Morgan Stanley

Good morning. Welcome to Morgan Stanley's fourth quarter and full year 2025 earnings call. On behalf of Morgan Stanley, I will begin the call with the following information and disclaimer. This call is being recorded. During today's presentation, we will refer to our earnings release, financial supplement, and strategic update, copies of which are available at MorganStanley.com. Today's presentation may include forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Please refer to our notices regarding forward-looking statements and non-GAAP measures that appear in the earnings release and strategic update. Within the strategic update, certain reported information has been adjusted as noted. These adjustments were made to provide a transparent and comparative view of our operating performance. The reconciliations Of these non-GAAP adjusted operating performance metrics are included in the notes to the presentation or the earnings release. This presentation may not be duplicated or reproduced without our consent. I will now turn the call over to Chairman and Chief Executive Officer Ted Pick.

Ted, you may proceed. Good morning and thank you for joining us.

In 2025, the U.S. economy proved resilient as ever. As predicted, the capital markets are kicking in with well-capitalized corporates and higher-end consumers driving the economy forward. 2026 starts with the tailwinds of constructive fiscal policy and easier monetary policy. As the arc of history resumes, geopolitics are front and center with a broadening set of opportunities and challenges. While the higher plane of Morgan Stanley results tell a story of durable performance, we are mindful of the combination of geopolitical swirl and nebulant markets. The macro backdrop is complicated. On the one hand, the setup is ideal. We are monetizing the long-awaited conversion of capital markets green shoots across our investment banking and markets verticals, and we are scaling asset inflows and transaction activity across our wealth businesses. At the same time, we are well served to watch for any overreaching against ongoing global uncertainties and higher asset prices. 2025 results, and in fact the results for every quarter over the last eight, are a blueprint for Morgan Stanley's success. We expect this mix of tailwinds and headwinds to prevail in 2026 and are prepared to continue to execute. We will now walk through the 2026 strategy deck entitled The Integrated Firm, Executing on a Higher Plane. which can be found on the Morgan Stanley website. We will then detail fourth quarter and full year results. Turning to slide three, Morgan Stanley's 2025 results are summarized by $9.3 trillion in total client assets, $10.21 in earnings per share, and a 21.6% return on tangible. The firm's trusted advisor franchise delivered across all three metrics. Slide four shows that our average earnings per share and returns on tangible over the last decade reflect the transformation of Morgan Stanley's business model. The last five years are the result of share gains and operating leverage via consistent investment in technology, footprint, and the successful integration of key strategic acquisitions. Moving to slide five, we're well on track toward our firm-wide goals. We've compounded wealth and investment management client assets towards 10 trillion plus. In institutional securities, we gained 100 basis points of wallet share with clients across investment banking and markets, reflecting the strength of our integrated investment bank and global franchise. Please turn to slide six. We've moved up the firm-wide goals page for review in the context of the last two very strong years. 2025 results in the fourth quarter or on an annual basis broadly met or exceeded our firm-wide goals. Asset growth accelerated with last year's additional $1.4 trillion. Wells pre-tax margins are at their highest levels ever with the fourth quarter's 31% printed result. Institutional securities gained share across underwriting and equities trading, and we closed the year with a strong advisory result. In short, the firm is running at a higher run rate. We are executing from a position of strength. Multi-year investments in the core businesses client momentum, management stability, and growing capital excess. But as I observed in the opening, there are both macroeconomic and geopolitical tailwinds and headwinds. And in our view, while we are happy to have reached many of these firm-wide goals, perhaps earlier than some expected, this is not the time to overreach. These last eight quarters memorialize consistent execution against different mini macro uncertainties, and our multi-year growth plan contemplates both secular growth in available wallet, and continued durable share gains. Our expectation going forward is that if this environment is welcoming, we are meant to execute at or above these firm-wide goals, as we did in 2025, and when the backdrop is more challenged, to endeavor to achieve higher lows. The longer-term cadence we seek is a higher plane of operating performance through the cycle as we compound earnings in a capital-efficient way. Now to the forward growth plan. Please turn to slide seven, where we review our major businesses. As you know, wealth has three channels. Our financial advisors workplace in E-Trade, each a category leader, which taken together comprise our strategic client acquisition model. In institutional securities, we have deep client relationships and a global footprint under the integrated investment bank. We have diversification in investment management led by parametric alternatives and fixed incomes. we continue to invest in each of our three business segments, wealth, institutional securities, and investment management via human capital and technology. Our growth plans embed the increasing adoption of AI tools throughout the enterprise and inside our client base. With each passing quarter, our confidence continues to increase in the potential for both the efficiency and the effectiveness of AI-related technologies across the business units and infrastructure. Slide eight. Our wealth management business is built for scale and performance. The financial advisor, workplace, and E-Trade channels are each thriving. The business had net new assets of over $350 billion last