10-QPeriod: Q2 FY2021

MORGAN STANLEY Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 2, 2021For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley's second quarter 2021 results demonstrate robust performance, with firm net revenues increasing by 8% and net income applicable to Morgan Stanley growing by 10% year-over-year. This growth was driven by strong contributions across all three business segments: Institutional Securities, Wealth Management, and Investment Management. The firm reported an annualized ROTCE of 18.6%, or 19.0% excluding integration-related expenses, and maintained a solid expense efficiency ratio of 69% (68% excluding integration costs). Key strategic initiatives are also evident, with Morgan Stanley doubling its quarterly common stock dividend to $0.70 per share and increasing its share repurchase authorization to $12 billion over the next 12 months. The acquisitions of E*TRADE and Eaton Vance continue to be integrated, contributing to revenue growth in Wealth Management and Investment Management, respectively. The firm also highlighted a strong Common Equity Tier 1 capital ratio of 16.6% under the standardized approach, indicating a solid capital position.

Financial Highlights

35 data points
Beta

Net Income

$3.51B

EPS (Diluted)

$1.85

Total Assets

$1.16T

Cash & Equivalents

$126.48B

Free Cash Flow

$4.62B

Financial Statements
Beta
Interest Expense$347.00M
Net Income$3.51B
EPS (Basic)$1.88
EPS (Diluted)$1.85
Shares Outstanding (Basic)1.81B
Shares Outstanding (Diluted)1.84B

Key Highlights

  • 1Firm-wide net revenues increased 8% year-over-year to $14.8 billion, driven by strong performance across all segments.
  • 2Net income applicable to Morgan Stanley grew 10% year-over-year to $3.5 billion, or $1.85 per diluted share.
  • 3Wealth Management saw a 30% increase in net revenues to $6.1 billion, driven by higher asset management fees and the E*TRADE acquisition.
  • 4Investment Management experienced a significant 92% increase in net revenues to $1.7 billion, largely due to the Eaton Vance acquisition.
  • 5The Institutional Securities segment reported net revenues of $7.1 billion, with Investment Banking revenues up 16% due to strong advisory and equity underwriting.
  • 6The company doubled its quarterly common stock dividend to $0.70 per share and authorized a $12 billion share repurchase program.
  • 7Morgan Stanley maintained a strong Common Equity Tier 1 capital ratio of 16.6% (standardized).

Frequently Asked Questions

Morgan Stanley reported strong financial results in the second quarter of 2021. Net revenues increased by 8% to $14.8 billion compared to the prior year quarter, and net income applicable to Morgan Stanley rose by 10% to $3.5 billion. This growth was supported by contributions from all three business segments, demonstrating the firm's diversified business model.

The acquisitions of E*TRADE and Eaton Vance have positively impacted the results. Wealth Management net revenues increased by 30%, largely due to incremental revenues from the E*TRADE acquisition. Similarly, Investment Management net revenues surged by 92%, driven by incremental revenues from the Eaton Vance acquisition and higher average assets under management.

Morgan Stanley is returning capital to shareholders through increased dividends and share repurchases. The company doubled its quarterly common stock dividend to $0.70 per share and authorized a significant share repurchase program of up to $12 billion over the next 12 months, indicating confidence in its financial strength and future earnings capacity.

The firm maintains a strong capital position. As of June 30, 2021, its standardized Common Equity Tier 1 capital ratio was 16.6%, which is well above regulatory minimums and reflects a robust capital buffer.