⚠ Tangible Equity Leaves Out the DealsLow threat

Morgan Stanley (MS) — threat to the moat

Morgan Stanley's 21.6% return on tangible equity is 16.6% once the $22.7 billion it paid for its acquisitions is counted.

Return on tangible equity strips out goodwill and intangible assets, and Morgan Stanley has a lot of both because it bought its wealth franchise. Goodwill was $16,726 million and intangible assets $6,010 million at the end of 20251, about $22.7 billion together2. Common equity was $101,882 million and tangible common equity $79,147 million3.

Common equity at end-2025 ($bn)79.1Tangible common equity16.7Goodwill6.0IntangiblesMorgan Stanley Form 10-K FY2025, balance sheet; ROTCE 21.6% against ROE 16.6%
Five points of return are goodwill.

Including what it paid, the return is lower: return on equity was 16.6% in 2025 against 21.6% on tangible equity45. The gap is the cost of E*TRADE and Eaton Vance, about $20.6 billion together6.

Both measures cleared a 10% hurdle in 2025. But the market prices Morgan Stanley on its full book too: the shares trade at about 3.69 times tangible book and 2.90 times book7.

E*TRADE alone added identified intangibles of about $3.3 billion, including customer relationships of $2.8 billion8. Intangible assets were $6,453 million at the end of 2024 and $6,010 million at the end of 20259, falling as they are amortised, which quietly raises the tangible return each year.

For an owner, the lower return is the one that counts. Return on equity is reported each quarter; a year in which it fell below 12% would mean the acquisitions were not earning their keep.

References
  1. ReportedGoodwill was $16,726 million and intangible assets $6,010 million at the end of 2025, about $22.7 billion together.
    Morgan Stanley Form 10-K for fiscal 2025 - balance sheet, deposits, loans, goodwill and credit provisions. — FY2025 · publ. 19 February 2026 · source ↗
  2. Moat Explorer calcGoodwill was $16,726 million and intangible assets $6,010 million at the end of 2025, about $22.7 billion together.
    Moat Explorer calculation from Morgan Stanley's reported figures ($ millions unless stated). Wealth Management: asset management revenue share 18,627 / 31,754 = 58.7%; net interest income share 7,911 / 31,754 = 24.9%. Client assets change 2025: 7,381 - 6,194 = 1,187 billion; net new assets 356.3 / 1,187 = 30%, so market and other changes 830.7 billion, about 70%. Fee-based share of advisor-led assets 2,347 / 4,758 = 49.3% (2024); 2,753 / 5,715 = 48.2% (2025); 3,022 / 6,273 = 48.2% (June 2026). Transactional revenue 2,473 / 4,259 - 1 = -42% (2022). Wealth Management pre-tax margins: 2015 3,332 / 15,100 = 22.1%; 2020 4,387 / 19,086 = 23.0%; 2021 6,181 / 24,243 = 25.5%; 2022 6,583 / 24,417 = 27.0%; 2023 6,530 / 26,268 = 24.9%; 2024 7,740 / 28,420 = 27.2%; 2025 9,293 / 31,754 = 29.3%. Wealth Management revenue growth (31,754 / 15,100)^(1/10) - 1 = 7.7% a year. Self-directed assets 1,667 / 1,437 - 1 = 16%; households 8.5 / 8.3 - 1 = 2.4%; daily average revenue