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| Quarterly Financial Supplement |
Page |
|
Consolidated Financial Summary
|
1
|
|
Consolidated Financial Metrics, Ratios and Statistical Data
|
2
|
|
Consolidated and U.S. Bank Supplemental Financial Information
|
3
|
|
Consolidated Average Common Equity and Regulatory Capital Information
|
4
|
|
Institutional Securities Income Statement Information, Financial Metrics and Ratios
|
5
|
|
Wealth Management Income Statement Information, Financial Metrics and Ratios
|
6
|
|
Wealth Management Financial Information and Statistical Data
|
7
|
|
Investment Management Income Statement Information, Financial Metrics and Ratios
|
8
|
|
Investment Management Financial Information and Statistical Data
|
9
|
|
Consolidated Loans and Lending Commitments
|
10
|
|
Consolidated Loans and Lending Commitments Allowance for Credit Losses
|
11
|
|
Definition of U.S. GAAP to Non-GAAP Measures
|
12
|
|
Definitions of Performance Metrics and Terms
|
13 - 14
|
|
Supplemental Quantitative Details and Calculations
|
15 - 16
|
|
Legal Notice
|
17
|
|
The Firm's earnings results reflect the effect of the acquisition of Eaton Vance Corp. (“Eaton Vance”)
prospectively from the March 1, 2021 acquisition date. The comparisons of current year results to certain prior periods are impacted by the acquisition of Eaton Vance reported in the Investment Management segment.
|
|
|
Consolidated Financial Summary
|
||||||||||||||||||||||||||||||||
|
(unaudited, dollars in millions)
|
||||||||||||||||||||||||||||||||
|
Quarter Ended
|
Percentage Change From:
|
Nine Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
|
Sep 30, 2022
|
Jun 30, 2022
|
Sep 30, 2021
|
Jun 30, 2022
|
Sep 30, 2021
|
Sep 30, 2022
|
Sep 30, 2021
|
Change
|
|||||||||||||||||||||||||
|
Net revenues
|
||||||||||||||||||||||||||||||||
|
Institutional Securities
|
$
|
5,817
|
$
|
6,119
|
$
|
7,495
|
(5
|
%)
|
(22
|
%)
|
$
|
19,593
|
$
|
23,164
|
(15
|
%)
|
||||||||||||||||
|
Wealth Management
|
6,120
|
5,736
|
5,935
|
7
|
%
|
3
|
%
|
17,791
|
17,989
|
(1
|
%)
|
|||||||||||||||||||||
|
Investment Management
|
1,168
|
1,411
|
1,453
|
(17
|
%)
|
(20
|
%)
|
3,914
|
4,469
|
(12
|
%)
|
|||||||||||||||||||||
|
Intersegment Eliminations
|
(119
|
)
|
(134
|
)
|
(130
|
)
|
11
|
%
|
8
|
%
|
(379
|
)
|
(391
|
)
|
3
|
%
|
||||||||||||||||
|
Net revenues
|
$
|
12,986
|
$
|
13,132
|
$
|
14,753
|
(1
|
%)
|
(12
|
%)
|
$
|
40,919
|
$
|
45,231
|
(10
|
%)
|
||||||||||||||||
|
Provision for credit losses
|
$
|
35
|
$
|
101
|
$
|
24
|
(65
|
%)
|
46
|
%
|
$
|
193
|
$
|
(1
|
)
|
*
|
||||||||||||||||
|
Non-interest expenses
|
||||||||||||||||||||||||||||||||
|
Institutional Securities
|
$
|
4,167
|
$
|
4,483
|
$
|
4,498
|
(7
|
%)
|
(7
|
%)
|
$
|
13,476
|
$
|
14,321
|
(6
|
%)
|
||||||||||||||||
|
Wealth Management
|
4,460
|
4,196
|
4,405
|
6
|
%
|
1
|
%
|
13,005
|
13,225
|
(2
|
%)
|
|||||||||||||||||||||
|
Investment Management
|
1,052
|
1,162
|
1,083
|
(9
|
%)
|
(3
|
%)
|
3,321
|
3,299
|
1
|
%
|
|||||||||||||||||||||
|
Intersegment Eliminations
