MS Morgan Stanley 10-Q 2026-09-30 section summaries

Morgan Stanley — Q3 and nine months ended September 30, 2026

Consolidated results

Q3 revenue grew 11.6%; nine-month revenue grew 18.0%. Higher net interest income and asset-management and trading revenues supported growth, while Q3 investment revenues were negative. Non-interest expenses rose faster than Q3 revenue, and the pre-tax margin eased to 32% from 33% (9M: 33%, up from 31%).

Segment performance

Segment profit is income before tax. Segment asset comparisons are affected by a Q1 2026 allocation-methodology change that shifted certain assets from Wealth Management to Institutional Securities.

Institutional Securities’ Q3 trading revenue increased to $5.470B from $4.681B, led by equities ($4.429B from $3.225B); interest-rate trading fell to $599M from $1.039B. Wealth Management benefited from higher asset-management revenue ($5.544B from $4.789B). Investment Management revenue and profit declined.

Balance sheet, cash flow and funding

Equity less goodwill and other intangible assets was $95.425B, versus $89.916B. Nine-month cash flow from operations was –$55.869B, compared with –$15.479B; payments for premises, equipment and software (capital expenditures) were $2.518B, versus $2.189B. Operating cash outflows reflected volatile balance-sheet movements, including $50.545B used by resale agreements, while customer and other payables provided $49.997B. Financing provided $106.084B, including borrowing proceeds and deposit inflows. Cash and cash equivalents increased $26.974B to $138.669B.

Average daily total liquidity resources were $439.909B in Q3, versus $404.077B in Q2; average eligible HQLA was $347.337B. The liquidity coverage ratio rose to 133% from 129%, above the 100% minimum. Deposits—primarily Wealth Management client funding—rose, including time deposits to $132.532B from $99.640B. Borrowings included $29.395B with original maturities over one year due within the next 12 months.

Capital, credit and risk

The Standardized required CET1 ratio was 11.8%, including a 7.3% capital conservation buffer (4.3% stress capital buffer and 3.0% G-SIB surcharge). Revised eSLR rules reduced the Firm’s required SLR to 3.5% from 5.0%. The Firm reported compliance with TLAC requirements; external TLAC was $315.125B, or 52.9% of RWA.

Total loans were $329.602B gross; loans net of allowance were $328.358B. Lending commitments were $246.877B, bringing loans net of allowance plus commitments to $575.235B, up from $498.204B at year-end, mainly from Institutional Securities corporate and secured lending and Wealth Management securities-based lending. The ending allowance for loans and commitments was $2.068B. Nine-month loan net charge-offs rose to $176M from $105M; corporate charge-offs increased notably, while nonaccrual HFI loans fell to $829M from $1.147B. Management cited portfolio growth and provisions on specific corporate and CRE loans as drivers of the allowance increase.

Q3 average Management VaR was $61M versus $56M in Q2, and quarter-end VaR was $70M versus $54M, mainly reflecting equity exposure and market volatility. HTM securities had a $47.173B carrying value and $37.628B fair value, a $9.545B shortfall; the Firm said it expected to recover AFS amortized cost and did not expect to need to sell those securities before recovery. Morgan Stanley also disclosed legal proceedings, including claims concerning cash-sweep interest and antitrust matters, whose outcomes could affect particular periods.

Morgan Stanley — 3Q 2026 Form 10-Q

Consolidated results

Quarterly revenue increased 12% year over year, while 9M revenue rose 18%. Higher Wealth Management advisor payouts and Institutional Securities incentive compensation contributed to compensation expense growth; 9M compensation included $178M of severance from a March workforce action. Higher execution-related costs, technology spending, marketing and business-development costs drove non-compensation expense increases. Credit provision in Q3 primarily reflected growth in corporate loans and secured lending; 9M provision also included specific commercial real-estate and corporate-loan provisions.

In Q1 2026, the firm changed accounting for deferred-compensation hedges: derivatives hedging most unvested awards are treated as cash-flow hedges, with changes initially recorded in OCI and later reclassified to compensation expense; hedges primarily for vested awards remain in compensation expense. Morgan Stanley no longer presents non-GAAP results excluding deferred-compensation mark-to-market effects. For comparison, prior-year DCP adjustments reduced reported Q3 2025 revenue by $248M and compensation expense by $300M; 9M 2025 adjustments were $476M and $669M, respectively.

Segment performance

Institutional Securities’ 18% Q3 revenue growth reflected strong Equity results on increased client activity and higher Advisory revenue. Wealth Management grew 10%, led by asset-management revenue from higher markets and cumulative positive fee-based flows, and higher net interest income. Investment Management revenue declined 12% as lower performance-based income and other revenue more than offset higher asset-management fees.

Institutional Securities’ Advisory/M&A growth, particularly in the Americas, was partly offset by lower underwriting. Equity gains reflected stronger Financing and Execution Services, especially in Asia; Fixed Income was weaker on Commodities and Credit, partly offset by Global Macro. Investment Management’s performance-based income and other declined following a reversal of accrued carried interest, primarily related to investments in one private fund. Its Q3 expenses fell 7% to $1.200B from $1.287B, as lower carried-interest-related compensation more than offset higher non-compensation costs.

Operating metrics

Just over half of Q3 Wealth Management net new assets related to IPO-related holdings by institutional investors; fee-based flows included a new corporate retirement mandate. Investment Management Q3 flows comprised +$16B in long-term AUM; Equity had $9B of outflows, while alternatives and solutions had $15B of inflows and fixed income $10B. The firm cited continuing equity outflows potentially related to investment strategy, product structure and performance versus benchmarks. Investment Management’s long-term average fee rate was 35 bps in Q3, down from 40 bps; alternatives and solutions includes $602B of Parametric Long-Term AUM, generally lower-fee products. Wealth Management’s average fee rate was 60 bps, versus 63 bps a year earlier.

Financial position and capital

Goodwill and other intangible assets are reported together in the supplied figures. Average tangible common equity was $83.944B in Q3 2026 versus $75.844B in Q3 2025, and $81.784B for 9M 2026 versus $74.163B for 9M 2025. Management’s forward-looking ROTCE goal is 20% in a normal market environment.

Total client assets reached $10.479T, including $378B of Wealth Management assets invested in Investment Management products, which are also included in Investment Management AUM. In the U.S. bank subsidiaries, total assets were $654.0B and deposits $466.9B, versus $598.7B and $408.7B at year-end 2025. The firm reorganized bank businesses during Q1 2026, including transferring MSCS’s Fixed Income business to MSBNA and MSBNA’s acquisition of the MSESE Group.

Management described strong early-quarter activity that moderated amid renewed geopolitical tensions, higher interest rates and rising energy prices; inflation, economic growth, monetary policy and the pace and acceptance of AI investment remain uncertainties. Asia revenue rose 55% in Q3, primarily on strong Institutional Securities Equity results, while EMEA revenue declined 6% on lower Investment Banking and Investment Management results. A new internal-use software cost standard takes effect January 1, 2028; Morgan Stanley is evaluating its impact.

Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of the end of the reporting period. No change in internal control over financial reporting during the period materially affected, or was reasonably likely to materially affect, the company’s internal control over financial reporting.

This section provides no specific risk disclosures, financial metrics, or business developments. It directs readers to “Risk Factors” in Part I, Item 1A of Morgan Stanley’s 2025 Form 10-K for the Firm’s risk discussion.