Morgan Stanley’s quarter was driven by strong Wealth Management and Equity results, but higher credit costs, heavier spending and a carried-interest reversal in Investment Management kept the quality mixed. The result looks solid, not clean.
Morgan Stanley · Q3 2026 · Reported 14 Oct 2026 · US
Key figures
USD | Q3 2026 | Q3 2025 | Change |
|---|---|---|---|
Net revenues | 20.34bn | 18.22bn | +11.6% |
Pre-tax income | 6.48bn | 6.03bn | +7.5% |
Diluted EPS | 3.03 | 2.80 | +8.2% |
Expense efficiency ratio | 67% | 67% | 0.0 pp |
Provision for credit losses | 148m | 0m | +148m |
Institutional Securities revenue | 10.03bn | 8.52bn | +17.7% |
Equity revenue | 5.80bn | 4.12bn | +40.9% |
Wealth Management revenue | 9.07bn | 8.23bn | +10.1% |
Wealth net new assets | 232.4bn | 81.0bn | +187% |
Investment Management revenue | 1.46bn | 1.65bn | -11.6% |
Figures in USD, as reported. Margins are computed from the reported lines.
Wealth and Equities drove the quarter, though not every business lifted
Net revenues rose 11.5% to $20.3 billion and diluted EPS rose 8.2% to $3.03, with the release pointing to two clear engines: Institutional Securities was led by Equity, while Wealth Management posted record revenue 8-K. Institutional Securities revenue increased to $10.0 billion from $8.5 billion, and Wealth Management revenue increased to $9.1 billion from $8.2 billion 8-K.
The mix matters. In Institutional Securities, Equity revenue rose to $5.8 billion from $4.1 billion on strong performance across businesses and regions, driven by client engagement and strength in Asia, while Fixed Income fell to $2.0 billion from $2.2 billion 8-K. In Wealth Management, record revenue was tied to robust asset management fees and higher net interest income, alongside $232.4 billion of net new assets and $80.5 billion of fee-based flows; the release says just over half of net new assets were IPO-related, which suggests an unusually large quarter rather than a simple continuation of the underlying run rate 8-K8-K.
Underlying quality was solid, but not without offsets
Pre-tax income rose to $6.5 billion from $6.0 billion, but the release also shows costs and credit normalizing upward 8-K. Firmwide provision for credit losses was $148 million against $0 a year ago, compensation expense rose to $8.0 billion from $7.4 billion, and non-compensation expense rose to $5.7 billion from $4.8 billion, while the expense efficiency ratio was unchanged at 67% 8-K.
Those offsets were visible inside the segments. Institutional Securities recorded a $141 million provision for credit losses, primarily driven by growth in corporate and secured lending portfolios, and included $105 million of charge-offs tied to certain corporate and commercial real estate loans that had been largely provisioned in prior quarters 8-K. Investment Management was weaker: revenue fell to $1.5 billion from $1.7 billion and pre-tax income fell to $259 million from $364 million because performance-based income and other revenues swung to negative $106 million from positive $117 million on a reversal of accrued carried interest related primarily to certain investments in one private fund 8-K.
Capital return stayed active, but the release leaves cash flow unanswered
Morgan Stanley repurchased $1.5 billion of common stock in the quarter, up from $1.1 billion a year ago, and declared a quarterly dividend of $1.15 per share payable on November 13, 2026 8-K. Book value per share rose to $68.59 from $62.98 and tangible book value per share rose to $53.96 from $48.64, while ROTCE was 22.6% against 23.5% a year ago 8-K.
Capital ratios were mixed: standardized CET1 was 14.9% versus 15.1% a year ago, while advanced CET1 improved to 16.3% from 15.7% 8-K. The release does not provide cash flow detail or the fuller balance-sheet and risk discussion that would come with a 10-Q, so this quarter supports earnings strength more clearly than it answers funding, liquidity or credit trajectory questions 8-K8-K8-K.
What to watch next
Whether Wealth Management can sustain fee-based flows after a quarter in which just over half of net new assets were IPO-related 8-K.
Whether credit costs in Institutional Securities remain elevated after provisions tied to lending growth and charge-offs on certain corporate and commercial real estate loans 8-K.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's public filings. AI was used in parts of the analysis and drafting. Figures are checked automatically against the filings they come from. This is not investment advice.