trades 1,029 / 837 - 1 = 23% (2025) and 1,278 / 1,029 - 1 = 24% (Q2 2026); 1,278 / 759 = 1.68 since 2023. Wealth Management bank loans 181 / 146 - 1 = 24% (2022-2025). Balance sheet 2025: loans 289,038 / 246,814 - 1 = 17.1%; deposits 415,523 / 376,007 - 1 = 10.5%; borrowings 348,935 / 288,819 - 1 = 20.8%. Firm loans June 2026 315,653 / 289,038 - 1 = 9.2%; 315,653 / 246,814 - 1 = 28% since end-2024. Uninsured deposits 84,201 / 415,523 = 20.3%. Net new assets Q2 2026 excluding IPO-related inflows: just over half of 148.1 billion was IPO-related, so the rest is below 148.1 / 2 = 74.05 billion. Segments: sum of segment net revenues 2025 33,080 + 31,754 + 6,525 = 71,359, less firm net revenues 70,645 = 714 of eliminations; eliminations as reported each year 2015 213, 2016 290, 2017 290, 2018 463, 2019 467, 2020 539, 2021 541, 2022 517, 2023 555, 2024 600, 2025 714. Wealth and Investment Management share of segment revenue: 2015 (15,100 + 2,315) / 35,368 = 49.2%; 2023 (26,268 + 5,370) / 54,698 = 57.8%; 2025 (31,754 + 6,525) / 71,359 = 53.6%. Institutional Securities share of segment revenue 2025 33,080 / 71,359 = 46.4%. Share of firm pre-tax income 2025: Institutional Securities 11,237 / 21,954 = 51.2%; Wealth Management 9,293 / 21,954 = 42.3%; Investment Management 1,478 / 21,954 = 6.7%. Share of segment pre-tax income: 2021 Institutional Securities 11,814 / (11,814 + 6,181 + 1,678) = 11,814 / 19,673 = 60.1%; 2023 4,476 / 11,848 = 37.8%, Wealth and Investment Management 6,530 + 842 = 7,372 = 62.2%; 2025 Institutional Securities 11,237 / 22,008 = 51.1%, Wealth and Investment Management 10,771 / 22,008 = 48.9%; 2015 Wealth and Investment Management (3,332 + 492) / 8,495 = 45.0%. Q2 2026 Institutional Securities 4,262 / 7,348 = 58.0%; revenue 11,040 / 7,643 - 1 = 44%. Institutional Securities pre-tax margins: 2015 4,671 / 17,953 = 26.0%; 2021 11,814 / 29,833 = 39.6%; 2022 6,715 / 24,393 = 27.5%; 2023 4,476 / 23,060 = 19.4%; 2024 8,749 / 28,080 = 31.2%; 2025 11,237 / 33,080 = 34.0%; growth (33,080 / 17,953)^(1/10) - 1 = 6.3% a year. Equity 15,631 / 9,986 - 1 = 57% (2023-2025); 15,631 / 12,230 - 1 = 27.8% (2025); 15,631 / 70,645 = 22.1% of firm; 15,631 / 33,080 = 47.3% of segment. Fixed income 8,716 / 8,418 - 1 = 3.5%; 8,716 / 33,080 = 26.3% of segment. Equity underwriting 851 / 4,437 - 1 = -81% (2022). Investment Management margins: 2021 1,678 / 6,220 = 27.0%; 2023 842 / 5,370 = 15.7%; 2025 1,478 / 6,525 = 22.7%; fees 6,068 / 5,231 - 1 = 16% (2023-2025); Parametric 524 / 336 - 1 = 56%. Regions: Asia 9,420 / 6,434 - 1 = 46%; Asia 9,420 / 70,645 = 13.3% (2025); 6,434 / 54,143 = 11.9% (2023); Americas 52,897 / 70,645 = 74.9% (2025); Q2 2026 Americas 15,046 / 21,348 = 70.5%, Asia 3,930 / 21,348 = 18.4%. Capital and valuation: CET1 excess 14.8% - 11.8% = 3.0 points (June 2026). Goodwill and intangibles 16,726 + 6,010 = 22,736. Acquisitions 11.9 + 8.7 = 20.6 billion. Compensation 29,216 / 48,342 = 60.4% of non-interest expenses; 29,216 / 26,178 - 1 = 11.6%. Dividends per share 3.85 / 