10/14/2021 | Press release | Distributed by Public on 10/14/2021 05:31
Financial Summary2,3,4
|
||||||||
Firm ($ millions, except per share data)
|
3Q 2021
|
3Q 2020
|
||||||
Net revenues
|
$
|
14,753
|
$
|
11,721
|
||||
Provision for credit losses
|
$
|
24
|
$
|
111
|
||||
Compensation expense
|
$
|
5,920
|
$
|
5,086
|
||||
Non-compensation expenses
|
$
|
3,935
|
$
|
3,037
|
||||
Pre-tax income10
|
$
|
4,874
|
$
|
3,487
|
||||
Net income app. to MS
|
$
|
3,707
|
$
|
2,717
|
||||
Expense efficiency ratio7
|
67
|
%
|
69
|
%
|
||||
Earnings per diluted share
|
$
|
1.98
|
$
|
1.66
|
||||
Book value per share
|
$
|
54.56
|
$
|
50.67
|
||||
Tangible book value per share
|
$
|
40.47
|
$
|
44.81
|
||||
Return on equity
|
14.5
|
%
|
13.2
|
%
|
||||
Return on tangible equity5
|
19.6
|
%
|
15.0
|
%
|
||||
Institutional Securities
|
||||||||
Net revenues
|
$
|
7,495
|
$
|
6,129
|
||||
Investment Banking
|
$
|
2,849
|
$
|
1,707
|
||||
Equity
|
$
|
2,876
|
$
|
2,311
|
||||
Fixed Income
|
$
|
1,640
|
$
|
1,954
|
||||
Wealth Management
|
||||||||
Net revenues
|
$
|
5,935
|
$
|
4,654
|
||||
Fee-based client assets ($ billions)11
|
$
|
1,752
|
$
|
1,333
|
||||
Fee-based asset flows ($ billions)12
|
$
|
70.6
|
$
|
23.8
|
||||
Net new assets ($ billions)9
|
$
|
134.5
|
$
|
51.8
|
||||
Loans ($ billions)
|
$
|
121.2
|
$
|
91.3
|
||||
Investment Management
|
||||||||
Net revenues
|
$
|
1,453
|
$
|
1,056
|
||||
AUM ($ billions)13
|
$
|
1,522
|
$
|
715
|
||||
Long-term net flows ($ billions)14
|
$
|
(2.3
|
)
|
$
|
10.4
|
•
|
Firm net revenues of $14.8 billion and net income of $3.7 billion increased more than 25% year over year reflecting strong performance across all business segments and regions.
|
• | The Firm delivered ROTCE of 19.6% or 20.2% excluding the impact of integration-related expenses.5,6 |
• | The Firm expense efficiency ratio improved to 67% or 66% excluding the impact of integration-related expenses.6,7 |
• | Common Equity Tier 1 capital standardized ratio was 16.0%. |
• | Institutional Securities net revenues of $7.5 billion reflect record Investment Banking revenues, led by advisory, continued strong performance in Equity, and solid results in Fixed Income. |
• | Wealth Management delivered a pre-tax margin of 25.8% or 27.7% excluding integration-related expenses.6,8 Results reflect record asset management revenues and continued growth in bank lending. The business added record net new assets of $135 billion9 representing a year-to-date 10% annualized growth rate from beginning period assets. |
•
|
Investment Management results reflect an increase in fee-based asset management revenues on AUM of $1.5 trillion.
|
Media Relations: Wesley McDade 212-761-2430
|
Investor Relations: Leslie Bazos 212-761-5352
|
•
|
Record advisory revenues driven by higher completed M&A transactions.
|
•
|
Equity underwriting revenues increased from a year ago primarily from IPOs and blocks driven by more issuances and activity in a constructive market.
|
•
|
Fixed income underwriting revenues increased from a year ago driven by higher non-investment grade loan issuances on the back of increased event financing, partially offset by lower investment grade bond volumes.
|
•
|
Equity net revenues increased from a year ago reflecting higher results across products driven by strong client engagement in a favorable market environment, with particular strength in Asia.
