8-K
MORGAN STANLEY (MS)
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORTPursuant To Section 13 or 15(d) ofthe Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 16, 2024
| Morgan Stanley | ||
|---|---|---|
| (Exact Name of Registrant<br>as Specified in Charter) | ||
| Delaware | 1-11758 | 36-3145972 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 1585 Broadway, New York, New York | 10036 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| Registrant’s telephone number, including area code: (212) 761-4000 | ||
| Not Applicable | ||
| (Former Name or Former Address, if Changed Since Last Report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value | MS | New York Stock Exchange |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| --- | --- | --- |
| Depositary Shares, each representing 1/1,000th interest in a share of Floating Rate Non-Cumulative Preferred Stock, Series A, $0.01 par value | MS/PA | New York Stock Exchange |
| Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series E, $0.01 par value | MS/PE | New York Stock Exchange |
| Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series F, $0.01 par value | MS/PF | New York Stock Exchange |
| Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series I, $0.01 par value | MS/PI | New York Stock Exchange |
| Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series K, $0.01 par value | MS/PK | New York Stock Exchange |
| Depositary Shares, each representing 1/1,000th interest in a share of 4.875% Non-Cumulative Preferred Stock, Series L, $0.01 par value | MS/PL | New York Stock Exchange |
| Depositary Shares, each representing 1/1,000th interest in a share of 4.250% Non-Cumulative Preferred Stock, Series O, $0.01 par value | MS/PO | New York Stock Exchange |
| Depositary Shares, each representing 1/1,000th interest in a share of 6.500% Non-Cumulative Preferred Stock, Series P, $0.01 par value | MS/PP | New York Stock Exchange |
| Global Medium-Term Notes, Series A, Fixed Rate Step-Up Senior Notes Due 2026 of Morgan Stanley Finance LLC (and Registrant’s guarantee with respect thereto) | MS/26C | New York Stock Exchange |
| Global Medium-Term Notes, Series A, Floating Rate Notes Due 2029 of Morgan Stanley Finance LLC (and Registrant’s guarantee with respect thereto) | MS/29 | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On July 16, 2024, Morgan Stanley (the "Company") released financial information with respect to its quarter ended June 30, 2024. A copy of the press release containing this information is annexed as Exhibit 99.1 to this Report and by this reference incorporated herein and made a part hereof. In addition, a copy of the Company's Financial Data Supplement for its quarter ended June 30, 2024 is annexed as Exhibit 99.2 to this Report and by this reference incorporated herein and made a part hereof.
The information furnished under Item 2.02 of this Report, including Exhibit 99.1 and Exhibit 99.2, shall be deemed to be "filed" for purposes of the Securities Exchange Act of 1934, as amended.
| Item 9.01 | Financial Statements and Exhibits. |
|---|---|
| (d) | Exhibits |
| Exhibit | |
| Number | Description |
| 99.1 | Press release of the Company, datedJuly 16, 2024, containing financial information for the quarter endedJune 30, 2024. |
| 99.2 | Financial Data Supplement of the Company for the quarter endedJune 30, 2024. |
| 101 | Interactive Data Files pursuant to Rule 406 of Regulation S-T formatted in Inline eXtensible Business Reporting Language (“Inline XBRL”). |
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| MORGAN STANLEY <br>(Registrant) | ||||
|---|---|---|---|---|
| Date: | July 16, 2024 | By: | /s/ Raja Akram | |
| Name: | Raja Akram | |||
| Title: | Deputy Chief Financial Officer |
Document
Morgan Stanley Second Quarter 2024 Earnings Results
Morgan Stanley Reports Net Revenues of $15.0 Billion, EPS of $1.82 and ROTCE of 17.5%
NEW YORK, July 16, 2024 – Morgan Stanley (NYSE: MS) today reported net revenues of $15.0 billion for the second quarter ended June 30, 2024 compared with $13.5 billion a year ago. Net income applicable to Morgan Stanley was $3.1 billion, or $1.82 per diluted share,1 compared with net income of $2.2 billion, or $1.24 per diluted share,1 for the same period a year ago.
| Ted Pick, Chief Executive Officer, said, “The Firm delivered another strong quarter in an improving capital markets environment, resulting in first half 2024 revenues of $30.2 billion, EPS of $3.85 and an ROTCE of 18.6%. Total client assets grew to $7.2 trillion on our road to $10+ trillion. We announced an increase of our quarterly common stock dividend to $0.925 per share while maintaining robust capital levels with a CET1 ratio of 15.2%, reflecting the durability of our business model. We continue to execute on our strategy and remain well positioned to deliver growth and long-term value for our shareholders.” | ||
|---|---|---|
| Financial Summary2,3 | ||
| --- | --- | --- |
| Firm ($ millions, except per share data) | 2Q 2024 | 2Q 2023 |
| Net revenues | 15,019 | 13,457 |
| Provision for credit losses | 76 | 161 |
| Compensation expense | 6,460 | 6,262 |
| Non-compensation expenses | 4,409 | 4,222 |
| Pre-tax income6 | 4,074 | 2,812 |
| Net income app. to MS | 3,076 | 2,182 |
| Expense efficiency ratio8 | 72 | 78 |
| Earnings per diluted share1 | 1.82 | 1.24 |
| Book value per share | 56.80 | 55.24 |
| Tangible book value per share4 | 42.30 | 40.79 |
| Return on equity | 13.0 | 8.9 |
| Return on tangible common equity4 | 17.5 | 12.1 |
| Institutional Securities | ||
| Net revenues | 6,982 | 5,654 |
| Investment Banking | 1,619 | 1,075 |
| Equity | 3,018 | 2,548 |
| Fixed Income | 1,999 | 1,716 |
| Wealth Management | ||
| Net revenues | 6,792 | 6,660 |
| Fee-based client assets ($ billions)9 | 2,188 | 1,856 |
| Fee-based asset flows ($ billions)10 | 26.0 | 22.7 |
| Net new assets ($ billions)11 | 36.4 | 89.5 |
| Loans ($ billions) | 150.9 | 144.7 |
| Investment Management | ||
| Net revenues | 1,386 | 1,281 |
| AUM ($ billions)12 | 1,518 | 1,412 |
| Long-term net flows ($ billions)13 | (1.2) | 1.1 |
All values are in US Dollars.
Highlights
•Net revenues for the second quarter were $15.0 billion, balanced across Wealth Management and Institutional Securities.
•The Firm delivered ROTCE of 17.5%.2,4
•The Firm expense efficiency ratio was 72% for both the second quarter and the first half of the year benefiting from our scale and intentional expense management.3,8
•During the quarter, the Firm accreted $1.5 billion of Common Equity Tier 1 capital while supporting our clients and executing capital actions, and ended the quarter with a Standardized Common Equity Tier 1 capital ratio of 15.2%.16
•Institutional Securities net revenues of $7.0 billion reflect strong performance across the franchise, with notable strength in Equity, driven by higher client activity, and in Investment Banking on robust debt underwriting results.
•Wealth Management delivered a pre-tax margin of 26.8% for the quarter.7 Net revenues were $6.8 billion on record asset management revenues driven by cumulative fee-based asset flows and a positive market environment. Fee-based asset flows were $26 billion for the quarter and $52 billion for the first half of the year.10 The business added net new assets of $36 billion in the quarter and $131 billion in the first half of the year.11
•Investment Management results reflect net revenues of $1.4 billion, primarily driven by increased asset management revenues on higher long-term average AUM.12
| Media Relations: Wesley McDade 212-761-2430 Investor Relations: Leslie Bazos 212-761-5352 |
|---|
Second Quarter Results
Institutional Securities
Institutional Securities reported net revenues for the current quarter of $7.0 billion compared with $5.7 billion a year ago. Pre-tax income was $2.0 billion compared with $1.0 billion a year ago.6
| Investment Banking revenues up 51% from a year ago:<br><br><br><br>•Advisory revenues increased from a year ago on higher completed M&A transactions.<br><br><br><br>•Equity underwriting revenues increased from a year ago driven by private placements and higher revenues in IPOs and convertible offerings.<br><br><br><br>•Fixed income underwriting revenues increased significantly from a year ago primarily driven by higher non-investment grade issuances.<br><br><br><br>Equity net revenues up 18% from a year ago:<br><br><br><br>•Equity net revenues increased from a year ago reflecting strong performance across business lines and regions, particularly in Asia, on stronger client engagement and a constructive market environment.<br><br><br><br>Fixed Income net revenues up 16% from a year ago:<br><br><br><br>•Fixed Income net revenues increased from a year ago driven by higher results in credit reflecting strong financing revenues and in foreign exchange on higher client engagement.<br><br><br><br>Other:<br><br><br><br>•Other revenues for the quarter increased from a year ago primarily driven by higher net interest income and fees and lower mark-to-market losses on corporate loans, inclusive of loan hedges. | ( millions) | ||
|---|---|---|---|
| Net Revenues | 5,654 | ||
| Investment Banking | 1,075 | ||
| Advisory | 455 | ||
| Equity underwriting | 225 | ||
| Fixed income underwriting | 395 | ||
| Equity | 2,548 | ||
| Fixed Income | 1,716 | ||
| Other | 315 | ||
| Provision for credit losses | 97 | ||
| Total Expenses | 4,580 | ||
| Compensation | 2,215 | ||
| Non-compensation | 2,365 |
All values are in US Dollars.
Provision for credit losses:
•Provision for credit losses decreased on lower provisions on corporate loans compared to the prior year quarter.
Total Expenses:
•Compensation expense increased from a year ago on higher revenues, partially offset by lower severance costs.
•Non-compensation expenses increased from a year ago on higher execution-related expenses.
