MORGAN STANLEY Quarterly Report for Q2 Ended Jun 30, 2014

Summary

Morgan Stanley reported strong financial results for the second quarter and the first half of 2014, demonstrating significant year-over-year improvements. Net income applicable to Morgan Stanley common shareholders surged to $1.82 billion ($0.92 diluted EPS) in Q2 2014, a substantial increase from $803 million ($0.41 diluted EPS) in Q2 2013. For the first six months of 2014, net income was $3.40 billion ($1.66 diluted EPS), up from $1.94 billion ($0.89 diluted EPS) in the same period of 2013. These improvements were driven by robust performance across all business segments, notably a significant rebound in Income from Continuing Operations Applicable to Morgan Stanley and a favorable tax benefit. The company's total assets stood at $826.6 billion at June 30, 2014, a slight decrease from $832.7 billion at December 31, 2013, reflecting shifts within trading assets. The company's regulatory capital ratios remained strong and well above minimum requirements, with a Common Equity Tier 1 ratio of 13.9% under transitional U.S. Basel III rules at June 30, 2014, indicating a solid capital position for future growth and shareholder returns. Key drivers for the improved performance included strong investment banking revenues, which increased across advisory and underwriting, and solid results in Wealth Management, supported by higher fee-based revenues and net interest income. The Institutional Securities segment saw a slight decrease in net revenues but managed expenses effectively, contributing to a significant increase in income from continuing operations. The company also managed its liquidity well, maintaining a substantial Global Liquidity Reserve, and confirmed its commitment to returning capital to shareholders through dividends and share repurchases.

Key Highlights

• 1Net income applicable to Morgan Stanley common shareholders increased significantly to $1.82 billion in Q2 2014, up from $803 million in Q2 2013.
• 2Diluted EPS from continuing operations was $0.92 in Q2 2014, compared to $0.43 in Q2 2013.
• 3Total net revenues for Q2 2014 were $8.61 billion, a slight increase from $8.52 billion in Q2 2013.
• 4Investment banking revenues across advisory and underwriting showed strong growth, up 33% year-over-year for the quarter.
• 5Wealth Management net revenues increased 5% year-over-year for the quarter, driven by higher asset management fees and net interest income.
• 6Morgan Stanley maintained a strong Common Equity Tier 1 capital ratio of 13.9% under transitional U.S. Basel III rules at June 30, 2014, well above regulatory requirements.
• 7The company reported a significant discrete net tax benefit of $609 million in Q2 2014, primarily due to the remeasurement of tax reserves.

Frequently Asked Questions