MS - Earnings call transcript Q2 2024

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Operator

Good morning. Welcome to Morgan Stanley's Second Quarter 2024 Earnings Call. On behalf of Morgan Stanley, I will begin the call with the following information and disclaimers.

This call is being recorded.

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

This presentation the in cause forward-looking our measures statements may and forward-looking duplicated not notices undertake presentation materially. may regarding subject the does earnings Please Today's risks forward-looking that or refer update to our statements Morgan that Stanley non-GAAP uncertainties discussion. be results appear statements without actual are may release. and to in to this differ not that reproduced include to consent.

now to Pick. Ted the will I turn call Chief Executive over Officer,

Ted Pick

second Good morning, $XX EPS generated $X.XX and firm in thank the you and a us. on quarter. The in return revenue, joining billion XX.X% for in tangible

demonstration Securities, a of completes see in and and year-over-year now total are posted delivered beginning earnings billion our on client XX% trillion Together, of operating franchise, and strong revenue, Institutional billion to with leverage year-over-year, Institutional $XX we operating revenues $XX up plus. the Equities, XXXX, from our XX.X% continued across In income with a we've in we a strong of increase In we're XX% banking half an $X capital. underwriting. $X back focus quarter. And XX%. trillion investment $X.X margins earnings Investment Wealth, fixed of Management, including Wealth In we on billion our world-class assets grown to road benefits on first return Solid to leverage.

third over dividend of reflecting that of by stress our row to growth we the $X.XXX, increase we year durable back results, a annual announced the the earnings on in Further, $X.XXX time. for the the will test

built is XXX During $X.X end, requirement. CETX And points our of ratio quarter basis above XX.X%, forward billion the capital. the at we quarter,

the the continue dividend back opportunistically. flexibility position to and buy growth, Our stock our support to clients us support capital provides to

and in balance Wealth earnings segments. roughly continued profitability respectively, Securities billion $X and across and in both top billion and showed split the Institutional Management. quarter Investment major with Institutional revenue, businesses and $X.X Wealth The also our line between also produced

Our are firm. the to integrated working maximize businesses closely adjacent across opportunities together

Bank, and Wealth Investment navigating around another growth billion share. net In we In geopolitical we of means spend uncertainty delivering advice. Across Management, cycle in capture time, customization Management, in being on assets. clients to and the deliberate flows. including and new in strong assets investing Management to areas, risk and changes solutions real the continue aggregating assets growth given Investment our over fee-based focus are to deliver management over and is X%, Wealth secular Year-to-date, in annualized $XX with quarter we strong where

be on focused balance each Institutional political continues on remain growth growth support the fee-based to and U.S. themes infrastructure revenue, support average to best-in-class day Strong and be our the forward daily Wealth year. the now Securities. and the to which year a well flows We're million throughout, the path, geopolitics around this rate continued and and of navigating franchise. uncertainty continued show $XXX about and and the cycle, Management best-in-class for those Wealth the of out Investment talent building expect across We ongoing stability

blue. growth on nutshell. And demands earnings strong the managing and world-class levels a narrative a do which That's around execution a and institutions that wanted individuals deliver that we segments. executes and on across durable and in strategy so I then maintaining returns in deliver Stanley the while way through that we we Morgan robust this clear, capital it advise first-class capital, our world to strategy, allocating reiterate to raising, the cycle is in

in that assassination to in the our Americans, hope finally, come, will, find selves. on ways we this weekend preserve unify to And better to reflecting we and the attempt, months in as share

the detail. now greater us Sharon will take that, through Thank quarter you. With in

Sharon Yeshaya

Thank $XX you, and of good morning. In the second produced Firm quarter, billion. the revenues

on higher along and ROTCE investment, Wealth yielded equity our Management in and scale resilience $X.XX, operating of strong focus highlight of with strength management improved near-term durable on Our clients. Institutional the XX.X%. fees and and firm. fee-based was led pickup established more and strategy, economy a flows. performance, The and outlook rates integrated Investment power supported our our Results our asset client the the Banking. engagement, drove also and on record Securities in conviction EPS amongst reporting was stable, Together, prioritizing U.S. leverage by profitability. delivered confidence

addresses ratio year-to-date dedicated base. we growth, and back-office supports lower severance, and asset ongoing well robust expectations. and to of committed our our XX%, prioritize from from Year-to-date ensure absence effort spend. technology litigation expenses On efficiency investments and current infrastructure in integration that The prioritization, client benefiting expense benefited and the regulatory as costs expenses, related to reductions scale as remain to growth Firm's was our targeted

franchise. events institutional year, our opportunities U.S. versus the Higher unfolded of economic Strong back and of performance the businesses. as in international political macro the to global capturing increased data. demonstrate and $X of revenues Now debt the markets. breadth well Institutional activity markets Asia in as integrated of client strength on last to underwriting In equity the our investment billion results. contributed Securities XX% bank business, across

revenues prior broad-based. were from the billion. The year increase Banking XX% Investment was $X.X

beginning These markets and in across in Investment an Banking investments up. have and activity care, improve We deepening health sectors, to key global continue broadening talent picks our are as and including financials, footprint coverage capital lending, to and invest impact technology industrial.

