⚠ The Buffer Resets in 2027Moderate threat

Morgan Stanley (MS) — threat to the moat

Morgan Stanley's low stress buffer lasts until October 2027, and one bad test could take back most of its excess capital.

The 4.3% buffer is not permanent. It holds until 1 October 20271, after which a new stress test sets it again. The buffer was 6.0% only a year before the cut2.

Standardized CET1 requirement (%)13.5%Dec 202411.8%Dec 202514.8%Actual Jun 2026Morgan Stanley Form 10-K FY2025; Q2 2026 earnings release and 10-Q
The requirement fell 1.7 points.

Two other dials sit beside it. The G-SIB surcharge of 3.0% may rise to 3.5%, though not before 1 January 20283. And the firm's balance sheet has grown fast, from $1,215,071 million of total assets at the end of 2024 to $1,675,057 million in June 202645, which can raise the surcharge calculation.

The firm plans on the excess. It reauthorised a $20 billion multi-year buyback beginning in the third quarter of 20266, and its strategic update counted about 320 basis points of excess capital7.

The stress test is annual, and the 2026 test did not change the buffer: the firm said its results "do not impact the Firm’s Stress Capital Buffer"8. The next reset comes with the 2027 test. The requirement fell to 11.8% at the latest date from 13.5% at the end of 2024910.

The 2027 result is the event to watch. A buffer back at 6% with a 3.5% surcharge would lift the requirement by more than two points and absorb most of today's excess.

References
  1. ReportedIt holds until 1 October 2027, after which a new stress test sets it again.
    Morgan Stanley Form 8-K exhibit 99.1, dividend increase to $1.15, a $20 billion multi-year buyback and the stress capital buffer after the 2026 stress test. — June 2026 · publ. 24 June 2026 · source ↗
  2. ReportedThe buffer was 6.0% only a year before the cut.
    Morgan Stanley Form 10-K for fiscal 2025 - capital, the stress capital buffer, dividends and share repurchases. — FY2025 · publ. 19 February 2026 · source ↗
  3. ReportedThe G-SIB surcharge of 3.0% may rise to 3.5%, though not before 1 January 2028.
    Morgan Stanley Form 10-K for fiscal 2025 - capital, the stress capital buffer, dividends and share repurchases. — FY2025 · publ. 19 February 2026 · source ↗
  4. ReportedAnd the firm's balance sheet has grown fast, from $1,215,071 million of total assets at the end of 2024 to $1,675,057 million in June 2026, which can raise the surcharge calculation.
    Morgan Stanley Form 10-K for fiscal 2025 - capital, the stress capital buffer, dividends and share repurchases. — FY2025 · publ. 19 February 2026 · source ↗
  5. ReportedAnd the firm's balance sheet has grown fast, from $1,215,071 million of total assets at the end of 2024 to $1,675,057 million in June 2026, which can raise the surcharge calculation.
    Morgan Stanley second-quarter 2026 financial supplement, Form 8-K exhibit 99.2 - Wealth Management metrics, Investment Management assets under management and flows, regional revenues. — Q2 2026 · publ. 15 July 2026 · source ↗
  6. ReportedIt reauthorised a $20 billion multi-year buyback beginning in the third quarter of 2026, and its strategic update counted about 320 basis points of excess capital.
    Morgan Stanley Form 8-K exhibit 99.1, dividend increase to $1.15, a $20 billion multi-year buyback and the stress capital buffer after the 2026 stress test. — June 2026 · publ. 24 June 2026 · source ↗
  7. ReportedIt reauthorised a $20 billion multi-year buyback beginning in the third quarter of 2026, and its strategic update counted about 320 basis points of excess capital.
    Morgan Stanley strategic update, The Integrated Firm: Executing on a Higher Plane, Form 8-K exhibit 99.3 - ROTCE 2016-2025, firmwide goals, five-year Wealth Management aggregates and wallet share. — 2016-2025 · publ. 15 January 2026 · source ↗
  8. ReportedThe stress test is annual, and the 2026 test did not change the buffer: the firm said its results "do not impact the Firm’s Stress Capital Buffer".
    Morgan Stanley Form 8-K exhibit 99.1, dividend increase to $1.15, a $20 billion multi-year buyback and the stress capital buffer after the 2026 stress test. — June 2026 · publ. 24 June 2026 · source ↗
  9. ReportedThe requirement fell to 11.8% at the latest date from 13.5% at the end of 2024.
    Morgan Stanley Form 10-Q for the quarter ended 30 June 2026 - capital requirements, legal proceedings including the cash-sweep litigation, and the 2026 bank-entity reorganisation. — Q2 2026 · publ. 4 August 2026 · source ↗
  10. ReportedThe requirement fell to 11.8% at the latest date from 13.5% at the end of 2024.
    Morgan Stanley Form 10-K for fiscal 2025 - capital, the stress capital buffer, dividends and share repurchases. — FY2025 · publ. 19 February 2026 · source ↗
Sources
Generated September 26, 2026