0.55 = 7.0 times. Payout 2025 (6,147 + 4,585) / 16,249 = 66%. Buyback price 197.64 / 85.35 = 2.3 times. Total assets 1,675,057 / 1,215,071 - 1 = 37.9% (end-2024 to June 2026); common equity 106,579 / 94,761 - 1 = 12.5%. MUFG stake 380,010,887 shares x $196.31 = about $74.6 billion. Trailing twelve months to June 2026: net revenues 70,645 - 34,531 + 41,928 = 78,042; net income 16,861 - 7,854 + 11,148 = 20,155; diluted EPS 10.21 - 4.73 + 6.90 = 12.38. P/E = market value / net income: 2023 153.05 / 9.087 = 16.8; 2024 202.54 / 13.390 = 15.1; 2025 282.15 / 16.861 = 16.7; September 2026 308.32 / 20.155 = 15.3; price to sales 308.32 / 78.042 = 3.95. Revenue growth (70,645 / 35,155)^(1/10) - 1 = 7.2% a year. Wealth Management 2025: revenue 31,754 / 28,420 - 1 = 11.7%, pre-tax income 9,293 / 7,740 - 1 = 20.1%; bank loans 181 / 160 - 1 = 13.1%, deposits 408 / 370 - 1 = 10.3%; stock plan unvested 658 / 534 - 1 = 23% (six months). Investment banking 7,619 / 10,272 - 1 = -26% (2025 vs 2021). Tangible book value per share 50.00 / 44.57 - 1 = 12.2%. Non-compensation expenses 19,126 / 17,723 - 1 = 7.9%; net revenues 70,645 / 61,761 - 1 = 14.4%. Revenue per employee 70,645 / 83,000 = about 0.85 million. Vanguard, BlackRock and State Street 6.9% + 5.7% + 7.2% = 19.8% of the stock. Diluted EPS growth (10.21 / 2.90)^(1/10) - 1 = 13.4% a year. Q2 2026 Institutional Securities share of segment revenue 11,040 / (11,040 + 8,856 + 1,646) = 11,040 / 21,542 = 51.2%. First half 2026: Institutional Securities pre-tax income 8,423 / 5,392 - 1 = 56%, share of firm pre-tax income 8,423 / 14,359 = 58.7% (H1 2025 5,392 / 10,166 = 53.0%); Wealth Management pre-tax income 5,288 / 4,151 - 1 = 27%. Q2 2026 Wealth Management revenue 8,856 / 7,764 - 1 = 14%; asset management revenue 5,261 / 4,411 - 1 = 19%; firm revenue 21,348 / 16,792 - 1 = 27%; headcount 82,944 / 80,393 - 1 = 3.2%. Investment Management pre-tax income (1,478 - 870) / 8,700 = 7.0% of the Eaton Vance price. Net income 16,861 / 6,127 - 1 = 175%; shareholders equity 111,632 / 75,182 - 1 = 48%. Self-directed plus stock plan unvested assets June 2026 1,811 + 658 = 2,469 billion. Average diluted shares 1,592 / 1,646 - 1 = -3.3%. Total client assets 9,276 / 7,860 - 1 = 18%. Market value 308.32 / 153.05 = 2.0 times (end-2023 to September 2026). 2023 charges 249 + 353 + 293 = 895. Net income 9,087 / 15,034 - 1 = -40% (2021-2023). Borrowings 348,935 / 288,819 - 1 = 21%. Loans to deposits 289,038 / 415,523 = 70%. Compensation 29,216 / 70,645 = 41% of net revenues (2025). Net new assets 2025 quarterly average 356.3 / 4 = 89.1 billion. Forecast extrapolation: 2026 revenue 41,928 x 2 = 83,856; 2026 EPS 196.31 / 15.14 = 12.97; 2027 83.9 x 1.072 = 89.9 and 12.97 x 1.072 = 13.90; 2028 96.4 and 14.90 - capital, valuation, payouts and trailing figures. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Morgan Stanley's Forms 10-K and 10-Q, earnings releases and financial supplements, the 2026 proxy statement and market data; operands shown in the source line.
