10-QPeriod: Q3 FY2019

MORGAN STANLEY Quarterly Report for Q3 Ended Sep 30, 2019

Filed November 5, 2019For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley reported solid financial results for the third quarter of 2019. Net revenues increased slightly year-over-year, driven by strong performance in Fixed Income sales and trading, and significant growth in the Investment Management segment. While the Institutional Securities segment saw a slight decline in net revenues due to lower equity sales and trading, the overall revenue picture remains positive. Net income applicable to Morgan Stanley and diluted earnings per share both showed modest increases compared to the prior year quarter. The firm maintained strong capital ratios and liquidity positions, well above regulatory requirements. Wealth Management continued to be a stable contributor, with fee-based client assets showing growth. The firm also announced a common stock dividend and continued its share repurchase program, demonstrating a commitment to returning capital to shareholders. Overall, the report indicates a stable financial position with growth in key areas, despite some headwinds in certain trading segments.

Financial Highlights

34 data points
Beta

Net Income

$2.17B

EPS (Diluted)

$1.27

Total Assets

$902.60B

Cash & Equivalents

$79.66B

Free Cash Flow

$13.34B

Financial Statements
Beta
Interest Expense$3.13B
Net Income$2.17B
EPS (Basic)$1.28
EPS (Diluted)$1.27
Shares Outstanding (Basic)1.60B
Shares Outstanding (Diluted)1.63B

Key Highlights

  • 1Net revenues for the third quarter of 2019 were $10,032 million, a slight increase from $9,872 million in the prior year quarter.
  • 2Net income applicable to Morgan Stanley was $2,173 million, or $1.27 per diluted share, up from $2,112 million, or $1.17 per diluted share, in the prior year quarter.
  • 3Institutional Securities segment net revenues increased 2% year-over-year to $5,023 million, driven by higher Fixed Income sales and trading, but offset by lower Equity sales and trading and Investment banking.
  • 4Wealth Management segment net revenues were relatively unchanged year-over-year at $4,358 million, with fee-based client assets growing to $1,186 billion.
  • 5Investment Management segment net revenues increased 17% year-over-year to $764 million, reflecting higher investments and asset management revenues.
  • 6The firm maintained strong capital ratios, with Common Equity Tier 1 capital at 16.3% as of September 30, 2019.
  • 7The firm repurchased $1,500 million of common stock in the third quarter of 2019 and declared a quarterly dividend of $0.35 per share.

Frequently Asked Questions

Morgan Stanley's net revenues for the third quarter of 2019 were $10,032 million, representing a slight increase from $9,872 million in the third quarter of 2018. This growth was primarily driven by the Investment Management segment and strength in Fixed Income sales and trading, partially offset by weaker performance in Equity sales and trading and Investment Banking within the Institutional Securities segment.

For the third quarter of 2019, Morgan Stanley reported a net income applicable to Morgan Stanley of $2,173 million, or $1.27 per diluted common share. This compares to $2,112 million, or $1.17 per diluted common share, in the prior year quarter, indicating an improvement in profitability on a per-share basis.

The Institutional Securities segment saw a 2% increase in net revenues to $5,023 million, driven by Fixed Income trading, though Investment Banking and Equity trading were lower. Wealth Management's net revenues were stable at $4,358 million, with growth in fee-based client assets. Investment Management experienced significant growth, with net revenues up 17% to $764 million due to strong performance in investments and asset management.

Morgan Stanley maintained a strong capital position, with a Common Equity Tier 1 capital ratio of 16.3% and a Tier 1 capital ratio of 18.5% as of September 30, 2019. These ratios are well above the regulatory minimum requirements, indicating robust capital adequacy.

During the third quarter of 2019, Morgan Stanley repurchased $1,500 million of its common stock as part of its ongoing Share Repurchase Program. Additionally, the firm declared a quarterly common stock dividend of $0.35 per share, reflecting its commitment to returning capital to shareholders.