preannounced sectors. Europe M&A most and perspective, backlog global having in increases an footprint. market Asia, $XXX averages. prior $XXX historical were we suggests below of the driven brought revenues M&A strong a market the in improved transactions million, diversification the activity remain our versus products, Advisory The year. by of million and increase number importance Equity demonstrating completed year, but of to to revenues continues build From reflecting underwriting prior a across versus a geographical across

continues in averages. reflect underwriting across advisory strong boardroom issuance, pipelines U.S. refinancing. a for are to The opportunities Inflation support well issuance Results improve, meaningful led underwriting reengagement. and and Investment spreads were and CLO provided which and has stabilize helped X-year healthy tighter income by sponsor moderate, above has Banking sectors. Fixed regions rates the to pickup noninvestment-grade as The and data revenues backdrop $XXX loan historical confidence and continued front-end bond million,

rate in geopolitical investment developments, sellers Investment changes our and bank clients. well gap, valuation positioned early expectations our innings buyers we are to that the progress Banking past an is make and As integrated we close Subject to still in the of to expect service rebound.

equity. to Turning

performance. Prime higher we the and seasonal client $X witnessed contributed brokerage Cash revenues new We a higher strong client dynamic patterns risk management peaks. all and billion, business. XX% volumes continue Asia increased Asia, in were last last in activity as prior year, Europe. revenues reflects of up Equity and Regionally, this across from be year in across in to over compared results strong client results year, reflecting regions. strength business and to to versus global balances regions. engagement, leader reached Higher increased

the the back business the evidence of work. year's last the support the from second integrated Macro convertible by Derivative year. up benefited quarter. of well. firm Further, Despite realized improved revenues and Fixed environment with were clients driven were on of market was up around growth versus quarter more results revenues issuances, year-over-year, political solutions. as corporate business versus income client clients navigated billion performance events $X additional results continue our lower financing the at the over the to higher activity elections year. our durable as was activity increased year Micro volatility, we prior and engaged in of

commodities with in the in were results line Solid year. prior

ISG commercial charge-offs million, by In provisions and to the already quarter, lending $XX were to which taken loans related had primarily were Net ISG two for real commercial Turning million, estate individual estate previously provisions. provisions. certain real driven we $XX loans.

revenues delivered Management. record management Wealth to $X.X billion, strong Wealth results with generating asset fees. of Turning management

to and make goal, operating Our PBT through towards our cycle. our generate leverage the ability grow progress continued margin demonstrating to

We scaled gathering $X.X on our client assets are reached Management differentiated, asset multichannel strategy. delivering trillion. Wealth

up profits asset-gathering our strategy. billion, by reported points. our DCP impacted margin The quarter. of to XX.X%. the a negatively Moving margin margin our $X.X in basis of XXX Pretax business leverage second approximately metrics with year-over-year operating demonstrates was inherent the

We the which the improving business. run are with efficiency we

levels than cumulative and year. revenues the management the more asset of Asset of by $X were XX%. $XXX up That's versus impact million fees flows. average higher It's fee-based positive driven billion in prior

In consecutive the marking flows bringing strong, fee-based flows over of fee-based billion year-to-date of were $XX the quarter quarter, billion, to $XX billion. $XX the seventh

acquisition client brokerage adviser-led accounts, now steady $X Fee-based in stand of fee-based a our off. funnel investments migration from seeing evidence are are We at trillion. accounts assets that to paying assets

reflecting billion, outflows billion, time Still, payments. headwinds $XX We particularly and among remains first this lumpy and assets. seasonal increased flows Year-to-date, the our $XXX tax-related impacted net by impacted annualized Net and clients, environment growth both net period both of half beginning representing were X% business-specific period believe of spending, given assets in growth from macroeconomic high new be factors. flows tax solid. will worth NNA quarter. any new assets Net are

were $XXX million. revenues Transactional

lending can met be approximately macroeconomic $XXX balances up client impact billion were our by the by grew sweep billion, driven last needs. primarily of stable, lending down can mostly sequentially, deposits higher our X% year. equity-related capabilities offset Bank in diversified CDs. with Excluding $XXX and stabilizes, that was Total $X of as increase evidenced billion remains revenues billion backdrop meet versus to the The DCP, deposits growth $XX transactions. by

impact in Net scale tax expected continued with $X.X fees repricing the decline intend In will quarter, payments. interest advisory we day. of make billion, the of assets, Wealth of third generating largely a perform to the and gains against aggregating the backdrop well, down million our competitive business benefiting from changing sweep The The our was was Management the offset attributable which of seasonality income our differentiated consistently and approximately intended changes $XXX to be earning to from offering, to rates changes the investment reflecting dynamics. modestly sweeps, largely these to portfolio.

