Earnings call transcript Q2 2023

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Operator

Good morning. On behalf of Morgan Stanley, I will begin the call with the following disclaimer.

This call is being recorded.

During today's presentation, we will refer to our earnings release and financial supplement, copies of which are available at morganstanley.com.

Today's presentation may include forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. notices the statements earnings our that non-GAAP to in appear release. refer regarding and forward-looking measures Please

This presentation may our consent. not be duplicated or reproduced without

Chief I to the turn Executive and will Gorman. Officer, call James now Chairman over

James Gorman

morning, Good us. everyone, for you Hi. joining thank and

environment with second the a ended it's better we headwinds and quarter tone. a with ongoing a overall from in to The We fair quarter uncertainties, low-rate environment. say reflect to market lower-inflation started transition high-inflation, significant the place headwinds that the and higher-rate, a better

In addition, markets. there were issues impacting several the other

first April banks risk started combined with on of helped bank broader by the U.S. crisis and into out strength system. bleeding the what XXXX, heels financial the stories from of to had and failed Prompt the idiosyncratic large action the to regulators the which banks the support the system. since rebalance of turned be

headlong debt our found a ceiling into we crisis. country Second, moving

no resolved, was While and it view is in markets in May. our created to April was be unnecessary the uncertainty there doubt likely it

increases, at very, a end raising we Thirdly, reached the may Fed And plateau if be recent not XX very a not close quite months, to rapidly rates at rate while we're over of its after I pause, believe meeting. the it.

from welcome. surely been efforts is to recent the rhetoric U.S. and is now there's constructive and government dialogue both strong leaders from weeks normalize Finally, but China in evident, recent a relations

Seeing positively, few in the the last quarter. of tone these a evidenced four particularly macro markets, in not-insignificant concerns progressed the constructive supported weeks more

final Day we're how gone. E*TRADE of completed Stanley completed very pleased a after back-office Labor Beyond part and more macro Morgan be at integration the with to issues, the with it's part we significant

work initiatives our standing can And announced in how over exchange serve new our MUFG, foreign equity institutional time with clients. global and our best partner, further businesses long of together to with Japanese evidence today, and research we

CCAR. the year of under recent has received the every introduced. importantly, stress test was we for most We're improved since the performance SCB pleased year, And results the our consecutive fourth

strong year. with our stock total about That by dividend dividend our share annually the X% $X.XX yield the did our last we given annual of price. Given increased same dividend to results, a as per we brings $X.XXX, current

billion financial over grew encouraging. As net to by with the certain the Wealth new Investment months. this performance in from $XXX firm approximately of and our bringing Management billion, metrics six new billion, year-to-date quarter, $XXX we $XX in assets inflows saw key Management, assets Net were combined to

is quarter and and and in ahead our growth pace, growth net evidence of and our obviously happen, serve. clients well channels expanded our assets that year-to-date scale while we is the any Wealth of Our around in that can new Management consistent bounce will

the navigated businesses of last delivered when of a institutional very net And ROTCE well. our an conditions Second, X% revenues from $XX over altogether, firm different. year environment translates choppy into billion, This XX%. were up

ratio our Finally, XX.X%. CETX was

the face exceed While desire in unfolding the remain it it of capital did, and this would reflects highly our Endgame. significantly we knew new to III our Basel capitalized requirements,

the of seen activity many rate through later across XXXX, promising. early in positive quarter of too predict improvement but tone business the It's rest to parts more and the is the of market our

the balance strong. Of the unknown. fundamentals remain moves our of year the through course, model remains much said, business how of it That

the processes. annual next talent our firm of the should like I meeting clear brief succession. any annual CEO role strategic be in intentional out meeting. or managed made comment planning before would At year's transition a of management critical and planning Succession on the just it I Finally, May, for

as Board do for I and certain environment, CEO have but lead transition are not I to CCAR out business of to matters. committed Endgame remain limited a pending including Basel to results, uncertainties We of other the the the proposals I and period when role, a our response and number with III issues, Chairman been dealing Executive I those upcoming time. that of

indeed candidates that three internal have as the appropriate evaluate up very to the Stanley. CEO their to We are readiness Board for fortunate Morgan next strong of step to along continues processes

now quarter take you. Sharon detail to turn together I'll the Thank greater then we'll the discuss questions. call to over your in and

Sharon Yeshaya

morning. Thank good you, and

revenues firm produced of The $XX.X billion.

of Reported results ROTCE was and EPS $XXX by ROTCE Our basis reduced points. and about our charges approximately This million. include $X.XX, XX.X%. $X.XX by was severance EPS XXX

the Institutional end witnessed Securities, in we shoots retail stabilization a by cash and our outflows sweep sentiment engagement client emerged well of of cash As equivalents. activity towards discussed, green progressively across improved Wealth Management, the that as of moderation evidenced James as picked And into and investments quarter, In the businesses. up.

