Morgan Stanley Reports Third Quarter 2014:

• Net Revenues of $8.9 Billion and Earnings per Diluted Share from Continuing Operations of $0.84
• Excluding DVA, Net Revenues were $8.7 Billion and Earnings per Diluted Share from Continuing Operations of $0.77
• Strong Performance in Wealth Management with Pre-Tax Margin of 22%; Record Revenue per Financial Advisor
• Investment Banking Ranked #1 in Global IPOs and #2 in Global Announced M&A; Continued Strength in Equity Sales & Trading

NEW YORK, October 17, 2014 – Morgan Stanley (NYSE: MS) today reported net revenues of $8.9 billion for the third quarter ended September 30, 2014 compared with $8.0 billion a year ago. For the current quarter, income from continuing operations applicable to Morgan Stanley was $1.7 billion, or $0.84 per diluted share, compared with income of $889 million, or $0.44 per diluted share, for the same period a year ago. The current quarter included a net discrete tax benefit of $237 million or $0.12 per diluted share.

Results for the current quarter included positive revenues related to the change in the fair value of certain of the Firm’s long-term and short-term borrowings resulting from the fluctuation in the Firm’s credit spreads and other credit factors (Debt Valuation Adjustment, DVA) of $215 million, compared with negative revenues of $171 million a year ago.

Excluding DVA, net revenues for the current quarter were $8.7 billion compared with $8.1 billion a year ago. Income from continuing operations applicable to Morgan Stanley was $1.6 billion, or $0.77 per diluted share, compared with income of $1.0 billion, or $0.50 per diluted share, a year ago.

Compensation expense of $4.2 billion increased from $4.0 billion a year ago primarily driven by higher revenues. Non-compensation expenses of $2.4 billion decreased from $2.6 billion a year ago primarily reflecting lower
litigation costs.

For the current quarter, net income applicable to Morgan Stanley, including discontinued operations, was $1.7 billion or $0.84 per diluted share, compared with net income of $906 million or $0.45 per diluted share in the third quarter of 2013.

Business Overview

• Institutional Securities net revenues excluding DVA were $4.3 billion reflecting continued strength in Investment Banking and Equity sales and trading and improved results in Fixed Income and Commodities sales and trading.
• Wealth Management net revenues were $3.8 billion and pre-tax margin was 22%. Fee based asset flows for the quarter were $6.5 billion, with total client assets above $2.0 trillion at quarter end.
• Investment Management reported net revenues of $655 million with assets under management or supervision of $398 billion.

James P. Gorman, Chairman and Chief Executive Officer, said, “Morgan Stanley has delivered another quarter of earnings growth and strong performance based on consistent execution for our clients. We are well positioned to create superior returns for our shareholders, particularly as the U.S. economy continues to strengthen.”

Click here for the complete press release PDF.