MORGAN STANLEY Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Four Pillars: The firm emphasized four pillars - Strategy (consistently serve clients and manage capital), Culture (rigor, humility, partnership), Financial Strength (strong capital and liquidity), and Growth (invest in talent, clients, technology).
• Business Growth: Wealth and Investment Management combined revenues grew from $20 billion to $34 billion, with client assets nearly tripling to $7.9 trillion. Institutional securities wallet share expanded by ~100 basis points.
• Capital Deployment: In 2024, the firm accreted over $5.5 billion of CET1, continued to grow the dividend, repurchase stock, and invest in businesses, with high capital levels protecting against challenging climates.

Segment Performance

• Institutional Securities: Full year revenues reached $28.1 billion, with fourth quarter at $7.3 billion. Driven by strong equity and fixed income results. Investment banking revenues totaled $6.2 billion for the full year and $1.6 billion in the fourth quarter. Equity revenues were a record $12.2 billion full year, and fixed income revenues stood at $8.4 billion full year.
• Wealth Management: Full year revenues were $28.4 billion, with fourth quarter at $7.5 billion. Fee-based flows amounted to $123 billion, and net new assets for the full year were $252 billion. Focused on advisor-led, workplace, and self-directed channels.
• Investment Management: Annual revenues were $5.9 billion, with quarterly revenues at $1.6 billion. AUM reached a new peak of $1.7 trillion, supported by market gains and net inflows. Long-term net inflows for 2024 totaled $18 billion.

Guidance

• Expected 2025 tax rate to be approximately 24%, with quarterly volatility. Focus on disciplined execution leveraging the integrated firm for growth.
• Wealth Management anticipates growth from workplace partnerships and increased self-directed trading activity. Institutional Securities expects a rebound in M&A and deal activity as markets remain constructive.

Risks

• Geopolitical uncertainty and resurgence of inflation, impacting market dynamics and client behavior.
• Regulatory compliance risks, particularly in AML/BSA for wealth management's international growth ambitions.

Question and Answer

Q: How to separate trading environment from durable client gains in institutional securities?

A: Focus on the integrated investment bank approach, client touchpoints across divisions, and disciplined risk-weighted asset (RWA) deployment to ensure durable client share gains beyond short-term market environments.

Q: AML/BSA compliance in wealth management for international growth?

A: The firm has robust systems and processes in place, and results in wealth management speak to its ability to attract clients, with investments in processes and systems to support growth.

Q: Loan growth and deposit expansion in wealth bank?

A: Loan balances in wealth management grew to $160 billion, with opportunities in servicing wealth clients' lending needs. Deposit balances are growing, with focus on workplace partnerships and self-directed channels to expand the deposit base.