  3. ReportedCommon equity was $101,882 million and tangible common equity $79,147 million.
    Morgan Stanley Form 10-K for fiscal 2025 - balance sheet, deposits, loans, goodwill and credit provisions. — FY2025 · publ. 19 February 2026 · source ↗
  4. ReportedIncluding what it paid, the return is lower: return on equity was 16.6% in 2025 against 21.6% on tangible equity.
    Morgan Stanley Form 10-K for fiscal 2025 - financial highlights, income statement, balance sheet and business description. — FY2025 · publ. 19 February 2026 · source ↗
  5. ReportedIncluding what it paid, the return is lower: return on equity was 16.6% in 2025 against 21.6% on tangible equity.
    Morgan Stanley fourth-quarter and full-year 2025 earnings release, Form 8-K exhibit 99.1. — FY2025 · publ. 15 January 2026 · source ↗
  6. Moat Explorer calcThe gap is the cost of E*TRADE and Eaton Vance, about $20.6 billion together.
    Moat Explorer calculation from Morgan Stanley's reported figures ($ millions unless stated). Wealth Management: asset management revenue share 18,627 / 31,754 = 58.7%; net interest income share 7,911 / 31,754 = 24.9%. Client assets change 2025: 7,381 - 6,194 = 1,187 billion; net new assets 356.3 / 1,187 = 30%, so market and other changes 830.7 billion, about 70%. Fee-based share of advisor-led assets 2,347 / 4,758 = 49.3% (2024); 2,753 / 5,715 = 48.2% (2025); 3,022 / 6,273 = 48.2% (June 2026). Transactional revenue 2,473 / 4,259 - 1 = -42% (2022). Wealth Management pre-tax margins: 2015 3,332 / 15,100 = 22.1%; 2020 4,387 / 19,086 = 23.0%; 2021 6,181 / 24,243 = 25.5%; 2022 6,583 / 24,417 = 27.0%; 2023 6,530 / 26,268 = 24.9%; 2024 7,740 / 28,420 = 27.2%; 2025 9,293 / 31,754 = 29.3%. Wealth Management revenue growth (31,754 / 15,100)^(1/10) - 1 = 7.7% a year. Self-directed assets 1,667 / 1,437 - 1 = 16%; households 8.5 / 8.3 - 1 = 2.4%; daily average revenue trades 1,029 / 837 - 1 = 23% (2025) and 1,278 / 1,029 - 1 = 24% (Q2 2026); 1,278 / 759 = 1.68 since 2023. Wealth Management bank loans 181 / 146 - 1 = 24% (2022-2025). Balance sheet 2025: loans 289,038 / 246,814 - 1 = 17.1%; deposits 415,523 / 376,007 - 1 = 10.5%; borrowings 348,935 / 288,819 - 1 = 20.8%. Firm loans June 2026 315,653 / 289,038 - 1 = 9.2%; 315,653 / 246,814 - 1 = 28% since end-2024. Uninsured deposits 84,201 / 415,523 = 20.3%. Net new assets Q2 2026 excluding IPO-related inflows: just over half of 148.1 billion was IPO-related, so the rest is below 148.1 / 2 = 74.05 billion. Segments: sum of segment net revenues 2025 33,080 + 31,754 + 6,525 = 71,359, less firm net revenues 70,645 = 714 of eliminations; eliminations as reported each year 2015 213, 2016 290, 2017 290, 2018 463, 2019 467, 2020 539, 2021 541, 2022 517, 2023 555, 2024 600, 2025 714. Wealth and Investment Management share of segment revenue: 2015 (15,100 + 2,315) / 35,368 = 49.2%; 2023 (26,268 + 5,370) / 54,698 = 57.8%; 2025 (31,754 + 6,525) / 71,359 = 53.6%. Institutional Securities share