Morgan Stanley (MS)

“For the third quarter, we expect a modest sequential increase in NII.”

“We continue to expect our annual tax rate to be between 22% and 23%, which similar to prior years, will exhibit some quarterly volatility.”

“and with the passage of time, we seek to grow standalone wealth assets from the current $8 trillion-$10 trillion.”

“We reaffirmed our targets at 30% in the strategy deck. And we did that for good reason, mainly because we want to be in a position that we can invest and so we've never really managed the margin quarter-by-quarter.”

“And over time, we'll continue to move up the margin on its own organically.”

“And on the organic front, assuming the economy continues to grow, we think we've got a ton of opportunity to put top line up and continue to carry margin.”

“If you take all of that together, we would expect that we're modestly up here, either where we are today from capital neutral to modestly positive in terms of the overall amount of capital that we should have.”

“Looking ahead, we expect NII to build over the course of the year, with a modest increase in the second quarter compared to the first.”

“We continue to expect our 2026 tax rate to be between 22% and 23%, which similar to prior years, will exhibit some quarterly volatility.”

“Over the course of the first quarter, we will be transitioning all economic hedges for DCP obligations to derivative instruments.”

“Looking ahead to the first quarter, we expect NII to remain roughly flat quarter over quarter as higher average sweeps and lending balances should help to offset the full impact of the two rate cuts in the fourth quarter.”

“Client balances continue to rise, supporting the outlook for financing revenues.”

“It is the case, though, that with the compounding of earnings and the continued growth of these businesses, it is quite possible that we are going to be moving right through these firm-wide goals. By definition, the math should take us through the $10 trillion.”

“We continue to see opportunities to expand our margins over time, really in all of the businesses.”

“Our view would be that that is why we thought that the efficiency ratio at 70 was a good number... that we should be able to continue to press that further in a thoughtful way as we compound earnings.”

“That even with the ongoing investments we're making, back to Mike's question on AI, in core technology or in ongoing AI efficiency and effectiveness tools, we would expect that if the markets are conducive and we execute, so those are two ifs, Markets, you know, market is constructive, and we execute, across wealth and the investment bank and and I am as well. That we should continue to realize operating leverage.”

“And then as you can see, we are continuing to gain share from some of the lesser firms, that have incomplete offerings.”

“We expect our 2026 tax rate to be between 22-23%. And consistent with prior years we do expect some quarterly volatility.”

“As we look ahead to the remainder of 2026, assuming the current forward curve, incremental loan growth, and our for the deposit mix, we expect NII to continue to trend higher.”

“Looking ahead to 2026, investment banking pipelines remain healthy global, and diversified across sectors. Strategic activity is accelerating, Companies and sponsors are looking to access capital for growth investments.”

“We will also continue to opportunistically buy back stock.”

“The dividend is now $1 share. That is sacrosanct and we'll continue to grow that along”

“The buyback has been opportunistic. We'll continue to buy shares back. Maybe at a slightly higher cadence.”

“We continue to expect our fourth quarter tax rate will be approximately 24%.”

“Looking ahead to the fourth quarter, we expect to see a modest sequential gain in NII.”

“And we do believe that in the investment banking and capital markets new issue arena, we are gaining share. We would be seeking to do that. Globally over the next year or two years.”

“So that might be more idiosyncratic to your point And so, yes, the base will rise as those prime brokerage balances will rise, assuming that there's not sort of some major market decline which would cause a contraction in balances.”

“yes, there is room for an inflection as you continue to move higher.”

“I think the ability for the highly capitalized, global investment banks... we'll be able to get back after that core share around corporate product.”

“Generally speaking, in a lower rate environment, we see inflows, right, of sweeps.”

“And then finally, the buyback. We are at a $4 billion pace per annum. That is obviously a lever that we will use tactically and accordingly.”

“When the environment stabilizes a bit, we are one-pronged through the 3-pronged administration effort, we would expect areas like the M&A business and underwriting business to pick up.”

“A resumption of investment banking activity in June highlighted that clients turned to Morgan Stanley as market windows reopen, and serve as momentum heading into the second half of 2025.”

“As we look ahead, we are entering the third quarter with momentum. Investment Banking pipelines are healthy, dialogues are active and markets have proven resilient.”

“As we look ahead to the third quarter, we would expect NII to remain around recent levels, subject to changes in the policy rate.”

“We expect a tax rate of approximately 24% in the second half of this year, consistent with our initial guidance.”

“The underlying business progressed towards our long-term goal of 30%.”

