Morgan Stanley Files 10-Q for Period Ending March 31, 2024

AI Summary

MORGAN STANLEY (MS-PL) filed a Quarterly Report (10-Q) with the SEC on May 3, 2024. Morgan Stanley filed its 10-Q report for the quarterly period ended March 31, 2024. The filing covers the period from January 1, 2024, to March 31, 2024. The company's fiscal year ends on December 31. Morgan Stanley is incorporated in Delaware. The filing was submitted on May 3, 2024.

Why It Matters

For investors and stakeholders tracking MORGAN STANLEY, this filing contains several important signals. This 10-Q filing provides crucial insights into Morgan Stanley's financial health and operational performance during the first quarter of 2024, enabling investors to assess recent trends and make informed decisions. The detailed financial data within this report allows stakeholders to evaluate the company's profitability, liquidity, and capital structure, which are key indicators for investment analysis in the financial services sector.

Risk Assessment

Risk Level: medium — MORGAN STANLEY shows moderate risk based on this filing. The financial services industry is subject to significant regulatory oversight and market volatility, which can impact Morgan Stanley's performance and profitability.

Analyst Insight

Investors should analyze the detailed financial statements and risk factors presented in this 10-Q to understand Morgan Stanley's current financial position and future outlook.

Key Numbers

• 2024-03-31 — Period End Date (10-Q Filing)
• 2024-05-03 — Filing Date (10-Q Filing)
• 2024-01-01 — Quarter Start Date (10-Q Filing)
• 2023-01-01 — Prior Quarter Start Date (10-Q Filing)
• 2023-03-31 — Prior Quarter End Date (10-Q Filing)

Key Players & Entities

• MORGAN STANLEY (company) — FILER
• 0000895421 (company) — CENTRAL INDEX KEY
• 212-761-4000 (dollar_amount) — BUSINESS PHONE
• 2024-05-03 (date) — FILED AS OF DATE
• 2024-03-31 (date) — CONFORMED PERIOD OF REPORT
• 2024-01-01 (date) — Reporting Period Start Date
• 2023-01-01 (date) — Prior Period Start Date
• 2023-03-31 (date) — Prior Period End Date

FAQ

Key Dates

• 2024-03-31: Quarterly Period End — End of the reporting period for the 10-Q filing.
• 2024-05-03: Filing Date — Date the 10-Q report was officially submitted to the SEC.

Key Financial Figures

• $0.01 — ange on which registered Common Stock, $0.01 par value MS New York Stock Exchange D
• $15.1 billion — 2024 The Firm reported net revenues of $15.1 billion and net income of $3.4 billion with str
• $3.4 billion — nues of $15.1 billion and net income of $3.4 billion with strong contributions across each o
• $7.0 billion — nstitutional Securities net revenues of $7.0 billion reflect strong performance across the b
• $6.9 billion — -tax margin of 26.3%. Net revenues were $6.9 billion on higher asset management revenues dri
• $95 billion — nt. Net new assets for the quarter were $95 billion. Investment Management results reflect
• $1.4 billion — agement results reflect net revenues of $1.4 billion on higher average AUM of $1.5 trillion.
• $1.5 — f $1.4 billion on higher average AUM of $1.5 trillion. The quarter included positive
• $7.6 billion — ncluded positive long-term net flows of $7.6 billion. Net Revenues ($ in millions) Net I
• $14.5 billion — "), which increased by 4% compared with $14.5 billion in the quarter ended March 31, 2023 ("p
• $3.4 b — income applicable to Morgan Stanley was $3.4 billion, or $2.02 per diluted common shar
• $2.02 — to Morgan Stanley was $3.4 billion, or $2.02 per diluted common share, which increas
• $3.0 b — increased by 14%, or 19% compared with $3.0 billion, or $1.70 per diluted common shar
• $1.70 — , or 19% compared with $3.0 billion, or $1.70 per diluted common share in the prior y
• $6,696 million — Compensation and benefits expenses of $6,696 million in the current quarter increased 4% fro

