Sharon Yeshaya
Chief Financial Officer at Morgan Stanley
Thank you, and good morning. The firm produced revenues of $14.8 billion in the third quarter, once again representing one of the top three quarters of the last decade. Excluding integration-related expenses, our EPS was $2.04 and our ROTCE was 20.2%. Year-to-date revenues reached a record of $45.2 billion. Institutional Securities continues to power performance, with particular strength in Investment Banking and equities. Wealth Management and Investment Management each set year-to-date records. While investing for growth, our business model demonstrated operating leverage. The firms year-to-date efficiency ratio improved to 67%.
Now to the businesses. Institutional Securities delivered an extremely strong quarter with $7.5 billion in revenues. Year-to-date, the revenues of $23.2 billion were the strongest in over a decade. The integrated investment bank is working seamlessly to serve our clients and to gain share. Balanced revenue supported overall results. Advisory, in particular was a standout, with a record quarterly and year-to-date performance. Importantly, Institutional Securities is delivering remarkable operating leverage. The pre-tax margin, which was 38% year-to-date has significantly contributed to the firms strong efficiency ratio this year.
Investment Banking revenues were a record of $2.8 billion, increasing 67% from the prior year. Exceptional performance in advisory and continued strength in underwriting drove the quarter's results. The Americas and Europe led the year-over-year increase. Advisory revenues were a record $1.3 billion, reflecting increased completed M&A activity versus the prior year. Results were supported by greater sector diversification compared to last year.
Equity underwriting revenues were $1 billion, marking the fourth consecutive quarter at or above this level. The increase from the prior year was driven by strength across products. Fixed income underwriting revenues were $567 million. The year-over-year increase was driven by strength in non-investment grade loans, supported by the combination of the rate environment and elevated levels of event driven activity. Investment Banking pipelines remain healthy across sectors and regions and activity is expected to continue on the back of current momentum. Financial sponsors are deploying capital and corporate clients are looking for strategic opportunities as a source for growth.
Equity revenues were very strong, increasing 24% from the prior year to $2.9 billion. Our equities business remains a global leader. Results benefited from sustained client activity throughout the quarter. Revenues in Asia were particularly strong, underscoring the importance of our diversified global footprint. Cash and derivative revenues were both higher versus the prior year. Broad-based client engagement continued through the summer months.
Prime brokerage revenues increased versus last year on higher equity market levels. Fixed income revenues declined from the strong prior year to $1.6 billion, still the business delivered solid third quarter. Micro results remained above historical averages, but reflected lower revenues and securitized products and credit corporates compared to the prior year, which benefited from wider bid offer spreads. Macro also declined versus last year with lower revenues in both rates and foreign exchange. Commodities was strong and revenues improved versus the prior year as North America power and gas benefited from robust client activity.
Turning to Wealth Management. The prior quarter will be a more relevant benchmark as a comparison period given the acquisition of E TRADE. Revenues were $5.9 billion, down 3% from the prior quarter. However, excluding the impact of DCP, which declined by approximately $300 million, the revenues increased 2%. Integration-related costs were $113 million. Excluding integration-related expenses, PBT was $1.6 billion and the margin was 27.7%.
We realized a record of $135 billion of net new assets, which underscores the power of the asset gathering platform we have built. Net new assets in the quarter were strong and balanced, inclusive of assets from existing clients and new clients, stock for investing events and net recruiting. Year-to-date NNA exceeds $300 billion, representing a 10% annualized growth rate of beginning period assets.
In the quarter, we added $43 billion of predominantly retirement assets through an asset acquisition. These incremental assets are reflected in total client assets, fee-based assets, net new assets and fee-based flows. We are particularly excited about the approximately 600,000 participants associated with these retirement assets, who will now have access to educational content and analytical tools delivered through the financial wellness platform, deepening these relationships and ultimately converting workplace relationships, to advisor-led or self-directed clients based on their individual needs, it's at the core of our expansion strategy. The workplace channel serves as an asset acquisition funnel that will fuel our growth over time. We are excited by the momentum in the workplace. Year-to-date new stock plan participants have more than doubled. We have nearly $500 billion in our invested assets.
