10-QPeriod: Q1 FY2025

MORGAN STANLEY Quarterly Report for Q1 Ended Mar 31, 2025

Filed May 5, 2025For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley's first quarter 2025 results demonstrate robust performance, with net revenues of $17.7 billion, a 17% increase year-over-year, and net income of $4.3 billion, up 26% from the prior year quarter. This growth was driven by strong contributions across all business segments, particularly Institutional Securities, which saw a 28% revenue increase driven by Equity and Investment Banking activities, and Wealth Management, which delivered solid revenue growth and added significant net new assets. The firm also reported improved profitability metrics, with Return on Equity (ROE) at 17.4% and Return on Tangible Common Equity (ROTCE) at 23.0%, exceeding their stated goals. Despite a challenging economic environment marked by increased uncertainty and market volatility, Morgan Stanley maintained a strong capital position with a Common Equity Tier 1 capital ratio of 15.3% under the standardized approach. The firm also managed expenses effectively, with an expense efficiency ratio of 68%, though it did incur $144 million in severance costs related to a workforce reduction impacting approximately 2% of its global workforce. Overall, the report indicates a positive financial quarter for Morgan Stanley, characterized by broad-based growth and solid profitability.

Financial Highlights

33 data points
Beta

Net Income

$4.32B

EPS (Diluted)

$2.60

Total Assets

$1.30T

Cash & Equivalents

$90.74B

Free Cash Flow

-$23.98B

Financial Statements
Beta
Net Income$4.32B
EPS (Basic)$2.62
EPS (Diluted)$2.60
Shares Outstanding (Basic)1.58B
Shares Outstanding (Diluted)1.60B

Key Highlights

  • 1Net revenues increased by 17% to $17.7 billion in Q1 2025 compared to Q1 2024.
  • 2Net income applicable to Morgan Stanley common shareholders increased by 29% to $4.3 billion.
  • 3Return on Equity (ROE) was 17.4% and Return on Tangible Common Equity (ROTCE) was 23.0%, indicating strong profitability.
  • 4Institutional Securities segment saw a 28% increase in net revenues to $9.0 billion, driven by strong performance in Equity and Investment Banking.
  • 5Wealth Management segment delivered a 6% increase in net revenues to $7.3 billion, adding $94 billion in net new assets.
  • 6Common Equity Tier 1 capital ratio remained strong at 15.3% (Standardized approach).
  • 7Firm incurred $144 million in severance costs related to a reduction in force, impacting approximately 2% of its global workforce.

Frequently Asked Questions

Revenue growth was driven by strong performance across all business segments. Specifically, the Institutional Securities segment benefited from higher results in Equity and Investment Banking on increased Fixed Income underwriting revenues. Wealth Management saw growth primarily from higher Asset management revenues, while Investment Management experienced an increase in Asset management fees due to higher average Assets Under Management (AUM).

Morgan Stanley demonstrated strong profitability, reporting a Return on Equity (ROE) of 17.4% and a Return on Tangible Common Equity (ROTCE) of 23.0% for the first quarter of 2025. These figures indicate effective use of shareholder equity and tangible equity to generate earnings.

The firm maintained a robust capital position. As of March 31, 2025, its Common Equity Tier 1 capital ratio was 15.3% under the standardized approach and 15.7% under the advanced approach, both well above regulatory minimums.

Yes, the firm incurred $144 million in severance costs during the quarter due to a reduction in force that affected approximately 2% of its global workforce. These costs were related to performance management and workforce alignment.