- Net Revenues of $9.9 Billion and
Earnings per Diluted Share from Continuing Operations of
$1.18
- Excluding DVA,1 Net
Revenues were $9.8 Billion and Earnings per Diluted Share from
Continuing Operations of $1.142,3,4
- Strong Performance in Equity Sales
& Trading and Improved Results in Fixed Income &
Commodities; Investment Banking Achieved Top 3 Rankings in Global
IPOs, Global Equity and Global Announced M&A5
- Wealth Management Pre-Tax Margin of
22%;6 Record Client Assets and Revenue Per Financial
Advisor
- ROE from Continuing Operations of
14.2%, or 10.1% Excluding DVA and Discrete Tax
Benefit2,7
- Quarterly Dividend Increased 50% to
$0.15 per Share
Morgan Stanley (NYSE: MS) today reported net revenues of $9.9
billion for the first quarter ended March 31, 2015 compared with
$9.0 billion a year ago. For the current quarter, income from
continuing operations applicable to Morgan Stanley was $2.4
billion, or $1.18 per diluted share,8 compared with income of $1.5
billion, or $0.74 per diluted share,8 for the same period a year
ago. Results for the current quarter included a net discrete tax
benefit of $564 million or $0.29 per diluted share primarily
associated with the repatriation of non-U.S. earnings at a lower
cost than originally estimated.9
Excluding DVA, net revenues for the current quarter were $9.8
billion compared with $8.9 billion a year ago.1,4 Income from
continuing operations applicable to Morgan Stanley was $2.3
billion, or $1.14 per diluted share, compared with income of $1.4
billion, or $0.70 per diluted share, a year ago.3,4
Compensation expense of $4.5 billion increased from $4.3 billion
a year ago primarily driven by higher revenues. Non-compensation
expenses of $2.5 billion increased from $2.3 billion a year ago
reflecting higher legal costs and volume driven expenses.
For the current quarter, net income applicable to Morgan
Stanley, including discontinued operations, was $2.4 billion or
$1.18 per diluted share,8 compared with net income of $1.5 billion
or $0.74 per diluted share in the first quarter of 2014.8
The annualized return on average common equity from continuing
operations was 14.2% in the current quarter, or 10.1% excluding DVA
and the net discrete tax benefit.7
Summary of Firm Results
(dollars in millions) As Reported
Excluding DVA4
Net MS Income Net MS Income Revenues
Cont. Ops.
Revenues Cont. Ops. 1Q 2015 $ 9,907 $ 2,399 $ 9,782 $
2,319 4Q 2014 (a) $ 7,764 $
(1,622)
$ 7,541 $
(1,767)
1Q 2014 $ 8,996 $ 1,506 $ 8,870
$ 1,431
a) Results for the fourth quarter of 2014 included several
significant items: legal expenses of $3.1 billion associated with
legacy residential mortgage matters; a net discrete tax benefit of
approximately $1.4 billion related to the restructuring of a legal
entity; compensation expense adjustments of approximately $1.1
billion related to changes in discretionary incentive compensation
deferrals; and a reduction to net revenues of $468 million related
to initial implementation of funding valuation adjustments
(FVA).
Business Overview
- Institutional Securities net revenues
excluding DVA were $5.3 billion.10 Revenues for the quarter reflect
strong performance in Equity sales and trading across products and
regions, improved performance in Fixed Income and Commodities sales
and trading on higher levels of client activity and solid results
in Investment Banking.
- Wealth Management net revenues were
$3.8 billion. The pre-tax margin was 22%.6 Fee based asset flows
for the quarter were $13.3 billion, with total client assets of
$2.0 trillion at quarter end.
- Investment Management reported net
revenues of $669 million with assets under management or
supervision of $406 billion.
James P. Gorman, Chairman and Chief Executive Officer, said,
“This was our strongest quarter in many years with improved
performance across most areas of the firm. It reflects our ongoing
strategy to build platforms for growth while maintaining a prudent
risk profile and disciplined expense management.”