the NII sweeps, decline modestly third primarily by be of driven will Therefore, quarter third the NII and in quarter. path could

out rate as next these the expectations changes, and look that into of inflect year. we should believe NII higher you client path inclusive our behavior, pricing Importantly, around

on Management strategy offering advice. gathering needs meeting and clients' our assets, predicated Wealth is lending Our

to strong results management quarter. this core strategy, our of the Management record a Asset produce fees, Wealth reaching continues

strong towards over delivered to Taken margin, together, and work a time. we we continue XX% margins

This nearly in channels, securities institutional with our is our advisers years is to our relationships journey engagement. deepen XX duration invest and workplace supports three we grow, are connectivity to channel, quarter, around have trillion-plus progress Management's client tools reached increasing AI offering. across The average flows continue partnership supported order $XX where our investments towards $XX in helping These and to we growing. total in Wealth approximately adviser-led assets. million client and steady

Revenues to higher of Turning second $X.X billion Management. asset from increased by Investment management revenue. supported the X% quarter, prior

AUM. related areas. private average Asset at the up reflecting other X% fees funds, management income Total billion, in driven were were trillion. by our private higher as AUM U.S. U.S. year-over-year, Performance-based were and ended secular and gains revenues infrastructure, $XX credit reflecting and $X.X growth equity $X.X primarily investments million our quarter

recorded $X approximately net We long-term of outflows billion.

current across strategies. areas in of see Parametric. namely trends, outflows strategic Consistent to we continue equity saw with strong active momentum focus, our We industry

private as positioned customization, strength of growth, such business alternatives. is well Our and in given direct indexing areas secular

continued support on incremental capabilities, deep focus growth. our distribution, Our with product global should creation and structuring combined

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

supported on was focus CETX actively with activity Our Client standardized and We XX.X%. velocity a strong clients were was markets of ratio resources. open.

$X.X our also We earnings capital billion CETX continued capital strong and grew by distribution. reflecting

recent test model position. and our most capital durable reaffirm results The business strong stress

Banking quarterly year a and strength, $X.XXX. capital markets we of and in pipelines a For a over increase from to active per of clients. enter year support healthy the robust Having position the are generated an ROTCE half are earnings announced dividend are XX.X% of a $X.XX third row, base dialogues Investment of diverse, share the open. year-to-date, with and back we

Management, of operating Wealth fee-based the to In leverage demonstrate flows that continue strong our is working. and realization strategy

opportunities see time we to active, equivalent into and fee-based engage cash their balances products. and cash over more become markets clients capital retail for deploy As

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

Operator

question from take with first [Operator Instructions] Evercore. our Glenn We'll Schorr

Glenn Schorr

drill to appreciate bit on I the Sharon, down and wanted upfront said. you commentary NII all I on little a Wealth. what

deposits in and keep that rate like So if money. on on of paid of and up trillion good making have to assets in and advisory advisory of you $X client advisory money a they you're handful add change in accounts, percent cash, can amount a

then more XXXX sharper wanted did . I NII? NII? to about the what you on you offset said exactly little a say the And focus on is get So what

Sharon Yeshaya

that which is portion question. Sure. of sweep are, are Glenn, the the we as for BDP sweep on Thanks, impacted that the Actually, adviser-led channel, mentioned, balances you -- the actually overall portion the a small that the of disclose.

is a investment the offset increase ahead. is will portfolio by stack. And portion that pricing portfolio, of offset that the reprices, it being the we overall the quarter right? as when it's So largely that So things and mature that look investment it amount small of change in repricing in

Glenn Schorr

you small the a only in portion reason channel, not of over. particular meaning there to this is why advisory And repricing have on focus go

Sharon Yeshaya

we about is would we And a those in wide broadly, that note and transactional sweeps, think products accounts, accounts. when think range choices transactional our in about I for clients. what we Certainly. Yes, of have what mainly is there

they a transactional and you And about brokerage. lot accounts options of so think therefore, as have their

Operator

We'll move to Ebrahim our next with Poonawala of Bank question America. from

Ebrahim Poonawala

maybe with margin. the strong The quarter. more stock's and, pretax weaker drag has on and on with do Just importantly, margin, and right? morning, NII an NII it wealth had to You extremely this revenues sticking

get So of one, I pieces maybe around moving behavior, cuts. visibility think, NII, interest into of we Sharon, your client level rate lots

at ahead, would stabilizing what for you're gives NII And there sense potentially XQ? Just go a then a -- give Or post you around . question to client if cash is comfort us you yes. rate of, behavior? for any history guidance, assets looking is that cuts maybe imply that

