- Net Revenues of $9.7 Billion and
Earnings per Diluted Share of $0.85
- Excluding DVA,1 Net
Revenues of $9.6 Billion and Earnings per Diluted Share of
$0.792,3,4
- Continued Strength in Equity Sales
& Trading; Investment Banking Ranked #1 in Global IPOs and #2
in Global Announced M&A5
- Wealth Management Pre-Tax Margin of
23%6
Morgan Stanley (NYSE:MS) today reported net revenues of $9.7
billion for the second quarter ended June 30, 2015 compared with
$8.6 billion a year ago. For the current quarter, net income
applicable to Morgan Stanley was $1.8 billion, or $0.85 per diluted
share,7 compared with net income of $1.9 billion, or $0.92 per
diluted share,7 for the same period a year ago. The earnings for
the prior year second quarter included a net discrete tax benefit
of $609 million or $0.31 per diluted share, principally related to
the remeasurement of reserves and related interest.8
Excluding DVA, net revenues for the current quarter were $9.6
billion compared with $8.5 billion a year ago.1,4 Excluding DVA and
the net discrete tax benefit in the prior year quarter, net income
applicable to Morgan Stanley was $1.7 billion, or $0.79 per diluted
share, compared with net income of $1.2 billion, or $0.58 per
diluted share in the prior year.3,4
Compensation expense of $4.4 billion increased from $4.2 billion
a year ago primarily driven by higher revenues. Non-compensation
expenses of $2.6 billion increased from $2.5 billion a year ago on
higher volume driven expenses and professional services costs,
principally consulting fees.
The annualized return on average common equity was 9.9 percent
in the current quarter, or 9.1 percent excluding DVA. 9
Summary of Firm Results (dollars in millions)
As Reported
Excluding DVA 4 Net Net Income
Net Net Income Revenues App. to MS (a)
Revenues App. to MS (a) 2Q 2015 $9,743 $1,807 $9,561
$1,688 1Q 2015 $9,907 $2,394 $9,782 $2,314 2Q 2014
$8,608 $1,899
$8,521 $1,838
(a) Net income applicable to Morgan Stanley included net
discrete tax benefits of $564 million and $609 million in 1Q 2015
and 2Q 2014, respectively.
Business Overview
- Institutional Securities net revenues
excluding DVA were $5.0 billion.10 Revenues for the quarter reflect
robust performance in Equity sales and trading, strong results in
Investment Banking and continued progress in Fixed Income and
Commodities sales and trading.
- Wealth Management net revenues were
$3.9 billion. The pre-tax margin was 23%.6 Fee based asset flows
for the quarter were $13.9 billion, with total client assets of
$2.0 trillion at quarter end.
- Investment Management reported net
revenues of $751 million with assets under management or
supervision of $403 billion.
James P. Gorman, Chairman and Chief Executive Officer, said, “We
delivered a strong quarter across each of our businesses, through
client-focused execution, expense discipline and prudent risk
management. We remain focused on delivering the long-term value of
this franchise.”
Summary of Institutional Securities Results
(dollars in millions)
As Reported Excluding DVA
10 Net Pre-Tax Net Pre-Tax
Revenues Income Revenues Income 2Q 2015
$5,172 $1,622 $4,990 $1,440 1Q 2015 $5,458 $1,813 $5,333 $1,688 2Q
2014 $4,248 $960
$4,161 $873
INSTITUTIONAL SECURITIES
Institutional Securities reported pre-tax income from continuing
operations of $1.6 billion compared with pre-tax income of $960
million in the second quarter of last year. Net revenues for the
current quarter were $5.2 billion compared with $4.2 billion a year
ago. Excluding DVA, net revenues for the current quarter of $5.0
billion, compared with $4.2 billion a year ago.1,10 The following
discussion for sales and trading excludes DVA.
- Advisory revenues of $423 million,
equity underwriting revenues of $489 million and fixed income
underwriting revenues of $528 million were essentially unchanged
from the prior year quarter, reflecting a continued favorable
market environment.