Summary of Institutional
Securities Results (dollars in millions) As
Reported
Excluding DVA10
Net Pre-Tax Net Pre-Tax Revenues Income Revenues
Income 1Q 2015 $ 5,458 $ 1,813 $ 5,333 $ 1,688 4Q 2014 (a) $
3,430 $
(3,661)
$ 3,207 $
(3,884)
1Q 2014 $ 4,677 $ 1,416 $ 4,551
$ 1,290
a) Results for the fourth quarter of 2014 included several
significant items: legal expenses of $3.1 billion associated with
legacy residential mortgage matters; compensation expense
adjustments of approximately $900 million related to changes in
discretionary incentive compensation deferrals; and a reduction to
net revenues of $468 million related to initial implementation of
funding valuation adjustments (FVA).
INSTITUTIONAL SECURITIES
Institutional Securities reported pre-tax income from continuing
operations of $1.8 billion compared with pre-tax income of $1.4
billion in the first quarter of last year. Net revenues for the
current quarter were $5.5 billion compared with $4.7 billion a year
ago. Excluding DVA, net revenues for the current quarter of $5.3
billion compared with $4.6 billion a year ago.1,10 The following
discussion for sales and trading excludes DVA.
- Advisory revenues of $471 million
increased from $336 million a year ago on increased M&A
activity. Equity underwriting revenues of $307 million decreased
from $315 million a year ago on fewer IPOs. Fixed income
underwriting revenues of $395 million decreased from $485 million
in the prior year quarter primarily driven by lower loan
volumes.
- Equity sales and trading net revenues
of $2.3 billion increased from $1.7 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 $1.9 billion increased from $1.7
billion a year ago. Results for the current quarter reflect
strength in commodities and higher revenues in rates and foreign
exchange, partly offset by lower results in credit products.11
- Other sales and trading net losses of
$213 million compared with losses of $244 million a year ago
primarily reflecting lower costs related to the Firm’s long-term
debt.
- Other revenues of $90 million compared
with $191 million a year ago. Revenues for the prior year period
reflected a gain resulting from the disposition of CanTerm.12
- Compensation expense of $2.0 billion
increased from $1.9 billion a year ago on higher revenues.
Non-compensation expenses of $1.6 billion for the current quarter
increased from $1.4 billion a year ago reflecting higher legal
costs and volume driven expenses.
- Morgan Stanley’s average trading
Value-at-Risk (VaR) measured at the 95% confidence level was $47
million for the current quarter, unchanged from the fourth quarter
of 2014 and compared with $50 million in the first quarter of the
prior year.13
Summary of Wealth Management Results (dollars in
millions)
Net
Pre-Tax
Revenues
Income
1Q 2015
$3,834
$855
4Q 2014
$3,804
$736
1Q 2014
$3,609
$686
WEALTH MANAGEMENT
Wealth Management reported pre-tax income from continuing
operations of $855 million compared with $686 million in the first
quarter of last year. The quarter’s pre-tax margin was 22%.6 Net
revenues for the current quarter were $3.8 billion compared with
$3.6 billion a year ago.
- Asset management fee revenues of $2.1
billion increased from $2.0 billion a year ago reflecting positive
fee based asset flows and market appreciation.
- Transactional revenues14 of $950
million decreased from $996 million a year ago primarily reflecting
lower trading revenues and a decrease in commissions and fees.
- Net interest income of $689 million
increased from $538 million a year ago on higher deposit and loan
balances.
- Compensation expense of $2.2 billion
and non-compensation expenses of $754 million for the current
quarter were relatively unchanged from a year ago.
- Total client assets were $2.0 trillion
at quarter end. Client assets in fee based accounts of $803 billion
increased 11% compared with the prior year quarter. Fee based asset
flows for the quarter were $13.3 billion.