year-to-date firm's The ratio XX%. efficiency was

Vance, for the quarter included associated E*TRADE Together, efficiency severance, to about to E*TRADE. which Eaton of of to year-to-date the this points basis integration expenses with approximately year's addition severance of XX% represent of In impact and ratio. $XX and the XXX integrations an relates million costs

balance year, line prior with are for with our remaining. of expectations the in guidance, the our approximately $XXX broadly For expenses total million integration

environment. the towards half XXXX, to balance we investments of Looking with continue operating back the

period, was last activity Institutional the revenues lower conditions. versus to -- activity businesses. declined market to improved Now alongside the while billion $X.X overall With client the X% year. quarter better results progressed, prior compared as client Securities overall of

compared flat were ago. year a revenues to banking Investment

revenues pressure, in completed a pickup Although of volumes. remained M&A million advisory Advisory underwriting $XXX lower reflected results. supported under

Equity underwriting $XXX revenues million. were

and signs regular follow-on at issuance. times and activity for supported encouraging that IPO opened While remained weight muted, were were results equity equity-linked markets by convertibles,

$XXX Investment-grade revenues advantage issuance, an financials bond of and year-over-year, corporates million, markets underwriting backdrop. June, by were where investment-grade driven and uncertain took May income markets up against mostly resilient Fixed in remain constructive respectively.

volatility, and dialogue positively Across investment quarter consistently in as client implied with trended currently plateau preannounced The backlog lower grew quarter active. banking, throughout progressed. the potential M&A client activity is the a rates

hires the best to our footprint selective the in position have invest enhance opportunity. to to for continue We franchise senior made and

While near the remain the term, will we the whether it medium-term of certainly conditions for outlook slowdown for to are and positive know XXXX. especially and continue is current typical for summer cognizant hard trends encouraging,

Equity Prime XX% market previous results consistent with lower on market revenues lower market Cash lower to revenues volatility. were by lower to declined levels. brokerage volumes volatility. derivatives the compared last activity client in quarter and strong global versus second and were balances, $X.X billion, down average due solid, year increasing supported rising and

billion last elevated income compared of Fixed revenues $X.X year's decreased to results.

tempered activity reflects and risk client performance management. Solid prudent

the performance exchange environment and year-over-year, shifted the the in and significantly pickup activity, Micro the supported which in client prior partially on However, a results in of and the improved offset overall revenues declined compared client were volatile attributed results. the declines year, of robust reduced June foreign client lower challenging commodities predominantly to conditions resolution quarter's Macro sentiment market debate following last year, debt benefited were versus in to by the in and down activity. back markets. energy rates. engagement ceiling down from Results

held revenues improved and net of by million interest last of sale. lower and corporate $XXX on net Other versus income mark-to-market loans for hedges year, fees driven losses higher largely

and provisions. to lending Turning ISG

estate were were increased $XX all to ISG for Net handful substantially was our from by on increase credit modest negative provisions portfolio and charge-offs $XX driven outlook lending from $X.X specific billion. corporate million. and growth. and losses allowance the lending million, continued In commercial The loans Our commitments loans were ISG a real quarter, for portfolio. of

Management. Wealth billion, to Turning Revenues were record. a $X.X

demonstrate serve income. supported continue Excluding Results different higher increased to of market and the strength and revenues model throughout to business clients X%, DCP, the net environments. by our impact were interest billion of the $X.X ability

with Pretax $XX profit expenses million of PBT was integration-related $XX million. were were $X.X a margin XX.X%. charges billion, Severance and

the factors drag were these of margin XXX three Taken DCP, together impact a points. in basis and of the approximately with

Wealth our consolidation outflows were the Despite tax-related Most platform's seasonal continued assets the in new new Management environments. to driven advisor-led various objectives. to against net client our deliver recruiting offset in of by strong challenging delivered and our assets, channel, April. net market were billion market demonstrating model backdrop, existing core grow Net and ability $XX notably, business

Our including our workplace efficiently and business, clients including new and providing early to prospect service AI, with current data investments channel. are from tools in technology, better advisers more

are Also critical that of pleased integral converting million to X platform. E*TRADE's over E*TRADE with mentioned, which we client We priority. did share this part we've back-office accounts no significant, virtually been unified Stanley's accomplished a an disruption, integration, always James as Morgan to has

We expect to in finish our half second of integration year. on time this efforts the

line quarter. was Performance Moving metrics the down environment. light solid in to of in the the our second business

X% quarter, year's revenues last Transactional lower $XXX million. $X.X reflecting versus management were Asset market billion, primarily were levels. down revenues second

billion. activity client X% the Excluding were the of year-over-year, $XX.X impact flows lower DCP, reflective of quarter. declined revenues most Fee-based for of