- Equity sales and trading net revenues
of $2.3 billion increased from $1.8 billion a year ago reflecting
strong performance across products and regions on higher levels of
client activity.11
- Fixed Income & Commodities sales
and trading net revenues of $1.3 billion increased from $1.0
billion a year ago. Results reflect higher revenues primarily in
rates and foreign exchange, partly offset by lower results in
credit products and commodities.11
- Other revenues of $212 million
increased from $108 million a year ago reflecting fees and gains
associated with corporate loans and higher results in our Japanese
joint venture Mitsubishi UFJ Morgan Stanley Securities Co.,
Ltd.
- Compensation expense of $1.9 billion
increased from $1.7 billion a year ago on higher revenues.
Non-compensation expenses of $1.7 billion for the current quarter
increased from $1.6 billion a year ago primarily driven by
increased business activity and higher professional services costs,
including legal and consulting fees.
- Morgan Stanley’s average trading
Value-at-Risk (VaR) measured at the 95% confidence level was $54
million compared with $47 million from the first quarter of 2015
and $48 million in the second quarter of the prior year.12
On May 11, 2015, Morgan Stanley announced a definitive agreement
to sell the Global Oil Merchanting unit of its Commodities division
to Castleton Commodities International LLC.
Summary of Wealth Management Results
(dollars in millions)
Net Pre-Tax Revenues
Income 2Q 2015 $3,875 $885 1Q 2015 $3,834 $855 2Q
2014 $3,702 $763
WEALTH MANAGEMENT
Wealth Management reported pre-tax income from continuing
operations of $885 million compared with $763 million in the second
quarter of last year. The quarter’s pre-tax margin was 23%.6 Net
revenues for the current quarter were $3.9 billion compared with
$3.7 billion a year ago.
- Asset management fee revenues of $2.2
billion increased from $2.1 billion a year ago reflecting an
increase in fee based assets and positive flows.
- Transactional revenues13 of $872
million decreased from $991 million a year ago primarily reflecting
lower revenues related to investments associated with certain
employee deferred compensation plans and lower levels of new issue
activity.
- Net interest income of $737 million
increased from $577 million a year ago on higher deposit and loan
balances.
- Compensation expense for the current
quarter of $2.2 billion was essentially unchanged from a year ago.
Non-compensation expenses of $790 million increased from $754
million a year ago, primarily driven by higher consulting and legal
fees.
- Total client assets were $2.0 trillion
at quarter end. Client assets in fee based accounts of $813 billion
increased 7% compared with the prior year quarter. Fee based asset
flows for the quarter were $13.9 billion.
- Wealth Management representatives were
15,771 at the end of the current quarter. Average annualized
revenue per representative of $978,000 increased 8% compared with
the prior year quarter.
As of June 30, 2015 the transfer of deposits from Citigroup Inc.
(Citi) to the Firm was completed. During the quarter, approximately
$4 billion of deposits held by Citi relating to the Firm’s customer
accounts were transferred to the Firm’s depository institutions.
Wealth Management bank deposits were $132 billion at the end of the
current quarter.
Summary of Investment Management Results
(dollars in millions)
Net Pre-Tax Revenues
Income 2Q 2015 $751 $220 1Q 2015 $669 $187 2Q 2014
$705 $209
INVESTMENT MANAGEMENT
Investment Management reported pre-tax income from continuing
operations of $220 million compared with pre-tax income of $209
million in the second quarter of last year.
- Net revenues of $751 million increased
from $705 million in the prior year primarily reflecting higher
gains on investments in the Merchant Banking and Real Estate
Investing business.
- Compensation expense for the current
quarter of $308 million increased from $293 million a year ago,
principally due to an increase in deferred compensation associated
with carried interest. Non-compensation expenses of $223 million
increased from $203 million a year ago.