Filing Documents

• ms-20240331.htm (10-Q) — 6488KB
• exhibit15q12024_10-q.htm (EX-15) — 10KB
• exhibit311q12024_10-q.htm (EX-31.1) — 10KB
• exhibit312q12024_10-q.htm (EX-31.2) — 10KB
• exhibit321q12024_10-q.htm (EX-32.1) — 5KB
• exhibit322q12024_10-q.htm (EX-32.2) — 6KB
• ms-20240331_g1.jpg (GRAPHIC) — 24KB
• ms-20240331_g10.jpg (GRAPHIC) — 33KB
• ms-20240331_g2.jpg (GRAPHIC) — 19KB
• ms-20240331_g3.jpg (GRAPHIC) — 19KB
• ms-20240331_g4.jpg (GRAPHIC) — 19KB
• ms-20240331_g5.jpg (GRAPHIC) — 33KB
• ms-20240331_g6.jpg (GRAPHIC) — 38KB
• ms-20240331_g7.jpg (GRAPHIC) — 36KB
• ms-20240331_g8.jpg (GRAPHIC) — 35KB
• ms-20240331_g9.jpg (GRAPHIC) — 27KB
• 0000895421-24-000322.txt ( ) — 31242KB
• ms-20240331.xsd (EX-101.SCH) — 154KB
• ms-20240331_cal.xml (EX-101.CAL) — 162KB
• ms-20240331_def.xml (EX-101.DEF) — 820KB
• ms-20240331_lab.xml (EX-101.LAB) — 1365KB
• ms-20240331_pre.xml (EX-101.PRE) — 1138KB
• ms-20240331_htm.xml (XML) — 7967KB

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations I 2 4 Introduction 4 Executive Summary 5 Business Segments 9 Institutional Securities 10 Wealth Management 12 Investment Management 14 Supplemental Financial Information 16 Accounting Development Updates 16 Critical Accounting Estimates 16 Liquidity and Capital Resources 17 Balance Sheet 17 Regulatory Requirements 21

Quantitative and Qualitative Disclosures about Risk

Quantitative and Qualitative Disclosures about Risk I 3 26 Market Risk 26 Credit Risk 28 Country and Other Risks 33 Report of Independent Registered Public Accounting Firm 35 Consolidated Financial Statements and Notes I 1 36 Consolidated Income Statement (Unaudited) 36 Consolidated Comprehensive Income Statement (Unaudited) 36 Consolidated Balance Sheet (Unaudited at March 31 , 202 4 ) 37 Consolidated Statement of Changes in Total Equity (Unaudited) 38 Consolidated Cash Flow Statement (Unaudited) 39

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 40 1. Introduction and Basis of Presentation 40 2. Significant Accounting Policies 41 3. Cash and Cash Equivalents 41 4. Fair Values 41 5. Fair Value Option 47 6. Derivative Instruments and Hedging Activities 48 7. Investment Securities 51 8. Collateralized Transactions 53 9. Loans, Lending Commitments and Related Allowance for Credit Losses 55 10. Other Assets 58 11. Deposits 58 12. Borrowings and Other Secured Financings 59 13. Commitments, Guarantees and Contingencies 59 14. Variable Interest Entities and Securitization Activities 63 15. Regulatory Requirements 65 16. Total Equity 67 17. Interest Income and Interest Expense 69 18. Income Taxes 69 19. Segment, Geographic and Revenue Information 69 Financial Data Supplement (Unaudited) 72 Glossary of Common Terms and Acronyms 73

Controls and Procedures

Controls and Procedures I 4 74 Other Information II

Legal Proceedings

Legal Proceedings II 1 74

Risk Factors

Risk Factors II 1A 74 Unregistered Sales of Equity Securities and Use of Proceeds II 2 74 Other Information II 5 74 Exhibits II 6 74

Signatures

Signatures 74 2 Table of Contents Available Information We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission ("SEC"). The SEC maintains a website, www.sec.gov , that contains annual, quarterly and current reports, proxy and information statements, and other information that issuers file electronically with the SEC. Our electronic SEC filings are available to the public at the SEC's website. Our website is www.morganstanley.com . You can access our Investor Relations webpage at www.morganstanley.com/about-us-ir . We make available free of charge, on or through our Investor Relations webpage, our proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended ("Exchange Act"), as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. We also make available, through our Investor Relations webpage, via a link to the SEC's website, statements of beneficial ownership of our equity securities filed by our directors, officers, 10% or greater shareholders and others under Section 16 of the Exchange Act. You can access information about our corporate governance at www.morganstanley.com/about-us-governance , our sustainability initiatives at www.morganstanley.com/about-us/sustainability-at-morgan-stanley , and our commitment to diversity and inclusion at www.morganstanley.com/about-us/diversity . Our webpages include: Amended and Restated Certificate of Incorporation; Amended and Restated Bylaws; Charters for our Audit Committee, Compensation, Management Development and Succession Committee, Governance and Sustainability Committee, Operations and Technology Committee, and Risk Committee; Corporate Governance Policies; Policy Regarding Corporate Political Activities; Policy Rega