June were $X.X moderated lending. remains by by deposits in to encouraging, Total Sweep slightly up grew tax outflows included it too The recent quarter-over-quarter. balances $XXX of lending Bank declarative. driven which May month's to are paydowns April, early compared offsetting but billion trends mortgages, be and outflows. securities-based billion, seasonal during

sweep offset was costs quarter. flat were prior higher versus and of virtually Net income of $X.X impact the billion balances interest The rates. lower by funding higher

a NII the will to rest various not trajectory the do our be deposit towards of year, Results function Looking of and we expand. mix expect the rates. of

institutional business, the to progressed. the quarter sentiment as improved Similar retail

advisor-led into since equity monthly beginning balances. time the flows of the June first the year, For saw from positive markets sweep

ongoing support activity growth this more asset our cycles. by market clients encouraged positioned to and well and are We through recent remain

course Management. reflecting environment. cumulative over Investment lower the income with second to X% primarily the $X.X from asset and declined the Revenues market lower impact Turning year, of prior performance-based quarter, of commensurate the levels the of billion

investing and client income year-over-year, and management the environment challenging of related other declined as real and the estate Asset revenues and reflecting to declining billion, and in such Asia due markets, our stability Performance-based certain diversification year-over-year $X.X fees were classes equity. private franchise. asset X%

Solid our reflecting strategies our franchise. our as other of client-driven of and partial acted a private capital-light, diversity alternative alternative platform the performance in areas offset,

increased AUM trillion. Total $X.X

continues outflows fixed by equities which progress were net ongoing demand Vance in and Our Eaton integration with positive. well. offset and million driven were were in Integration-related $XX income. solutions, quarter. Inflows Long-term to flows alternatives the in expenses

platform. and private credit consistent Parametric solutions, me, equity our remain excuse net diverse alternatives of and continue sources portfolios, private underscoring customized benefits Within inflows, of the --

from Additionally, alternatives a this solutions benefited to significant inflow a solutions mandate. and portfolio quarter, related

money of market Liquidity and ongoing for funds. demand by billion, an had inflows overlay services supported $X.X

to continue growth be geographies across private well our and in global client markets, secular We with such as customization areas, positioned in very base.

spot $X.X sheet. to balance Total assets the from decreased prior the billion to $XX trillion. quarter Turning

Our about Recent quarter standardized test billion continued XX.X%, RWAs Standardized results durable CETX $X versus stress to declined prudent conditions the prior quarter. reaffirmed market XX our from $XXX approximately our up billion business position and was model. strong management. and due to ratio points the basis prior resource capital

and renewed repurchase authorization. $XX $X.XXX of a increase announced our billion We quarterly dividend multi-year

Our tax mix the rate of earnings. was reflecting quarter, for our global XX%

While tax we tax the consistent this year, the our in second guidance. a outperformed in initial rate of guidance of with our XX% expect half, we first half approximately

Although stable we the sure we what cannot will the a be growth testament to prevail, to Investment we can is are out of given market and for to the and as Should XXXX, Wealth address net how rest continue management levels our to control our particularly asset the team Management higher assets, priority realities. diligently benefit, of play strategy. attract asset backdrop poised new

our are market, lag building supporting business driving remaining while and underwriting the client trends Open capitalized. Securities, to conviction activity our Institutional Within well advance and advisory firm while critically, to remain functioning clear markets growth backlog long-term continues key and financing the consistent levels. strategy, will and is Most positive.

that, will now open line the up With questions. we to

Operator

[Operator our Ebrahim first Instructions] America. question Bank of with take from Poonawala We'll

is Your open. line Please ahead. now go

Ebrahim Poonawala

morning. Thank good you, and

James Gorman

morning. Good

Ebrahim Poonawala

question, for maybe on first Thanks guess you. the the for I succession. James, update

and firm And out? Give is a a week you next management as through franchise? strategic about over think shareholder to that Stanley we a As review sense. about talked could investors manage built Morgan you've or from the you targets from the expected I But the Endgame we franchise, unfolding of have will you the unknowns. Basel that us rules I as value radical game-changing comfort know what terms laid think would changes. the a ability two, rules proposition be as plenty of around reevaluate the I the perspective, of And get do team, are to think what to where pretty question you, in these see the of have shareholders

James Gorman

I have it. Well, it's an important right, question. you're on And comments made

being way, implemented we Let's I'm set sort based sure actually of not where of of to the off what say. are Endgame III looks fully it's We've now. the right the a speculation By of just had Basel table in like. lot Europe,

the U.S. Chair. aside, we capital, get the putting speech the banks more knit that did think I actually from have Vice but

the it's title look important at holistic that speech, review. to which think capital I of was

stress as and So, it's taking CCAR, the this account SCB buffers is into stuff all tests, of implemented. the like

rules. haven't different the in said, there as we There the views accrete will is I need period. for a extensive proposal of a seen be Secondly, weeks. to as you will be mean, actual capital. very an guess more U.S. out, coming the clearly comment I banking system to couple There

large well. the put U.S. fact, In at the inflation, happened during Signature, period of in Valley test look First Silicon we've during together, if regional the the with that of what years, this actually really -- Republic years, with rate biggest what few banks did happened XX banks, all the you what COVID, last increase had happened happened what's what's high

not certainly In row fact, CCAR. four years position under a of improved Morgan capital all for in if our them, Stanley,

