Highlights From Morgan Stanley (MS) Q2 Conference Call, Revenue up 22%

Morgan Stanley (NYSE: MS) reported Q2 EPS of ($0.38), $0.24 better than the analyst estimate of ($0.62). Revenue for the quarter came in at $9.28 billion versus the consensus estimate of $8.08 billion.

Highlights from Morgan Stanley's second quarter conference call:

• Results also reflected gains in mono lines in the quarter versus losses in the first quarter of 2011.
• Noninterest expenses were $7.3 billion, up from $6.8 billion last quarter.
• Firmwide compensation ratio was 52% in the second quarter, versus 51% in the first quarter excluding the impact of DVA and the MUMSSS loss last quarter.
• Non-compensation expenses were $2.7 billion, up 10% from last quarter.
• Results also reflected gains in mono lines in the quarter versus losses in the first quarter of 2011. Our noninterest expenses were $7.3 billion, up from $6.8 billion last quarter. The firmwide compensation ratio was 50%, compared to 57% in the first quarter, though excluding the impact of DVA and the MUMSSS loss last quarter, the ratio was 52% in the second quarter, versus 51% in the first quarter.
  
• MUFG now owns 22% of MS shares outstanding.
• Institutional Securities, revenues of $5.2 billion were up 44% from last quarter.
• Advisory revenues of $533 million were up 38% sequentially, driven by a significant increase in America's revenues.
• Prime brokerage revenues were up significantly sequentially and double-digit year over year while client balances continue to grow modestly.
• Growth in their electronic trading businesses continued to outpace the market.
• Fixed income and commodities sales and trading revenues of $2.1 billion included positive DVA of 192 million.
• Rates revenues for the first half of 2011 were higher than the same period last year.
• Total client assets remain strong at over $1.7 trillion. Net fee-based asset flows were $9.7 million, driving fee based assets under management to a record $high 509 billion at quarter end, up 29% year over year.
• The number of FAs was 17,638, down just over 160 sequentially, in line with our prior comments on FA head count.
• Bank deposits were $110 billion, of which $56 billion are held by Morgan Stanley Bank.
• In Real Estate Investing, revenues of $175 million
• Over the next several months, expect some relief in the markets due to policy makers in Europe and the US avoiding the precipice.
  
• The net funded exposure, Greece, Ireland, Portugal and Spain is about 2 billion.
• Tier 1 common would be around 6 and a half to 7% under Basel III at the end of the second quarter.
• The company is comfortable with its RWA inflation and mitigation estimate of about $480 billion risk weighted assets by year end 2012.
• Integration spend has been running at about 80 to 100 a quarter.
  

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