- Wealth Management representatives of
15,915 produced average annualized revenue per representative of
$959,000 in the current quarter.
Summary of Investment Management Results (dollars in
millions)
Net
Pre-Tax
Revenues
Income
1Q 2015
$669
$187
4Q 2014
$588
$(6)
1Q 2014
$752
$268
INVESTMENT MANAGEMENT
Investment Management reported pre-tax income from continuing
operations of $187 million compared with pre-tax income of $268
million in the first quarter of last year.15
- Net revenues of $669 million decreased
from $752 million in the prior year primarily reflecting lower
gains on investments in the Merchant Banking and Real Estate
Investing business.16 The current quarter also reflects lower
revenues driven by the deconsolidation of certain legal entities
during the quarter ended June 30, 2014 associated with a real
estate fund sponsored by the Firm.17
- Compensation expense for the current
quarter of $273 million decreased from $286 million a year ago,
while non-compensation expenses of $209 million increased from $198
million a year ago.
- Assets under management or supervision
at March 31, 2015 of $406 billion increased from $386 billion a
year ago primarily due to positive flows. The business recorded net
inflows of $1.3 billion in the current quarter.
CAPITAL
At March 31, 2015, the Firm’s Common Equity Tier 1 risk-based
capital ratio was approximately 13.1% and its Tier 1 risk-based
capital ratio was approximately 14.7%. The Firm is subject to a
“capital floor” such that these regulatory capital ratios currently
reflect the lower of the ratios computed under the U.S. Basel III
Advanced Approach or the U.S. Basel III Standardized Approach,
taking into consideration applicable transitional provisions. At
March 31, 2015, the capital floor is represented by the U.S. Basel
III Advanced Approach.18
At March 31, 2015, book value and tangible book value per common
share were $33.80 and $28.91,19 respectively, based on
approximately 2.0 billion shares outstanding.
OTHER MATTERS
In the current quarter, the Firm recognized a net discrete tax
benefit of $564 million primarily associated with the repatriation
of non-U.S. earnings at a cost lower than originally estimated due
to an internal restructuring to simplify its legal entity
organization in the U.K. The effective tax rate from continuing
operations for the current quarter was 13.6%, or 33.3% excluding
the net discrete tax benefit.20
During the quarter ended March 31, 2015, the Firm repurchased
approximately $250 million of its common stock or approximately 7
million shares. The Firm announced a share repurchase of up to $3.1
billion of common stock beginning in the second quarter of 2015
through the end of second quarter 2016.
The Firm increased its quarterly dividend to $0.15 per share
from $0.10 per share, payable on May 15, 2015 to common
shareholders of record on April 30, 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.
(See Attached Schedules)
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 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 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 from continuing operations applicable to Morgan Stanley
common shareholders and average diluted shares from a non-GAAP to
GAAP basis is as follows (number of shares, and DVA impact thereon,
are presented in millions):
1Q 2015 1Q 2014 Earnings
(loss) per diluted share from cont. ops. - Non-GAAP $1.14 $0.70 DVA
Impact $0.04 $0.04 Earnings (loss) per diluted share from cont.
ops. - GAAP $1.18 $0.74 Average diluted shares - Non-GAAP
1,963 1,969 DVA Impact 0 0 Average diluted shares - GAAP 1,963
1,969
4 Net revenues and income (loss) from continuing operations
applicable to Morgan Stanley, 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 income (loss) from continuing
operations applicable to Morgan Stanley from a non-GAAP to GAAP
basis is as follows (amounts are presented in millions):
1Q 2015 4Q 2014
1Q 2014 Firm net revenues - Non-GAAP $9,782 $7,541
$8,870 DVA impact $125 $223 $126 Firm net revenues - GAAP $9,907
$7,764 $8,996 Income (loss) applicable to MS - Non-GAAP
$2,319 $(1,767) $1,431 DVA impact $80 $145 $75 Income (loss)
applicable to MS - GAAP $2,399 $(1,622) $1,506
5 Source: Thomson Reuters – for the period of January 1, 2015 to
March 31, 2015 as of April 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 Annualized return on average common equity from continuing
operations (ROE) and ROE, excluding DVA and net discrete tax
benefit, 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
income from continuing operations applicable to Morgan Stanley less
preferred dividends as a percentage of average common equity. To
determine the ROE, excluding DVA and net discrete tax benefit, both
the numerator and denominator were adjusted to exclude those items.