me So, extensive of of that are that it's say hard period. be we comes not I as we forcefully comment what will here to capitalized. the what for will starts. suspect there commenting kind that won't very be be But an same out and sit well

in the the which system, the It's the there be harm making, sausage banking the of will economy. a is strengthen a will backbone to Clearly, lot not evaluation. period. be transition think us. I of to there long Then U.S. is intent

with in last there Chair reading proposed and question. I any parties couple and from allowing I So, paragraph through transition had read be in all times. changes speech this rule-making he happen occur to appropriate notice final standard a comment Any interested to I'd would for the changes to the time. just go anticipating days, requirements of the process, appropriate capital the thought Vice would

his not some it speech again in will be point -- be out, could effective he fully And goes later on it for years. to

any here going to meaningful the are is happen of So, in think this before we in XXXX. XXXX. I end don't way

what regulators will And a what the goes what standardized think trying personal in different right after period just on it, out as comes is applying from various I risk RWA out from to which the operating a year comment hit now very be take my peep in. figure the on European way to to risk not income, we're be don't assess build is but -- which And fee-based fee businesses standardized operating fine, seems mean, I operating to it proposal, put hit is. create a me capital to do is you risk. based to current to nuts.

to them stability. You build create

regulators, taking a that's clear point and with consideration. under So the I think they're it we've made very

So, yes, their the believe I long rules. banks trust. European story ironic, complying short, all it's with don't final It's own are the

well. system my healthy Stanley no years robust Stanley tested result a strategic major this, XX in have very We is capital any for a as a row. done is will has Morgan of that's chance here Morgan a there conclusion. be there And of shift been

Ebrahim Poonawala

quick question, right. about sounds nuts Sharon, and One for helpful, is That you.

seen that from in percentage should is back expectation half, take, NII here. I You a mentioned within expanding give stabilize implied few in as guess, the points? or NII the not

Sharon Yeshaya

the really depends It It depend question. for mix. Ebrahim, will really deposit -- thanks the on

you so, as think driver what's with there in that we that be think And quarter. of in signs sweeps primary back liability term. the encouraging But when mentioned, mix on mix, near the half terms were NII I will of the about going the as about

Operator

from question Ryan Devin next our to move We'll Securities. JMP with

is line Your go ahead. Please open. now

Devin Ryan

Hey, quarter. the to half of accelerated quarter a thanks. you on think, engagement backdrop. had I towards And that pretty good mentioned ultimately, the And I relative Institutional morning. the of want to kind back to really Securities. the Good you touch just

of things to other kind assuming ceiling the started bit. debate, a side the I'm debt of normalize So, little on

of are just some more to outcome, results, second that recovery back So, think XXXX puts the kind if is the is of whether which second and back still of half or since in quarter kind normal quarter, so what about we want talk Thanks. if of the second a the therefore, the quarter? bounce maybe you takes, normalization and could outcome quarter softest you I the actually of from the and think, saw actually in that this results,

Sharon Yeshaya

Sure.

ISG Let's first. take all of

we've we post XXXX. and has been for a COVID think XXXX discussed about at between ISG overall what length normal, when about lot land So, wallet really the to

there view Our broadly not has changed.

you we X% In expect out terms we When share are wallet share sort perspective. laid a you look in of income, of where to specifically, we've ourselves moved of be, a from to XX% where pretty wallet talked we've terms share. about wallet fixed clear market guidelines from

that change -- business sure we're client and our that around dramatic made really there client-centric we've service a the that to think has to franchise able in able making I and base. So, been be

What that we us you less quarter. we right last client you're talked level, there this second saw change activity after specifically for mentioned, and activity was quarter as dramatic in income the debate. second to in is highlight, about, as that a compared you right, ceiling fixed interestingly, debt year's But

So, I wallet. XXXX XXXX. between our capture of think overall in wallet do will normalization, what we're that the fair is looking land share we and terms think And likely of to

Devin Ryan

M&A just we capital in then, this are Okay. capital the kind color markets, lackluster. terms equity normalization there. theme, seeing And green shoot still in Great just of been markets, of and some pretty normalization. debt

a would something idiosyncratic so, as maybe come basis And like results that's markets business? back recovery of kind whether that Or in then next? Thanks. market else lag hold capital is curious recover, feel there that may more just that you on M&A just to

Sharon Yeshaya

announcement. Remember just is of to always advisory of course, going lagged the that, because Yes. be

the of the announcements. And more a we If look that of a see had we're dialogue we we began think back to we six, quarter, very around that last muted announcements sector-specific that fact a them. the seeing months. if really in about digesting strategic have dearth we're nine month So, or

see energy and seeing be dialogue. transitional reasons discussions industry So that you're to where might where financials you have strategic consolidation, actually

gives us is you're confidence what dialogues. seeing of broadening out strategic So, that those a

and both is likely six dealing with simply are seeing across nine you and from a will we're the sectors having is announcement to it backlog pipeline to discussions. backlog lag fair we're because lagged building, advisory that last Our it various months. say But

