07/15/2021 | Press release | Distributed by Public on 07/15/2021 05:39
Financial Summary2,3,4
|
||||||||
Firm ($ millions, except per share data)
|
2Q 2021
|
2Q 2020
|
||||||
Net revenues
|
$
|
14,759
|
$
|
13,660
|
||||
Provision for credit losses
|
$
|
73
|
$
|
239
|
||||
Compensation expense
|
$
|
6,423
|
$
|
6,035
|
||||
Non-compensation expenses
|
$
|
3,697
|
$
|
3,031
|
||||
Pre-tax income9
|
$
|
4,566
|
$
|
4,355
|
||||
Net income app. to MS
|
$
|
3,511
|
$
|
3,196
|
||||
Expense efficiency ratio7
|
69
|
%
|
66
|
%
|
||||
Earnings per diluted share
|
$
|
1.85
|
$
|
1.96
|
||||
Book value per share
|
$
|
54.04
|
$
|
49.57
|
||||
Tangible book value per share
|
$
|
40.12
|
$
|
43.68
|
||||
Return on equity
|
13.8
|
%
|
15.7
|
%
|
||||
Return on tangible equity5
|
18.6
|
%
|
17.8
|
%
|
||||
Institutional Securities
|
||||||||
Net revenues
|
$
|
7,092
|
$
|
8,199
|
||||
Investment Banking
|
$
|
2,376
|
$
|
2,051
|
||||
Equity
|
$
|
2,827
|
$
|
2,627
|
||||
Fixed Income
|
$
|
1,682
|
$
|
3,041
|
||||
Wealth Management
|
||||||||
Net revenues
|
$
|
6,095
|
$
|
4,704
|
||||
Fee-based client assets ($ billions)10
|
$
|
1,680
|
$
|
1,236
|
||||
Fee-based asset flows ($ billions)11
|
$
|
33.7
|
$
|
11.1
|
||||
Net new assets ($ billions)12
|
$
|
71.2
|
$
|
20.4
|
||||
Loans ($ billions)
|
$
|
114.7
|
$
|
85.2
|
||||
Investment Management
|
||||||||
Net revenues
|
$
|
1,702
|
$
|
886
|
||||
AUM ($ billions)13
|
$
|
1,524
|
$
|
665
|
||||
Long-term net flows ($ billions)14
|
$
|
13.5
|
$
|
15.4
|
Highlights
|
|
•
|
Firm net revenues of $14.8 billion and net income of $3.5 billion reflect strong performance with contributions across each of our business segments and geographies.
|
•
|
The Firm delivered ROTCE of 18.6% or 19.0% excluding the impact of integration-related expenses.5,6
|
•
|
The Firm expense efficiency ratio was 69% or 68% excluding the impact of integration-related expenses.6,7
|
•
|
Common Equity Tier 1 capital standardized ratio was 16.7%.
|
• |
The Firm doubled its quarterly common stock dividend to $0.70 per share and increased its share repurchase authorization of outstanding common stock up to $12 billion, over the next 12 months.
|
• |
Institutional Securities net revenues of $7.1 billion reflect strong results as clients remained active across Investment Banking and Equity.
|
• |
Wealth Management delivered a pre-tax margin of 26.8% or 27.8% excluding integration-related expenses.6,8 Results reflect higher asset management fees, growth in bank lending, as well as net new assets and fee-based flows of $71 billion and $34 billion, respectively.
|
• |
Investment Management results reflect strong asset management fees on AUM of $1.5 trillion which includes $13.5 billion of positive long-term net flows across all asset classes.
|
Media Relations: Wesley McDade 212-761-2430
|
Investor Relations: Leslie Bazos 212-761-5352
|
•
|
Advisory revenues increased from a year ago on higher M&A completed transactions.
|
•
|
Equity underwriting increased from a year ago driven by higher volumes in traditional IPOs partially offset by lower revenues from convertible issuance and follow-on offerings.
|
•
|
Fixed income underwriting revenues decreased from a year ago primarily due to lower investment grade and non-investment grade bond issuances partially offset by strength in non-investment grade loans.
|
•
|
Equity net revenues increased from a year ago driven by high levels of client activity with particular strength in Asia. Results reflect higher revenues in prime brokerage partially offset by declines in cash equities and derivatives driven by lower volatility and volumes compared to a year ago.
