Morgan Stanley (MS) Risk Analysis

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 could in the 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, 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 and laws and regulations related to new technologies, including artificial intelligence and tokenization. New laws, rules, regulations and guidelines, as well as ongoing implementation of, our efforts to comply with, and/or changes to laws, rules, regulations and guidelines, including changes in the breadth, application, interpretation or enforcement of laws, rules, regulations and guidelines, could materially impact the profitability of our businesses and the value of assets we hold, impact our income tax provision and effective tax rate, expose us to additional theories of liability and additional costs, require changes to business practices or force us to discontinue businesses, adversely affect our ability to pay dividends and repurchase our stock or require us to raise capital, including in ways that may adversely impact our shareholders or creditors. 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. See "Business-Supervision and Regulation."

Commissions and fees result from arrangements in which the client is charged a fee for executing transactions related to securities, services related to sales and trading activities, and sales of other products. Within the Institutional Securities business segment, commissions and fees include fees earned from market-making activities, such as executing and clearing client transactions on major stock and derivative exchanges, as well as from OTC derivatives. Within the Wealth Management business segment, commissions and fees arise from client transactions including in equity securities, insurance products, mutual funds, alternative investments, futures and options. Wealth Management also earns revenues from order flow payments for directing customer orders to broker-dealers, exchanges and market centers for execution.

Other revenues for Institutional Securities include revenues and losses from equity method investments, fees earned in association with lending activities, mark-to-market gains and losses on loans and lending commitments held for sale, as well as gains and losses on economic derivative hedges associated with certain held-for-sale and held-for-investment loans and lending commitments. Other revenues for Wealth Management include realized gains and losses on AFS securities, account handling fees, referral fees and other miscellaneous revenues. Provision for Credit Losses The Provision for credit losses includes the provision for credit losses for loans and lending commitments held for investment. Institutional Securities-Fixed Income and Equities Fixed income and Equities net revenues are composed of Trading revenues, Commissions and fees, Asset management revenues, Net interest, and certain Investments and Other revenues directly attributable to those businesses. These revenues, which can be affected by a variety of interrelated factors, including market volumes, bid-offer spreads and the impact of market conditions on inventory held to facilitate client activity, as well as the effect of hedging activity, are viewed in the aggregate when assessing the performance and profitability of our businesses. The 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-Financing. We provide financing, prime brokerage and fund administration services to our clients active in the equity markets through a variety of products, including margin lending, securities lending and swaps. Results from this business are largely driven by the difference between financing income earned and financing and liquidity costs incurred, which are reflected in Net interest for securities lending products, and in Trading revenues for derivative products. Fees for providing fund administration services are reflected in Asset management revenues. 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. Fixed Income-Within fixed income, we make markets in various flow and structured products in order to facilitate client activity as part of the following products and services: - Global macro products. We make markets for our clients in interest rate and foreign exchange products across emerging and 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. This market-making activity also generates 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. - Commodities products and Other. We make markets in various commodity products related primarily to electricity, natural gas, oil and metals. These activities are primarily recorded in Trading revenues. Fixed income also includes certain Investments and Other revenues. Institutional Securities-Other Net Revenues Other net revenues include impacts from certain treasury functions, such as liquidity and funding costs and gains and losses on economic hedges related to certain borrowings. Other net revenues also include mark-to-market gains and losses on held-for-sale corporate loans and lending commitments, as well as net interest and gain and losses on economic hedges associated with held-for-sale and held-for-investment corporate loans and lending commitments. Also included are gains and losses from financial instruments used to economically hedge compensation expense related to certain DCP, income and losses from the equity method investment related to our Japanese securities joint venture with MUFG, as well as Investments and Other revenues that are not directly attributable to Fixed income and Equities businesses. Compensation Expense 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. The factors that drive compensation for our employees vary from period to period, from segment to segment and within a segment. For certain revenue-producing employees in the Wealth Management and Investment Management business segments, compensation is largely paid on the basis of formulaic payouts that link employee compensation to revenues. Compensation for other employees, including revenue-producing employees in the Institutional Securities business segment and employees in corporate support functions, include base salary and benefits and may also include incentive compensation that is determined following the assessment of the performance of the Firm, business unit and individual. Income Taxes The Income tax provision for our business segments is generally determined based on the revenues, expenses and activities directly attributable to each business segment. Certain items have been allocated to each business segment, generally in proportion to its respective net revenues or other relevant measures. Institutional Securities Income Statement Information % Change$ in millions20252024202320252024RevenuesAdvisory$2,888 $2,378 $2,244 21 %6 %Equity1,965 1,599 889 23 %80 %Fixed Income2,766 2,193 1,445 26 %52 %Total Underwriting4,731 3,792 2,334 25 %62 %Total Investment Banking7,619 6,170 4,578 23 %35 %Equity15,631 12,230 9,986 28 %22 %Fixed Income8,716 8,418 7,673 4 %10 %Other1,114 1,262 823 (12)%53 %Net revenues33,080 28,080 23,060 18 %22 %Provision for credit losses302 202 401 50 %(50)%Compensation and benefits9,785 8,669 8,369 13 %4 %Non-compensation expenses11,756 10,460 9,814 12 %7 %Total non-interest expenses21,541 19,129 18,183 13 %5 %Income before provision for income taxes11,237 8,749 4,476 28 %95 %Provision for income taxes2,430 1,947 884 25 %120 %Net income8,807 6,802 3,592 29 %89 %Net income applicable to noncontrolling interests157 136 139 15 %(2)%Net income applicable to Morgan Stanley$8,650 $6,666 $3,453 30 %93 % Investment Banking Investment Banking Volumes $ in billions202520242023Completed mergers and acquisitions1$756 $655 $677 Equity and equity-related offerings2, 379 63 32 Fixed Income offerings2, 4414 326 236 Source: LSEG Data & Risk Analytics (formerly known as Refinitiv) as of January 2, 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. 1.Includes transactions of $100 million or more. Based on full credit to each of the advisors in a transaction. 2.Based on full credit for single book managers and equal credit for joint book managers. 3.Includes Rule 144A issuances and registered public offerings of common stock, convertible securities and rights offerings. 4.Includes Rule 144A and publicly registered issuances, non-convertible preferred stock, mortgage-backed and asset-backed securities, and taxable municipal debt. Excludes leveraged loans and self-led issuances.

Functional risk and control committees and other committees within the ERM framework facilitate efficient and comprehensive supervision of our risk exposures and processes. Each business segment has a risk committee that is responsible for helping to ensure that the business segment, as applicable, adheres to established limits and/or tolerances for market, credit, operational and other risks, as applicable; implements risk measurement, monitoring, and management policies, procedures, controls and systems that are consistent with the risk framework established by the FRC; and reviews, on a periodic basis, our aggregate risk exposures, risk exception experience, and the efficacy of our risk identification, measurement, monitoring and management policies and procedures, and related controls.

The Board has also authorized the Firm Risk Committee ("FRC"), a management committee appointed and co-chaired by the Chief Executive Officer and Chief Risk Officer, which includes the most senior officers of the Firm from the business, independent risk functions and control groups, to help oversee the ERM framework. The FRC's responsibilities include: oversight of our risk management principles, procedures, limits and tolerances; the monitoring of capital levels and material market, credit, operational, model, liquidity, legal, compliance, reputational and other risks, as appropriate; and the steps management has taken to monitor and manage such risks. The FRC also establishes and communicates risk appetite, including aggregate Firm limits and tolerances, as appropriate. The Governance Process Review Subcommittee of the FRC oversees governance and process issues on behalf of the FRC. The FRC reports to the Board, the BAC, the BOTC and the BRC through the Chief Risk Officer, Chief Financial Officer, Chief Legal Officer and Head of Non-Financial Risk.

The Internal Audit Department ("IAD") independently identifies and assesses risks facing the Firm and provides independent, objective and timely assurance to stakeholders about the effectiveness of risk management, governance and controls over key risks within the Firm's businesses and functions. Activities (including outsourced activities) and entities of the Firm (including subsidiaries, affiliates and branches) are subject to IAD coverage. IAD designs and executes a comprehensive risk-based assurance plan to fulfill its role and purpose, which includes assessing compliance with policies, procedures and laws and regulations. IAD may conduct other assurance work, such as retrospective reviews, pre-implementation reviews, and investigations as requested by the BAC, senior management or the Firm's regulators. IAD executes its activities in accordance with the mandatory elements of The Institute of Internal Auditors' Global Internal Audit Standards, as well as the Firm's Code of Ethics and Business Conduct, regulatory requirements, and IAD's policies, procedures, standards and guidance. The Chief Audit Officer, who reports directly to the Chair of the BAC and administratively to the Firm's Chief Executive Officer ("CEO"), communicates the results of IAD activities to the BAC on a quarterly basis and periodically to the BRC and BOTC.

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, including as part of our Integrated Firm initiatives, which may heighten the potential conflicts of interest or the risk of improper sharing of information. We have policies, procedures and controls that are designed to identify and address potential conflicts of interest, and we utilize various measures, such as the use of disclosure, to manage these potential conflicts. However, identifying and mitigating potential conflicts of interest can be complex and challenging and can become the focus of media and regulatory scrutiny. Indeed, actions that merely appear to create a conflict can put our reputation at risk even if the likelihood of an actual conflict has been mitigated. It is possible that potential conflicts could give rise to litigation or enforcement actions, which may lead to our clients being less willing to enter into transactions in which a conflict may occur and could adversely affect our businesses and reputation. Our regulators also have the ability to scrutinize our activities for potential conflicts of interest, including through detailed examinations of specific transactions. For example, our status as a BHC supervised by the Federal Reserve subjects us to direct Federal Reserve scrutiny with respect to transactions between our U.S. Bank Subsidiaries and their affiliates. Further, the Volcker Rule subjects us to regulatory scrutiny regarding certain transactions between us and our clients. Competitive Environment

We maintain sufficient Liquidity Resources, which consist of HQLA and cash deposits with banks, to cover daily funding needs and to meet strategic liquidity targets sized by the Required Liquidity Framework and Liquidity Stress Tests. We actively manage the amount of our Liquidity Resources considering the following components: unsecured debt maturity profile; balance sheet size and composition; funding needs in a stressed environment, inclusive of contingent cash outflows; legal entity, regional and segment liquidity requirements; regulatory requirements; and collateral requirements. The amount of Liquidity Resources we hold is based on our risk appetite and is calibrated to meet various internal and regulatory requirements and to fund prospective business activities. The Liquidity Resources are primarily held within the Parent Company and its major operating subsidiaries. The Total HQLA values in the tables immediately following are different from Eligible HQLA, which, in accordance with the LCR rule, also takes into account certain regulatory weightings and other operational considerations. Liquidity Resources by Type of Investment Average Daily BalanceThree Months Ended$ in millionsDecember 31, 2025September 30, 2025Cash deposits with central banks$67,334 $56,629 Unencumbered HQLA securities1:U.S. government obligations186,200 189,861 U.S. agency and agency mortgage-backed securities89,737 82,958 Non-U.S. sovereign obligations234,790 30,629 Other investment grade securities358 321 Total HQLA1$378,419 $360,398 Cash deposits with banks (non-HQLA)7,465 7,692 Total Liquidity Resources$385,884 $368,090 1.HQLA is presented prior to applying weightings and includes all HQLA held in subsidiaries. 2.Primarily composed of unencumbered French, U.K., Japanese, German, Italian, and Spanish government obligations. Liquidity Resources by Non-Bank and Bank Legal Entities Average Daily BalanceThree Months Ended$ in millionsDecember 31, 2025September 30, 2025Non-Bank legal entitiesU.S.:Parent Company$91,181 $90,626 Non-Parent Company58,795 55,786 Total U.S.149,976 146,412 Non-U.S.77,770 70,173 Total Non-Bank legal entities227,746 216,585 Bank legal entitiesU.S.150,428 145,349 Non-U.S.7,710 6,156 Total Bank legal entities158,138 151,505 Total Liquidity Resources$385,884 $368,090 Liquidity Resources may fluctuate from period to period based on the overall size and composition of our balance sheet, the maturity profile of our unsecured debt, and estimates of funding needs in a stressed environment, among other factors. Regulatory Liquidity Framework

We use Liquidity Stress Tests to model external and intercompany liquidity flows across multiple scenarios and a range of time horizons. These scenarios contain various combinations of idiosyncratic and systemic stress events of different severity and duration. The methodology, implementation, production and analysis of our Liquidity Stress Tests are important components of the Required Liquidity Framework. The assumptions used in our various Liquidity Stress Test scenarios include, but are not limited to, the following: - No government support;- No access to equity and limited access to unsecured debt markets;- Repayment of all unsecured debt maturing within the stress horizon;- Higher haircuts for and significantly lower availability of secured funding;- Additional collateral that would be required by trading counterparties, certain exchanges and clearing organizations related to credit rating downgrades;- Additional collateral that would be required due to collateral substitutions, collateral disputes and uncalled collateral;- Discretionary unsecured debt buybacks;- Drawdowns on lending commitments provided to third parties; and - Client cash withdrawals and reduction in customer short positions that fund long positions. Liquidity Stress Tests are produced and results are reported at different levels, including major operating subsidiaries and major currencies, to capture specific cash requirements and cash availability across the Firm, including a limited number of asset sales in a stressed environment. The Liquidity Stress Tests assume that subsidiaries will use their own liquidity first to fund their obligations before drawing liquidity from the Parent Company and that the Parent Company will support its subsidiaries and will not have access to subsidiaries' liquidity reserves. In addition to the assumptions underpinning the Liquidity Stress Tests, we take into consideration settlement risk related to intraday settlement and clearing of securities and financing activities. At December 31, 2025 and December 31, 2024, we maintained sufficient liquidity to meet current and contingent funding obligations as modeled in our Liquidity Stress Tests.