Wealth Management
Wealth Management reported net revenues of $6.8 billion in the current quarter compared with $6.7 billion a year ago. Pre-tax income of $1.8 billion6 in the current quarter resulted in a pre-tax margin of 26.8%.7
| Net revenues up 2% from a year ago:<br><br><br><br>•Record asset management revenues reflect higher asset levels from a year ago and the cumulative impact of positive fee-based flows.<br><br><br><br>•Transactional revenues increased 5% excluding the impact of mark-to-market on investments associated with DCP.5,14 The increase was primarily driven by higher equity related transactions.<br><br><br><br>•Net interest income decreased from a year ago on lower average sweep deposits reflecting the cumulative effect of cash redeployments by clients in a higher interest rate environment.<br><br><br><br>Provision for credit losses:<br><br><br><br>•Provision for credit losses decreased on lower provisions in the commercial real estate sector compared to the prior year quarter.<br><br><br><br>Total Expenses:<br><br><br><br>•Compensation expense increased from a year ago on higher compensable revenues, partially offset by lower expenses related to DCP and lower severance costs.<br><br><br><br>•Non-compensation expenses decreased from a year ago on lower professional services and the absence of integration-related expenses in the current quarter. | ( millions) | ||
|---|---|---|---|
| Net Revenues | 6,660 | ||
| Asset management | 3,452 | ||
| Transactional14 | 869 | ||
| Net interest | 2,156 | ||
| Other | 183 | ||
| Provision for credit losses | 64 | ||
| Total Expenses | 4,915 | ||
| Compensation | 3,503 | ||
| Non-compensation | 1,412 |
All values are in US Dollars.
Investment Management
Investment Management net revenues were $1.4 billion compared with $1.3 billion a year ago. Pre-tax income was $222 million compared with $170 million a year ago.6
| Net revenues up 8% from a year ago:<br><br><br><br>•Asset management and related fees increased from a year ago on higher average AUM driven by higher market levels.<br><br><br><br>•Performance-based income and other revenues increased from a year ago primarily due to higher accrued carried interest in our private funds, partially offset by mark-to-market losses on investments associated with DCP versus gains in the prior year.<br><br><br><br>Total Expenses:<br><br>•Compensation expense increased from a year ago on higher compensation associated with carried interest.<br><br><br><br>•Non-compensation expenses increased from a year ago, primarily driven by continued investments in technology and infrastructure to support business growth. | ( millions) | ||
|---|---|---|---|
| Net Revenues | 1,281 | ||
| Asset management and related fees | 1,268 | ||
| Performance-based income and other | 13 | ||
| Total Expenses | 1,111 | ||
| Compensation | 544 | ||
| Non-compensation | 567 |
All values are in US Dollars.
Other Matters
| •The Firm repurchased 0.8 billion of its outstanding common stock during the quarter as part of its Share Repurchase Program.•The Firm reauthorized a multi-year repurchase program of up to 20 billion of outstanding common stock without a set expiration date.•The Board of Directors declared a 0.925 quarterly dividend per share, an increase of 7.5 cents, payable on August 15, 2024 to common shareholders of record on July 31, 2024.•The effective tax rate for the current quarter was 23.5%. | ||
|---|---|---|
| 750 | 1,000 | |
| 8 | 12 | |
| 95.96 | 83.86 | |
| 1,619 | 1,659 | |
| 23.5% | 21.0% | |
| 15.2% | 15.5% | |
| 17.0% | 17.4% | |
| 15.3% | 15.8% | |
| 17.1% | 17.8% | |
| 6.8% | 6.7% | |
| 5.5% | 5.5% |
All values are in US Dollars.
Morgan Stanley (NYSE: MS) is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in 42 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit www.morganstanley.com.
A financial summary follows. Financial, statistical and business-related information, as well as information regarding business and segment trends, is included in the financial supplement. Both the earnings release and the financial supplement are available online in the Investor Relations section at www.morganstanley.com.
NOTICE:
The information provided herein and in the financial supplement, including information provided on the Firm’s earnings conference calls, may include certain non-GAAP financial measures. The definition of such measures or reconciliation of such measures to the comparable U.S. GAAP figures are included in this earnings release and the financial supplement, both of which are available on www.morganstanley.com.
This earnings release may contain forward-looking statements, including the attainment of certain financial and other targets, objectives and goals. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management’s current estimates, projections, expectations, assumptions, interpretations or beliefs and which are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of risks and uncertainties that may affect the future results of the Firm, please see “Forward-Looking Statements” preceding Part I, Item 1, “Competition” and “Supervision and Regulation” in Part I, Item 1, “Risk Factors” in Part I, Item 1A, “Legal Proceedings” in Part I, Item 3, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and “Quantitative and Qualitative Disclosures about Risk” in Part II, Item 7A in the Firm’s Annual Report on Form 10-K for the year ended December 31, 2023 and other items throughout the Form 10-K, the Firm’s Quarterly Reports on Form 10-Q and the Firm’s Current Reports on Form 8-K, including any amendments thereto.
1 Includes preferred dividends related to the calculation of earnings per share for the second quarter of 2024 and 2023 of approximately $134 million and $133 million, respectively.
2 The Firm prepares its Consolidated Financial Statements using accounting principles generally accepted in the United States (U.S. GAAP). From time to time, Morgan Stanley may disclose certain “non-GAAP financial measures” in the course of its earnings releases, earnings conference calls, financial presentations and otherwise. The Securities and Exchange Commission defines a “non-GAAP financial measure” as a numerical measure of historical or future financial performance, financial position, or cash flows that is subject to adjustments that effectively exclude, or include amounts from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. Non-GAAP financial measures disclosed by Morgan Stanley are provided as additional information to analysts, investors and other stakeholders in order to provide them with greater transparency about, or an alternative method for assessing our financial condition, operating results, or capital adequacy. These measures are not in accordance with, or a substitute for U.S. GAAP, and may be different from or inconsistent with non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we will also generally define it or present the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable U.S. GAAP financial measure.
3 Our earnings releases, earnings conference calls, financial presentations and other communications may also include certain metrics which we believe to be useful to us, analysts, investors, and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results.
4 Tangible common equity is a non-GAAP financial measure that the Firm considers useful for analysts, investors and other stakeholders to allow comparability of period-to-period operating performance and capital adequacy. Tangible common equity represents common equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction. The calculation of return on average tangible common equity, also a non-GAAP financial measure, represents full year or annualized net income applicable to Morgan Stanley less preferred dividends as a percentage of average tangible common equity. The calculation of tangible book value per common share, also a non-GAAP financial measure, represents tangible common shareholder’s equity divided by common shares outstanding.
5 “DCP” refers to certain employee deferred cash-based compensation programs. Please refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other Matters – Deferred Cash-Based Compensation” in the Firm’s Annual Report on Form 10-K for the year ended December 31, 2023.
6 Pre-tax income represents income before provision for income taxes.
7 Pre-tax margin represents income before provision for income taxes divided by net revenues.
8 The expense efficiency ratio represents total non-interest expenses as a percentage of net revenues.
9 Wealth Management fee-based client assets represent the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets.
10 Wealth Management fee-based asset flows include net new fee-based assets (including asset acquisitions), net account transfers, dividends, interest, and client fees, and exclude institutional cash management related activity.
11 Wealth Management net new assets represent client asset inflows, inclusive of interest, dividends and asset acquisitions, less client asset outflows, and exclude the impact of business combinations/divestitures and the impact of fees and commissions.
12 AUM is defined as assets under management or supervision.
13 Long-term net flows include the Equity, Fixed Income and Alternative and Solutions asset classes and excludes the Liquidity and Overlay Services asset class.
14 Transactional revenues include investment banking, trading, and commissions and fee revenues.
15 Capital ratios are estimates as of the press release date, July 16, 2024.
16 CET1 capital is defined as Common Equity Tier 1 capital. The Firm’s risk-based capital ratios are computed under each of the (i) standardized approaches for calculating credit risk and market risk risk‐weighted assets (RWAs) (the “Standardized Approach”) and (ii) applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (the “Advanced Approach”). For information on the calculation of regulatory capital and ratios, and associated regulatory requirements, please refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Regulatory Requirements" in the Firm’s Annual Report on Form 10-K for the year ended December 31, 2023.
17 The Tier 1 leverage ratio is a leverage-based capital requirement that measures the Firm’s leverage. Tier 1 leverage ratio utilizes Tier 1 capital as the numerator and average adjusted assets as the denominator.
18 The Firm’s supplementary leverage ratio (SLR) utilizes a Tier 1 capital numerator of approximately $80.5 billion and $78.4 billion, and supplementary leverage exposure denominator of approximately $1.47 trillion and $1.42 trillion, for the second quarter of 2024 and 2023, respectively.
