MS 10-K & 10-Q changes, risk factors and insider trading

Our results of operations have been in the past and may, in the future, be materially affected by global financial market and economic conditions, including, in particular, by periods of low or slowing economic growth in the United States and other major markets, both directly and indirectly through their impact on client activity levels. These include the level and volatility of equity, fixed income and commodity prices; the level, term structure and volatility of interest rates; inflation, currency values and unemployment rates; the level of other market indices,indices; fiscal or monetary policies established by governments, central banks and financial regulators; and uncertainty concerning the future path of interest rates, government shutdowns, debt ceilings or funding, which may be driven by economic conditions, recessionary fears, market uncertainty or lack of confidence among investors and clients due to the effects of widespread events such as global pandemics, natural disasters, climate-related incidents, acts of war or aggression, geopolitical instability, changes as a result of global elections, including changes in U.S. presidential administrations or Congress, changes to global trade policies, supply chain complications and the implementation of tariffs, protectionist trade policies, trade sanctions or investment restrictions and other factors, or a combination of these or other factors.

The results of our Institutional Securities business segment, particularly results relating to our involvement in primary and secondary markets for all types of financial products, are subject to substantial market fluctuations due to a variety of factors that we cannot control or predict with great certainty. These fluctuations impact results by causing variations in business flows and activity and in the fair value of securities and other financial products. Fluctuations also occur due to the level of global market activity, which, among other things,

the level of global market activity, which, among other things, can be impacted by market uncertainty or lack of investor and client confidence due to unforeseen economic, geopolitical or market conditions that in turn affect the size, number and timing of investment banking client assignments and transactions and the realization of returns from our principal investments.

In addition, financial markets are susceptible to severe events evidenced by rapid depreciation in asset values accompanied by a reduction in asset liquidity. Under these extreme conditions, hedging and other risk management strategies may not be as effective at mitigating trading losses as they would be under more normal market conditions. Moreover, under these conditions, market participants are particularly exposed to trading strategies employed by many market participants simultaneously and on a large scale, which could lead to increased individual counterparty risk for our businesses. Although our risk management and monitoring processes seek to quantify and mitigate risk to more extreme market moves, severe market events have historically been difficult to predict, and we could realize significant losses if extreme market events were to occur.

Our net interest income is sensitive to changes in interest rates, generally resulting in higher net interest income in higher interest rate scenarios and lower net interest income in lower interest rate scenarios. The level and pace of interest rate changes, along with other developments, such as pricing changes to certain deposit types due to various competitive dynamics and alternative cash-equivalent products available to depositors, have in the past impacted, and could again impact, client preferencespreferences, forincluding cash allocationallocation, and the pace of reallocation of client balances, resulting in changes in the deposit mix and associated interest expense, as well as client demand for loans. These factors have in the past adversely affected, and may in the future adversely affect, our results of operations, including our net interest income.

We incur significant credit risk exposure through our Institutional Securities business segment. This risk may arise from a variety of business activities, including, but not limited to: extending credit to clients through various lending commitments; entering into swap or other derivative contracts under which counterparties have obligations to make payments to us; acting as clearing broker for listed and over-the-counter derivatives whereby we guarantee client performance to clearinghouses; providing short- or long-term funding that is secured by physical or financial collateral, including, but not limited to, real estate and marketable securities, whose value may at times be insufficient to fully cover the loan repayment amount; posting margin and/or

securities, whose value may at times be insufficient to fully cover the loan repayment amount; posting margin and/or collateral and other commitments to clearinghouses, clearing agencies, exchanges, banks, securities firms and other financial counterparties; and investing and trading in securities and loan pools, whereby the value of these assets may fluctuate based on realized or expected defaults on the underlying obligations or loans.

Our valuations related to, and reserves for losses on, credit exposures rely on complex models, estimates and subjective judgments about the future. While we believe current valuations and reserves adequately address our perceived levels of risk, future economic conditions, including inflationU.S. real GDP growth rate, credit spreads, interest rates and changes in real estate and other asset values, that differ from or are more severe than forecast, inaccurate models or assumptions, or external factors, such as geopolitical events, changes in international trade policies, global pandemics or natural disasters, could lead to inaccurate measurement of or deterioration of credit quality of our borrowers and counterparties or the value of collateral and result in unexpected losses. We may also incur higher-than-anticipated credit losses as a result of (i) disputes with counterparties over the valuation of collateral or (ii) actions taken by other lenders that may negatively impact the valuation of collateral. In cases where we foreclose on collateral, sudden declines in the value or liquidity of collateral may result in significant losses to us despite our (i) credit monitoring, (ii) over-collateralization, (iii) ability to call for additional collateral or (iv) ability to force repayment of the underlying obligation, especially where there is a single type of collateral supporting the obligation. In addition, in the longer term, climate change may have a negative impact on the financial condition of our clients, which may decrease revenues from those clients and increase the credit risk associated with loans and other credit exposures to those clients. Certain of our credit exposures may be concentrated by counterparty, product, sector, portfolio, industry or geographic region. Although our models and estimates account for correlations among related types of exposures, a change in the market or economic environment for a concentrated product or an external factor impacting a concentrated counterparty, sector, portfolio, industry or geographic region may result in credit losses in excess of amounts forecast. For further information regarding our country risk exposure, see also “Quantitative and Qualitative Disclosures about Risk—Country Risk.”