“So the upshot is that $4 billion is a very big number, but the run rate has been higher than what we've seen a couple years ago. And it makes sense as we continue to consolidate share, we're clearly continuing to take share with the right technology, the right mix of client business, the right focus on returns around the world. So it's a winner, and insofar as we don't go risk off, it'll continue to be a winner.”

“And so what's happening is we are selective about it. But it is fair to say that Jed and Vince are getting a lot of inbound inquiry and we would expect that to continue.”

“For the second quarter, deposit mix will remain the key driver of NII.”

“However, over the course of the recent two weeks, we have seen a notable increase in sweep balances, exceeding our internal forecast. While this is likely associated with recent market uncertainty, it could have offsetting impacts to the NII in the second quarter should this continue.”

“The pipeline is very strong, depending on how you measure it, the strongest it's been in five years to 10 years, maybe even longer, and we are excited about pushing that through to the rest of the investment bank.”

“Our business is well positioned for a strong continued rebound in deal making activity.”

“But overall, I think we're very happy with what we have from the wealth management perspective and it's really about seeing the change in environment that should help the dynamics as we move forward to see that increase in loan growth.”

“These revenues will continue to benefit from the breadth and the depth of our growing alternatives platform.”

“Looking ahead to 2025, our M&A pipelines are healthy and diversified, outpacing recent years.”

“Against the four pillars of strategy, culture, financial strength, and growth, delivering the integrated firm is foundational to durable earnings growth and 20% returns through the cycle.”

“On the asset side, we will continue to grow our wealth management lending capability by covering clients holistically as their financial needs evolve.”

“We will continue to invest heavily across the firm, in our talent, our clients, in e-trade and in parametric, in our bank, across resiliency in technology and infrastructure, and in the development of the integrated firm.”

“We will continue to prudently grow the dividend, continue to invest in each of our three businesses and across our infrastructure, and continue to opportunistically repurchase the stock.”

“Today, with our expanded offering, we reach over 19 million relationships and have added net new assets of over $250 billion in each of the past two years on track to delivering $10 trillion plus of total client assets.”

“I wouldn't be surprised if we also begin to see it from a tax perspective as we enter the second part of the quarter.”

“In the short run, similarly sized additional modernization efforts focused on decommissioning legacy technologies may result in higher amortization costs.”

“No, I actually -- thank you for the question. I don't think that it's more mature with less upside. I actually think there's more upside to go when you think about the penetration of FAs using those products.”

“So, I think that it has momentum, and as you know, those are the durable revenue streams that we expect to gain over time.”

“And that's going to cost money on margin in the short term, but it will give us the opportunity for growth as we move forward over the long term.”

“You'll also likely see, as you get into tax cycles with asset levels where they are, an increase also in SBL.”

“We'll be buying back $3 billion-plus this year, as that's an ongoing lever that we're going to pull.”

“Expanding markets and increased client engagement should further support asset growth as we progress toward $10 trillion in client assets.”

“But we do think that there's opportunity to surpass that higher.”

“In January, I had said 30% was the goal. We were in the mid-20s. We just printed 27% GAAP, 28% [Ex-CPE] (ph). It's a core stated objective. It will take some quarters to get there, but we intend on achieving it over time as we continue to grow assets and scale in the business.”

“Investment Banking pipelines are healthy and diverse, dialogues are active and markets are open.”

“And then connecting to Investment Banking, I think that business has too hit an inflection point again where they can continue to prosecute high-margin business through the cycle.”

“And as you hear from our bullish commentary with respect to overall corporate finance activity in the investment bank, that will bleed through over time to the transactional line.”

“As we look ahead through time, which was the second point of my guidance, is that when we look over the next year, we're seeing and we expect that we should see an inflection in NII.”

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

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

“And then over time, you would also begin to see a benefit as rates to be cut, that BDP could actually see inflows, which you've seen from a historical perspective.”

“It is worth noting if we can manage to stay at 3.0, assuming the framework holds through whatever Basel brings, that will be our buffer in 2026.”

“The backlogs are all up. I think it will be a slow march back.”

“We continue to expect our 2024 tax rate to be approximately 23%, which similar to prior years will exhibit some quarter to quarter volatility.”

“While the uncertainty of the rate path and geopolitical developments may impact the near-term conversion of pipeline to realized, conditions should improve over time and the underlying trends suggest that confidence is increasing.”

“Looking ahead, we expect the steady build of this business to continue.”

“We remain focused on supporting clients on their path to advice, deepening existing client relationships and using our scaled platform to achieve sustainable 30% pretax profits over time.”