| Consolidated Income Statement Information | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited, dollars in millions) | ||||||||||||||||
| Quarter Ended | Percentage Change From: | Six Months Ended | Percentage<br>Change | |||||||||||||
| Jun 30, 2024 | Mar 31, 2024 | Jun 30, 2023 | Mar 31, 2024 | Jun 30, 2023 | Jun 30, 2024 | Jun 30, 2023 | ||||||||||
| Revenues: | ||||||||||||||||
| Investment banking | $ | 1,735 | $ | 1,589 | $ | 1,155 | 9 | % | 50 | % | $ | 3,324 | $ | 2,485 | 34 | % |
| Trading | 4,131 | 4,852 | 3,802 | (15 | %) | 9 | % | 8,983 | 8,279 | 9 | % | |||||
| Investments | 157 | 137 | 95 | 15 | % | 65 | % | 294 | 240 | 23 | % | |||||
| Commissions and fees | 1,183 | 1,227 | 1,090 | (4 | %) | 9 | % | 2,410 | 2,329 | 3 | % | |||||
| Asset management | 5,424 | 5,269 | 4,817 | 3 | % | 13 | % | 10,693 | 9,545 | 12 | % | |||||
| Other | 322 | 266 | 488 | 21 | % | (34 | %) | 588 | 740 | (21 | %) | |||||
| Total non-interest revenues | 12,952 | 13,340 | 11,447 | (3 | %) | 13 | % | 26,292 | 23,618 | 11 | % | |||||
| Interest income | 13,529 | 12,930 | 10,913 | 5 | % | 24 | % | 26,459 | 20,893 | 27 | % | |||||
| Interest expense | 11,462 | 11,134 | 8,903 | 3 | % | 29 | % | 22,596 | 16,537 | 37 | % | |||||
| Net interest | 2,067 | 1,796 | 2,010 | 15 | % | 3 | % | 3,863 | 4,356 | (11 | %) | |||||
| Net revenues | 15,019 | 15,136 | 13,457 | (1 | %) | 12 | % | 30,155 | 27,974 | 8 | % | |||||
| Provision for credit losses | 76 | (6) | 161 | * | (53 | %) | 70 | 395 | (82 | %) | ||||||
| Non-interest expenses: | ||||||||||||||||
| Compensation and benefits | 6,460 | 6,696 | 6,262 | (4 | %) | 3 | % | 13,156 | 12,672 | 4 | % | |||||
| Non-compensation expenses: | ||||||||||||||||
| Brokerage, clearing and exchange fees | 995 | 921 | 875 | 8 | % | 14 | % | 1,916 | 1,756 | 9 | % | |||||
| Information processing and communications | 1,011 | 976 | 926 | 4 | % | 9 | % | 1,987 | 1,841 | 8 | % | |||||
| Professional services | 753 | 639 | 767 | 18 | % | (2 | %) | 1,392 | 1,477 | (6 | %) | |||||
| Occupancy and equipment | 464 | 441 | 471 | 5 | % | (1 | %) | 905 | 911 | (1 | %) | |||||
| Marketing and business development | 245 | 217 | 236 | 13 | % | 4 | % | 462 | 483 | (4 | %) | |||||
| Other | 941 | 857 | 947 | 10 | % | (1 | %) | 1,798 | 1,867 | (4 | %) | |||||
| Total non-compensation expenses | 4,409 | 4,051 | 4,222 | 9 | % | 4 | % | 8,460 | 8,335 | 1 | % | |||||
| Total non-interest expenses | 10,869 | 10,747 | 10,484 | 1 | % | 4 | % | 21,616 | 21,007 | 3 | % | |||||
| Income before provision for income taxes | 4,074 | 4,395 | 2,812 | (7 | %) | 45 | % | 8,469 | 6,572 | 29 | % | |||||
| Provision for income taxes | 957 | 933 | 591 | 3 | % | 62 | % | 1,890 | 1,318 | 43 | % | |||||
| Net income | $ | 3,117 | $ | 3,462 | $ | 2,221 | (10 | %) | 40 | % | $ | 6,579 | $ | 5,254 | 25 | % |
| Net income applicable to nonredeemable noncontrolling interests | 41 | 50 | 39 | (18 | %) | 5 | % | 91 | 92 | (1 | %) | |||||
| Net income applicable to Morgan Stanley | 3,076 | 3,412 | 2,182 | (10 | %) | 41 | % | 6,488 | 5,162 | 26 | % | |||||
| Preferred stock dividend | 134 | 146 | 133 | (8 | %) | 1 | % | 280 | 277 | 1 | % | |||||
| Earnings applicable to Morgan Stanley common shareholders | $ | 2,942 | $ | 3,266 | $ | 2,049 | (10 | %) | 44 | % | $ | 6,208 | $ | 4,885 | 27 | % |
Notes:
–In the first quarter of 2024, the Firm implemented certain presentation changes that impacted interest income and interest expense but had no effect on net interest income. These changes were made to align the accounting treatment between the balance sheet and the related interest income or expense, primarily by offsetting interest income and expense for certain prime brokerage-related customer receivables and payables that are currently accounted for as a single unit of account on the balance sheet. The current and previous presentation of these interest income and interest expense amounts are acceptable and the change does not represent a change in accounting principle. These changes were applied retrospectively to the income statement in 2023 and accordingly, prior period amounts were adjusted to conform with the current presentation.
–Firm net revenues excluding mark-to-market gains and losses on deferred cash-based compensation plans (DCP) were: 2Q24: $15,073 million, 1Q24: $14,949 million, 2Q23: $13,343 million, 2Q24 YTD: $30,022 million, 2Q23 YTD: $27,707 million.
–Firm compensation expenses excluding DCP were: 2Q24: $6,405 million, 1Q24: $6,447 million, 2Q23: $6,084 million, 2Q24 YTD: $12,852 million, 2Q23 YTD: $12,301 million.
–The End Notes are an integral part of this presentation. Refer to pages 12 - 17 of the Financial Supplement for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice.
| Consolidated Financial Metrics, Ratios and Statistical Data | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited) | ||||||||||||||||||||||
| Quarter Ended | Percentage Change From: | Six Months Ended | Percentage Change | |||||||||||||||||||
| Jun 30, 2024 | Mar 31, 2024 | Jun 30, 2023 | Mar 31, 2024 | Jun 30, 2023 | Jun 30, 2024 | Jun 30, 2023 | ||||||||||||||||
| Financial Metrics: | ||||||||||||||||||||||
| Earnings per basic share | $ | 1.85 | $ | 2.04 | $ | 1.25 | (9 | %) | 48 | % | $ | 3.89 | $ | 2.98 | 31 | % | ||||||
| Earnings per diluted share | $ | 1.82 | $ | 2.02 | $ | 1.24 | (10 | %) | 47 | % | $ | 3.85 | $ | 2.95 | 31 | % | ||||||
| Return on average common equity | 13.0 | % | 14.5 | % | 8.9 | % | 13.8 | % | 10.7 | % | ||||||||||||
| Return on average tangible common equity | 17.5 | % | 19.7 | % | 12.1 | % | 18.6 | % | 14.5 | % | ||||||||||||
| Book value per common share | $ | 56.80 | $ | 55.60 | $ | 55.24 | $ | 56.80 | $ | 55.24 | ||||||||||||
| Tangible book value per common share | $ | 42.30 | $ | 41.07 | $ | 40.79 | $ | 42.30 | $ | 40.79 | ||||||||||||
| Financial Ratios: | ||||||||||||||||||||||
| Pre-tax margin | 27 | % | 29 | % | 21 | % | 28 | % | 23 | % | ||||||||||||
| Compensation and benefits as a % of net revenues | 43 | % | 44 | % | 47 | % | 44 | % | 45 | % | ||||||||||||
| Non-compensation expenses as a % of net revenues | 29 | % | 27 | % | 31 | % | 28 | % | 30 | % | ||||||||||||
| Firm expense efficiency ratio | 72 | % | 71 | % | 78 | % | 72 | % | 75 | % | ||||||||||||
| Effective tax rate | 23.5 | % | 21.2 | % | 21.0 | % | 22.3 | % | 20.1 | % | ||||||||||||
| Statistical Data: | ||||||||||||||||||||||
| Period end common shares outstanding (millions) | 1,619 | 1,627 | 1,659 | — | % | (2 | %) | |||||||||||||||
| Average common shares outstanding (millions) | ||||||||||||||||||||||
| Basic | 1,594 | 1,601 | 1,635 | — | % | (3 | %) | 1,597 | 1,640 | (3 | %) | |||||||||||
| Diluted | 1,611 | 1,616 | 1,651 | — | % | (2 | %) | 1,614 | 1,657 | (3 | %) | |||||||||||
| Worldwide employees | 79,066 | 79,610 | 82,006 | (1 | %) | (4 | %) |
The End Notes are an integral part of this presentation. Refer to pages 12 - 17 of the Financial Supplement for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice.