- Assets under management or supervision
at June 30, 2015 of $403 billion increased from $399 billion a year
ago. The business recorded net outflows of $4.0 billion in the
current quarter.
CAPITAL
As of June 30, 2015, the Firm’s Common Equity Tier 1 and Tier 1
risk-based capital ratios under U.S. Basel III Advanced Approach
transitional provisions were approximately 14.0% and 15.7%,
respectively.14
As of June 30, 2015, the Firm estimates its pro forma fully
phased-in Common Equity Tier 1 risk-based capital ratio (Advanced
Approach) and pro forma fully phased-in Supplementary Leverage
Ratio to be approximately 12.5% and 5.3%, respectively.14,15,16
At June 30, 2015, book value and tangible book value per common
share were $34.52 and $29.54,17 respectively, based on
approximately 2.0 billion shares outstanding.
OTHER MATTERS
The effective tax rate from continuing operations for the
current quarter was 32.8%.
During the quarter ended June 30, 2015, the Firm repurchased
approximately $625 million of its common stock or approximately 16
million shares.
The Board of Directors declared a $0.15 quarterly dividend per
share payable on August 14, 2015 to common shareholders of record
on July 31, 2015.
Morgan Stanley is a leading global financial services firm
providing a wide range of investment banking, securities, wealth
management and investment management services. With offices in more
than 43 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.
This earnings release contains forward-looking statements.
Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date on
which they are made and which reflect management's current
estimates, projections, expectations or beliefs and which are
subject to risks and uncertainties that may cause actual results to
differ materially. For a discussion of additional risks and
uncertainties that may affect the future results of the Company,
please see “Forward-Looking Statements” immediately 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 Market Risk” in
Part II, Item 7A in the Company's Annual Report on Form 10-K for
the year ended December 31, 2014 and other items throughout the
Form 10-K, the Company’s Quarterly Reports on Form 10-Q and the
Company’s Current Reports on Form 8-K, including any amendments
thereto.
1 Represents the change in the fair value of certain of the
Firm’s long-term and short-term borrowings resulting from the
fluctuation in the Firm’s credit spreads and other credit factors
(Debt Valuation Adjustment, DVA).
2 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. For these purposes, “GAAP” refers to generally accepted
accounting principles in the United States. The Securities and
Exchange Commission (SEC) defines a “non-GAAP financial measure” as
a numerical measure of historical or future financial performance,
financial positions, 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
GAAP. Non-GAAP financial measures disclosed by Morgan Stanley are
provided as additional information to investors in order to provide
them with greater transparency about, or an alternative method for
assessing, our financial condition and operating results. These
measures are not in accordance with, or a substitute for 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 GAAP, along with a reconciliation of the
differences between the non-GAAP financial measure we reference and
such comparable GAAP financial measure.
3 Earnings (loss) per diluted share amounts, excluding DVA, are
non-GAAP financial measures that the Firm considers useful for
investors to allow better comparability of period-to-period
operating performance. Such exclusions are provided to
differentiate revenues associated with Morgan Stanley borrowings,
regardless of whether the impact is either positive, or negative,
that result solely from fluctuations in credit spreads and other
credit factors. The reconciliation of earnings (loss) per diluted
share applicable to Morgan Stanley common shareholders from a
non-GAAP to GAAP basis is as follows (number of shares are
presented in millions):
2Q 2015
2Q 2014 Earnings (loss) per diluted
share - Non-GAAP $0.79 $0.58 DVA Impact $0.06 $0.03 Net discrete
tax benefit $0.00 $0.31 Earnings (loss) per diluted share - GAAP
$0.85 $0.92 Average diluted shares 1,960 1,969
4 Net revenues excluding DVA and net income (loss) applicable to
Morgan Stanley, excluding DVA and net discrete benefit, are
non-GAAP financial measures that the Firm considers useful for
investors to allow for better comparability of period-to-period
operating performance. The reconciliation of net revenues and net
income (loss) applicable to Morgan Stanley from a non-GAAP to GAAP
basis is as follows (amounts are presented in millions):
2Q 2015
1Q 2015 2Q
2014 Firm net revenues - Non-GAAP $9,561 $9,782 $8,521 DVA
impact $182 $125 $87 Firm net revenues - GAAP $9,743 $9,907 $8,608
Net income (loss) applicable to MS ex. DVA/net discrete tax
benefit - Non-GAAP $1,688 $1,750 $1,229 Net discrete tax benefit $0
$564 $609 Net income (loss) applicable to MS ex. DVA - Non-GAAP
$1,688 $2,314 $1,838 DVA impact $119 $80 $61 Net income (loss)
applicable to MS - GAAP $1,807 $2,394 $1,899
5 Source: Thomson Reuters – for the period of January 1, 2015 to
June 30, 2015 as of July 1, 2015.