Operator

We'll from Glenn Schorr move Evercore with question to next ISI Group. our

go line is Your open. ahead. Please now

Glenn Schorr

Hi, thank you.

three-year little billion. [due a (ph) was it bit could down to $XX quarter for first produced. half well be just the your if Wealth. but to what So, lumpy, on But you well so lately, I'm lumpiness on income this doubling drill can well bodes to] to drill curious the contributing didn't I down mean, pre-tax more know think for good I I the it of on it of bit trillion of happened year. what's every doubling want pre-tax margin your so workplace pace. a I little ahead -- I and sorry, this wonder $X work of obviously, But

Sharon Yeshaya

over And was the clients. was funnel part than contributing the away advisor-led Thank long referencing of of channel is aware, may going a term, the where who he particular is forward. said think big when the question. was what much, to not you NNA. that, Interestingly, in one production for because be it this historically, I you And that Andy's helpful over channel expansion see more for we of asset-led existing about assets -- we strategy a quarter, proponent. yes, business that gave think XX% the Glenn, those did is This so we see we've speech from quarter, held an was big it generally no

give but talking clients only been not [Technical back existing through to been more begin really has advice. Difficulty] prospect about we've to This time clients, advisors better also their XXXX new strategy offer to a that

and of for our where base. real believe lot And to us beginning I so think grow to away, that's a in that, asset that of opportunity you're to work terms see that's assets continue a held aggregating we

James Gorman

it's was know, been Glenn, I years $X obviously just run decades. a want many focus three for this you for bit rate, to the of trillion. as mine add because on a this before The little

a quarter extend higher quarter, right, be I So year excited, than think going don't billion excited But I would billion we're year. $XXX lumpy. running to here rate, you going have And we're that's the as billion. in $XXX-ish if This I mean around a be too about of you're obviously wouldn't too you're be would it $XX and that. that, run somewhere get about ahead it a just to run I rate. it's get

What that's about lot really I what This just stop. not a thing. of got clients. We've going a excited real to is about, really is care something I'm it's wealthy

And I'm annually $X one. that. deal. with five bringing to trillion pretty I'm lumpy. the unstoppable there I And in out accounts, much a dividends, accounts, lumpiness the is the in, it. it's it. when, is their And money this be will the about value Just going happen. be force, portfolio will X% on there a think years, think it's migration excited from know years. to from the sure the be but in the on a but trillion bit This know -- happened $XX of the workplace, I which they're in the interest it get number, a they just I I the over happens migration great three increase don't every we E*TRADE put a at real this And

much I have up and XX you revenue. we're out, end way if revenue a call tenure, you basis had years, I $XXX in we my it's the but like think to are compounding, ago, trillion, so that get seems years this of crazy, stuff. know end at $XX which and to and know heading clearly people at to heading Well, to And points, we're billion trillion, kind much, I trillion X% do of business. me math do $XX I I -- started job XX $X.X today. which this is million the a is going over you if $XX But we XX do than fewer long the

possible. it's So

Glenn Schorr

just quickie, Sharon. Maybe Wow. one

if have percentage client most talked widespread it's how the base shifts early have sure here, [room tell have and/or or what for moving? curious we've the share concentrated. on I'm I'm of across for FA too can (ph) settled you the sweeps, on about You any to curious accounted what but clients FAs of stats if what's of and you in. not you] and been percentage

Sharon Yeshaya

Yes.

terms answering of is still move them sweeps see interesting terms seen sweeps into January. out just used into In that so which or see various cash since those some markets of of it, might remember, into not actually We the that of sure of -- began shift Glenn, to began we to or coming savings assets. base In money I'm be we markets, own terms savings moving not see over we we in our is alternatives. trend sweeps, some of other June, to move deposit from our dollars those seeing products, actual question, have of XX% of What's movement in client your I'm the base. totally hadn't

just marketplace that of deploying some or cash equivalents into the that excess So shows also are actually as well. cash actually the clients

Operator

next Wolfe to question, ahead. Please our Chubak move we'll For with Research. Steven go

Steven Chubak

Hey, good morning.

actions all? helpful lengthy buyback And at to be if the informs businesses? the meaningful, are some I some James, your transition can comments quite you pursue the near-term if It Endgame. pressure mitigating on you could III your Basel might to inflation speak of given alleviate the just could So RWA appetite on of appreciate how be period your what

James Gorman

industry top changes the whole mean, is as Steve, the clearly many capital years evidenced in industry. to think, are for school, across banks response, eight shows capitalized. hear their the economic first. see got which we've well comments of sincerely And I regulatory of I'm G-SIB that all sure, by CCARs, want rule I talking again, the right out by without have appropriate recent encouraged to with the the from Well, I country. outcome They they conversations to the for had the result proposed definition, bodies. the stability, bank's understand by do the And banks,

flexibility Clearly, I So, to what want ahead we mitigate. and around talk RWAs. don't get have about our we'd

just this little We look. perspective. really three the quarter. mean, saw but with beginning environment, was III squarely. wasn't I at this fails mean, that from the You a quarter, had ended up a let's that we it did bank back say That mind, of you more a I it XX.X% had not that we of the that good Basel in CETX. my from

to So, cautious. be we wanted

the on And totally the just treat times increases at. we're buyback, dividend. entirely many regard exactly think stock, and going saying dividend you've it without expect obviously, the as coming I company on specific And We've way. yield said the comfortable a continue that they're dividend, the we're half many, with and over what they're to seen, years appropriate, would I they we level

the stock. On mean, the buyback, in weakness I we would of take advantage

quarter accreted -- and We're $X will creating this was difficult We billion. very we a be prudent.