The reconciliation of ROE from continuing operations to ROE from
continuing operations, excluding DVA and net discrete tax benefit
is as follows:
1Q 2015 ROE from cont. ops. excluding DVA and
discrete tax benefit 10.1% DVA impact 0.7% Discrete tax benefit
3.4% ROE from cont. ops. 14.2%
8 Includes preferred dividends and other adjustments related to
the calculation of earnings per share for the first quarter of 2015
and 2014 of approximately $80 million and $56 million,
respectively. Refer to page 3 of Morgan Stanley’s Financial
Supplement accompanying this release for the calculation of
earnings per share.
9 The impact to earnings per diluted share from continuing
operations is calculated by dividing the net discrete tax benefit
by the average number of shares outstanding.
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):
1Q 2015 4Q 2014
1Q 2014 Net revenues - Non-GAAP $5,333 $3,207 $4,551
DVA impact $125 $223 $126 Net revenues - GAAP $5,458 $3,430 $4,677
Pre-tax income (loss) - Non-GAAP $1,688 $(3,884) $1,290 DVA
impact $125 $223 $126 Pre-tax income (loss) - GAAP $1,813 $(3,661)
$1,416
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):
1Q 2015 1Q 2014 Sales &
Trading - Non-GAAP $3,958 $3,115 DVA Impact $125 $126 Sales &
Trading - GAAP $4,083 $3,241 FIC Sales & Trading -
Non-GAAP $1,903 $1,654 DVA Impact $100 $76 FIC Sales & Trading
- GAAP $2,003 $1,730 Equity Sales & Trading - Non-GAAP
$2,268 $1,705 DVA Impact $25 $50 Equity Sales & Trading - GAAP
$2,293 $1,755
12 “CanTerm” refers to CanTerm Canadian Terminals Inc.
13 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 7 of Morgan Stanley’s Financial Supplement
accompanying this release for the VaR disclosure.
14 Transactional revenues include investment banking, trading,
and commissions and fee revenues.
15 Results for the first quarter of 2015 and 2014 included
pre-tax income of $14 million and $54 million, respectively,
related to investments held by certain consolidated real estate
funds. The limited partnership interests in these funds are
reported in net income (loss) applicable to nonredeemable
noncontrolling interests on page 10 of Morgan Stanley’s Financial
Supplement accompanying this release.
16 Net revenues for the current quarter included gains of $14
million compared with gains of $54 million in the prior year first
quarter related to investments held by certain consolidated real
estate funds.
17 On April 1, 2014, the Firm deconsolidated approximately $2
billion in total assets related to a real estate fund sponsored by
the Firm.
18 As an 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 which have been
approved by their regulators to exit the parallel run, such as the
Firm, to a permanent “capital floor”. In calendar year 2014, the
capital floor resulted in the Firm’s capital ratios being the lower
of the capital ratios computed under the Advanced Approach or the
U.S. Basel I-based rules as supplemented by the existing market
risk rules known as “Basel 2.5”. 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.
For the current quarter, the Firm's capital floor is represented by
the Advanced Approach. These computations are preliminary estimates
as of April 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 March 31, 2015. The methods for
calculating the Firm’s risk-based capital ratios will change
through 2022 as aspects of the U.S. Basel III final rule are phased
in. The Firm’s capital takes into consideration regulatory
capital requirements as well as capital required for organic
growth, acquisitions and other business needs.
19 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.
