How Morgan Stanley (MS) Makes Its Money
Morgan Stanley shares a name with JPMorgan Chase & (JPM) and this is no coincidence. Morgan Stanley's "Morgan" is the nephew of J.P. Morgan, Henry.The company was founded in 1935 by Henry S. Morgan, Harold Stanley and others.
Morgan Stanley started out as an investment bank, but today it's much more. With offices in 42 countries, Morgan Stanley is a well-known and respected global financial services firm offering a wide range of investment banking, securities, wealth management and asset management services. Clients include corporations, governments, institutions and individuals.
In fact, Morgan Stanley's primary revenue segments are institutional securities, wealth management, and investment management. In addition, Morgan Stanley's commercial bank competes with companies such as Wells Fargo & What. (WFC), US Bancorp (USB) and other outlets.
In fiscal 2022, the company reported net sales of $53.7 billion.That's a 10.2% increase from revenue of $59.8 billion a year ago. In addition, the company repurchased $9.9 billion of common stock.Morgan Stanley's board of directors announced a quarterly dividend of $0.775 per share, payable on February 15, 2023, the same period last year.In addition, the company reported net income of $3.0 billion for the period, compared to $3.7 billion for the same period last year.
Institutional Securities
Institutional securities are generally Morgan Stanley's primary source of income. In the busy 2022 fiscal year, the company reported net sales of $24.4 billion.Institutional titles#039; Clients include corporations, governments, financial institutions, and high net worth and ultra high net worth clients. This division provides services such as investment banking, sales and trading, corporate lending, and more.
In the institutional securities space, Morgan Stanley's investment banking division makes money by charging fees for advisory services such as underwriting and mergers and acquisitions. In 2022, investment banking revenues fell 49% year over year to about $5.24 billion. Consulting revenues totaled $2.94 billion.The share subscription totaled $851 million. Pension insurance totaled $1.43 billion.
Worldwide, Morgan Stanley is a consistent leader in mergers and acquisitions and initial public offerings (IPOs). The guarantees include securities issues and syndicated loans.With respect to sales and trading, Morgan Stanley makes a profit by acting as a market maker in its clients' purchases and sales of financial instruments.
Wealth Management
Morgan Stanley's Wealth Management segment provides a range of financial services and solutions for individual investors and small and medium-sized businesses/institutions. It includes more than 16,000 business people. From the latest annual report available, Morgan Stanley advises approximately 3.5 million people and holds over $3.9 trillion in assets from advisor-focused clients.For its wealth management clients, Morgan Stanley offers products and services in brokerage and investment advice, retirement planning, financial services and estate planning, etc.
Morgan Stanley makes money by paying clients by debiting a contractual percentage of their assets tied to accounts that are generally non-asset class dependent.
In 2022, Wealth Management reported net sales of $24.4 billion (+1% YoY) with a pre-tax margin of 27% in 2022, or 28.4% after integration costs.Additionally, the segment grew $311 billion in net new money, up 6% year-to-date
Investment Management
Investment Management, Morgan Stanley's smallest division, works primarily with institutional investors. These include donations, government agencies, sovereign wealth funds, and insurance companies.
In 2022, Investment Management's net income was $5.4 billion, down 14% year-on-year. The company has on record $1 in assets under management.3 trillion.”
The net income of the Investment Management segment comes from two areas: investing and wealth management. Performance-based revenue (capital expenditures) was $43 million in a challenging 2022 compared to $644 million.
Wealth management revenue was $5.3 billion, down from $5 billion.57 billion in 2021 and is attributed to declining assets and the ongoing decline in the market.
Net worth is generally understood to mean the market capitalization of a company. According to this report, Morgan Stanley had a net worth of around $140.90 billion as of May 2023.
Morgan Stanley reportedly plans to cut 3,000 employees in the second quarter of 2023. This would be in addition to the 2% headcount reduction that took place in December 2022.
In 2022, Investment Management's net income was $5.4 billion, down 14% year-on-year. The company has on record $1 in assets under management.3 trillion.”
The net income of the Investment Management segment comes from two areas: investing and wealth management. Performance-based revenue (capital expenditures) was $43 million in a challenging 2022 compared to $644 million.
Wealth management revenue was $5.3 billion, down from $5 billion.57 billion in 2021 and is attributed to declining assets and the ongoing decline in the market.
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