“So when we think about January and what we're seeing, we see the recruiting being healthy.”

“As it relates to sponsors, we would expect sponsors to come back that will obviously take time, and I do think it will likely take a couple of potential prints in certain places and other things that will be encouraging will be on the equity IPO side.”

“Overall, the pipeline is more diversified than we've necessarily seen in historical years. We expect to see continued momentum in energy that we've seen over the past year, we see optimistic signs in real estate, and we see optimistic signs in technology.”

“However, if it was more gradual in nature, which is similar to what you might see in the forward curve, you will have offsets associated with the reinvestment of the portfolio. So that will offset the rate decline, right? We'll largely offset those rate declines.”

“the next question is, what is the pace of the interest rate cuts that we see? If you see an instantaneous shock, we disclose to you what that means, right? So an instantaneous 100 basis point shock lower will be negative, around $600 million, right?”

“As it relates to capital markets, boardroom confidence is rising and our calendar is building.”

“As we move forward and transition from integration to optimization for client experience, we expect to see greater scale benefits from our investments over time.”

“Our asset led gathering strategy remains unchanged, and we expect it to deliver margin expansion over time.”

“Looking ahead to the first quarter of 2024, the deposit mix will continue to be the primary driver of net interest income.”

“Corporate confidence will ultimately drive the cycle forward and we are encouraged by signs the CEO and boardroom optimism is growing, evidenced by the build of our advisory and IPO pipeline.”

“Nevertheless, as we have discussed this morning, the Morgan Stanley of today is meant to perform through the cycle, and based on the evidence we see, our building M&A and IPO pipelines, improving boardroom confidence, and an increasingly positive tone from our retail and institutional clients, we remain constructive on the year ahead.”

“We expect NNA growth to continue to vary quarter by quarter, given seasonality and even year to year given market tone and the cadence of migrating workplace assets and attracting assets held away.”

“We will hit 30% pretax margins in wealth, 70% efficiency ratio for the firm and 20% ROTCE.”

“The underlying business has achieved 30% margins before, and we intend to deliver that return profile again in the long term against a higher base of revenue.”

“I would add if, in fact, the Basel III end game outcome is more favorable than perhaps the Street expects. We will adjust accordingly, but we have tools.”

“So we quite possibly could have a dynamic where if we are in this soft landing zone, we could see increased activity.”

“We believe that the revenue mix will toggle around. There could be periods like in 2020 or '21, where the investment bank is really firing on all cylinders. Again, early economy type of activity, and that could grow again towards 50%.”

“28% can go to 30%. We can make that happen.”

“So we're certainly not going to be raising capital. We're going to continue with our buyback through this period.”

“I would be very surprised if this firm doesn't do some transactions in both wealth and asset management over the next three years outside the U.S.”

“What we did say is that the next quarter, we have said, will be lower.”

“we expect to continue to return capital to our shareholders.”

“on the margin you're going to have a little bit of NII impact over the next 12-months, but that's really not the real game.”

“Just on the expense management, we could do things on expenses easily, more than we've done. And you could get a couple of hundred million from that.”

“I don't think the announcements won't translate into revenues in Q4, but they will in Q1, Q2 next year.”

“This increased client conviction will also further support asset growth and wealth and investment management.”

“As clients gain more conviction, we expect our institutional business to capture more opportunities, particularly in investment banking.”

“Looking towards the rest of this year, based on where we exited the quarter, we expect NII to trend lower.”

“we anticipate a similar amount in the fourth quarter as previously communicated.”

“we expect momentum to continue this year, given the fourth quarter has some seasonal considerations, we expect most of the activity to materialize in 2024”

“because of the buffers we have built, even if this proposal were implemented today as written, we have adequate capital to meet the ultimate requirement.”

“So, unfortunately, there's not that much more clarity I can give you other than what is leading us as we go forward is largely that liability mix. And so that's the trend that will when we look out in the next couple of quarters is one of the biggest trends that will drive NII from here.”

“We'll be doing buybacks through this year. We have $20 billion authorization from the Board. We won't be doing $20 billion, but we'll be doing buybacks, and we'll moderate it.”

“And the dividend increases you've seen, I think they're entirely appropriate, and I would expect they continue over coming years without saying exactly what level they're at.”

“Within Institutional Securities, while advisory will lag the financing market, the backlog is building and underwriting trends are positive.”

“Should stable and higher asset levels prevail, Wealth and Investment Management are poised to benefit, particularly as we continue to attract net new assets, a testament to our asset growth strategy.”

