Morgan Stanley(MS) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported record revenues of $17.7 billion and EPS of$2.60, with a return on tangible equity (ROTCE) of 23% [5][16]. - The efficiency ratio for the first quarter was 68%, despite incurring $144 million in severance charges related to performance management [17][18]. - The common equity Tier 1 (CET1) ratio stood at 15.3$9 billion, up 28% year-over-year, driven by strong performance in equity and fixed income [18][19]. - Wealth Management generated revenues of $7.3 billion, with a reported margin of 27$94 billion in net new assets [29][30]. - Investment Management reported revenues of $1.6 billion, a 16$1.6 trillion [39]. Market Data and Key Metrics Changes - The company noted increased volatility in stock, bond, and currency markets, with a heightened risk of recession but a consensus leaning towards softer growth rather than negative [9][11]. - Client activity remained strong across various regions, particularly in Asia, where Institutional Securities revenues were up 35% year-over-year [77][78]. Company Strategy and Development Direction - The company emphasized a strategy focused on raising, managing, and allocating capital for clients, with a commitment to long-term growth despite near-term uncertainties [14][15]. - The management highlighted the importance of maintaining a strong global presence and adapting to changing market dynamics, particularly in Asia and Europe [79][82]. Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the economic outlook, noting that while some clients are pausing strategic activities, others continue to engage actively [92][95]. - The company is preparing for potential regulatory reforms, particularly regarding the Supplementary Leverage Ratio (SLR), which could provide additional opportunities for capital deployment [99][100]. Other Important Information - The company repurchased $1 billion of common stock during the quarter, reflecting its commitment to returning capital to shareholders [42]. - The firm experienced strong demand for strategic advice and capital raising, despite some disruptions in near-term deal activity due to market volatility [23][24]. Q&A Session Summary Question: Equities trading outlook - Management noted that client activity across all products and regions was strong, and while a weaker economy could impact trading, current engagement levels remain high [51][55]. Question: M&A outlook - Management highlighted encouraging trends in M&A activity, with year-over-year growth across all client segments, despite some market deterioration [58][60]. Question: Risk management in trading - Management indicated that client engagement remains strong, and while there is natural volatility, the market-making function continues to perform well [72][74]. Question: International business prospects - Management expressed bullish sentiments regarding the international business, particularly in Asia, emphasizing the importance of local engagement and partnerships [77][81]. Question: Impact of SLR changes - Management discussed the potential impact of SLR reforms on capital deployment, emphasizing the need for a holistic view of regulatory changes [99][100]. Question: Advisor business trends - Management reported strong interest in the advisor platform, with increased recruitment and retention trends, particularly in the self-directed and advisor-led channels [108][110].