10-QPeriod: Q1 FY2023

MORGAN STANLEY Quarterly Report for Q1 Ended Mar 31, 2023

Filed May 2, 2023For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley reported net revenues of $14.5 billion and net income of $3.0 billion for the first quarter of 2023, a slight decrease from the prior year's $14.8 billion in net revenues and $3.7 billion in net income. The firm's Return on Tangible Common Equity (ROTCE) was 16.9%, and its expense efficiency ratio was 72%. The Institutional Securities segment saw a 11% decline in net revenues due to lower Investment Banking and Equity/Fixed Income results, partially offset by higher 'Other' revenues. Wealth Management, however, experienced an 11% increase in net revenues, driven by positive mark-to-market gains on deferred compensation plan investments and higher net interest income, despite increased expenses and provisions for credit losses. Investment Management's net revenues decreased by 3%, reflecting lower average assets under management due to market declines. For the quarter, the firm repurchased $1.5 billion of its common stock and announced a quarterly dividend of $0.775 per share. The firm's capital position remains strong, with a Common Equity Tier 1 capital ratio of 15.1% under the standardized approach. The provision for credit losses significantly increased to $234 million, primarily due to a deteriorating macroeconomic outlook and expectations for commercial real estate borrowers. Management highlighted that recent stresses in the banking sector have not significantly impacted Morgan Stanley's results or financial condition.

Financial Highlights

34 data points
Beta

Net Income

$2.98B

EPS (Diluted)

$1.70

Total Assets

$1.20T

Cash & Equivalents

$111.26B

Free Cash Flow

-$9.87B

Financial Statements
Beta
Interest Expense$7.63B
Net Income$2.98B
EPS (Basic)$1.72
EPS (Diluted)$1.70
Shares Outstanding (Basic)1.65B
Shares Outstanding (Diluted)1.66B

Key Highlights

  • 1Net revenues were $14.5 billion, a slight decrease from $14.8 billion in the prior year quarter.
  • 2Net income applicable to Morgan Stanley common shareholders was $2.8 billion, down from $3.5 billion in the prior year quarter.
  • 3Institutional Securities net revenues declined 11% to $6.8 billion, impacted by lower Investment Banking and Equity/Fixed Income results.
  • 4Wealth Management net revenues increased 11% to $6.6 billion, driven by mark-to-market gains on deferred compensation plan investments and higher net interest income.
  • 5Investment Management net revenues decreased 3% to $1.3 billion, reflecting lower average assets under management.
  • 6Provision for credit losses rose significantly to $234 million from $57 million in the prior year quarter, primarily due to macroeconomic outlook and commercial real estate concerns.
  • 7The firm's Common Equity Tier 1 capital ratio was strong at 15.1% (standardized approach).

Frequently Asked Questions

Morgan Stanley reported net revenues of $14.5 billion and net income of $3.0 billion for the first quarter of 2023. This represents a slight decrease compared to the prior year quarter's net revenues of $14.8 billion and net income of $3.7 billion. The firm maintained a strong Common Equity Tier 1 capital ratio of 15.1%.

The Institutional Securities segment experienced an 11% decline in net revenues to $6.8 billion, primarily due to weaker performance in Investment Banking and Equity/Fixed Income businesses. In contrast, Wealth Management saw an 11% increase in net revenues to $6.6 billion, boosted by gains on deferred compensation plan investments and higher net interest income. Investment Management's net revenues decreased by 3% to $1.3 billion, impacted by lower asset values and net outflows.

Morgan Stanley's provision for credit losses increased significantly to $234 million in Q1 2023 from $57 million in the prior year quarter. This increase is attributed to a worsening macroeconomic outlook and increased expectations of losses from commercial real estate borrowers.

The firm maintained a strong capital position with a Common Equity Tier 1 capital ratio of 15.1% under the standardized approach. During the quarter, Morgan Stanley repurchased $1.5 billion of its common stock and declared a quarterly dividend of $0.775 per share.