Morgan Stanley (MS) Q2 2024 earnings summary

Executive summary

• Second quarter 2024 net revenues reached $15.0B, up 12% year-over-year, with EPS of $1.82 and ROTCE of 17.5%, reflecting strong operating leverage and profitability.

• Net income for Q2 2024 was $3.1B, a 41% increase year-over-year; diluted EPS rose 47% to $1.82.

• First half 2024 results included $30.2B in revenue, $6.5B in net income, EPS of $3.85, and ROTCE of 18.6%.

• Institutional Securities and Wealth Management segments contributed nearly equally to revenue and earnings, highlighting a balanced business model.

• Total client assets grew to $7.2T, with Wealth Management client assets at $5.7T and continued progress toward the $10T+ target.

Financial highlights

• Institutional Securities revenue was $7.0B, up 23% year-over-year, driven by strong equity and debt underwriting performance.

• Investment banking revenues rose 51% year-over-year to $1.6B, with fixed income underwriting up 70% and equity underwriting up, though still below historical averages.

• Wealth Management generated $6.8B in revenue, with record asset management fees, a pre-tax margin of 26.8%, and $36B in net new assets.

• Fee-based flows in Wealth Management were $26B for the quarter and $52B year-to-date.

• Investment Management revenues increased 8% year-over-year to $1.4B, driven by higher AUM and performance fees.

Outlook and guidance

• NII is expected to decline modestly in Q3 due to changes in advisory sweep rates, but should inflect higher in 2025 as rate cuts and portfolio repricing take effect.

• The firm remains confident in achieving a 30% pre-tax margin in Wealth Management over time, with current margins at 27% GAAP and 28% ex-DCP.

• ROTCE goal remains at 20% in a normal market environment.

• SCB expected to increase to 6.0% from October 1, 2024, raising the CET1 requirement to 13.5%.

• Management is bullish on a multi-year investment banking rebound, citing healthy pipelines and increased corporate finance activity.