|
•
|
Fixed Income net revenues declined versus a strong prior year quarter. Results reflect a decrease in our macro businesses in a less volatile environment and lower results in our micro businesses driven by tighter bid-offer and credit spreads. The decrease was partially offset by higher revenues in commodities driven by an increase in client activity.
|
($ millions)
|
3Q 2021
|
3Q 2020
|
||||||
Net Revenues
|
$
|
7,495
|
$
|
6,129
|
||||
Investment Banking
|
$
|
2,849
|
$
|
1,707
|
||||
Advisory
|
$
|
1,272
|
$
|
357
|
||||
Equity underwriting
|
$
|
1,010
|
$
|
874
|
||||
Fixed income underwriting
|
$
|
567
|
$
|
476
|
||||
Equity
|
$
|
2,876
|
$
|
2,311
|
||||
Fixed Income
|
$
|
1,640
|
$
|
1,954
|
||||
Other
|
$
|
130
|
$
|
157
|
||||
Provision for credit losses
|
$
|
24
|
$
|
113
|
||||
Total Expenses
|
$
|
4,498
|
$
|
3,968
|
||||
Compensation
|
$
|
2,248
|
$
|
2,001
|
||||
Non-compensation
|
$
|
2,250
|
$
|
1,967
|
||||
•
|
Provision for credit losses decreased from a year ago on loans held for investment as a result of an improved macroeconomic environment.
|
•
|
Compensation expense increased from a year ago on higher revenues.
|
•
|
Non-compensation expenses increased from a year ago primarily driven by higher volume related expenses.
|
•
|
Asset management revenues increased from a year ago reflecting higher asset levels driven by market appreciation and strong positive fee-based flows in the advisor-led channel.
|
•
|
Transactional revenues15 increased 38% 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 increased from a year ago as a result of the E*TRADE acquisition and strong bank lending growth.
|
($ millions)
|
3Q 2021
|
3Q 2020
|
||||||
Net Revenues
|
$
|
5,935
|
$
|
4,654
|
||||
Asset management
|
$
|
3,628
|
$
|
2,793
|
||||
Transactional15
|
$
|
832
|
$
|
880
|
||||
Net interest income
|
$
|
1,348
|
$
|
889
|
||||
Other
|
$
|
127
|
$
|
92
|
||||
Provision for credit losses
|
$
|
0
|
$
|
(2
|
)
|
|||
Total Expenses
|
$
|
4,405
|
$
|
3,536
|
||||
Compensation
|
$
|
3,159
|
$
|
2,684
|
||||
Non-compensation
|
$
|
1,246
|
$
|
852
|
||||
•
|
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.
|
•
|
Performance-based income and other revenues decreased from a year ago due to overall lower accrued carried interest in the Asia private equity business, primarily driven by an underlying public investment in one of the funds.
|
($ millions)
|
3Q 2021
|
3Q 2020
|
||||||
Net Revenues
|
$
|
1,453
|
$
|
1,056
|
||||
Asset management and related fees
|
$
|
1,470
|
$
|
795
|
||||
Performance-based income and other
|
$
|
(17
|
)
|
$
|
261
|
|||
Total Expenses
|
$
|
1,083
|
$
|
741
|
||||
Compensation
|
$
|
513
|
$
|
401
|
||||
Non-compensation
|
$
|
570
|
$
|
340
|
||||
•
|
Compensation expense increased from a year ago primarily driven by incremental compensation expenses as a result of the Eaton Vance acquisition,6 partially offset by lower compensation associated with carried interest.
|
•
|
Non-compensation expenses increased from a year ago primarily driven by incremental expenses as a result of the Eaton Vance acquisition.6
|
•
|
The Firm repurchased $3.6 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 November 15, 2021 to common shareholders of record on October 29, 2021.