year. Over the last five years, the firm attracted $1.6 trillion plus of net new assets with a doubling of fee-based flows. For 2025, wealth achieved $32 billion in revenues, 29% margins. The funnel is working. Please turn to slide nine. With 20 million wealth relationships, future growth is embedded in the business. Our intense focus on the value of advice, which generates movement through the funnel, allows us to capture opportunities for advisor-led assets. In 2025, we saw accelerating flows across channels with 100 billion migrating to financial advisors. We're using our scale to invest in broadening capabilities for FAs that are difficult for others to replicate. Alternatives and privates. tax-efficient investing, digitized assets, family office and OCIO, and tailored lending. Collaboration across the integrated firm is felt by clients for both their corporate and personal wealth needs. Slide 10 dives deeper into institutional securities. We have an established global footprint and revenue base. Banking and markets gain wallet share delivering margins of 34 percent. Revenue growth supported by the recovery in investment banking is running roughly two times SLR and RWA growth since 2023, reflecting our continued focus on capital efficiency and operating leverage. Turning to slide 11, the institutional securities value proposition is reflected in the integrated investment bank. We approach client coverage holistically and provide comprehensive solutions with the support of integrated teams. The collegiality and Morgan Stanley tenure of the leadership teams across banking and markets, on average about 25 years at the firm, is critical in bringing the best of our intellectual capital to clients. The themes of the equitization of global markets and the full suite of expertise to advise on cross-border M&A are at our global core. ISG Sharegain's position as well for the global investment banking and capital market cycle in 2026 and beyond. Please turn to slide 12. In investment management, We continue to benefit from secular growth in investing solutions and the democratization of alternatives. Parametric is the industry leader in tax-efficient investing at $685 billion in AUM and stands to benefit as more clients and asset managers seek customized solutions. Our alternatives platform has more than doubled in five years, with investable assets now at $270 billion. These and other areas of strength are supported by ongoing investments in technology and global distribution. Slide 13 underscores Morgan Stanley's global presence. We have 30,000 people outside the U.S. in every business unit and in large tracts of infrastructure. Twenty-five percent of our revenues this year came from outside the U.S., with EMEA growing revenues by 40 percent and Asia by 50 percent over the last two years. We have leading businesses in Japan, thanks to our almost 20-year joint ventures with our close partner MUFG, and a world-class business in Hong Kong. We've grown in the EU and maintained leadership in the UK. In a world that is both de-globalizing and re-globalizing, our presence and footprint matter. Slide 14 illustrates why Morgan Stanley wins as the integrated firm. We have scaled capabilities and a business mix that can support our clients throughout an entire life cycle. Our Morgan Stanley work business with its exclusive partnership with Carta positions us as an early trusted advisor to over 50,000 private companies. As workplace companies grow, we can provide traditional institutional servicing. Employees across our workplace companies benefit from our management of equity compensation plans, liquidity opportunities, and our full service advice. We are focused on both the public and the private ecosystems, augmented by our recent acquisition of EquityZen. The objective is to cover growth companies and their employees from founding to their public maturity while broadening access for investors to the growing stack of private companies. Again, our technology, leadership, and wealth enables us to deliver a holistic client experience. Please turn to slide 15. Our durable business model and strong earnings profile have kept capital levels high during a period where the regulatory capital framework has normalized. As we've grown fee-based revenue streams, our regulatory minimum CET1 ratio has steadily come down. At a CET1 ratio of 15%, we have over 300 basis points of excess capital. With the passage of time, the continued durability of the business model may be enhanced by further regulatory relief. Prudent dividend growth comes first, and accordingly, we have raised our quarterly dividend by 7.5 cents for four years in a row to now $1 per share. As we've discussed in previous years, excess capital will be directed to continued dividend growth and to ongoing investment in clients and technology across the integrated firm. We will also continue to opportunistically buy back stock. We are keeping full watch on potential M&A adjacency, but we will continue to be patient. Because we have worked diligently through the acquisitions of Smith Barney, Solium, E-Trade, and Eaton Vance over the last 15 years, We know what level of focus and energy is required across the entire firm to make a multi-year integration successful. In short, we are endeavoring to keep the bar for acquisitions high, bearing in mind that many asset classes, private and public, trade at elevated levels, that there is no shortage of ongoing opportunities, and that the first call on capital must be to our clients and the continued growth of our core businesses. Concluding with slide 16, We're supported by our four pillars of the integrated firm, strategy, culture, financial strength, and growth. Morgan Stanley's strategy to raise, manage, and allocate capital is well understood by our clients, people, and our shareholders. Culture is about rigor, humility, and partnership. Financial strength is about capital, earnings power, and durability. And growth is about smart, strategic investment into wealth, institutional securities, and investment management, and across the firm globally. The result is growing assets and compounding earnings in a capital efficient way over the long term. Thank you. Now, Sharon will review our fourth quarter and annual results, and then we will both take your questions.