In addition, as a clearing member of several central counterparties, we are responsible for the defaults or misconduct of our customers and could incur financial losses in the event of default by other clearing members. Although

in the event of default by other clearing members. Although we regularly review our credit exposures, default risk may arise from events or circumstances that are difficult to detect or foresee.

A default by a large financial institution or financial services firm could adversely affect financial markets.

The commercial soundness of many financial institutions and certain other large financial services firms may be closely interrelated as a result of credit, trading, clearing or other relationships among such entities. Increased centralization of trading activities through particular clearinghouses, centralagent agentsbanks or exchanges may increase our concentration of risk with respect to these entities. As a result, concerns about, or a default or threatened default by, one or more such entities could lead to significant market-wide liquidity and credit problems, losses or defaults by other institutions, or require financial commitments to multilateral actions intended to support market stability. This is sometimes referred to as systemic risk and may adversely affect financial intermediaries, such as clearinghouses, clearing agencies, exchanges, banks and securities firms, with which we interact on a daily basis and, therefore, could adversely affect us. See also “Systemic Risk Regime” under “Business—Supervision and Regulation—Financial Holding Company.”

Operational risk refers to the risk of loss, or of damage to our reputation, resulting from inadequate or failed processes or systems, human factors (e.g., inappropriate or unlawful conduct) or external events (e.g., cyberattacks or third-party vulnerabilities) that may manifest as, for example, loss of information, business disruption, theft and fraud, legal, regulatory and compliance risks, or damage to physical assets. We may experience operational risk events across the full scope of our business activities, including revenue-generating activities and support and control groups (e.g., information technology (“IT”) and trade processing). Legal, regulatory and compliance risk is included in the scope of operational risk and is discussed below under “Legal, Regulatory and Compliance Risk.” For more information on how we monitor and manage operational risk, see “Quantitative and Qualitative Disclosures about Risk—Operational Risk.”

Our businesses are highly dependent on our ability to process and report, on a daily basis, a large number of transactions across numerous and diverse markets in many currencies. We may introduce new products or services or change processes or reporting, including in connection with new regulatory requirements, or integration of processes or systems of acquired companies, resulting in new operational risk that we may not fully appreciate or identify.

As a major participant in the global capital markets, we face the risk of incorrect valuation or risk management of our trading positions due to flaws in data, models, electronic trading systems or processes, or due to fraud or cyberattacks. We also face the risk of operational failure or disruption of any of the clearing agents, exchanges, clearinghouses or other financial intermediaries we use to facilitate our lending, securities and derivatives transactions. In addition, in the event of a breakdown or improper operation or disposal of our, or a direct or indirect third party’s (or third parties thereof) systems, processes or information assets, or improper or unauthorized action by third parties, including consultants and subcontractorssubcontractors, or our employees, we have received in the past and may receive in the future regulatory sanctions, and could suffer financial loss, an impairment to our liquidity position, a disruption of our businesses or damage to our reputation.

In addition, the interconnectivity of multiple financial institutions with centralagent agents,banks, exchanges and clearinghouses, and the increased importance of these entities, increases the risk that an operational failure at one institution or entity may cause an industrywide operational failure that could materially impact our ability to conduct business. Furthermore, the concentration of Firm and personal information held by a small number of third parties increases the risk that a breach or disruption at a key third party may cause an industrywide event that could significantly increase the cost and risk of conducting business. These risks may be heightened to the extent that we rely on third parties that are concentrated in a geographic area.

There can be no assurance that our or our third parties’ business contingency and security response plans fully mitigate all potential risks to us. Our ability to conduct business may be adversely affected by a disruption in the infrastructure that supports our businesses and the communities where we are located. This may include a disruption involving physical site access; software flaws and

infrastructure that supports our businesses and the communities where we are located. This may include a disruption involving physical site access; software flaws and vulnerabilities; cybersecurity incidents; terrorist activities; political unrest; disease pandemics; catastrophic events; climate-related incidents and natural disasters (such as earthquakes, tornadoes, floods, hurricanes and wildfires); electrical outages; environmental hazards; computer servers; internet outages; client access to our digital platforms and mobile applications; communication platforms or other services we use; new technologies (such as generative artificial intelligence); and our employees or third parties with whom we conduct business. Although we and the third parties with whom we conduct business employ backup systems for data, those backup systems may be unavailable following a disruption, the affected data may not have been backed up or may not be recoverable from the backup, the backup systems may not process data as accurately or efficiently as the primary systems or the backup data may be costly to recover, any of which could adversely affect our business.

Notwithstanding evolving technology and technology-based risk and control systems, our businesses ultimately rely on people, including our employees and those of our third parties (or third parties thereof). As a result of human error or engagementmisconduct inthat violationsmay ofviolate applicable policies, laws, rules or procedures, certain errors or violations are not always discovered immediately by our technological processes or by our controls and other procedures that are intended to prevent and detect such errors or violations. These can include calculation or input errors, inadvertent or duplicate payments, mistakes in addressing emails or other communications, errors in software or model development or implementation, or errors in judgment, as well as intentional efforts to disregard or circumvent applicable policies, laws, rules or procedures. Our use of new technologies may be undermined by such human errors or misconduct due to undetected flaws or biases in the algorithms or data utilized by such technologies. Human errors and malfeasance, even if promptly discovered and remediated, can result in material losses and liabilities for us, and negatively impact our reputation in the future.