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations Introduction Morgan Stanley is a global financial services firm that maintains significant market positions in each of its business segments—Institutional Securities, Wealth Management and Investment Management. Morgan Stanley, through its subsidiaries and affiliates, provides a wide variety of products and services to a large and diversified group of clients and customers, including corporations, governments, financial institutions and individuals. Unless the context otherwise requires, the terms "Morgan Stanley," "Firm," "us," "we" or "our" mean Morgan Stanley (the "Parent Company") together with its consolidated subsidiaries. See the "Glossary of Common Terms and Acronyms" for the definition of certain terms and acronyms used throughout this Form 10-Q. A description of the clients and principal products and services of each of our business segments is as follows: Institutional Securities provides a variety of products and services to corporations, governments, financial institutions and ultra-high net worth clients. Investment Banking services consist of capital raising and financial advisory services, including the underwriting of debt, equity securities and other products, as well as advice on mergers and acquisitions, restructurings and project finance. Our Equity and Fixed Income businesses include sales, financing, prime brokerage, market-making, Asia wealth management services and certain business-related investments. Lending activities include originating corporate loans and commercial real estate loans, providing secured lending facilities, and extending securities-based and other financing to customers. Other activities include research. Wealth Management provides a comprehensive array of financial services and solutions to individual investors and small to medium-sized businesses and institutions covering: financial advisor-led brokerage, custody, administrative

Management's Discussion and Analysis

Management's Discussion and Analysis Executive Summary Overview of Financial Results Consolidated Results—Three Months Ended March 31, 2024 The Firm reported net revenues of $15.1 billion and net income of $3.4 billion with strong contributions across each of our businesses. The Firm delivered ROE of 14.5% and ROTCE of 19.7% (see "Selected Non-GAAP Financial Information" herein). The Firm's expense efficiency ratio was 71% demonstrating operating leverage in an improving market environment. At March 31, 2024, the Firm's Standardized Common Equity Tier 1 capital ratio was 15.0%. Institutional Securities net revenues of $7.0 billion reflect strong performance across the broad franchise, with particular strength in Equity as well as underwriting revenues, partially offset by lower results in Advisory. Wealth Management delivered a pre-tax margin of 26.3%. Net revenues were $6.9 billion on higher asset management revenues driven by the positive market environment. Net new assets for the quarter were $95 billion. Investment Management results reflect net revenues of $1.4 billion on higher average AUM of $1.5 trillion. The quarter included positive long-term net flows of $7.6 billion. Net Revenues ($ in millions) Net Income Applicable to Morgan Stanley ($ in millions) Earnings per Diluted Common Share We reported net revenues of $15.1 billion in the quarter ended March 31, 2024 ("current quarter," or "1Q 2024"), which increased by 4% compared with $14.5 billion in the quarter ended March 31, 2023 ("prior year quarter," or "1Q 2023"). For the current quarter, net income applicable to Morgan Stanley was $3.4 billion, or $2.02 per diluted common share, which increased by 14%, or 19% compared with $3.0 billion, or $1.70 per diluted common share in the prior year quarter. Non-interest Expenses ($ in millions) March 2024 Form 10-Q 5 Table of Contents

