Morgan Stanley Files Q3 2024 10-Q Report

TL;DR

MS Q3 2024 10-Q filed. Financials look solid.

AI Summary

Morgan Stanley filed its 10-Q for the period ending September 30, 2024. The filing details the company's financial performance and operations for the third quarter of 2024. Key financial data and operational highlights are presented within this report.

Why It Matters

This report provides investors and analysts with a detailed look into Morgan Stanley's financial health and strategic positioning during the third quarter of 2024.

Risk Assessment

Risk Level: low — This is a routine quarterly financial filing and does not contain immediate, significant negative news.

Key Players & Entities

• MORGAN STANLEY (company) — Filer of the 10-Q report
• 20240930 (date) — End of the reporting period
• 20241104 (date) — Filing date
• 0000895421-24-000491 (other) — Accession number for the filing

FAQ

Key Financial Figures

• $0.01 — ange on which registered Common Stock, $0.01 par value MS New York Stock Exchange D
• $15.4 b — 2024 The Firm reported net revenues of $15.4 billion, reflecting strong results across
• $2.1 billion — port ongoing growth. The Firm accreted $2.1 billion of Common Equity Tier 1 capital. At Sep
• $6.8 billion — nstitutional Securities net revenues of $6.8 billion reflect strong performance in Equity an
• $7.3 billion — re-tax margin of 28.3%. Net revenues of $7.3 billion reflect higher Asset management and Tra
• $64 billion — s. The business added net new assets of $64 billion in the third quarter and total client a
• $6 — quarter and total client assets reached $6 trillion as of September 30, 2024. Fee-
• $36 billion — r 30, 2024. Fee- based asset flows were $36 billion for the current quarter and total fee-b
• $2.3 — rter and total fee-based assets reached $2.3 trillion as of September 30, 2024. Inv
• $1.5 b — agement results reflect net revenues of $1.5 billion, primarily driven by increased as
• $7 billion — ncluded positive long-term net flows of $7 billion and end-of-period AUM of $1.6 trillion
• $1.6 — of $7 billion and end-of-period AUM of $1.6 trillion . Net Revenues ($ in million
• $15.4 billion — mon Share We reported net revenues of $15.4 billion in the quarter ended September 30, 2024
• $13.3 billion — ), which increased by 16% compared with $13.3 billion in the quarter ended September 30, 2023
• $3.2 billion — income applicable to Morgan Stanley was $3.2 billion in the current quarter, which increased

Filing Documents

• ms-20240930.htm (10-Q) — 7963KB
• exhibit15q32024_10-q.htm (EX-15) — 10KB
• exhibit311q32024_10-q.htm (EX-31.1) — 10KB
• exhibit312q32024_10-q.htm (EX-31.2) — 10KB
• exhibit321q32024_10-q.htm (EX-32.1) — 5KB
• exhibit322q32024_10-q.htm (EX-32.2) — 6KB
• ms-20240930_g1.jpg (GRAPHIC) — 24KB
• ms-20240930_g10.jpg (GRAPHIC) — 35KB
• ms-20240930_g11.jpg (GRAPHIC) — 35KB
• ms-20240930_g12.jpg (GRAPHIC) — 35KB
• ms-20240930_g13.jpg (GRAPHIC) — 23KB
• ms-20240930_g14.jpg (GRAPHIC) — 27KB
• ms-20240930_g2.jpg (GRAPHIC) — 28KB
• ms-20240930_g3.jpg (GRAPHIC) — 27KB
• ms-20240930_g4.jpg (GRAPHIC) — 25KB
• ms-20240930_g5.jpg (GRAPHIC) — 33KB
• ms-20240930_g6.jpg (GRAPHIC) — 34KB
• ms-20240930_g7.jpg (GRAPHIC) — 38KB
• ms-20240930_g8.jpg (GRAPHIC) — 40KB
• ms-20240930_g9.jpg (GRAPHIC) — 35KB
• 0000895421-24-000491.txt ( ) — 37016KB
• ms-20240930.xsd (EX-101.SCH) — 158KB
• ms-20240930_cal.xml (EX-101.CAL) — 179KB
• ms-20240930_def.xml (EX-101.DEF) — 854KB
• ms-20240930_lab.xml (EX-101.LAB) — 1396KB
• ms-20240930_pre.xml (EX-101.PRE) — 1174KB
• ms-20240930_htm.xml (XML) — 9876KB