9
Document
| Second Quarter 2024 Earnings Results | |
|---|---|
| Quarterly Financial Supplement | Page |
| Consolidated Financial Summary | 1 |
| Consolidated Financial Metrics, Ratios and Statistical Data | 2 |
| Consolidated and U.S. Bank Supplemental Financial Information | 3 |
| Consolidated Average Common Equity and Regulatory Capital Information | 4 |
| Institutional Securities Income Statement Information, Financial Metrics and Ratios | 5 |
| Wealth Management Income Statement Information, Financial Metrics and Ratios | 6 |
| Wealth Management Financial Information and Statistical Data | 7 |
| Investment Management Income Statement Information, Financial Metrics and Ratios | 8 |
| Investment Management Financial Information and Statistical Data | 9 |
| Consolidated Loans and Lending Commitments | 10 |
| Consolidated Loans and Lending Commitments Allowance for Credit Losses | 11 |
| Definition of U.S. GAAP to Non-GAAP Measures | 12 |
| Definitions of Performance Metrics and Terms | 13 - 14 |
| Supplemental Quantitative Details and Calculations | 15 - 16 |
| Legal Notice | 17 |
| Consolidated Financial Summary | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited, dollars in millions) | ||||||||||||||||
| Percentage Change From: | Six Months Ended | Percentage | ||||||||||||||
| Mar 31, 2024 | Jun 30, 2023 | Mar 31, 2024 | Jun 30, 2023 | Jun 30, 2024 | Jun 30, 2023 | Change | ||||||||||
| Net revenues | ||||||||||||||||
| Institutional Securities | 6,982 | $ | 7,016 | $ | 5,654 | — | % | 23 | % | $ | 13,998 | $ | 12,451 | 12 | % | |
| Wealth Management | 6,880 | 6,660 | (1 | %) | 2 | % | 13,672 | 13,219 | 3 | % | ||||||
| Investment Management | 1,377 | 1,281 | 1 | % | 8 | % | 2,763 | 2,570 | 8 | % | ||||||
| Intersegment Eliminations | (137) | (138) | (3 | %) | (2 | %) | (278) | (266) | (5 | %) | ||||||
| Net revenues (1) | 15,019 | $ | 15,136 | $ | 13,457 | (1 | %) | 12 | % | $ | 30,155 | $ | 27,974 | 8 | % | |
| Provision for credit losses | 76 | $ | (6) | $ | 161 | * | (53 | %) | $ | 70 | $ | 395 | (82 | %) | ||
| Non-interest expenses | ||||||||||||||||
| Institutional Securities | 4,882 | $ | 4,663 | $ | 4,580 | 5 | % | 7 | % | $ | 9,545 | $ | 9,296 | 3 | % | |
| Wealth Management | 5,082 | 4,915 | (3 | %) | 1 | % | 10,031 | 9,717 | 3 | % | ||||||
| Investment Management | 1,136 | 1,111 | 2 | % | 5 | % | 2,300 | 2,234 | 3 | % | ||||||
| Intersegment Eliminations | (134) | (122) | 6 | % | (3 | %) | (260) | (240) | (8 | %) | ||||||
| Non-interest expenses (1)(2) | 10,869 | $ | 10,747 | $ | 10,484 | 1 | % | 4 | % | $ | 21,616 | $ | 21,007 | 3 | % | |
| Income before provision for income taxes | ||||||||||||||||
| Institutional Securities | 2,046 | $ | 2,351 | $ | 977 | (13 | %) | 109 | % | $ | 4,397 | $ | 2,869 | 53 | % | |
| Wealth Management | 1,806 | 1,681 | 1 | % | 8 | % | 3,627 | 3,393 | 7 | % | ||||||
| Investment Management | 241 | 170 | (8 | %) | 31 | % | 463 | 336 | 38 | % | ||||||
| Intersegment Eliminations | (3) | (16) | * | 6 | % | (18) | (26) | 31 | % | |||||||
| Income before provision for income taxes | 4,074 | $ | 4,395 | $ | 2,812 | (7 | %) | 45 | % | $ | 8,469 | $ | 6,572 | 29 | % | |
| Net Income applicable to Morgan Stanley | ||||||||||||||||
| Institutional Securities | 1,520 | $ | 1,819 | $ | 759 | (16 | %) | 100 | % | $ | 3,339 | $ | 2,237 | 49 | % | |
| Wealth Management | 1,403 | 1,308 | — | % | 7 | % | 2,806 | 2,684 | 5 | % | ||||||
| Investment Management | 192 | 127 | (14 | %) | 30 | % | 357 | 261 | 37 | % | ||||||
| Intersegment Eliminations | (2) | (12) | * | — | % | (14) | (20) | 30 | % | |||||||
| Net Income applicable to Morgan Stanley | 3,076 | $ | 3,412 | $ | 2,182 | (10 | %) | 41 | % | $ | 6,488 | $ | 5,162 | 26 | % | |
| Earnings applicable to Morgan Stanley common shareholders | 2,942 | $ | 3,266 | $ | 2,049 | (10 | %) | 44 | % | $ | 6,208 | $ | 4,885 | 27 | % | |
| Notes: | ||||||||||||||||
| - | Firm net revenues excluding mark‐to‐market gains and losses on deferred cash‐based compensation plans (DCP) were: 2Q24: 15,073 million, 1Q24: 14,949 million, 2Q23: 13,343 million, 2Q24 YTD: 30,022 million, 2Q23 YTD: 27,707 million. | |||||||||||||||
| - | Firm compensation expenses excluding DCP were: 2Q24: 6,405 million, 1Q24: 6,447 million, 2Q23: 6,084 million, 2Q24 YTD: 12,852 million, 2Q23 YTD: 12,301 million. | |||||||||||||||
| - | The End Notes are an integral part of this presentation. See 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. |
All values are in US Dollars.
| Consolidated Financial Metrics, Ratios and Statistical Data | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited) | ||||||||||||||||||||||
| Quarter Ended | Percentage Change From: | Six Months Ended | Percentage | |||||||||||||||||||
| Jun 30, 2024 | Mar 31, 2024 | Jun 30, 2023 | Mar 31, 2024 | Jun 30, 2023 | Jun 30, 2024 | Jun 30, 2023 | Change | |||||||||||||||
| Financial Metrics: | ||||||||||||||||||||||
| Earnings per basic share | $ | 1.85 | $ | 2.04 | $ | 1.25 | (9 | %) | 48 | % | $ | 3.89 | $ | 2.98 | 31 | % | ||||||
| Earnings per diluted share | $ | 1.82 | $ | 2.02 | $ | 1.24 | (10 | %) | 47 | % | $ | 3.85 | $ | 2.95 | 31 | % | ||||||
| Return on average common equity | 13.0 | % | 14.5 | % | 8.9 | % | 13.8 | % | 10.7 | % | ||||||||||||
| Return on average tangible common equity | 17.5 | % | 19.7 | % | 12.1 | % | 18.6 | % | 14.5 | % | ||||||||||||
| Book value per common share | $ | 56.80 | $ | 55.60 | $ | 55.24 | $ | 56.80 | $ | 55.24 | ||||||||||||
| Tangible book value per common share | $ | 42.30 | $ | 41.07 | $ | 40.79 | $ | 42.30 | $ | 40.79 | ||||||||||||
| Financial Ratios: | ||||||||||||||||||||||
| Pre-tax margin | 27 | % | 29 | % | 21 | % | 28 | % | 23 | % | ||||||||||||
| Compensation and benefits as a % of net revenues | 43 | % | 44 | % | 47 | % | 44 | % | 45 | % | ||||||||||||
| Non-compensation expenses as a % of net revenues | 29 | % | 27 | % | 31 | % | 28 | % | 30 | % | ||||||||||||
| Firm expense efficiency ratio | 72 | % | 71 | % | 78 | % | 72 | % | 75 | % | ||||||||||||
| Effective tax rate | 23.5 | % | 21.2 | % | 21.0 | % | 22.3 | % | 20.1 | % | ||||||||||||
| Statistical Data: | ||||||||||||||||||||||
| Period end common shares outstanding (millions) | 1,619 | 1,627 | 1,659 | — | % | (2 | %) | |||||||||||||||
| Average common shares outstanding (millions) | ||||||||||||||||||||||
| Basic | 1,594 | 1,601 | 1,635 | — | % | (3 | %) | 1,597 | 1,640 | (3 | %) | |||||||||||
| Diluted | 1,611 | 1,616 | 1,651 | — | % | (2 | %) | 1,614 | 1,657 | (3 | %) | |||||||||||
| Worldwide employees | 79,066 | 79,610 | 82,006 | (1 | %) | (4 | %) | |||||||||||||||
| The End Notes are an integral part of this presentation. See 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. |
| Consolidated and U.S. Bank Supplemental Financial Information | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited, dollars in millions) | ||||||||||||||||
| Quarter Ended | Percentage Change From: | Six Months Ended | Percentage | |||||||||||||
| Jun 30, 2024 | Mar 31, 2024 | Jun 30, 2023 | Mar 31, 2024 | Jun 30, 2023 | Jun 30, 2024 | Jun 30, 2023 | Change | |||||||||
| Consolidated Balance sheet | ||||||||||||||||
| Total assets | $ | 1,212,447 | $ | 1,228,503 | $ | 1,164,911 | (1 | %) | 4 | % | ||||||
| Loans (1) | $ | 237,696 | $ | 227,145 | $ | 224,276 | 5 | % | 6 | % | ||||||
| Deposits | $ | 348,890 | $ | 352,494 | $ | 348,511 | (1 | %) | — | % | ||||||
| Long-term debt outstanding | $ | 269,897 | $ | 266,150 | $ | 243,820 | 1 | % | 11 | % | ||||||
| Maturities of long-term debt outstanding (next 12 months) | $ | 18,797 | $ | 19,701 | $ | 22,326 | (5 | %) | (16 | %) | ||||||
| Average liquidity resources | $ | 319,580 | $ | 318,664 | $ | 310,724 | — | % | 3 | % | ||||||
| Common equity | $ | 91,964 | $ | 90,448 | $ | 91,636 | 2 | % | — | % | ||||||
| Less: Goodwill and intangible assets | (23,480) | (23,635) | (23,973) | (1 | %) | (2 | %) | |||||||||
| Tangible common equity | $ | 68,484 | $ | 66,813 | $ | 67,663 | 3 | % | 1 | % | ||||||
| Preferred equity | $ | 8,750 | $ | 8,750 | $ | 8,750 | — | % | — | % | ||||||
| U.S. Bank Supplemental Financial Information | ||||||||||||||||
| Total assets | $ | 400,140 | $ | 400,856 | $ | 385,596 | — | % | 4 | % | ||||||