like the this to of I the comments. then the rule, like and And doing weeks, Sharon, buybacks making right, first here. of not guess, it's through in rule we're So couple not I'd we're see money year. range be We'll getting a

We be doing won't but authorization billion, Board. the it. moderate be we'll we'll doing buybacks, billion $XX have and from $XX We

as think of is to said, I going take surprised I this 'XX. -- by by thing are all the 'XX, if is I'd be we, this where done dusted -- and end

years, think is of and lifetime I -- in which X.X these a that's sort that's industries.

Steven Chubak

period years fully mean, get fair we a fully the when implemented it a were wasn't loaded. III immediately, going point, for with I of it's had all and impacts Basel James. to experience the No,

think all bit quickly. little priced trying in So, for prepare gets more to a I we're that just maybe some expectation it

James Gorman

be where with I'm the a these system And to Morgan and And U.S. -- won't It not but adapt, economy, for could. do going not the just I our rules for we'll global of is what self-interest. advocate think financial right we strategy. some Stanley's change the on strong U.S. align

Steven Chubak

XXX still helpful could your and If some you're more Management And out that you're of adjust IM, Wealth what that And XX% I squeeze of actions running distance The when XX%. that are recognize Eaton what the here, Investment within The to of Investment you're business? about Wealth, the perspective. it's for I Vance. the spitting mid-teens. Management. in we bps, integrating aspirations But taking laid margin, goal gap? that margin for No, margin close you've for one help are in just on maybe specials,

Sharon Yeshaya

margin I larger we've your efficiency we have the Steve, have that firm. around given Management. So, targets been really given goals though, Wealth point for the respect

I all did than back we and or there business. And months to the am. were and margins ago so, XX puts if look between ISG takes less -- so, where are places IM in close you Remember, XX% we we

the So, course what what appetite year active with themselves over are of equity. was, we've levels also the last the just market. of investor associated the the But in so just changes been cumulative particularly has around asset impact associated outflows or that seen with

diversification platform an in What's mean landscape. I invest the broadly changes industry then that important to more business. I see we continuing the business, in of that in is real and where to us -- And by mean

product. increased on inflows customization like continue customization of regardless the we top-line, So seen of flows, quarter, net what consistently, we've things every sort on to the see

talked additional we -- solutions-based about saw quarter. product You this a

see a Management margin we Management we as And side, grow to where business, the should we help the So, do industry we're similar into growing Wealth leaning business. as which through-the-cycle Investment the us assets see on assets, that support opportunities. for

Operator

UBS. go is Please question from ahead. Mr. Hawken, open. to your Hawken We'll Brennan line move now our with next

Sharon Yeshaya

go come to the one next and back Brennan. to we maybe Operator,

Operator

with Wells to the question from next We'll Fargo. Mike move Mayo

is go open. line Your ahead. now Please

Mike Mayo

about And first the Hi. chance James. is to ask have Well, this just... we you change, the CEO

James Gorman

you in Mike, CEO me change asked about XXXX.

second ask chance me. to your that's So,

Mike Mayo

you thrived, and go. there survived you well, Yes, so

James Gorman

you. that. I Thank appreciate

Mike Mayo

But first and ahead. Street have what it's going lately what's this is happen and to you -- Wall done

understand Chairman what don't Board I Chairman? first, what press, what I you're is So, what CEO? Executive let's the makes all And hear on that your new will the did do again your in-person mean, And through we And ultimately and thinking have I it of Executive considerations? like who candidates hope is when the see we what thinking in mean the past. could the process the is. timing from that you thought you And are meetings but that go just you're decision? what you in shareholder directly

James Gorman

shareholder than pieces, have more to those Well, this COVID, Since from in of meeting. shareholders before we in-person meetings. I to we're did physically take people going have the few the years security did we not a

be should was have But pet peeve it don't let's might months. about. ask time people of my question use of every waste just a That'll of would I that with was reports, they be if be we immediate along time just I I that's you make earnings like So, honest, money. six asked good that money. think two God -- what it's in-person, and one But shouldn't really And asking an two while enormous changes or quarterly and not Finance.

