Second Quarter Earnings Scorecard - Report on Morgan Stanley

NEW YORK, September 24, 2015 /PRNewswire/ --

ACI Association has initiated research coverage on Morgan Stanley (NYSE: MS). Select highlights from the internally released reports are being made available to the general public (included below), with access to the entirety of the research available to new members.

Today, membership is open to readers on a complementary basis at the following URL: http://www.aciassociation.com/MS.pdf

Highlights from our MS Report include:

• Topping Analysts' Estimates - On July 20, 2015, U.S. banking giant Morgan Stanley reported its Q2 2015 financial results. Morgan Stanley's revenues increased to $9.74 billion, representing a rise of 13% Y-o-Y. Excluding Debt Valuation Adjustment (DVA), net revenues were $9.6 billion, beating Thomson Reuters' consensus revenue estimate of $9.1 billion. Net income came in at $1.8 billion or $0.85 per diluted share, vis-a-vis $1.9 billion or $0.92 per diluted share reported in Q2 2014. Excluding DVA and the net discrete tax benefit in the prior year quarter, net income 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 quarter. The bank's diluted earnings of $0.79 also exceeded the consensus estimate of $0.74 per share.

• Strong Results for Institutional Securities - This segment reported net revenues of $5.2 billion compared to $4.2 billion in the same quarter prior year. Excluding DVA, net revenues were $5.0 billion, versus $4.2 billion in the prior year quarter. The release stated that Advisory revenues of $423 million, equity underwriting revenues of $489 million and fixed income underwriting revenues of $528 million stood relatively unchanged from the prior year quarter, thus reflecting a continued favorable market environment. However, equity sales and trading net revenues jumped 27.8% Y-o-Y to $2.3 billion, reflecting robust performance across products and regions on higher levels of client activity. Net revenue in Morgan Stanley's fixed income and commodities unit was $1.3 billion, compared to $1.0 billion a year ago. The segment's pre-tax income from continuing operations was $1.6 billion vis-a-vis $960 million in Q2 2014.

• Wealth Management's Performance - This segment reported revenues of $3.9 billion compared with $3.7 billion a year ago. The release highlighted that asset management fee revenues increased to $2.2 billion from $2.1 billion a year ago reflecting an increase in fee based assets and positive flows. Transactional revenues declined to $872 million 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. Pre-tax income from continuing operations was $885 million versus $763 million in Q2 2014. Net interest income rose to $737 million from $577 million a year ago on the back of higher deposit and loan balances. Wealth Management bank deposits at the end of the quarter were $132 billion.

• Positive Results for Investment Management - Net revenues for this segment rose to $751 million from $705 million in the corresponding quarter prior year, reflecting higher gains on investments in the Merchant Banking and Real Estate Investing business. Pre-tax income from continuing operations was $220 million versus $209 million reported in Q2 2014. As of June 30, 2015, the segment recorded assets under management or supervision of $403 billion versus $399 billion a year ago.

To find out how this influences our rating on Morgan Stanley, read the full report in its entirety here: http://www.aciassociation.com/MS.pdf

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