| Loans | $ | 220,900 | $ | 211,290 | $ | 209,065 | 5 | % | 6 | % | ||||||
| Investment securities portfolio (2) | $ | 119,197 | $ | 115,951 | $ | 119,289 | 3 | % | — | % | ||||||
| Deposits | $ | 342,900 | $ | 346,609 | $ | 342,522 | (1 | %) | — | % | ||||||
| Regional revenues | ||||||||||||||||
| Americas | $ | 11,268 | $ | 11,567 | $ | 10,394 | (3 | %) | 8 | % | $ | 22,835 | $ | 21,185 | 8 | % |
| EMEA (Europe, Middle East, Africa) | 1,871 | 1,826 | 1,500 | 2 | % | 25 | % | 3,697 | 3,237 | 14 | % | |||||
| Asia | 1,880 | 1,743 | 1,563 | 8 | % | 20 | % | 3,623 | 3,552 | 2 | % | |||||
| Consolidated net revenues | $ | 15,019 | $ | 15,136 | $ | 13,457 | (1 | %) | 12 | % | $ | 30,155 | $ | 27,974 | 8 | % |
| The End Notes are an integral part of this presentation. See 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. |
| Consolidated Average Common Equity and Regulatory Capital Information | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited, dollars in billions) | |||||||||||||||||||
| Quarter Ended | Percentage Change From: | Six Months Ended | Percentage | ||||||||||||||||
| Jun 30, 2024 | Mar 31, 2024 | Jun 30, 2023 | Mar 31, 2024 | Jun 30, 2023 | Jun 30, 2024 | Jun 30, 2023 | Change | ||||||||||||
| Average Common Equity | |||||||||||||||||||
| Institutional Securities | $ | 45.0 | $ | 45.0 | $ | 45.6 | — | % | (1 | %) | $ | 45.0 | $ | 45.6 | (1 | %) | |||
| Wealth Management | 29.1 | 29.1 | 28.8 | — | % | 1 | % | 29.1 | 28.8 | 1 | % | ||||||||
| Investment Management | 10.8 | 10.8 | 10.4 | — | % | 4 | % | 10.8 | 10.4 | 4 | % | ||||||||
| Parent Company | 5.7 | 5.0 | 6.8 | 14 | % | (16 | %) | 5.3 | 6.6 | (20 | %) | ||||||||
| Firm | $ | 90.6 | $ | 89.9 | $ | 91.6 | 1 | % | (1 | %) | $ | 90.2 | $ | 91.4 | (1 | %) | |||
| Regulatory Capital | |||||||||||||||||||
| Common Equity Tier 1 capital | $ | 71.8 | $ | 70.3 | $ | 69.9 | 2 | % | 3 | % | |||||||||
| Tier 1 capital | $ | 80.5 | $ | 79.0 | $ | 78.4 | 2 | % | 3 | % | |||||||||
| Standardized Approach | |||||||||||||||||||
| Risk-weighted assets | $ | 472.4 | $ | 467.8 | $ | 449.8 | 1 | % | 5 | % | |||||||||
| Common Equity Tier 1 capital ratio | 15.2 | % | 15.0 | % | 15.5 | % | |||||||||||||
| Tier 1 capital ratio | 17.0 | % | 16.9 | % | 17.4 | % | |||||||||||||
| Advanced Approach | |||||||||||||||||||
| Risk-weighted assets | $ | 469.7 | $ | 456.5 | $ | 441.9 | 3 | % | 6 | % | |||||||||
| Common Equity Tier 1 capital ratio | 15.3 | % | 15.4 | % | 15.8 | % | |||||||||||||
| Tier 1 capital ratio | 17.1 | % | 17.3 | % | 17.8 | % | |||||||||||||
| Leverage-based capital | |||||||||||||||||||
| Tier 1 leverage ratio | 6.8 | % | 6.7 | % | 6.7 | % | |||||||||||||
| Supplementary Leverage Ratio | 5.5 | % | 5.4 | % | 5.5 | % | |||||||||||||
| The End Notes are an integral part of this presentation. See 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. |
| Institutional Securities | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income Statement Information, Financial Metrics and Ratios | |||||||||||||||||||||
| (unaudited, dollars in millions) | |||||||||||||||||||||
| Quarter Ended | Percentage Change From: | Six Months Ended | Percentage | ||||||||||||||||||
| Jun 30, 2024 | Mar 31, 2024 | Jun 30, 2023 | Mar 31, 2024 | Jun 30, 2023 | Jun 30, 2024 | Jun 30, 2023 | Change | ||||||||||||||
| Revenues: | |||||||||||||||||||||
| Advisory | $ | 592 | $ | 461 | $ | 455 | 28 | % | 30 | % | $ | 1,053 | $ | 1,093 | (4 | %) | |||||
| Equity | 352 | 430 | 225 | (18 | %) | 56 | % | 782 | 427 | 83 | % | ||||||||||
| Fixed income | 675 | 556 | 395 | 21 | % | 71 | % | 1,231 | 802 | 53 | % | ||||||||||
| Underwriting | 1,027 | 986 | 620 | 4 | % | 66 | % | 2,013 | 1,229 | 64 | % | ||||||||||
| Investment banking | 1,619 | 1,447 | 1,075 | 12 | % | 51 | % | 3,066 | 2,322 | 32 | % | ||||||||||
| Equity | 3,018 | 2,842 | 2,548 | 6 | % | 18 | % | 5,860 | 5,277 | 11 | % | ||||||||||
| Fixed income | 1,999 | 2,485 | 1,716 | (20 | %) | 16 | % | 4,484 | 4,292 | 4 | % | ||||||||||
| Other | 346 | 242 | 315 | 43 | % | 10 | % | 588 | 560 | 5 | % | ||||||||||
| Net revenues | 6,982 | 7,016 | 5,654 | — | % | 23 | % | 13,998 | 12,451 | 12 | % | ||||||||||
| Provision for credit losses | 54 | 2 | 97 | * | (44 | %) | 56 | 286 | (80 | %) | |||||||||||
| Compensation and benefits | 2,291 | 2,343 | 2,215 | (2 | %) | 3 | % | 4,634 | 4,580 | 1 | % | ||||||||||
| Non-compensation expenses | 2,591 | 2,320 | 2,365 | 12 | % | 10 | % | 4,911 | 4,716 | 4 | % | ||||||||||
| Total non-interest expenses | 4,882 | 4,663 | 4,580 | 5 | % | 7 | % | 9,545 | 9,296 | 3 | % | ||||||||||
| Income before provision for income taxes | 2,046 | 2,351 | 977 | (13 | %) | 109 | % | 4,397 | 2,869 | 53 | % | ||||||||||
| Net income applicable to Morgan Stanley | $ | 1,520 | $ | 1,819 | $ | 759 | (16 | %) | 100 | % | $ | 3,339 | $ | 2,237 | 49 | % | |||||
| Pre-tax margin | 29 | % | 34 | % | 17 | % | 31 | % | 23 | % | |||||||||||
| Compensation and benefits as a % of net revenues | 33 | % | 33 | % | 39 | % | 33 | % | 37 | % | |||||||||||
| Non-compensation expenses as a % of net revenues | 37 | % | 33 | % | 42 | % | 35 | % | 38 | % | |||||||||||
| Return on Average Common Equity | 13 | % | 15 | % | 6 | % | 14 | % | 9 | % | |||||||||||
| Return on Average Tangible Common Equity (1) | 13 | % | 15 | % | 6 | % | 14 | % | 9 | % | |||||||||||
| Trading VaR (Average Daily 95% / One-Day VaR) | $ | 48 | $ | 54 | $ | 52 | |||||||||||||||
| The End Notes are an integral part of this presentation. See 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. |
| Wealth Management | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income Statement Information, Financial Metrics and Ratios | |||||||||||||||||||||
| (unaudited, dollars in millions) | |||||||||||||||||||||
| Percentage Change From: | Six Months Ended | Percentage | |||||||||||||||||||
| Mar 31, 2024 | Jun 30, 2023 | Mar 31, 2024 | Jun 30, 2023 | Jun 30, 2024 | Jun 30, 2023 | Change | |||||||||||||||
| Revenues: | |||||||||||||||||||||
| Asset management | 3,989 | $ | 3,829 | $ | 3,452 | 4 | % | 16 | % | $ | 7,818 | $ | 6,834 | 14 | % | ||||||
| Transactional | 1,033 | 869 | (24 | %) | (10 | %) | 1,815 | 1,790 | 1 | % | |||||||||||
| Net interest income | 1,856 | 2,156 | (3 | %) | (17 | %) | 3,654 | 4,314 | (15 | %) | |||||||||||
| Other | 162 | 183 | 38 | % | 22 | % | 385 | 281 | 37 | % | |||||||||||
| Net revenues (1) | 6,880 | 6,660 | (1 | %) | 2 | % | 13,672 | 13,219 | 3 | % | |||||||||||
| Provision for credit losses | (8) | 64 | * | (66 | %) | 14 | 109 | (87 | %) | ||||||||||||
| Compensation and benefits (1) | 3,788 | 3,503 | (5 | %) | 3 | % | 7,389 | 6,980 | 6 | % | |||||||||||
| Non-compensation expenses | 1,294 | 1,412 | 4 | % | (5 | %) | 2,642 | 2,737 | (3 | %) | |||||||||||
| Total non-interest expenses | 5,082 | 4,915 | (3 | %) | 1 | % | 10,031 | 9,717 | 3 | % | |||||||||||
| Income before provision for income taxes | 1,806 | 1,681 | 1 | % | 8 | % | 3,627 | 3,393 | 7 | % | |||||||||||
| Net income applicable to Morgan Stanley | 1,403 | $ | 1,403 | $ | 1,308 | — | % | 7 | % | $ | 2,806 | $ | 2,684 | 5 | % | ||||||
| Pre-tax margin | % | 26 | % | 25 | % | 27 | % | 26 | % | ||||||||||||
| Compensation and benefits as a % of net revenues | % | 55 | % | 53 | % | 54 | % | 53 | % | ||||||||||||
| Non-compensation expenses as a % of net revenues | % | 19 | % | 21 | % | 19 | % | 21 | % | ||||||||||||
| Return on Average Common Equity | % | 19 | % | 18 | % | 19 | % | 18 | % | ||||||||||||
| Return on Average Tangible Common Equity (2) | % | 35 | % | 34 | % | 35 | % | 35 | % | ||||||||||||
| Notes: | |||||||||||||||||||||
| - | Wealth Management net revenues excluding DCP were: 2Q24: 6,837 million, 1Q24: 6,740 million, 2Q23: 6,578 million, 2Q24 YTD: 13,577 million, 2Q23 YTD: 13,036 million. | ||||||||||||||||||||
| - | Wealth Management compensation expenses excluding DCP were: 2Q24: 3,568 million, 1Q24: 3,632 million, 2Q23: 3,396 million, 2Q24 YTD: 7,200 million, 2Q23 YTD: 6,754 million. | ||||||||||||||||||||
| - | The End Notes are an integral part of this presentation. See 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. |
All values are in US Dollars.
