Summary
Morgan Stanley's second quarter 2009 results showed a significant shift from the prior year, with a net loss applicable to the company for the six months ended June 30, 2009, contrasting with a substantial net income in the same period of 2008. This was driven by a sharp decline in net revenues, particularly in the Institutional Securities segment, which experienced a significant drop in trading revenues and substantial losses related to credit spread tightening on borrowings. However, the quarter saw some positive developments, including the completion of the combination with Smith Barney to form Morgan Stanley Smith Barney Holdings LLC (MSSB), which is expected to enhance the Global Wealth Management Group's performance. The company also completed the divestiture of its remaining interest in MSCI, contributing a gain to discontinued operations. Despite the challenging operating environment, Morgan Stanley maintained its capital ratios above regulatory well-capitalized levels, reflecting a focus on balance sheet strength.
Financial Highlights
43 data points| Revenue | $5.20B |
| Operating Income | -$155.00M |
| Interest Expense | $1.84B |
| Net Income | $149.00M |
| EPS (Basic) | $-1.10 |
| EPS (Diluted) | $-1.10 |
| Shares Outstanding (Basic) | 1.14B |
| Shares Outstanding (Diluted) | 1.14B |
Key Highlights
- 1Morgan Stanley reported a net loss applicable to the company of $28 million for the six months ended June 30, 2009, a significant decline from a net income of $2,556 million in the same period of 2008.
- 2Net revenues for the six months ended June 30, 2009, decreased by 40% to $8,357 million, largely impacted by a 64% decline in Institutional Securities net revenues.
- 3The company completed the combination of its Global Wealth Management Group with Citigroup's Smith Barney businesses, forming Morgan Stanley Smith Barney Holdings LLC (MSSB), a significant strategic move expected to bolster its wealth management segment.
- 4A gain of $310 million from discontinued operations was recognized due to the divestiture of the remaining ownership interest in MSCI Inc.
- 5The company's capital ratios remained strong, with Tier 1 capital to risk-weighted assets at 15.8% and a Tier 1 leverage ratio of 6.5% as of June 30, 2009, both exceeding regulatory requirements.
- 6Morgan Stanley repurchased its Series D Preferred Stock from the U.S. Treasury for $10,086 million during the quarter, impacting equity but also resolving a significant preferred obligation.
- 7The company experienced substantial losses of approximately $2.3 billion in the quarter ended June 30, 2009, related to the tightening of credit spreads on its borrowings accounted for at fair value, particularly impacting the Institutional Securities segment.