20 The effective tax rate from continuing operations, excluding
net discrete tax benefit is a non-GAAP financial measure that the
Firm considers useful for investors to allow better comparability
of period-to-period operating performance. The reconciliation of
effective tax rate from continuing operations from a non-GAAP to
GAAP basis is as follows:
1Q 2015
Effective Tax Rate - Non-GAAP
33.3%
Discrete Tax Benefit
(19.7%)
Effective Tax Rate - GAAP
13.6%
MORGAN STANLEY Quarterly Financial Summary
(unaudited, dollars in millions, except for per share data)
Quarter Ended
Percentage Change From: Mar 31, 2015 Dec 31,
2014 Mar 31, 2014 Dec 31, 2014 Mar 31,
2014 Net revenues Institutional Securities $ 5,458 $
3,430 $ 4,677 59 % 17 % Wealth Management 3,834 3,804 3,609 1 % 6 %
Investment Management 669 588 752 14 % (11 %) Intersegment
Eliminations (54 ) (58 ) (42 ) 7 % (29 %)
Consolidated net revenues $ 9,907 $ 7,764 $ 8,996
28 % 10 %
Income (loss) from continuing
operations before tax
Institutional Securities $ 1,813 $ (3,661 ) $ 1,416 * 28 % Wealth
Management 855 736 686 16 % 25 % Investment Management 187 (6 ) 268
* (30 %) Intersegment Eliminations 0 0
0 -- -- Consolidated income (loss) from continuing
operations before tax $ 2,855 $ (2,931 ) $ 2,370 * 20
%
Income (loss) from continuing
operations applicable to Morgan Stanley
Institutional Securities $ 1,755 $ (3,432 ) $ 965 * 82 % Wealth
Management 535 1,825 421 (71 %) 27 % Investment Management 109 (15
) 120 * (9 %) Intersegment Eliminations 0 0
0 -- --
Consolidated income (loss) from continuing
operations applicable to Morgan Stanley
$ 2,399 $ (1,622 ) $ 1,506 * 59 %
Earnings (loss) applicable to Morgan
Stanley common shareholders
$ 2,314 $ (1,749 ) $ 1,449 * 60 %
Earnings
per basic share: Income from continuing operations $ 1.21 $
(0.91 ) $ 0.75 * 61 % Discontinued operations $ (0.01 ) $ - $ - *
*
Earnings per basic share $ 1.20 $ (0.91 ) $ 0.75 * 60 %
Earnings per diluted share: Income from continuing
operations $ 1.18 $ (0.91 ) $ 0.74 * 59 % Discontinued operations $
- $ - $ - -- -- Earnings per diluted share $ 1.18 $ (0.91 ) $ 0.74
* 59 %
Financial Metrics: Return on average
common equity from continuing operations 14.2 % * 9.2 % Return on
average common equity 14.1 % * 9.2 % Return on
average common equity from continuing operations excluding DVA 13.5
% * 8.5 % Return on average common equity excluding DVA 13.5 % *
8.5 % Common Equity Tier 1 capital ratio Advanced
(Transitional) 13.1 % 12.6 % 14.1 % Tier 1 capital ratio Advanced
(Transitional) 14.7 % 14.1 % 15.6 % Book value per common
share $ 33.80 $ 33.25 $ 32.38 Tangible book value per common share
$ 28.91 $ 28.26 $ 27.41
Notes
-
Results for the quarters ended March 31,
2015, December 31, 2014 and March 31, 2014, include positive
revenue of $125 million, $223 million and $126 million,
respectively, related to 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).
-
Beginning in the first quarter of 2015,
the Firm is subject to a “capital floor” such that the regulatory
risk-based capital ratios reflect the lower of the ratios computed
under the Advanced Approach or the Standardized Approach under U.S.
Basel III, taking into consideration applicable transitional
provisions. At March 31, 2015, the capital floor is represented by
the U.S. Basel III Advanced Approach. Prior periods have not been
recast to reflect the new requirements.