CEO said -- the I to five I Mike, stuff, ago and three I years. years nobody stepped On we I'd mean, five said years me. three down believed ago, about about years, be

agree the Board the the to annual people to get to way and meeting say best the be said believe that job strategy won't with was in meeting. annual next this of the I I So,

happens start. already or it's There's We're dates. very it it next I meeting it my somewhere a whether tomorrow, happen just between happens, happens So is way start. best that that think and something done clear. tenure, them months. done months as get is in. the to those several the When relevant. that I've to it is help to job I whatever two XXth off it just get I mean things them want few it years than given it. get that better the somebody XX is intent. next irrelevant, off CEO for exactly on to And that frankly, do will new probably my great a in May, makes help to I annual thrive And to this good can will a isn't well

timing exact just be So the by driven that. will

at months. questions me the the remaining The Endgame, to CCAR stuff We given We Basel III Obviously, ultimately dividend next decide. over away just few dig an got here the call chipping what the done. the that's on thing got done. I We're important Board into will pieces. for

that that, want their input chaired CEO. and the to very on next a formal sure independently. point, should at a Development He runs choose committee, ultimately it's Comp, my reports Board the healthy. the they're Board, the processes, Management And think Succession Dennis have but I process. by they It's Nally, We full doing obviously, process. they I'm will Committee some And

bank. constituencies So the but criteria challenges given the And you with look to running operator and global a business for, obviously, best equipped Board a day, deal not necessarily who's what the of that's running figure out. will business the a given who's multiple on

think, the their than And more Board's along would I just ahead it to because here inappropriate of that's I'm that, gets help saying process. And be job. the So way.

that clarifies hopefully, Mike. So it,

Mike Mayo

Yes.

one Just follow-up.

that the the guess I the firm still people means top that's -- three And still the everything make get job happening? those don't your if What's or -- correct. that job. sure stay the at a contenders, maybe for any three good guess don't are So of a people part business that's there's and to two of firm heads lines, least that who technique made with firm get still part I

James Gorman

that Street a of happening. history Wall had not

think frankly -- we will challenge we history. will that I

We have years. eight an for worked team together at least unbelievable that

on. around been Officer; team Europe, they've operating our of Clare we them. and and think I so Woodman, all runs unbelievable Chief Grossman, an Eric on Sharon, committee Legal on this on you're have who executives hearing who and East; call; so Middle the

the for jobs President CEO That'll very COO these So, and we're one largest we it's be these enormous world. myself, navigate of jobs, but the in companies to talented of executives. path, or companies that are whether a global have frankly, help lot or of

in end Mike. we'll confident up I'm great a So place,

Operator

go ahead. from We'll Please next UBS. Hawken move our to question Brennan with

Brennan Hawken

Hopefully can hear now. you me

James Gorman

Brennan. ahead, Go

Brennan Hawken

All right.

Sorry before. about that

on than we the asset on something assets? about we but visibility be know So, Did actually were don't deposit yet happen tell NII have that And potentially mentioned some little on having we and do reprice and for cost of able you a more a in much how Sharon, come? impact, turned side. what roughly the looking big out the NII cost I us to before have with expected. the to great -- you line Could better were trends the asset side you were deposit the

Sharon Yeshaya

the where you market ALM we'll some have places we dependent from of and know, that on at benefited be will the asset There the side. were to as forward. rates mix it going But some look we see

than not clarity mix. So, forward other that is much more us I largely give as liability unfortunately, can we go leading what is that there's you

next that in is of couple look quarters so here. we when will of from biggest the trends trend that's out And drive one the will the that NII

Brennan Hawken

Okay. noticed, about know firm-wide for were NII trends different, I I $XXX Thanks that. And diverge down million quarter-over-quarter. can the it for then, sometimes, but

could substantially you that why deferred the us understand Management Wealth was the So, NII from maybe trends? help firm-wide

Sharon Yeshaya

was largely on what the position. booked type they're trading what just many various things, products have, funding you they're types booked, you it with including And and that addition, as associated instrument, where Yes, depends know, of of in how and costs.

an we portfolio on trading the really just we think given it the driver our side. basis. When when side look NII Management manage we're at from clearly et -- NII the about Wealth looking is broker it's manage business versus cetera, So, don't how a NII, the and the broader and dealer, bank we we our think on specifically I

Operator

We'll our Jefferies. question Fannon with move Dan from to next

now ahead. is open. go line Your Please

Dan Fannon

Thanks. Good morning.

and you think will maybe to closer to like? the need the see in NNA And to term mix wealth for look what total we strong NNA? acknowledging you NNA on number begin that longer in question the think Another do to size aggregate. get What fee-based

Sharon Yeshaya

looked those last highlighted funnel. question. sort we rather, to about you cash is we around thing last five as cash average year, lot the of advisor-led last at from That and fee years and Great the We've is that of still a assets think the One side, we and equivalents. historical of that about a based thought was quarter had or XX%. around XX%

idea so our to And fee-based you're of actually, looking right way investing do with are asset, specifically a you're in side, lot doing market a different the actively moving the and in So, that markets mind, retail the at into it assets. you the on when now. are has people obviously, that

the highlighted on, month encouraging as retail I individual markets. is of is what we into asked is to think, clients to question the I money the actually put Glenn see last began that in so And that quarter,

an is market encouraging do portion sign, of So a think but that's that dependent. that we

Dan Fannon

Thank Understood. you.