|
•
|
Fixed Income net revenues declined versus the prior year due to lower bid-offer spreads and volatility as well as tighter credit spreads.
|
•
|
Other revenues decreased from a year ago primarily reflecting lower mark-to-market gains associated with corporate lending activity.
|
($ millions)
|
2Q 2021
|
2Q 2020
|
||||||
Net Revenues
|
$
|
7,092
|
$
|
8,199
|
||||
Investment Banking
|
$
|
2,376
|
$
|
2,051
|
||||
Advisory
|
$
|
664
|
$
|
462
|
||||
Equity underwriting
|
$
|
1,072
|
$
|
882
|
||||
Fixed income underwriting
|
$
|
640
|
$
|
707
|
||||
Equity
|
$
|
2,827
|
$
|
2,627
|
||||
Fixed Income
|
$
|
1,682
|
$
|
3,041
|
||||
Other
|
$
|
207
|
$
|
480
|
||||
Provision for credit losses
|
$
|
70
|
$
|
217
|
||||
Total Expenses
|
$
|
4,524
|
$
|
4,989
|
||||
Compensation
|
$
|
2,433
|
$
|
2,952
|
||||
Non-compensation
|
$
|
2,091
|
$
|
2,037
|
||||
•
|
Provision for credit losses decreased from a year ago on loans held for investment as a result of an improved macroeconomic environment.
|
•
|
Compensation expense decreased from a year ago on lower revenues.
|
•
|
Non-compensation expenses were essentially unchanged from a year ago.
|
•
|
Asset management revenues increased from a year ago reflecting higher asset levels driven by market appreciation and positive fee-based flows.
|
•
|
Transactional revenues15 increased 49% excluding the impact of lower mark-to-market gains on investments associated with certain employee deferred compensation plans. Results reflect incremental revenues as a result of the E*TRADE acquisition and strong client activity.
|
•
|
Net interest income (NII) increased from a year ago driven by incremental NII as a result of the E*TRADE acquisition and higher bank lending partially offset by the impact of lower rates and an increase in mortgage securities prepayment amortization expense.
|
($ millions)
|
2Q 2021
|
2Q 2020
|
||||||
Net Revenues
|
$
|
6,095
|
$
|
4,704
|
||||
Asset management
|
$
|
3,447
|
$
|
2,507
|
||||
Transactional15
|
$
|
1,172
|
$
|
1,075
|
||||
Net interest income
|
$
|
1,255
|
$
|
1,030
|
||||
Other
|
$
|
221
|
$
|
92
|
||||
Provision for credit losses
|
$
|
3
|
$
|
22
|
||||
Total Expenses
|
$
|
4,456
|
$
|
3,540
|
||||
Compensation
|
$
|
3,275
|
$
|
2,729
|
||||
Non-compensation
|
$
|
1,181
|
$
|
811
|
||||
•
|
Compensation expense increased from a year ago driven by higher compensable revenues and incremental compensation as a result of the E*TRADE acquisition6 partially offset by decreases in the fair value of certain deferred compensation plan referenced investments.
|
•
|
Non-compensation expenses increased from a year ago primarily driven by incremental expenses as a result of the E*TRADE acquisition.6
|
•
|
Asset management and related fees increased from a year ago driven by incremental revenues as a result of the Eaton Vance acquisition and higher AUM on continued strong performance and positive net flows.
|
•
|
Performance-based income and other revenues increased from a year ago primarily on higher accrued carried interest across our funds, particularly in private equity and infrastructure.
|
($ millions)
|
2Q 2021
|
2Q 2020
|
||||||
Net Revenues
|
$
|
1,702
|
$
|
886
|
||||
Asset management and related fees
|
$
|
1,418
|
$
|
684
|
||||
Performance-based income and other
|
$
|
284
|
$
|
202
|
||||
Total Expenses
|
$
|
1,272
|
$
|
670
|
||||
Compensation
|
$
|
715
|
$
|
354
|
||||
Non-compensation
|
$
|
557
|
$
|
316
|
||||
•
|
Compensation expense increased from a year ago primarily driven by incremental compensation expenses as a result of the Eaton Vance acquisition,6 carried interest and higher asset management revenues.