Sharon Yeshaya

Yes.

don't you your and then that, question. why So second take I can ask

time, we predicated look balances seeing you that seeing this outside quarter inflection next as expect ahead those those see So NII. are an points sweep point we see in rate in tax And at through that would the is we been look of we on we that had you the you great Remember, to quarter, second a we stabilize. is deposits. was stabilization the cuts, the that over mentioned, which are when Ebrahim, pointing expect we particular point, guidance, is which my as and of year, should that a

to important level has recognize that been frictional So reaching it's that, transactional happening, of cash. that

by being now we've to products, you seen to clients growth continue paydowns. beginning an rate support to type I've to in see seen the rather to see see with quarter inflows, of likely addition you So use repricing then like began. is continue. benefit inflection. that of also as that just be that could But would perspective. offset also This the already cut, to our with And a mentioned. And SBL We over interest to and We've historical has lending. than BDP you'd look a products time, the actually first other the this have are lending it rates that, second you've portfolio, factors. from begin also the which which two One is that seen do since potentially hikes of piece lending

we are the course So all when for look of year NII. those encouraging the ahead signs next over

Ebrahim Poonawala

second high And whether investors, competitive I guess business too this at is pretax target, the question was, the the we is. talking question XX% when just my look given set aspirational, margin is the is whether how bar to

of for . extent pretax the when comfort we sustainable line you your a get terms XX% in So when And us time and be get there, of to the margin, there? that the remind business? should level the pace we on can,

Ted Pick

Ebrahim. high. level, Confidence Thanks,

line: the Wealth up management as asset net you asset there fees are If are Those quarter, context, category billion. fee-based net pieces and interest transactional, sequentially management, In that Last going that new you to XX% back, the That fee-paying year-over-year. take know. the are those are Management accounts, to income, three advisory-led. a figures is step was X% advice. into $XX assets

Wealth the growth a to fee-based that piece continues So, be story. flows of Management

with transactional. the The from bank, And interest net cylinder capital is transactional through overall activity link to corporate which over year. and the general to that respect will a Sharon weakness the should to said and, is and over as overall bullish inflect time relatively hear been as commentary finance, investment Transactional weak second our then in you has third activity line. will inflect that next bleed line the and income markets

those put going to we're continue to the You together, $XXX processing funnel, revenues day leverage. It's a continue million to of operating achieve the of business, the of that and scale simple. the grow, that the

the the think spending of was work XX% opportunity We I'd but we stated house business. take we're said [indiscernible] on we core top goal. the to our achieving in base. We some were printed on place of sponsor grow are we are and we and We scale lot an to as just it GAP, across advisor on E*TRADE, continue XX% investing objective. XX% focused It a mid-XXs. In in enormous investing and quarters time will time corporate in over assets the traditional is January, which there, get intend

Operator

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

Michael Mayo

continue said why this innings how we've this Sharon in real? that much you Do heard is investment you've early time now years. at this this many that backlog quarter-over-quarter? normally you to this And to And slow the rebound. industry your up period to only is time I expect for of confidence gives Ted, years? for What the How is before the and is summer rebound repeated say real. of election? -- couple the a an banking have that

Ted Pick

delayed it and now has we're But tempering It's prints been see because We're if some a been for of out. rates. normalization some that sort number also exactly inflation the with you're seeing that, to excellent beginning right and market will. think along question a of of you this, the calling shoots, an I have folks broaden

seen think of And course, the is convertibles this broader whether or the that the now up that of kind can significantly. activity in Global institutions. sign You, convertibles And other or we expect over corporate activity have number is weeks. finance community seen early the of to product. corporate can sponsors quicken, across last I activity of be

triples on like, ladder, the for M&A. seeing launch the pipeline year-over-year the and converts, typically it spaces, know, at goes at and bake-offs you the as seeing traditional In We've in. And then we're that the client context plus, bake-offs running of we're now some and IPO of in of IPOs, seeing been were they groups. rate our some and sectors kicking for margin M&A

corporate community, So sponsor cross-border community, community.