Our Required Liquidity Framework establishes the amount of liquidity we must hold in both normal and stressed environments to ensure that our financial condition and overall soundness are not adversely affected by an inability (or perceived inability) to meet our financial obligations in a timely manner. The Required Liquidity Framework considers the most constraining liquidity requirement to satisfy all regulatory and internal limits at a consolidated and legal entity level.

We have exposures to a wide range of risks related to interest rates and credit spreads, equity prices, foreign exchange rates and commodity prices as well as the associated implied volatilities, correlations and spreads of the global markets in which we conduct our trading activities. We are exposed to interest rate and credit spread risk as a result of our market-making activities and other trading in interest rate-sensitive financial instruments (i.e., risk arising from changes in the level or implied volatility of interest rates, the timing of mortgage prepayments, the shape of the yield curve and/or credit spreads). The activities from which those exposures arise and the markets in which we are active include, but are not limited to: derivatives, corporate and government debt across both developed and emerging markets and asset-backed debt, including mortgage-related securities. We are exposed to equity price, correlation and implied volatility risk as a result of making markets in equity securities and derivatives and maintaining other positions, including positions in non-public entities. Positions in non-public entities may include, but are not limited to, exposures to private equity, venture capital, private partnerships, real estate funds and other funds. Such positions are less liquid, have longer investment horizons and are more difficult to hedge than listed equities. We are exposed to foreign exchange rate, correlation and implied volatility risk as a result of making markets in foreign currencies and foreign currency derivatives, from maintaining foreign exchange positions and from holding non-U.S. dollar-denominated financial instruments. We are exposed to commodity price and implied volatility risk as a result of market-making activities in commodity products related primarily to electricity, natural gas, oil and precious metals. Commodity exposures are subject to periods of high price volatility as a result of changes in supply and demand. These changes can be caused by weather conditions, physical production and transportation, or geopolitical and other events that affect the available supply and level of demand for these commodities. We manage our trading positions by employing a variety of risk-mitigation strategies. These strategies include diversification of risk exposures and hedging. Hedging activities consist of the purchase or sale of positions in related securities and financial instruments, including a variety of derivative products (e.g., futures, forwards, swaps and options). Hedging activities may not always provide effective mitigation against trading losses due to differences in the terms, specific characteristics or other basis risks that may exist between the hedge instrument and the risk exposure that is being hedged. We manage the market risk associated with our trading activities on a Firmwide basis, on a worldwide trading division level and on an individual product basis. We manage and monitor our market risk exposures in such a way as to maintain a portfolio that we believe is well diversified in the aggregate with respect to market risk factors and that reflects our aggregate risk tolerance as established by our senior management. Aggregate market risk limits have been approved for the Firm across all divisions worldwide. Additional market risk limits are assigned to trading desks and, as appropriate, products and regions. Trading division risk managers, desk risk managers, traders and the Market Risk Department monitor market risk measures against limits in accordance with policies set by our senior management.

The Chief Risk Officer, who is independent of business units, reports to the BRC and the Chief Executive Officer. The Chief Risk Officer oversees compliance with our financial risk limits; approves exceptions to our financial risk limits; independently reviews material market, credit, model and liquidity risks; and reviews results of risk management processes with the Board, the BRC, the BOTC and the BAC, as appropriate. The Chief Risk Officer oversees the ERM framework, which includes non-financial risk, and coordinates with the the Chief Financial Officer and the Chief Executive Officer regarding capital and liquidity management and works with the Compensation, Management Development and Succession Committee of the Board ("CMDS Committee") to help ensure that the structure and design of incentive compensation arrangements do not encourage unnecessary and excessive risk taking.