| Wealth Management | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Financial Information and Statistical Data | |||||||||||||
| (unaudited, dollars in billions) | |||||||||||||
| Quarter Ended | Percentage Change From: | ||||||||||||
| Jun 30, 2024 | Mar 31, 2024 | Jun 30, 2023 | Mar 31, 2024 | Jun 30, 2023 | |||||||||
| Wealth Management Metrics | |||||||||||||
| Total client assets | $ | 5,690 | $ | 5,495 | $ | 4,885 | 4 | % | 16 | % | |||
| Net new assets | $ | 36.4 | $ | 94.9 | $ | 89.5 | (62 | %) | (59 | %) | |||
| U.S. Bank loans | $ | 150.9 | $ | 147.4 | $ | 144.7 | 2 | % | 4 | % | |||
| Margin and other lending (1) | $ | 25.5 | $ | 23.4 | $ | 21.7 | 9 | % | 18 | % | |||
| Deposits (2) | $ | 343 | $ | 347 | $ | 343 | (1 | %) | — | % | |||
| Annualized weighted average cost of deposits | |||||||||||||
| Period end | 3.11 | % | 2.96 | % | 2.53 | % | |||||||
| Period average | 3.03 | % | 2.92 | % | 2.32 | % | |||||||
| Advisor-led channel | |||||||||||||
| Advisor-led client assets | $ | 4,443 | $ | 4,302 | $ | 3,784 | 3 | % | 17 | % | |||
| Fee-based client assets | $ | 2,188 | $ | 2,124 | $ | 1,856 | 3 | % | 18 | % | |||
| Fee-based asset flows | $ | 26.0 | $ | 26.2 | $ | 22.7 | (1 | %) | 15 | % | |||
| Fee-based assets as a % of advisor-led client assets | 49 | % | 49 | % | 49 | % | |||||||
| Self-directed channel | |||||||||||||
| Self-directed client assets | $ | 1,247 | $ | 1,194 | $ | 1,101 | 4 | % | 13 | % | |||
| Daily average revenue trades (000's) | 781 | 841 | 765 | (7 | %) | 2 | % | ||||||
| Self-directed households (millions) | 8.2 | 8.1 | 8.1 | 1 | % | 1 | % | ||||||
| Workplace channel | |||||||||||||
| Stock plan unvested assets | $ | 452 | $ | 457 | $ | 402 | (1 | %) | 12 | % | |||
| Number of stock plan participants (millions) | 6.6 | 6.6 | 6.5 | — | % | 2 | % | ||||||
| The End Notes are an integral part of this presentation. See 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. |
| Investment Management | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income Statement Information, Financial Metrics and Ratios | |||||||||||||||||||||
| (unaudited, dollars in millions) | |||||||||||||||||||||
| Quarter Ended | Percentage Change From: | Six Months Ended | Percentage | ||||||||||||||||||
| Jun 30, 2024 | Mar 31, 2024 | Jun 30, 2023 | Mar 31, 2024 | Jun 30, 2023 | Jun 30, 2024 | Jun 30, 2023 | Change | ||||||||||||||
| Revenues: | |||||||||||||||||||||
| Asset management and related fees | $ | 1,342 | $ | 1,346 | $ | 1,268 | — | % | 6 | % | $ | 2,688 | $ | 2,516 | 7 | % | |||||
| Performance-based income and other | 44 | 31 | 13 | 42 | % | * | 75 | 54 | 39 | % | |||||||||||
| Net revenues | 1,386 | 1,377 | 1,281 | 1 | % | 8 | % | 2,763 | 2,570 | 8 | % | ||||||||||
| Compensation and benefits | 568 | 565 | 544 | 1 | % | 4 | % | 1,133 | 1,112 | 2 | % | ||||||||||
| Non-compensation expenses | 596 | 571 | 567 | 4 | % | 5 | % | 1,167 | 1,122 | 4 | % | ||||||||||
| Total non-interest expenses | 1,164 | 1,136 | 1,111 | 2 | % | 5 | % | 2,300 | 2,234 | 3 | % | ||||||||||
| Income before provision for income taxes | 222 | 241 | 170 | (8 | %) | 31 | % | 463 | 336 | 38 | % | ||||||||||
| Net income applicable to Morgan Stanley | $ | 165 | $ | 192 | $ | 127 | (14 | %) | 30 | % | $ | 357 | $ | 261 | 37 | % | |||||
| Pre-tax margin | 16 | % | 18 | % | 13 | % | 17 | % | 13 | % | |||||||||||
| Compensation and benefits as a % of net revenues | 41 | % | 41 | % | 42 | % | 41 | % | 43 | % | |||||||||||
| Non-compensation expenses as a % of net revenues | 43 | % | 41 | % | 44 | % | 42 | % | 44 | % | |||||||||||
| Return on Average Common Equity | 6 | % | 7 | % | 5 | % | 7 | % | 5 | % | |||||||||||
| Return on Average Tangible Common Equity (1) | 58 | % | 68 | % | 70 | % | 63 | % | 72 | % | |||||||||||
| The End Notes are an integral part of this presentation. See 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. |
| Investment Management | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Financial Information and Statistical Data | ||||||||||||||||
| (unaudited, dollars in billions) | ||||||||||||||||
| Quarter Ended | Percentage Change From: | Six Months Ended | Percentage | |||||||||||||
| Jun 30, 2024 | Mar 31, 2024 | Jun 30, 2023 | Mar 31, 2024 | Jun 30, 2023 | Jun 30, 2024 | Jun 30, 2023 | Change | |||||||||
| Assets Under Management or Supervision (AUM) | ||||||||||||||||
| Net Flows by Asset Class | ||||||||||||||||
| Equity | $ | (9.2) | $ | (5.5) | $ | (5.3) | (67 | %) | (74 | %) | $ | (14.7) | $ | (7.4) | (99 | %) |
| Fixed Income | 1.0 | 2.8 | (5.0) | (64 | %) | * | 3.8 | (7.0) | * | |||||||
| Alternatives and Solutions | 7.0 | 10.3 | 11.4 | (32 | %) | (39 | %) | 17.3 | 13.1 | 32 | % | |||||
| Long-Term Net Flows | (1.2) | 7.6 | 1.1 | * | * | $ | 6.4 | $ | (1.3) | * | ||||||
| Liquidity and Overlay Services | 1.3 | (12.9) | 9.7 | * | (87 | %) | (11.6) | 23.6 | * | |||||||
| Total Net Flows | $ | 0.1 | $ | (5.3) | $ | 10.8 | * | (99 | %) | $ | (5.2) | $ | 22.3 | * | ||
| Assets Under Management or Supervision by Asset Class | ||||||||||||||||
| Equity | $ | 301 | $ | 310 | $ | 289 | (3 | %) | 4 | % | ||||||
| Fixed Income | 176 | 174 | 165 | 1 | % | 7 | % | |||||||||
| Alternatives and Solutions | 558 | 543 | 482 | 3 | % | 16 | % | |||||||||
| Long‐Term Assets Under Management or Supervision | 1,035 | 1,027 | 936 | 1 | % | 11 | % | |||||||||
| Liquidity and Overlay Services | 483 | 478 | 476 | 1 | % | 1 | % | |||||||||
| Total Assets Under Management or Supervision | $ | 1,518 | $ | 1,505 | $ | 1,412 | 1 | % | 8 | % | ||||||
| The End Notes are an integral part of this presentation. See 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. |
| Consolidated Loans and Lending Commitments | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited, dollars in billions) | ||||||||||
| Quarter Ended | Percentage Change From: | |||||||||
| Jun 30, 2024 | Mar 31, 2024 | Jun 30, 2023 | Mar 31, 2024 | Jun 30, 2023 | ||||||
| Institutional Securities | ||||||||||
| Loans: | ||||||||||
| Corporate | $ | 17.7 | $ | 16.6 | $ | 17.8 | 7 | % | (1 | %) |
| Secured lending facilities | 48.3 | 42.1 | 41.2 | 15 | % | 17 | % | |||
| Commercial and residential real estate | 12.6 | 12.9 | 12.1 | (2 | %) | 4 | % | |||
| Securities-based lending and other | 7.7 | 7.7 | 8.1 | — | % | (5 | %) | |||
| Total Loans | 86.3 | 79.3 | 79.2 | 9 | % | 9 | % | |||
| Lending Commitments | 141.1 | 138.8 | 127.1 | 2 | % | 11 | % | |||
| Institutional Securities Loans and Lending Commitments | $ | 227.4 | $ | 218.1 | $ | 206.3 | 4 | % | 10 | % |
| Wealth Management | ||||||||||
| Loans: | ||||||||||
| Securities-based lending and other | $ | 87.8 | $ | 86.1 | $ | 87.6 | 2 | % | — | % |
| Residential real estate | 63.1 | 61.3 | 57.1 | 3 | % | 11 | % | |||
| Total Loans | 150.9 | 147.4 | 144.7 | 2 | % | 4 | % | |||
| Lending Commitments | 19.0 | 18.9 | 18.8 | 1 | % | 1 | % | |||
| Wealth Management Loans and Lending Commitments | $ | 169.9 | $ | 166.3 | $ | 163.5 | 2 | % | 4 | % |
| Consolidated Loans and Lending Commitments (1) | $ | 397.3 | $ | 384.4 | $ | 369.8 | 3 | % | 7 | % |
| The End Notes are an integral part of this presentation. See 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. |
| Consolidated Loans and Lending Commitments | ||||||||
|---|---|---|---|---|---|---|---|---|
| Allowance for Credit Losses (ACL) as of June 30, 2024 | ||||||||
| (unaudited, dollars in millions) | ||||||||
| Loans and Lending Commitments | ACL (1) | ACL % | Q2 Provision | |||||
| (Gross) | ||||||||
| Loans: | ||||||||
| Held For Investment (HFI) | ||||||||
| Corporate | $ | 6,764 | $ | 241 | 3.6 | % | $ | — |
| Secured lending facilities | 44,869 | 143 | 0.3 | % | 19 | |||
| Commercial and residential real estate | 8,804 | 469 | 5.3 | % | 45 | |||
| Other | 2,483 | 12 | 0.5 | % | (1) | |||
| Institutional Securities - HFI | $ | 62,920 | $ | 865 | 1.4 | % | $ | 63 |
| Wealth Management - HFI | 151,215 | 310 | 0.2 | % | 22 | |||
| Held For Investment | $ | 214,135 | $ | 1,175 | 0.5 | % | $ | 85 |
| Held For Sale | 15,283 | |||||||
| Fair Value | 8,972 | |||||||
| Total Loans | 238,390 | 1,175 | 85 | |||||
| Lending Commitments | 160,128 | 555 | 0.3 | % | (9) | |||
| Consolidated Loans and Lending Commitments | $ | 398,518 | $ | 1,730 | $ | 76 | ||
| The End Notes are an integral part of this presentation. See 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. |
| Definition of U.S. GAAP to Non-GAAP Measures | ||
|---|---|---|
| (a) | We prepare our financial statements using U.S. GAAP. From time to time, we may disclose certain “non‐GAAP financial measures” in this document or in the course of our earnings releases, earnings and other conference calls, financial presentations, definitive proxy statements and other public disclosures. A “non‐GAAP financial measure” excludes, or includes, amounts from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. We consider the non‐GAAP financial measures we disclose to be useful to us, investors, analysts and other stakeholders by providing further transparency about, or an alternate means of assessing or comparing our financial condition, operating results and capital adequacy. These measures are not in accordance with, or a substitute for, U.S. GAAP and may be different from or inconsistent with non‐GAAP financial measures used by other companies. Whenever we refer to a non‐GAAP financial measure, we will also generally define it or present the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, along with a reconciliation of the differences between the U.S. GAAP financial measure and the non‐GAAP financial measure. We present certain non‐GAAP financial measures that exclude the impact of mark‐to-market gains and losses on DCP investments from net revenues and compensation expenses. The impact of DCP is primarily reflected in our Wealth Management business segment results. These measures allow for better comparability of period‐to‐period underlying operating performance and revenue trends, especially in our Wealth Management business segment. By excluding the impact of these items, we are better able to describe the business drivers and resulting impact to net revenues and corresponding change to the associated compensation expenses. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Summary” in the 2023 Form 10‐K. | |