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 10 Institutional Securities 11 Wealth Management 14 Investment Management 17 Supplemental Financial Information 19 Accounting Development Updates 19 Critical Accounting Estimates 19 Liquidity and Capital Resources 20 Balance Sheet 20 Regulatory Requirements 24

Quantitative and Qualitative Disclosures about Risk

Quantitative and Qualitative Disclosures about Risk I 3 29 Market Risk 29 Credit Risk 31 Country and Other Risks 37 Report of Independent Registered Public Accounting Firm 39 Consolidated Financial Statements and Notes I 1 40 Consolidated Income Statement (Unaudited) 40 Consolidated Comprehensive Income Statement (Unaudited) 40 Consolidated Balance Sheet (Un audit ed at September 30, 2024 ) 41 Consolidated Statement of Changes in Total Equity (Unaudited) 42 Consolidated Cash Flow Statement (Unaudited) 43

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 44 1. Introduction and Basis of Presentation 44 2. Significant Accounting Policies 45 3. Cash and Cash Equivalents 45 4. Fair Values 45 5. Fair Value Option 51 6. Derivative Instruments and Hedging Activities 52 7. Investment Securities 56 8. Collateralized Transactions 58 9. Loans, Lending Commitments and Related Allowance for Credit Losses 59 10. Other Assets 63 11. Deposits 64 12. Borrowings and Other Secured Financings 64 13. Commitments, Guarantees and Contingencies 64 14. Variable Interest Entities and Securitization Activities 69 15. Regulatory Requirements 71 16. Total Equity 73 17. Interest Income and Interest Expense 75 18. Income Taxes 75 19. Segment, Geographic and Revenue Information 76 Financial Data Supplement (Unaudited) 79 Glossary of Common Terms and Acronyms 80

Controls and Procedures

Controls and Procedures I 4 81 Other Information II

Legal Proceedings

Legal Proceedings II 1 81

Risk Factors

Risk Factors II 1A 81 Unregistered Sales of Equity Securities and Use of Proceeds II 2 81 Other Information II 5 81 Exhibits II 6 81

Signatures

Signatures 81 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 clients. 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. Wealth Management covers: financial advisor-led brokerage, custody,

Management's Discussion and Analysis

Management's Discussion and Analysis Executive Summary Overview of Financial Results Consolidated Results—Three Months Ended September 30, 2024 The Firm reported net revenues of $15.4 billion, reflecting strong results across our business segments. The Firm delivered ROE of 13.1% and ROTCE of 17.5% for the third quarter, and ROE of 13.5% and ROTCE of 18.2% for the year-to-date (see "Selected Non-GAAP Financial Information" herein). The Firm's expense efficiency ratio was 72% for both the third quarter and year-to-date, benefiting from our scale and disciplined expense management while maintaining strong infrastructure to support ongoing growth. The Firm accreted $2.1 billion of Common Equity Tier 1 capital. At September 30, 2024, the Firm's Standardized Common Equity Tier 1 capital ratio was 15.1%. Institutional Securities net revenues of $6.8 billion reflect strong performance in Equity and Fixed Income on higher client activity and in Investment Banking on higher underwriting revenues. Wealth Management delivered a pre-tax margin of 28.3%. Net revenues of $7.3 billion reflect higher Asset management and Transactional revenues. The business added net new assets of $64 billion in the third quarter and total client assets reached $6 trillion as of September 30, 2024. Fee- based asset flows were $36 billion for the current quarter and total fee-based assets reached $2.3 trillion as of September 30, 2024. Investment Management results reflect net revenues of $1.5 billion, primarily driven by increased asset management revenues on higher average AUM. The quarter included positive long-term net flows of $7 billion and end-of-period AUM of $1.6 trillion . Net Revenues ($ in millions) Net Income Applicable to Morgan Stanley ($ in millions) Earnings per Diluted Common Share We reported net revenues of $15.4 billion in the quarter ended September 30, 2024 ("current quarter," or "3Q 2024"), which increased by 16% compared with $13.3 billion in the quarter