We conduct business in various jurisdictions outside the U.S., including jurisdictions that may not have comparable levels of protection for their corporate assets, such as intellectual property, trademarks, trade secrets, know-how, and customer information and records. The protection afforded in those jurisdictions may be less established and/or predictable than in the U.S. or other jurisdictions in which we operate. As a result, there may also be heightened risks associated with the potential theft of their data, technology and intellectual property in those jurisdictions by domestic or foreign actors, including private parties and those affiliated with or controlled by state actors. Additionally, we are subject to complex and evolving U.S. and international laws and regulations governing areas such as cybersecurity, privacy and data governance, transfer and protection, which may differ and potentially conflict, in various jurisdictions. Any theft of data, technologyjurisdictions or intellectualcause propertyus to develop or enhance controls that may negatively impact our operations and reputation, including disrupting the business activities of our subsidiaries, affiliates,encumber

Cybersecurity risks for financial institutions have significantly increased in recent years, in part because of the proliferation of new technologies; the use of the internet, mobile telecommunications and cloud technologies to conduct financial transactions; the use of artificial intelligence and the emergence of quantum computing; and the increased sophistication and activities of organized crime, hackers, terrorists, nation-states, state-sponsored actors and other parties. Any of these parties may also attempt to fraudulently induce employees, customers, clients, vendors or other third parties or users of our systems to disclose sensitive information in order to gain access to our networks, systems or data or those of our employees or clients, and such parties may see their effectiveness enhanced by the use of advanced systems, such as artificial intelligence. Global events and geopolitical instability have also led to increased nation-state targeting of financial institutions in the U.S. and abroad.

Like other financial services firms, the Firm, its third-party providers and its clients continue to be the subject of unauthorized access attacks; mishandling, loss, theft or misuse of information; computer viruses or malware; cyberattacks designed to obtain confidential information, destroy data, disrupt or degrade service, sabotage systems or networks, impede our ability to execute or confirm settlement of transactions or cause other damage; ransomware; denial of

cyberattacks designed to obtain confidential information, destroy data, disrupt or degrade service, sabotage systems or networks, impede our ability to execute or confirm settlement of transactions or cause other damage; ransomware; denial of service attacks; data breaches; social engineering attacks; phishing attacks; and other events. There can be no assurance that such unauthorized access, mishandling or misuse of information, or cybersecurity incidents will not occur in the future and they could occur more frequently and on a more significant scale.

While many of our agreements with partners and third parties include indemnification provisions, we may not be able to recover sufficiently, or at all, under such provisions to adequately offset any losses we may incur. In addition, although we maintain insurance coverage that may, subject to policy terms and conditions, cover certain aspects of cyber and information security risks, such insurance coverage may be insufficient to cover any or all losses we may incur, and we

although we maintain insurance coverage that may, subject to policy terms and conditions, cover certain aspects of cyber and information security risks, such insurance coverage may be insufficient to cover any or all losses we may incur, and we cannot be sure that such insurance will continue to be available to us on commercially reasonable terms, or at all, or that our insurers will not deny coverage as to any future claim.

In addition, our ability to raise funding could be impaired if investors, depositors or lenders develop a negative perception of our long-term or short-term financial prospects due to factors such as an incurrence of large trading, credit or operational losses, a downgrade by the rating agencies, a decline in the level of our business activity, if regulatory authorities take significant action against us or our industry, or if we discover significant employee misconduct or illegal activity.

The Parent Company has no business operations and depends on dividends, distributions, loans and other payments from its subsidiaries to fund dividend payments and to fund all payments on its obligations, including debt obligations. Regulatory restrictions, tax restrictions or elections and other legal restrictions may limit our ability to transfer funds freely, either to or from our subsidiaries. In particular, many of our

payments on its obligations, including debt obligations. Regulatory restrictions, tax restrictions or elections and other legal restrictions may limit our ability to transfer funds freely, either to or from our subsidiaries. In particular, many of our subsidiaries, including our bank and broker-dealer subsidiaries, are subject to laws, regulations and self-regulatory organization rules that, in certain circumstances, limit, as well as permit regulatory bodies to block or reduce, the flow of funds to the Parent Company, or that prohibit such transfers or dividends altogether, including steps to “ring fence” entities by regulators outside the U.S. to protect clients and creditors of such entities.

Our liquidity and financial condition have in the past been, and could in the future could be, adversely affected by U.S. and international markets and economic conditions.

Legal, regulatory and compliance risk includes the risk of legal or regulatory sanctions; material financial loss, including fines, penalties, judgments, damages and/or settlements; limitations on our business; or loss to reputation we may suffer as a result of our failure to comply with laws, regulations, rules, related self-regulatory organization standards and codes of conduct applicable to our business activities. This risk also includes contractual and commercial risk, such as the risk that a counterparty’s performance obligations will be unenforceable. It also includes compliance with AML, terrorist financing and anti-corruption rules and regulations. For more information on how we monitor and manage legal, regulatory and compliance risk, see “Quantitative and Qualitative Disclosures about Risk—Legal, Regulatory and Compliance Risk.”

Like other major financial services firms, we are subject to extensive regulation by U.S. federal and state regulatory agencies and securities exchanges, and by regulators and exchanges in each of the major markets where we conduct our business, including an increasing number of complex sanctions and disclosure regimes. These laws and regulations, which maycould continuein tothe future increase in volume and complexity, significantly affect the way and costs of doing business and can restrict the scope of our existing businesses and limit our ability to expand our product offerings and pursue certain investments.

