Morgan Stanley Reports Q3 Revenue of $20.3 Billion, EPS of $3.03

Morgan Stanley (NYSE: MS ) released third-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

6%. Wealth Management achieved record revenues of over $9 billion, with net new assets reaching $232 billion, indicating strong client trust and engagement. Institutional Securities revenue grew by 18% year-over-year to $10 billion, driven by high client activity in equities and strategic corporate engagements. The company is optimistic about future investment banking activity despite geopolitical tensions and higher interest rates, with a strong pipeline and ongoing strategic dialogues.

Morgan Stanley continues to invest in AI and technology to enhance infrastructure and business growth, positioning itself as a leader in digital and AI-driven financial solutions. 9%, providing flexibility for future growth and regulatory changes. The company's outlook remains positive, focusing on leveraging its integrated platform to deliver value to clients amid a complex economic environment. Full Transcript OPERATOR Good morning.

Welcome to Morgan Stanley's third quarter 2026 earnings call. On behalf of Morgan Stanley, I will begin the call with the following information and disclaimers. This call is being recorded. com.

Today's presentation may include forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Morgan Stanley does not undertake to update the forward-looking statements in this discussion. Please refer to our notices regarding forward-looking statements and non-GAAP measures that appear in the earnings release. This presentation may not be duplicated or reproduced without our consent.

I will now turn the call over to Chairman and Chief Executive Officer Ted Pick. Ted Pick, Chairman and Chief Executive Officer Thank you, operator. Good morning and thank you for joining us. 6%.

This quarter marks our fifth consecutive quarter above 20%, speaking to the consistent strength of our global franchise. 5 trillion. Against the complicated backdrop, the quarter's overall performance speaks to the momentum of the integrated firm. Wealth management continues to scale as clients entrust us with additional assets and deepen their relationships with Morgan Stanley.

Wealth had a record quarter with revenues of over $9 billion with milestone levels of net new assets of $232 billion and fee-based flows of $80 billion. This sustained performance reflects the strength of our financial advisors, the breadth of our unique capabilities and product offerings, and the trusted partnerships that distinguish our integrated firm. Institutional Securities delivered $10 billion of revenue, up 18% year over year. 8 billion.

Clients largely remained active as we deepened engagement across our global franchise. On the forward, banking pipelines remain high and strategic dialogues inside corporate boardrooms are active and generally receptive to action. Clients are seeking advice to capitalize on the current dynamic growth environment while accepting some additional structural volatility. Pent-up demand and catalysts to drive scale and productivity in a more constructive regulatory backdrop support an ongoing favorable outlook for investment banking activity.

In short, we remain positive about the ongoing ability to monetize the corporate finance life cycle across the investment bank. Stepping back, the third quarter unfolded in two distinct phases. July and August were unusually brisk as risk appetite was dominated by hyperscaler investment in the build-out of the AI ecosystem. In contrast, as Labor Day approached, we observed the headwinds of renewed tensions in the Middle East and higher interest rates globally as central banks moved to keep inflation at bay.

Market volumes were slower across asset classes as investors and institutional actors gauged risk-reward into the fourth quarter and year-end. As we move through October, the two known unknowns that we wrote about in our March shareholder letter, namely the acceleration of AI at the enterprise level and the risks associated with geopolitical conflict, have reached a critical juncture. S. nominal GDP growth of 5 to 6%.

Large-cap corporate earnings continue to move higher, the economy is at full employment, the Fed is focused on managing long-term inflation expectations, and the salutary effects of common-sense regulation are kicking in. S. and globally are reasons to be more cautious. As we move into the fourth quarter, it is clear to us now that these two known unknowns and how they interact—and which of the third quarter's narratives, half full or half empty, holds the upper hand—will drive investor and corporate behavior into year-end and into the first half of 2027.

Against either backdrop, financial strength remains a key pillar of Morgan Stanley. We continue to actively support clients while remaining well capitalized. Our very healthy level of excess capital, with 300 basis points of excess CET1, contributes to our financial strength and affords us substantial flexibility ahead. We look forward to continued dialogue and upcoming transparency as our regulators finalize the bank capital regulatory framework.

