- Key insight: Morgan Stanley, which reported a solid fourth quarter and a strong 2025 overall, left its financial targets as is.
- Expert quote: “We are going to not push on robust objectives, when in fact 20% returns are pretty darn good.” — CEO Ted Pick
- Forward look: During the fourth quarter, the investment banking giant got closer to its target of securing at least $10 trillion in firmwide client assets.
Morgan Stanley reported an earnings beat for the fourth quarter, reflecting a surge in investment banking revenues spurred by an uptick in client activity related to merger-and-acquisition deals.
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On Thursday, the Wall Street giant reported net income of $4.4 billion, up 18% year over year.
Earnings per diluted share totaled $2.68. Analysts polled by S&P Capital IQ had predicted $2.45.
Firmwide net revenues rose 10% from the year-ago quarter to $17.9 billion. Investment banking revenues climbed 44% during the same period, offsetting declines in trading and “other” revenues. Asset management revenues, along with commissions and fees, rose 12% year over year.
For all of 2025, Morgan Stanley’s revenues totaled $70.6 billion, up 14% year over year.
Ted Pick, who completed
Pick has focused much of his time as CEO on
During a morning conference call, one analyst wanted to know why the bank didn’t increase its targets, given its strong performance. Pick defended the bank’s decision, saying management “had a robust conversation” about it, but ultimately chose to leave the goals unchanged for now.
“I think the tendency has been, when a target is hit … let’s take it up further,” Pick said. “But I think part of the premise of rigor and humility at our place is, we do this in a way where we compound earnings again and again right through the cycle.”
He acknowledged that some of the two-year-old targets were reached last year. For all of 2025 and for the fourth quarter specifically, Morgan Stanley’s efficiency ratio was 68%, which beat the stated goal of 70%.
The return on tangible common equity was 21.6% for the full year and 21.8% between Oct. 1 and Dec. 31. The Wall Street bank’s stated goal for the profitability metric remains 20%.
Also during the fourth quarter, Morgan Stanley moved closer to its goal of securing at least $10 trillion in client assets. By the end of December, client assets had reached $9.3 trillion, helped in part by the addition of more than $350 billion in net new assets, the bank said.
In 2020, clients assets were $4.8 billion.
In response to another question about leaving the targets alone, Pick reiterated his stance.
“It’s just not in our prudent kind of long-term thinking … that we should move the targets higher because we’ve had a couple good years,” he said. “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.”
During the fourth quarter, Morgan Stanley’s noninterest expenses were $12.1 billion, up 8% from the same quarter in 2024. Of that total, $7.1 billion was classified as compensation and benefits, an increase of 12% year over year.
Noncompensation-related costs, such as marketing spending, occupancy costs, brokerage fees and professional services, rose 3% to just over $5 billion.
During the quarter, the bank repurchased $1.5 billion of its outstanding common stock, it said.
