10-QPeriod: Q1 FY2024

MORGAN STANLEY Quarterly Report for Q1 Ended Mar 31, 2024

Filed May 3, 2024For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley reported solid financial results for the first quarter of 2024, with net revenues of $15.1 billion, a 4% increase year-over-year, and net income applicable to common shareholders of $3.3 billion, up 19% year-over-year. This growth was driven by strong performance across all its key business segments: Institutional Securities, Wealth Management, and Investment Management. The firm achieved a Return on Equity (ROE) of 14.5% and a Return on Tangible Common Equity (ROTCE) of 19.7%, demonstrating improved profitability. The Institutional Securities segment saw a 3% increase in net revenues, bolstered by strong underwriting and equity performance, despite a slight dip in advisory. Wealth Management delivered robust net revenues of $6.9 billion, up 5%, with significant net new assets of $95 billion and strong pre-tax margins of 26.3%. Investment Management also contributed positively, with net revenues up 7% driven by higher assets under management. The firm maintained a strong capital position, with a Standardized Common Equity Tier 1 capital ratio of 15.0%.

Financial Highlights

34 data points
Beta

Net Income

$3.41B

EPS (Diluted)

$2.02

Total Assets

$1.23T

Cash & Equivalents

$102.31B

Free Cash Flow

$4.36B

Financial Statements
Beta
Interest Expense$11.13B
Net Income$3.41B
EPS (Basic)$2.04
EPS (Diluted)$2.02
Shares Outstanding (Basic)1.60B
Shares Outstanding (Diluted)1.62B

Key Highlights

  • 1Morgan Stanley reported a 4% increase in net revenues to $15.1 billion and a 19% increase in net income applicable to common shareholders to $3.3 billion for Q1 2024 compared to the prior year quarter.
  • 2The firm achieved a Return on Equity (ROE) of 14.5% and a Return on Tangible Common Equity (ROTCE) of 19.7%, indicating improved profitability.
  • 3Institutional Securities net revenues rose 3% to $7.0 billion, driven by higher underwriting and equity results, offsetting a decline in advisory.
  • 4Wealth Management saw a 5% increase in net revenues to $6.9 billion, supported by higher asset management revenues and $95 billion in net new assets.
  • 5Investment Management's net revenues grew 7% to $1.4 billion, benefiting from higher average assets under management.
  • 6The Standardized Common Equity Tier 1 capital ratio remained strong at 15.0% as of March 31, 2024.
  • 7The Provision for Credit Losses significantly decreased to a net release of $6 million from $234 million in the prior year quarter, reflecting an improved macroeconomic outlook.

Frequently Asked Questions

Revenue growth was primarily driven by strong performance in the Institutional Securities segment, particularly in underwriting and equity trading, and by higher asset management revenues in the Wealth Management segment due to positive market conditions. Investment Management also contributed positively with increased assets under management.

The Wealth Management segment reported a 5% increase in net revenues to $6.9 billion, with net new assets totaling $95 billion. The segment maintained a strong pre-tax margin of 26.3%, indicating effective cost management and revenue generation.

Morgan Stanley maintains a strong capital position with a Standardized Common Equity Tier 1 capital ratio of 15.0% as of March 31, 2024. The firm is compliant with all required regulatory liquidity and capital ratios, including the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR).

The provision for credit losses significantly improved, showing a net release of $6 million compared to a provision of $234 million in the prior year quarter. This improvement is attributed to a better macroeconomic outlook, although the firm continues to monitor specific commercial real estate and corporate loans.