Operator

RBC from move Cassidy We'll Markets. to with Gerard our next Capital question

go Your now line is Please open. ahead.

Gerard Cassidy

the color, Morgan XXXX, I of of was a channel. some in was for on share October the morning. that can deal back penetration Thank And was dominant obviously, think, Sharon, attractions, I player when closed, think you. Good E*TRADE are, can the any with increasing Are workplace give you us real you're the the Stanley it metrics this channel. channel? workplace guys having you us success in you there in in that one

Sharon Yeshaya

in movement We've quarterly called two we've the the in that channel it. a Yes. migration of we talked terms last just what is lot see updates around

sort that So, in. into from then, side. of beginning away And come to it of advisor-led portion then assets is assets are that workplace some moved held you as the a see core,

had we the call the $XXX was $XX it quarter that, running year. the full billion last that we year, quarter. that -- were quarter, at number we of years when first year around that you And For of largely to for one first first this up so almost And in rate billion. three $XX a look half, billion, a saw then, we're

don't XX%, is away. And a seed to the XX% that the to direction. XX% that are begin seeing can trending shows or again what assets so, And account coming good that that be so have of advisors. assets see from where through of being other people held brought in the sort migration, you in will the into with conversation in are We a signs. it that is workplace And that but puts are obviously, know we number what exactly land, encouraging it's

Gerard Cassidy

crisis financial came the is post Do and And than and to about more folks the comments the share with that the from your all you listening then, Dodd made through guys with some maybe circle time just the Can capital be when you appears your stronger than the regulators that or you with good. new you you time Basel us went III the are Frank? to regulations in from you really the Very peers what past, think think in this this past. regulators case? so not that we've engagement to James, Endgame feelings heard of the about to back

James Gorman

a -- which Well, once is, done We just I into feedback what industry we regulations? early. think from I the So, Frankly, think, test doesn't sort Gerard, compare need thing groups, there's rule. have the banks regulatory coordinated, European account? are right do The take The outcome. see test own community me what U.S. the of another like to plated standard bringing listen feel to the thing and their act. gold say, listen input do very will to there's the how on it's European and one they I to the receives end

I what's think for do should we U.S. system. right the financial

communities, the getting in shown from cetera. they're bodies, interest the Yes, They've a strong I feedback industry, an listening. interest -- et think in the the legislative

I'm Atlantic. but I assuming deal. will long across year Remember, be is. take And the will mean, comment it six the the first Endgame the XXXX, years taken III proposed a so it in how big So it's so. We'll in it out make its a small know way proof boat or be could a Basel to over this is -- here in don't sailing I the next -- putting. find period.

don't. So, what we we got about, to decide like what we've now

right So, think a for I'm a Valley, to tone, wants maintaining I do constructive this days. some whole contrary the because don't in to Silicon think to lot different to Republic later that happen stuff, everybody but this people's the views discussion up have that's First I place. is end with and

-- and other. each they we expect they're would should to because listening listen, that to So, yes, hope be I going

Operator

next our question, Lim For Please we'll SocGen. to Andrew go move with ahead.

Andrew Lim

circle questions. taking like Basel on again as back III for to my I'd good morning. Hi, Thanks well.

more comments end, low basis on your do, a at of towards basis are think like quantitative the the sort impacts to lot I XX below So, having points. bit European banks about of them guiding maybe work a

might specific more the wondering just versus was something banks bit U.S. field I if a So, for saw European debate? level that banks you the playing

familiar obviously, talked the have And large and Barr. we're then, by Jerome to over that banks, all the turning U.S. impacts Powell Michael about with been

assets competitors more total, of allude to forthcoming the under was being approach. added risk which isn't weighted standardized that might operational the assets, weighted a to standardized One saying risk case bit your that currently

RMBS or So, would bit whether that? relevant specific a about I that was think How that legacy wondering allude that, less if you losses like was a do about that, thoughts thought many you any had -- given more to years bit you from ago.

James Gorman

more going system the the yet. set which CCAR. I'm are of many to banks, country European Well, in that the I the detail not are European set some fully Basel into observing system And was go about ago up up not banks. was U.S. years was under compliant it of some just with and

for at capital had system we've So, years test something. I stress don't least, or know, actually a XX

observation. was simply that the So

risk going that the to yes, is is in is the that clearly risk operational the proposal Basel be standardized and actually readout. going initial proposal. be assets, to On to weighted in the That very approach III

position made think, fee-based to doesn't from proposal, business on But RWAs very that. my where the tying to up, I've that not clear U.S. me. ends is just sense standardized I make --

How approach. when specific evaluation to now they we've had lot lot idiosyncratic be get be of that. risk and A of on move work there, to So, done trying operational bank seen. standardized there are up to until the regulators a remains we a get

Operator

today's this for at There conference participating. are Ladies gentlemen, no this time. further everyone you call. Thank concludes questions and

You disconnect. now may

Morgan Stanley (MS) 18 Jul 232023 Q2 Earnings call transcript