|
(116
|
)
|
(129
|
)
|
(131
|
)
|
10
|
%
|
11
|
%
|
(371
|
)
|
(397
|
)
|
7
|
%
|
||||||||||||||||
|
Non-interest expenses (1)
|
$
|
9,563
|
$
|
9,712
|
$
|
9,855
|
(2
|
%)
|
(3
|
%)
|
$
|
29,431
|
$
|
30,448
|
(3
|
%)
|
||||||||||||||||
|
Income before provision for income taxes
|
||||||||||||||||||||||||||||||||
|
Institutional Securities
|
$
|
1,626
|
$
|
1,554
|
$
|
2,973
|
5
|
%
|
(45
|
%)
|
$
|
5,967
|
$
|
8,842
|
(33
|
%)
|
||||||||||||||||
|
Wealth Management
|
1,649
|
1,521
|
1,530
|
8
|
%
|
8
|
%
|
4,743
|
4,766
|
--
|
||||||||||||||||||||||
|
Investment Management
|
116
|
249
|
370
|
(53
|
%)
|
(69
|
%)
|
593
|
1,170
|
(49
|
%)
|
|||||||||||||||||||||
|
Intersegment Eliminations
|
(3
|
)
|
(5
|
)
|
1
|
40
|
%
|
*
|
(8
|
)
|
6
|
*
|
||||||||||||||||||||
|
Income before provision for income taxes
|
$
|
3,388
|
$
|
3,319
|
$
|
4,874
|
2
|
%
|
(30
|
%)
|
$
|
11,295
|
$
|
14,784
|
(24
|
%)
|
||||||||||||||||
|
Net Income applicable to Morgan Stanley
|
||||||||||||||||||||||||||||||||
|
Institutional Securities
|
$
|
1,274
|
$
|
1,121
|
$
|
2,229
|
14
|
%
|
(43
|
%)
|
$
|
4,586
|
$
|
6,734
|
(32
|
%)
|
||||||||||||||||
|
Wealth Management
|
1,253
|
1,190
|
1,157
|
5
|
%
|
8
|
%
|
3,715
|
3,663
|
1
|
%
|
|||||||||||||||||||||
|
Investment Management
|
107
|
188
|
320
|
(43
|
%)
|
(67
|
%)
|
498
|
936
|
(47
|
%)
|
|||||||||||||||||||||
|
Intersegment Eliminations
|
(2
|
)
|
(4
|
)
|
1
|
50
|
%
|
*
|
(6
|
)
|
5
|
*
|
||||||||||||||||||||
|
Net Income applicable to Morgan Stanley
|
$
|
2,632
|
$
|
2,495
|
$
|
3,707
|
5
|
%
|
(29
|
%)
|
$
|
8,793
|
$
|
11,338
|
(22
|
%)
|
||||||||||||||||
|
Earnings applicable to Morgan Stanley common shareholders
|
$
|
2,494
|
$
|
2,391
|
$
|
3,584
|
4
|
%
|
(30
|
%)
|
$
|
8,427
|
$
|
10,974
|
(23
|
%)
|
||||||||||||||||
|
Consolidated Financial Metrics, Ratios and Statistical Data
|
||||||||||||||||||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||||||||||||||
|
Quarter Ended
|
Percentage Change From:
|
Nine Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
|
Sep 30, 2022
|
Jun 30, 2022
|
Sep 30, 2021
|
Jun 30, 2022
|
Sep 30, 2021
|
Sep 30, 2022
|
Sep 30, 2021
|
Change
|
|||||||||||||||||||||||||
|
Financial Metrics:
|
||||||||||||||||||||||||||||||||
|
Earnings per basic share
|
$
|
1.49
|
$
|
1.40
|
$
|
2.01
|
6
|
%
|
(26
|
%)
|
$
|
4.95
|
$
|
6.11
|
(19
|
%)
|
||||||||||||||||
|
Earnings per diluted share
|
$
|
1.47
|
$
|
1.39
|
$
|
1.98
|
6
|
%
|
(26
|
%)
|
$
|
4.88
|
$
|
6.02
|
(19
|
%)
|
||||||||||||||||
|
Return on average common equity
|
10.7
|
%
|
10.1
|
%
|
14.5
|
%
|
11.9
|
%
|
15.1
|
%
|
||||||||||||||||||||||
|
Return on average tangible common equity
|
14.6
|
%
|
13.8
|
%
|
19.6
|
%
|
16.1
|
%
|
19.7
|
%
|
||||||||||||||||||||||
|
Book value per common share
|
$
|
54.46
|
$
|
54.46
|
$
|
54.56
|
$
|
54.46
|
$
|
54.56
|
||||||||||||||||||||||
|
Tangible book value per common share
|
$
|
39.93
|
$
|
40.07
|
$
|
40.47
|
$
|
39.93
|
$
|
40.47
|
||||||||||||||||||||||
|
Excluding integration-related expenses (1)
|
