Executive Summary

Morgan Stanley, a leading global financial services firm, has reported strong financial results for the first quarter of 2025. The company delivered robust performance across its business segments, with net revenues of $17.7 billion and net income of $4.3 billion, representing increases of 17% and 26% respectively compared to the same period in the prior year.

The firm’s return on equity (ROE) was 17.4% and return on tangible common equity (ROTCE) was 23.0%, reflecting the company’s ability to generate solid returns for its shareholders. Morgan Stanley’s expense efficiency ratio, which measures non-interest expenses as a percentage of net revenues, improved to 68% from 71% in the prior year quarter.

The Institutional Securities business segment was a standout performer, with net revenues increasing by 28% driven by strong results in Equity and gains on the sale of corporate loans. Wealth Management also delivered a solid performance, with a pre-tax margin of 26.6% and net revenues growing by 6%. Investment Management reported a 16% increase in net revenues, primarily due to higher asset management fees and performance-based income.

The company continued to maintain a strong capital position, with a Standardized Common Equity Tier 1 capital ratio of 15.3% as of March 31, 2025. Morgan Stanley also accreted $1.9 billion of Common Equity Tier 1 capital during the quarter.

Overview of Financial Results

Morgan Stanley reported net revenues of $17.7 billion in the first quarter of 2025, a 17% increase compared to the same period in the prior year. Net income applicable to the company was $4.3 billion, up 26% from the prior year quarter. Diluted earnings per common share increased by 29% to $2.60.

The firm’s expense efficiency ratio, which measures non-interest expenses as a percentage of net revenues, improved to 68% from 71% in the prior year quarter. This was primarily due to higher revenues, which outpaced the increase in non-interest expenses.

Consolidated Results—Three Months Ended March 31, 2025

• Net revenues were $17.7 billion, up 17% from the prior year quarter.
• Net income applicable to Morgan Stanley was $4.3 billion, up 26% from the prior year quarter.
• Diluted earnings per common share was $2.60, up 29% from the prior year quarter.
• ROE was 17.4% and ROTCE was 23.0%.
• The expense efficiency ratio was 68%, down from 71% in the prior year quarter.
• The firm accreted $1.9 billion of Common Equity Tier 1 capital, and the Standardized Common Equity Tier 1 capital ratio was 15.3% as of March 31, 2025.

Business Segment Results

Institutional Securities

• Net revenues were $8.98 billion, up 28% from the prior year quarter, driven by higher results in Equity and gains on the sale of corporate loans.
• Pre-tax margin was 37%, up from 34% in the prior year quarter.

Wealth Management

• Net revenues were $7.33 billion, up 6% from the prior year quarter, primarily reflecting higher asset management revenues.
• Pre-tax margin was 26.6%, up from 26.0% in the prior year quarter.

Investment Management

• Net revenues were $1.60 billion, up 16% from the prior year quarter, driven by higher asset management fees and performance-based income.
• Pre-tax margin was 20%, up from 18% in the prior year quarter.

Net Revenues by Region

• Americas net revenues increased 13% from the prior year quarter.
• EMEA net revenues increased 25% from the prior year quarter.
• Asia net revenues increased 35% from the prior year quarter.

Strengths and Weaknesses

Strengths:

• Diversified business model with strong performance across all three business segments.
• Robust capital position, with a Standardized Common Equity Tier 1 capital ratio of 15.3%.
• Improving expense efficiency, with the expense efficiency ratio declining to 68%.
• Solid returns, with ROE of 17.4% and ROTCE of 23.0%.

Weaknesses:

• Potential impact of economic and market conditions, such as geopolitical risks, inflation, and the timing and pace of central bank actions related to interest rates.
• Uncertainty around the evolution of global trade policies and their potential impact on the firm’s credit portfolios.

Outlook

The economic environment, client and investor confidence, and overall market sentiment deteriorated in 2025, as recent developments around global trade and government policies resulted in increased economic uncertainty and market volatility. Geopolitical risks, inflation, as well as the timing and pace of central bank actions related to interest rates present ongoing risks to the economic environment and growth.

These factors have impacted, and could continue to impact, capital markets and the firm’s businesses. However, Morgan Stanley’s diversified business model, strong capital position, and focus on expense management position the company well to navigate the current economic and market challenges.

The firm has set a target ROTCE of 20%, which it aims to achieve through a combination of business growth, efficient capital allocation, and disciplined cost management. While this target may be affected by market and economic conditions, Morgan Stanley’s management remains committed to delivering strong returns for its shareholders.

Overall, Morgan Stanley’s solid financial performance in the first quarter of 2025, coupled with its strategic initiatives and risk management practices, suggest the firm is well-positioned to navigate the current economic and market environment and continue to deliver value for its clients and shareholders.