10-QPeriod: Q3 FY2021

MORGAN STANLEY Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 3, 2021For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley's (MS) third quarter of 2021 showcased robust financial performance, with net revenues reaching $14.8 billion and net income soaring to $3.7 billion, marking significant year-over-year increases. This growth was broadly distributed across its key business segments: Institutional Securities, Wealth Management, and Investment Management. The Institutional Securities segment saw strong performance driven by record investment banking revenues, particularly in advisory services, and continued strength in equities. Wealth Management also delivered impressive results, with record asset management revenues and substantial net new asset inflows, supported by the integration of E*TRADE. The Investment Management segment benefited from increased fee-based asset management revenues, bolstered by the recent acquisition of Eaton Vance. Overall, the firm demonstrated improved profitability, with an annualized ROTCE of 19.6% (or 20.2% excluding integration expenses) and an expense efficiency ratio of 67% (66% excluding integration expenses). The Common Equity Tier 1 capital ratio stood strong at 16.0%, indicating a solid capital position. Investors can find reassurance in the firm's consistent execution and strategic growth across its diversified business lines.

Financial Highlights

35 data points
Beta

Net Income

$3.71B

EPS (Diluted)

$1.98

Total Assets

$1.19T

Cash & Equivalents

$123.86B

Free Cash Flow

$2.13B

Financial Statements
Beta
Interest Expense$288.00M
Net Income$3.71B
EPS (Basic)$2.01
EPS (Diluted)$1.98
Shares Outstanding (Basic)1.78B
Shares Outstanding (Diluted)1.81B

Key Highlights

  • 1Net revenues increased by over 25% to $14.8 billion compared to the prior year quarter.
  • 2Net income applicable to Morgan Stanley was $3.7 billion, up significantly from $2.7 billion in the prior year quarter.
  • 3Institutional Securities segment net revenues grew 22% year-over-year, driven by strong Investment Banking and Equity business performance.
  • 4Wealth Management net revenues rose 28%, benefiting from higher asset management fees and the E*TRADE acquisition, with record net new assets of $135 billion.
  • 5Investment Management net revenues increased by 38%, primarily due to higher asset management fees and the Eaton Vance acquisition.
  • 6The firm's Common Equity Tier 1 capital ratio remained strong at 16.0%.
  • 7ROTCE was 19.6%, underscoring strong profitability and capital management.

Frequently Asked Questions

Morgan Stanley's Institutional Securities segment saw a 22% increase in net revenues, driven by strong Investment Banking and Equity business performance. Wealth Management's net revenues grew by 28%, boosted by record asset management revenues and client asset inflows, while Investment Management's net revenues increased by 38%, largely due to the Eaton Vance acquisition and higher asset management fees.

The acquisitions of E*TRADE and Eaton Vance significantly contributed to the firm's growth in Q3 2021. E*TRADE bolstered Wealth Management revenues through incremental asset and net interest revenues. Eaton Vance strengthened the Investment Management segment by increasing asset management and related fees.

Morgan Stanley maintained a strong capital position, with its standardized Common Equity Tier 1 capital ratio at 16.0% as of September 30, 2021, indicating ample capital well above regulatory minimums.

The firm reported an annualized ROTCE of 19.6% (20.2% excluding integration-related expenses) and an expense efficiency ratio of 67% (66% excluding integration-related expenses), demonstrating improved profitability and operational efficiency during the quarter.