MS · Forward model · Institutional Securities · Bear case
What has to happen in Institutional Securities
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Institutional Securities
Investment Banking, Equity, Fixed Income and a residual Other line that marks corporate loans. $11,040M of net revenues in the basis quarter - 51.7% of the firm before eliminations and 44% above a year earlier, an all-time record on the firm's own reckoning. Pre-tax income doubled to $4,262M, a 38.61% margin against a 27.6% margin a year earlier, so this was operating leverage and not only a revenue rebound. Morgan Stanley publishes revenue sub-lines inside the segment (Advisory $798M, equity underwriting $851M, fixed income underwriting $788M, Equity $6,300M, Fixed Income $2,455M, Other -$152M) but never pre-tax income beneath the segment, so the line is projected as sequential growth on reported segment net revenues and is not split.
Latest: $10.60B (2031Q2E)
| Period | Value |
|---|---|
| 2023Q1 | $6.80B |
| 2023Q2 | $5.65B |
| 2023Q3 | $5.67B |
| 2023Q4 | $4.94B |
| 2024Q1 | $7.02B |
| 2024Q2 | $6.98B |
| 2024Q3 | $6.82B |
| 2024Q4 | $7.27B |
| 2025Q1 | $8.98B |
| 2025Q2 | $7.64B |
| 2025Q3 | $8.52B |
| 2025Q4 | $7.93B |
| 2026Q1 | $10.72B |
| 2026Q2 | $11.04B |
| 2026Q3E | $10.96B |
| 2026Q4E | $10.90B |
| 2027Q1E | $10.84B |
| 2027Q2E | $10.80B |
| 2027Q3E | $10.76B |
| 2027Q4E | $10.73B |
| 2028Q1E | $10.70B |
| 2028Q2E | $10.68B |
| 2028Q3E | $10.66B |
| 2028Q4E | $10.65B |
| 2029Q1E | $10.64B |
| 2029Q2E | $10.63B |
| 2029Q3E | $10.62B |
| 2029Q4E | $10.61B |
| 2030Q1E | $10.61B |
| 2030Q2E | $10.60B |
| 2030Q3E | $10.60B |
| 2030Q4E | $10.60B |
| 2031Q1E | $10.60B |
| 2031Q2E | $10.60B |
Assumptions & reasoning
- The 38.61% margin is PRE-TAX INCOME margin - $4,262M on $11,040M of segment net revenues - already net of $6,707M of segment non-interest expenses AND of the segment's own $71M provision for credit losses. It is NOT pre-provision pre-tax income, which would read 39.25%.
- Segment pre-tax income DOUBLED year on year on a 44% revenue gain, so the margin moved from 27.6% to 38.61%: operating leverage, not only a revenue rebound. The terminal 33.0% sits above the 32.68% 2024-25 blend and below the 35.85% last-six-quarter blend, because 38.61% is the highest of the fourteen disclosed quarters.
- ASEASONAL, and this is the vertical where the BAC and GS pages disagreed. Ratio to a CENTRED four-quarter moving average over 2023 Q3-2025 Q4 returns [1.1352, 0.9932, 0.9811, 0.8905], signal 0.2447 against a worst window spread of 0.1316 - 1.86:1. That clears the spread gate but sits below the 2.34:1 at which Goldman's Global Banking & Markets was REJECTED and far below the 8.6:1 that earned BAC's Global Markets its factors. No factors are carried.
- Three things killed the seasonality. The Q2 windows sign-flip (1.0376 in 2024 against 0.9336 in 2025). The Q4 windows spread 13.2 points (0.8253 / 0.9569 / 0.8688). And the two quarters outside the centred window contradict the shape outright: a 1.135 Q1 factor against a 0.993 Q2 factor implies Q2 below Q1, yet 2026 Q2 printed $11,040M against $10,721M in 2026 Q1, up 3.0%.
- No sub-line split is attempted. Morgan Stanley publishes revenue beneath the segment - Advisory $798M, equity underwriting $851M, fixed income underwriting $788M, Equity $6,300M, Fixed Income $2,455M, Other -$152M - but pre-tax income ONLY at segment level, so Banking cannot be separated from Markets without inventing a margin. Note that Other is NEGATIVE, a $354M year-on-year swing on corporate-loan marks, and it sits inside this segment total.