Earnings Call Insights: Morgan Stanley (MS) Q4 2025
Management View
- CEO Ted Pick opened with, “In 2025, the U.S. economy proved resilient as ever. As predicted, the capital markets are kicking in with well-capitalized corporates and higher-end consumers driving the economy forward. 2026 starts with the tailwinds of constructive fiscal policy and easier monetary policy.” He emphasized Morgan Stanley’s durable performance and readiness to navigate both market tailwinds and headwinds, noting, “We are monetizing the long-awaited conversion of capital markets green shoots across our investment banking and markets verticals, and we are scaling asset inflows and transaction activity across our wealth businesses.”
- Pick highlighted client assets of $9.3 trillion, annual EPS of $10.21, and a 21.6% ROTCE for 2025. He referenced 100 basis points of wallet share gains in Institutional Securities and fastest-ever Wealth’s pretax margins, stating, “Asset growth accelerated with last year’s additional $1.4 trillion. Wealth’s pretax margins are at their highest levels ever, with the fourth quarter’s 31% printed result.”
- The CEO outlined continued investments in technology and human capital, with a focus on scaling AI tools and integrating strategic acquisitions. He noted, “Our growth plans embed the increasing adoption of AI tools throughout the enterprise and inside our client base.”
- Sharon Yeshaya, CFO, stated, “2025 was an exceptional year for the firm, marked by deliberate execution of our strategy. Full year revenues reached a record of $70.6 billion and the fourth quarter revenues were $17.9 billion.” She reported record full-year EPS of $10.21 and ROTCE of 21.6%. “Alongside fourth quarter ROTCE and EPS of 21.8% and $2.68, respectively.”
Outlook
- Management expects the current mix of tailwinds and headwinds to persist into 2026, with a focus on executing at or above firmwide goals when the environment is favorable and achieving higher lows when conditions are more challenging. Pick stated, “Our expectation going forward is that if this environment is welcoming, we are meant to execute at or above these firmwide goals as we did in 2025. And when the backdrop is more challenged, to endeavor to achieve higher lows.”
- CFO Yeshaya commented on net interest income (NII), “Looking ahead to the first quarter, we expect NII to remain roughly flat quarter-over-quarter as higher average sweeps and lending balances should help to offset the full impact of the two rate cuts in the fourth quarter. As we look ahead to the remainder of 2026, assuming the current forward curve incremental loan growth and our projections for the deposit mix, we expect NII to continue to trend higher.”
- Pick indicated that targets would be revisited later in the year, stating, “Of course, we will revisit these targets in the late year to come. And if then we’ve passed through them very clearly and it’s time to take them higher, we will certainly consider that.”
Financial Results
- Morgan Stanley reported full-year revenues of $70.6 billion and fourth quarter revenues of $17.9 billion.
- Institutional Securities delivered record full-year revenues of $33.1 billion, including $7.9 billion in the fourth quarter. Investment Banking revenues were $7.6 billion for the year and $2.4 billion in Q4, a 47% increase from the prior year quarter. Equity revenues for the year were $15.6 billion, with $3.7 billion in Q4.
- Wealth Management achieved $31.8 billion in full-year revenues and a 29% margin, with net new assets of $356 billion and fee-based flows of $160 billion. Fourth quarter Wealth Management revenues were $8.4 billion, with an operating margin of 31.4%. Net new assets in Q4 were $122 billion.
- Investment Management revenues reached $6.5 billion for the year, with AUM scaling to $1.9 trillion. Long-term net inflows were $34 billion for the year and $2 billion in Q4.
- The firm’s standardized CET1 ratio ended at 15%, with $4.6 billion in share buybacks for the year and $1.5 billion in Q4.
Q&A
- Glenn Schorr, Evercore, asked about targets and potential over-earning. CEO Pick responded that the firm is focused on compounding earnings through the cycle, stating, “We have a very positive view of where the firm is positioned. We like the spaces we’re in. But we think that demonstrating our ability to compound earnings through the cycle is what the owners want to see.”
- Daniel Fannon, Jefferies, inquired about Wealth Management margin drivers. CFO Yeshaya explained, “We have consistently added fee-based flows. That is demonstration that the funnel is working. So from the revenue line items, right, the drivers of continued expanded market are twofold. One is building out the fee-based revenues and the fee-based assets…And the second piece that you mentioned is efficiency. We are also using technology to help us from an efficiency perspective.”
- Brennan Hawken, BMO, asked about the philosophy on targets. Pick clarified, “There is no philosophical frame shift though. I think we just now have the kind of confidence where we can start talking about what it would be like if there was a more challenging environment and our ability to still generate 17.5% return on tangible with an environment where earnings could be below $8.”
- Devin Ryan, Citizens, asked about institutional trading and wallet trajectory. Pick said, “We like the tailwinds…the equitization of markets around the world is underway…you could see the wallet in this business continue to grow by anywhere between 5% and maybe even 10% per annum.”
- Michael Mayo, Wells Fargo, pressed on trading business cycle. Pick acknowledged, “If we have lower asset prices because we just — we have a drawdown or we have kind of like a blip in the economy or the geopolitical thing kind of hits tails…could there be lower levels of performance? Absolutely.”
Sentiment Analysis
- Analysts’ tone was constructive but probing, with repeated questions about sustainability of results, targets, and margin expansion. There was interest in whether current performance is peak or sustainable, and several questions pressed for specificity on future targets or structural improvements.
- Management’s sentiment was confident yet cautious in both prepared remarks and Q&A. CEO Pick repeatedly emphasized durability, discipline, and the importance of not overreaching, using language such as “part of the premise of rigor and humility at our place is that we do this in a way where we compound earnings again and again, right through the cycle.”
- Compared to the previous quarter, management’s tone remains slightly more guarded, emphasizing consistency and cycle-durability over immediate target raises, while analysts continue to press for clarity on upside potential and margin sustainability.
Quarter-over-Quarter Comparison
- Compared to Q3 2025, Morgan Stanley reported slightly lower quarterly revenues ($17.9 billion vs. $18.2 billion) and EPS ($2.68 vs. $2.80), with ROTCE down from 23.5% to 21.8% for the quarter. Full-year figures and asset levels increased.
- Wealth Management margins improved from 30.3% to 31.4% in Q4, with higher net new assets and fee-based flows.
- The focus on AI adoption, technology investment, and the integration of recent acquisitions remains consistent, but there is a greater emphasis on conservatism in guidance language this quarter.
- Analysts in both quarters sought clarity on the sustainability of gains and expansion plans, but management’s responses in Q4 were more explicit about avoiding premature target increases and focusing on compounding performance through the cycle.
Risks and Concerns
- CEO Pick and CFO Yeshaya highlighted ongoing geopolitical risks, potential for market volatility, and the risk of overreaching amid strong results.
- Management noted that while asset prices are high and performance strong, “this is not the time to overreach,” emphasizing a disciplined approach to capital deployment and M&A.
- Analysts voiced concerns about sustainability of margins, target increases, and possible over-earning in current market conditions.
- Management reiterated its intent to maintain high capital buffers and pursue measured investments, with acquisitions subject to a “high bar.”
Final Takeaway
Morgan Stanley’s leadership stressed the firm’s strong positioning, record financial results, and the successful execution of its integrated strategy, while prioritizing disciplined growth and cautious capital deployment amid ongoing macro and geopolitical uncertainties. Management affirmed its intention to compound earnings and deliver durable shareholder value by leveraging investments in technology, scaling core businesses, and maintaining a prudent approach to targets and capital allocation—even as the firm surpasses many of its stated goals ahead of schedule.