Summary
Morgan Stanley's (MS) second-quarter 2012 report shows a net income of $591 million, or $0.29 per diluted share, on net revenues of $6.95 billion. This represents a significant decrease compared to the prior year's second quarter, which saw a net income of $1.19 billion on net revenues of $9.21 billion. The decline in net revenues was primarily driven by a substantial drop in investment banking and principal transactions (trading) revenues, exacerbated by a challenging market environment and reduced client activity. While Global Wealth Management Group showed resilience with slightly improved income from continuing operations and stable net revenues, the Institutional Securities segment experienced a significant revenue decline, particularly in fixed income and commodities trading. Despite the revenue headwinds, Morgan Stanley demonstrated strong expense management, with total non-interest expenses decreasing by 17% year-over-year, largely due to lower compensation expenses. The company also reported solid capital ratios, well above regulatory requirements, and maintained a strong liquidity position. The report highlights ongoing efforts to divest non-core assets, such as the sale of Quilter, and manage risk effectively, particularly in light of regulatory changes and market volatility.
Financial Highlights
41 data points| Revenue | $6.94B |
| Operating Income | $483.00M |
| Interest Expense | $1.48B |
| Net Income | $591.00M |
| EPS (Basic) | $0.30 |
| EPS (Diluted) | $0.29 |
| Shares Outstanding (Basic) | 1.89B |
| Shares Outstanding (Diluted) | 1.91B |
Key Highlights
- 1Net income applicable to Morgan Stanley was $591 million for Q2 2012, down from $1.19 billion in Q2 2011.
- 2Net revenues decreased to $6.95 billion from $9.21 billion year-over-year, primarily due to lower investment banking and trading revenues.
- 3Institutional Securities segment saw a significant revenue decline, with investment banking down 40% and fixed income/commodities trading down 60% (excluding DVA).
- 4Global Wealth Management Group's net revenues remained relatively stable at $3.31 billion, with income from continuing operations increasing to $245 million.
- 5Total non-interest expenses decreased by 17% to $6.01 billion, driven by a 21% reduction in compensation and benefits.
- 6The company's capital ratios remained strong, with a Tier 1 common capital ratio of 13.6% and a Tier 1 leverage ratio of 7.1%, both exceeding regulatory requirements.
- 7The company is actively managing its liquidity, maintaining a Global Liquidity Reserve of $173 billion at June 30, 2012.