The Firm and its employees are subject to wide-ranging regulation and supervision, which, among other things, subject us to intensive scrutiny of our businesses and any plans for expansion of those businesses through acquisitions or otherwise, limitations on activities, a systemic risk regime that imposes heightened capital and liquidity and funding requirements, including the global implementation of capital standards established by the Basel Committee, and other enhanced prudential standards, resolution regimes and resolution planning requirements, requirements for maintaining minimum amounts of TLAC and external long-term debt, restrictions on activities and investments imposed by the Volcker Rule, comprehensive derivatives regulation, interest rate benchmark requirements, commodities regulation, market structure regulation, consumer protection regulation, AML, terrorist financing and anti-corruption rules and regulations, tax regulations and interpretations, antitrust laws, trade and transaction reporting obligations, requirements related to preventing the misuse of confidential information, including material non-public information, record-keeping requirements, broadened fiduciary obligations and disclosure requirements.requirements and laws and regulations related to new technologies, including artificial intelligence and tokenization.

In addition, regulatory requirements that are imposed by foreign policymakers and regulators may be inconsistent or conflict with regulations that we are subject to in the U.S. and may adversely affect us.

In addition, a wholly owned, direct subsidiary of the Parent Company, Morgan Stanley Holdings LLC (“Funding IHC”), serves as a resolution funding vehicle. The Parent Company has transferred, and has agreed to transfer on an ongoing basis, certain assets to the Funding IHC. In the event of a resolution scenario, the Parent Company would be obligated to contribute all of its material assets that can be contributed under the terms of the amended and restated support

basis, certain assets to the Funding IHC. In the event of a resolution scenario, the Parent Company would be obligated to contribute all of its material assets that can be contributed under the terms of the amended and restated support agreement (other than shares in subsidiaries of the Parent Company and certain other assets) to the Funding IHC. The Funding IHC would be obligated to provide capital and liquidity, as applicable, to certain supported subsidiaries, pursuant to the terms of the secured amended and restated support agreement.

In addition, certain jurisdictions, including the U.K. and E.U. jurisdictions, have implemented changes to resolution regimes to provide resolution authorities with the ability to recapitalize a failing entity organized in such jurisdiction by writing down certain unsecured liabilities or converting certain unsecured liabilities into equity. Such “bail-in” powers are intended to enable the recapitalization of a failing institution by allocating losses to its shareholders and unsecured creditors. This may increase the overall level of capital and liquidity required by us on a consolidated basis and may result in limitations on our ability to efficiently distribute capital and liquidity among our affiliated entities, including in times of stress. Non-U.S. regulators are also considering requirements that certain subsidiaries of large financial institutions maintain minimum

ability to efficiently distribute capital and liquidity among our affiliated entities, including in times of stress. Non-U.S. regulators are also considering requirements that certain subsidiaries of large financial institutions maintain minimum amounts of TLAC that would pass losses up from the subsidiaries to the Parent Company and, ultimately, to security holders of the Parent Company in the event of failure.

Investigations and proceedings initiated by these authorities may result in adverse judgments, settlements, fines, penalties, disgorgement, restitution, forfeiture, injunctions or other relief, and have included and may in the future include requirements that the Firm admit certain conduct, which may result in increased exposure to civil litigation. In addition, these measures have caused and may in the future cause collateral consequences. For example, such matters could impact our ability to engage in, or impose limitations on, certain of our businesses.

As a global financial services firm that provides products and services to a large and diversified group of clients, including corporations, governments, financial institutions and individuals, we face potential conflicts of interest in the normal course of business. For example, potential conflicts can occur when there is a divergence of interests between us and a client, among clients, between an employee on the one hand and us or a client on the other, or situations in which we may be a creditor of a client. Moreover, we utilize multiple brands and business channels, including those resulting from our acquisitions, and continue to enhance the collaboration across business segments, whichincluding mayas heighten the potential conflictspart of interestour or the risk of improper sharing of information.Integrated

Morgan Stanley is a global financial services firm that maintains significant market positions in each of its business segments—Institutional Securities, Wealth Management and Investment Management. Morgan Stanley, through its subsidiaries and affiliates, provides a wide variety of products and services to a large and diversified group of clients and customers, including corporations, governments, financial institutions and individuals. We operate as an Integrated Firm whereby we serve clients holistically across our business segments. Unless the context otherwise requires, the terms “Morgan Stanley,” “Firm,” “us,” “we” or “our” mean Morgan Stanley (the “Parent Company”) together with its consolidated subsidiaries. See the “Glossary of Common Terms and Acronyms” for the definition of certain terms and acronyms used throughout this Form 10-K. For an analysis of 20232024 results compared with 20222023 results, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the annual report on Form 10-K for the year ended December 31, 20232024 filed with the SEC.

A description of the clients and principal products and services of each of our business segments is asbelow. follows:Through the Integrated Firm some of our clients may use the products and services of more than one of our business segments.

Institutional Securities provides a variety of products and services to corporations, governments, financial institutions and ultra-high net worth clients. Investment Banking services consist of capital raising and financial advisory services, including the underwriting of debt, equity securities and other products, as well as advice on mergers and acquisitions, restructurings and project finance. Our Markets business, which comprises Equity and Fixed IncomeIncome, businesses includeprovides sales, financing, prime brokerage, market-making, and Asia wealth management services and holds certain business-related investments. Lending activities include originating corporate loans and commercial real estate loans, providing secured lending facilities, and extending securities-based and other financing to clients. Other activities include research.