-
The return on average common equity
metrics, return on average common equity excluding DVA metrics, and
tangible book value per common share are non-GAAP measures that the
Firm considers to be useful measures to assess operating
performance and capital adequacy.
-
Tangible book value per common share
equals tangible common equity divided by period end common shares
outstanding.
-
See page 4 of the Financial Supplement and
End Notes 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: Mar 31, 2015 Dec 31,
2014 Mar 31, 2014 Dec 31, 2014
Mar 31, 2014 Revenues: Investment banking $ 1,357 $
1,456 $ 1,308 (7 %) 4 % Trading 3,650 1,451 2,962 152 % 23 %
Investments 266 112 359 138 % (26 %) Commissions and fees 1,186
1,235 1,216 (4 %) (2 %) Asset management, distribution and admin.
fees 2,681 2,684 2,549 -- 5 % Other 171 223
294 (23 %) (42 %) Total non-interest revenues
9,311 7,161 8,688 30 % 7 % Interest income 1,484 1,436 1,343
3 % 10 % Interest expense 888 833
1,035 7 % (14 %) Net interest 596
603 308 (1 %) 94 % Net revenues
9,907 7,764 8,996 28 % 10 %
Non-interest expenses: Compensation and benefits 4,524 5,104 4,306
(11 %) 5 % Non-compensation expenses: Occupancy and equipment 342
364 361 (6 %) (5 %) Brokerage, clearing and exchange fees 463 468
443 (1 %) 5 % Information processing and communications 415 404 424
3 % (2 %) Marketing and business development 150 186 147 (19 %) 2 %
Professional services 486 611 453 (20 %) 7 % Other 672
3,558 492 (81 %) 37 % Total
non-compensation expenses 2,528 5,591 2,320 (55 %) 9 %
Total non-interest expenses 7,052
10,695 6,626 (34 %) 6 %
Income (loss) from continuing operations before taxes 2,855 (2,931
) 2,370 * 20 % Income tax provision / (benefit) from continuing
operations 387 (1,353 ) 785 *
(51 %) Income (loss) from continuing operations 2,468
(1,578 ) 1,585 * 56 % Gain (loss) from
discontinued operations after tax (5 ) (8 ) (1
) 38 % * Net income (loss) $ 2,463 $ (1,586 ) $ 1,584 * 55 % Net
income applicable to nonredeemable noncontrolling interests
69 44 79 57 % (13 %) Net income
(loss) applicable to Morgan Stanley 2,394
(1,630 ) 1,505 * 59 % Preferred stock dividend /
Other 80 119 56 (33 %) 43
% Earnings (loss) applicable to Morgan Stanley common shareholders
$ 2,314 $ (1,749 ) $ 1,449 * 60 % Amounts
applicable to Morgan Stanley: Income (loss) from continuing
operations 2,399 (1,622 ) 1,506 * 59 % Gain (loss) from
discontinued operations after tax (5 ) (8 ) (1
) 38 % * Net income (loss) applicable to Morgan Stanley $ 2,394
$ (1,630 ) $ 1,505 * 59 % Pre-tax profit
margin 29 % * 26 % Compensation and benefits as a % of net revenues
46 % 66 % 48 % Non-compensation expenses as a % of net revenues 26
% 72 % 26 % Effective tax rate from continuing operations 13.6 %
46.2 % 33.1 %
Notes
-
In the quarter ended March 31, 2015,
income tax provision / (benefit) from continuing operations
included a net discrete tax benefit of $564 million primarily
associated with the repatriation of non-U.S. earnings at a cost
lower than originally estimated. In the quarter ended December 31,
2014, the income tax provision / (benefit) from continuing
operations included a net discrete tax benefit of approximately
$1.4 billion primarily related to the completion of a legal entity
restructuring, partially offset by the impact of a tax provision of
approximately $900 million which resulted from the non-deductible
expenses related to litigation and regulatory matters.