||||||||||||||||||||||||||||||||
|
Adjusted earnings per diluted share
|
$
|
1.53
|
$
|
1.44
|
$
|
2.04
|
6
|
%
|
(25
|
%)
|
$
|
5.04
|
$
|
6.15
|
(18
|
%)
|
||||||||||||||||
|
Adjusted return on average common equity
|
11.1
|
%
|
10.5
|
%
|
15.0
|
%
|
12.2
|
%
|
15.4
|
%
|
||||||||||||||||||||||
|
Adjusted return on average tangible common equity
|
15.2
|
%
|
14.3
|
%
|
20.2
|
%
|
16.6
|
%
|
20.2
|
%
|
||||||||||||||||||||||
|
Financial Ratios:
|
||||||||||||||||||||||||||||||||
|
Pre-tax profit margin
|
26
|
%
|
25
|
%
|
33
|
%
|
28
|
%
|
33
|
%
|
||||||||||||||||||||||
|
Compensation and benefits as a % of net revenues
|
43
|
%
|
42
|
%
|
40
|
%
|
43
|
%
|
42
|
%
|
||||||||||||||||||||||
|
Non-compensation expenses as a % of net revenues
|
30
|
%
|
32
|
%
|
27
|
%
|
29
|
%
|
25
|
%
|
||||||||||||||||||||||
|
Firm expense efficiency ratio
|
74
|
%
|
74
|
%
|
67
|
%
|
72
|
%
|
67
|
%
|
||||||||||||||||||||||
|
Firm expense efficiency ratio excluding integration-related expenses (1)
|
73
|
%
|
73
|
%
|
66
|
%
|
71
|
%
|
67
|
%
|
||||||||||||||||||||||
|
Effective tax rate
|
21.4
|
%
|
23.6
|
%
|
23.6
|
%
|
21.1
|
%
|
22.9
|
%
|
||||||||||||||||||||||
|
Statistical Data:
|
||||||||||||||||||||||||||||||||
|
Period end common shares outstanding (millions)
|
1,694
|
1,723
|
1,799
|
(2
|
%)
|
(6
|
%)
|
|||||||||||||||||||||||||
|
Average common shares outstanding (millions)
|
||||||||||||||||||||||||||||||||
|
Basic
|
1,674
|
1,704
|
1,781
|
(2
|
%)
|
(6
|
%)
|
1,704
|
1,797
|
(5
|
%)
|
|||||||||||||||||||||
|
Diluted
|
1,697
|
1,723
|
1,812
|
(2
|
%)
|
(6
|
%)
|
1,725
|
1,824
|
(5
|
%)
|
|||||||||||||||||||||
|
Worldwide employees
|
81,567
|
78,386
|
73,620
|
4
|
%
|
11
|
%
|
|||||||||||||||||||||||||
|
Notes:
|
|
|
‐
|
For the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021, Firm results include pre-tax integration-related expenses of $123 million, $120 million and $145 million ($94 million, $92 million and $111 million after-tax) respectively, reported in the Wealth Management and Investment Management business segments. The nine months ended September 30, 2022 and 2021 results include pre-tax integration-related expenses of $350 million and $310 million ($268 million and $238 million after-tax), respectively. |
| - |
The End Notes are an integral part of this presentation. See pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice. |
|
Consolidated and U.S. Bank Supplemental Financial Information
|
||||||||||||||||||||||||||||||||
|
(unaudited, dollars in millions)
|
||||||||||||||||||||||||||||||||
| Quarter Ended |
Percentage Change From: |
Nine Months Ended | Percentage | |||||||||||||||||||||||||||||
|
Sep 30, 2022
|
Jun 30, 2022
|
Sep 30, 2021
|
Jun 30, 2022
|
Sep 30, 2021
|
Sep 30, 2022
|
Sep 30, 2021
|
Change
|
|||||||||||||||||||||||||
|
Consolidated Balance sheet
|
||||||||||||||||||||||||||||||||
|
Total assets
|
$
|
1,160,029
|
$
|
1,173,776
|
$
|
1,190,476
|
(1
|
%)
|
(3
|
%)
|
||||||||||||||||||||||
|
Loans (1)
|
$
|
218,448
|
$
|
214,573
|
$
|
188,274
|
2
|
%
|
16
|
