Morgan Stanley Q3 Earnings Beat on Deal-Making Boom, Solid Trading

Morgan Stanley’s MS third-quarter 2025 earnings of $2.80 per share handily surpassed the Zacks Consensus Estimate of $2.08. Also, the bottom line soared 49% from the prior-year quarter.

Shares of Morgan Stanley jumped almost 4.5% in pre-market trading as it became the latest Wall Street giant to gain from a surge in dealmaking activities during the quarter.

Behind Morgan Stanley’s Q3 Headline Numbers

Like its Wall Street peers, Morgan Stanley’s investment banking (IB) business gained from a frenzy of deal-making activities and IPOs. Advisory fees jumped 25% year over year as completed M&A transactions rose. 

Further, higher non-investment grade and investment grade issuances supported the company’s fixed income underwriting fees, which surged 39%. Moreover, equity underwriting income soared 80% “as clients actively engaged in capital-raising opportunities.” Hence, total IB fees (in the Institutional Securities division) increased 44% to $2.11 billion. We had projected it to be $1.54 billion.

Similarly, MS posted a solid trading performance. Equity trading revenues climbed 35% year over year to $4.12 billion and fixed-income trading income was up 8% to $2.17 billion. Our projections for equity and fixed-income trading revenues were $3.56 billion and $2.11 billion, respectively.

Further, the performance of the company’s wealth management and investment management businesses was impressive, driven by a rise in client assets and assets under management. Morgan Stanley’s net interest income (NII) increased, given the improved lending activities. On the other hand, an increase in total non-interest expenses was the undermining factor.

Net income applicable to common shareholders was $4.45 billion, an increase of 47% from the year-ago quarter. Our estimate for the metric was $3.12 billion.

Morgan Stanley’s Revenues Surge, Expenses Up

Quarterly net revenues were $18.22 billion, surging 18% from the prior-year quarter. The top line handily beat the Zacks Consensus Estimate of $16.4 billion.

NII was $2.49 billion, up 13%. We had projected NII of $2.31 billion.

Total non-interest revenues of $15.73 billion jumped 19%. Our estimate for the metric was $13.56 billion.

Total non-interest expenses were $12.2 billion, up 10%. Our estimate for the metric was $11.44 billion.

Provision for credit losses was nil compared with $79 million in the prior-year quarter. We had projected the metric to be $85.3 million.

Morgan Stanley’s Segment Performance

Institutional Securities: Pre-tax income was $3.18 billion, jumping 67% from the prior-year quarter. Our estimate for the same was $2.25 billion.

Net revenues were $8.52 billion, up 25% year over year. The upside resulted from increased equity and fixed income trading revenues and higher IB net revenues. We had projected segment net revenues of $7.44 billion.

Wealth Management: Pre-tax income totaled $2.5 billion, rising 21% year over year. Our estimate for the metric was $1.87 billion.

Net revenues were $8.23 billion, up 13%, driven by higher asset management revenues, transactional revenues and NII. We had projected revenues of $7.14 billion.

Total client assets were $7.05 trillion as of Sept. 30, 2025, up 18% year over year. We had projected the metric to be $6.4 trillion.

Investment Management: Pre-tax income was $364 million, climbing 40% from the year-ago quarter. Our estimate for the same was $243.2 million.

Net revenues were $1.65 billion, growing 13%. The improvement was attributable to a rise in asset management and related fees, and performance-based income and other revenues. We had projected revenues of $1.46 billion.

As of Sept. 30, 2025, total assets under management or supervision were $1.81 trillion, up 13% year over year. Our estimate for the metric was $1.75 trillion.

Morgan Stanley’s Capital Position Solid

As of Sept. 30, 2025, book value per share was $62.98, up from $58.25 in the corresponding period of 2024. The tangible book value per share was $48.64, up from $43.76 as of Sept. 30, 2024.

Morgan Stanley’s Tier 1 capital ratio (advanced approach) was 17.6% compared with 16.9% in the year-ago quarter. The common equity Tier 1 capital ratio was 15.7% compared with 14.9% a year ago.

Update on Morgan Stanley’s Share Buyback Plan

In the reported quarter, Morgan Stanley repurchased 7 billion shares for $1.1 billion.

Our Viewpoint on Morgan Stanley

The rebound of the IB business and a solid deal-making pipeline are expected to support Morgan Stanley’s financials. Efforts to become less dependent on capital markets-driven revenues and inorganic expansion/strategic alliances will support top-line growth. However, elevated expenses due to expansion efforts and volatile trading revenues are concerns.
 

Morgan Stanley Price, Consensus and EPS Surprise

Morgan Stanley price-consensus-eps-surprise-chart | Morgan Stanley Quote

Currently, Morgan Stanley carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Morgan Stanley’s Peers

Jefferies Financial Group’s JEF third-quarter fiscal 2025 (ended Aug. 31) adjusted earnings of $1.05 per share handily surpassed the Zacks Consensus Estimate of 79 cents. The bottom line compared favorably with the prior-year quarter’s earnings of 78 cents per share. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

JEF’s results were aided by strong performance in Investment Banking and Capital Markets and Asset Management segments. However, higher expenses remain a spoilsport.

JPMorgan’s JPM third-quarter 2025 earnings were $5.07 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $4.83.

Better-than-expected performance of capital markets businesses, higher NII and decent loan growth supported JPM’s results. Higher adjusted expenses and a rise in provisions were the undermining factors.

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