|
•
|
The Firm intends to early adopt the standardized approach for counterparty credit risk (SA-CCR) under Basel III in the fourth quarter. In the absence of further mitigation, our risk-weighted assets (RWAs) under the Standardized Approach could increase by $35 - $45 billion and decrease our Standardized CET1 capital ratio by approximately 120 basis points. 20
|
3Q 2021
|
3Q 2020
|
|||||||
Capital16
|
||||||||
Standardized Approach
|
||||||||
CET1 capital17,20
|
16.0
|
%
|
17.4
|
%
|
||||
Tier 1 capital17
|
17.6
|
%
|
19.5
|
%
|
||||
Advanced Approach
|
||||||||
CET1 capital17
|
17.1
|
%
|
16.9
|
%
|
||||
Tier 1 capital17
|
18.9
|
%
|
19.0
|
%
|
||||
Leverage-based capital
|
||||||||
Tier 1 leverage18
|
7.3
|
%
|
8.3
|
%
|
||||
SLR19
|
5.7
|
%
|
7.4
|
%
|
||||
Common Stock Repurchases
|
||||||||
Repurchases ($ millions)
|
$
|
3,557
|
N/A
|
|||||
Number of Shares (millions)
|
36
|
N/A
|
||||||
Average Price
|
$
|
99.44
|
N/A
|
|||||
Period End Shares (millions)
|
1,799
|
1,576
|
||||||
Tax Rate
|
23.6
|
%
|
21.1
|
%
|
||||
Consolidated Income Statement Information
|
||||||||||||||||||||||||||||||||
(unaudited, dollars in millions)
|
||||||||||||||||||||||||||||||||
Quarter Ended
|
Percentage Change From:
|
Nine Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
Sep 30, 2021
|
Jun 30, 2021
|
Sep 30, 2020
|
Jun 30, 2021
|
Sep 30, 2020
|
Sep 30, 2021
|
Sep 30, 2020
|
Change
|
|||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Investment banking
|
$
|
3,013
|
$
|
2,560
|
$
|
1,826
|
18
|
%
|
65
|
%
|
$
|
8,413
|
$
|
5,239
|
61
|
%
|
||||||||||||||||
Trading
|
2,861
|
3,330
|
3,150
|
(14
|
%)
|
(9
|
%)
|
10,416
|
10,754
|
(3
|
%)
|
|||||||||||||||||||||
Investments
|
45
|
381
|
346
|
(88
|
%)
|
(87
|
%)
|
744
|
659
|
13
|
%
|
|||||||||||||||||||||
Commissions and fees
|
1,280
|
1,308
|
1,037
|
(2
|
%)
|
23
|
%
|
4,214
|
3,499
|
20
|
%
|
|||||||||||||||||||||
Asset management
|
5,201
|
4,973
|
3,664
|
5
|
%
|
42
|
%
|
14,572
|
10,346
|
41
|
%
|
|||||||||||||||||||||
Other
|
290
|
342
|
212
|
(15
|
%)
|
37
|
%
|
916
|
221
|
*
|
||||||||||||||||||||||
Total non-interest revenues
|
12,690
|
12,894
|
10,235
|
(2
|
%)
|
24
|
%
|
39,275
|
30,718
|
28
|
%
|
|||||||||||||||||||||
Interest income
|
2,351
|
2,212
|
2,056
|
6
|
%
|
14
|
%
|
7,000
|
7,917
|
(12
|
%)
|
|||||||||||||||||||||
Interest expense
|
288
|
347
|
570
|
(17
|
%)
|
(49
|
%)
|
1,044
|
3,475
|
(70
|
%)
|
|||||||||||||||||||||
Net interest
|
2,063
|
1,865
|
1,486
|
11
|
%
|
39
|
%
|
5,956
|
4,442
|
34
|
%
|
|||||||||||||||||||||
Net revenues
|
14,753
|
14,759
|
11,721
|
--
|
26
|
%
|
45,231
|
35,160
|
29
|
%
|
||||||||||||||||||||||
Provision for credit losses
|
24
|
73
|
111
|
(67
|
%)
|
(78
