Morgan Stanley Third Quarter 2023 Earnings Results
Morgan Stanley Reports Net Revenues of $13.3 Billion, EPS of $1.38 and ROTCE of 13.5%
NEW YORK----October 18, 2023--
Morgan Stanley (NYSE: MS) today reported net revenues of $13.3 billion for the third quarter ended September 30, 2023 compared to $13.0 billion a year ago. Net income applicable to Morgan Stanley was $2.4 billion, or $1.38 per diluted share,(1) compared to net income of $2.6 billion, or $1.47 per diluted share,(1) for the same period a year ago.
James P. Gorman, Chairman and Chief Executive Officer, said, “While the market environment remained mixed this quarter, the Firm delivered solid results with an ROTCE of 13.5%. Our Equity and Fixed Income businesses navigated markets well, and both Wealth and Investment Management produced higher revenues and profits year-over-year. We completed the integration of E*TRADE in the quarter, further executing on our strategy of building revenue synergies across channels and attracting clients to our best-in-class advice offering. Our ability to gather assets, together with our strong capital position and leading client franchises, position us to deliver continued growth and strong shareholder returns going forward.”
Financial Summary(2) (,3) Highlights
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Firm ($ millions, except
per share data) 3Q 2023 3Q 2022
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The Firm reported net
revenues of $13.3 billion
and net income of $2.4
billion. The Firm
delivered ROTCE of
13.5%.(4) The Firm
expense efficiency ratio
year-to-date was 75%.(5)
The quarter included
integration-related
expenses of $68 million.
Standardized Common
Equity Tier 1 capital
ratio was 15.5%. (15)
Institutional Securities
net revenues of $5.7
billion reflect solid
results in Equity and
Fixed Income and muted
completed activity in
Investment Banking.
Wealth Management
delivered a pre-tax
margin of 26.7%.(6) Net
revenues were $6.4
billion, reflecting
increased asset
management revenues on
higher average asset
levels compared to a year
ago. The quarter included
continued strong positive
fee-based flows of $22.5
billion. (9) Investment
Management net revenues
of $1.3 billion increased
compared to a year ago on
higher asset management
revenues and AUM of $1.4
Net revenues $13,273 $12,986 trillion. (11)
Provision for credit losses $134 $35
Compensation expense $5,935 $5,614
Non-compensation expenses $4,059 $3,949
Pre-tax income(7) $3,145 $3,388
Net income app. to MS $2,408 $2,632
Expense efficiency ratio(5) 75% 74%
Earnings per diluted
share(1) $1.38 $1.47
Book value per share $55.08 $54.46
Tangible book value per
share $40.53 $39.93
Return on equity 10.0% 10.7%
Return on tangible
equity(4) 13.5% 14.6%
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Institutional Securities
Net revenues $5,669 $5,817
Investment Banking $938 $1,277
Equity $2,507 $2,459
Fixed Income $1,947 $2,181
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Wealth Management
Net revenues $6,404 $6,120
Fee-based client assets ($
billions)(8) $1,857 $1,628
Fee-based asset flows ($
billions)(9) $22.5 $16.7
Net new assets ($
billions)(10) $35.7 $64.8
U.S. Bank loans ($
billions) $145.8 $145.7
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Investment Management
Net revenues $1,336 $1,168
AUM ($ billions)(11) $1,388 $1,279
Long-term net flows ($
billions)(12) $(6.8) $(1.9)
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Institutional Securities
Institutional Securities reported net revenues for the current quarter of $5.7 billion compared to $5.8 billion a year ago. Pre-tax income was $1.2 billion compared to $1.6 billion a year ago.(7)
Investment Banking
revenues down 27%
compared to a year ago:
Advisory revenues
decreased driven by fewer
completed M&A
transactions. Equity
underwriting revenues
increased primarily
driven by higher block
offerings, partially
offset by lower revenues
from IPOs. Fixed income
underwriting revenues
decreased primarily
driven by lower
event-driven
non-investment grade
activity. Equity net
revenues up 2% compared
to a year ago: Equity net
revenues reflected solid
results across
businesses.
Mark-to-market gains on
business-related
investments compared to
losses a year ago were
offset by prime brokerage
due to changes in the mix
of client balances. Fixed
Income net revenues down
11% compared to a year
ago: Fixed Income net
revenues decreased as
lower client activity and
less favorable market
conditions drove declines
in rates and foreign
exchange. These declines
were partially offset by
constructive trading
environments in
commodities, as well as
agency and non-agency
trading. Other: Other
revenues increased
primarily driven by lower
mark-to-market losses on
corporate loans, net of
loan hedges, and higher
net interest income and
fees from corporate
loans. ($ millions) 3Q 2023 3Q 2022
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Net Revenues $5,669 $5,817
Investment Banking $938 $1,277
Advisory $449 $693
Equity underwriting $237 $218
Fixed income underwriting $252 $366
Equity $2,507 $2,459
Fixed Income $1,947 $2,181
Other $277 $(100)
Provision for credit
losses $93 $24
Total Expenses $4,377 $4,167
Compensation $2,057 $1,948
Non-compensation $2,320 $2,219
Provision for credit losses:
-- Provision for credit losses increased primarily driven by deteriorating
conditions in the commercial real estate sector, including provisions for
certain specific loans.
Total Expenses:
-- Compensation expenses increased on higher discretionary compensation,
partially offset by lower expenses related to outstanding deferred equity
compensation.
-- Non-compensation expenses increased primarily driven by higher
execution-related, technology and professional services expenses.
Wealth Management
Wealth Management reported net revenues for the current quarter of $6.4 billion compared to $6.1 billion a year ago. Pre-tax income of $1.7 billion(7) in the current quarter resulted in a reported pre-tax margin of 26.7%.(6)
Net revenues increased 5%
compared to a year ago:
Asset management revenues
increased 7% compared to
a year ago reflecting
higher average asset
levels and the impact of
cumulative positive
fee-based asset flows.
Transactional
revenues(13) increased 7%
excluding the impact of
mark-to-market gains on
investments associated
with certain employee
deferred compensation
plans. The increase
primarily reflects higher
activity associated with
alternative products
compared to a year ago.
Net interest income
decreased 3% driven by
changes in deposit mix,
partially offset by
higher interest rates.
Provision for credit
losses: Provision for
credit losses increased
primarily driven by
provisions for certain
specific commercial real
estate loans. ($ millions) 3Q 2023 3Q 2022
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Net Revenues $6,404 $6,120