Morgan Stanley

Morgan Stanley reported second-quarter 2026 revenue of $21.3 billion and record EPS ex-CVA of $3.46. ROTCE was 26.6%, and the year-to-date efficiency ratio was 65%. Institutional Securities revenue was a record $11 billion, with pre-tax profit of $4.3 billion; Wealth Management revenue was a record $8.9 billion with pre-tax profit of $2.7 billion and a 30.5% pre-tax margin; Investment Management revenue was $1.6 billion, up 6% year over year. On the balance sheet, total spot assets were $1.7 trillion, standardized RWAs were $590 billion, and standardized CET1 was 14.8%; the firm repurchased $1.5 billion of common stock and increased the quarterly dividend to $1.15. For guidance, Sharon Yeshaya said the third quarter should see a modest sequential increase in Wealth Management net interest income, and the annual tax rate is expected to remain between 22% and 23%.

Ted Pick framed the quarter as evidence that the integrated model is working, citing record results, $10 trillion of total client assets across Wealth and Investment Management, and $18 billion of CET1 accretion over the last 10 quarters. He emphasized that the firm is focused on raising, managing, and allocating capital for clients, with excess capital providing flexibility to support clients, invest, and return capital. He also said the bar remains high for inorganic deals, but the firm continues to evaluate bolt-ons while prioritizing organic growth.

Sharon Yeshaya highlighted record firmwide revenue of $21.3 billion, EPS ex-CVA of $3.46, ROTCE of 26.6%, and a 65% year-to-date efficiency ratio. She pointed to higher technology-driven spend for infrastructure, AI-enabled efficiencies, and business growth, while noting the firm still produced operating leverage in the first half. She also cited a standardized CET1 ratio of 14.8%, $1.5 billion of share repurchases, a 23.1% quarterly tax rate, and a full-year tax-rate expectation of 22% to 23%. In Wealth Management, she said deposits grew to $436 billion, NII rose to $2.3 billion, and third-quarter NII should increase modestly sequentially.

Analysts focused heavily on workplace-driven net new assets, asking whether Morgan Stanley is near a peak in that channel and how much of the flow is tied to IPOs versus broader client conversion. Management said the workplace funnel is still early, with roughly 70% of the top 100 unicorns by market cap in the pipeline, and stressed that IPOs are one source of a longer-term client-acquisition engine that also includes 401(k)s, E*TRADE, referrals, and advice conversion. Questions also probed whether wealth margins can move into the low- to mid-30s and whether the firm is holding too much capital; Ted Pick said 30% is a benchmark, not a target, and that capital is being kept as a durable buffer while still being deployed to clients. Later questions focused on the sustainability of trading and the AI capex cycle, with management saying activity is broadening geographically and that AI investment is still early, with some risk of overbuild but also meaningful multi-year opportunity.