Management's role in assessing and managing material risks from cybersecurity threatsOur Cybersecurity Program is operated and maintained by management, including the Chief Information Officer of Cyber, Data, Risk and Resilience ("CIO") and the Chief Information Security Officer ("CISO"). These senior officers are responsible for assessing and managing the Firm's cybersecurity risks. Our Cybersecurity Program strategy, which is set by the CISO and overseen by the Head of Cyber, Technology, and Information Security Non-Financial Risk ("Head of NFR CTIS"), is informed by various risk and control assessments, control testing, external assessments, threat intelligence, and public and private information sharing. Our Cybersecurity Program also includes processes for escalating and considering the materiality of incidents that impact the Firm, including escalation to senior management and the Board.The members of management that lead our Cybersecurity Program and strategy have extensive experience in technology, cybersecurity and information security. The CIO has over 30 years of experience in various engineering, IT, operations and information security roles. The CISO has over 25 years of experience leading cybersecurity teams at financial institutions, including in the areas of IT strategy, risk management and information security. The Head of NFR CTIS has over 25 years of experience in technology, security and compliance roles, including experience in government security agencies.Risk levels and mitigating measures are presented to and monitored by dedicated management-level cybersecurity risk committees. These committees include representatives from Firm management as well as business and control stakeholders who review, challenge and, where appropriate, consider exceptions to our policies and procedures. Significant cybersecurity risks are escalated from these committees to our Non-Financial Risk Committee. The CIO and the Head of NFR CTIS report on the status of our Cybersecurity Program, including significant cybersecurity risks; review metrics related to the program; and discuss the status of regulatory and remedial actions and incidents to the FRC, the BOTC and the Board, as appropriate. For more information regarding the Firm's ERM framework, see "Quantitative and Qualitative Disclosures about Risk-Risk Management."Board of Directors' oversight of risks from cybersecurity threatsAs discussed above, material cybersecurity risks are addressed by management-level ERM committees with escalation to the BOTC and Board, as appropriate. The BOTC has primary responsibility for assisting the Board in its oversight of significant operational risk exposures of the Firm and its business units, including IT, information security, fraud, third-party oversight, business disruption and resilience, and cybersecurity risks (including review of cybersecurity risks against established risk management methodologies) and the steps management has taken to monitor and control such exposures. In accordance with its charter, the BOTC receives quarterly reports from (i) Technology, including the CIO or the CISO; (ii) Operations; and (iii) NFR. Such reporting includes updates on our Cybersecurity Program, risks from cybersecurity threats, our programs to address and mitigate the risks associated with the evolving cybersecurity threat environment, and NFR's assessment of cybersecurity risks. Senior officers in Technology and NFR also provide an annual report to the BOTC on the status of our broader information security program in compliance with the Gramm-Leach-Bliley Act, which includes a discussion of risks arising from cybersecurity threats. At least annually, senior management representatives in Technology and NFR discuss the status of the Cybersecurity Program and key cybersecurity risks with the Board and, in accordance with the Board's Corporate Governance Policies, all Board members are invited to attend BOTC meetings and have access to meeting materials. The BOTC, which meets at least quarterly, also reviews and approves significant policies related to cybersecurity, receives an annual independent assessment of key aspects of our Cybersecurity Program from an independent third party and holds joint meetings with the BAC and BRC, as necessary and appropriate. The chair of the BOTC regularly discusses cybersecurity developments with senior management, including the senior officers mentioned above, and reports to the Board on cybersecurity risks and threats and other related matters. Firm Resilience The Firm's critical processes and businesses could be disrupted by events including cyberattacks, failure or loss of access to technology and/or associated data, military conflicts, acts of terror, natural disasters, severe weather events and infectious disease. The Firm maintains a Firmwide resilience program that is designed to provide for operational resilience and enable it to respond to and recover critical processes and supporting assets in the event of a disruption impacting our people, technology, facilities and third parties. The key elements of the Firm's resilience program include business continuity management, technology disaster recovery, third party resilience and key business service resilience. Resilience testing is performed both internally and with critical third parties to validate recovery capability in accordance with business requirements. Third-Party Risk Management In connection with our ongoing operations, we utilize the products and/or services of third parties, which we anticipate will continue and may increase in the future. These products and/or services include, for example, outsourced processing and support functions and other professional services. Our risk-based approach to managing exposure to our third parties includes the performance of due diligence, implementation of service-level and other contractual agreements, consideration of operational risks and ongoing monitoring of the performance of our third parties. We maintain and continue to enhance our third-party risk management program, which is designed to align with our risk tolerance and meet regulatory requirements. The program includes appropriate governance, policies, procedures and enabling technology. The third-party risk management program includes the adoption of appropriate risk management controls and practices throughout the third-party management life cycle to manage risk of service failure, risk of data loss and reputational risk, among others. Model Risk Model risk is the potential for adverse consequences from decisions based on incorrect or misused model outputs. Model risk can lead to financial loss, poor business and strategic decision-making, noncompliance with applicable laws and/or regulations or damage to the Firm's reputation. The risk inherent in a model is a function of the materiality, complexity and uncertainty around inputs and assumptions. Model risk is generated from the use of models impacting financial statements, regulatory filings, capital adequacy assessments and the formulation of strategy. Sound model risk management is an integral part of our Risk Management Framework. The Model Risk Management Department ("MRM") is a distinct department in Risk Management responsible for the oversight of model risk. The MRM establishes a model risk tolerance in line with our risk appetite. The tolerance is based on an assessment of the materiality of the risk of financial loss or reputational damage due to errors in design, implementation and/or inappropriate use of models. The tolerance is monitored through model-specific and aggregate business-level assessments, which are based upon qualitative and quantitative factors. The effective challenge of models consists of critical analysis by objective, informed parties who can identify model limitations and assumptions and drive appropriate changes. The MRM provides effective challenge of models, independently validates and approves models for use, annually recertifies models, periodically revalidates, identifies and tracks remediation plans for model limitations and reports on model risk metrics. The department also oversees the development of controls to support a complete and accurate Firmwide model inventory. Liquidity Risk Liquidity risk refers to the risk that we will be unable to finance our operations due to a loss of access to the capital markets or difficulty in liquidating our assets. Liquidity risk also encompasses our ability (or perceived ability) to meet our financial obligations without experiencing significant business disruption or reputational damage that may threaten our viability as a going concern. Liquidity risk also encompasses the associated funding risks triggered by the market or idiosyncratic stress events that may negatively affect our liquidity and may impact our ability to raise new funding or the cost of new funding. Generally, we incur liquidity and funding risk as a result of our trading, lending, investing and client facilitation activities. Our Liquidity Risk Management Framework is critical to helping ensure that we maintain sufficient liquidity reserves and durable funding sources to meet our daily obligations and to withstand unanticipated stress events. The Liquidity Risk Department is a distinct area in Risk Management responsible for the oversight and monitoring of liquidity risk. The Liquidity Risk Department ensures transparency of material liquidity and funding risks, compliance with established risk limits and escalation of risk concentrations to appropriate senior management. To execute these responsibilities, the Liquidity Risk Department establishes limits in line with our risk appetite, identifies and analyzes emerging liquidity and funding risks to ensure such risks are appropriately mitigated, monitors and reports risk exposures against metrics and limits, and reviews the methodologies and assumptions underpinning our Liquidity Stress Tests to ensure sufficient liquidity and funding under a range of adverse scenarios. The Treasury Department and applicable business units have primary responsibility for evaluating, monitoring and controlling the liquidity and funding risks arising from our business activities and for maintaining processes and controls to manage the key risks inherent in their respective areas. The Liquidity Risk Department coordinates with the Treasury Department and these business units to help ensure a consistent and comprehensive framework for managing liquidity and funding risk across the Firm. See also "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources" herein. Legal, Regulatory and Compliance Risk 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 that we may suffer as a result of 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. We are generally subject to extensive regulation in the different jurisdictions in which we conduct our business (see also "Business-Supervision and Regulation" and "Risk Factors"). We have established procedures based on legal and regulatory requirements on a worldwide basis that are designed to facilitate compliance with applicable statutory and regulatory requirements and to require that our policies relating to business conduct, ethics and practices are followed globally. In addition, we have established procedures to mitigate the risk that a counterparty's performance obligations will be unenforceable, including consideration of counterparty legal authority and capacity, adequacy of legal documentation, the permissibility of a transaction under applicable law and whether applicable bankruptcy or insolvency laws limit or alter contractual remedies. The heightened legal and regulatory focus on the financial services and banking industries globally presents a continuing business challenge for us. Climate Risk Climate-related risk consists of physical and transition risks. Physical risks include harm to people and property arising from acute climate-related events, such as floods, hurricanes, heatwaves, droughts and wildfires, and chronic, longer-term shifts in climate patterns, such as higher global average temperatures, rising sea levels and long-term droughts. Transition risks include policy, legal, technology and market changes. Examples of these transition risks include changes in consumer and business sentiment, related technologies, shareholder preferences and any additional regulatory and legislative requirements, including increased disclosure requirements or taxation of carbon emissions. Climate risk, which is not expected to have a significant effect on our consolidated results of operations or financial condition in the near term, is an overarching risk that can impact other categories of risk. Physical risk may lead to increased credit risk by diminishing borrowers' repayment capacity or impacting the value of collateral. In addition, physical risk could pose increased operational risk to our facilities and people. The impacts of transition risk may lead to and amplify credit or liquidity risk by reducing our customers' operating income or the value of their assets as well as exposing us to reputational, compliance and/or litigation risk due to increased legal and regulatory scrutiny or negative public sentiment. As climate risk is interconnected with other risk types, we have developed and continue to enhance processes to embed climate risk considerations into our risk management practices and governance structures. The BRC oversees Firmwide risks, which include climate risk, and, as part of its oversight, receives updates on our risk management approach to climate risk, including our approaches toward scenario analysis and integration of climate risk into our existing risk management processes. Our climate risk management efforts are overseen by the Climate Risk Committee, which is co-chaired by our Firm Risk Management Chief Operating Officer and Chief Sustainability Officer and shapes our approach to managing climate-related risks in line with our overall risk framework. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Morgan Stanley and subsidiaries (the "Firm") as of December 31, 2025 and 2024, the related consolidated income statements, comprehensive income statements, cash flow statements and statements of changes in total equity for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Firm as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Firm's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 19, 2026, expressed an unqualified opinion on the Firm's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Firm's management. Our responsibility is to express an opinion on the Firm's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Firm in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Valuation of Level 3 Financial Assets and Certain Level 3 Financial Liabilities Carried at Fair Value on a Recurring Basis and Level 3 Loans Held for Sale - Refer to Note 4 to the financial statements Critical Audit Matter Description The Firm's trading and financing activities result in the Firm carrying material financial instruments having limited price transparency. These financial instruments can span a broad array of product types and generally include derivatives, securities, loans, and borrowings. As described in Note 4, at December 31, 2025 the Level 3 financial assets carried at fair value on a recurring basis approximate $8.0 billion; the Level 3 trading liabilities, borrowings, other secured financings, and securities sold under agreements to repurchase carried at fair value on a recurring basis approximate $5.0 billion, and the Level 3 loans held for sale approximate $3.7 billion. Unlike financial instruments whose inputs are readily observable and, therefore, more easily independently corroborated, the valuation of these financial instruments is inherently subjective and often involves the use of unobservable inputs and proprietary valuation models whose underlying algorithms and valuation methodologies are complex. We identified the valuation of Level 3 financial assets and Level 3 trading liabilities, borrowings, other secured financings, and securities sold under agreements to repurchase carried at fair value on a recurring basis and Level 3 loans held for sale as a critical audit matter given the Firm uses complex valuation models and/or valuation inputs that are not observable in the marketplace to determine the respective carrying values. Performing our audit procedures to evaluate the appropriateness of these models and inputs involved a high degree of auditor judgment, professionals with specialized skills and knowledge, and an increased extent of testing. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the valuation of Level 3 financial assets and Level 3 trading liabilities, borrowings, other secured borrowings, and securities sold under agreements to repurchase carried at fair value on a recurring basis and Level 3 loans held for sale included the following, among others: - We tested the design and operating effectiveness of the Firm's model review and price verification controls. The Firm maintains these internal controls to assess the appropriateness of its valuation methodologies and the relevant inputs and assumptions. - We independently evaluated the appropriateness of management's valuation methodologies for selected financial instruments, including the input assumptions, considering the expected assumptions of other market participants and external data when available. - We developed independent estimates for selected financial instruments using externally sourced inputs and independent valuation models and used such estimates to further evaluate management's estimates. For certain of our selected financial instruments, this included a comparison to the Firm's estimates for similar transactions and an evaluation of the Firm's assumptions inclusive of the inputs, as applicable. - We tested the revenues arising from the trade date fair value estimates for selected structured transactions for which we developed independent estimates to test the valuation inputs and assumptions used by the Firm and evaluated whether these methods were consistent with the Firm's relevant valuation policies. - We assessed the consistency by which management has applied significant and unobservable valuation assumptions used in developing the Firm's estimates. - We performed a retrospective assessment of management's estimates for certain of our selected financial instruments, for which there were events or transactions occurring after the valuation date. We did so by comparing management's estimates to the relevant evidence provided by such events or transactions, as applicable. /s/ Deloitte & Touche LLP New York, New York February 19, 2026 We have served as the Firm's auditor since 1997. December 2025 Form 10-K80See Notes to Consolidated Financial Statements See Notes to Consolidated Financial Statements81December 2025 Form 10-K December 2025 Form 10-K82See Notes to Consolidated Financial Statements See Notes to Consolidated Financial Statements83December 2025 Form 10-K 1. Introduction and Basis of Presentation The FirmMorgan 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. Morgan Stanley operates as an Integrated Firm whereby it serves clients holistically across its business segments. Unless the context otherwise requires, the terms "Morgan Stanley" or the "Firm" 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.A description of the clients and principal products and services of each of the Firm's business segments is below. 