-
Pre-tax profit margin is a non-GAAP
financial measure that the Firm considers to be a useful measure to
assess operating performance.
-
Preferred stock dividend / other includes
allocation of earnings to Participating Restricted Stock Units
(RSUs).
12
MORGAN STANLEY Quarterly Earnings Per Share
(unaudited, dollars in millions, except for per share data)
Quarter Ended
Percentage Change From: Mar 31, 2015 Dec 31,
2014 Mar 31, 2014 Dec 31, 2014 Mar 31,
2014 Income (loss) from continuing
operations $ 2,468 $ (1,578 ) $ 1,585 * 56 % Net income
applicable to nonredeemable noncontrolling interests 69
44 79 57 % (13 %)
Income
(loss) from continuing operations applicable to Morgan Stanley
2,399 (1,622 ) 1,506 * 59 % Less: Preferred Dividends 78
119 54 (34 %) 44 %
Income
(loss) from continuing operations applicable to Morgan Stanley,
prior to allocation of income to Participating Restricted Stock
Units 2,321 (1,741 ) 1,452 * 60 %
Basic EPS
Adjustments: Less: Allocation of earnings to Participating
Restricted Stock Units 2 0 2
* --
Earnings (loss) from continuing operations
applicable to Morgan Stanley common shareholders $
2,319 $ (1,741 ) $ 1,450
* 60 % Gain (loss) from discontinued operations after tax (5
) (8 ) (1 ) 38 % * Less: Gain (loss) from discontinued operations
after tax applicable to noncontrolling interests 0
0 0 -- --
Gain (loss) from
discontinued operations after tax applicable to Morgan Stanley
(5 ) (8 ) (1 ) 38 % * Less: Allocation of earnings to Participating
Restricted Stock Units 0 0 0
-- --
Earnings (loss) from discontinued operations
applicable to Morgan Stanley common shareholders (5
) (8 ) (1 ) 38 % *
Earnings (loss) applicable to Morgan Stanley common
shareholders $ 2,314 $ (1,749
) $ 1,449 * 60 % Average basic common
shares outstanding (millions) 1,924 1,920 1,924 -- --
Earnings per basic share: Income from
continuing operations
$ 1.21 $ (0.91
) $ 0.75 * 61 % Discontinued operations
$ (0.01 ) $ - $ -
* * Earnings per basic share
$ 1.20
$ (0.91 ) $ 0.75
* 60 %
Earnings (loss) from
continuing operations applicable to Morgan Stanley common
shareholders $ 2,319 $ (1,741
) $ 1,450 * 60 %
Earnings (loss)
from discontinued operations applicable to Morgan Stanley common
shareholders (5 ) (8 ) (1 ) 38 % *
Earnings (loss)
applicable to Morgan Stanley common shareholders $
2,314 $ (1,749 ) $ 1,449
* 60 % Average diluted common shares outstanding and common
stock equivalents (millions) 1,963 1,920 1,969 2 % --
Earnings per diluted share: Income from
continuing operations
$ 1.18 $ (0.91
) $ 0.74 * 59 % Discontinued operations
$ - $ - $ - -- --
Earnings per diluted share
$ 1.18
$ (0.91 ) $ 0.74
* 59 % Notes:
-
The Firm calculates earnings per share
using the two-class method as described under the accounting
guidance for earnings per share. For further discussion of the
Firm's earnings per share calculations, see page 13 of the
Financial Supplement and Note 16 to the consolidated financial
statements in the Firm's Annual Report on Form 10-K for the year
ended December 31, 2014.
13
Morgan StanleyMedia Relations: Michele Davis
212-761-9621Investor Relations: Kathleen McCabe 212-761-4469
Morgan Stanley (NYSE:MS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Morgan Stanley (NYSE:MS)
Historical Stock Chart
From Apr 2023 to Apr 2024