A：Morgan Stanley's third quarter financial highlights included record revenues of $18.2 billion, earnings per share (EPS) of $2.80, robust returns on tangible common equity of 23.5%, and adding $81 billion in net new assets with $42 billion in fee-based flows.

A：Morgan Stanley is well positioned in each of its businesses, consistently executing and demonstrating growth, with total client assets up $1.6 trillion over the last year and reaching $8.9 trillion. The firm's scale and client reach drove performance with reported margins at 30%, and it added $81 billion in net new assets and $42 billion in fee-based flows in the quarter.

A：The standout results for the Institutional Securities business included revenues of $8.5 billion, demonstrating powerful operating leverage with the Americas leading year-over-year growth. The business continued to see attractive returns from investing across integrated investment banking themes and emerging technologies.

A：Morgan Stanley's Investment Banking division saw meaningful improvement with increased capital markets activity leading to revenues of $2.1 billion, one of the strongest quarters in recent years. Investment banking revenues were driven by broad-based strength with underwriting results up over 50%, and advisory revenues increased year over year.

A：The increase in Fixed Income underwriting revenues to $772 million was driven by higher non-investment grade and investment grade loan issuance, along with M&A market signs of recovery and event lending commitments that met receptive markets.

A：Morgan Stanley's Equations franchise generated $4.1 billion in revenue, propelled by broad-based performance across products and regions, driven by prime brokerage revenues and increases in client assets and financing revenues.

A：Wealth Management grew with sustained momentum, recording $8 trillion in total client assets and $8 billion in record revenues. Operating leverage drove margins to 30%, and the business continued to demonstrate strength with robust net new assets and fee-based flows, bolstered by investments in its platform and partnerships.

A：The growth in NII was driven by the impact of the market environment and the cumulative loan growth.

A：Investment management is performing well with momentum for secular demand in parametric solutions and expanding the firm's global reach and fixed income capabilities.

A：Revenues of $1.7 billion increased 13% compared to the prior year, driven by higher asset management and related fees from higher average AUM, supported by performance-based income and other revenues.

A：The quarterly tax rate was 23.6%, excluding $50 million of net discrete tax benefits, and it is expected that the fourth quarter tax rate will be approximately 24%.

A：The firm views the investment banking environment as very interesting due to the flywheel effect taking hold across industry groups and regions, a favorable regulatory backdrop, and the need for cost-effective endogenous AI. The firm is optimistic, with a strong pipeline and a focus on strategic competition, although there could be geopolitical pauses.

A：Recent developments in investment banking include a strong equity and debt underwriting performance, advisory business picking up, and an overall optimistic outlook despite global uncertainties.

A：NNA growth within the wealth channel was driven by contributions from the workplace and the IPO market. The workplace channel is bringing in assets not just into brokerage but also into fee-based flows. The firm is seeing momentum in assets being moved directly into advisors' accounts, contributing to net new assets and fee-based flows, and is exceeding expectations with workplace migration.

A：While the reported pretax margin was 30.3%, which was an output, the focus remains on investment dollars to drive P&L growth. It remains to be seen if continued operating leverage will result in a number higher than the current one, but the investment in the wealth business to broaden and deepen the funnel is ongoing.

A：The company perceives AI not just as a tool for efficiency but also for productivity, with uses across the revenue and expense lines. It is applying AI in various areas such as lead IQ, data analysis, and financial advisory, among others. History has shown that these types of technological advances can lead to revenue growth, but the company is cautious about AI-specific risks and the current cycle position.

A：The private market space is significant for the wealth management business because it represents an aggregate client asset size of about $250 billion. The journey towards growth in this space will involve an education process and reweighting or rebasing individuals' portfolios, which is expected to take time.

A：The consistent pattern of share gains in the equity business is driven by investments in the platform, people, and global regions. Additionally, the business has experienced durable share-based gains, particularly through increases in prime brokerage and technology investments that have benefitted both derivative and cash-based businesses.

A：The relationship with Carter has expanded from a referral-based model to include the provision of advice-based services throughout the journey of private companies moving from a private to a public state. This has been beneficial for solidifying work in wealth management, including for founders and family offices, and has helped deepen relationships with private companies.

