Morgan Stanley's record Q1: $20.6B revenue, $3.43 EPS on wealth strength

Transcript intelligence

What changed

Sequentially, Morgan Stanley followed a record FY2025 (revenue of $70.6B, EPS of $10.21, 21.6% ROTCE) with an even stronger start to 2026. During the quarter the firm closed its Equity Zen acquisition to expand private-credit capabilities, launched a digital-asset pilot with Zero Hash, and completed a Federal Reserve-approved reorganization that moved over $100B of assets onto its bank. Wealth-management net new assets of $118B and record fee-based flows of $54B mark a step-up from the prior year's run rate, and the reported bank reorganization improves funding efficiency.

Guidance delta

Guidance sentiment was maintained at both the current and prior quarter. Management reaffirmed its multi-year targets and pointed to modest net interest income growth in the second quarter, while flagging geopolitical tension, the U.S. rate path and Basel III as the principal variables. No upward revision was reported; the change is more visibility on capital strength and transaction momentum than an alteration to the target framework.

Key takeaways

• Record Q1 revenue of $20.6B and EPS of $3.43 with a 27% ROTCE, a 13.6% beat of the EPS consensus
• Wealth Management revenue of $8.5B, a 30.4% pretax margin and $118B of net new assets; fee-based flows hit a record $54B
• Capital remains strong with a CET1 ratio of 15.1% versus an 11.8% regulatory requirement
• Closed the Equity Zen acquisition and launched a digital-asset pilot with Zero Hash
• Management kept its multi-year targets, guiding to modest Q2 net interest income growth

Management priorities

• Integrate Equity Zen into the private-credit platform
• Expand the digital-asset offering beyond the Zero Hash pilot
• Deepen AI integration across advisory, trading and client-service tools
• Grow Asian market share and leverage partnerships such as MUFG
• Maintain capital efficiency while targeting modest Q2 net interest income growth