Management's Discussion and Analysis

Management's Discussion and Analysis Non-interest Expenses ($ in millions) Compensation and benefits expenses of $6,733 million in the current quarter increased 13% from the prior year quarter, primarily due to higher expenses related to certain employee deferred cash-based compensation plans linked to investment performance ("DCP") and an increase in the formulaic payout to Wealth Management representatives driven by higher compensable revenues. Compensation and benefits expenses of $19,889 million in the current year period increased 7% from the prior year period, primarily due to an increase in the formulaic payout to Wealth Management representatives driven by higher compensable revenues and higher discretionary incentive compensation on higher revenues, partially offset by lower severance costs. During the prior year period, Compensation and benefits expenses included severance costs of $308 million, associated with a reduction in workforce during the second quarter of 2023. This specific reduction in workforce occurred across the Firm's business segments and geographic regions, impacted approximately 4% of the Firm's global workforce, and resulted from the Firm's review of its global workforce, operating expenses and the business environment following the acquisitions of E*TRADE Financial Corporation ("E*TRADE") and Eaton Vance Corp. ("Eaton Vance"), rather than a change in strategy or exit of businesses. We recorded severance costs of $207 million in the Institutional Securities business segment, $78 million in the Wealth Management business segment, and $23 million in the Investment Management business segment for the prior year period. These costs were primarily incurred in the Americas and EMEA, with the majority in the Americas. Non-compensation expenses of $4,350 million in the current year quarter increased 7% from the prior year quarter, primarily due to higher execution-related expenses and increased technology spend. Non-compensation expen

Management's Discussion and Analysis

Management's Discussion and Analysis 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 $6,815 million in the current quarter and $20,813 million in the current year period increased 20% and 15%, respectively, compared with the prior year periods, primarily reflecting higher Equity revenues and higher underwriting results within Investment Banking. Wealth Management net revenues of $7,270 million in the current quarter and $20,942 million in the current year period increased 14% and 7%, respectively, compared with the prior year periods, primarily reflecting higher Asset management revenues and higher gains on investments associated with certain employee deferred cash-based compensation plans ("DCP Investments"), partially offset by lower Net interest income. Investment Management net revenues of $1,455 million in the current quarter and $4,218 million in the current year period increased 9% and 8%, respectively, compared with the prior year periods, reflecting higher Asset management and related fees and higher Performance-based income and other revenues. September 2024 Form 10-Q 7 Table of Contents

Management's Discussion and Analysis

Management's Discussion and Analysis Net Revenues by Region 1 ($ in millions) 1. For a discussion of how the geographic breakdown of net revenues is determined, see Note 22 to the financial statements in the 2023 Form 10-K. Americas net revenues in the current quarter increased 13% from the prior year quarter, driven by higher Asset management revenues within the Wealth Management business segment and higher results from Equity and Investment Banking within the Institutional Securities business segment. Americas net revenues in the current year period increased 9% from the prior year period, primarily driven by higher Asset management revenues within the Wealth Management business segment and higher results across businesses within the Institutional Securities business segment. EMEA net revenues in the current quarter increased 24% from the prior year quarter, primarily driven by higher results from Investment Banking and Fixed Income within the Institutional Securities business segment. EMEA net revenues in the current year period increased 17% from the prior year period, primarily driven by higher Investment Banking revenues within the Institutional Securities business segment and higher results from the Investment Management business segment. Asia net revenues in the current quarter increased 31% from the prior year quarter, primarily driven by higher results across Institutional Securities and Investment Management business segments. Asia net revenues in the current year period increased 11% from the prior year period, primarily driven by higher results from Equity within the Institutional Securities business segment. Selected Financial Information and Other Statistical Data Three Months Ended September 30, Nine Months Ended September 30, $ in millions, except per share data 2024 2023 2024 2023 Consolidated results Net revenues $ 15,383 $ 13,273 $ 45,538 $ 41,247 Earnings applicable to Morgan Stanley common shareholders $ 3,028 $ 2,262 $ 9,236

Management's Discussion and Analysis

Management's Discussion and Analysis Economic and Market Conditions The economic environment, client and investor confidence and overall market sentiment continued to improve in the third quarter of 2024. While inflationary pressures have moderated and interest rates declined, geopolitical risks including ongoing tensions in the Middle East, the U.S. political cycle and the timing and pace of further interest rate reductions present ongoing risks to the economic environment. These factors have impacted, and could continue to impact capital markets and our businesses, as discussed further in "Business Segments" herein. For more information on economic and market conditions, and the potential effects of geopolitical events and acts of war or aggression on our future results, refer to "Risk Factors" and "Forward-Looking Statements" in the 2023 Form 10-K. Selected Non-GAAP Financial Information 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 accorda

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