6 Pre-tax margin is a non-GAAP financial measure that the Firm
considers useful for investors to assess operating performance.
Pre-tax margin represents income (loss) from continuing operations
before taxes divided by net revenues.
7 Includes preferred dividends and other adjustments related to
the calculation of earnings per share for the second quarter of
2015 and 2014 of approximately $142 million and $79 million,
respectively. Refer to page 13 of Morgan Stanley’s Financial
Supplement accompanying this release for the calculation of
earnings per share.
8 The impact to earnings per diluted share is calculated by
dividing the net discrete tax benefit by the average number of
diluted shares outstanding.
9 Annualized return on average common equity (ROE) and ROE
excluding DVA are non-GAAP financial measures that the Firm
considers useful for investors to allow better comparability of
period-to-period operating performance. The calculation of ROE uses
net income applicable to Morgan Stanley less preferred dividends as
a percentage of average common equity. To determine the ROE
excluding DVA, both the numerator and denominator were adjusted to
exclude this item. The reconciliation of ROE to ROE excluding DVA
is as follows:
2Q 2015 ROE
excluding DVA 9.1% DVA impact 0.8% ROE 9.9%
10 Institutional Securities net revenues and pre-tax income
(loss), excluding DVA, are non-GAAP financial measures that the
Firm considers useful for investors to allow for better
comparability of period-to-period operating performance. The
reconciliation of net revenues and pre-tax income (loss) from a
non-GAAP to GAAP basis is as follows (amounts are presented in
millions):
2Q 2015
1Q 2015 2Q
2014 Net revenues - Non-GAAP $4,990 $5,333 $4,161 DVA impact
$182 $125 $87 Net revenues - GAAP $5,172 $5,458 $4,248
Pre-tax income (loss) - Non-GAAP $1,440 $1,688 $873 DVA impact $182
$125 $87 Pre-tax income (loss) - GAAP $1,622 $1,813 $960
11 Sales and trading net revenues, including Fixed Income &
Commodities (FIC) and Equity sales and trading net revenues
excluding DVA, are non-GAAP financial measures that the Firm
considers useful for investors to allow better comparability of
period-to-period operating performance. The reconciliation of sales
and trading, including FIC and Equity sales and trading net
revenues from a non-GAAP to GAAP basis is as follows (amounts are
presented in millions):
2Q 2015
2Q 2014 Sales & Trading - Non-GAAP
$3,322 $2,559 DVA Impact $182 $87 Sales & Trading - GAAP $3,504
$2,646 FIC Sales & Trading - Non-GAAP $1,267 $1,011 DVA
Impact $110 $50 FIC Sales & Trading - GAAP $1,377 $1,061
Equity Sales & Trading - Non-GAAP $2,270 $1,789 DVA Impact $72
$37 Equity Sales & Trading - GAAP $2,342 $1,826
12 VaR represents the loss amount that one would not expect to
exceed, on average, more than five times every one hundred trading
days in the Firm’s trading positions if the portfolio were held
constant for a one-day period. Further discussion of the
calculation of VaR and the limitations of the Firm’s VaR
methodology is disclosed in Part II, Item 7A “Quantitative and
Qualitative Disclosures about Market Risk” included in Morgan
Stanley’s Annual Report on Form 10-K for the year ended December
31, 2014. Refer to page 6 of Morgan Stanley’s Financial Supplement
accompanying this release for the VaR disclosure.