“While we outperformed our tax guidance in the first half, we expect a tax rate of approximately 23% in the second half of this year, consistent with our initial guidance.”

“Looking towards the rest of the year, we do not expect NII to expand.”

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

“For the balance of the year, our expectations for total integration expenses are broadly in line with our prior guidance, with approximately $150 million remaining.”

“While we are cognizant of the typical summer slowdown and it is hard to know whether positive trends will continue for the near term, current conditions remain encouraging, certainly for the medium-term outlook and especially for 2024.”

“This $10 trillion target is for real.”

“So, yes, we have a lot of levers to push that margin around a couple of percent points. That’s not, frankly, a source of great anxiety to me at this point.”

“And I think you’ll see us probably push a few of those levers as we get through this year and certainly next year.”

“We continue to expect our full year tax rate to be approximately 23%, which will exhibit some quarter-to-quarter volatility.”

“Already, we are seeing a growing M&A pipeline and some spring-like signs of new issuance emerging.”

“That said, it largely remains a back half 2023 and full year 2024 story.”

“We will hit the 30% margin. I mean, we're almost there now in a more challenging environment. So that zero anxiety about whether it's this year or next year, it's coming, and all of them will contribute.”

“We're on our way to achieve the 30% margin target as you relate to the Wealth Management business.”

“Obviously, we're -- I mean, it's fair to assume that we're going to continue moving on capital distributions.”

“Our deposit franchise has grown significantly since 2019 and will continue to support future NII through various cycles.”

“And when we look ahead, we would expect to remain above that 2019 level, and we'll have to see what the upside is.”

“I think that as we continue to gain scale across the businesses, each of those dollars that we put to work will be more and more efficient.”

“While we expect the growth of NII to moderate from the pace of the last two quarters, we anticipate continued expansion in the first quarter of approximately 5% sequentially, assuming the forward curve is realized.”

“Looking ahead, we do not believe that NII has peaked.”

“However, particularly as it relates to the integration of E*TRADE, the final back-office integration remains scheduled to conclude in 2023.”

“That's about by the way up to 5% to 7% of beginning period assets within wealth and asset management.”

“Of note, we've added a new goal that I spoke to earlier that we've talked about in the last six months to generate $1 trillion in net new assets approximately every three years.”

“Obviously, there will be up and downs in individual years. But over a three-year period, we expect to drive approximately $1 trillion in net new assets.”

“Given the scale and reach of our businesses, we expect to deliver this pace of asset accumulation going forward.”

“As we continue to grow our client assets, we expect Wealth and Investment Management will become an increasingly larger portion of the firm's pretax profit.”

“Starting with the expected path to $10 trillion in client assets across Wealth and Investment Management, we've demonstrated our ability to generate over the last three years positive net new assets of approximately $300 million (ph) a year. Combining that with reasonable average market assumptions give us the confidence this will lead to $10 trillion in client assets in reasonable years ahead.”

“I mean to your base question, tech spend is going up. I think it's fair to say along with some of our controls and compliance areas, it's the fastest-growing part of this Firm.”

“As well as over the course of the fourth quarter, we will expect something in terms of integration expense, specifically from an E*TRADE perspective, it will look similar to the third quarter.”

“I'd just repeat something that Andy Saperstein said at one of the recent conferences that our plan is to generate $1 trillion of new money, new client money every three years.”

“Through the end of the year, we would expect NII to remain broadly in line with the guidance provided last quarter.”

“Fortunately, the business model changes for the past decade or more, plus the acquisitions of Smith Barney, E*TRADE and Eaton Vance put us in a position of significant relative strength and should support solid absolute performance in the months ahead.”

“We had given you previous guidance of $200 million that we expected to see as an incremental fee positive over the course of the year as those waivers went away because rates came off of that zero-bound. We stand behind that guidance, and you’ve continued to see that flow into the numbers.”

“We’re investing in the business everywhere, particularly around the workplace retirement space. We’ve invested in the digital bank and building out the wealth space. We’ve invested in asset management and our capability, and we’re going to be doing more of that, taking the Eaton Vance Funds internationally, expanding the Parametric program.”

“On the other hand, balance sheet growth will be very measured. I think we will pick up share by banks coming back to us, not necessarily us having to move forward.”

“When it does, we believe that will free up another bunch of capital.”

“The change in business model, the growth in the asset management business, the growth in the workplace retirement business, all of these things, which frankly are very capital-friendly. Yes, that number is going to keep moving.”

“The diversification across fund strategies should continue to support results.”

