making activity are primarily driven by gains and losses from buying and selling positions to stand ready for and satisfy client demand and are recorded in Trading revenues.
Previous wording
•Credit products. We make markets in credit-sensitive products, such as corporate bonds and mortgage securities and other securitized products, and related derivative instruments. The values of positions in this business are sensitive to changes in credit spreads and interest rates, which result in gains and losses reflected in Trading revenues. We undertake lending activities, which include commercial mortgage lending, secured lending facilities and financing extended to sales and trading customers. Due
Current wording
•Credit products. We make markets in credit-sensitive products, such as corporate bonds and mortgage securities and other securitized products, and related derivative instruments. This market-making activity also generates gains and losses on inventory held to facilitate client activity which are reflected in Trading revenues. We undertake lending activities, which include commercial mortgage lending, secured lending facilities and financing extended to sales and trading customers. Due to the amount and type of the interest-bearing securities and loans making up this business, a significant portion of the results is also reflected in Net interest revenues.
Previous wording
Compensation and benefits expenses include base salaries and fixed allowances, formulaic programs, discretionary incentive compensation, amortization of deferred cash and equity awards, changes in the fair value of DCP investments, carried interest allocated to employees, severance costs, and other items such as health and welfare benefits. For additional information on DCP, refer to “Other Matters” herein.
Current wording
Compensation and benefits expenses include base salaries and fixed allowances, formulaic programs, discretionary incentive compensation, amortization of deferred cash and equity awards, changes in the fair value of the referenced notional DCP investments, carried interest allocated to employees, severance costs, and other items such as health and welfare benefits. For additional information on DCP, refer to “Other Matters” herein.
Previous wording
•Advisory revenues increased primarily due to higher completed M&A transactions.
Current wording
•Advisory revenues increased primarily reflecting higher completed M&A transactions.
Previous wording
•Equity underwriting revenues increased primarily on higher initial public offerings and follow-on offerings.
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•Equity underwriting revenues increased primarily reflecting higher convertible issuances and initial public offerings.
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•Fixed income underwriting revenues increased primarily reflecting higher bond issuances, non-investment grade loan issuances and securitized products revenues.
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•Fixed income underwriting revenues increased primarily reflecting higher non-investment and investment grade bond and loan issuances, which benefited from higher event-related activity.
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•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.
Current wording
•Execution services revenues increased primarily due to increased client activity and higher gains on inventory held to facilitate client activity in derivatives and cash equities.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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requests. Our liquidity obligations can be explicit in some cases, and in others, customers expect us to be willing to transact with them. In order to most effectively fulfill our market-making function, we engage in activities across all of our trading businesses that include, but are not limited to:
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loans, while Borrowings, Securities loaned and Securities sold under agreements to repurchase generally incur interest expense.
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Equity—Execution services. A significant portion of the results for this business is generated by commissions and fees from executing and clearing client transactions on major stock
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Indefinite-lived intangible assets are not amortized but are tested for impairment on an annual basis as of July 1 and on an interim basis when certain events or circumstances exist.
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regulatory fine/penalty may ultimately be materially different from the recorded accruals.
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Significant judgment is required in estimating the consolidated provision for (benefit from) income taxes, current and deferred tax balances (including valuation
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We believe that accessing debt investors through multiple distribution channels helps provide consistent access to the unsecured markets. In addition, the issuance of borrowings
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Securities-based lending allows clients to borrow money against the value of qualifying securities, generally for any purpose other than purchasing, trading or carrying securities
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partially reduce associated credit risk. At both December 31, 2025 and December 31, 2024, greater than 95% of the CRE loans balance in the Wealth Management business segment received guarantees. All of our lending against CRE properties within Wealth Management are in the Americas region.
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elevated in loans backed by collateral pools with significant concentrations in individual issuers or securities with similar risk characteristics. For a further discussion, see “Risk Factors—Credit Risk” herein.
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The Operational Risk Department and the Non-Financial Risk Cyber, Technology, and Information Security Department (“NFR CTIS”) provide independent oversight of operational
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that are designed to address regulatory requirements and protect our clients’, employees’ and own data against unauthorized disclosure, modification and misuse. These policies, procedures and technologies cover a broad range of areas, including: identification of internal and external threats, access control, data security, protective controls, detection of malicious or unauthorized activity, incident response and recovery planning. See also “Firm Resilience” herein for a discussion of our resilience program that is designed to mitigate the impacts of cybersecurity events and other risks.