|
•
|
Non-compensation expenses increased from a year ago primarily driven by incremental expenses as a result of the Eaton Vance acquisition6 and higher brokerage and clearing costs.
|
•
|
The Common Equity Tier 1 capital standardized ratio was 16.7%, 350 basis points above the aggregate standardized approach CET1 requirement.
|
•
|
The Firm announced a repurchase authorization of up to $12 billion of outstanding common stock through June 30, 2022. The Firm repurchased $2.9 billion of its outstanding common stock during the quarter as part of its Share Repurchase Program.
|
•
|
The Board of Directors declared a $0.70 quarterly dividend per share, payable on August 13, 2021 to common shareholders of record on July 30, 2021, a 100 percent increase from the current $0.35 per share dividend.
|
2Q 2021
|
2Q 2020
|
|||||||
Capital16
|
||||||||
Standardized Approach
|
||||||||
CET1 capital17
|
16.7
|
%
|
16.5
|
%
|
||||
Tier 1 capital17
|
18.4
|
%
|
18.6
|
%
|
||||
Advanced Approach
|
||||||||
CET1 capital17
|
17.7
|
%
|
16.1
|
%
|
||||
Tier 1 capital17
|
19.5
|
%
|
18.1
|
%
|
||||
Leverage-based capital
|
||||||||
Tier 1 leverage18
|
7.4
|
%
|
8.1
|
%
|
||||
SLR19
|
5.9
|
%
|
7.3
|
%
|
||||
Common Stock Repurchases
|
||||||||
Repurchases ($ millions)
|
$
|
2,939
|
N/A
|
|||||
Number of Shares (millions)
|
34
|
N/A
|
||||||
Average Price
|
$
|
86.21
|
N/A
|
|||||
Period End Shares (millions)
|
1,834
|
1,576
|
||||||
Tax Rate
|
23.1
|
%
|
25.7
|
%
|
||||
Consolidated Income Statement Information
|
(unaudited, dollars in millions)
|
Quarter Ended
|
Percentage Change From:
|
Six Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
Jun 30, 2021
|
Mar 31, 2021
|
Jun 30, 2020
|
Mar 31, 2021
|
Jun 30, 2020
|
Jun 30, 2021
|
Jun 30, 2020
|
Change
|
|||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Investment banking
|
$
|
2,560
|
$
|
2,840
|
$
|
2,142
|
(10
|
%)
|
20
|
%
|
$
|
5,400
|
$
|
3,413
|
58
|
%
|
||||||||||||||||
Trading
|
3,330
|
4,225
|
4,803
|
(21
|
%)
|
(31
|
%)
|
7,555
|
7,604
|
(1
|
%)
|
|||||||||||||||||||||
Investments
|
381
|
318
|
275
|
20
|
%
|
39
|
%
|
699
|
313
|
123
|
%
|
|||||||||||||||||||||
Commissions and fees
|
1,308
|
1,626
|
1,102
|
(20
|
%)
|
19
|
%
|
2,934
|
2,462
|
19
|
%
|
|||||||||||||||||||||
Asset management
|
4,973
|
4,398
|
3,265
|
13
|
%
|
52
|
%
|
9,371
|
6,682
|
40
|
%
|
|||||||||||||||||||||
Other
|
342
|
284
|
473
|
20
|
%
|
(28
|
%)
|
626
|
9
|
*
|
||||||||||||||||||||||
Total non-interest revenues
|
12,894
|
13,691
|
12,060
|
(6
|
%)
|
7
|
%
|
26,585
|
20,483
|
30
|
%
|
|||||||||||||||||||||
Interest income
|
2,212
|
2,437
|
2,358
|
(9
|
%)
|
(6
|
%)
|
4,649
|
5,861
|
(21
|
%)
|
|||||||||||||||||||||
Interest expense
|
347
|
409
|
758
|
(15
|
%)
|
(54
|
%)
|
756
|
2,905
|
(74
|
%)
|
|||||||||||||||||||||
Net interest
|
1,865
|
2,028
|
1,600
|
(8
|
%)
|
17
|
%
|
3,893
|
2,956
|
32
|
%
|
|||||||||||||||||||||
Net revenues
|
14,759
|
15,719
|
13,660
