Morgan Stanley
CEO : Mr. Edward N. Pick
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2024 Q3 | 0.4% YoY | -5.3% | 37.4% | 2024-10-16 |
Sharon Yeshaya says,
Financial Performance Metrics
- Total revenues reached $15.4 billion in the third quarter, showcasing growth despite challenging market conditions.
- EPS was reported at $1.88, reflecting the firm’s profitability.
- ROTCE stood at 17.5%, indicating strong returns on tangible common equity.
- The efficiency ratio year-to-date was 72%, demonstrating cost management and operational efficiency.
Institutional Securities Growth
- Institutional Securities revenues amounted to $6.8 billion, nearing record levels for a third quarter.
- Investment Banking revenues increased to $1.5 billion, driven by strong debt underwriting.
- Equity underwriting revenues reached $362 million, with notable activity in Asia.
- Fixed income underwriting revenues more than doubled from the previous year, reaching $555 million.
Wealth Management and Investment Management Performance
- Wealth Management achieved record revenues of $7.3 billion in the third quarter.
- Client assets in Wealth Management reached an impressive $6 trillion.
- Asset management revenues rose to $4.3 billion, marking an 18% year-over-year increase.
- Investment Management revenues increased by 9% to $1.5 billion, driven by higher asset management fees.
Balance Sheet and Capital Management
- Total spot assets expanded to $1.3 trillion, with $490 billion in standardized RWAs.
- The firm accreted approximately $2 billion of Common Tier 1 capital, maintaining a CET1 ratio of 15.1%.
- A quarterly dividend of $0.925 was declared, showcasing commitment to shareholder returns.
- The company repurchased $750 million worth of common stock during the quarter.
Outlook and Strategic Initiatives
- Looking ahead, Net Interest Income (NII) is expected to be modestly down in the fourth quarter due to lower rate expectations.
- The firm touches 19 million relationships, an increase of 1.3 million from the previous year, thanks to an expanded offering.
- Investment in intellectual capital and infrastructure continues to be a priority to meet global client demand.
Ted Pick says,
Financial Performance Overview
- Morgan Stanley reported third-quarter revenues of $15.4 billion.
- Net income for the quarter was $3 billion.
- The return on tangible common equity was 17.5%.
- Year-to-date returns on tangible common equity stood at 18%.
- Sequential EPS reported for the quarters were $2.02, $1.82, and $1.88.
Strategic Achievements and Growth
- Morgan Stanley achieved $200 billion of organic growth in the first nine months.
- Total client assets rose by almost $1.4 trillion over the last year.
- Client assets in Wealth and Investment Management reached $7.6 trillion, progressing towards the target of $10 trillion.
- The efficiency ratio improved by approximately 300 basis points to 72%.
Investment Banking and Market Conditions
- Underwriting markets have improved, and there’s increasing participation among financial sponsors and corporates.
- The equity market is broadening, and evolving interest rate policies are favorable for market businesses.
- Parametric business benefits from individual client focus on tax customization strategies.
- The bank’s integrated approach helps clients manage volatility amid economic and policy uncertainties.
Future Outlook and Strategic Goals
- The firm is unified under four pillars: strategy, culture, financial strength, and growth.
- Morgan Stanley aims to manage and allocate capital by maintaining a culture of rigor, humility, and partnership.
- High levels of capital and liquidity support a plan for durable growth.
- Continued investment in business and infrastructure to capture market opportunities.
| Quarter | EPS ($) | Efficiency Ratio (%) | Client Assets ($ Trillion) |
|---|---|---|---|
| Q1 2024 | 2.02 | 75 | 7.4 |
| Q2 2024 | 1.82 | 74 | 7.5 |
| Q3 2024 | 1.88 | 72 | 7.6 |
Q & A sessions,
Financial Performance and Guidance
- The firm produced revenues of $15.4 billion in the third quarter, with an EPS of $1.88 and ROTCE of 17.5%.
- The year-to-date efficiency ratio was 72%, driven by discipline in controllable spending and lower litigation and consulting costs.
- Investment Banking revenues rose to $1.5 billion, with fixed income underwriting revenues more than doubling to $555 million.
- Looking ahead, NII is expected to be modestly down in the fourth quarter due to lower rate expectations.
- Net new assets totaled $64 billion in the quarter, contributing to a year-to-date total of $195 billion.
Wealth and Investment Management
- Wealth Management recorded a record revenue of $7.3 billion, with client assets reaching $6 trillion.
- Fee-based assets now stand at $2.3 trillion, with strong net new assets supported by advisor-led and workplace channels.
- Investment Management revenues increased 9% year-over-year to $1.5 billion, driven by demand in alternatives and solutions.
- MSIM’s total AUM is now $1.6 trillion, with liquidity and overlay strategies showing strong inflows.
Strategic Investments and Efficiency
- Continued focus on optimizing occupancy, with only a $11 million increase year-to-date despite significant space optimization investments.
- Decline in professional services spending as part of integration efforts, allowing reallocation towards growth-related infrastructure investments.
- Investments in new technology, data centers, and buildings to support cyber resilience and future growth plans.
Rate Environment and Deposit Trends
- The firm has observed stabilizing trends in sweeps and NII, with a $175 million delta between this quarter and last year’s third quarter.
- Deposit trends have been encouraging since the Fed’s rate cuts, with a focus on monitoring interest rate paths in future quarters.
- The deposit base is distinct from commercial banks, with the impact of QT being negligible.
Technology and Innovation
- The partnership with OpenAI continues to progress well, enhancing productivity tools for advisors.
- AI tools like debrief are aiding in meeting efficiency by automating language translation and email drafting post-meetings.
- Investment in technology aims to boost long-term efficiency, particularly in helping advisors prospect more business efficiently.
No bad stock 