|
%)
|
(1
|
)
|
757
|
*
|
|||||||||||||||||||||
Non-interest expenses:
|
||||||||||||||||||||||||||||||||
Compensation and benefits
|
5,920
|
6,423
|
5,086
|
(8
|
%)
|
16
|
%
|
19,141
|
15,404
|
24
|
%
|
|||||||||||||||||||||
Non-compensation expenses:
|
||||||||||||||||||||||||||||||||
Brokerage, clearing and exchange fees
|
825
|
795
|
697
|
4
|
%
|
18
|
%
|
2,530
|
2,153
|
18
|
%
|
|||||||||||||||||||||
Information processing and communications
|
788
|
765
|
616
|
3
|
%
|
28
|
%
|
2,286
|
1,768
|
29
|
%
|
|||||||||||||||||||||
Professional services
|
734
|
746
|
542
|
(2
|
%)
|
35
|
%
|
2,104
|
1,526
|
38
|
%
|
|||||||||||||||||||||
Occupancy and equipment
|
427
|
414
|
373
|
3
|
%
|
14
|
%
|
1,246
|
1,103
|
13
|
%
|
|||||||||||||||||||||
Marketing and business development
|
146
|
146
|
78
|
--
|
87
|
%
|
438
|
273
|
60
|
%
|
||||||||||||||||||||||
Other
|
1,015
|
831
|
731
|
22
|
%
|
39
|
%
|
2,703
|
2,188
|
24
|
%
|
|||||||||||||||||||||
Total non-compensation expenses
|
3,935
|
3,697
|
3,037
|
6
|
%
|
30
|
%
|
11,307
|
9,011
|
25
|
%
|
|||||||||||||||||||||
Total non-interest expenses
|
9,855
|
10,120
|
8,123
|
(3
|
%)
|
21
|
%
|
30,448
|
24,415
|
25
|
%
|
|||||||||||||||||||||
Income before provision for income taxes
|
4,874
|
4,566
|
3,487
|
7
|
%
|
40
|
%
|
14,784
|
9,988
|
48
|
%
|
|||||||||||||||||||||
Provision for income taxes
|
1,150
|
1,054
|
736
|
9
|
%
|
56
|
%
|
3,380
|
2,221
|
52
|
%
|
|||||||||||||||||||||
Net income
|
$
|
3,724
|
$
|
3,512
|
$
|
2,751
|
6
|
%
|
35
|
%
|
$
|
11,404
|
$
|
7,767
|
47
|
%
|
||||||||||||||||
Net income applicable to nonredeemable noncontrolling interests
|
17
|
1
|
34
|
*
|
(50
|
%)
|
66
|
156
|
(58
|
%)
|
||||||||||||||||||||||
Net income applicable to Morgan Stanley
|
3,707
|
3,511
|
2,717
|
6
|
%
|
36
|
%
|
11,338
|
7,611
|
49
|
%
|
|||||||||||||||||||||
Preferred stock dividend
|
123
|
103
|
120
|
19
|
%
|
3
|
%
|
364
|
377
|
(3
|
%)
|
|||||||||||||||||||||
Earnings applicable to Morgan Stanley common shareholders
|
$
|
3,584
|
$
|
3,408
|
$
|
2,597
|
5
|
%
|
38
|
%
|
$
|
10,974
|
$
|
7,234
|
52
|
%
|
Consolidated Financial Metrics, Ratios and Statistical Data
|
||||||||||||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||||||||||
Quarter Ended
|
Percentage Change From:
|
Nine Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
Sep 30, 2021
|
Jun 30, 2021
|
Sep 30, 2020
|
Jun 30, 2021
|
Sep 30, 2020
|
Sep 30, 2021
|
Sep 30, 2020
|
Change
|
|||||||||||||||||||||||||
Financial Metrics:
|
||||||||||||||||||||||||||||||||
Earnings per basic share
|
$
|
2.01
|
$
|
1.88
|
$
|
1.68
|
7
|
%
|
20
|
%
|
$
|
6.11
|
$
|
4.68
|
31
|
%
|
||||||||||||||||
Earnings per diluted share
|
$
|
1.98
|
$
|
1.85
|
$