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 Income, provides 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 investors, including high and ultra-high net worth individuals, and businesses and institutions. Wealth Management supports clients through three channels: Advisor-Led, Self-Directed and Workplace. Wealth Management includes: financial advisor-led brokerage, investment advisory, custody, cash management, and administrative 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. majority voting interest or otherwise. For VIEs (i.e., entities that do not meet the aforementioned criteria), the Firm consolidates those entities where it has the power to make the decisions that most significantly affect the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.For investments in entities in which the Firm does not have a controlling financial interest but has significant influence over operating and financial decisions, it applies the equity method of accounting with net gains and losses recorded within Other revenues (see Note 11) unless the Firm has elected to measure the investment at fair value, in which case net gains and losses are recorded within Investments revenues (see Note 5).Equity and partnership interests held by entities qualifying for accounting purposes as investment companies are carried at fair value.The Firm's significant regulated U.S. and international subsidiaries include:- Morgan Stanley & Co. LLC ("MS&Co."),- Morgan Stanley Smith Barney LLC ("MSSB"),- Morgan Stanley Europe SE ("MSESE"), - Morgan Stanley & Co. International plc ("MSIP"),- Morgan Stanley Capital Services LLC ("MSCS"),- Morgan Stanley Capital Group Inc. ("MSCG"),- Morgan Stanley MUFG Securities Co., Ltd. ("MSMS"),- Morgan Stanley Bank, N.A. ("MSBNA") and- Morgan Stanley Private Bank, National Association ("MSPBNA").For further information on the Firm's significant regulated U.S. and international subsidiaries, see Note 16. 2. Significant Accounting Policies Revenue RecognitionRevenues are recognized when the promised goods or services are delivered to our customers in an amount that is based on the consideration the Firm expects to receive in exchange for those goods or services when such amounts are not probable of significant reversal. Investment BankingRevenues from investment banking activities consist of revenues earned from underwriting, primarily equity and fixed income securities and loan syndications, and advisory fees, primarily for mergers, acquisitions and restructurings. Underwriting revenues are generally recognized on trade date if there is no uncertainty or contingency related to the amount to be paid. Underwriting costs are deferred and recognized in permits an election to account for tax equity investments using the proportional amortization method if certain conditions are met. Under the proportional amortization method, the initial cost of the investment is amortized in proportion to the income tax credits and other income tax benefits received and recognized net in the income statement as a component of provision for income taxes. The update requires a separate accounting policy election to be made for each tax credit program. Additional disclosures are required regarding (i) the nature of our tax equity investments and (ii) the effect of our tax equity investments and related income tax credits on the financial condition and results of operations (see Note 11).The adoption resulted in a decrease to Retained earnings of $60 million as of January 1, 2024, net of tax, and a corresponding reduction to Other assets. 3. Cash and Cash Equivalents $ in millionsAtDecember 31,2025 AtDecember 31,2024 Cash and due from banks$4,462 $4,436 Interest bearing deposits with banks107,233 100,950 Total Cash and cash equivalents$111,695 $105,386 Restricted cash$30,385 $29,643 For additional information on cash and cash equivalents, including restricted cash, see Note 2. 4. Fair Values Recurring Fair Value Measurements     Assets and Liabilities Measured at Fair Value on a Recurring Basis At December 31, 2025$ in millionsLevel 1Level 2Level 3Netting1TotalAssets at fair valueTrading assets:U.S. Treasury and agency securities$70,801 $48,504 $- $- $119,305 Other sovereign government obligations44,790 359 59 - 45,208 State and municipal securities- 3,740 - - 3,740 MABS- 2,326 317 - 2,643 Loans and lending commitments2- 9,520 1,424 - 10,944 Corporate and other debt3,720 32,117 1,414 - 37,251 Corporate equities3,5161,160 823 276 - 162,259 Derivative and other contracts:Interest rate2,231 125,002 452 - 127,685 Credit- 10,081 263 - 10,344 Foreign exchange11 85,969 165 - 86,145 Equity7,335 85,077 717 - 93,129 Commodity and other222 13,746 2,494 - 16,462 Netting1(7,509)(247,840)(1,049)(40,577)(296,975)Total derivative and other contracts2,290 72,035 3,042 (40,577)36,790 Investments4,5795 416 1,507 - 2,718 Physical commodities- 685 - - 685 Total trading assets4283,556 170,525 8,039 (40,577)421,543 Investment securities -AFS80,907 29,559 - - 110,466 Total assets at fair value$364,463 $200,084 $8,039 $(40,577)$532,009 financial instruments, such as equity method investments and certain receivables. 5. Fair Value Option The Firm has elected the fair value option for certain eligible instruments that are risk managed on a fair value basis to mitigate income statement volatility caused by measurement basis differences between the elected instruments and their associated risk management transactions or to eliminate complexities of applying certain accounting models. Borrowings Measured at Fair Value on a Recurring Basis $ in millionsAtDecember 31, 2025AtDecember 31, 2024Business Unit Responsible for Risk ManagementEquity$64,457 $49,144 Interest rates46,394 34,451 Commodities13,665 14,829 Credit6,094 3,306 Foreign exchange1,869 1,602 Total$132,479 $103,332 Net Revenues from Liabilities under the Fair Value Option $ in millionsTrading RevenuesInterest ExpenseNet Revenues12025Borrowings$(11,414)$1,000 $(12,414)Deposits(254)235 (489)2024Borrowings(1,118)650 (1,767)Deposits(134)242 (376)2023Borrowings(7,991)503 (8,494)1.Amounts do not reflect any gains or losses from related economic hedges. Gains (losses) from changes in fair value are recorded in Trading revenues and are mainly attributable to movements in the reference price or index, interest rates or foreign exchange rates.Gains (Losses) Due to Changes in Instrument-Specific Credit Risk $ in millionsTradingRevenuesOCI2025Loans and other receivables1$(44)$- Lending commitments(2)- Deposits- 50 Borrowings(20)(1,187)2024Loans and other receivables1$(53)$- Lending commitments(3)- Deposits- (39)Borrowings(27)(663)2023Loans and other receivables1$(123)$- Lending commitments14 - Deposits- 17 Borrowings(19)(1,726)$ in millionsAtDecember 31, 2025AtDecember 31, 2024Cumulative pre-tax DVA gain (loss) recognized in AOCI$(4,005)$(2,868)1.Loans and other receivables-specific credit gains (losses) were determined by excluding the non-credit components of gains and losses. Difference between Contractual Principal and Fair Value1$ in millionsAtDecember 31, 2025AtDecember 31, 2024Loans and other receivables2$10,746 $10,207 Nonaccrual loans2 8,146 7,719 Borrowings33,680 3,249 1.Amounts indicate contractual principal greater than or (less than) fair value. 2.The majority of the difference between principal and fair value amounts for loans and other receivables relates to distressed debt positions purchased at amounts well below par. 3.Excludes borrowings where the repayment of the initial principal amount fluctuates based on changes in a reference price or index. The previous tables exclude non-recourse debt from consolidated VIEs, liabilities related to transfers of financial assets treated as collateralized financings, pledged commodities and other liabilities that have specified assets attributable to them. Fair Value Loans on Nonaccrual Status$ in millionsAtDecember 31, 2025AtDecember 31, 2024Nonaccrual loans$1,240 $647 Nonaccrual loans 90 or more days past due$124 $155 6. Derivative Instruments and Hedging Activities The Firm trades and makes markets globally in listed futures, OTC swaps, forwards, options and other derivatives referencing, among other things, interest rates, equities, currencies, investment grade and non-investment grade corporate credits, loans, bonds, U.S. and other sovereign securities, emerging market bonds and loans, credit indices, ABS indices, property indices, mortgage-related and other ABS, and real estate loan products. The Firm uses these instruments for market-making, managing foreign currency and credit exposure, and asset/liability management.The Firm manages its market-making positions by employing a variety of risk mitigation strategies. These strategies include diversification of risk exposures and hedging. Hedging activities consist of the purchase or sale of positions in related securities and financial instruments, including a variety of derivative products (e.g., futures, forwards, swaps and options). The Firm manages the market risk associated with its market-making activities on a Firmwide basis, on a worldwide trading division level and on an individual product basis. tranche, they are passed on to the next most senior tranche in the capital structure.Other Credit Contracts.  The Firm has invested in CLNs and CDOs, which are hybrid instruments containing embedded derivatives, in which credit protection has been sold to the issuer of the note. If there is a credit event of a reference entity underlying the instrument, the principal balance of the note may not be repaid in full to the Firm. 7. Investment Securities AFS and HTM SecuritiesAt December 31, 2025$ in millionsAmortizedCost1GrossUnrealizedGainsGrossUnrealizedLossesFairValueAFS securitiesU.S. Treasury securities$80,745 $187 $25 80,907 U.S. agency securities224,031 24 1,943 22,112 Agency CMBS5,504 1 286 5,219 State and municipal securities1,754 10 17 1,747 FFELP student loan ABS3486 1 6 481 Unallocated basis adjustment42 - 2 - Total AFS securities112,522 223 2,279 110,466 HTM securitiesU.S. Treasury securities12,299 - 663 11,636 U.S. agency securities238,303 67 6,785 31,585 Agency CMBS709 - 43 666 Non-agency CMBS1,779 12 63 1,728 Total HTM securities53,090 79 7,554 45,615 Total investment securities$165,612 $302 $9,833 $156,081 At December 31, 2024$ in millionsAmortizedCost1GrossUnrealizedGainsGrossUnrealizedLossesFairValueAFS securitiesU.S. Treasury securities$70,160 $62 $388 $69,834 U.S. agency securities224,113 6 2,652 21,467 Agency CMBS5,704 - 388 5,316 State and municipal securities 1,373 18 4 1,387 FFELP student loan ABS3612 1 9 604 Unallocated basis adjustment4(2)2 - - Total AFS securities101,960 89 3,441 98,608 HTM securitiesU.S. Treasury securities16,885 - 1,082 15,803 U.S. agency securities241,582 4 8,592 32,994 Agency CMBS1,154 - 88 1,066 Non-agency CMBS1,450 3 113 1,340 Total HTM securities61,071 7 9,875 51,203 Total investment securities$163,031 $96 $13,316 $149,811 1.Amounts are net of any ACL.2.U.S. agency securities consist mainly of agency mortgage pass-through pool securities, CMOs and agency-issued debt.3.Underlying loans are backed by a guarantee, ultimately from the U.S. Department of Education, of at least 95% of the principal balance and interest outstanding.4.Represents the amount of unallocated portfolio layer method basis adjustments related to AFS securities hedged in a closed portfolio. Portfolio layer method basis At December 31, 2025$ in millionsAmortizedCost1FairValueAnnualized Average Yield2HTM securitiesU.S. Treasury securities:Due within 1 year$5,435 $5,416 2.2 %After 1 year through 5 years5,108 4,961 2.4 %After 5 years through 10 years203 179 1.3 %After 10 years1,553 1,080 2.3 %Total12,299 11,636 U.S. agency securities:After 1 year through 5 years140 135 2.0 %After 5 years through 10 years28 28 2.2 %After 10 years38,135 31,422 2.1 %Total38,303 31,585 Agency CMBS:Due within 1 year202 199 1.1 %After 1 year through 5 years354 338 1.4 %After 5 years through 10 years130 110 1.6 %After 10 years23 19 1.3 %Total709 666 Non-agency CMBS:Due within 1 year138 135 4.9 %After 1 year through 5 years847 824 4.6 %After 5 years through 10 years321 298 4.5 %After 10 years473 471 6.9 %Total1,779 1,728 Total HTM securities53,090 45,615 2.2 %Total investment securities$165,612 $156,081 3.2 %1.Amounts are net of any ACL.2.Annualized average yield is computed using the effective yield, weighted based on the amortized cost of each security. The effective yield is shown pre-tax and excludes the effect of related hedging derivatives. 3.At December 31, 2025, the annualized average yield, including the interest rate swap accrual of related hedges, was 3.7% for AFS securities contractually maturing within 1 year and 3.7% for all AFS securities.4.Represents the amount of unallocated portfolio layer method basis adjustments related to AFS securities hedged in a closed portfolio. Portfolio layer method basis adjustments are not allocated to individual securities. Refer to Note 2 and Note 6 herein for additional information.Gross Realized Gains (Losses) on Sales of AFS Securities$ in millions202520242023Gross realized gains$31 $52 $70 Gross realized (losses)(1)- (21)Total1$30 $52 $49 1.Realized gains and losses are recognized in Other revenues in the income statement. 8. Collateralized Transactions The Firm enters into securities purchased under agreements to resell, securities sold under agreements to repurchase, securities borrowed and securities loaned transactions to, among other things, acquire securities to cover short positions and settle other securities obligations, to accommodate customers' needs and to finance its inventory positions. The Firm monitors the fair value of the underlying securities as compared with the related receivable or payable, including accrued interest, and, as necessary, requests additional collateral, as provided under the applicable agreement to ensure such transactions are adequately collateralized, or returns excess collateral. 9. Loans, Lending Commitments and Related Allowance for Credit Losses The Firm's held-for-investment and held-for-sale loan portfolios consist of the following types of loans:- Corporate. Corporate includes revolving lines of credit, term loans and bridge loans made to corporate entities for a variety of purposes.- Secured Lending Facilities. Secured lending facilities include loans provided to clients, which are collateralized by various assets, including residential and commercial real estate mortgage loans, investor commitments for capital calls, corporate loans and other assets.- Commercial Real Estate.  Commercial real estate loans include owner-occupied loans and income-producing loans.- Residential Real Estate. Residential real estate loans mainly include non-conforming loans and HELOC.- Securities-based Lending and Other.  Securities-based lending includes loans that allow clients to borrow money against the value of qualifying securities, generally for any suitable purpose other than purchasing, trading, or carrying securities or refinancing margin debt. The majority of these loans are structured as revolving lines of credit. Other primarily includes certain loans originated in the tailored lending business within the Wealth Management business segment.Loans by Type At December 31, 2025$ in millionsHFI LoansHFS LoansTotal LoansCorporate$7,277 $7,202 $14,479 Secured lending facilities69,149 1,817 70,966 Commercial real estate8,039 320 8,359 Residential real estate72,403 5 72,408 Securities-based lending and Other112,984 30 113,014 Total loans269,852 9,374 279,226 ACL(1,132)(1,132)Total loans, net$268,720 $9,374 $278,094 Loans to non-U.S. borrowers, net$34,532 $3,622 $38,154  At December 31, 2024$ in millionsHFI LoansHFS LoansTotal LoansCorporate$6,889 $9,183 $16,072 Secured lending facilities48,842 2,507 51,349 Commercial real estate8,412 628 9,040 Residential real estate66,738 - 66,738 Securities-based lending and Other 96,019 1 96,020 Total loans226,900 12,319 239,219 ACL(1,066)(1,066)Total loans, net$225,834 $12,319 $238,153 Loans to non-U.S. borrowers, net$23,335 $4,763 $28,098 10. Goodwill and Intangible Assets Goodwill Rollforward$ in millionsISWMIMTotalAt December 31, 2023¹$424 $10,199 $6,084 $16,707 Foreign currency(12)(8)(3)(23)Acquired23 - - 23 Disposals- (1)- (1)December 31, 2024435 10,190 6,081 16,706 Foreign currency2 9 9 20 At December 31, 2025¹$437 $10,199 $6,090 $16,726 Accumulated impairments2$673 $- $27 $700 1.Balances represent the amount of the Firm's goodwill after accumulated impairments.2.There were no impairments recorded in 2025, 2024 or 2023.Intangible Assets Rollforward$ in millionsISWMIM TotalAt December 31, 2023$26 $3,427 $3,602 $7,055 Acquired13 - - 13 Disposals- (6)- (6)Amortization expense(10)(479)(113)(602)Other(2)(3)(2)(7)At December 31, 2024$27 $2,939 $3,487 $6,453 Acquired1 - - 1 Amortization expense(7)(334)(113)(454)Other- 2 8 10 At December 31, 2025$21 $2,607 $3,382 $6,010 Intangible Assets by TypeNon-amortizableAmortizable$ in millionsGrossCarryingAmountGrossCarryingAmountAccumulatedAmortizationAt December 31, 2025Management contracts$2,117 $235 $100 Customer relationships- 4,746 1,514 Trade names- 766 259 Other- 28 9 Total$2,117 $5,775 $1,882 At December 31, 2024Management contracts2,112 245 93 Customer relationships- 8,746 5,121 Trade names- 769 223 Other- 26 8 Total$2,112 $9,786 $5,445 Intangible Assets Estimated Future Amortization Expense$ in millionsAt December 31, 20252026$345 2027341 2028337 2029335 2030331 The Firm's annual goodwill and non-amortizable intangible asset impairment testing as of July 1, 2025 did not indicate any impairment. For more information, see Note 2. 11. Other Assets and Leases Equity Method Investments $ in millionsAtDecember 31, 2025AtDecember 31, 2024Investments$2,054 $1,869 $ in millions202520242023Income (loss)$246 $241 $124 Equity method investments, other than investments in certain fund interests, are summarized above and are included in Other assets in the balance sheet with related income or loss included in Other revenues in the income statement. See "Net Asset Value Measurements-Fund Interests" in Note 4 for the carrying value of certain of the Firm's fund interests, which are composed of general and limited partnership interests, as well as any related carried interest. Japanese Securities Joint Venture$ in millions202520242023Income (loss) from investment in MUMSS$123 $146 $129 The Firm and Mitsubishi UFJ Financial Group, Inc. ("MUFG") formed a joint venture in Japan comprising their respective investment banking and securities businesses by forming two joint venture companies, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. ("MUMSS") and Morgan Stanley MUFG Securities Co., Ltd. ("MSMS") (collectively, the "Joint Venture"). The Firm owns a 40% economic interest in the Joint Venture, and MUFG owns the other 60%.The Firm's 40% voting interest in MUMSS is accounted for under the equity method within the Institutional Securities business segment and is included in the equity method investment balances above. The Firm consolidates MSMS into the Institutional Securities business segment, based on its 51% voting interest.The Firm engages in transactions in the ordinary course of business with MUFG and its affiliates; for example, investment banking, financial advisory, sales and trading, including foreign exchange trading and equity transactions for institutional clients and Japanese research, derivatives, investment management, lending, securitization and other financial services transactions. Such transactions are on substantially the same terms as those that would be available to unrelated third parties for comparable transactions. Tax Equity InvestmentsThe Firm invests in tax equity investment interests which entitle the Firm to a share of tax credits and other income tax benefits generated by the projects underlying the investments. The Firm accounts for certain renewable energy and other tax equity investments programs using the proportional amortization method. Lease Liabilities$ in millionsAtDecember 31, 2025AtDecember 31, 20242025$772 2026$819 790 2027853 736 2028751 716 2029664 562 2030612 482 Thereafter2,337 1,923 Total undiscounted cash flows$6,036 $5,981 Imputed interest(1,040)(1,044)Amount on balance sheet$4,996 $4,937 Committed leases not yet commenced$163 $63 Lease Costs$ in millions202520242023Fixed costs$831 $917 $938 Variable costs1171 181 206 Less: Sublease income(2)(6)(10)Total lease cost, net$1,000 $1,092 $1,134 1.Includes common area maintenance charges and other variable costs not included in the measurement of ROU assets and lease liabilities.Cash Flows Statement Supplemental Information$ in millions202520242023Cash outflows-Lease liabilities$852 $942 $892 Non-cash-ROU assets recorded for new and modified leases645 489 1,055 Occupancy lease agreements, in addition to base rentals, generally provide for rent and operating expense escalations resulting from increased assessments for real estate taxes and other charges. 