I of a multiyear think the we're in banking-led early investment stages cycle.

economy some going the up, to you are regulatory that there's a the by active. of to across the bunch then U.S., sectors should is that see expect whole If if believe led typically hold to you most normalization

So call. this we quite are on convicted

Michael Mayo

so And to much the been to this just looking people I think mean the waiting they've deals for for the Don't in than that matter get lower? could money a one simply higher way. rates that's and you go like. going interest borrow are rates pushback. in of in the not get with when Is past. to way Or

Ted Pick

it's mean I question. a fair

take in repression, this context I XX You've last the what or written your X% on and even right? was cycle, years, the go to context the you that rates of point, in even normal end some of would at that because before still will front potentially. X% I the the know to normalization some rate about normalization a into full-blown financial of going the view we're steepening some don't have And

mid-XXs old economic most of the to back the average cost capital just of weighted we're now normal and periods. So

activity corporate inventory two world reality cap between will community, cost an that community to competitive to of released you we're from that go jurisdiction been that kind with needs been is market percentage has competitive measure And suppressed contend much has by against the risk a have seeing of to on be asset There real too, powder the a there's sitting the know, real as and dry raised, differences just sponsor needs capital as that been bid weapon the on that in to will because another. multitrillion-dollar and sides a smaller any on the and of stockpile percentage to of stickiness stock game so of of with enormous, the act that's from then sovereign the one glue.

the were is historic and tell the now of difference to the we're next of none resumption So I into number front you we call that the the on over in and number is that normalized rates financial being me along of recession, quarters over end, of come full-blown key of with which think the lines more community of a us to short, see unless next to going normalize go you X% will M&A that sponsor years, saw even activity really the a age. can if something institutionally

the the in have rules They They reach. finance loan work act They global work with with know. to package. concert to corporate partners, entire capital as a structure. and can don't they They us work have actually can will as you

So investment also it's investment would leading bespoke bring. in straight can straight global of rate exchange space, the couple public on tree not ornaments the M&A banks other the the interest the the offerings a and foreign and that IPO advisor, banking hedging private be just

last to couple extent really entire the have done target we're decided at bankers the we've a has over the the industries. careers why very to really high-quality several is Morgan fruits across investment of come their been it spent typically firm of And have to years, front-office this and who Stanley And to seeing platform. hiring, that so-called one

into get quite and behind sustainable see activity I election a has the point of and continue on we us, I on then think election quarters your XXXX But certainly of I should promise. that coming number a as am on been So the bullish pace. on sort the take it. that we

Operator

from is with Jefferies. Dan Fannon question next Our

Daniel Fannon

a to quarter, XQ. on But on sourced breakdown and to more the get I hoping was an family a office little saw contributor. a in from little were maybe more where color the bit we the I color in within the flows hoping the bit Last Wealth, outsized contribution. be get think flows channels quarter

Sharon Yeshaya

Sure. sourcing -- taxes. those and terms continue of we drag, In really as I quarter, to where from. in It's I'll that. the are biggest assets coming though, this particular is take mentioned, see broad-based from offset

it's have workplace you So -- still a accounts.

directly. You account still have the advice-based

places contributors. have the fact just What mind, coming getting clients. the still to remain that most the though, the split you're it's in net my and continues, those channel, in All with various be new three but isn't you interesting, not just it's channels, that have, advice-based from self-directed. You contribution but from existing clients, existing

relationships some And new from those also are of net sourced are workplace. clients that being

more that device then adviser speaks I So somebody but sees focus who into in are funnel interplay directly wants you into that that's self-directed, and an clients, how actually power adviser, would fee-based. the those in bring differentiated what channel you not just net on for Once coming the that's have new work, eventually acquisitions to new assets, and seeing it platform. of is the differentiated channel because from,

whole So it's than would really just that I the rather one attention leg. isolated to, ecosystem call your

Ted Pick

affinity their and I is important, at on that it. institutions at products Which of terms is reason the the continue to sponsor amongst that community wealth, effect house own other the has because top part corporate success potentially of workplace around of workplace, the then and so experience can in those an

clients comp of on effectively the know, then the do entire your prospective a mandate, the you can we by effect and MS wellness you work as via FA, through the where work overseeing directly client product executives sticky incentive it having the an Stanley that effectively asset financial funnel seen an firm. wellness, durable, to workplace where that potential actually institutionalized working great aren't could base, start of So ourselves a employee be by can the indirect at the on job going Morgan through you educating to is senior up institutionalizing necessarily Solium which, succeeded you is and way sale

Operator

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

Brennan Hawken

the to a follow-up the down comments, that drill in on give second just to like change here your little Sharon. you more prepared repricing mentioned I'd

seen book has we've that slow. repricing the securities So the in been

will just there's on ability to benefit repricing, you the and money repricing sweep to be the then I'm deposit why just offset? the is that then slowly curious Is taking kind an the a So side. replace deposits, will offset funding phased be you're And switch and it? help have of than think it in that as can therefore, because a to fund phased that the that just higher-yielding way nitty-gritty rather question asset side as going see you on that it, to you actions

Sharon Yeshaya

thanks, are to that make quarter. we'll changes that Brennan, take the the question. No, all in So I'll happen, expected will happen third

