Morgan Stanley (MS) is expected to reward shareholders with share repurchases and increased dividends, given its strong excess capital position, RBC Capital Markets said in a note emailed Monday.

The brokerage also added that the capital position could result in the company returning up to 100% of its earnings, after a strong Q2.

RBC said Q2 results were driven on the back of growth engines including Institutional Securities, Wealth Management and Investment Management.

Morgan Stanley reported net revenue of $21.35 billion, up 27% from a year earlier and EPS of $3.46, up 62% from a year earlier, which was also above RBC's estimate of $3.20.

RBC maintained its sector perform rating and increased the price target to $243 from $207.

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