13 Transactional revenues include investment banking, trading,
and commissions and fee revenues.
14 As a U.S. Basel III Advanced Approach banking organization,
the Firm is required to compute risk-based capital ratios using
both (i) standardized approaches for calculating credit risk
weighted assets (“RWAs”) and market risk RWAs (the “Standardized
Approach”); and (ii) an advanced internal ratings-based approach
for calculating credit risk RWAs, an advanced measurement approach
for calculating operational risk RWAs, and an advanced approach for
market risk RWAs calculated under Basel III (the “Advanced
Approach”). To implement a provision of the Dodd-Frank Act, U.S.
Basel III subjects Advanced Approach banking organizations that
have been approved by their regulators to exit the parallel run,
such as the Firm, to a permanent “capital floor”. Beginning on
January 1, 2015, the capital floor is the lower of the capital
ratios computed under the Advanced Approach or the Standardized
Approach under U.S. Basel III, taking into consideration applicable
transitional provisions. As of June 30, 2015, the lower ratio is
represented by U.S. Basel III Advanced Approach. These computations
are preliminary estimates as of July 20, 2015 (the date of this
release) and could be subject to revision in Morgan Stanley’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2015.
The methods for calculating the Firm’s risk-based capital ratios
will change through January 1, 2022 as aspects of the U.S. Basel
III final rule are phased in. For information on the calculation of
regulatory capital and ratios for prior periods, please refer to
Part II, Item 7 "Liquidity and Capital Resources - Regulatory
Requirements" in Morgan Stanley's Annual Report on Form 10-K for
the year ended December 31, 2014 and Part I, Item 2 "Liquidity and
Capital Resources - Regulatory Requirements" in Morgan Stanley's
Quarterly Report on Form 10-Q for the quarter ended March 31,
2015.
15 U.S. Basel III requires the Firm to disclose information
related to its supplementary leverage ratio beginning on January 1,
2015, which through to the end of 2017 will include the effects of
transitional provisions. The supplementary leverage ratio will
become effective as a capital standard on January 1, 2018.
Specifically, beginning on January 1, 2018, the Firm must maintain
a Tier 1 supplementary leverage capital buffer of greater than 2%
in addition to the 3% minimum supplementary leverage ratio (for a
total of greater than 5%), in order to avoid limitations on capital
distributions, including dividends and stock repurchases, and
discretionary bonus payments to executive officers. The Firm’s pro
forma Supplementary Leverage Ratio estimate utilizes a fully
phased-in U.S. Basel III Tier 1 capital numerator and a denominator
of approximately $1.16 trillion. The Firm’s estimates are subject
to risks and uncertainties that may cause actual results to differ
materially from estimates based on these regulations. Further,
these expectations should not be taken as projections of what the
Firm’s supplementary leverage ratios or earnings, assets or
exposures will actually be at future dates. See “Risk Factors” in
Part I, Item 1A of the 2014 Form 10-K for a discussion of risks and
uncertainties that may affect the future results of the Firm.
16 The pro forma fully phased-in Common Equity Tier 1 risk-based
capital ratio and pro forma fully phased-in supplementary leverage
ratio are non-GAAP financial measures that the Firm considers to be
useful measures for evaluating compliance with new regulatory
capital requirements that have not yet become effective.
17 Tangible common equity and tangible book value per common
share are non-GAAP financial measures that the Firm considers to be
useful measures of capital adequacy. Tangible common equity equals
common equity less goodwill and intangible assets net of allowable
mortgage servicing rights deduction. Tangible book value per common
share equals tangible common equity divided by period end common
shares outstanding.
