Morgan Stanley reported profits for the fourth quarter above market estimates on Thursday. The firm in New York earned $4.4 billion during this period. This figure represents $2.68 per share for the quarter ending December 31. Analysts expected earnings of $2.41 per share for the final three months. Revenue net of interest reached $17.9 billion during the fourth quarter of 2025. This result exceeded the anticipated revenue of $17.72 billion. Performance in wealth management and investment banking fueled these results. The company shares rose 1.3% following the announcement.
Investors responded to the growth in assets and income from fees. The wealth management unit generated $8.43 billion in revenue. This amount marks a 13% increase from the previous year. Total client assets reached $9.3 trillion at the end of December. The firm attracted over $350 billion in new assets during the year. These figures highlight the strategic shift toward consistent income from fees. Morgan Stanley now manages nearly $10 trillion in total assets. The board declared a dividend for the quarter of $1.00 per share.
Morgan Stanley Q4 results
Key Performance Figures
- Quarterly Earnings: $4.4 billion
- Earnings Per Share: $2.68
- Total Revenue: $17.89 billion
- Wealth Management Revenue: $8.43 billion
- Investment Banking Revenue: $2.41 billion
- Total Client Assets: $9.3 trillion
- Annual Revenue: $70.6 billion
- Return on Tangible Equity: 21.6%
Wealth Management Division Results
The wealth management segment remains a driver for the firm. Revenue from this division grew by 13% year-on-year. The unit contributed nearly half of the total revenue for the quarter. Morgan Stanley added $350 billion in net new assets during 2025. This division provides income through various market cycles. Management continues to invest in technology for its advisers. The firm aims for $10 trillion in total client assets soon. Higher interest rates benefited interest income within this segment.
Wealth management pre-tax profit margins reached 32%. The company improved its expense efficiency ratio to 68%. Compensation expenses for the quarter totalled $7.06 billion. This figure sat below the market forecast of $7.24 billion. Non-compensation costs reached $5.05 billion for the period. The firm maintains focus on cost discipline across all operations. Total non-interest expenses reached $12.11 billion during the quarter. These results reflect the scale of the wealth management platform.
Results from the Wealth Management Division
Investment Banking and Institutional Securities
Investment banking revenue surged by 47% compared to 2024. Fees from dealmaking reached $2.41 billion in the fourth quarter. A recovery in merger activity supported this growth. Equity underwriting and debt issuance also contributed to the rise. Institutional securities revenue increased during the three-month period. Equity trading revenue grew by 10% to $3.67 billion. Fixed income trading revenue declined by 9% to $1.76 billion. Market volatility influenced trading volumes across asset classes.
The institutional securities division remains vital for the performance of the firm. Corporations increased their capital raising activities during late 2025. Morgan Stanley advised on several mergers of scale during the quarter. The investment banking backlog remains active for the start of 2026. Underwriting activity showed resilience despite economic uncertainty. Institutional clients continue to seek strategic advice from the firm. The bank occupies a leading position in league tables. The technology and healthcare sectors led the volume of dealmaking.
Results of Investment Banking and Institutional Securities
Annual Financial Performance
For the full year 2025, Morgan Stanley recorded peak revenue. Total revenue for the year reached $70.6 billion. This figure represents a 14.3% increase from 2024. Net income for the full year totalled $16.9 billion. Earnings per share reached $10.21 for the twelve months. The firm achieved a return on tangible equity of 21.6%. The Common Equity Tier 1 capital ratio stood at 15.0%. Morgan Stanley ended the year with a capital position of scale.
Chief Executive Officer Ted Pick commented on the annual results. Pick stated, “Morgan Stanley delivered outstanding performance in 2025.” He noted that the results reflect multi-year investments in growth. Pick highlighted the momentum across the integrated firm during the year. The CEO credited the wealth and investment management units for growth. Management expects continued activity in capital markets during 2026. The firm plans to return capital to shareholders through dividends. Share buyback programmes remain a core part of the capital strategy.
Annual Financial Performance
Market Context and Future Outlook
The results followed positive reports from other banks of scale. JPMorgan Chase and Goldman Sachs also reported growth this week. The financial sector shows resilience despite shifts in central bank policy. Investors monitor the impact of interest rates on bank margins. Morgan Stanley benefits from its business model. The firm balances trading volatility with income from management fees. Analysts maintain a professional outlook for the stock. Shares have climbed over 40% in the past year.
The bank faces potential changes in regulations in the coming year. Provisions for credit losses increased during 2025. The firm set aside $18 million for loan losses. This amount remained below the analyst forecast of $81 million. Management monitors the health of the consumer and corporate sectors. Economic indicators suggest a landing for the economies. Morgan Stanley prepares for various scenarios in the 2026 market. The firm maintains a network of offices in 42 countries.
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Analysis of Profitability Metrics
Return on equity for the quarter reached 16.9%. This figure exceeded the analyst estimate of 15.1%. The tangible book value per share stood at $50.00. Book value per share reached $64.37 at year-end. The effective tax rate for the period was 23.2%. This rate was lower than the expected 23.8%. Financial stability remains a priority for the leadership team. The firm manages risk across its portfolio.
Morgan Stanley demonstrates operational leverage as revenues grow faster than costs. The efficiency ratio indicates management of expenses. Technology investments reduce operational costs for the bank. Digital platforms attract clients to the wealth management unit. Investment management revenues rose by 5% to $1.72 billion. This segment complements the broader strategy for assets. The firm provides a range of investment products. Asset inflows remain positive across product categories.
Capital Allocation and Dividends
The board of directors declared a dividend for the quarter of $1.00. This payment reflects the cash flow of the firm. Shareholders receive a portion of the annual profits. The firm maintains a commitment to returning capital. Capital ratios remain above the requirements for banks. The common equity tier 1 ratio provides a buffer for risks. Morgan Stanley uses share buybacks to manage its share count. This strategy supports the growth of earnings per share over time.
Investors value the consistency of the dividend payments. The bank increased its dividend payout in previous quarters. Management balances shareholder returns with reinvestment in the business. The model of the firm allows for capital deployment. Strategic acquisitions in recent years now contributed to the profit. The firm evaluates opportunities for expansion in international markets. Organic growth remains the focus for the wealth segment. Morgan Stanley continues to strengthen its position in the industry.