Wealth Management provides a comprehensive array of financial services and solutions to individual investorsinvestors, including high and smallultra-high tonet medium-sizedworth individuals, and businesses and institutions. Wealth Management coverssupports clients through three channels: Advisor-Led, Self-Directed and Workplace. Wealth Management includes: financial advisor-led brokerage, investment advisory, custody, administrativecash management, and investment advisoryadministrative services; self-directed brokerage services; financial and wealth planning services; workplace services, including stock plan administration; securities-based lending, residential and commercial real estate loans and other lending products; banking; and retirement plan services.

The results of operations in the past have been, and in the future may continue to be, materially affected by: competition; legislative, legal and regulatory developments; market and economic conditions; and other risk factors. These factors also may have an adverse impact on our ability to achieve our strategic objectives. Additionally, the discussion of our results of operations herein may contain forward-looking statements. These statements, which reflect management’s beliefs and expectations, are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of the risks and uncertainties that may affect our future results, see “Forward-Looking Statements”, “Business—Competition”, “Business—Supervision and Regulation”, “Risk Factors” and “Liquidity and Capital Resources—Regulatory Requirements” herein.

•The Firm reported net revenues of $61.8$70.6 billion and net income applicable to Morgan Stanley of $13.4$16.9 billion,billion reflecting strong results across our business segments.segments and demonstrating the strength of our Integrated Firm.

•The Firm accreted $5.6 billion of Common Equity Tier 1 capital while supporting clients and returning capital to shareholders. At December 31, 2024,2025, the Firm’s Standardized Common Equity Tier 1 capital ratio was 15.9%.15.0%, and its Supplementary Leverage Ratio was 5.4%.

•Institutional Securities net revenues of $28.1$33.1 billionbillion, reflectprimarily higherreflecting resultsstrong acrossperformance businessesin and regionsEquity on higher client activity and improvedhigher marketunderwriting conditions.and Advisory revenues within Investment Banking.

•Wealth Management delivered net revenues of $28.4$31.8 billion, primarily reflecting higher Asset management revenues on higher market levels and Transactionalthe revenues.cumulative impact of strong fee-based flows. The pre-tax margin was 27.2%.29.3%. Fee-based asset flows were $123$160 billion and the business added net new assets of $252$356 billion.

•Investment Management reported net revenues of $5.9$6.5 billion, primarily drivenreflecting byhigher asset management revenuesfees driven by higher average AUM on higher averagemarket AUM.levels.

•Compensation and benefits expenses of $26,178$29,216 million in 20242025 increased 7%12% from the prior year, primarily due to an increase in the formulaic payout to Wealth Management representativesadvisors and higher discretionary incentive compensation,compensation within Institutional Securities, both on higher revenues, partiallyand offsethigher bysalary lower severance costs.expenses.

•Non-compensation expenses of $17,723$19,126 million in 20242025 increased 3%8% from the prior year, primarily drivendue byto higher execution-related expenses and increased technology spend, partially offset by lower legal expenses and lower FDIC special assessment cost.spend.

•Institutional Securities net revenues of $28,080$33,080 million in 20242025 increased 22%18% from the prior year, primarily reflecting higher results across businesses, particularly in Equity driven by increased client activity and higher average client balances, and higher underwriting resultsand Advisory revenues within Investment Banking.

•Wealth Management net revenues of $28,420$31,754 million in 20242025 increased 8%12% from the prior year, primarily reflecting higher Asset management revenues on higher market levels and the cumulative impact of positive fee-based flows, and higher Transactional revenues,revenues partiallyon offsethigher byclient lower Net interest income.activity.

•Investment Management net revenues of $5,861$6,525 million in 20242025 increased 9%11% from the prior year, primarily reflecting higher Asset management and related fees driven by higher AUM on higher market levels and higher Performance-based income and other revenues.

•EMEAAmericas net revenues in 20242025 increased 19%13% from the prior year, primarily driven by higher results across businesses within the Institutional Securitiesall business segment.segments.

•AsiaEMEA net revenues in 20242025 increased 19%16% from the prior year, primarily driven by higher results from Equity and Investment Bankingrevenues within the Institutional Securities business segment.

2.ROE and ROTCE represent annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity and average tangible common equity, respectively.

8.Client assets representrepresents the sum of Wealth Management client assets and Investment Management AUM. Certain Wealth Management client assetsassets, totaling $350 billion as of December 31, 2025, are invested in Investment Management products and are therefore also included in Investment Management’s AUM.

The economic environment,environment was resilient in 2025, as client and investor confidence and overall market sentiment improved and markets rebounded from early-year uncertainty. The year was characterized by increased momentum in 2024.capital Whilemarkets activity and lower interest ratesrates. declinedThe inrate recentof months,economic elevatedgrowth, inflation,ongoing geopolitical risksuncertainty, includingas ongoingwell tensions in the Middle East, uncertainties surrounding government and policy developments in the markets we operate in andas the timing and pace of any further interestcentral ratebank actions present ongoing risks to the economic environment. These factors have impacted,impacted and could continue to impact capital markets and our businesses, as discussed further in “Business Segments” herein.

For more information on economic and market conditions, and the potential effects of geopolitical events and acts of war or aggression on our future results, refer to “Risk Factors” and “Forward-Looking Statements.Statements” herein.