“However, in Wealth Management, rising rates are already driving NII higher, supporting performance and net new assets remain healthy in Investment Management.”

“Looking ahead, while the second half of the year remains difficult to predict, we are focused on our underlying business drivers. Lower asset values will impact revenue in both Wealth and Investment Management.”

“Looking ahead to the second quarter, NII is now a more reasonable exit rate going forward. While the magnitude of rate hikes is not certain, if the forward curve is realized and our model assumptions materialize, we estimate $500 million of incremental NII to be spread over the upcoming two quarters weighted towards the fourth quarter.”

“The Investment Banking pipeline remains solid. Conversion to realize will largely be dependent on market conditions and corporate confidence.”

“Listen, we are clearly going to keep pushing capital distribution through buyback and dividend to shareholders.”

“Further, we saw our first rate hike in the year in the first quarter, and with our strong and growing deposit base, this will have a near immediate economic impact to our business and it supports our path to delivering the margins that we projected in excess of 30%.”

“So our money market guidance we gave you was about plus $200 million and we stand by plus $200 million, but I’d say, for the full year.”

“We talked about aiming towards 30% and we have made improvements from the 24% that we gave you at the end of the quarter.”

“By the end of this year, approximately 90% of U.S. stock participants will be in a position to access a companion account.”

“That’s not really the prediction. But the idea is there’s still more education that can be done and that’s why I think we feel comfortable that even though we might see rates rise. The actual amount that we gave you as guidance from a lending perspective should continue.”

“Beta for us is informed by the last rate hike cycle. So, we have given you historically and we stand by as sort of a 50 beta as an end state.”

“We continue to expect our full year tax rate will be in line with full year 2021.”

“Due to the further moves in rate expectations since January, we should see this benefit at least double if the forward curve and our modeled assumptions are realized over the remaining nine months of the year.”

“We have completed the net runoff in wholesale deposits and do not anticipate further declines in deposit costs.”

“We expect loan growth over the remainder of the year to be consistent with our prior guidance of approximately $5 billion per quarter.”

“These strong results should continue to be supported, as we realize the benefits of rising rates.”

“By the end of 2022, we expect to no longer separate our integration expenses.”

“Investment banking pipelines remain healthy across sectors and regions. However, the conversion from pipeline to realize will be largely dependent on market conditions going forward.”

“When we get the kick up from the forward curve, we get some of the rate increase in the next couple of years. We finished the integration expenses. You're going to see that number go up. No question about that.”

“the Firm will clearly benefit substantially as rates rise over the next several years.”

“we stick to the cost synergy guidance that we gave when we first announced the transaction.”

“We would expect the vast majority of the integration-related expenses to be pulled forward into 2022 with a slight residual in 2023 but most of that happening in 2022.”

“I don't think that's sustainable. I mean, God I'd love it, but I don't think it's sustainable, but we're not going back to 3%, 4%. I don't know if it's 5, 6, 7, somewhere in that zone. But it's going to be a very healthy growth rate.”

“I don't think 10% or 11% is realistic to hold. But certainly, we're not going back to anywhere near where we were in the old days.”

“In terms of our outlook for calendar year 2022, the exit rate of our Wealth and Investment Management asset base and the integrations of our acquisitions set these businesses up to further support results.”

“In the first half of this year, we will bring a number of Eaton Vance and Calvert funds onto our international distribution platform.”

“This year, NII will be impacted by the forward curve on lending growth.”

“The fourth quarter NII is a reasonable base to inform 2022.”

“As we look ahead to the first quarter of 2022, we expect the PBT margin to be more in line with the 2021 full year margin, excluding integration-related expenses.”

“Our outlook entering 2022 is strong, and our pipelines continue to be healthy across products.”

“Additionally, we expect another $200 million this year from the reversal of fee waivers in our Investment Management business.”

“we expect these areas will continue to drive growth into the future.”

“We now have over $500 billion of unvested assets in this channel and expect to retain an increasing proportion as they vest.”

“As it relates to institutional securities, while it remains difficult to forecast this business, the banking pipeline looks healthy and the year has started off well.”

“That would deliver another $1.3 billion, which largely goes to the bottom line.”

“we continue to think about meeting our companion accounts for example, which was 50% right now and 90% in the U.S. accounts by next year.”

“For the remainder of the year, we expect NII to build sequentially on the back of loan growth at a pace slightly below the third quarter.”

“Investment Banking pipelines remain healthy across sectors and regions. And activity is expected to continue on the back of current momentum.”