|
(6
|
%)
|
8
|
%
|
30,478
|
23,439
|
30
|
%
|
|||||||||||||||||||||
Provision for credit losses
|
73
|
(98
|
)
|
239
|
*
|
(69
|
%)
|
(25
|
)
|
646
|
*
|
|||||||||||||||||||||
Non-interest expenses:
|
||||||||||||||||||||||||||||||||
Compensation and benefits
|
6,423
|
6,798
|
6,035
|
(6
|
%)
|
6
|
%
|
13,221
|
10,318
|
28
|
%
|
|||||||||||||||||||||
Non-compensation expenses:
|
||||||||||||||||||||||||||||||||
Brokerage, clearing and exchange fees
|
795
|
910
|
716
|
(13
|
%)
|
11
|
%
|
1,705
|
1,456
|
17
|
%
|
|||||||||||||||||||||
Information processing and communications
|
765
|
733
|
589
|
4
|
%
|
30
|
%
|
1,498
|
1,152
|
30
|
%
|
|||||||||||||||||||||
Professional services
|
746
|
624
|
535
|
20
|
%
|
39
|
%
|
1,370
|
984
|
39
|
%
|
|||||||||||||||||||||
Occupancy and equipment
|
414
|
405
|
365
|
2
|
%
|
13
|
%
|
819
|
730
|
12
|
%
|
|||||||||||||||||||||
Marketing and business development
|
146
|
146
|
63
|
--
|
132
|
%
|
292
|
195
|
50
|
%
|
||||||||||||||||||||||
Other
|
831
|
857
|
763
|
(3
|
%)
|
9
|
%
|
1,688
|
1,457
|
16
|
%
|
|||||||||||||||||||||
Total non-compensation expenses
|
3,697
|
3,675
|
3,031
|
1
|
%
|
22
|
%
|
7,372
|
5,974
|
23
|
%
|
|||||||||||||||||||||
Total non-interest expenses
|
10,120
|
10,473
|
9,066
|
(3
|
%)
|
12
|
%
|
20,593
|
16,292
|
26
|
%
|
|||||||||||||||||||||
Income before provision for income taxes
|
4,566
|
5,344
|
4,355
|
(15
|
%)
|
5
|
%
|
9,910
|
6,501
|
52
|
%
|
|||||||||||||||||||||
Provision for income taxes
|
1,054
|
1,176
|
1,119
|
(10
|
%)
|
(6
|
%)
|
2,230
|
1,485
|
50
|
%
|
|||||||||||||||||||||
Net income
|
$
|
3,512
|
$
|
4,168
|
$
|
3,236
|
(16
|
%)
|
9
|
%
|
$
|
7,680
|
$
|
5,016
|
53
|
%
|
||||||||||||||||
Net income applicable to nonredeemable noncontrolling interests
|
1
|
48
|
40
|
(98
|
%)
|
(98
|
%)
|
49
|
122
|
(60
|
%)
|
|||||||||||||||||||||
Net income applicable to Morgan Stanley
|
3,511
|
4,120
|
3,196
|
(15
|
%)
|
10
|
%
|
7,631
|
4,894
|
56
|
%
|
|||||||||||||||||||||
Preferred stock dividend
|
103
|
138
|
149
|
(25
|
%)
|
(31
|
%)
|
241
|
257
|
(6
|
%)
|
|||||||||||||||||||||
Earnings applicable to Morgan Stanley common shareholders
|
$
|
3,408
|
$
|
3,982
|
$
|
3,047
|
(14
|
%)
|
12
|
%
|
$
|
7,390
|
$
|
4,637
|
59
|
%
|
||||||||||||||||
The End Notes are an integral part of this presentation. Refer to the Financial Supplement on pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice for additional information. |
Consolidated Financial Metrics, Ratios and Statistical Data
|
(unaudited)
|
Quarter Ended
|
Percentage Change From:
|
Six Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
Jun 30, 2021
|
Mar 31, 2021
|
Jun 30, 2020
|
Mar 31, 2021
|
Jun 30, 2020
|
Jun 30, 2021
|
Jun 30, 2020
|
Change
|
|||||||||||||||||||||||||
Financial Metrics:
|
||||||||||||||||||||||||||||||||
Earnings per basic share
|
$
|
1.88
|
$
|
2.22
|
$
|
1.98
|
(15
|
%)
|
(5
|
%)
|
$
|
4.10
|
$
|
3.00
|
37
|
%
|
||||||||||||||||