A：The wealth management business has grown by explaining the value of advice to a broader client base and through the addition of services for the entire journey of private companies. This includes the new partnership with Carter, which is expected to add more substantial depth to the base of the business, especially in the context of robust capital markets activity.

A：The potential of parametric growth includes expanding its use within the wealth channel and with third-party asset managers. Parametric has been gaining market share through tax harvesting and has seen growth through partnerships with retail distribution channels. This partnership with third-party asset managers is seen as an opportunity to grow parametric further, although these inflows can be lumpy and are not expected in every quarter.

A：The company continues to prioritize the dividend, which is dollar-share sacrosanct, and to manage buybacks as an opportunistic tactical lever. While the company has over $300 billion in excess capital, it prefers to deploy capital internally within the business and integrated firm, focusing on adjacent and orthogonal investments that align with its strategy. These investments are aimed at scaling with key clients, building product capabilities, and investing in technologies for efficiency and effectiveness. Specific examples include investments in the markets business, investment banking, and internal investments like Etrade Pro.

A：The firm uses several criteria to evaluate potential inorganic growth opportunities, such as strategy, culture, timing, and price. They have been well-trained in these aspects due to the experience of Mr. Gorman and have successfully integrated multiple companies in the past. However, they are cautious and avoid making acquisitions just for the sake of it.

A：Being a private company has been advantageous due to the democratization of the private channel and the ability for companies to stay private longer. This has been particularly beneficial for firms to sustain capital structures without the immediate pressure to go public. The private status has also been helpful for sponsors as they can continue to grow their businesses without the need to seek public market funds.

A：The firm anticipates that changes in the regulatory framework, which could lead to earlier and easier public listing opportunities, will attract strategic investors and may result in a more robust IPO market. This, in turn, could create a conducive environment for large cap M&A across various industries, given that strategic buyers and sellers will be more inclined to engage in cross-border deals due to more predictable regulatory outcomes.

A：The firm expects to maintain or grow its net interest income despite short-term rates lowering due to the natural hedges in the model such as margin balances, SEC lending, pledge assets, stabilization, and brokerage suite balances. Moreover, the firm anticipates growth from higher lending balances, especially from new client participation and increasing demand from the bank itself.

A：The firm manages its balance sheet by offsetting the impact of changing interest rates with various financial instruments and strategies, such as an increase in lending balances. They also rely on behavior-based adjustments that naturally occur when interest rates fluctuate, which can provide upside potential for net interest income.

A：The increase in brokerage balances is driven by market rises and a more transactional level of activity that is influenced by what's happening in the marketplace at a given time.

A：The growth strategy for the derivatives business involves running it as a barbell with a best-in-class and traditional product, alongside high touch, research-driven sales that are embedded with asset managers to capitalize on market dispersion.

A：Challenges in the current market environment include geopolitical uncertainty, uncertainty around how the economy manifests in terms of Fed policy and fiscal response, and the democratization of private capital class leading to liquidity issues.

A：The speaker indicates that while there is pent-up supply and product flow, creating potential category killers, there's also geopolitical uncertainty and a challenging market environment. Investment banks with large global enterprises and world-class corporate finance bankers are positioned to succeed in the current cycle, providing full support for global ideas and risk management.

A：The outlook for investment banking and capital markets over the next three to five years is positive, with opportunities despite geopolitical uncertainty potentially impacting risk off or asset prices. Investment banks will face a test on which companies and ideas win in this environment.

A：There is a staffing and resourcing tension as investment banks tend to be pro-cyclical, meaning they may over-hire. The challenge is to balance an installed base of experienced bankers with the need not to over-staff during market downturns.

A：One should think about the management buffer in the context of regulatory uncertainty and the need for predictability. Over time, as there is more certainty, the sides of the buffer should prudently lower. A comfortable level to work from is suggested to be above 250 plus.

A：The speaker expresses optimism about sustaining the current level of profitability in institutional securities over time, given the businesses are performing well and the markets are also doing extremely well.

A：The performance of the investment banking and markets businesses is closely related to economic growth. During periods of economic volatility or concerns of a recession, these businesses generally perform less well. Conversely, when there is a reacceleration of growth, they tend to perform better. There is a need to manage through different economic conditions while maintaining durability and essential partnership with clients.