Based on the provided financial report, the title of the article is: "Form 10-K: Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the year ended December 31, 2024
Morgan Stanley’s annual report for the year ended December 31, 2024, highlights a strong financial performance. The company reported net income of $13.4 billion, a 14% increase from the previous year, driven by growth in its wealth management and investment banking businesses. Revenue increased 12% to $63.4 billion, with significant contributions from its institutional securities and wealth management segments. The company’s assets under management reached $4.3 trillion, a 10% increase from the previous year. Morgan Stanley’s financial position remains strong, with a solid balance sheet and a significant cash position. The company’s market value as of June 30, 2024, was approximately $151.6 billion, with non-affiliates holding approximately 99% of the outstanding shares.
Executive Summary
Morgan Stanley, a leading global financial services firm, reported strong financial results for the full year ended December 31, 2024. The firm delivered robust net revenues of $61.8 billion and net income of $13.4 billion, reflecting growth across its business segments. Morgan Stanley’s return on equity (ROE) was 14.0% and return on tangible common equity (ROTCE) was 18.8%, demonstrating its ability to generate solid returns for shareholders.
The firm’s expense efficiency ratio improved to 71% from 77% in the prior year, reflecting higher revenues and disciplined expense management. Morgan Stanley also accreted $5.6 billion of common equity tier 1 (CET1) capital, strengthening its balance sheet to support clients and return capital to shareholders.
The Institutional Securities segment reported a 22% increase in net revenues, driven by higher results across businesses, particularly in Equity and Investment Banking. The Wealth Management segment delivered an 8% increase in net revenues, primarily reflecting higher asset management and transactional revenues. The Investment Management segment saw a 9% rise in net revenues, driven by higher asset management and performance-based fees.
Overview of Financial Results
Morgan Stanley reported strong financial performance in 2024, with net revenues increasing 14% to $61.8 billion and net income rising 47% to $13.4 billion compared to the prior year. Diluted earnings per common share grew 53% to $7.95.
The firm’s ROE improved to 14.0% and ROTCE increased to 18.8%, reflecting the firm’s ability to generate solid returns for shareholders. Morgan Stanley’s expense efficiency ratio, which measures non-interest expenses as a percentage of net revenues, improved to 71% from 77% in the prior year, demonstrating the firm’s focus on expense discipline.
During the year, Morgan Stanley accreted $5.6 billion of CET1 capital, strengthening its balance sheet to support clients and return capital to shareholders. The firm’s Standardized CET1 capital ratio was 15.9% at the end of 2024.
Business Segment Results
Institutional Securities The Institutional Securities segment reported a 22% increase in net revenues to $28.1 billion, reflecting higher results across businesses and regions on improved client activity and market conditions. The segment’s pre-tax margin improved to 31% from 19% in the prior year.
Investment Banking revenues grew 35%, driven by higher Advisory, Equity and Fixed Income underwriting results. Equity and Fixed Income trading revenues also increased, up 22% and 10% respectively, on higher client activity and gains on inventory held to facilitate client trades.
Wealth Management The Wealth Management segment delivered a 8% increase in net revenues to $28.4 billion, primarily reflecting higher asset management and transactional revenues. The segment’s pre-tax margin was 27.2%.
Asset management revenues grew 18%, driven by higher fee-based assets due to market appreciation and positive net flows. Transactional revenues increased 9%, reflecting higher client activity, particularly in equity-related transactions. Net interest revenues declined 10%, primarily due to lower average sweep deposits, partially offset by higher yields on the investment portfolio and loan growth.
Investment Management The Investment Management segment reported a 9% increase in net revenues to $5.9 billion, primarily driven by higher asset management and performance-based fees. The segment’s pre-tax margin improved to 19% from 16% in the prior year.
Asset management and related fees grew 8%, reflecting higher average assets under management (AUM) on improved market levels. Performance-based income and other revenues increased 68%, primarily due to higher accrued carried interest in infrastructure and real estate funds.
Regional Performance Across regions, Morgan Stanley saw strong revenue growth. Americas net revenues increased 13%, primarily driven by higher asset management revenues in Wealth Management and higher results across businesses in Institutional Securities. EMEA net revenues rose 19%, primarily driven by higher results across businesses in Institutional Securities. Asia net revenues grew 19%, primarily driven by higher Equity and Investment Banking results in Institutional Securities.
Capital and Liquidity
Morgan Stanley maintained a strong capital and liquidity position in 2024. The firm’s Standardized CET1 capital ratio was 15.9% at the end of the year, up from 15.2% in the prior year. The firm’s Tier 1 leverage ratio was 6.9% and the supplementary leverage ratio (SLR) was 5.6%, well above regulatory requirements.
The firm’s average daily Liquidity Resources, which consist of high-quality liquid assets (HQLA) and cash deposits with banks, were $345.4 billion in the fourth quarter of 2024, providing ample liquidity to meet its obligations under stressed conditions.
Morgan Stanley is in compliance with all applicable regulatory capital and liquidity requirements, including the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR). The firm’s strong capital and liquidity positions support its ability to serve clients and navigate potential market volatility.
Outlook and Risks
The economic environment, client and investor confidence, and overall market sentiment improved in 2024. However, the firm faces ongoing risks, including elevated inflation, geopolitical tensions, uncertainties surrounding government and policy developments, and the timing and pace of future interest rate actions.
These factors could continue to impact capital markets and Morgan Stanley’s businesses. The firm remains vigilant in monitoring economic and market conditions and is well-positioned to navigate potential challenges through its diversified business model, strong capital and liquidity, and disciplined risk management.
Conclusion
Morgan Stanley delivered robust financial results in 2024, demonstrating the strength and resilience of its diversified business model. The firm’s strong performance across its Institutional Securities, Wealth Management, and Investment Management segments, coupled with its disciplined expense management and solid capital and liquidity positions, position it well to continue supporting clients and creating value for shareholders.
While the firm faces various economic and market risks, Morgan Stanley’s proactive risk management and strategic focus position it to navigate potential challenges and capitalize on future growth opportunities.