12. Deposits Deposits$ in millionsAtDecember 31,2025 AtDecember 31,2024 Savings and demand deposits$315,883 $299,898 Time deposits99,640 76,109 Total deposits$415,523 $376,007 Deposits subject to FDIC insurance$331,322 $298,351 Deposits not subject to FDIC insurance$84,201 $77,656 Time Deposit Maturities$ in millionsAtDecember 31, 20252026$44,380 202723,390 202813,670 20299,570 20308,260 Thereafter370 Total$99,640 Uninsured Non-U.S. Time Deposit Maturities$ in millionsAtDecember 31, 2025Less than 3 months$2,187 3 - 6 months860 6 - 12 months747 Over 12 months76 Total$3,870 Deposits in U.S. Bank Subsidiaries from Non-U.S. Depositors$ in millionsAt December 31, 2025At December 31, 2024Deposits in U.S. bank subsidiaries from non-U.S. depositors$1,057 $700 13. Borrowings and Other Secured Financings Maturities and Terms of BorrowingsParent CompanySubsidiariesAtDecember 31, 2025AtDecember 31, 2024$ in millionsFixed Rate1Variable Rate2Fixed Rate1Variable Rate2Original maturities of one year or less:Next 12 months$- $- $62 $7,192 $7,254 $4,512 Original maturities greater than one year:2025$21,921 2026$10,821 $747 $3,816 $10,851 $26,235 37,969 202719,976 2,090 4,108 13,443 39,617 34,050 202812,947 3,133 10,807 17,875 44,762 28,719 202921,014 2,535 4,735 8,226 36,510 26,159 203015,582 498 2,869 11,971 30,920 20,016 Thereafter108,593 2,392 21,996 30,656 163,637 115,473 Total greater than one year$188,933 $11,395 $48,331 $93,022 $341,681 $284,307 Total$188,933 $11,395 $48,393 $100,214 $348,935 $288,819 Weighted average coupon at period end34.1 %3.4 %4.8 %4.8 %4.2 %4.1 %1.Fixed rate borrowings include instruments with step-up, step-down and zero coupon features.2.Variable rate borrowings include those that bear interest based on a variety of indices, including SOFR and federal funds rates, in addition to certain notes carried at fair value with various payment provisions, including notes linked to the performance of a specific index, a basket of stocks, a specific equity security, a commodity, a credit exposure or basket of credit exposures. 3.Only includes borrowings with original maturities greater than one year. Weighted average coupon is calculated utilizing U.S. and non-U.S. dollar interest rates and excludes the effect of related hedging derivatives and financial instruments for which the fair value option was elected. See "Rates for Borrowings with Original Maturities Greater than One Year" table herein for more information. Borrowings with Original Maturities Greater than One Year$ in millionsAtDecember 31, 2025AtDecember 31, 2024Senior$329,502 $270,594 Subordinated12,179 13,713 Total$341,681 $284,307 Weighted average stated maturity, in years6.36.6Certain senior debt securities are denominated in various non-U.S. dollar currencies and may be structured to provide a return that is linked to equity, credit, commodity or other indices (e.g., the consumer price index). Senior debt also may be structured to be callable by the Firm or extendible at the option of holders of the senior debt securities. For transfers of assets that fail to meet accounting criteria for a sale, the Firm continues to record the assets and recognizes the associated liabilities in the balance sheet. 14. Commitments, Guarantees and Contingencies CommitmentsYears to Maturity at December 31, 2025$ in millionsLess than 11-33-5Over 5TotalLending:Corporate$23,398 $48,607 $79,273 $5,843 $157,121 Secured lending facilities5,341 8,035 10,429 5,930 29,735 Commercial and Residential real estate66 115 173 465 819 Securities-based lending and Other17,663 3,094 230 504 21,491 Forward-starting secured financing receivables1138,050 2,782 - - 140,832 Central counterparty14,062 - - - 14,062 Investment activities2,319 94 80 503 2,996 Letters of credit and other financial guarantees30 3 - 5 38 Total$200,929 $62,730 $90,185 $13,250 $367,094 Lending commitments participated to third parties$12,164 1.These amounts primarily include secured financing receivables yet to settle as of December 31, 2025, with settlement generally occurring within three business days. These amounts also include commitments to enter into certain collateralized financing transactions.Since commitments associated with these instruments may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements.Types of CommitmentsLending Commitments.  Lending commitments primarily represent the notional amount of legally binding obligations to provide funding to clients for different types of loan transactions. For syndications that are led by the Firm, the lending commitments accepted by the borrower but not yet closed are net of the amounts agreed to by counterparties that will participate in the syndication. For syndications that the Firm participates in and does not lead, lending commitments accepted by the borrower but not yet closed include only the amount that the Firm expects it will be allocated from the lead syndicate bank. Due to the nature of the Firm's obligations under the commitments, these amounts include certain commitments participated to third parties.Forward-Starting Secured Financing Receivables.  These amounts include securities purchased under agreements to resell and securities borrowed that the Firm has entered into prior to the balance sheet date that will settle after the balance sheet date. These transactions are primarily secured by collateral from U.S. government agency securities and other sovereign government obligations when they are funded.Central Counterparty.  These commitments relate to the Firm's membership in certain clearinghouses and are Beginning in February of 2024, Morgan Stanley Smith Barney LLC ("MSSB") and E*TRADE Securities LLC ("E*TRADE Securities"), among others, have been named as defendants in multiple putative class actions pending in the federal district courts for the District of New Jersey and SDNY. The class action claims have been brought on behalf of brokerage, advisory and retirement account holders, alleging various contractual, fiduciary, and statutory claims (including under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §1962(c)-(d)) that MSSB and/or E*TRADE Securities failed to pay a reasonable rate of interest on its cash sweep products. All matters pending in the SDNY (which focus solely on MSSB's cash sweep program) were consolidated into one action styled Estate of Sherlip, et al. v. Morgan Stanley, et al. An amended class action complaint was filed on August 15, 2025. On September 12, 2025, MSSB moved to dismiss the complaint. The matters pending in the District of New Jersey (which includes claims against both MSSB and E*TRADE Securities) have been consolidated into one action styled In re E*TRADE Cash Sweep Litigation, No. 2:24-cv-00603. The Firm awaits the appointment of lead counsel and, thereafter, the filing of a consolidated complaint in that matter. Together, the complaints seek, inter alia, certification of classes of plaintiffs, unspecified compensatory damages, equitable and injunctive relief, and treble damages. The Firm is also responding to requests from state securities regulators regarding brokerage account cash balances swept to the affiliate bank deposit program. 15. Variable Interest Entities and Securitization Activities OverviewThe Firm is involved with various SPEs in the normal course of business. In most cases, these entities are deemed to be VIEs.The Firm's variable interests in VIEs include debt and equity interests, commitments, guarantees, derivative instruments and certain fees. The Firm's involvement with VIEs arises primarily from:- Interests purchased in connection with market-making activities, securities held in its Investment securities portfolio and retained interests held as a result of securitization activities, including re-securitization transactions.- Guarantees issued and residual interests retained in connection with municipal bond securitizations.- Loans made to and investments in VIEs that hold debt, equity, real estate or other assets.- Derivatives entered into with VIEs.- Structuring of CLNs or other asset-repackaging notes designed to meet the investment objectives of clients.- Other structured transactions designed to provide tax-efficient yields to the Firm or its clients. continuing involvement and received sales treatment. The transferred assets are carried at fair value prior to securitization, and any changes in fair value are recognized in the income statement. The Firm may act as underwriter of the beneficial interests issued by these securitization vehicles, for which Investment banking revenues are recognized. The Firm may retain interests in the securitized financial assets as one or more tranches of the securitization. Certain retained interests are carried at fair value in the balance sheet with changes in fair value recognized in the income statement. Fair value for these interests is measured using techniques that are consistent with the valuation techniques applied to the Firm's major categories of assets and liabilities as described in Notes 2 and 4. Further, as permitted by applicable guidance, certain transfers of assets where the Firm's only continuing involvement is a derivative are only reported in the following Assets Sold with Retained Exposure table.Proceeds from New Securitization Transactions and Sales of Loans$ in millions202520242023New transactions1$52,869 $36,326 $21,051 Retained interests11,524 7,956 4,311 Sales of corporate loans to CLO SPEs1, 2- - 24 1.Net gains on new transactions and sales of corporate loans to CLO entities at the time of the sale were not material for all periods presented.2.Sponsored by non-affiliates.The Firm has provided, or otherwise agreed to be responsible for, representations and warranties regarding certain assets transferred in securitization transactions sponsored by the Firm (see Note 14).Assets Sold with Retained Exposure$ in millionsAtDecember 31,2025 AtDecember 31,2024 Gross cash proceeds from sale of assets1$112,395 $92,229 Fair valueAssets sold$113,159 $92,580 Derivative assets recognized in the balance sheet1,201 998 Derivative liabilities recognized in the balance sheet438 648 1.The carrying value of assets derecognized at the time of sale approximates gross cash proceeds.The Firm enters into transactions in which it sells securities, primarily equities, and contemporaneously enters into bilateral OTC derivatives with the purchasers of the securities, through which it retains exposure to the sold securities. 16. Regulatory Requirements Regulatory Capital FrameworkThe Firm is an FHC under the Bank Holding Company Act of 1956, as amended, and is subject to the regulation and oversight of the Board of Governors of the Federal Reserve System ("Federal Reserve"). The Federal Reserve establishes capital requirements for the Firm, including "well-capitalized" standards, and evaluates the Firm's compliance with such capital requirements. The OCC establishes similar capital requirements and well-capitalized standards for the Firm's U.S. bank subsidiaries, including, among others, MSBNA and MSPBNA (together, "U.S. Bank Subsidiaries"). The regulatory capital requirements are largely based on the Basel III capital standards established by the Basel Committee on Banking Supervision and on certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In addition, many of the Firm's regulated subsidiaries are subject to regulatory capital requirements, including regulated subsidiaries registered as swap dealers with the CFTC or conditionally registered as security-based swap dealers with the SEC or registered as broker-dealers or futures commission merchants.Regulatory Capital RequirementsThe Firm is required to maintain minimum risk-based and leverage-based capital ratios under regulatory capital requirements. A summary of the calculations of regulatory capital and RWA follows.Risk-Based Regulatory Capital. Risk-based capital ratio requirements apply to Common Equity Tier 1 ("CET1") capital, Tier 1 capital and Total capital (which includes Tier 2 capital), each as a percentage of RWA, and consist of regulatory minimum required ratios plus the Firm's capital conservation buffer requirement. Capital requirements require certain adjustments to, and deductions from, capital for purposes of determining these ratios.Capital Buffer RequirementsAtDecember 31,2025 AtDecember 31,2024 At December 31, 2025 and December 31, 2024StandardizedStandardizedAdvancedCapital buffersFixed 2.5% buffer-%-%2.5%SCB4.3%6.0%N/AG-SIB capital surcharge3.0%3.0%3.0%CCyB1-%-%-%Capital conservation buffer requirement7.3%9.0%5.5%1.The CCyB can be set up to 2.5% but is currently set by the Federal Reserve at zero.The capital conservation buffer requirement represents the amount of CET1 capital the Firm must maintain above the minimum risk-based capital requirements in order to avoid restrictions on the Firm's ability to make capital distributions,continues to be subject to the minimum net capital requirements of the SEC and CFTC.- MSCG, a U.S. entity, is registered with the CFTC as a swap dealer and is subject to its capital requirements.Certain other U.S. and non-U.S. subsidiaries of the Firm are subject to various securities, commodities and banking regulations, and capital adequacy requirements promulgated by the regulatory and exchange authorities of the countries in which they operate. These subsidiaries have also consistently operated with capital in excess of their local capital adequacy requirements.Restrictions on PaymentsThe regulatory capital requirements referred to above, and certain covenants contained in various agreements governing indebtedness of the Firm, may restrict the Firm's ability to withdraw capital from its subsidiaries. The following table represents net assets of consolidated subsidiaries that may be restricted as to the payment of cash dividends and advances to the Parent Company.$ in millionsAtDecember 31,2025 AtDecember 31,2024 Restricted net assets$59,985 $49,914 17. Total Equity Morgan Stanley Shareholders' EquityPreferred Stock SharesOutstanding Carrying Value$ in millions, except per share dataAtDecember 31,2025 LiquidationPreferenceper ShareAtDecember 31,2025 AtDecember 31,2024 SeriesA44,000 $25,000 $1,100 $1,100 C1519,882 1,000 408 408 E34,500 25,000 862 862 F34,000 25,000 850 850 I40,000 25,000 1,000 1,000 K40,000 25,000 1,000 1,000 L20,000 25,000 500 500 M400,000 1,000 430 430 N3,000 100,000 300 300 O52,000 25,000 1,300 1,300 P40,000 25,000 1,000 1,000 Q40,000 25,000 1,000 1,000 Total$9,750 $9,750 Shares authorized30,000,000 1.Series C preferred stock is held by MUFG.The Firm's preferred stock has a preference over its common stock upon liquidation. The Firm's preferred stock qualifies as and is included in Tier 1 capital in accordance with regulatory capital requirements (see Note 16). Cumulative Foreign Currency Translation Adjustments$ in millionsAtDecember 31,2025 AtDecember 31,2024 Associated with net investments in subsidiaries with a non-U.S. dollar functional currency$(2,978)$(4,326)Hedges, net of tax1,808 2,849 Total$(1,170)$(1,477)Carrying value of net investments in non-U.S. dollar functional currency subsidiaries subject to hedges$20,904 $18,303 Cumulative foreign currency translation adjustments include gains or losses resulting from translating foreign currency financial statements from their respective functional currencies to U.S. dollars, net of hedge gains or losses and related tax effects. The Firm uses foreign currency contracts to manage the currency exposure relating to its net investments in non-U.S. dollar functional currency subsidiaries. The Firm may also elect not to hedge its net investments in certain foreign operations due to market conditions or other reasons, including the availability of various currency contracts at acceptable costs. Information relating to the effects on cumulative foreign currency translation adjustments that resulted from the translation of foreign currency financial statements and from gains and losses from hedges of the Firm's net investments in non-U.S. dollar functional currency subsidiaries is summarized in the previous table. 18. Interest Income and Interest Expense $ in millions202520242023Interest incomeCash and cash equivalents1$2,566 $3,068 $3,408 Investment securities5,328 5,161 3,992 Loans13,995 13,771 12,424 Securities purchased under agreements to resell214,548 12,416 7,762 Securities borrowed36,623 5,391 5,191 Trading assets, net of Trading liabilities6,242 5,924 4,488 Customer receivables and Other19,761 8,404 8,584 Total interest income$59,063 $54,135 $45,849 Interest expenseDeposits$10,626 $10,368 $8,216 Borrowings12,556 13,242 11,437 Securities sold under agreements to repurchase412,874 10,787 6,737 Securities loaned53,076 1,036 784 Customer payables and Other9,885 10,091 10,445 Total interest expense$49,017 $45,524 $37,619 Net interest$10,046 $8,611 $8,230 1.In 2023, interest-bearing Cash and cash equivalents and related interest were presented separately for the first time. The prior year amounts for Customer receivables and Other have been disaggregated to exclude Cash and cash equivalents to align with the current presentation.2.Includes interest paid on Securities purchased under agreements to resell. 3.Includes fees paid on Securities borrowed. 4.Includes interest received on Securities sold under agreements to repurchase. 5.Includes fees received on Securities loaned. Interest income and Interest expense are classified in the income statement based on the nature of the instrument and related market conventions. When included as a component of the instrument's fair value, interest is included within Trading revenues or Investments revenues. Otherwise, it is included within Interest income or Interest expense.Accrued Interest$ in millionsAtDecember 31,2025 AtDecember 31,2024 Customer and other receivables$4,051 $3,322 Customer and other payables4,663 3,938 19. Deferred Compensation Plans and Carried Interest Compensation Stock-Based Compensation PlansCertain current and former employees of the Firm, including financial advisors in the Wealth Management segment, participate in the Firm's stock-based compensation plans. These plans include RSUs, PSUs and an ESPP.Stock-Based Compensation Expense$ in millions202520242023RSUs$1,690 $1,464 $1,607 PSUs225 148 91 ESPP11 10 11 Total$1,926 $1,622 $1,709 Retirement-eligible awards1$267 $202 $178 1.Total expense includes stock-based compensation anticipated to be awarded in January of the following year that does not contain a future service requirement.Tax Benefit Related to Stock-Based Compensation Expense$ in millions202520242023Tax benefit1$413 $343 $382 1.Excludes income tax consequences related to employee share-based award conversions.Unrecognized Compensation Cost Related to Stock-Based Awards Granted$ in millionsAtDecember 31,20251 To be recognized in:2026$583 2027248 Thereafter45 Total$876 1.Amounts do not include forfeitures or 2025 performance year compensation awarded in January 2026 which will begin to be amortized in 2026.In connection with awards under its stock-based compensation plans, the Firm is authorized to issue shares of common stock held in treasury or newly issued shares.The Firm generally uses treasury shares, if available, to deliver shares to employees or employee stock trusts and has an ongoing repurchase authorization that includes repurchases in connection with awards under its stock-based compensation plans. Tangible Common Equity of each member of the defined comparison group ("MS Relative ROTCE"). PSUs have vesting, conversion and cancellation provisions that are generally similar to those of RSUs. Dividend equivalents that accrue on these awards are paid in cash when the awards convert. At December 31, 2025, approximately 2.5 million PSUs at target were outstanding.Fair Value of PSU Awards202520242023Weighted average price on award date$136.31 $83.86 $85.76 Deferred Cash-Based Compensation PlansDCP generally provide a return to the plan participants based upon the performance of each participant's referenced investments.Deferred Cash-Based Compensation Expense$ in millions202520242023Deferred cash-based awards$950 $770 $693 Return on referenced investments764 672 668 Total$1,714 $1,442 $1,361 Retirement-eligible awards1$401 $287 $259 1.Total expense includes deferred cash-based compensation anticipated to be awarded in January of the following year that does not contain a future service requirement.Carried Interest CompensationThe Firm generally recognizes compensation expense for any portion of carried interest (both realized and unrealized) that is allocated to employees.Carried Interest Compensation Expense$ in millions202520242023Expense$235 $114 $44 20. Employee Benefit Plans Pension PlansNet Periodic Benefit Expense (Income) Pension Plans$ in millions202520242023Service cost, benefits earned during the period$23 $20 $20 Interest cost on projected benefit obligation145 137 140 Expected return on plan assets(92)(99)(99)Net amortization of prior service cost1 1 1 Amortization of net (gains) losses21 21 (9)Plan settlements1 - 2 Net periodic benefit expense$99 $80 $55 Certain current and former U.S. employees of the Firm and its U.S. affiliates who were hired before July 1, 2007 are covered by the U.S. pension plan, a non-contributory defined benefit pension plan that is qualified under Section 401(a) of the subsidiaries. Under such plans, contributions are generally determined based on a fixed rate of base salary with certain vesting requirements. 