10-QPeriod: Q2 FY2022

MORGAN STANLEY Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 5, 2022For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley's (MS) Q2 2022 filing shows net revenues of $13.1 billion, a decrease from $14.8 billion in the prior year quarter, reflecting a challenging macroeconomic environment. Net income applicable to Morgan Stanley common shareholders was $2.39 billion, down from $3.41 billion year-over-year. The firm's diversified business model, however, demonstrated resilience, particularly in its Wealth Management and Investment Management segments. Despite headwinds, Wealth Management reported a strong pre-tax margin of 26.5% and significant net new assets of $53 billion. Institutional Securities' performance was impacted by reduced investment banking activity due to economic uncertainty, although Fixed Income and Equity businesses saw client engagement amidst market volatility. The firm maintained a strong capital position, with a Standardized Common Equity Tier 1 capital ratio of 15.2% at June 30, 2022. Expenses were managed, though impacted by a $200 million regulatory matter related to unapproved personal devices and record-keeping. Management remains focused on strategic objectives, including the integration of recent acquisitions and driving long-term shareholder value through dividends and share repurchases.

Financial Highlights

35 data points
Beta

Net Income

$2.50B

EPS (Diluted)

$1.39

Total Assets

$1.17T

Cash & Equivalents

$131.29B

Free Cash Flow

$14.91B

Financial Statements
Beta
Interest Expense$1.33B
Net Income$2.50B
EPS (Basic)$1.40
EPS (Diluted)$1.39
Shares Outstanding (Basic)1.70B
Shares Outstanding (Diluted)1.72B

Key Highlights

  • 1Net revenues of $13.1 billion for the quarter ended June 30, 2022, compared to $14.8 billion in the prior year quarter.
  • 2Net income applicable to Morgan Stanley common shareholders was $2.39 billion ($1.39 per diluted share) for the current quarter, down from $3.41 billion ($1.85 per diluted share) in the prior year quarter.
  • 3Wealth Management delivered a pre-tax margin of 26.5% (28.2% excluding integration costs) and added $53 billion in net new assets.
  • 4Institutional Securities net revenues decreased 14% year-over-year, primarily due to lower underwriting revenues, despite increased Fixed Income and Equity business performance.
  • 5Investment Management net revenues decreased 17% year-over-year, impacted by lower performance-based income and lower equity markets affecting AUM.
  • 6The Standardized Common Equity Tier 1 capital ratio remained strong at 15.2% as of June 30, 2022.
  • 7Total non-interest expenses increased slightly due to a $200 million regulatory matter, impacting the expense efficiency ratio.

Frequently Asked Questions

Morgan Stanley's Institutional Securities segment saw a 14% decrease in net revenues, largely due to a slowdown in investment banking amid economic uncertainty, though Fixed Income and Equity businesses showed resilience. Wealth Management performed well with a 26.5% pre-tax margin and strong net new asset inflows. Investment Management's net revenues declined by 17%, primarily affected by market conditions impacting assets under management and performance-based fees.

Morgan Stanley maintained a robust capital position, reporting a Standardized Common Equity Tier 1 capital ratio of 15.2% as of June 30, 2022. This indicates the firm's ability to absorb potential losses and meet regulatory requirements.

Yes, the firm's expense efficiency ratio was impacted by $200 million related to a regulatory matter concerning the use of unapproved personal devices and record-keeping requirements. This charge affected the overall profitability for the quarter.

Wealth Management reported adding $53 billion in net new assets during the quarter, demonstrating continued client engagement. Total deposits remained relatively stable at $347.1 billion.