And so those and various made, different changes they'll dynamics. be on based competitive will be

Brennan Hawken

Wells Got you -- advisory is some is there that mean and that dynamics? on you Okay. we've to could changes it. the And focused the this just of? the it recently is going have to relationship that then is I'm And else not by what similar something announced BofA, what by being be competitors? seen is competitive from Or other -- warehouse aware

Sharon Yeshaya

are I the dealt just stated said, within channel. advisor-led be that it, as That's it exactly limited, sweeps to as you the and will

Operator

question Devin JMP from next Securities. Ryan comes Our with

Devin Ryan

continue, Just trying component to could the that's impact wanted just seasonal flows. whether of something by understand question, you first mentioned that that, that Sharon, the season on tax another influenced factor, it -- client then But just whether also just GWM spending. to increased on inflation? on was flows. The which mentioned is one you drill get. I a And I completely into or

Sharon Yeshaya

Yes.

spending. certainly that's so We that bands alongside ]. data I in really We've are spending. homes higher see various it interesting in purchases out. We see tailored I increased question. income actual investments. that seen [ think did spending worth, and a call in see We that the by of net higher

different -- and in cohort, So different ways. speak, ways its are to in that cash using its various investment they so is

our So do seeing know interesting within we're in only think I that's as it that that's dynamic playing portfolios It's mentioned their data. an well. have something that out. I others

Devin Ryan

and great lot Banking hear the backdrop, And just as primary it. kind a well the and between be of on from of Got there's which up. that debt markets capital follow-up Investment as end M&A to trading, our is picks a the on in commentary improving and Okay. maybe then to interplay equities, I going in more kind appreciate the expectation issuance

just the that could you levels maybe you and market? equities really move as trading what high feel means could whether around So about and income to primary these guys trying even issuance you higher sustain for the fixed think or just maybe like stronger even wallet get businesses, a

Ted Pick

will be competitive naturally know an Well, that asset. can where speak to integration I set areas

Here, we business, investment of Institutional getting integrated years. something which on X for we're our we inside X believe, our -- has special have, really bank, now so-called been ongoing or Securities

under relationships Dan fixed direction. sort our equities business. income, issue critical a because the across have at banking new place this is facet appropriate strategy you through business and and capital now our that been And important of markets Simkowitz's of Now built have

have and to the compounded one those folks division You now having of from been advanced some mobilization another. by

lot investment be the have the as boardroom you the can in in fixed high-quality substantial, who the not structuring appropriate, product, part colleagues, on issue not necessitate the familiarity advice, bespoke as product, that an a only of and products that now the are it some and IPOs. also you in bankers vanilla new traditional we'd effectively be just to Yes, expertise be horizon quite their or private and with are is and to products work world-class equities convertibles income. of but, But more can calendar. in institutional product. there's of work there's the the So that on that brought lean if business A or expect real whether know, there important area

our And are credit of folks, example, to share which area, i.e., the the also fixed inside been our that debt And work income macro fixed the if income with space, whether but business, underwriting, and group just speaks new to linked commodities is have income at in broader they housed fixed the XX%. believe, capital quite year-over-year closely done see markets rate that not and look banking, you'll our extraordinary. exchange. interest business, is professionals, working the our by number, you in products in foreign securitized for or business and up issue gains I been fine That that's revenue

to our our deploy when reason on we we into think are more you a bank, part but capital. increase not see lot just the need of not to the so the is integrated because get bullish, earlier So a is Mike's denominator, investment much ISG, that numerator, the also you to on question of there knitting that ability

bespoke advice quality clients as can get so that But global, we comes the the that base. demand We people, importantly, that of our kind and, the we to it will that are the bring do when of for of it's markets it. the is so familiarity from that client able the appropriate advice differentiated to

is the within it, we see cycle, across the secret the is that synergies investment of, one. So on to your that working Wealth investment different than and now stand-alone the think, sauce been of even structured, I into Firm include leadership basis. bank the part good on this last the I that tap cost inside ability And will about bank that obviously we'd the And But next specifically. Investment a the be have experience which we've and feel doesn't generate Management. above way our capital then hard into on that question really returns it's the to

coming higher of cycle, not only be be will financial Rates that potential repression. U.S. with us. very community, some the to Investment bottom the top We'll where Bank, across strong the sponsor our going from relationships to We'll Investment around leadership we world Management. also and and of toggling and Wealth that cycle, dealing well between be have own with the financial bouts the recession. but age institutionalization unpredictability of of But election than group inflation the

Operator

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

Steven Chubak

So maybe just the operating off XX%. incremental margins within question quite a north Year-to-date, with leverage are just on just starting ISG. of strong,

and You positively. spoke constructively on IB inflecting and trading

bit activity incremental sustainable margin better especially the what to which skew towards at builds is as of to want least steadily tends Investment be Banking, Just believe more from compensable. given a may here, understand you more heavily a growth, some