|
1.66
|
7
|
%
|
19
|
%
|
$
|
6.02
|
$
|
4.62
|
30
|
%
|
||||||||||||||||
Return on average common equity
|
14.5
|
%
|
13.8
|
%
|
13.2
|
%
|
15.1
|
%
|
12.6
|
%
|
||||||||||||||||||||||
Return on average tangible common equity
|
19.6
|
%
|
18.6
|
%
|
15.0
|
%
|
19.7
|
%
|
14.3
|
%
|
||||||||||||||||||||||
Book value per common share
|
$
|
54.56
|
$
|
54.04
|
$
|
50.67
|
$
|
54.56
|
$
|
50.67
|
||||||||||||||||||||||
Tangible book value per common share
|
$
|
40.47
|
$
|
40.12
|
$
|
44.81
|
$
|
40.47
|
$
|
44.81
|
||||||||||||||||||||||
Excluding integration-related expenses
|
||||||||||||||||||||||||||||||||
Adjusted earnings per diluted share
|
$
|
2.04
|
$
|
1.89
|
$
|
1.66
|
8
|
%
|
23
|
%
|
$
|
6.15
|
$
|
4.62
|
33
|
%
|
||||||||||||||||
Adjusted return on average common equity
|
15.0
|
%
|
14.1
|
%
|
13.2
|
%
|
15.4
|
%
|
12.6
|
%
|
||||||||||||||||||||||
Adjusted return on average tangible common equity
|
20.2
|
%
|
19.0
|
%
|
15.0
|
%
|
20.2
|
%
|
14.3
|
%
|
||||||||||||||||||||||
Financial Ratios:
|
||||||||||||||||||||||||||||||||
Pre-tax profit margin
|
33
|
%
|
31
|
%
|
30
|
%
|
33
|
%
|
28
|
%
|
||||||||||||||||||||||
Compensation and benefits as a % of net revenues
|
40
|
%
|
44
|
%
|
43
|
%
|
42
|
%
|
44
|
%
|
||||||||||||||||||||||
Non-compensation expenses as a % of net revenues
|
27
|
%
|
25
|
%
|
26
|
%
|
25
|
%
|
26
|
%
|
||||||||||||||||||||||
Firm expense efficiency ratio
|
67
|
%
|
69
|
%
|
69
|
%
|
67
|
%
|
69
|
%
|
||||||||||||||||||||||
Firm expense efficiency ratio excluding integration-related expenses
|
66
|
%
|
68
|
%
|
69
|
%
|
67
|
%
|
69
|
%
|
||||||||||||||||||||||
Effective tax rate
|
23.6
|
%
|
23.1
|
%
|
21.1
|
%
|
22.9
|
%
|
22.2
|
%
|
||||||||||||||||||||||
Statistical Data:
|
||||||||||||||||||||||||||||||||
Period end common shares outstanding (millions)
|
1,799
|
1,834
|
1,576
|
(2
|
%)
|
14
|
%
|
|||||||||||||||||||||||||
Average common shares outstanding (millions)
|
||||||||||||||||||||||||||||||||
Basic
|
1,781
|
1,814
|
1,542
|
(2
|
%)
|
15
|
%
|
1,797
|
1,546
|
16
|
%
|
|||||||||||||||||||||
Diluted
|
1,812
|
1,841
|
1,566
|
(2
|
%)
|
16
|
%
|
1,824
|
1,565
|
17
|
%
|
|||||||||||||||||||||
Worldwide employees
|
73,620
|
71,826
|
63,051
|
2
|
%
|
17
|
%
|
- |
For the quarters ended September 30, 2021 and June 30, 2021, Firm results include pre-tax integration-related expenses of $145 million and $90 million ($111 million and $69 million after‐tax) respectively, reported in the Wealth Management and Investment Management business segments. The nine months ended September 30, 2021 results include pre-tax integration-related expenses of $310 million ($238 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. |