MORGAN STANLEY Quarterly Consolidated Financial
Summary (unaudited, dollars in millions, except for per
share data)
Quarter Ended
Percentage Change From:
Six Months Ended Percentage June 30, 2015
Mar 31, 2015 June 30, 2014
Mar 31, 2015 June 30, 2014 June 30, 2015
June 30, 2014 Change Net revenues
Institutional Securities $ 5,172 $ 5,458 $ 4,248 (5 %) 22 % $
10,630 $ 8,925 19 % Wealth Management 3,875 3,834 3,702 1 % 5 %
7,709 7,311 5 % Investment Management 751 669 705 12 % 7 % 1,420
1,457 (3 %) Intersegment Eliminations (55 ) (54 )
(47 ) (2 %) (17 %) (109) (89 ) (22 %) Net
revenues $ 9,743 $ 9,907 $ 8,608 (2 %) 13 % $
19,650 $ 17,604 12 %
Income (loss) from continuing
operations before tax Institutional Securities $ 1,622 $ 1,813
$ 960 (11 %) 69 % $ 3,435 $ 2,376 45 % Wealth Management 885 855
763 4 % 16 % 1,740 1,449 20 % Investment Management 220 187 209 18
% 5 % 407 477 (15 %) Intersegment Eliminations 0
0 0 -- -- 0 0 --
Income (loss) from continuing operations before tax $ 2,727
$ 2,855 $ 1,932 (4 %) 41 % $ 5,582 $ 4,302 30
%
Net Income (loss) applicable to Morgan Stanley
Institutional Securities $ 1,087 $ 1,750 $ 1,290 (38 %) (16 %) $
2,837 $ 2,253 26 % Wealth Management 561 535 467 5 % 20 % 1,096 888
23 % Investment Management 159 109 142 46 % 12 % 268 263 2 %
Intersegment Eliminations 0 0 0
-- -- 0 0 -- Net Income (loss)
applicable to Morgan Stanley $ 1,807 $ 2,394 $ 1,899
(25 %) (5 %) $ 4,201 $ 3,404 23 % Earnings (loss)
applicable to Morgan Stanley common shareholders $ 1,665 $
2,314 $ 1,820 (28 %) (9 %) $ 3,979 $ 3,269 22
%
Financial Metrics: Earnings per diluted
share from continuing operations
$
0.85 $ 1.18 $ 0.92 (28 %) (8 %) $ 2.03
$
1.66 22 % Earnings per diluted share
$
0.85
$
1.18
$
0.92 (28 %) (8 %)
$
2.03
$
1.66 22 % Earnings per diluted share from continuing
operations excluding DVA
$
0.79
$
1.14
$
0.89 (31 %) (11 %)
$
1.93
$
1.59 21 % Earnings per diluted share excluding DVA
$
0.79
$
1.14
$
0.89 (31 %) (11 %)
$
1.93
$
1.59 21 % Return on average common equity from continuing
operations
9.9 %
14.2 %
11.3 %
12.0%
10.2 % Return on average common equity
9.9 %
14.1 %
11.3 %
12.0%
10.2 % Return on average common equity from continuing
operations excluding DVA
9.1 %
13.5 %
10.7 %
11.3%
9.6 % Return on average common equity excluding DVA
9.1 %
13.5 %
10.7 %
11.3%
9.6 % Notes:
-
Refer to End Notes and Definition of
Performance Metrics and GAAP to Non-GAAP Measures on pages 14-15
from the Financial Supplement for additional information related to
the calculation of the financial metrics.
