Morgan Stanley Q4 2024 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Glenn Schorr - Evercore ISI - Analyst : Appreciate it. I guess let's talk about trading. There's a lot of upside in trading. We've all seen great trading environments, and this certainly was a good one. But I wonder if you could just try to parse out what -- how you think about great trading environment versus what your words are just more durable, the higher client balances, the record PB, the share gains? And how are you going to measure the success of those durable gains? I'm just trying to separate your actions versus the environment. You certainly have been performing really well.

Question: Ebrahim Poonawala - Bank of America - Analyst : I guess maybe just -- I know this is -- you've addressed this in prior calls, but as we think about just investments in systems as it pertains to AML, BSA on the Wealth Management side, if you don't mind addressing where the firm stands there today in terms of sort of meeting all the higher standards from a regulatory compliance standpoint. And I think the essence of my question is, as we think about the growth opportunity in terms of international wealth, do you need to sort of get your ducks lined up on the AML, BSA front in order to pursue those more aggressively or actively?

Question: Ebrahim Poonawala - Bank of America - Analyst : Got it. And I guess separate question, slide 13 with regards to the investment into the bank. Just remind us in terms of the -- where we stand in terms of the integration of the bank and as we think about with some of your peers where the bank and the wealth businesses probably are fully integrated? Are we there yet? And then what's the opportunity when you think about just deposit growth from your wealth management clients that you can bring on board?

Question: Brennan Hawken - UBS - Analyst : Would love to follow-up on that -- some of that last discussion and talk about the loan growth. Because it seems like loan growth was -- the trends were better than certainly many were expecting last year. And it feels like given the expectation of capital markets reopening, improving risk appetites, we should continue to see that building momentum. Could you talk a little bit below the surface around what you're seeing on the loan side? You spoke to it at a really high level before, but I'd just love to drill down and hear what you're seeing more recently. And then where do you stand from a capability perspective? Do you guys need to continue to build that out? Or do you feel like you're fully ramped from a competitive perspective?

Question: Brennan Hawken - UBS - Analyst : That's interesting when thinking about utilizing the balance sheet. Thanks for that. I'm really sort of happy to ask this next question because of the focus on cash in the past year or so. And now I don't have to worry about drawing Sharon's eyre when I ask about this. It seems like we're likely to have a pivot around cash trends, we've got stability and even a little growth in the sweep. And when you think about prior easing cycles, what has how long has it taken before we see some of the recycling out of those yield-oriented cash equivalents like CDs and money funds, which tend to be thinner margin into more market-oriented products that are higher margin. How should we be thinking about that time line?

Question: Michael Mayo - Wells Fargo Securities - Analyst : (technical difficulty) You were pretty bulled up on the markets and some of that's playing out. But how much are your backlogs up or backlogs a record -- I'm not hearing record backlogs anymore. I hear up but not record, I'm just wondering how much you can monetize the backlogs that were in place, in some cases, I guess, one, two, or three years ago?

Question: Michael Mayo - Wells Fargo Securities - Analyst : So you said the best backlog in seven years, was that for mergers or all Investment Banking?

Question: Michael Mayo - Wells Fargo Securities - Analyst : Okay. So yes, that's -- I guess that would be a lagging driver to the whole Capital Markets team. And for you guys, when you think of a multiplier of --

Question: Steven Chubak - Wolfe Research, LLC - Analyst : So I wanted to ask on the 30% Wealth Management margin target. Just taking a step back, you're already running at 29% on a core basis. Sharon, you cited a number of headwinds in the coming year, whether it's just NII inflecting, AUM growth, capital markets fee tailwinds I'm just trying to understand what would preclude you from getting to that goal this year? And why isn't the longer-term aspiration something north of 30%, just given significant operating leverage in this model at scale?

Question: Steven Chubak - Wolfe Research, LLC - Analyst : It's great to hear. Just one quick follow-up, Sharon. You referenced the recently announced partnership with Carta and was hoping to double-click into some of the tangible financial benefits from leveraging that partnership just given the number of plan participants, it's been pretty stagnant over the last few quarters, but certainly feels as though this could be a potential accelerant maybe help reinvigorate growth within that channel.

Question: Chinedu Bolu - Autonomous Research - Analyst : Ted and Sharon. Maybe on Wealth Management organic growth, first of all, so if I look at flows over the last three years, total flows have been so much short of that sort of $1 trillion target and have been at the lower end of your 5% to 7% organic growth target. So maybe just talk through how you think about the ability to accelerate organic growth going forward? And then maybe confidence level in that $1 trillion target.

Question: Chinedu Bolu - Autonomous Research - Analyst : Very fair. Maybe another quick one here on just a comp leverage, very strong expenses, especially in ISG comp. And I'm sorry if I missed this in the prepared remarks but is the 2024 full year ISG comp ratio of 31% kind of a good place to run going forward, obviously, as [human] revenue continues to grow?

Question: Devin Ryan - Citizens JMP - Analyst : I just have one on investment management. Slide 12, you lay out, Parametric's been a great success story in the alternative bucket. Investment management overall, it's still less than 10% of firm-wide revenue. And I know the alts bucket specifically is an area of focus. But I'm curious, areas like private equity, private credit, there's a lot of secular growth there. I know you've had ambitions to grow private credit. But how do you think about that becoming a larger strategic piece of Morgan Stanley? And what's the appetite there to maybe do acquisitions to step function or accelerate that?

Question: Daniel Fannon - Jefferies & Company Inc. - Analyst : One more question just on wealth. Can you talk about adviser retention and the kind of recruitment and backlogs here? And then you used to talk about the companion accounts within wealth and workplace. So curious if there's any update on where that sits and some of the progress you're seeing within that initiative. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 16, 2025 / 1:30PM, MS.N - Q4 2024 Morgan Stanley Earnings Call

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Many of us share your optimism on the outlook for Morgan Stanley in the business. Can you share with us the risk -- aside from the obvious geopolitical risk globally, what risks or curve balls are you guys trying to keep your eyes on for this year because, again, things do look very good for yourselves and others. But what are some of the risks you guys talk about on a regular basis.