We present certain non-GAAP financial measures that exclude the impact of mark-to-market gains and losses, net of financing costslosses on DCP investments from net revenues. We also exclude the impact of mark-to-market gainsrevenues and losses on DCP from compensation expenses. The impact of DCP investments and DCP areis primarily reflected in our Wealth Management business segment results. These measures allow for better comparability of period-to-period underlying operating performance and revenue trends.trends, especially in our Wealth Management business segment. By excluding the impact of these items, we are better able to describe the business drivers and resulting impact to net revenues and corresponding change to the associated compensation expenses. For additional information on DCP, refer to “Other Matters” herein.

Substantially all of our operating revenues and operating expenses are directly attributable to our business segments. Certain revenues and expenses have been allocated to each business segment, generally in proportion to its respective net revenues, non-interest expenses or other relevant measures. See Note 22 to the financial statements for segment net revenues by income statement line itemitem, segment expenses, and information on intersegment transactions.

Within the Institutional Securities business segment, Trading revenues arise from transactions in cash instruments and derivatives in which we act as a market maker for our clients. In this role, we stand ready to buy, sell or otherwise transact with customers under a variety of market conditions and to provide firm or indicative prices in response to customer requests. Our liquidity obligations can be explicit in some cases, and in others, customers expect us to be willing to transact with them. In order to most effectively fulfill our market-making function, we engage in activities across all of our trading businesses that include, but are not limited to:

Investments revenues are composed of realized and unrealized gains and losses derived from investments, including those associated with employeecarried deferredinterest compensationarrangements and co-investment plans. Estimates of the fair value of the investments that produce these revenues may involve significant judgment and may fluctuate significantly over time in light of business, market, economic and financial conditions, generally or in relation to specific transactions.

Within the Investment Management business segment, Investments revenues are primarily from performance-based fees in the form of carried interest, a portion of which is subject to risk of reversal, and gains and losses from investments. The business is entitled to receive carried interest when the return in certain funds exceeds specified performance targets. Additionally, we consolidate certain sponsored Investment Management funds where revenues are primarily attributable to holders of noncontrolling interests.

Within the Wealth Management business segment, Asset management revenues are related to advisory services associated with fee-based assets, account service and administration, as well as distribution of products. These revenues are generally based on the net asset value of the account in which a client is invested.

Within the Institutional Securities business segment, Net interest is a function of market-making strategies, client activity, and the prevailing level, term structure and volatility of interest rates. Net interest is impacted by market-making, lending and financing activitiesactivities. as weWe generally earn interest on securities held by the Firm, Securities borrowed, Securities purchased under agreements to resell, Loans and margin loans, while Borrowings, Securities loaned and Securities sold under agreements to repurchase generally incur interest expense.

FollowingThe following is a description of the revenue-generating activities within our equity and fixed income businesses, as well as how their results impact the income statement line items.

Equity—Execution services. A significant portion of the results for this business is generated by commissions and fees from executing and clearing client transactions on major stock and derivative exchanges, as well as from OTC transactions. We make markets for our clients principally in equity-related securities and derivative products, including those that provide liquidity and are utilized for hedging. Market-making also generates gains and losses on inventory held to facilitate client activity, which are reflected in Trading revenues. Execution services also includes certain Investments and Other revenues.

•Global macro products. We make markets for our clients in interest rate,rate and foreign exchange andproducts across emerging marketand products,developed markets, including exchange-traded and OTC securities and derivative instruments. The results of this market-making activity are primarily driven by gains and losses from buying and selling positions to stand ready for and satisfy client demand and are recorded in Trading revenues.

•Credit products. We make markets in credit-sensitive products, such as corporate bonds and mortgage securities and other securitized products, and related derivative instruments. TheThis valuesmarket-making ofactivity positionsalso in this business are sensitive to changes in credit spreads and interest rates, which result ingenerates gains and losses on inventory held to facilitate client activity which are reflected in Trading revenues. We undertake lending activities, which include commercial mortgage lending, secured lending facilities and financing extended to sales and trading customers. Due to the amount and type of the interest-bearing securities and loans making up this business, a significant portion of the results is also reflected in Net interest revenues.

Compensation and benefits expenses include base salaries and fixed allowances, formulaic programs, discretionary incentive compensation, amortization of deferred cash and equity awards, changes in the fair value of the referenced notional DCP investments, carried interest allocated to employees, severance costs, and other items such as health and welfare benefits. For additional information on DCP, refer to “Other Matters” herein.

Net revenues of $6,170$7,619 million in 20242025 increased 35%23% compared with the prior year, reflecting anincreases increaseacross regions and businesses, particularly in underwriting and Advisory revenues.

•Advisory revenues increased primarily due toreflecting higher completed M&A transactions.

•Equity underwriting revenues increased primarily onreflecting higher convertible issuances and initial public offerings and follow-on offerings.

•Fixed income underwriting revenues increased primarily reflecting higher non-investment and investment grade bond and loan issuances, non-investmentwhich gradebenefited loanfrom issuanceshigher andevent-related securitized products revenues.activity.

Net revenues of $12,230$15,631 million in 20242025 increased 22%28% compared with the prior year, reflecting an increase in bothFinancing and Execution services and Financing, particularly in Asia and the Americas.services.

•Execution servicesFinancing revenues increased primarily due to higher gains on inventory held to facilitateaverage client activitybalances and increased client activity in derivatives and cash equities.activity.

