10-QPeriod: Q1 FY2018

MORGAN STANLEY Quarterly Report for Q1 Ended Mar 31, 2018

Filed May 4, 2018For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley reported a strong first quarter of 2018, with net revenues increasing to $11,077 million, up 14% from $9,745 million in the prior year quarter. Net income applicable to Morgan Stanley surged to $2,668 million ($1.45 per diluted share), a significant increase from $1,930 million ($1.00 per diluted share) in the first quarter of 2017. This performance was driven by robust results across all business segments, particularly strong trading revenues in the Institutional Securities division and growth in asset management revenues within Wealth Management and Investment Management. Expenses also saw an increase, with compensation and benefits rising 10% and non-compensation expenses increasing 11%, partly due to the adoption of new accounting standards and higher volume-related expenses. Despite the rise in expenses, the firm maintained solid profitability and capital ratios. The Common Equity Tier 1 capital ratio stood at 15.5% at quarter-end, well above regulatory requirements. Investors should note the continued strategic focus on growth across all segments and the company's commitment to capital return through share repurchases and dividends.

Financial Highlights

36 data points
Beta

Revenue

$5.91B

Net Income

$2.67B

45.1% Net Margin

EPS (Diluted)

$1.45

Total Assets

$858.50B

Cash & Equivalents

$87.34B

Free Cash Flow

$12.65B

Financial Statements
Beta
Revenue$5.91B
Interest Expense$1.89B
Net Income$2.67B
EPS (Basic)$1.48
EPS (Diluted)$1.45
Shares Outstanding (Basic)1.74B
Shares Outstanding (Diluted)1.77B

Key Highlights

  • 1Net revenues increased by 14% to $11,077 million in Q1 2018 compared to Q1 2017.
  • 2Net income applicable to Morgan Stanley significantly increased by 38% to $2,668 million ($1.45 per diluted share) in Q1 2018.
  • 3Institutional Securities segment net revenues grew by 18% to $6,100 million, driven by strong sales and trading and investment banking performance.
  • 4Wealth Management segment net revenues increased by 8% to $4,374 million, primarily due to growth in asset management revenues.
  • 5Investment Management segment net revenues rose by 18% to $718 million, also driven by higher asset management revenues.
  • 6Compensation and benefits expenses increased by 10% year-over-year, reflecting higher incentive compensation and salaries.
  • 7The Common Equity Tier 1 capital ratio was 15.5% as of March 31, 2018, demonstrating strong capital adequacy.

Frequently Asked Questions

Morgan Stanley reported net revenues of $11,077 million for the first quarter of 2018, a 14% increase from $9,745 million in the first quarter of 2017. This growth was driven by strong performance across all business segments.

The Institutional Securities segment saw an 18% increase in net revenues to $6,100 million, fueled by higher sales and trading and investment banking revenues. Wealth Management net revenues increased by 8% to $4,374 million, primarily due to growth in asset management. Investment Management also reported an 18% increase in net revenues to $718 million, driven by higher asset management revenues.

Morgan Stanley maintained a strong capital position. As of March 31, 2018, its Common Equity Tier 1 capital ratio was 15.5%, well above regulatory requirements. The firm also announced a common stock dividend of $0.25 per share, payable in May 2018.

Total non-interest expenses increased by 15% to $7,657 million. Compensation and benefits expenses rose 10% to $4,914 million, primarily due to higher incentive compensation and salaries. Non-compensation expenses increased by 11% to $2,743 million, partly due to the adoption of new accounting standards and higher volume-related expenses.