As we enter the final quarter of the year, Morgan Stanley remains aligned and cohesive, focused on delivering higher highs and higher lows through the cycle. Particularly when the environment is as complex as it is today, it is essential that we continue to execute on our clear and consistent strategy to act as trusted advisor to our clients, raising, managing, and allocating capital across the integrated firm. With that, I'll turn it over to Sharon to take you through the quarter in greater detail. Sharon Yeshaya, Chief Financial Officer Thank you and good morning.

In the third quarter the firm delivered strong results. 6%. Growth momentum from the second quarter carried into the early part of the third quarter with markets focused on AI investment and continued economic expansion. However, rising energy prices and interest rates weighed on market activity following a shortened post—Labor Day September.

Despite market uncertainty, corporate activity remains strong, reflecting continued strategic dialogue. Ongoing client engagement reinforces the opportunity for our integrated firm to deepen relationships and support future activity. Year to date, the firm's efficiency ratio was 66%. Strong revenues drove operating leverage, more than offsetting elevated execution-related costs compared to the prior year.

We continue to invest across our technology stack, embracing AI tools to support our infrastructure, business growth, and people. Together these investments position us to strengthen our competitive moats across the integrated firm. Now to the businesses. Institutional Securities revenues were $10 billion, up 18% versus the prior year.

The year-over-year increase was driven by our leading equities franchise and a pickup in advisory activity. Momentum from the second quarter carried into July before client activity in markets moderated through September, but boardroom dialogue remained strong through the quarter, supporting the build of strategic pipelines and future capital markets financings. 2 billion, up 2% from the prior year, reflecting strength in the Americas as well as in Asia, consistent with our expectations of a sequential broadening out of global activity. Advisory revenues of $887 million drove results.

The increase relative to the prior-year period reflects higher completed activity across most sectors. Equity underwriting revenues were $525 million, down compared to broad-based strength in the prior year, with a few large deals driving the market. Fixed income underwriting revenues continued to be strong at $747 million, supported by a new-issue market that remained active. Pipelines remain robust and diversified across products, sectors, and regions.

Strategic activity remains healthy, supported by ongoing corporate investment, portfolio repositioning, and capital allocation priorities. AI continues to contribute to the advisory and capital markets momentum, but activity is broad based across sectors and products. 8 billion, increasing 41% versus the prior year, reflecting growth across products and across Asia. As client needs become more complex and global, our integrated franchise is well positioned.

Our investments in technology and talent have strengthened our capabilities, allowing us to serve at greater scale and manage risk more effectively in fast-moving markets. Prime brokerage drove results, led by growth in financing revenues on higher average client balances. Derivative results increased versus the prior year, driven by higher client activity early in the quarter and strong risk management. Cash results were higher year over year, driven by increased client volumes across regions.

Fixed income revenues were $2 billion, reflecting lower structured activity in credit and commodities. Macro results increased modestly compared to the prior year, aided by foreign exchange. Micro results declined year over year, driven by lower performance in securitized products. Commodity results were solid, though declined against a strong comparative period that benefited from structured transactions.

Turning to ISG lending and provisions in the quarter, ISG provisions were $141 million, driven primarily by portfolio growth. Net charge-offs were $105 million, primarily related to certain corporate and commercial real estate loans which were largely provisioned for in prior periods. Turning to Wealth Management, the business delivered records across key growth indicators including net new assets of $232 billion and fee-based flows of $80 billion. In the first nine months of the year, we have delivered roughly half a trillion of net new assets and about $175 billion in fee-based flows.

These results demonstrate the reach of our multichannel model and our ability to connect clients with trusted advice. 8 billion were also records. 4% shows consistent strength as we invest in technology, marketing, and our banking capabilities to support future growth. 5 billion, benefiting from higher markets and the cumulative impact of robust fee-based flows.

Fee-based flows of $80 billion set a new organic record, with nearly half coming from a corporate retirement mandate. We continue to expand our retirement capabilities and deepen engagement with plan participants, creating more opportunities to build advice-based relationships over time. 2 billion, up 6% year over year excluding the prior year's DCP benefit. While trading activity moderated from the second quarter, retail engagement across our differentiated product offering remains healthy, with alternatives delivering another quarter of record sales.

