Focus: U.S. Stocks Q4 2025 Earnings Reports Core Highlights: Morgan Stanley delivered robust Q4 2025 results and a strong full-year performance, with the company deciding to maintain its established financial targets. Executive Statement: "A 20% return rate is already quite substantial; we will not arbitrarily raise our established challenging targets." — CEO Ted Pick. Future Outlook: During the fourth quarter, this investment banking giant moved closer to its goal of surpassing $10 trillion in total firm client assets. Morgan Stanley reported its fourth-quarter earnings, surpassing market expectations, primarily driven by a recovery in client deal activity related to mergers and acquisitions, which significantly boosted investment banking revenue. The Wall Street giant disclosed on Thursday that its fourth-quarter net profit reached $4.4 billion, an 18% increase year-over-year. Diluted earnings per share were $2.68, exceeding the $2.45 consensus estimate from analysts surveyed by S&P Capital IQ. The company's total net revenue increased by 10% year-over-year to $17.9 billion. A 44% climb in investment banking revenue during the period offset declines in trading revenue and revenue from "other" businesses. Asset management revenue, along with commissions and fee revenue, grew by 12% compared to the same period last year. For the full year 2025, Morgan Stanley's total revenue reached $70.6 billion, representing a 14% increase. Ted Pick, who completed his second year as CEO of Morgan Stanley on January 1, stated in a press release that the company "delivered strong performance in 2025," a result that confirms "years of investment have translated into growth momentum across the integrated firm." Since introducing the strategy to build an "integrated firm" in early 2024, Pick has consistently prioritized it during his tenure as CEO. On Thursday, Morgan Stanley reaffirmed the financial targets set after Pick's promotion to CEO, including core goals of reaching at least $10 trillion in total firm client assets and maintaining an efficiency ratio of 70%. During the morning's analyst call, an analyst questioned why the targets weren't being raised given the strong performance. Pick defended the company's decision, stating that management had engaged in "thorough discussion" but ultimately chose to keep the targets unchanged for now. Pick stated, "A common practice in the industry is to raise the bar further once a target is achieved. However, in our firm, rigor and humility are consistent principles; we prefer to achieve sustained compound profit growth over a full business cycle." He acknowledged that some targets set two years ago were achieved last year. For both full-year 2025 and the fourth quarter, Morgan Stanley's efficiency ratio was 68%, better than the 70% target. The full-year 2025 return on tangible common equity was 21.6%, and this metric rose to 21.8% for the fourth quarter (October 1 to December 31), both exceeding the company's set profitability target of 20%. Furthermore, Morgan Stanley's client asset base moved closer to the $10 trillion goal during the fourth quarter. The company revealed that by the end of December, client assets had reached $9.3 trillion, a achievement partly attributable to net new client assets exceeding $350 billion. Back in 2020, the firm's client assets stood at just $4.8 trillion. In response to another question about maintaining the targets, Pick reiterated his stance. He stated, "Based on prudent long-term strategic considerations, we will not hastily raise targets just because of strong performance in recent years. If we can continue to increase our share of wallet with clients and solidify our market position, a 20% return rate is already quite substantial; there's no need for us to artificially raise those challenging targets." In the fourth quarter, Morgan Stanley's non-interest expenses totaled $12.1 billion, an 8% increase year-over-year. Compensation and benefits expenses within this amounted to $7.1 billion, a significant 12% increase. Non-compensation costs, including marketing, occupancy, brokerage commissions, and professional fees, increased by 3% year-over-year, slightly exceeding $5 billion. The company also disclosed that it repurchased $1.5 billion worth of its outstanding common stock during the fourth quarter.