Consolidated Results—Three Months Ended MarchJune 31,30, 2026

•The expense efficiency ratio was 65% for both the firstsecond quarter,quarter and year-to-date, demonstrating operating leverage while continuingwe continued to invest in our businesses.

•At MarchJune 31,30, 2026, the Firm’s Standardized Common Equity Tier 1 capital ratio was 15.1%.14.9%.

•Institutional Securities reported net revenues of $10.7$11.0 billion, primarily reflecting strong results in our Markets businessEquity and higher Investment Banking revenues driven by Advisory.revenues.

•Wealth Management delivered net revenues of $8.5$8.9 billion and a pre-tax margin of 30.4%billion, reflecting strong Asset management revenues, increased netNet interest income,income and higher Transactionalclient revenues.activity, generating a pre-tax margin of 30.5%. The business added net new assets of $118$148 billion and fee-based assetassets flowsof were $54$39 billion.

We reported net revenues of $20.6$21.3 billion in the quarter ended MarchJune 31,30, 2026 (“current quarter,” or “1Q2Q 2026”), which increased by 16%27% compared with $17.7$16.8 billion in the quarter ended MarchJune 31,30, 2025 (“prior year quarter,” or “1Q2Q 2025”). Net income applicable to Morgan Stanley was $5.6 billion in the current quarter, which increased by 29%58% compared with $4.3$3.5 billion in the prior year quarter. Diluted earnings per common share was $3.43$3.46 in the current quarter, which increased by 32%62% compared with $2.60$2.13 in the prior year quarter.

•Compensation and benefits expenses of $8,542$8,187 million in the current quarter and $16,729 million in the current year period increased 14% fromcompared with the prior year quarter,periods, primarily due to an increase in the formulaic payout to Wealth Management advisors and higher discretionary incentive compensation within Institutional Securities, both based on higher revenues.

•Non-compensation expenses of $4,929$5,715 million in the current quarter and $10,644 million in the current year period increased 9%19% fromand 14%, respectively, compared with the prior year quarter,periods, primarily due to higher execution-related expenses.expenses and increased technology spend.

The Provision for credit losses on loans and lending commitments of $98 million in the current quarter and $196 million in the current year period was primarily related to certain specific commercial real estate and corporate loans and increasedportfolio macroeconomicgrowth uncertainty.in corporate loans and secured lending facilities. The Provision for credit losses on loans and lending commitments of $196 million in the prior year quarter and $331 million in the prior year period was $135 million, primarily related to portfolio growth in corporate loans and secured lending facilities and corporate loans, provisions for certain specific loans, including residential real estate loans related to the California wildfires, and deterioration in thea macroeconomic outlook.outlook reflecting slower GDP growth.

•Institutional Securities net revenues of $10,721$11,040 million in the current quarter and $21,761 million in the current year period increased 19%44% fromand 31%, respectively, compared with the prior year quarter,periods, primarily reflecting stronghigher results in our Markets businessEquity on increased client activity and higher Investment Banking results on higher completed M&A transactions within Advisory.results.

•Wealth Management net revenues of $8,519$8,856 million in the current quarter and $17,375 million in the current year period increased 16%14% fromand 15%, respectively, compared with the prior year quarter,periods, primarily reflecting higher Asset management revenues on higher market levels and the cumulative impact of positive fee-based flows, increased Net interest income and higher Transactional revenues on strong client activity.

•Investment Management net revenues of $1,535$1,646 million in the current quarter decreasedand 4%$3,181 frommillion in the current year period increased 6% and 1%, respectively, compared with the prior year quarter, primarilyperiods, reflecting lower accrued carried interest in our private funds, partially offset by higher Asset management and related fees driven by higher average

•Americas net revenues increased 11%22% and 16% in the current quarter and in the current year period, respectively, compared with the prior year quarter,periods, primarily driven by higher Asset management revenues within the Wealth Management business segment and higher Investment Banking and Fixed IncomeEquity results within the Institutional Securities business segment.

•EMEA net revenues increased 15%11% and 13% in the current quarter and in the current year period, respectively, compared with the prior year quarter,periods, primarily driven by higher results in our Markets business within the Institutional Securities business segment.

•Asia net revenues increased 43%71% and 57% in the current quarter and in the current year period, respectively, compared with the prior year quarter,periods, primarily driven by strong results in Equity within the Institutional Securities business segment.

8.Client assets represents the sum of Wealth Management client assets and Investment Management AUM. Certain Wealth Management client assets, totaling $382 billion and $350 billion as of MarchJune 31,30, 2026 and December 31, 2025, respectively, are invested in Investment Management products and are therefore also included in Investment Management’s AUM.

InThe economic environment exhibited strength in the firstsecond quarter of 2026, characterized by active capital markets supported by the economic environment remained resilient, with strong client engagement against a backdropadoption of increased economic uncertaintyAI and marketimproved volatility.investor sentiment. Geopolitical risk, inflation, elevatedrising asset prices, the rate of economic growth,growth and the future path of monetary policy presentrepresent ongoing uncertainties which could continue to impact the capital markets and our businesses.

We arecontinue monitoringto monitor the ongoing military conflictdevelopments in the Middle East and itstheir impact on the regional economy, global economic conditions, and financial markets. Our direct exposure to the region isremains limited.

For the prior year quarter,periods, we present certain non-GAAP financial measures that exclude the impact of mark-to-market gains and losses on DCP investments from net revenues and compensation expenses. The impact of DCP is primarily reflected in our Wealth Management business segment results. These measures allow for better comparability of period-to-period underlying operating performance and revenue trends, especially in our Wealth Management business segment. By excluding the impact of these items, we are better able to describe the business drivers and resulting impact to net revenues and corresponding change to the associated compensation expenses for the prior year quarter.period.

