Morgan Stanley Second Quarter 2026 Earnings Results (Form 8-K)

Second Quarter Results

Institutional Securities

Institutional Securities reported net revenues of $11.0 billion compared with $7.6 billion a year ago. Pre-tax income was $4.3 billion compared with $2.1 billion a year ago.4

Provision for credit losses:

•Provision for credit losses in the quarter was driven by portfolio growth in corporate loans and secured lending facilities and individual assessments for certain corporate and commercial real estate loans.

Total Expenses:

•Compensation expense increased from a year ago primarily driven by higher revenues.

•Non-compensation expenses increased from a year ago primarily driven by higher execution-related expenses.

2

Wealth Management

Wealth Management reported net revenues of $8.9 billion compared with $7.8 billion a year ago. Pre-tax income of $2.7 billion resulted in a pre-tax margin of 30.5%.4,15 Strong net new assets for the quarter were $148 billion of which just over half represented inflows related to IPOs of certain clients in our Workplace channel.

Investment Management

Investment Management reported net revenues of $1.6 billion in the current quarter. Pre-tax income was $404 million compared with $323 million a year ago.4

3

4

Morgan Stanley (NYSE: MS) is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in 42 countries, the Firm's employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit www.morganstanley.com.

A financial summary follows. Financial, statistical and business-related information, as well as information regarding business and segment trends, is included in the financial supplement. Both the earnings release and the financial supplement are available online in the Investor Relations section at www.morganstanley.com.

NOTICE:

The information provided herein and in the financial supplement, including information provided on the Firm's earnings conference calls, may include certain non-GAAP financial measures. The definition of such measures or reconciliation of such measures to the comparable U.S. GAAP figures are included in this earnings release and the financial supplement, both of which are available on www.morganstanley.com.

This earnings release may contain forward-looking statements, including the attainment of certain financial and other targets, objectives and goals. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management's current estimates, projections, expectations, assumptions, interpretations or beliefs and which are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of risks and uncertainties that may affect the future results of the Firm, please see "Forward-Looking Statements" preceding Part I, Item 1, "Competition" and "Supervision and Regulation" in Part I, Item 1, "Risk Factors" in Part I, Item 1A, "Legal Proceedings" in Part I, Item 3, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 and "Quantitative and Qualitative Disclosures about Risk" in Part II, Item 7A in the Firm's Annual Report on Form 10-K for the year ended December 31, 2025 and other items throughout the Form 10-K, the Firm's Quarterly Reports on Form 10-Q and the Firm's Current Reports on Form 8-K, including any amendments thereto.

5

1 Includes preferred dividends related to the calculation of earnings per share for the second quarter of 2026 and 2025 of approximately $145 million and $147 million, respectively.

2 The Firm prepares its Consolidated Financial Statements using accounting principles generally accepted in the United States (U.S. GAAP). From time to time, Morgan Stanley may disclose certain "non-GAAP financial measures" in the course of its earnings releases, earnings conference calls, financial presentations and otherwise. The Securities and Exchange Commission defines a "non-GAAP financial measure" as a numerical measure of historical or future financial performance, financial position, or cash flows that is subject to adjustments that effectively exclude, or include amounts from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. Non-GAAP financial measures disclosed by Morgan Stanley are provided as additional information to analysts, investors and other stakeholders in order to provide them with greater transparency about, or an alternative method for assessing our financial condition, operating results, or capital adequacy. These measures are not in accordance with, or a substitute for U.S. GAAP, and may be different from or inconsistent with non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we will also generally define it or present the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable U.S. GAAP financial measure.

3 Our earnings releases, earnings conference calls, financial presentations and other communications may also include certain metrics which we believe to be useful to us, analysts, investors, and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results.

4 Pre-tax income represents income before provision for income taxes.

5 The expense efficiency ratio represents total non-interest expenses as a percentage of net revenues.

6 Tangible common equity is a non-GAAP financial measure that the Firm considers useful for analysts, investors and other stakeholders to allow comparability of period-to-period operating performance and capital adequacy. Tangible common equity represents common equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction. The calculation of return on average tangible common equity, also a non-GAAP financial measure, represents full year or annualized net income applicable to Morgan Stanley less preferred dividends as a percentage of average tangible common equity. The calculation of tangible book value per common share, also a non-GAAP financial measure, represents tangible common shareholder's equity divided by common shares outstanding.

7 Wealth Management fee-based client assets represent the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets.

8 Wealth Management fee-based asset flows include net new fee-based assets (including asset acquisitions), net account transfers, dividends, interest, and client fees, and exclude institutional cash management related activity.

9 Wealth Management net new assets represent client asset inflows, inclusive of interest, dividends and asset acquisitions, less client asset outflows, and exclude the impact of business combinations/divestitures and the impact of fees and commissions.