| (b) | The following are considered non‐GAAP financial measures: | |
| - | Tangible common equity represents common shareholders’ equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction. In addition, we believe that certain ratios that utilize tangible common equity, such as return on average tangible common equity (“ROTCE”) and tangible book value per common share, also non‐GAAP financial measures, are useful for evaluating the operating performance and capital adequacy of the business period‐to‐period, respectively. | |
| - | ROTCE represents annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average tangible common equity. | |
| - | Tangible book value per common share represents tangible common equity divided by common shares outstanding. | |
| - | Segment return on average common equity and return on average tangible common equity represent net income applicable to Morgan Stanley by segment less preferred dividends allocated to each segment, annualized as a percentage of average common equity and average tangible common equity, respectively, allocated to each segment. The amount of capital allocated to the business segments is generally set at the beginning of each year and remains fixed throughout the year until the next annual reset unless a significant business change occurs (e.g., acquisition or disposition). | |
| - | Net revenues excluding DCP represents net revenues adjusted for the impact of mark‐to‐market gains and losses on economic hedges associated with certain employee deferred cash‐based compensation plans. | |
| - | Compensation expense excluding DCP represents compensation adjusted for the impact related to certain employee deferred cash‐based compensation plans linked to investment performance. |
| Definitions of Performance Metrics and Terms | |
|---|---|
| Our earnings releases, earnings conference calls, financial presentations and other communications may also include certain metrics that we believe to be useful to us, investors, analysts and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results. | |
| Page 1: | |
| (a) | Provision for credit losses represents the provision for credit losses on loans held for investment and unfunded lending commitments. |
| (b) | Net income applicable to Morgan Stanley represents net income, less net income applicable to nonredeemable noncontrolling interests. |
| (c) | Earnings applicable to Morgan Stanley common shareholders represents net income applicable to Morgan Stanley, less preferred dividends. |
| Page 2: | |
| (a) | Return on average common equity represents annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity. |
| (b) | Return on average tangible common equity represents a non‐GAAP financial measure. |
| (c) | Book value per common share represents common equity divided by period end common shares outstanding. |
| (d) | Tangible book value per common share represents a non‐GAAP financial measure. |
| (e) | Pre‐tax margin represents income before provision for income taxes as a percentage of net revenues. |
| (f) | The Firm expense efficiency ratio represents total non‐interest expenses as a percentage of net revenues. |
| Page 3: | |
| (a) | Liquidity Resources, which are primarily held within the Parent Company and its major operating subsidiaries, are comprised of high quality liquid assets (HQLA) and cash deposits with banks. The total amount of Liquidity Resources is actively managed by us considering the following components: unsecured debt maturity profile; balance sheet size and composition; funding needs in a stressed environment, inclusive of contingent cash outflows; legal entity, regional and segment liquidity requirements; regulatory requirements; and collateral requirements. Average Liquidity Resources represents the average daily balance for the three months ended June 30, 2024, March 31, 2024 and June 30, 2023. |
| (b) | Our goodwill and intangible balances utilized in the calculation of tangible common equity are net of allowable mortgage servicing rights deduction. |
| (c) | Tangible common equity represents a non‐GAAP financial measure. |
| (d) | U.S. Bank refer to our U.S. Bank Subsidiaries, Morgan Stanley Bank N.A. and Morgan Stanley Private Bank, National Association, and excludes transactions between the bank subsidiaries, as well as deposits from the Parent Company and affiliates. |
| (e) | Firmwide regional revenues reflect our consolidated net revenues on a managed basis. Further discussion regarding the geographic methodology for net revenues is disclosed in Note 22 to the consolidated financial statements included in the 2023 Form 10‐K. |
| Page 4: | |
| (a) | Our attribution of average common equity to the business segments is based on the Required Capital framework, an internal capital adequacy measure. This framework is a risk‐based and leverage‐based capital measure, which is compared with our regulatory capital to ensure that we maintain an amount of going concern capital after absorbing potential losses from stress events, where applicable, at a point in time. The amount of capital allocated to the business segments is generally set at the beginning of each year and remains fixed throughout the year until the next annual reset unless a significant business change occurs (e.g., acquisition or disposition). We define the difference between our total average common equity and the sum of the average common equity amounts allocated to our business segments as Parent Company common equity. The Required Capital framework is based on our regulatory capital requirements. We continue to evaluate our Required Capital framework with respect to the impact of evolving regulatory requirements, as appropriate. For further discussion of the framework, refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Regulatory Requirements" in the 2023 Form 10‐K. |
| (b) | Our risk‐based capital ratios are computed under each of (i) the standardized approaches for calculating credit risk and market risk risk‐weighted assets (RWAs) (“Standardized Approach”) and (ii) the applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (“Advanced Approach”). For information on the calculation of regulatory capital and ratios, and associated regulatory requirements, please refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Regulatory Requirements" in the 2023 Form 10‐K. |
| (c) | Supplementary leverage ratio represents Tier 1 capital divided by the total supplementary leverage exposure. |
| Page 5: | |
| (a) | Institutional Securities Equity and Fixed income net revenues include trading, net interest income (interest income less interest expense), asset management, commissions and fees, investments and other revenues which are directly attributable to those businesses. |
| (b) | Pre‐tax margin represents income before provision for income taxes as a percentage of net revenues. |
| (c) | VaR represents the unrealized loss in portfolio value that, based on historically observed market risk factor movements, would have been exceeded with a frequency of 5%, or five times in every 100 trading days, if the portfolio were held constant for one day. Further discussion of the calculation of VaR and the limitations of our VaR methodology, is disclosed in "Quantitative and Qualitative Disclosures about Risk" included in the 2023 Form 10‐K. |
| Page 6: | |
| (a) | Transactional revenues for the Wealth Management segment includes investment banking, trading, and commissions and fee revenues. |
| (b) | Net interest income represents interest income less interest expense. |
| (c) | Other revenues for the Wealth Management segment includes investments and other revenues. |
| (d) | Pre‐tax margin represents income before provision for income taxes as a percentage of net revenues. |
| Definitions of Performance Metrics and Terms | |
|---|---|
| Our earnings releases, earnings conference calls, financial presentations and other communications may also include certain metrics that we believe to be useful to us, investors, analysts and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results. | |
| Page 7: | |
| (a) | Client assets represent those for which Wealth Management is providing services including financial advisor‐led brokerage, custody, administrative and investment advisory services; self-directed brokerage and investment advisory services; financial and wealth planning services; workplace services, including stock plan administration, and retirement plan services. |
| (b) | Net new assets represent client asset inflows, inclusive of interest, dividends and asset acquisitions, less client asset outflows, and exclude the impact of business combinations/divestitures and the impact of fees and commissions. |
| (c) | Margin and other lending represents margin lending arrangements, which allow customers to borrow against the value of qualifying securities and other lending which includes non‐purpose securities‐based lending on non‐bank entities. |
| (d) | Deposits reflect liabilities sourced from Wealth Management clients and other sources of funding on our U.S. Bank Subsidiaries. Deposits include sweep deposit programs, savings and other deposits, and time deposits. |