11
MORGAN STANLEY Quarterly Consolidated Income
Statement Information (unaudited, dollars in millions)
Quarter
Ended Percentage Change From: Six Months Ended
Percentage June 30, 2015 Mar 31, 2015 June
30, 2014 Mar 31, 2015 June 30, 2014 June 30,
2015 June 30, 2014 Change Revenues: Investment
banking $ 1,614 $ 1,357 $ 1,633 19 % (1 %) $ 2,971 $ 2,941 1 %
Trading 2,973 3,650 2,516 (19 %) 18 % 6,623 5,478 21 % Investments
261 266 227 (2 %) 15 % 527 586 (10 %) Commissions and fees 1,158
1,186 1,138 (2 %) 2 % 2,344 2,354 -- Asset management, distribution
and admin. fees 2,742 2,681 2,621 2 % 5 % 5,423 5,170 5 % Other
297 171 206 74 % 44 %
468 500 (6 %)
Total non-interest revenues
9,045 9,311 8,341 (3 %) 8 % 18,356 17,029 8 % Interest
income 1,386 1,484 1,250 (7 %) 11 % 2,870 2,593 11 % Interest
expense 688 888 983 (23
%) (30 %) 1,576 2,018 (22 %) Net
interest 698 596 267 17 %
161 % 1,294 575 125 % Net
revenues 9,743 9,907 8,608
(2 %) 13 % 19,650 17,604
12 % Non-interest expenses: Compensation and benefits 4,405 4,524
4,200 (3 %) 5 % 8,929 8,506 5 % Non-compensation expenses:
Occupancy and equipment 351 342 358 3 % (2 %) 693 719 (4 %)
Brokerage, clearing and exchange fees 487 463 458 5 % 6 % 950 901 5
% Information processing and communications 438 415 411 6 % 7 % 853
835 2 % Marketing and business development 179 150 165 19 % 8 % 329
312 5 % Professional services 598 486 531 23 % 13 % 1,084 984 10 %
Other 558 672 553 (17 %)
1 % 1,230 1,045 18 % Total
non-compensation expenses 2,611 2,528 2,476 3 % 5 % 5,139 4,796 7 %
Total non-interest
expenses 7,016 7,052 6,676
(1 %) 5 % 14,068 13,302 6 %
Income (loss) from continuing operations before taxes 2,727
2,855 1,932 (4 %) 41 % 5,582 4,302 30 % Income tax provision /
(benefit) from continuing operations 894 387
15 131 % * 1,281
800 60 % Income (loss) from continuing operations
1,833 2,468 1,917 (26 %) (4 %)
4,301 3,502 23 % Gain (loss)
from discontinued operations after tax (2 ) (5 )
0 60 % * (7 ) (1 ) * Net income
(loss) $ 1,831 $ 2,463 $ 1,917 (26 %) (4 %) $ 4,294 $ 3,501 23 %
Net income applicable to nonredeemable noncontrolling interests
24 69 18 (65 %) 33 %
93 97 (4 %) Net income (loss)
applicable to Morgan Stanley 1,807 2,394
1,899 (25 %) (5 %) 4,201
3,404 23 % Preferred stock dividend / Other
142 80 79 78 % 80 % 222
135 64 % Earnings (loss) applicable to
Morgan Stanley common shareholders $ 1,665 $ 2,314 $
1,820 (28 %) (9 %) $ 3,979 $ 3,269 22 %
Pre-tax profit margin 28 % 29 % 22 % 28 % 24 %
Compensation and benefits as a % of net revenues 45 % 46 % 49 % 45
% 48 % Non-compensation expenses as a % of net revenues 27 % 26 %
29 % 26 % 27 % Effective tax rate from continuing operations 32.8 %
13.6 % 0.8 % 22.9 % 18.6 %
Notes:
-
Refer to End Notes and Definition of
Performance Metrics and GAAP to Non-GAAP Measures on pages 14
-15 from the Financial Supplement for additional information.
