Morgan Stanley’s Robust Q4 and Full-Year Performance for 2025
Morgan Stanley, a leading global financial services firm, reported an impressive earnings beat for the fourth quarter, buoyed by a surge in investment banking revenues. This performance was driven by an increase in client activity, particularly in the realm of merger-and-acquisition deals. The Wall Street giant posted a net income of $4.4 billion, marking an 18% increase year over year. This growth exceeded the expectations of analysts polled by S&P Capital IQ, who had predicted earnings per diluted share at $2.45, whereas the actual figure reached $2.68.
Revenue Growth and Financial Targets
The firm’s net revenues saw a year-over-year increase of 10%, amounting to $17.9 billion. Investment banking revenues recorded a significant 44% surge during the same period, balancing the declines in trading and “other” revenues. In addition, asset management revenues, together with commissions and fees, rose by 12%. For the full year of 2025, Morgan Stanley’s revenues totaled $70.6 billion, marking a 14% year-over-year increase.
Morgan Stanley’s CEO, Ted Pick, who marked his second year at the helm on January 1, expressed satisfaction with the bank’s performance. In a press release, he stated, “We delivered outstanding performance in 2025. Our results demonstrate multi-year investments, which have contributed to growth and momentum across the integrated firm.”
Building the “Integrated Firm”
Under Pick’s leadership, the focus has been on building the “integrated firm” he envisaged in early 2024. As a testament to this strategic shift, the bank reiterated its financial targets, including a firmwide goal of securing at least $10 trillion of client assets and achieving an efficiency ratio of 70%. During a morning conference call, when asked why the bank didn’t increase its targets given its strong performance, Pick defended the decision, citing the importance of consistent, compounded earnings through the cycle.
Meeting Targets and Future Growth
Pick acknowledged that some of the 2-year-old targets were met in 2025. Notably, Morgan Stanley’s efficiency ratio for the full year and the fourth quarter was 68%, surpassing the stated goal of 70%. Furthermore, the return on tangible common equity was 21.6% for the full year and 21.8% for the final quarter, beating the firm’s stated goal of 20%.
By the end of December, Morgan Stanley had moved closer to achieving its ambitious goal of securing at least $10 trillion in client assets. The bank reported that client assets had reached $9.3 trillion, boosted in part by the addition of more than $350 billion in net new assets.
Expenses and Stock Repurchases
During the fourth quarter, Morgan Stanley’s noninterest expenses amounted to $12.1 billion, an 8% rise year over year. Of this total, $7.1 billion was attributed to compensation and benefits, marking a 12% increase. Noncompensation-related costs, including marketing spending, occupancy costs, brokerage fees, and professional services, rose 3% to just over $5 billion. The bank also repurchased $1.5 billion of its outstanding common stock during the quarter.
In conclusion, Morgan Stanley’s impressive performance in 2025, marked by strong revenues and successful achievements of key financial targets, reflect the firm’s commitment to strategic growth and financial discipline. As CEO Ted Pick stated, “We are going to not push on robust objectives, when in fact 20% returns are pretty darn good if we’re continuing to gain wallet, and secure market share.”
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