Sharon Yeshaya

the on think right? firm put coming We different the over are where whole XX% So targets is when question, those your efficiency would I with it you the depends time at highlighted, from. we for specific a the really look below through can that yourself The or firm, issue that you cycle. at Steve, run ratio focus, revenues it, durable on

be periods So there related, you there with where might might BC&E of have associated jurisdictions it. time it's of where higher be periods different time

of it margins speaking, space, ISG Wealth have space. you Investment broadly and the Management and XX% and the sort as But to relates enterprise, we've then Wells the given

running by enterprise So entire an margin. ratio somewhere XX% a look broadly, of at for you're at efficiency XX% definition, run you to more if

Ted Pick

in quarter, quarter. typically add income would the I Banking Fixed is, have seasonality tends shakes but thing street-wide its only the every out business. that's first know, year, typically in strongest That's you course, The in Investment fourth that quarter, to there's real out. as to the not of

to about the obviously, around [indiscernible] by driven in then it's that will And be in part and September. months, summer this tends all quarter elections. Third be sort the weaker one of will upcoming September be

kind piece. that's the of So seasonality

within other again, has, a been remiss, business. they high-margin where billion that just through I'd prosecute our sort scale years. the having Investment see business prime are equities then to point has last business think of #X again hit we inflection an And cash, businesses, demand where importance the much derivatives in the business And continue can of $X I cycle. Banking, clients This and leading The of services reached brokerage. across the connecting to be to too, in we been for the or is have the underscore not dozen #X the

But of are this, holding levels. about of price economy we're where given course, and on is general All that, up now, feeling dependent right the we too. good asset

Steven Chubak

Both a noted, you just you on Sharon. follow-up and on deposit discussion. which house similar actions the announced And your wire deposits, peers

any from Because or had vantage pricing it from point, our simply decision? was of at competitive prompted mentioned to cycle better the if received by rate understand the these to But I difficult this that reconcile? stage you informed your regulators peers feedback wanted there's actions is dynamics. You of the timing

Sharon Yeshaya

Steve, know, sorry, don't on as . comment, we matters. regulatory you I'm

Operator

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

Gerard Cassidy

business markets your you good you, especially experience or these you sponsor and the more comments if benefit You XX gave workplace over stronger months? revenues in capital take the insights we XX maybe ECM equity think Can Investment in that could touched that could into up next with numbers derivative Banking see private go bring, channel, I the about Sharon, second Investment to on companies with should the Banking. a what channel of then us maybe public, in potentially thinking should us share And from of business. your it market next workplace pick transactional Solarium, your the Ted, stronger from a see stronger the

Sharon Yeshaya

a I I know, a about also assets years question. you with asked with underlying completely different Gerard, me think I the is. great that's what associated values of agree few ago, you. those

those As the you workplace assets assets rise, have value client of rise.

now add corporates. Solarium, It issue New that when new add have we new also have their should stock. the base. E*TRADE workplace, are that also you net and platforms all their just should now -- corporations you will integrated. and It They participants. have It of And employee grow flows. employees add absolutely more

E*TRADE people can those Ted as And we as wellness. can said, account, transact an offer flow So then, financial into flows also on that.

So begin that helps to absolutely, it ecosystem work.

Gerard Cassidy

acquisitions? in you a last final but that good the you get Ted, three you growth then share enhance a with Very Or years take is XX today III good. game there And you to maybe of G-SIB I you acquisitions. step as back, the years, done proposal, are guys some where very any relief, today? Once if like end obviously, us, growing with we parts two, just that you'd complementing over as next a of Basel have look the good picture are follow-up, organically, out can job possibly with

Ted Pick

I'll Gerard, take was to capital, believe indeed $X.XXX, the view things, a could spot and dividend again link that brief external all and test, And it or it what prioritized tougher which opportunities. We could, capital, you we annual on a yield. CCAR opportunity anticipated above potential the to know, I policy. was. And give that at we potential increasing if uses a have been to we are has we've of X.X% dividend offers as dividend in possible

of So on continued the priority that highest capital. is use

If of you use capital inorganic course, include, opportunity. to of

Second, our clients.