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Where a third-party vendor cannot meet those standards, its services, and the residual risk to the Firm, are subject to review, challenge and escalation through our risk management processes and ERM committees, which may ultimately result in requesting increased security measures or ceasing engagement with such third-party vendor.
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Risk levels and mitigating measures are presented to and monitored by dedicated management-level cybersecurity risk committees. These committees include representatives from Firm management as well as business and control stakeholders who review, challenge and, where appropriate, consider exceptions to our policies and procedures. Significant cybersecurity risks are escalated from these committees to our Non-Financial Risk Committee. The CIO
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The Firm’s critical processes and businesses could be disrupted by events including cyberattacks, failure or loss of access to technology and/or associated data, military conflicts, acts of terror, natural disasters, severe weather events and infectious disease. The Firm maintains a Firmwide resilience
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well as exposing us to reputational, compliance and/or litigation risk due to increased legal and regulatory scrutiny or negative public sentiment.
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Our audit procedures related to the valuation of Level 3 financial assets and Level 3 trading liabilities, borrowings, other secured
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corresponding change to the associated compensation expenses. For additional information on DCP, refer to “Other Matters” herein.
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Within the Wealth Management business segment, Asset management revenues are related to advisory services
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to the amount and type of the interest-bearing securities and loans making up this business, a significant portion of the results is also reflected in Net interest revenues.
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manager. Only one third-party asset manager strategy can be held per account.
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definition of fair value, Level 1, Level 2, Level 3 and related valuation techniques, and quantitative information about and sensitivity of significant unobservable inputs used in Level 3 fair value measurements, see Notes 2 and 4 to the financial statements.
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range of loss or range of additional loss) is probable or reasonably possible, or to estimate the amount of loss, including through potentially lengthy discovery or determination of important factual matters, determination of issues related to class certification, the calculation of damages or other relief, and consideration of novel or unsettled legal questions relevant to the proceedings or investigations in question.
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strategies that may be available to tax attribute carryforwards before they expire.
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correlations or other market factors, such as market liquidity; and
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As described in our most recent resolution plan, our preferred resolution strategy is an SPOE strategy. In line with our
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sensitivity analyses cover substantially all of the non-trading market risk in our portfolio.
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Event-driven loans and lending commitments are associated with certain underwritings and/or syndications to finance a specific transaction, such as merger, acquisition, recapitalization or project finance activities. Balances may fluctuate as such lending is related to transactions that vary in timing and size from period to period.
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As of December 31, 2024 and December 31, 2023, our lending against commercial real estate (“CRE”) properties within the Institutional Securities business segment totaled$10.7 billion and $9.4 billion, respectively. This represents
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which includes requiring customers to deposit additional collateral or reduce debt positions, when necessary.
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A credit derivative is a contract between a seller and buyer of protection against the risk of a credit event occurring on one
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transfer and/or limit operational risk exposures, due diligence, implementation of enhanced policies and procedures, technology change management controls, exception management processing controls, and segregation of duties.
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As part of the ERM framework, we have implemented and maintain a program to assess, identify and manage risks arising from the cybersecurity threats confronting the Firm (“Cybersecurity Program”). Our Cybersecurity Program helps
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for escalating and considering the materiality of incidents that impact the Firm, including escalation to senior management and the Board.
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In accordance with its charter, the BOTC receives quarterly reports from (i) Technology, including the CIO or the CISO; (ii) Operations; and (iii) NFR. Such reporting includes updates on our Cybersecurity Program, risks from cybersecurity threats, our programs to address and mitigate the risks associated with the evolving cybersecurity threat environment, and NFR’s assessment of cybersecurity risks. Senior officers in Technology and NFR also provide an annual report to the BOTC on the status of our broader information security program in compliance with the Gramm-Leach-Bliley Act, which includes a discussion of risks arising
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Our Liquidity Risk Management Framework is critical to helping ensure that we maintain sufficient liquidity reserves and durable funding sources to meet our daily obligations and to withstand unanticipated stress events. The Liquidity Risk
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regulatory focus on the financial services and banking industries globally presents a continuing business challenge for us.
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of its valuation methodologies and the relevant inputs and assumptions.