21. Income Taxes Components of Provision for Income Taxes$ in millions202520242023CurrentU.S. federal$2,232 $2,011 $1,190 State and local 601 660 542 Foreign1,535 1,244 1,314 Total$4,368 $3,915 $3,046 DeferredU.S. federal $394 $8 $(295)State and local 91 (6)(59)Foreign76 150 (109)Total$561 $152 $(463)Provision for income taxes$4,929 $4,067 $2,583 Reconciliation of U.S. Federal Statutory Income Tax to Effective Income TaxYear Ended December 31,$ in millions202520242023$%$%$%U.S. federal statutory tax$4,610 21.0 %$3,695 21.0 %$2,481 21.0 %State and local taxes1430 2.0 378 2.1 292 2.5 Foreign taxesIndiaCapital gains tax115 0.5 205 1.2 50 0.4 Other14 0.1 15 0.1 11 0.1 BrazilCapital gains tax17 0.1 21 0.1 347 2.9 Other22 0.1 15 0.1 15 0.1 Other jurisdictions252 1.1 161 0.9 80 0.7 Changes in tax laws and rates- 0.0 15 0.1 - 0.0 Cross-border taxes12 0.1 30 0.2 47 0.4 U.S. tax creditsGeneral business credits(260)(1.2)(295)(1.7)(285)(2.4)Foreign tax credit(28)(0.1)(50)(0.3)(375)(3.2)Changes in valuation allowances9 0.0 14 0.1 (2)0.0 Nontaxable or nondeductible itemsIncome/(loss) from affiliates(413)(1.9)(368)(2.1)(241)(2.0)Employee share-based compensation(167)(0.8)(71)(0.4)(138)(1.2)Other30 0.1 36 0.2 79 0.7 Unrecognized tax benefits99 0.5 77 0.4 66 0.6 OtherProportional amortization187 0.9 189 1.1 156 1.3 Effective tax$4,929 22.5 %$4,067 23.1 %$2,583 21.9 %1.Amounts are net of U.S. federal income tax benefits. The tax effects in this category were primarily related to New York State and City in 2025, 2024 and 2023. Rollforward of Unrecognized Tax Benefits$ in millions202520242023Balance at beginning of period$1,305 $1,244 $1,129 Increases based on tax positions related to the current period211 202 147 Increases based on tax positions related to prior periods78 132 141 Decreases based on tax positions related to prior periods(30)(52)(73)Decreases related to settlements with taxing authorities(2)(174)(79)Decreases related to lapse of statute of limitations(44)(47)(21)Balance at end of period$1,518 $1,305 $1,244 Net unrecognized tax benefits1$1,347 $1,159 $1,090 1.Represent ending unrecognized tax benefits adjusted for the impact of the federal benefit of state issues, competent authority arrangements and foreign tax credit offsets. If recognized, these net benefits would favorably impact the effective tax rate in future periods.Interest Expense (Benefit) and Penalties Associated with Unrecognized Tax Benefits, Net of Federal and State Income Tax Benefits$ in millions202520242023Recognized in income statement$109 $92 $65 Accrued at end of period364 255 237 Interest and penalties related to unrecognized tax benefits are recognized as a component of the provision for income taxes. Earliest Tax Year Subject to Examination in Major JurisdictionsJurisdictionTax YearU.S.2017New York State and New York City2010U.K.2014Japan2021Hong Kong2018The Firm is routinely under examination by the IRS and other tax authorities in certain countries, such as the U.K., and in states and localities in which it has significant business operations, such as New York.The Firm believes that the resolution of these tax examinations will not have a material effect on the annual financial statements, although a resolution could have a material impact in the income statement and on the effective tax rate for any period in which such resolutions occur. 22. Segment, Geographic and Revenue Information The Firm structures its segments primarily based upon the nature of the financial products and services provided to customers and its management organization, which is consistent with the approach used by the Firm's chief operating decision maker ("CODM") to assess the Firm's financial performance. The Firm provides a wide range of financial products and services to its customers in each of its business segments: Institutional Securities, Wealth Assets by Business Segment$ in millionsAtDecember 31,2025 AtDecember 31,2024 Institutional Securities$969,553 $796,608 Wealth Management433,017 400,848 Investment Management17,700 17,615 Total1$1,420,270 $1,215,071 1. Parent assets have been fully allocated to the business segments.Total Assets by Region$ in millionsAtDecember 31,2025 AtDecember 31,2024 Americas994,553 $893,170 EMEA228,870 179,187 Asia196,847 142,714 Total$1,420,270 $1,215,071 23. Parent Company Parent Company Only-Condensed Income Statement and Comprehensive Income Statement$ in millions202520242023RevenuesDividends from bank subsidiaries$3,886 $5,571 $5,770 Dividends from BHC and non-bank subsidiaries4,325 5,229 6,812 Total dividends from subsidiaries8,211 10,800 12,582 Trading(151)(827)(775)Other(3)36 (31)Total non-interest revenues8,057 10,009 11,776 Interest income14,234 15,739 13,596 Interest expense14,195 15,377 13,618 Net interest39 362 (22)Net revenues8,096 10,371 11,754 Non-interest expenses397 358 287 Income before income taxes7,699 10,013 11,467 Provision for (benefit from) income taxes(557)(499)(520)Net income before undistributed gain of subsidiaries8,256 10,512 11,987 Undistributed (loss) gain of subsidiaries8,605 2,878 (2,900)Net income16,861 13,390 9,087 Other comprehensive income (loss), net of tax:Foreign currency translation adjustments307 (324)51 Change in net unrealized gains (losses) on available-for-sale securities988 521 1,098 Pensions and other25 12 (87)Change in net debt valuation adjustment(849)(551)(1,250)Net change in cash flow hedges58 (51)20 Comprehensive income$17,390 $12,997 $8,919 Net income$16,861 $13,390 $9,087 Preferred stock dividends and other612 590 557 Earnings applicable to Morgan Stanley common shareholders$16,249 $12,800 $8,530 Average Balances and Interest Rates and Net Interest Income 20252024$ in millionsAverageDailyBalanceInterestAverageRateAverageDailyBalanceInterestAverageRateInterest earning assetsCash and cash equivalents:U.S.$54,637 $1,732 3.2 %$47,751 $2,004 4.2 %Non-U.S.45,666 834 1.8 %43,406 1,064 2.5 %Investment securities2162,840 5,328 3.3 %156,920 5,161 3.3 %Loans2257,513 13,995 5.4 %226,454 13,771 6.1 %Securities purchased under agreements to resell3:U.S.72,438 9,919 13.7 %65,222 7,332 11.2 %Non-U.S.41,126 4,629 11.3 %47,735 5,084 10.7 %Securities borrowed4:U.S.120,273 6,396 5.3 %110,024 4,985 4.5 %Non-U.S.18,854 227 1.2 %18,224 406 2.2 %Trading assets, net of Trading liabilities:U.S.114,215 5,259 4.6 %106,063 5,016 4.7 %Non-U.S.24,088 983 4.1 %14,385 908 6.3 %Customer receivables and Other:U.S.66,830 7,630 11.4 %52,510 6,223 11.9 %Non-U.S.18,891 2,131 11.3 %15,889 2,181 13.7 %Total$997,371 $59,063 5.9 %$904,583 $54,135 6.0 %Interest bearing liabilitiesDeposits2$384,412 $10,626 2.8 %$350,487 $10,368 3.0 %Borrowings2,5307,055 12,556 4.1 %265,473 13,242 5.0 %Securities sold under agreements to repurchase6,8:U.S.20,260 7,784 38.4 %18,442 5,336 28.9 %Non-U.S.50,834 5,090 10.0 %52,135 5,451 10.5 %Securities loaned7,8:U.S.9,844 2,152 21.9 %9,499 108 1.1 %Non-U.S.7,025 924 13.2 %6,853 928 13.5 %Customer payables and Other:U.S.133,680 6,801 5.1 %128,853 6,478 5.0 %Non-U.S.65,411 3,084 4.7 %61,237 3,613 5.9 %Total$978,521 $49,017 5.0 %$892,979 $45,524 5.1 %Net interest income and net interest rate spread$10,046 0.9 %$8,611 0.9 % Effect of Volume and Rate Changes on Net Interest Income 2025 versus 2024 Increase (Decrease)Due to Change in: $ in millionsVolumeRateNet ChangeInterest earning assetsCash and cash equivalents:U.S.$289 $(561)$(272)Non-U.S.55 (285)(230)Investment securities2195 (28)167 Loans21,889 (1,665)224 Securities purchased under agreements to resell3:U.S.811 1,776 2,587 Non-U.S.(704)249 (455)Securities borrowed4:U.S.464 947 1,411 Non-U.S.14 (193)(179)Trading assets, net of Trading liabilities:U.S.386 (143)243 Non-U.S.612 (537)75 Customer receivables and Other:U.S.1,697 (290)1,407 Non-U.S.412 (462)(50)Change in interest income$6,120 $(1,192)$4,928 Interest bearing liabilitiesDeposits2$1,004 $(746)$258 Borrowings2,52,074 (2,760)(686)Securities sold under agreements to repurchase6,8:U.S.526 1,922 2,448 Non-U.S.(136)(225)(361)Securities loaned7,8:U.S.4 2,040 2,044 Non-U.S.23 (27)(4)Customer payables and Other:U.S.243 80 323 Non-U.S.246 (775)(529)Change in interest expense$3,984 $(491)$3,493 Change in net interest income$2,136 $(701)$1,435 Average Balances and Interest Rates and Net Interest Income 2023$ in millionsAverageDailyBalanceInterestAverageRateInterest earning assetsCash and cash equivalents1:U.S.$56,920 $2,386 4.2 %Non-U.S.48,373 1,022 2.1 %Investment securities2153,307 3,992 2.6 %Loans2215,628 12,424 5.8 %Securities purchased under agreements to resell3:U.S.47,604 4,714 9.9 %Non-U.S.61,766 3,048 4.9 %Securities borrowed4:U.S.115,279 4,794 4.2 %Non-U.S.18,514 397 2.1 %Trading assets, net of Trading liabilities:U.S.93,409 3,792 4.1 %Non-U.S.12,788 696 5.4 %Customer receivables and Other1:U.S.45,815 6,314 13.8 %Non-U.S.14,485 2,270 15.7 %Total$883,888 $45,849 5.2 %Interest bearing liabilitiesDeposits2$342,583 $8,216 2.4 %Borrowings2,5238,164 11,437 4.8 %Securities sold under agreements to repurchase6,8:U.S.22,718 3,591 15.8 %Non-U.S.46,392 3,146 6.8 %Securities loaned7:U.S.4,244 67 1.6 %Non-U.S.9,470 717 7.6 %Customer payables and Other:U.S.133,069 6,954 5.2 %Non-U.S.63,916 3,491 5.5 %Total$860,556 $37,619 4.4 %Net interest income and net interest rate spread$8,230 0.8 % Effect of Volume and Rate Changes on Net Interest Income 2024 versus 2023 Increase (Decrease)Due to Change in: $ in millionsVolumeRateNet ChangeInterest earning assetsCash and cash equivalents1:U.S.$(384)$2 $(382)Non-U.S.(105)147 42 Investment securities294 1,075 1,169 Loans2624 723 1,347 Securities purchased under agreements to resell3:U.S.1,745 873 2,618 Non-U.S.(692)2,728 2,036 Securities borrowed4:U.S.(219)410 191 Non-U.S.(6)15 9 Trading assets, net of Trading liabilities:U.S.514 710 1,224 Non-U.S.87 125 212 Customer receivables and Other1:U.S.923 (1,014)(91)Non-U.S.220 (309)(89)Change in interest income$2,801 $5,485 $8,286 Interest bearing liabilitiesDeposits2$190 $1,962 $2,152 Borrowings2,51,311 494 1,805 Securities sold under agreements to repurchase6,8:U.S.(676)2,421 1,745 Non-U.S.389 1,916 2,305 Securities loaned7:U.S.83 (42)41 Non-U.S.(198)409 211 Customer payables and Other:U.S.(220)(256)(476)Non-U.S.(146)268 122 Change in interest expense$733 $7,172 $7,905 Change in net interest income$2,068 $(1,687)$381 1.In 2023, interest-bearing Cash and cash equivalents and related interest were presented separately for the first time. The prior year amounts for Customer receivables and Other have been disaggregated to exclude Cash and cash equivalents to align with the current presentation. 2.Amounts include primarily U.S. balances. 3.Includes interest paid on Securities purchased under agreements to resell. 4.Includes fees paid on Securities borrowed. 5.Average daily balance includes borrowings carried at fair value but, for certain borrowings, interest expense is considered part of fair value and is recorded in Trading revenues. 6.Includes interest received on Securities sold under agreements to repurchase. 7.Includes fees received on Securities loaned. 8.The annualized average rate was calculated using (a) interest expense incurred on all securities sold under agreements to repurchase and securities-loaned transactions, whether or not such transactions were reported in the balance sheet and (b) net average on-balance sheet balances, which exclude certain securities-for-securities transactions. Deposits Average Daily Deposits 202520242023$ in millionsAverageAmountAverageRateAverageAmountAverageRateAverageAmountAverageRateDeposits1:Savings and demand$296,827 2.2 %$280,926 2.5 %$286,513 2.0 %Time87,584 4.6 %69,561 4.8 %56,070 4.3 %Total$384,411 2.8 %$350,487 3.0 %$342,583 2.4 %1.The Firm's deposits were primarily held in U.S. offices. ABSAsset-backed securitiesACLAllowance for credit lossesAFSAvailable-for-saleAMLAnti-money launderingAOCIAccumulated other comprehensive income (loss)AUMAssets under management or supervisionBalance sheetConsolidated balance sheetBHCBank holding companybpsBasis points; one basis point equals 1/100th of 1%Cash flow statementConsolidated cash flow statementCCARComprehensive Capital Analysis and ReviewCCyBCountercyclical capital bufferCDOCollateralized debt obligation(s), including Collateralized loan obligation(s)CDSCredit default swapsCECLCurrent Expected Credit Losses, as calculated under the Financial Instruments-Credit Losses accounting updateCEOChief Executive OfficerCET1Common Equity Tier 1CFTCU.S. Commodity Futures Trading CommissionCLNCredit-linked note(s)CLOCollateralized loan obligation(s)CMBSCommercial mortgage-backed securitiesCMOCollateralized mortgage obligation(s)CRECommercial real estateCRMCredit Risk Management DepartmentCTACumulative foreign currency translation adjustmentsCVACredit valuation adjustmentDCPEmployee deferred cash-based compensation plans linked to investment performanceDCP investmentsInvestments associated with certain DCPDVADebt valuation adjustmentEBITDAEarnings before interest, taxes, depreciation and amortizationELNEquity-linked note(s)EMEAEurope, Middle East and AfricaEPSEarnings per common shareE.U.European UnionFDICFederal Deposit Insurance CorporationFFELPFederal Family Education Loan ProgramFHCFinancial holding companyFICCFixed Income Clearing CorporationFICOFair Isaac CorporationFinancial statementsConsolidated financial statementsFVAFunding valuation adjustmentFVOFair value optionG-SIBGlobal systemically important bankHELOCHome Equity Line of CreditHFIHeld-for-investmentHFSHeld-for-saleHQLAHigh-quality liquid assetsHTMHeld-to-maturityI/EIntersegment eliminationsIHCIntermediate holding companyIMInvestment Management Income statementConsolidated income statementIRSInternal Revenue ServiceISInstitutional SecuritiesLCRLiquidity coverage ratio, as adopted by the U.S. banking agenciesLTVLoan-to-valueM&AMerger, acquisition and restructuring transactionMSBNAMorgan Stanley Bank, N.A.MS&Co.Morgan Stanley & Co. LLCMSCGMorgan Stanley Capital Group Inc.MSCSMorgan Stanley Capital Services LLCMSESEMorgan Stanley Europe SEMSIPMorgan Stanley & Co. International plcMSMSMorgan Stanley MUFG Securities Co., Ltd.MSPBNAMorgan Stanley Private Bank, National AssociationMSSBMorgan Stanley Smith Barney LLCMUFGMitsubishi UFJ Financial Group, Inc.MUMSSMitsubishi UFJ Morgan Stanley Securities Co., Ltd.MWhMegawatt hourN/ANot ApplicableN/MNot MeaningfulNAVNet asset valueNon-GAAPNon-generally accepted accounting principles in the U.S. NSFRNet stable funding ratio, as adopted by the U.S. banking agenciesOCCOffice of the Comptroller of the CurrencyOCIOther comprehensive income (loss)OISOvernight index swapOTCOver-the-counterPRAPrudential Regulation AuthorityPSUPerformance-based stock unitRMBSResidential mortgage-backed securitiesROEReturn on average common equityROTCEReturn on average tangible common equityROURight-of-useRSURestricted stock unitRWARisk-weighted assetsSCBStress capital bufferSECU.S. Securities and Exchange CommissionSLRSupplementary leverage ratioSOFRSecured Overnight Financing RateS&PStandard & Poor'sSPESpecial purpose entitySPOESingle point of entryTLACTotal loss-absorbing capacityU.K.United KingdomUPBUnpaid principal balanceU.S.United States of AmericaU.S. Bank SubsidiariesMSBNA and MSPBNAU.S. GAAPAccounting principles generally accepted in the U.S.VaRValue-at-RiskVIEVariable interest entityWACCImplied weighted average cost of capitalWMWealth Management Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Controls and Procedures Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures Under the supervision and with the participation of the Firm's management, including the Chief Executive Officer and Chief Financial Officer, the Firm conducted an evaluation of the effectiveness of the Firm's disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Firm's disclosure controls and procedures were effective as of the end of the period covered by this annual report. Management's Report on Internal Control Over Financial Reporting The Firm's management is responsible for establishing and maintaining adequate internal control over financial reporting. The Firm's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). The internal control over financial reporting includes those policies and procedures that: - Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Firm;- Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and that receipts and expenditures are being made only in accordance with authorizations of the Firm's management and directors; and - Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Firm assets that could have a material effect on the Firm's financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of the Firm's internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework (2013). Based on management's assessment and those criteria, management believes that the Firm maintained effective internal control over financial reporting as of December 31, 2025. The Firm's independent registered public accounting firm has audited and issued a report on the Firm's internal control over financial reporting, which appears below. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Morgan Stanley and subsidiaries (the "Firm") as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Firm maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the financial statements of the Firm as of and for the year ended December 31, 2025 and our report dated February 19, 2026 expressed an unqualified opinion on those financial statements. Basis for Opinion The Firm's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Firm's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Firm in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP New York, New York February 19, 2026 Changes in Internal Control Over Financial Reporting No change in the Firm's internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) occurred during the quarter ended December 31, 2025 that materially affected, or is reasonably likely to materially affect, the Firm's internal control over financial reporting. Other Information None Disclosure Regarding Foreign Jurisdictions That Prevent Inspections Not applicable.