Management's Discussion and Analysis

Management's Discussion and Analysis Compensation and benefits expenses of $6,696 million in the current quarter increased 4% from the prior year quarter, primarily due to an increase in the formulaic payout to Wealth Management representatives driven by higher compensable revenues and higher discretionary incentive compensation, partially offset by lower stock-based compensation expense in the prior year quarter. Non-compensation expenses of $4,051 million in the current quarter decreased 2% from the prior year quarter, primarily driven by lower legal and professional services expenses and lower marketing and business development costs, partially offset by an increased technology spend, an incremental FDIC special assessment cost of $42 million and higher execution-related expenses. Provision for Credit Losses The Provision for credit losses on loans and lending commitments was a net release of $6 million, primarily as a result of improvements in the macroeconomic outlook. This was partially offset by provisions for certain specific commercial real estate and corporate loans and modest growth in certain other loan portfolios. The Provision for credit losses on loans and lending commitments in the prior year quarter was $234 million, primarily related to a deterioration in both the macroeconomic outlook and the commercial real estate portfolio. For further information on the Provision for credit losses, see "Credit Risk" herein. Business Segment Results Net Revenues by Segment 1 ($ in millions) Net Income Applicable to Morgan Stanley by Segment 1 ($ in millions) 1. The amounts in the charts represent the contribution of each business segment to the total of the applicable financial category and may not sum to the total presented on top of the bars due to intersegment eliminations. See Note 19 to the financial statements for details of intersegment eliminations. Institutional Securities net revenues of $7,016 million in the current quarter increased 3%

Management's Discussion and Analysis

Management's Discussion and Analysis EMEA net revenues in the current quarter increased 5% from the prior year quarter, primarily driven by higher results from Investment Banking and Equity, partially offset by lower results from Fixed income within the Institutional Securities business segment. Asia net revenues in the current quarter decreased 12% from the prior year quarter, primarily driven by lower results from Fixed income and Equity within the Institutional Securities business segment. Selected Financial Information and Other Statistical Data Three Months Ended March 31, $ in millions, except per share data 2024 2023 Consolidated results Net revenues $ 15,136 $ 14,517 Earnings applicable to Morgan Stanley common shareholders $ 3,266 $ 2,836 Earnings per diluted common share $ 2.02 $ 1.70 Consolidated financial measures Expense efficiency ratio 1 71 % 72 % ROE 2 14.5 % 12.4 % ROTCE 2, 3 19.7 % 16.9 % Pre-tax margin 4 29 % 26 % Effective tax rate 21.2 % 19.3 % Pre-tax margin by segment 4 Institutional Securities 34 % 28 % Wealth Management 26 % 26 % Investment Management 18 % 13 % $ in millions, except per share data, worldwide employees and client assets At March 31, 2024 At December 31, 2023 Average liquidity resources for three months ended 5 $ 318,664 $ 314,504 Loans 6 $ 227,145 $ 226,828 Total assets $ 1,228,503 $ 1,193,693 Deposits $ 352,494 $ 351,804 Borrowings $ 271,383 $ 263,732 Common equity $ 90,448 $ 90,288 Tangible common equity 3 $ 66,813 $ 66,527 Common shares outstanding 1,627 1,627 Book value per common share 7 $ 55.60 $ 55.50 Tangible book value per common share 3, 7 $ 41.07 $ 40.89 Worldwide employees (in thousands) 80 80 Client assets 8 (in billions) $ 7,000 $ 6,588 Capital Ratios 9 Common Equity Tier 1 capital—Standardized 15.0 % 15.2 % Tier 1 capital—Standardized 16.9 % 17.1 % Common Equity Tier 1 capital—Advanced 15.4 % 15.5 % Tier 1 capital—Advanced 17.3 % 17.4 % Tier 1 leverage 6.7

Management's Discussion and Analysis

Management's Discussion and Analysis 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. Tangible common equity is a non-GAAP financial measure that we believe analysts, investors and other stakeholders consider useful to allow for comparability to peers and of the period-to-period use of our equity. The calculation of 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. The calculation of ROTCE represents annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average tangible common equity. The calculation of tangible book value per common share represents tangible common equity divided by common shares outstanding. The principal non-GAAP financial measures presented in this document are set forth in the following tables. Reconciliations from U.S. GAAP to Non-GAAP Consolidated Financial Measures Three Months Ended March 31, $ in millions 2024 2023 Net revenues $ 15,136 $ 14,517 Adjustment for mark-to-market losses (gains) on DCP 1 (187) (153) Adjusted Net revenues—non-GAAP $ 14,949 $ 14,364 Compensation expense $ 6,696 $ 6,410 Adjustment for mark-to-market gains (losses) on DCP 1 (249) (193) Adjusted Compensation expense—non-GAAP $ 6,447 $ 6,21

Management's Discussion and Analysis

Management's Discussion and Analysis Business Segments Substantially all of our operating revenues and operating expenses are directly attributable to our business segments. Certain revenues and expenses have been allocated to each business segment, generally in proportion to its respective net revenues, non-interest expenses or other relevant measures. See Note 19 to t

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