10 AUM is defined as assets under management or supervision.

11 Long-term net flows include the Equity, Fixed Income and Alternative and Solutions asset classes and excludes the Liquidity and Overlay Services asset class. During the first quarter of 2026, certain changes were made to the presentation of Investment Management AUM classifications and Net Flows. These changes had no impact on Total AUM and were made to more closely align reporting with underlying investment strategies and to conform reporting of Net Flows, excluding distributions, which for long-term products were $3 billion and $2 billion for the quarters ended June 30, 2026 and June 30, 2025, respectively, with the relevant presentations in our SEC Forms 10-K and 10-Q. For additional information, please refer to the Addendums in the Firm's first quarter 2026 financial supplement and in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Investment Management" in the Firm's Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 available online in the Investor Relations section at www.morganstanley.com.

12 Firm pre-tax income, Firm earnings per diluted share, Institutional Securities net revenues and Institutional Securities pre-tax income represent records for a reported quarterly period after excluding the impact of debt valuation adjustments (DVA), which were previously reflected in net revenues in prior periods before 2016, and reflecting the current reporting structure of the Firm (i.e. exclusive of discontinued operations). Net revenues and net income applicable to Morgan Stanley, excluding the impact of DVA, were non-GAAP financial measures in those prior periods that were reconciled to the comparable GAAP financial measures in the respective quarterly reports filed on Form 10-Q.

13 During the first quarter of 2026, as a result of a March workforce management action, we recognized severance costs of $178 million in Compensation and benefits expense. The workforce management action was related to an effort to improve operational efficiency and manage performance, rather than a change in strategy or exit of businesses. The action occurred

6

across our business segments and geographic regions and impacted approximately 2% of our global workforce at that time. We recorded severance costs of $94 million in the Institutional Securities business segment, $61 million in the Wealth Management business segment, and $23 million in the Investment Management business segment. These costs were incurred across all regions, with the majority in the Americas.

14 CET1 capital is defined as Common Equity Tier 1 capital. The Firm's risk-based capital ratios are computed under each of the (i) standardized approaches for calculating credit risk and market risk risk‐weighted assets (RWAs) (the "Standardized Approach") and (ii) applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (the "Advanced Approach"). For information on the calculation of regulatory capital and ratios, and associated regulatory requirements, please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Regulatory Requirements" in the Firm's Annual Report on Form 10-K for the year ended December 31, 2025.

15 Pre-tax margin represents income before provision for income taxes divided by net revenues.

16 "DCP" refers to certain employee deferred cash-based compensation programs. Please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations - Other Matters - Deferred Cash-Based Compensation" in the Firm's Annual Report on Form 10-K for the year ended December 31, 2025.

Beginning in the first quarter of 2026, hedges for Wealth Management DCP awards were primarily transitioned to derivative instruments with changes in fair value recorded in compensation expense or in other comprehensive income within shareholder's equity and later reclassified to compensation expense in the same period as the related DCP award vests. As a result, the Firm no longer presents non-GAAP measures of net revenues and compensation expense excluding DCP. Wealth Management net revenues included mark-to-market gains associated with DCP of $294 million in the second quarter of 2025.

17 Wealth Management transactional revenues include investment banking, trading, and commissions and fee revenues.

18 Capital ratios are estimates as of the press release date, July 15, 2026 and are subject to change in the Firm's Quarterly Report on Form 10-Q for the quarter ended June 30, 2026.

19 The Tier 1 leverage ratio is a leverage-based capital requirement that measures the Firm's leverage. Tier 1 leverage ratio utilizes Tier 1 capital as the numerator and average adjusted assets as the denominator.

20 The Firm's supplementary leverage ratio (SLR) utilizes a Tier 1 capital numerator of approximately $97.2 billion and $88.4 billion, and supplementary leverage exposure denominator of approximately $1.97 trillion and $1.62 trillion, for the second quarter of 2026 and 2025, respectively.

