Summary
Morgan Stanley's second quarter 2011 report shows a net income of $1.193 billion applicable to Morgan Stanley, a decrease from $1.960 billion in the same period last year. Net revenues increased to $9.282 billion from $7.963 billion, driven by strong performance in Investment Banking and Global Wealth Management. However, a significant factor impacting the results was a one-time, non-cash negative adjustment of approximately $1.7 billion related to the conversion of MUFG's Series B Preferred Stock into common stock, which significantly impacted earnings per share. The Institutional Securities segment saw a decrease in income from continuing operations before taxes, largely due to higher compensation and non-compensation expenses. Conversely, Global Wealth Management Group and Asset Management showed improvements in income from continuing operations before taxes. The company also reported gains related to credit spread widening on its borrowings, which provided a temporary boost to revenue but masked some underlying operational trends. Liquidity remains strong, with a Global Liquidity Reserve of $182 billion, and capital ratios are well above regulatory requirements.
Financial Highlights
41 data points| Revenue | $9.20B |
| Operating Income | $2.21B |
| Interest Expense | $2.03B |
| Net Income | $1.19B |
| EPS (Basic) | $-0.38 |
| EPS (Diluted) | $-0.38 |
| Shares Outstanding (Basic) | 1.46B |
| Shares Outstanding (Diluted) | 1.46B |
Key Highlights
- 1Net income applicable to Morgan Stanley decreased to $1.193 billion from $1.960 billion year-over-year, primarily impacted by a $1.7 billion non-cash adjustment related to a MUFG preferred stock conversion.
- 2Net revenues increased by 16.5% to $9.282 billion, driven by strong performance in Investment Banking (up 66%) and Global Wealth Management Group (up 13% in fee-based revenues).
- 3Institutional Securities segment's income from continuing operations before taxes decreased to $1.457 billion from $1.595 billion due to higher compensation and non-compensation expenses.
- 4Global Wealth Management Group's income from continuing operations before taxes increased to $322 million from $207 million, benefiting from higher fee-based revenues and gains on securities available for sale.
- 5Asset Management reported income from continuing operations before taxes of $165 million, a significant improvement from a loss of $86 million in the prior year period, driven by higher net investment gains.
- 6Diluted Earnings Per Share (EPS) was $(0.38), negatively impacted by the MUFG conversion adjustment, compared to $1.09 in the prior year quarter.
- 7The company maintained strong liquidity with a Global Liquidity Reserve of $182 billion and capital ratios well above regulatory requirements.