Morgan Stanley continues to take steps to attain a return on equity in excess of its cost of capital, including reducing risk weighted assets, controlling expenses and managing capital levels. These steps resulted in a reported return on average equity of 7.5% for 2Q'14, excluding debt-valuation adjustment (DVA) and a one-time
Morgan Stanley's overall profitability decreased from the prior quarter. As calculated by Fitch, pre-tax operating profits (excluding DVA impact) declined 14% to
Wealth Management's pre-tax operating margin improved to 21% at 2Q'14 from 19% at 1Q'14. The higher margin was due to a
Institutional net revenues (excluding DVA impact) declined 8% to
Investment banking net revenues increased 26% sequentially due to strength across all products with substantial growth in EMEA. Advisory revenues increased both on a QoQ basis and a year-over-year basis driven by higher M&A activity. Underwriting revenues were up 27% from 1Q'14 with equity underwriting increasing 55% reflecting a higher level of IPOs. The investment banking backlog remains strong and Morgan Stanley should continue to benefit from a higher level of activity.
Morgan Stanley has consistently maintained liquidity at conservative levels. Global liquidity reserve, including unencumbered liquid securities and cash, was a solid
During 2Q'14, the firm reduced FIC risk-weighted-assets (RWA) to
Morgan Stanley estimated that its Tier I common ratio under the
During 2Q'14, Morgan Stanley repurchased approximately
Additional information is available at 'www.fitchratings.com'.
Source: Fitch Ratings
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