12
MORGAN STANLEY Quarterly Earnings Per Share
(unaudited, dollars in millions, except for per share data)
Quarter
Ended Percentage Change From: Six Months Ended
Percentage June 30, 2015 Mar 31, 2015 June
30, 2014 Mar 31, 2015 June 30, 2014 June 30,
2015 June 30, 2014 Change Income
(loss) from continuing operations $ 1,833 $ 2,468 $ 1,917 (26
%) (4 %) $ 4,301 $ 3,502 23 % Net income applicable to
nonredeemable noncontrolling interests 24 69
18 (65 %) 33 % 93
97 (4 %)
Income (loss) from continuing operations
applicable to Morgan Stanley 1,809 2,399 1,899 (25 %) (5 %)
4,208 3,405 24 % Less: Preferred Dividends 141
78 76 81 % 86 % 219
130 68 %
Income (loss) from continuing
operations applicable to Morgan Stanley, prior to allocation of
income to Participating Restricted Stock Units 1,668 2,321
1,823 (28 %) (9 %) 3,989 3,275 22 %
Basic EPS
Adjustments: Less: Allocation of earnings to Participating
Restricted Stock Units 1 2 3
(50 %) (67 %) 3 5
(40 %)
Earnings (loss) from continuing operations applicable to
Morgan Stanley common shareholders $ 1,667
$ 2,319 $ 1,820 (28 %) (8 %)
$
3,986 $ 3,270 22 % Gain (loss) from
discontinued operations after tax (2 ) (5 ) 0 60 % * (7 ) (1 ) *
Less: Gain (loss) from discontinued operations after tax applicable
to noncontrolling interests 0 0
0 -- -- 0 0 --
Gain (loss) from discontinued operations after tax applicable to
Morgan Stanley (2 ) (5 ) 0 60 % * (7 ) (1 ) * Less: Allocation
of earnings to Participating Restricted Stock Units 0
0 0 -- -- 0
0 --
Earnings (loss) from discontinued operations
applicable to Morgan Stanley common shareholders (2
) (5 ) 0 60 % *
(7 )
(1 )
*
Earnings (loss) applicable to Morgan Stanley common
shareholders $ 1,665 $ 2,314
$ 1,820 (28 %) (9 %)
$ 3,979 $
3,269 22 % Average basic common shares outstanding
(millions) 1,919 1,924 1,928 -- -- 1,922 1,926 --
Earnings per basic
share: Income from continuing operations
$ 0.87
$ 1.21 $ 0.94 (28 %) (7 %)
$
2.07 $ 1.70 22 % Discontinued operations
$ - $ (0.01 ) $ -
*
--
$ - $ - -- Earnings per basic share
$ 0.87 $
1.20 $ 0.94 (28 %)
(7 %)
$ 2.07
$ 1.70 22 %
Earnings (loss) from continuing
operations applicable to Morgan Stanley common shareholders
$ 1,667 $ 2,319 $ 1,820
(28 %) (8 %)
$ 3,986 $ 3,270 22 %
Earnings (loss) from discontinued operations applicable
to Morgan Stanley common shareholders (2 ) (5 ) 0 60 %
*
(7 ) (1 ) *
Earnings (loss) applicable to Morgan Stanley
common shareholders $ 1,665 $ 2,314
$ 1,820 (28 %) (9 %)
$ 3,979 $
3,269 22 % Average diluted common shares outstanding
and common stock equivalents (millions) 1,960 1,963 1,969 -- --
1,962 1,969 --
Earnings per diluted share: Income from continuing
operations
$ 0.85 $ 1.18 $
0.92 (28 %) (8 %)
$ 2.03 $ 1.66
22 % Discontinued operations
$ - $ -
$ - -- --
$ - $ - --
Earnings per diluted share
$ 0.85
$ 1.18 $
0.92 (28 %) (8 %)
$ 2.03 $ 1.66
22 %
Notes:
-
Refer to End Notes and Definition of
Performance Metrics and GAAP to Non-GAAP Measures on pages 14
-15 from the Financial Supplement for additional information.
13
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version on businesswire.com: http://www.businesswire.com/news/home/20150720005604/en/
For Morgan StanleyMedia Relations:Michele Davis,
212-761-9621orInvestor Relations:Kathleen McCabe, 212-761-4469
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