7

Consolidated Income Statement Information
(unaudited, dollars in millions)
			Quarter Ended																		Percentage Change From:												Six Months Ended												Percentage Change
			Jun 30, 2026						Mar 31, 2026						Jun 30, 2025						Mar 31, 2026						Jun 30, 2025						Jun 30, 2026						Jun 30, 2025
Revenues:
Investment banking			$	2,651					$	2,289					$	1,644					16		%				61		%				$	4,940					$	3,355					47		%
Trading			6,723						6,730						4,745						-		%				42		%				13,453						9,856						36		%
Investments			226						146						388						55		%				(42		%)				372						757						(51		%)
Commissions and fees			1,833						1,690						1,425						8		%				29		%				3,523						2,906						21		%
Asset management			6,912						6,730						5,953						3		%				16		%				13,642						11,916						14		%
Other			223						292						290						(24		%)				(23		%)				515						1,041						(51		%)
Total non-interest revenues			18,568						17,877						14,445						4		%				29		%				36,445						29,831						22		%
Interest income			15,902						15,273						14,905						4		%				7		%				31,175						28,653						9		%
Interest expense			13,122						12,570						12,558						4		%				4		%				25,692						23,953						7		%
Net interest			2,780						2,703						2,347						3		%				18		%				5,483						4,700						17		%
Net revenues			21,348						20,580						16,792						4		%				27		%				41,928						34,531						21		%
Provision for credit losses			98						98						196						-		%				(50		%)				196						331						(41		%)
Non-interest expenses:
Compensation and benefits			8,187						8,542						7,190						(4		%)				14		%				16,729						14,711						14		%
Non-compensation expenses:
Brokerage, clearing and exchange fees			1,464						1,256						1,188						17		%				23		%				2,720						2,410						13		%
Information processing and communications			1,203						1,148						1,089						5		%				10		%				2,351						2,139						10		%
Professional services			680						602						711						13		%				(4		%)				1,282						1,385						(7		%)
Occupancy and equipment			482						483						459						-		%				5		%				965						908						6		%
Marketing and business development			401						310						297						29		%				35		%				711						535						33		%
Other			1,485						1,130						1,040						31		%				43		%				2,615						1,946						34		%
Total non-compensation expenses			5,715						4,929						4,784						16		%				19		%				10,644						9,323						14		%
Total non-interest expenses			13,902						13,471						11,974						3		%				16		%				27,373						24,034						14		%
Income before provision for income taxes			7,348						7,011						4,622						5		%				59		%				14,359						10,166						41		%
Provision for income taxes			1,695						1,373						1,047						23		%				62		%				3,068						2,220						38		%
Net income			$	5,653					$	5,638					$	3,575					-		%				58		%				$	11,291					$	7,946					42		%
Net income applicable to noncontrolling interests			72						71						36						1		%				100		%				143						92						55		%
Net income applicable to Morgan Stanley			5,581						5,567						3,539						-		%				58		%				11,148						7,854						42		%
Preferred stock dividends			145						156						147						(7		%)				(1		%)				301						305						(1		%)
Earnings applicable to Morgan Stanley common shareholders			$	5,436					$	5,411					$	3,392					-		%				60		%				$	10,847					$	7,549					44		%

Notes:

-In the periods prior to 2026, the Firm presented non-GAAP financial measures to adjust net revenues and compensation expense for mark-to-market gains and losses on deferred cash-based compensation plans (DCP). Firm net revenues excluding DCP, which represents a non‐GAAP financial measure, were: 2Q25: $16,415 million, 2Q25 YTD: $34,303 million. Firm compensation expenses excluding DCP, which represents a non‐GAAP financial measure, were: 2Q25: $6,819 million, 2Q25 YTD: $14,342 million.

-Beginning in the first quarter of 2026, the Firm utilizes derivatives to hedge certain DCP awards and as a result will no longer present non-GAAP financial measures excluding DCP.

-The End Notes are an integral part of this presentation. Refer to pages 12 - 18 of the Financial Supplement for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice.

8

Consolidated Financial Metrics, Ratios and Statistical Data
(unaudited)
						Quarter Ended																		Percentage Change From:												Six Months Ended												Percentage Change
						Jun 30, 2026						Mar 31, 2026						Jun 30, 2025						Mar 31, 2026						Jun 30, 2025						Jun 30, 2026						Jun 30, 2025
Financial Metrics:
			Earnings per basic share			$	3.50					$	3.47					$	2.15					1		%				63		%				$	6.96					$	4.78					46		%
			Earnings per diluted share			$	3.46					$	3.43					$	2.13					1		%				62		%				$	6.90					$	4.73					46		%
			Return on average common equity			20.7		%				21.0		%				13.9		%																20.9		%				15.7		%
			Return on average tangible common equity			26.6		%				27.1		%				18.2		%																26.8		%				20.6		%
			Book value per common share			$	67.80					$	66.18					$	61.59																	$	67.80					$	61.59
			Tangible book value per common share			$	53.18					$	51.58					$	47.25																	$	53.18					$	47.25
Financial Ratios:
			Pre-tax margin			34		%				34		%				28		%																34		%				29		%
			Compensation and benefits as a % of net revenues			38		%				42		%				43		%																40		%				43		%
			Non-compensation expenses as a % of net revenues			27		%				24		%				28		%																25		%				27		%
			Firm expense efficiency ratio			65		%				65		%				71		%																65		%				70		%
			Effective tax rate			23.1		%				19.6		%				22.7		%																21.4		%				21.8		%
Statistical Data:
			Period end common shares outstanding (millions)			1,572						1,580						1,598						(1		%)				(2		%)
			Average common shares outstanding (millions)
			Basic			1,554						1,561						1,577						-		%				(1		%)				1,558						1,581						(1		%)
			Diluted			1,569						1,576						1,593						-		%				(2		%)				1,573						1,596						(1		%)
			Worldwide employees			82,944						83,922						80,393						(1		%)				3		%

The End Notes are an integral part of this presentation. Refer to pages 12 - 18 of the Financial Supplement for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice.

9