Bank lending balances grew $5 billion sequentially, driven by securities-based lending and mortgages. Total deposits grew by nearly $30 billion sequentially to $465 billion, reflecting investments to strengthen our bank offering. 2 billion, down modestly as deposits grew and the mix shifted. Looking ahead, we expect a modest increase in the fourth quarter, subject to rates and client behavior.

Lastly, net new assets of $232 billion reflect the strength of our core business and the differentiated growth opportunities created by workplace and the integrated firm. IPO-related flows once again contributed to just over half of the overall NNA. With an active IPO calendar, the pace of our funnel accelerates and client interest in advice increases. While flows will fluctuate as lockups expire, funds make distributions, and individuals use assets for consumption, our pipeline and our connectivity across channels allows us to build relationships early and deepen them over time.

Since acquiring E*TRADE and expanding our workplace offering six years ago, we have added over $2 trillion of net new assets. Our multiyear track record demonstrates our differentiated client acquisition funnel and its durability. 4 trillion in client assets and serve nearly 21 million relationships. Our platform and broad product offering enables us to serve our clients across a wide range of needs, while our scale supports continued investment in future technology, including AI and digital tools.

Together, these strengths provide us with a powerful competitive advantage that positions us to lead as the future of wealth management takes shape. 8 billion. Parametric continues to benefit from distribution through our scaled Wealth Management platform, while Fixed Income was supported by strong performance. 5 billion reflect steady growth in asset management and related fees; carry reversal primarily related to two investments in a private fund muted overall results.

Looking ahead, we continue to invest in opportunities related to global distribution and connectivity with our financial advisors. 7 trillion. Standardized RWAs increased sequentially to $596 billion as we actively supported clients in our Markets business and continued to grow corporate lending. 9%.

3%. For the fourth quarter, we expect our tax rate to be slightly above the third quarter's tax rate and our full-year guidance remains unchanged. Amid a changing rate environment and geopolitical uncertainty, we remain a trusted advisor to clients. This environment underscores the value of the integrated firm as we leverage capabilities across businesses to address evolving client needs.

5 trillion in total client assets across Wealth and Investment Management, we have the foundation to build on as we close out the year. With that, we will now open the line up to questions. OPERATOR We are now ready to take questions. To get in the queue, you may press star and the number one on your touchtone telephone.

If your question has been answered or you wish to remove yourself from the queue, please press star and the number two on your touchtone telephone. You are allowed to ask one question and one follow-up; then we'll move to the next person in the queue. Please stand by while we compile the Q&A roster. We'll take our first question from Steven Chubak with Wolfe Research.

Ted Pick, Chairman and Chief Executive Officer Morning, Steve. Steven Chubak, Analyst at Wolfe Research Good morning and thanks for taking my question. So this is a meaty one, so I'm just going to limit it to one question, but a two-parter just on the topic of digital infra capex spending and the implications for future revenue growth. So you guys have been the leader just in digital infra-related financing activity.

We see that in the league table numbers for both ECM and DCM. As we look ahead, do you think there's room for digital infra-related IB fees to continue to grow off the current base even as a larger portion of equity and debt financing is expected to migrate from the public to the private markets? And then for the second part, was hoping you could just speak to some of the ancillary revenue streams tied to a lot of this digital infra build-out that exists outside of the core IB franchise.

So certainly SMAs and the NNA tailwind should be a durable source of strength in Wealth, but whether there's other sources of revenue related to this opportunity that might be overlooked by the investor community? Ted Pick, Chairman and Chief Executive Officer Yes, meaty questions on AI. Of course we're still relatively early in the CapEx cycle. Whether it ends up being 10 trillion or more or less, we will see as it plays out.

But the hyperscaler CapEx is running as we speak at around a trillion a year, and our role as an advisor in all pieces of this will remain a critical differentiator. We're advising clients on the full ecosystem of their strategic and capital markets alternatives.