Earnings per diluted share
|
$
|
1.85
|
$
|
2.19
|
$
|
1.96
|
(16
|
%)
|
(6
|
%)
|
$
|
4.04
|
$
|
2.96
|
36
|
%
|
||||||||||||||||
Return on average common equity
|
13.8
|
%
|
16.9
|
%
|
15.7
|
%
|
15.3
|
%
|
12.2
|
%
|
||||||||||||||||||||||
Return on average tangible common equity
|
18.6
|
%
|
21.1
|
%
|
17.8
|
%
|
19.8
|
%
|
13.9
|
%
|
||||||||||||||||||||||
Book value per common share
|
$
|
54.04
|
$
|
52.71
|
$
|
49.57
|
$
|
54.04
|
$
|
49.57
|
||||||||||||||||||||||
Tangible book value per common share
|
$
|
40.12
|
$
|
38.97
|
$
|
43.68
|
$
|
40.12
|
$
|
43.68
|
||||||||||||||||||||||
Excluding integration-related expenses
|
||||||||||||||||||||||||||||||||
Adjusted earnings per diluted share
|
$
|
1.89
|
$
|
2.22
|
$
|
1.96
|
(15
|
%)
|
(4
|
%)
|
$
|
4.11
|
$
|
2.96
|
39
|
%
|
||||||||||||||||
Adjusted return on average common equity
|
14.1
|
%
|
17.1
|
%
|
15.7
|
%
|
15.6
|
%
|
12.2
|
%
|
||||||||||||||||||||||
Adjusted return on average tangible common equity
|
19.0
|
%
|
21.4
|
%
|
17.8
|
%
|
20.1
|
%
|
13.9
|
%
|
||||||||||||||||||||||
Financial Ratios:
|
||||||||||||||||||||||||||||||||
Pre-tax profit margin
|
31
|
%
|
34
|
%
|
32
|
%
|
33
|
%
|
28
|
%
|
||||||||||||||||||||||
Compensation and benefits as a % of net revenues
|
44
|
%
|
43
|
%
|
44
|
%
|
43
|
%
|
44
|
%
|
||||||||||||||||||||||
Non-compensation expenses as a % of net revenues
|
25
|
%
|
23
|
%
|
22
|
%
|
24
|
%
|
25
|
%
|
||||||||||||||||||||||
Firm expense efficiency ratio
|
69
|
%
|
67
|
%
|
66
|
%
|
68
|
%
|
70
|
%
|
||||||||||||||||||||||
Firm expense efficiency ratio excluding integration-related expenses
|
68
|
%
|
66
|
%
|
66
|
%
|
67
|
%
|
70
|
%
|
||||||||||||||||||||||
Effective tax rate
|
23.1
|
%
|
22.0
|
%
|
25.7
|
%
|
22.5
|
%
|
22.8
|
%
|
||||||||||||||||||||||
Statistical Data:
|
||||||||||||||||||||||||||||||||
Period end common shares outstanding (millions)
|
1,834
|
1,869
|
1,576
|
(2
|
%)
|
16
|
%
|
|||||||||||||||||||||||||
Average common shares outstanding (millions)
|
||||||||||||||||||||||||||||||||
Basic
|
1,814
|
1,795
|
1,541
|
1
|
%
|
18
|
%
|
1,804
|
1,548
|
17
|
%
|
|||||||||||||||||||||
Diluted
|
1,841
|
1,818
|
1,557
|
1
|
%
|
18
|
%
|
1,829
|
1,565
|
17
|
%
|
|||||||||||||||||||||
Worldwide employees
|
71,826
|
70,975
|
61,596
|
1
|
%
|
17
|
%
|
|||||||||||||||||||||||||
Notes: | |
- |
For the quarters ended June 30, 2021 and March 31, 2021, Firm results include pre-tax integration-related expenses of $90 million and $75 million ($69 million and $58 million after‐tax) respectively, reported in the Wealth Management and Investment Management business segments. The six months ended June 30, 2021 results include pre-tax integration-related expenses of $165 million ($127 million after‐tax). |
- |
The End Notes are an integral part of this presentation. Refer to the Financial Supplement on pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice for additional information. |