10-QPeriod: Q1 FY2022

MORGAN STANLEY Quarterly Report for Q1 Ended Mar 31, 2022

Filed May 4, 2022For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley reported solid results for the first quarter of 2022, with net revenues of $14.8 billion, slightly down from $15.7 billion in the prior year quarter. Net income applicable to Morgan Stanley common shareholders was $3.54 billion, or $2.02 per diluted share, compared to $3.98 billion, or $2.19 per diluted share, in the first quarter of 2021. The firm's ROTCE (Return on Tangible Common Equity) was 19.8%, demonstrating resilience in a volatile market. The Institutional Securities segment saw an 11% decline in net revenues to $7.66 billion, primarily due to lower underwriting revenues, though Equity and Fixed Income businesses performed strongly. Wealth Management delivered stable net revenues of $5.94 billion and a strong pre-tax margin of 26.5%, with significant net new assets of $142 billion. The Investment Management segment's net revenues increased by 2% to $1.34 billion, boosted by incremental fee-based revenues from the Eaton Vance acquisition. Financially, Morgan Stanley maintained a strong capital position, with its standardized Common Equity Tier 1 capital ratio at 14.5% as of March 31, 2022. The firm managed expenses effectively, achieving an efficiency ratio of 69%, while continuing to invest in its businesses. The firm also continued its capital return program, repurchasing $2.87 billion of common stock and announcing a $0.70 per share dividend. While direct exposure to Russia and Ukraine is limited, the firm is monitoring geopolitical impacts.

Financial Highlights

35 data points
Beta

Net Income

$3.67B

EPS (Diluted)

$2.02

Total Assets

$1.22T

Cash & Equivalents

$136.09B

Free Cash Flow

$239.00M

Financial Statements
Beta
Interest Expense$434.00M
Net Income$3.67B
EPS (Basic)$2.04
EPS (Diluted)$2.02
Shares Outstanding (Basic)1.73B
Shares Outstanding (Diluted)1.75B

Key Highlights

  • 1Net revenues of $14.8 billion for Q1 2022, a slight decrease from $15.7 billion in Q1 2021.
  • 2Net income applicable to Morgan Stanley common shareholders was $3.54 billion, or $2.02 per diluted share, down from $3.98 billion, or $2.19 per diluted share, in Q1 2021.
  • 3Return on Tangible Common Equity (ROTCE) of 19.8%, indicating strong profitability despite market volatility.
  • 4Institutional Securities segment net revenues decreased 11% to $7.66 billion, driven by lower underwriting, but Equity and Fixed Income revenues were strong.
  • 5Wealth Management segment reported stable net revenues of $5.94 billion and added $142 billion in net new assets.
  • 6Investment Management segment saw net revenues increase 2% to $1.34 billion, benefiting from the Eaton Vance acquisition.
  • 7Standardized Common Equity Tier 1 capital ratio remained strong at 14.5% as of March 31, 2022.

Frequently Asked Questions

The Institutional Securities segment's net revenues decreased by 11% year-over-year primarily due to a 37% decline in Investment Banking revenues, driven by lower underwriting volumes across equity and fixed income products. However, Equity and Fixed Income trading revenues showed resilience, with Equity revenues up 10% and Fixed Income revenues largely stable compared to the prior year quarter, benefiting from client engagement in volatile markets.

The Wealth Management segment delivered stable net revenues of $5.94 billion, with a pre-tax margin of 26.5% (or 27.8% excluding integration expenses). Key drivers included higher asset management fees and continued growth in bank lending. The segment also saw robust client activity, adding $142 billion in net new assets, partly due to an asset acquisition.

Morgan Stanley maintained a strong capital position, with its standardized Common Equity Tier 1 capital ratio at 14.5% as of March 31, 2022, exceeding regulatory requirements. The firm continued its capital return strategy, repurchasing $2.87 billion of common stock during the quarter and announcing a quarterly dividend of $0.70 per share, demonstrating a commitment to returning capital to shareholders.

Morgan Stanley stated that its direct exposure to Russia and Ukraine is limited. The firm is not entering any new business onshore in Russia and its activities there are restricted to helping global clients close out pre-existing obligations. The company continues to monitor the situation's impact on economies and financial markets.