Morgan Stanley Reports 17% Revenue Growth to $17.7 Billion in Q1 2025

Morgan Stanley reported strong financial performance for the first quarter of 2025, with net revenues reaching $17.7 billion, a 17% increase from $15.1 billion in the same period last year. The firm’s net income applicable to common shareholders was $4.3 billion, reflecting a 26% rise compared to $3.4 billion in the prior year quarter. Earnings per diluted share also saw a significant increase, rising to $2.60 from $2.02, marking a 29% year-over-year growth. The firm achieved a return on equity (ROE) of 17.4% and a return on tangible common equity (ROTCE) of 23.0%, indicating improved profitability metrics.

In terms of operational changes, Morgan Stanley's Institutional Securities segment reported net revenues of $9.0 billion, up 28% from the previous year, driven by strong performance in equity and investment banking, particularly in fixed income underwriting. Wealth Management generated $7.3 billion in net revenues, a 6% increase, bolstered by asset management revenues and net new asset inflows of $94 billion. The Investment Management segment also performed well, with net revenues of $1.6 billion, a 16% increase, primarily due to higher asset management fees on an average assets under management (AUM) of $1.7 trillion.

The firm’s total non-interest expenses for the quarter were $12.1 billion, a 12% increase from the prior year, largely due to higher compensation and benefits expenses, which included $144 million in severance costs related to a reduction in force affecting approximately 2% of the workforce. The firm’s expense efficiency ratio improved to 68%, down from 71% in the previous year, indicating better cost management relative to revenue growth. Additionally, the provision for credit losses was $135 million, compared to a net release of $6 million in the prior year, reflecting a cautious approach amid a deteriorating macroeconomic outlook.

Morgan Stanley continues to focus on strategic growth, with a significant emphasis on its Wealth Management and Investment Management segments. The firm has also been proactive in managing its capital, accreting $1.9 billion of Common Equity Tier 1 capital, resulting in a CET1 capital ratio of 15.3% as of March 31, 2025. Looking ahead, the firm anticipates ongoing challenges due to geopolitical risks and economic uncertainties, which may impact capital markets and its business operations. However, it remains committed to achieving its ROTCE goal of 20% under normal market conditions.