In the quarter, transactional revenues were $832 million. Excluding the impact of DCP, revenues declined 4%, in line with seasonal patterns. Self-directed daily average tradings were approximately 960,000 in the quarter, in line with the average level for the full year of 2020, while moderating from the exceptionally high activity seen earlier this year, client engagement remains high. DARTs this quarter were three times above E TRADE pre-acquisition record.
Asset Management revenues were $3.6 billion, up 5% sequentially. Year to date, these revenues increased 29% to a record $10.3 billion. The strength in fee-based flows supports our view, the clients first consolidate assets under our platform and then migrate these assets to advisory. Bank lending balances grew $7 billion sequentially to $121 billion and have grown 23% year to date. Growth in securities-based lending and mortgages drove the increase, reflecting strong client demand for new lines and increased household participation.
Net interest income was $1.3 billion. Prepayment amortization was negligible in the quarter, but it did impact the sequential move. Excluding for prepay for both quarters, NII was up 4%, benefiting from the incremental growth in lending balances and decreased deposit costs. For the remainder of the year, we expect NII to build sequentially on the back of loan growth at a pace slightly below the third quarter. The integration of E TRADE remains on track. Today, dual clients of E TRADE and Morgan Stanley can choose to provide their Morgan Stanley advisor with visibility into their E TRADE accounts. By year-end, clients will be able to link their self-directed accounts via single sign-on, building on our digital client experience.
Moving to Investment Management. The timing of the Eaton Vance acquisition makes the prior quarter a more relevant benchmark. Revenues were $1.5 billion, declining 15%. While asset management and related fees rose sequentially, the increase was offset by lower performance-based income and other revenue. Total AUM remains strong at $1.5 trillion. Net total net flows were $12.3 billion in the quarter, driven by liquidity and overlay services. Long-term flows reflected a single redemption of $7.5 billion in our solutions business by a large asset manager. The redemption was approximately half of the asset managers AUM with us, and we expect the remainder of the AUM to be redeemed in the first half of 2022, as the asset manager brings its equity trading implementation in-house. Excluding this idiosyncratic outflow, we saw a positive long-term net flows with continued demand for Parametric customized portfolios, private real estate and private credit, and sustainable strategies through both Calvert and MSIM funds.
Asset management and related fees were $1.5 billion, reflecting the high proportion of durable and recurring revenues in this business. Performance-based income and other revenues were a loss of $17 million in the quarter. Gains across the platform were offset by lower accrued carried interest in our Asian private equities business, primarily driven by a single underlying public investment in one of the fund. The broadening of our growing alternatives portfolio helped mitigate this overall impact. Finally, the integration with the Eaton Vance remains on pace. We continue to invest in secular growth areas, particularly sustainability, alternatives and customization for Wealth Management platforms and clients.
Turning to the balance sheet. Total spot assets increased to $1.2 trillion. Risk-weighted assets grew by approximately $11 billion, primarily driven by increased client activity in the quarter. We continue to deliver on our commitment to return capital to shareholders and are executing on our $12 billion buyback authorization, buying back $3.6 billion of stock in the quarter. Our standardized CET1 ratio now stands at 16%. As James mentioned, we intend to early adopt SA-CCR during the fourth quarter of this year after taking into consideration the potential benefits to certain capital metrics, such as the future SCB calculation. With our current portfolio, size and mix, the adoption would imply an estimated increase to our risk-weighted assets of approximately $35 billion to $45 billion. This would also imply a reduction to our CET1 ratio by approximately 120 basis points upon adoption.
We have commenced mitigation efforts, which should offset some of the impact to our CET1 ratio. We will continue to remain well capitalized post the adoption of SA-CCR. We continue to benefit from the diversification of our franchise. The firm is firing on all cylinders as we enter the end of the year on a strong footing. We are capturing share in Institutional Securities. Clients remain engaged and pipelines are healthy. We are excited by the momentum we see in Wealth Management's ability to attract and consolidate assets, and the benefits of the improved diversification in Investment Management. Importantly, we are meaningfully investing in technology across all of our businesses.
With that, we will now open the line up to questions.