bank. you about particularly in also see we've thought for lean and across leverage appropriate, clients But buyback to continued the have the the operating We as business investment across the the segments businesses, buyback, back of been dividend more way in $X reflective returning been us opportunistically past billion offering and that than capital. This optionality. a and and that stock buying a have across quarter, between has

of noting which in would context brings, attention today, points X.X framework be here sit And buffer. we above attention, to XXX basis normally is but does are the G-SIB As sort manage get whatever much importantly, worth be if our buffer, at holds forward-looking X.X, one stay through we of continue your we we the which question, get that will but XXXX. in strategic buffer the in the the Basel assuming in that can It's opportunity. context

billion we over quarter. accreted this XXX we're $X.X and So

the the regulatory we might at something opportunities reality road, sure, to formulation, the we forced horizon, It's general after hierarchy, in Basel External, about across can the think need buyback three, appropriate, around of we got be [ about. we as inside just forced The i.e., is then we've look CCAR investing and some opportunistically. something that, Down ], continued think And in just we're inorganic, short years third, therefore, potential two, is stuff. operating returns term. first, if our second. out, definition dividend not is hierarchy to achieving clients have against the what importantly, four going refinement come understand so

are the last operating tell the made in would I the you in generate to Investment of short with to we years. our the determined Bank, returns of the talked XX, But that over acquisitions major and efficiency segments: Wealth very integrated then Management the XX% we've obviously we're And and term, leverage and happy about. XX that we've margins each and hit ratios and two Investment

Operator

Martinez HSBC. next Saul We'll question to with from move our

Saul Martinez

trading the on question the earlier your on I sales for follow outlook to wanted businesses. and

consistently who billion issuance pick may now, markets to $XX where to are equities. share. we're of of within had revenue annual banks small have about you've right we cuts, a $XX from post-pandemic backdrop going same competition more strong, At have rate up. activity kind done in You've the period, lost perhaps see And billion time,

you a is how in share you you So pre-pandemic? than materially backdrop? grow it ability And your the -- revenues you can what businesses, do a or I this these see guess, you gain higher ultimately, view was wallet from think have for do maintain that see do to evolving on how base here

Ted Pick

do to to to share answer would businesses whether in We share our credit that private the we are to are globally. grow is like grow corporate equity products it that the durable. leading alternative have the connected think want then that very sovereign that the core is base, global that I be asset managers, There client and can and few be asset private There are players into firms clients. that that lead floor, managers, and offered. that come can

to continue business. largest we in We example, the equities believe Asia, where market's have world-class I have business, a for

U.K. in been as at our putting the management friends has Tokyo. of MUFG with know, quite and you And time differentiated business senior and venture the the in continent growing we where attention. joint have assiduously on been a partners lot a We've our in

continues if of be world footprint and the equities world. you global to It So the an be continues in a -- firm consider to equities-based.

it U.S. in price in asset the the You see momentum

You And more offer. for to strong [indiscernible] business, the broaden to and see opportunity sectors. do folks been more to now the very and obviously the potential in we've that suite for that brokerage example, stock where for equities, we traditionally picking that in names prime gives

belly on business. where, of That, of all see front macro see where them corporate you'll kinds based the an administration offer. whether or you'll risk, rate and offers course, inoculate acquirer we You curve. the see the for exchange activity, challenges curve, service steeper the the of U.S., yield how facing the that significant the may could catalyst a to connected some the opportunities acquisition, on rates handles the on next to and wish uncertainty foreign that's And M&A to activity continued

every bank. working the Again, like we I controls like space growing we're allowing idea the to in demand. I inside fully lead to sandboxes investment when that. that a engage the are looking them that years that on the durably idea our and and advice catalyst are entirety in with enough But can spectrum that the appropriate offer around of breathing event, once capital the of few we integrated clients so financing

to like that to quarters would you of would be answer grow denominator, and we almost I'd see along with think grow the then and So numerator years. responsibly. can up and imperceptibly the inch over the the course

Saul Martinez

helpful. That's

follow-up, a get related follow-up. Securities where what on cycle the the guess Investment you I out? IFC The to ROE have view normalized here. in the be year, A sort Do of ROE, plays a cycle. on Banking first of view as as the in kind early quick half can Banking ROE Just of Institutional highlighted, a XX% Investment on, you in would

Ted Pick

the as green We're we're of come on seasonality, a of early the dealing regulatory we put those the We're forward hard high-margin uncertainty that geopolitics, pin we returns of the to the will when what Basel see To given elections, product, in speak, some We're a until some uncertainties, quarter reality course. the not normalization watching kind on be of U.S. still namely. in cycle. stuff M&A to the it, early. mention with question the still earlier through shoots repat, it's of on in

leverage contribute Wealth of looking to look we in think that of And returns efficiency Management. Investment Bank. But overall XX% number Investment the over the course that. investment a the inside of that bank, and just And yes, operating inside we us, measuring then to to not integrated at we're we sustainable real returns firm, seeing the the you're the about are firm. generated have And we right the are of point but the some out

Operator

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

have great You may day. disconnect, now and a

Morgan Stanley (MS) 16 Jul 242024 Q2 Earnings call transcript