A significant number of our financial instruments are carried at fair value. The use of fair value to measure financial instruments is fundamental to our risk management practices and is our most critical accounting estimate. We make estimates regarding the valuation of assets and liabilities measured at fair value in preparing the financial statements. These assets and liabilities include, but are not limited to: - Trading assets and Trading liabilities;- Investment Securities-AFS;- Certain Securities purchased under agreements to resell;- Loans held-for-sale (measured at the lower of amortized cost or fair value);- Certain Deposits, primarily certificates of deposit;- Certain Securities sold under agreements to repurchase;- Certain Other secured financings; and - Certain Borrowings. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. In determining fair value, we use various valuation approaches. A hierarchy for inputs is used in measuring fair value that maximizes the use of observable prices and inputs, and minimizes the use of unobservable prices and inputs by requiring that the relevant observable inputs be used when available. The hierarchy is broken down into three levels: wherein Level 1 represents quoted prices in active markets, Level 2 represents valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, and Level 3 consists of valuation techniques that incorporate significant unobservable inputs and, therefore, require the greatest use of judgment. The fair values for the substantial majority of our financial assets and liabilities carried at fair value are based on observable prices and inputs and are classified in level 1 or 2, of the fair value hierarchy. Level 3 financial assets represented 0.7% and 0.9% of our total assets, as of December 31, 2025 and December 31, 2024, respectively. In periods of market disruption, the observability of prices and inputs, as well as market liquidity, may be reduced for many instruments, which could cause an instrument to be recategorized from Level 1 to Level 2 or from Level 2 to Level 3. In addition, a downturn in market conditions could lead to declines in the valuation of many instruments carried at fair value. Imprecision in estimating unobservable market inputs or other factors can affect the amount of gain or loss recorded for a particular position. The Firm uses various methodologies and assumptions in the determination of fair value. The use of methodologies or assumptions different than those used by the Firm could result in a different estimate of fair value at the reporting date. For further information on the definition of fair value, Level 1, Level 2, Level 3 and related valuation techniques, and quantitative information about and sensitivity of significant unobservable inputs used in Level 3 fair value measurements, see Notes 2 and 4 to the financial statements. Where appropriate, valuation adjustments are made to account for various factors, such as liquidity risk (bid-ask adjustments), credit quality, model uncertainty, concentration risk and funding, in order to arrive at fair value. For a further discussion of valuation adjustments that we apply, see Note 2 to the financial statements. Goodwill and Intangible Assets

