Morgan Stanley earned $3.03 a share on net revenues of $20.3 billion in the third quarter, it said in its earnings release on Wednesday. A year earlier it reported $2.80 and $18.2 billion. Net income applicable to Morgan Stanley was $4.9 billion, against $4.6 billion. Return on tangible common equity was 22.6 per cent, down from 23.5 per cent a year ago.
The result was above the $2.94 LSEG consensus that Reuters reported before the quarter. Our preview on Tuesday set out three lines to settle the read against the record second quarter. All three came in lower than in the second quarter, and the bank still grew from a year ago.
The three lines, against the second quarter
Equity revenue was $5.8 billion, against the second quarter's record $6.3 billion, or about 8 per cent lower by this publication's arithmetic. Investment banking revenue was $2.16 billion, against $2.44 billion, about 11 per cent lower. Wealth Management net new assets were $232.4 billion, against $148 billion, and the release says just over half of them were again associated with IPO-related flows.
Chief financial officer Sharon Yeshaya said on the call, as transcribed by Motley Fool, that "rising energy prices and interest rates weighed on market activity following a shortened post Labor Day September." Chief executive Ted Pick said "banking pipelines remain high and strategic dialogues inside corporate boardrooms are active."
One line did most of the year-on-year work
Revenue rose $2.1 billion, or 12 per cent, from a year earlier. Equity revenue alone rose $1.7 billion, from $4.1 billion, a 41 per cent increase that the release attributes to strength across businesses and regions, particularly Asia. That is about four-fifths of the firm's total increase, by our arithmetic.
The rest of Institutional Securities was flat or weaker. Fixed income fell 7 per cent to $2.0 billion from $2.2 billion, on lower credit and commodities revenue. Investment banking rose 2 per cent: advisory was up to $887 million from $684 million, while equity underwriting fell to $525 million from $652 million on fewer IPOs and blocks. The segment's revenue was $10.0 billion, against $8.5 billion.
Wealth and asset management
Wealth Management set a revenue record of $9.1 billion, up from $8.2 billion, and fee-based flows were $80.5 billion, against $41.9 billion a year earlier. Yeshaya said the 30.4 per cent pre-tax margin "shows consistent strength." Client assets across Wealth and Investment Management reached $10.5 trillion.
Investment Management went the other way. Its revenue fell to $1.5 billion from $1.7 billion, because performance-based income turned negative, at minus $106 million, on the reversal of accrued carried interest in one of its private funds, the release says.
Costs and credit
Non-interest expenses rose to $13.7 billion from $12.2 billion, also about 12 per cent, so the efficiency ratio held at 67 per cent. Compensation was $8.0 billion, against $7.4 billion. Non-compensation costs were $5.7 billion, against $4.8 billion, up about 20 per cent by our arithmetic and the faster-growing line.
The provision for credit losses was $148 million, against none a year ago. That is the firm-wide figure. The $141 million that Yeshaya cited on the call is the Institutional Securities share, which the release says was driven mainly by growth in corporate and secured lending; Wealth Management accounted for the other $7 million. The institutional business also took $105 million of charge-offs on certain corporate and commercial real estate loans that had largely been provisioned for in earlier quarters. The standardised common equity tier 1 ratio was 14.9 per cent, against 15.1 per cent a year earlier.
What it spent on its own shares
Morgan Stanley repurchased $1.5 billion of stock, about 7 million shares at an average price of $212.74. A year ago it bought the same number of shares for $1.1 billion, at $145.77 on average. Pick said in the release: "We continue to invest for growth while delivering strong returns for shareholders."
The quarter's shape is the point. The bank grew from a year ago because equities grew, while fixed income and asset management shrank and deal fees were roughly flat. Yeshaya said she expects a modest increase in net interest income in the fourth quarter, subject to rates and client behaviour. If the delayed deals the bank described in September close before year-end, banking can share the load; if not, the fourth quarter depends on equities again.
Reported figures, segment results, the provision split, charge-offs, capital ratios, repurchases and the Ted Pick quotation on investing for growth are from Morgan Stanley's third-quarter 2026 earnings release, furnished to the SEC on Form 8-K on 14 October 2026. Remarks by chief financial officer Sharon Yeshaya and Pick's comment on banking pipelines are from a transcript of the earnings call published by Motley Fool, not checked against audio. Second-quarter comparisons are from Morgan Stanley's release of 15 July 2026, as cited in Cranberry's preview of 13 October, which is also the source for the $2.94 LSEG consensus reported by Reuters. The share of the increase from equities, the comparisons with the second quarter and the expense growth rates are this publication's arithmetic. The analysis is our own.
Topics marketsMorgan Stanleybank earningsequities tradingwealth management
