MORGAN STANLEY Quarterly Report for Q2 Ended Jun 30, 2024

Summary

Morgan Stanley reported strong financial results for the quarter ended June 30, 2024, with net revenues of $15.0 billion, a 12% increase year-over-year, and net income applicable to Morgan Stanley common shareholders rising 41% to $3.1 billion. This performance was driven by robust activity across its business segments. Institutional Securities saw a 23% revenue increase, largely due to strong Equity and Investment Banking performance, particularly in debt underwriting. Wealth Management delivered a solid pre-tax margin of 26.8% with net revenues of $6.8 billion, supported by higher asset management revenues from cumulative fee-based flows and favorable market conditions, experiencing $26 billion in fee-based asset flows for the quarter. Investment Management also showed growth, with net revenues up 8% driven by increased asset management revenues on higher average assets under management. The Firm maintained a strong capital position, with its Common Equity Tier 1 capital ratio at 15.2%. The reported Return on Equity (ROE) was 13.0%, and Return on Tangible Common Equity (ROTCE) was 17.5%, indicating efficient capital utilization. The expense efficiency ratio remained steady at 72%. While the overall economic environment improved, management noted ongoing risks from geopolitical factors, inflation, and interest rate uncertainty, which could continue to impact capital markets and the Firm's businesses. The provision for credit losses decreased significantly year-over-year, primarily due to improved macroeconomic outlook and lower provisions related to commercial real estate, though specific commercial real estate loans, particularly in the office sector, continue to be monitored.

Key Highlights

• 1Net revenues increased 12% year-over-year to $15.0 billion, reflecting broad-based strength across segments.
• 2Net income applicable to Morgan Stanley common shareholders surged 41% to $3.1 billion, with diluted EPS growing 47% to $1.82.
• 3Institutional Securities revenue grew 23%, driven by strong performance in Equity and Investment Banking (up 51% and 66% in underwriting respectively).
• 4Wealth Management demonstrated resilience with a pre-tax margin of 26.8% and fee-based asset flows of $26 billion, contributing to a 2% net revenue increase.
• 5Investment Management revenue rose 8% due to higher average assets under management and performance fees.
• 6The firm maintained a strong Common Equity Tier 1 capital ratio of 15.2%.
• 7Provision for credit losses declined to $76 million from $161 million in the prior year's quarter, signaling improving credit conditions.

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