Performance-based income and other revenues increased to $457 million in 2025, from $234 million in the prior year, primarily due to higher accrued carried interest in infrastructure and real estate funds. Non-interest expenses of $5,047 million in 2025 increased 7% from the prior year, as a result of higher Compensation and benefits expenses and Non-compensation expenses. - Compensation and benefits expenses increased, primarily due to higher compensation associated with carried interest and higher salaries. - Non-compensation expenses increased, primarily due to higher distribution expenses on higher AUM and increased technology spend. Assets Under Management or Supervision Rollforwards $ in billionsAtDec 31,2024Inflows1Outflows2Market Impact3Other4AtDec 31,2025 Equity$312 $45 $(67)$26 $(2)$314 Fixed Income192 89 (59)12 - 234 Alternatives and Solutions6593 159 (120)76 (5)703 Long-Term AUM$1,097 $293 $(246)$114 $(7)$1,251 Liquidity and Overlay Services569 2,721 (2,661)26 (11)644 Total$1,666 $3,014 $(2,907)$140 $(18)$1,895 $ in billionsAtDec 31,2023 Inflows1Outflows2Market Impact3Other4AtDec 31,2024 Equity$295 $44 $(66)$49 $(10)$312 Fixed Income171 69 (49)7 (6)192 Alternatives and Solutions6508 140 (108)62 (9)593 Long-Term AUM$974 $253 $(223)$118 $(25)$1,097 Liquidity and Overlay Services485 2,349 (2,268)20 (17)569 Total$1,459 $2,602 $(2,491)$138 $(42)$1,666 $ in billionsAtDec 31,2022Inflows1Outflows2Market Impact3Other4,5AtDec 31,2023Equity$259 $40 $(57)$57 $(4)$295 Fixed Income173 56 (62)11 (7)171 Alternatives and Solutions6431 108 (91)57 3 508 Long-Term AUM$863 $204 $(210)$125 $(8)$974 Liquidity and Overlay Services442 2,282 (2,244)20 (15)485 Total$1,305 $2,486 $(2,454)$145 $(23)$1,459 1.Inflows represent investments or commitments from new and existing clients in new or existing investment products, including reinvestments of client dividends and increases in invested capital. Inflows exclude the impact of exchanges, whereby a client changes positions within the same asset class. 2.Outflows represent redemptions from clients' funds, transition of funds from the committed capital period to the invested capital period and decreases in invested capital. Outflows exclude the impact of exchanges, whereby a client changes positions within the same asset class. 3.Market impact includes realized and unrealized gains and losses on portfolio investments. This excludes any funds where market impact does not impact management fees. 4.Other contains both distributions to investors and foreign currency impact for all periods. Distributions represent returns of capital or returns on investments. Foreign currency impact reflects foreign currency changes for non-U.S. dollar denominated funds. 5.In 2023, our Retail Municipal and Corporate Fixed Income business ("FIMS") was combined with our Parametric retail customized solutions business. The impact of the change was a $6 billion movement in AUM from Fixed Income to the Alternatives and Solutions asset class included in Other. 6.As of December 31, 2025, 2024, and 2023, Alternatives and Solutions includes Parametric Long-Term period-end AUM of $524 billion, $423 billion and $336 billion, respectively. Parametric Long-Term products generally have lower average fee rates than other Alternatives and Solutions products. Average AUM $ in billions202520242023Equity$318 $305 $279 Fixed income212 180 170 Alternatives and Solutions640 557 466 Long-term AUM subtotal1,170 1,042 915 Liquidity and Overlay Services572 498 464 Total$1,742 $1,540 $1,379 Average Fee Rates1 Fee rate in bps202520242023Equity69 71 71 Fixed income36 36 35 Alternatives and Solutions27 28 32 Long-term AUM40 42 44 Liquidity and Overlay Services12 12 13 Total31 32 34 1.Based on Asset management revenues, net of waivers, excluding performance-based fees and other non-management fees. For certain non-U.S. funds, it includes the portion of advisory fees that the advisor collects on behalf of third-party distributors. The payment of those fees to the distributor is included in Non-compensation expenses in the income statement. Asset management and other related fees within the Investment Management segment are primarily generated from Equity, Fixed Income and the following products: Alternatives and Solutions. Includes products in fund of funds, real estate, infrastructure, private equity and credit strategies and multi-asset portfolios, as well as systematic strategies that create custom investment solutions, including those offered by Parametric. Liquidity and Overlay Services. Includes liquidity products, as well as overlay services, which represent investment strategies that use passive exposure instruments to obtain, offset or substitute specific portfolio exposures, beyond those provided by the underlying holdings of the fund. Supplemental Financial Information U.S. Bank Subsidiaries Our U.S. Bank Subsidiaries accept deposits, provide loans to a variety of customers, including large corporate and institutional clients, as well as high to ultra-high net worth individuals, and invest in securities. Lending activity in our U.S. Bank Subsidiaries from the Institutional Securities business segment primarily includes Secured lending facilities, Commercial and Residential real estate and Corporate loans. Lending activity in our U.S. Bank Subsidiaries from the Wealth Management business segment primarily includes Securities-based lending, which allows clients to borrow money against the value of qualifying securities, other forms of secured loans, including tailored lending to ultra-high net worth clients, and Residential real estate loans. Consistent with the Firm's strategic objective of ongoing growth of eligible assets at MSBNA, on February 14, 2026, the fixed income derivatives business of Morgan Stanley Capital Services LLC ("MSCS") was merged into MSBNA. For a further discussion of our credit risks, see "Quantitative and Qualitative Disclosures about Risk-Credit Risk" herein. For a further discussion about loans and lending commitments, see Notes 9 and 14 to the financial statements. U.S. Bank Subsidiaries' Supplemental Financial Information1 $ in billionsAtDecember 31,2025AtDecember 31,2024 Investment securitiesAvailable-for-sale at fair value$88.4 $76.5 Held-to-maturity44.2 47.8 Total Investment securities$132.6 $124.3 Wealth Management loans2Residential real estate$72.3 $66.6 Securities-based lending and Other3108.9 92.9 Total Wealth Management loans$181.2 $159.5 Institutional Securities loans2Corporate$8.4 $7.1 Secured lending facilities67.2 50.2 Commercial and Residential real estate11.2 10.5 Securities-based lending and Other9.0 5.6 Total Institutional Securities loans$95.8 $73.4 Total assets$487.3 $434.8 Deposits4$408.1 $369.7 1.Amounts exclude transactions between the bank subsidiaries, as well as deposits from the Parent Company and affiliates. 2.Represents loans, net of ACL. For a further discussion of loans in the Wealth Management and Institutional Securities business segments, see "Quantitative and Qualitative Disclosures about Risk-Credit Risk" herein. 3.Other loans primarily include tailored lending. For a further discussion of Other loans, see "Quantitative and Qualitative Disclosures about Risk-Credit Risk" herein. 4.For further information on deposits, see "Liquidity and Capital Resources-Funding Management-Balance Sheet-Unsecured Financing" herein. Other Matters Deferred Cash-Based Compensation The Firm sponsors a number of deferred cash-based compensation programs and stock-based compensation programs for current and former employees, including financial advisors in the Wealth Management business segment, which generally contain vesting, clawback and cancellation provisions. Deferred compensation for financial advisors in the Wealth Management business segment is generally composed of 75% cash-based awards and 25% stock-based awards. The following discussion and tables relate only to deferred cash-based compensation. Employees are permitted to allocate the value of their deferred cash-based awards among a menu of notional investments, whereby the value of their awards will track the performance of the referenced notional investments. The menu of investments, which is selected by the Firm, includes fixed income, equity, commodity and money market funds. Compensation expense for DCP awards is calculated based on the notional value of the award granted, adjusted for changes in the fair value of the referenced investments that employees select. Compensation expense is recognized over the vesting period relevant to each separately vesting portion of deferred awards. We invest directly, as principal, in financial instruments and other investments to economically hedge certain of our obligations under these DCP awards. Changes in the fair value of such investments, net of financing costs, are recorded in net revenues, and included in Transactional revenues in the Wealth Management business segment. Although changes in compensation expense resulting from changes in the fair value of the referenced investments will generally be offset by changes in the fair value of investments recognized in net revenues, there is typically a timing difference between the immediate recognition of gains and losses on our investments and the deferred recognition of the related compensation expense over the vesting period. While this timing difference may not be material to our Income before provision for income taxes in any individual period, it may impact the Wealth Management business segment reported ratios and operating metrics in certain periods due to potentially significant impacts to net revenues and compensation expenses. At December 31, 2025 and December 31, 2024, substantially all employee-referenced investments that subjected the Firm to price risk were economically hedged. Amounts Recognized in Compensation Expense $ in millions202520242023Deferred cash-based awards$950 $770 $693 Return on referenced investments764 672 668 Total recognized in compensation expense$1,714 $1,442 $1,361 Amounts Recognized in Compensation Expense by Segment $ in millions202520242023Institutional Securities$155 $150 $162 Wealth Management1,382 1,100 984 Investment Management 177 192 215 Total recognized in compensation expense$1,714 $1,442 $1,361 Projected Future Compensation Obligation1 $ in millionsAward liabilities at December 31, 20252, 3$6,423 Fully vested amounts to be distributed by the end of February 20264(701)Unrecognized portion of prior awards at December 31, 202531,928 2025 performance year awards granted in 20263446 Total5$8,096 1.Amounts relate to performance years 2025 and prior. 2.Balance is reflected in Other liabilities and accrued expenses in the balance sheet as of December 31, 2025. 3.Amounts do not include assumptions regarding forfeitures or assumptions about future market conditions with respect to referenced investments. 4.Distributions after February of each year are generally immaterial. 5.Of the total projected future compensation obligation, approximately 15% relates to Institutional Securities, approximately 79% relates to Wealth Management and approximately 6% relates to Investment Management. The previous table presents a rollforward of the Firm's estimated projected future compensation obligation for existing deferred cash-based compensation awards, exclusive of any assumptions about future market conditions with respect to referenced investments. Projected Future Compensation Expense1 $ in millionsEstimated to be recognized in:2026$679 2027475 Thereafter1,220 Total$2,374 1.Amounts relate to performance years 2025 and prior, and do not include assumptions regarding forfeitures or assumptions about future market conditions with respect to referenced investments. The previous table sets forth an estimate of compensation expense associated with the projected future compensation obligation. Our projected future compensation obligation and expense for DCP for performance years 2025 and prior are forward-looking statements subject to uncertainty. Actual results may be materially affected by various factors, including, among other things: the performance of each participant's referenced investments; changes in market conditions; participants' allocation of their deferred awards; and participant cancellations or accelerations. See "Forward-Looking Statements" and "Risk Factors" for additional information. For further information on the Firm's deferred stock-based plans and carried interest compensation, which are excluded from the previous tables, see Notes 2 and 19 to the financial statements. Accounting Development Updates The Financial Accounting Standards Board has issued certain accounting updates that apply to us. Accounting updates not referenced below were assessed and determined to be either not applicable or to not have a material impact on our financial statements upon adoption. - ASU 2024-03 - Disaggregation of Income Statement Expenses (Issued November 2024). This update requires quantitative and qualitative disclosure of certain expense categories contained within their relevant expense lines in the income statement, including but not limited to: (1) employee compensation; (2) depreciation; and (3) intangible asset amortization. The update requires the disaggregation of these expense lines in a tabular format in the notes to the financial statements, including the separate disclosure of certain other expenses and gains or losses included within these expense lines which are required under existing U.S. GAAP, with all other expenses permitted to be disclosed in an "other items" category. Additionally, the update requires disclosure of the total amount and definition of the Firm's selling expenses. The update is effective for the Firm for annual periods beginning January 1, 2027, with early adoption permitted. We are currently evaluating the disclosure impact of this accounting update; however, we do not expect a material impact on our financial statements upon adoption. - ASU 2025-06 - Internal-Use Software (Issued September 2025). This update introduces targeted improvements to the recognition and capitalization guidance for internal-use software costs. The update eliminates the prior "project stage" framework and instead requires capitalization of software development costs when (i) management has authorized and committed to funding the software project, and (ii) it is probable that the project will be completed and the software will be used to perform its intended function. In assessing the probability threshold, entities are required to evaluate whether significant development uncertainty exists, including whether the software contains novel or unproven functionality or whether significant performance requirements have not been identified or continue to be substantially revised. The update is effective for the Firm beginning January 1, 2028, with early adoption permitted. Transition may be applied prospectively, retrospectively, or under a modified approach. We are currently evaluating this accounting update. - ASU 2025-07 - Derivatives Scope Refinements and Share-Based Consideration from a Customer (Issued September 2025). This update introduces targeted refinements to the derivatives and revenue recognition accounting guidance. It expands an existing scope exception for derivative accounting to exclude certain non-exchange-traded contracts. The update also clarifies that share-based payments from a customer are treated as noncash consideration under the revenue recognition standard until the related performance obligations are fulfilled and the right to the consideration is unconditional. The update is effective for the Firm beginning January 1, 2027, with early adoption permitted. Transition may be applied prospectively, or under a modified retrospective approach. We are currently evaluating this accounting update; however, we do not expect a material impact on our financial statements upon adoption. - ASU 2025-08 - Purchased Loans (Issued November 2025). This update expands the application of the "gross-up" approach for purchased credit deteriorated financial assets under Topic 326 to include purchased seasoned loans (excluding credit cards), measured at amortized cost that are not credit deteriorated. Purchased seasoned loans include loans obtained in a business combination or loans acquired at least 90 days after origination and the acquirer was not involved in the origination, either through an asset purchase or through consolidation of a variable interest entity. The gross-up approach requires recognition of an allowance for credit losses at acquisition with a corresponding increase to the amortized cost basis of the loan. The update is effective for the Firm beginning January 1, 2027, with early adoption permitted. Transition will be applied prospectively to loans acquired on or after the adoption date. We are currently evaluating this accounting update. - ASU 2025-09 - Hedge Accounting Improvements (Issued November 2025). This update improves hedge accounting guidance by clarifying certain aspects and aligning hedge accounting more closely with the economics of an entity's risk management activities. The ASU enables entities to apply hedge accounting to a greater number of highly effective economic hedges by making targeted improvements to several areas including, but not limited to, the similar risk assessment for cash flow hedges. The update is effective for the Firm beginning January 1, 2027, with early adoption permitted. The updates should be applied prospectively for all hedging relationships as of the date of adoption. We are currently evaluating this accounting update; however, we do not expect a material impact on our financial statements upon adoption. - ASU 2025-10 - Government Grants (Issued December 2025). This update introduces guidance on the accounting for government grants, including recognition, measurement and presentation requirements to reduce diversity in practice and increase consistency among business entities. The guidance excludes transactions within the scope of ASC 740, Income Taxes, government guarantees and the benefit of below-market interest rate loans. Grants related to an asset or to income will be recognized when it is probable that an entity will comply with the conditions attached to the grant, the grant will be received and the related expenses that the grant is intended to compensate have been incurred. For grants related to an asset, entities may elect either a deferred income approach or a cost accumulation approach. The update is effective for the Firm beginning January 1, 2029, with early adoption permitted. Transition may be applied on a modified prospective approach, a modified retrospective approach or on a full retrospective approach. We are currently evaluating this accounting update. - ASU 2025-11 - Interim Reporting (Issued December 2025). This update improves the navigability of interim disclosure requirements and clarifies when that guidance is applicable. The amendments also add a principle for disclosing material events since the last annual reporting period, which aligns U.S. GAAP interim financial statement requirements with SEC regulations for registrants. The amendments do not expand or reduce existing disclosure requirements, rather they provide clarity on existing interim reporting requirements. The update is effective for interim periods beginning January 1, 2028, with early adoption permitted. Amendments may be applied prospectively or retrospectively. We are currently evaluating the disclosure impact of this accounting update; however, we do not expect a material impact on our financial statements upon adoption. Critical Accounting Estimates Our financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions (see Note 1 to the financial statements). We believe that of our significant accounting policies (see Note 2 to the financial statements), the following policies involve a higher degree of judgment and complexity. Fair Value