of segment revenue 2025 33,080 / 71,359 = 46.4%. Share of firm pre-tax income 2025: Institutional Securities 11,237 / 21,954 = 51.2%; Wealth Management 9,293 / 21,954 = 42.3%; Investment Management 1,478 / 21,954 = 6.7%. Share of segment pre-tax income: 2021 Institutional Securities 11,814 / (11,814 + 6,181 + 1,678) = 11,814 / 19,673 = 60.1%; 2023 4,476 / 11,848 = 37.8%, Wealth and Investment Management 6,530 + 842 = 7,372 = 62.2%; 2025 Institutional Securities 11,237 / 22,008 = 51.1%, Wealth and Investment Management 10,771 / 22,008 = 48.9%; 2015 Wealth and Investment Management (3,332 + 492) / 8,495 = 45.0%. Q2 2026 Institutional Securities 4,262 / 7,348 = 58.0%; revenue 11,040 / 7,643 - 1 = 44%. Institutional Securities pre-tax margins: 2015 4,671 / 17,953 = 26.0%; 2021 11,814 / 29,833 = 39.6%; 2022 6,715 / 24,393 = 27.5%; 2023 4,476 / 23,060 = 19.4%; 2024 8,749 / 28,080 = 31.2%; 2025 11,237 / 33,080 = 34.0%; growth (33,080 / 17,953)^(1/10) - 1 = 6.3% a year. Equity 15,631 / 9,986 - 1 = 57% (2023-2025); 15,631 / 12,230 - 1 = 27.8% (2025); 15,631 / 70,645 = 22.1% of firm; 15,631 / 33,080 = 47.3% of segment. Fixed income 8,716 / 8,418 - 1 = 3.5%; 8,716 / 33,080 = 26.3% of segment. Equity underwriting 851 / 4,437 - 1 = -81% (2022). Investment Management margins: 2021 1,678 / 6,220 = 27.0%; 2023 842 / 5,370 = 15.7%; 2025 1,478 / 6,525 = 22.7%; fees 6,068 / 5,231 - 1 = 16% (2023-2025); Parametric 524 / 336 - 1 = 56%. Regions: Asia 9,420 / 6,434 - 1 = 46%; Asia 9,420 / 70,645 = 13.3% (2025); 6,434 / 54,143 = 11.9% (2023); Americas 52,897 / 70,645 = 74.9% (2025); Q2 2026 Americas 15,046 / 21,348 = 70.5%, Asia 3,930 / 21,348 = 18.4%. Capital and valuation: CET1 excess 14.8% - 11.8% = 3.0 points (June 2026). Goodwill and intangibles 16,726 + 6,010 = 22,736. Acquisitions 11.9 + 8.7 = 20.6 billion. Compensation 29,216 / 48,342 = 60.4% of non-interest expenses; 29,216 / 26,178 - 1 = 11.6%. Dividends per share 3.85 / 0.55 = 7.0 times. Payout 2025 (6,147 + 4,585) / 16,249 = 66%. Buyback price 197.64 / 85.35 = 2.3 times. Total assets 1,675,057 / 1,215,071 - 1 = 37.9% (end-2024 to June 2026); common equity 106,579 / 94,761 - 1 = 12.5%. MUFG stake 380,010,887 shares x $196.31 = about $74.6 billion. Trailing twelve months to June 2026: net revenues 70,645 - 34,531 + 41,928 = 78,042; net income 16,861 - 7,854 + 11,148 = 20,155; diluted EPS 10.21 - 4.73 + 6.90 = 12.38. P/E = market value / net income: 2023 153.05 / 9.087 = 16.8; 2024 202.54 / 13.390 = 15.1; 2025 282.15 / 16.861 = 16.7; September 2026 308.32 / 20.155 = 15.3; price to sales 308.32 / 78.042 = 3.95. Revenue growth (70,645 / 35,155)^(1/10) - 1 = 7.2% a year. Wealth Management 2025: revenue 31,754 / 28,420 - 1 = 11.7%, pre-tax income 9,293 / 7,740 - 1 = 20.1%; bank loans 181 / 160 - 1 = 13.1%, deposits 408 / 370 - 1 = 10.3%; stock plan unvested 658 / 534 - 1 = 23% (six months). Investment banking 7,619 / 10,272 - 1 = -26% (2025 vs 2021). Tangible book value per share 50.00 / 44.57 - 1 = 12.2%. Non-compensation expenses 19,126 / 17,723 - 1 = 7.9%; net revenues 70,645 / 61,761 - 1 = 14.4%. Revenue per employee 70,645 / 83,000 = about 0.85 million. Vanguard, BlackRock and State Street 6.9% + 5.7% + 7.2% = 19.8% of the stock. Diluted EPS growth (10.21 / 2.90)^(1/10) - 1 = 13.4% a year. Q2 2026 Institutional Securities share of segment revenue 11,040 / (11,040 + 8,856 + 1,646) = 11,040 / 21,542 = 51.2%. First half 2026: Institutional Securities pre-tax income 8,423 / 5,392 - 1 = 56%, share of firm pre-tax income 8,423 / 14,359 = 58.7% (H1 2025 5,392 / 10,166 = 53.0%); Wealth Management pre-tax income 5,288 / 4,151 - 1 = 27%. Q2 2026 Wealth Management revenue 8,856 / 7,764 - 1 = 14%; asset management revenue 5,261 / 4,411 - 1 = 19%; firm revenue 21,348 / 16,792 - 1 = 27%; headcount 82,944 / 80,393 - 1 = 3.2%. Investment Management pre-tax income (1,478 - 870) / 8,700 = 7.0% of the Eaton Vance price. Net income 16,861 / 6,127 - 1 = 175%; shareholders equity 111,632 / 75,182 - 1 = 48%. Self-directed plus stock plan unvested assets June 2026 1,811 + 658 = 2,469 billion. Average diluted shares 1,592 / 1,646 - 1 = -3.3%. Total client assets 9,276 / 7,860 - 1 = 18%. Market value 308.32 / 153.05 = 2.0 times (end-2023 to September 2026). 2023 charges 249 + 353 + 293 = 895. Net income 9,087 / 15,034 - 1 = -40% (2021-2023). Borrowings 348,935 / 288,819 - 1 = 21%. Loans to deposits 289,038 / 415,523 = 70%. Compensation 29,216 / 70,645 = 41% of net revenues (2025). Net new assets 2025 quarterly average 356.3 / 4 = 89.1 billion. Forecast extrapolation: 2026 revenue 41,928 x 2 = 83,856; 2026 EPS 196.31 / 15.14 = 12.97; 2027 83.9 x 1.072 = 89.9 and 12.97 x 1.072 = 13.90; 2028 96.4 and 14.90 - capital, valuation, payouts and trailing figures. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Morgan Stanley's Forms 10-K and 10-Q, earnings releases and financial supplements, the 2026 proxy statement and market data; operands shown in the source line.
  7. ReportedBut the market prices Morgan Stanley on its full book too: the shares trade at about 3.69 times tangible book and 2.90 times book.
    Morgan Stanley (MS) statistics - price to book 2.90, price to tangible book 3.69, price to sales 3.96. — September 2026 · publ. 25 September 2026 · source ↗
  8. ReportedE*TRADE alone added identified intangibles of about $3.3 billion, including customer relationships of $2.8 billion.
    Morgan Stanley Form 10-K for fiscal 2020 - the E*TRADE acquisition and segment pre-tax income for 2018-2020. — FY2020 · publ. February 2021 · source ↗
  9. ReportedIntangible assets were $6,453 million at the end of 2024 and $6,010 million at the end of 2025, falling as they are amortised, which quietly raises the tangible return each year.
    Morgan Stanley Form 10-K for fiscal 2025 - balance sheet, deposits, loans, goodwill and credit provisions. — FY2025 · publ. 19 February 2026 · source ↗
Sources
Generated September 26, 2026