| (e) | Annualized weighted average cost of deposits represents the total annualized weighted average cost of the various deposit products, excluding the effect of related hedging derivatives. The period end cost of deposits is based upon balances and rates as of June 30, 2024, March 31, 2024 and June 30, 2023. The period average is based on daily balances and rates for the period. |
| (f) | Advisor‐led client assets represent client assets in accounts that have a Wealth Management representative assigned. |
| (g) | Fee‐based client assets represent the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets. |
| (h) | Fee‐based asset flows include net new fee‐based assets (including asset acquisitions), net account transfers, dividends, interest and client fees, and exclude institutional cash management related activity. For a description of the Inflows and Outflows included in Fee‐based asset flows, see Fee‐based client assets in the 2023 Form 10‐K. |
| (i) | Self‐directed client assets represent active accounts which are not advisor led. Active accounts are defined as having at least $25 in assets. |
| (j) | Daily average revenue trades (DARTs) represent the total self‐directed trades in a period divided by the number of trading days during that period. |
| (k) | Self‐directed households represent the total number of households that include at least one active account with self‐directed assets. Individual households or participants that are engaged in one or more of our Wealth Management channels are included in each of the respective channel counts. |
| (l) | The workplace channel assets includes equity compensation solutions for companies, their executives and employees. Stock plan unvested assets represent the market value of public company securities at the end of the period. |
| (m) | Stock plan participants represent total accounts with vested and/or unvested stock plan assets in the workplace channel. Individuals with accounts in multiple plans are counted as participants in each plan. |
| Page 8: | |
| (a) | Asset management and related fees represents management and administrative fees, distribution fees, and performance‐based fees, not in the form of carried interest. Asset management and related fees represents Asset management as reported on our consolidated income statement. |
| (b) | Performance‐based income and other includes performance‐based fees in the form of carried interest, gains and losses from investments, gains and losses from hedges on seed capital and certain employee deferred compensation plans, net interest, and other revenues. Performance‐based income and other represents investments, investment banking, trading, net interest and other revenues as reported on our consolidated income statement. |
| (c) | Pre‐tax margin represents income before provision for income taxes as a percentage of net revenues. |
| Page 9: | |
| (a) | Investment Management Alternatives and Solutions asset class includes products in Fund of Funds, Real Estate, Private Equity and Credit strategies, Multi‐Asset portfolios, as well as Custom Separate Account portfolios. |
| (b) | Investment Management net flows include new commitments, investments or reinvestments, net of client redemptions, returns of capital post-fund investment period and dividends not reinvested and excludes the impact of the transition of funds from their commitment period to the invested capital period. |
| (c) | Overlay Services represents investment strategies that use passive exposure instruments to obtain, offset, or substitute specific portfolio exposures beyond those provided by the underlying holdings of the fund. |
| (d) | Total assets under management or supervision excludes shares of minority stake assets which represent the Investment Management business segment’s proportional share of assets managed by third-party asset managers in which we hold investments accounted for under the equity method. |
| Page 10 and 11: | |
| (a) | Corporate loans include relationship and event-driven loans and typically consist of revolving lines of credit, term loans and bridge loans. |
| (b) | Secured lending facilities include loans provided to clients, which are primarily secured by loans, which are, in turn, collateralized by various assets including residential real estate, commercial real estate, corporate and financial assets. |
| (c) | Securities-based lending and other includes financing extended to sales and trading customers and corporate loans purchased in the secondary market. |
| (d) | Institutional Securities Lending Commitments principally include Corporate lending activity. |
| Supplemental Quantitative Details and Calculations | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Page 1: | |||||||||||
| (1) | The following sets forth the net revenue impact of mark‐to‐market gains and losses on investments associated with DCP and compensation expense impact related to DCP: | ||||||||||
| 2Q24 | 1Q24 | 2Q23 | 2Q24 YTD | 2Q23 YTD | |||||||
| $ | 15,019 | $ | 15,136 | $ | 13,457 | 30,155 | 27,974 | ||||
| 54 | (187) | (114) | (133) | (267) | |||||||
| $ | 15,073 | $ | 14,949 | $ | 13,343 | $ | 30,022 | $ | 27,707 | ||
| $ | 6,460 | $ | 6,696 | $ | 6,262 | $ | 13,156 | $ | 12,672 | ||
| (55) | (249) | (178) | (304) | (371) | |||||||
| $ | 6,405 | $ | 6,447 | $ | 6,084 | $ | 12,852 | $ | 12,301 | ||
| - | |||||||||||
| - | |||||||||||
| (2) | The Firm non-interest expenses by category are as follows: | ||||||||||
| 2Q24 | 1Q24 | 2Q23 | 2Q24 YTD | 2Q23 YTD | |||||||
| $ | 6,460 | $ | 6,696 | $ | 6,262 | $ | 13,156 | $ | 12,672 | ||
| 995 | 921 | 875 | 1,916 | 1,756 | |||||||
| 1,011 | 976 | 926 | 1,987 | 1,841 | |||||||
| 753 | 639 | 767 | 1,392 | 1,477 | |||||||
| 464 | 441 | 471 | 905 | 911 | |||||||
| 245 | 217 | 236 | 462 | 483 | |||||||
| 941 | 857 | 947 | 1,798 | 1,867 | |||||||
| 4,409 | 4,051 | 4,222 | 8,460 | 8,335 | |||||||
| $ | 10,869 | $ | 10,747 | $ | 10,484 | $ | 21,616 | $ | 21,007 | ||
| Page 3: | |||||||||||
| (1) | Includes loans held for investment (net of allowance), loans held for sale and also includes loans at fair value which are included in Trading assets on the balance sheet. | ||||||||||
| (2) | As of June 30, 2024, March 31, 2024 and June 30, 2023, the U.S. Bank investment securities portfolio included held to maturity investment securities of 50.2 billion, 50.7 billion and 54.9 billion, respectively. | ||||||||||
| Page 5: | |||||||||||
| (1) | Institutional Securities average tangible common equity represents average common equity adjusted to exclude goodwill and intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 2Q24: 482mm; 1Q24: 482mm; 2Q23: 471mm; 2Q24 YTD: 482mm; 2Q23 YTD: 471mm | ||||||||||
| Page 6: | |||||||||||
| (1) | The following sets forth the net revenue impact of mark-to-market gains and losses on investments associated with DCP and compensation expense impact related to DCP: | ||||||||||
| 2Q24 | 1Q24 | 2Q23 | 2Q24 YTD | 2Q23 YTD | |||||||
| $ | 6,792 | $ | 6,880 | $ | 6,660 | $ | 13,672 | $ | 13,219 | ||
| 45 | (140) | (82) | (95) | (183) | |||||||
| $ | 6,837 | $ | 6,740 | $ | 6,578 | $ | 13,577 | $ | 13,036 | ||
| $ | 3,601 | $ | 3,788 | $ | 3,503 | $ | 7,389 | $ | 6,980 | ||
| (33) | (156) | (107) | (189) | (226) | |||||||
| $ | 3,568 | $ | 3,632 | $ | 3,396 | $ | 7,200 | $ | 6,754 | ||
| (2) | Wealth Management average tangible common equity represents average common equity adjusted to exclude goodwill and intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 2Q24: 13,582mm; 1Q24: 13,582mm; 2Q23: 14,075mm; 2Q24 YTD: 13,582mm; 2Q23 YTD: 14,075mm |
All values are in US Dollars.
| Supplemental Quantitative Details and Calculations | |||||||
|---|---|---|---|---|---|---|---|
| Page 7: | |||||||
| (1) | Wealth Management other lending included 2 billion of non‐purpose securities based lending on non‐bank entities in each period ended June 30, 2024, March 31, 2024 and June 30, 2023. | ||||||
| (2) | For the quarters ended June 30, 2024, March 31, 2024 and June 30, 2023, Wealth Management deposits of 343 billion, 347 billion and 343 billion, respectively. Total deposits details are as follows: | ||||||
| 2Q24 | 1Q24 | 2Q23 | |||||
| $ | 129 | $ | 139 | $ | 158 | ||
| 214 | 208 | 185 | |||||
| $ | 343 | $ | 347 | $ | 343 | ||
| Page 8: | |||||||
| (1) | Investment Management average tangible common equity represents average common equity adjusted to exclude goodwill and intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 2Q24: 9,676mm; 1Q24: 9,676mm; 2Q23: 9,687mm; 2Q24 YTD: 9,676mm; 2Q23 YTD: 9,687mm. | ||||||
| Page 10: | |||||||
| (1) | For the quarters ended June 30, 2024, March 31, 2024 and June 30, 2023, Investment Management reflected loan balances of 481 million, 465 million and 386 million, respectively. | ||||||
| Page 11: | |||||||
| (1) | For the quarter ended June 30, 2024, the Allowance Rollforward for Loans and Lending Commitments is as follows: | ||||||
| Institutional Securities | Wealth Management | Total | |||||
| $ | 852 | $ | 289 | $ | 1,141 | ||
| (48) | (2) | (50) | |||||
| 63 | 22 | 85 | |||||
| (2) | 1 | (1) | |||||
| $ | 865 | $ | 310 | $ | 1,175 | ||
| $ | 548 | $ | 17 | $ | 565 | ||
| — | — | — | |||||
| (9) | — | (9) | |||||
| (1) | — | (1) | |||||
| $ | 538 | $ | 17 | $ | 555 | ||
| $ | 1,400 | $ | 306 | $ | 1,706 | ||
| (48) | (2) | (50) | |||||
| 54 | 22 | 76 | |||||
| (3) | 1 | (2) | |||||
| $ | 1,403 | $ | 327 | $ | 1,730 |
All values are in US Dollars.
| Legal Notice |
|---|
| This Financial Supplement contains financial, statistical and business-related information, as well as business and segment trends. |
| The information should be read in conjunction with the Firm's second quarter earnings press release issued July 16, 2024. |
17