The use of derivatives as cash flow hedges of certain DCP awards is expected to substantially mitigate timing differences between the recognition of changes in the fair value of the hedging instruments and the deferred recognition of related DCP compensation expense over the vesting period. The expected mitigation of these timing differences, alongside the associated income statement changes described above, enables us to better present the operating performance and revenuesrevenue trends. Accordingly, we will no longer present non-GAAP financial measures excluding DCP.

Source: LSEG Data & Risk Analytics as of AprilJuly 1, 2026. Transaction volumes may not be indicative of net revenues in a given period. In addition, transaction volumes for prior periods may vary from amounts previously reported due to the subsequent withdrawal, change in value or change in timing of certain transactions.

Net revenues of $2,116$2,437 million in the current quarter and $4,553 million in the current year period increased 36%58% fromand 47%, respectively, compared with the prior year quarter,periods, reflecting increases across businesses, particularly in Advisorythe revenues.Americas.

•Advisory revenues increased primarily reflecting higher completed M&A transactions, particularly in the Americas.transactions.

•Equity underwriting revenues increased primarily reflectingon higher initial public offerings, follow-on offerings and convertible issuances.

•Fixed Income underwriting revenues increased primarily reflecting higher non-investment grade and investment grade issuances,bond which benefitedissuances from higherclient event-relatedcapital activity,raising and higherstrategic securitized products revenues, partially offset by lower non‑investment grade issuances.activity.

Net revenues of $5,148$6,300 million in the current quarter and $11,448 million in the current year period increased 25%69% fromand 46%, respectively, compared with the prior year quarter,periods, reflecting an increase in Financing and Execution services.services, particularly in Asia.

•Financing revenues increased primarily due to increased client activity and higher average client balances, particularly in Asia.balances.

•CreditExecution productsservices revenues increased primarily due to higher results in inventory held to facilitate client activityderivatives and increased client activity across products, particularly on higher lending revenues in securitizedcash products.equities.

•CommoditiesGlobal macro products and other fixed income revenues increasedwere relatively unchanged compared with the prior year quarter, primarily duedriven toby a decline in foreign exchange products, offset by higher gains on inventory held to facilitate client activity and increased client activity in oil,rates power and gas products amid volatility in energy markets.products.

Other net revenues werereflected $99a loss of $152 million in the current quarter,quarter compared with $692a gain of $202 million in the prior year quarter, primarily drivenreflecting byhigher themark-to-market absencelosses on corporate loans, inclusive of realized gains on the sale of corporate loans held-for-sale in the prior year quarter.hedges.

The Provision for credit losses on loans and lending commitments of $92$71 million in the current quarter and $163 million in the current year period was primarily related to certain specific commercial real estate and corporate loans and increasedportfolio macroeconomicgrowth uncertainty.in corporate loans and secured lending facilities. The Provision for credit losses on loans and lending commitments of $91$168 million in the prior year quarter and $259 million in the prior year period was primarily related to portfolio growth in corporate loans and secured lending facilities and corporate loans and deterioration in thea macroeconomic outlook.outlook reflecting slower GDP growth.

Non-interest expenses of $6,468$6,707 million in the current quarter and $13,175 million in the current year period increased 15%25% fromand 20%, respectively, compared with the prior year quarter,periods, reflecting higher Non‑compensationNon-compensation expenses and Compensation and benefits expenses.

•Compensation and benefits expenses increased primarily due to higher discretionary incentive compensation on higher revenues and higher stock-based compensation expense related to awards granted in prior periods.revenues.

•Non-compensation expenses increased primarily due to higher execution‑relatedexecution-related expenses.

4.Annualized weighted average represents the total annualized weighted average cost of the various deposit products. Amounts include the effect of related hedging derivatives. The period end cost of deposits is based upon balances and rates as of MarchJune 31,30, 2026 and December 31, 2025. The period average is based on daily balances and rates for the period.

NNA represent client asset inflows, including interest, dividends and asset acquisitions, less client asset outflows, and excluding the impact of business combinations/divestitures and the impact of fees and commissions. Any revenues earned by Wealth Management on client assets will vary depending upon the services and products provided. The level of NNA in a given period is influenced by a variety of factors, including macroeconomic factors that impact client investment and spending behaviors, seasonality, our ability to attract and retain financial advisors and clients, capital market and corporate activities which may impact the amount of assets in certain client channels, and large idiosyncratic inflows and outflows, including single large client events. These factors have had an impact on our NNA in recent periods. Should these factors continue, the growth rate of our NNA may be impacted.

1.Advisor-led client assets represent client assets in accounts that have a Wealth Management representativeadvisor assigned.

Asset management revenues of $5,079$5,261 million in the current quarter and $10,340 million in the current year period increased 16%19% and 17%, respectively, compared with the prior year quarter,periods, primarily reflecting higher fee-based assets due to higher market levels and the cumulative impact of positive fee-based flows.

Transactional revenues of $1,127$1,167 million in the current quarter increaseddecreased 29%8% compared with the prior year quarter, primarily driven by the$294 absencemillion of lossesgains on DCP investments in the prior year quarter of $131 million,quarter, which are no longer presented in net revenues, andpartially offset by higher client activity across products and channels.