%
|
||||||||||||||||||||||
|
Deposits
|
$
|
338,123
|
$
|
347,148
|
$
|
329,041
|
(3
|
%)
|
3
|
%
|
||||||||||||||||||||||
|
Long-term debt outstanding
|
$
|
216,361
|
$
|
221,979
|
$
|
224,937
|
(3
|
%)
|
(4
|
%)
|
||||||||||||||||||||||
|
Maturities of long-term debt outstanding (next 12 months)
|
$
|
18,755
|
$
|
19,737
|
$
|
13,899
|
(5
|
%)
|
35
|
%
|
||||||||||||||||||||||
|
Average liquidity resources
|
$
|
308,001
|
$
|
306,370
|
$
|
358,310
|
1
|
%
|
(14
|
%)
|
||||||||||||||||||||||
|
Common equity
|
$
|
92,261
|
$
|
93,846
|
$
|
98,153
|
(2
|
%)
|
(6
|
%)
|
||||||||||||||||||||||
|
Less: Goodwill and intangible assets
|
(24,613
|
)
|
(24,803
|
)
|
(25,345
|
)
|
(1
|
%)
|
(3
|
%)
|
||||||||||||||||||||||
|
Tangible common equity
|
$
|
67,648
|
$
|
69,043
|
$
|
72,808
|
(2
|
%)
|
(7
|
%)
|
||||||||||||||||||||||
|
Preferred equity
|
$
|
8,750
|
$
|
7,750
|
$
|
7,750
|
13
|
%
|
13
|
%
|
||||||||||||||||||||||
|
U.S. Bank Supplemental Financial Information
|
||||||||||||||||||||||||||||||||
|
Total assets
|
$
|
371,165
|
$
|
377,724
|
$
|
367,111
|
(2
|
%)
|
1
|
%
|
||||||||||||||||||||||
|
Loans
|
$
|
204,889
|
$
|
201,853
|
$
|
174,552
|
2
|
%
|
17
|
%
|
||||||||||||||||||||||
|
Investment securities portfolio (2)
|
$
|
123,007
|
$
|
125,785
|
$
|
144,056
|
(2
|
%)
|
(15
|
%)
|
||||||||||||||||||||||
|
Deposits
|
$
|
331,943
|
$
|
339,575
|
$
|
326,941
|
(2
|
%)
|
2
|
%
|
||||||||||||||||||||||
|
Regional revenues
|
||||||||||||||||||||||||||||||||
|
Americas
|
$
|
10,094
|
$
|
9,662
|
$
|
11,255
|
4
|
%
|
(10
|
%)
|
$ |
30,220
|
$ |
33,331
|
(9
|
%) | ||||||||||||||||
|
EMEA (Europe, Middle East, Africa)
|
1,392
|
1,678
|
1,752
|
(17
|
%)
|
(21
|
%)
|
5,381
|
6,004
|
(10
|
%) |
|||||||||||||||||||||
|
Asia
|
1,500
|
1,792
|
1,746
|
(16
|
%)
|
(14
|
%)
|
5,318
|
5,896
|
(10
|
%) |
|||||||||||||||||||||
|
Consolidated net revenues
|
$
|
12,986
|
$
|
13,132
|
$
|
14,753
|
(1
|
%)
|
(12
|
%)
|
$ |
40,919
|
$ |
45,231
|
(10
|
%) |
||||||||||||||||
|
Consolidated Average Common Equity and Regulatory Capital Information
|
||||||||||||||||||||||||||||||||
|
(unaudited, dollars in billions)
|
||||||||||||||||||||||||||||||||
|
Quarter Ended
|
Percentage Change From:
|
Nine Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
|
Sep 30, 2022
|
Jun 30, 2022
|
Sep 30, 2021
|
Jun 30, 2022
|
Sep 30, 2021
|
Sep 30, 2022
|
Sep 30, 2021
|
Change
|
|||||||||||||||||||||||||
|
Average Common Equity
|
||||||||||||||||||||||||||||||||
|
Institutional Securities
|
$
|
48.8
|
$
|
48.8
|
$
|
43.5
|
--
|
12
|
%
|
$
|
48.8
|
$
|
43.5
|
12
|
%
|
|||||||||||||||||
|
Wealth Management
|
31.0
|
31.0
|
28.6
|
--
|
8
|
%
|
31.0
|
28.6
|
8
|
%
|
||||||||||||||||||||||
|
Investment Management
|
10.6
|
10.6
|
10.7
|
--
|
(1
|
%)
|
10.6
|
8.2
|
29
|
%
|
||||||||||||||||||||||
|
Parent
|
2.5
|
3.9
|
15.8
|
(36
|
%)
|
(84
|
%)
|
4.3
|
16.6
|
(74
|
%)
|
|||||||||||||||||||||
|
Firm
|
$
|
92.9
|
$
|
94.3
|
$
|
98.6
|
(1
|
%)
|
(6
|
%)
|
$
|
94.7
|
$
|
96.9
|
(2
|
%)
|
||||||||||||||||
|
Regulatory Capital (1)
|
||||||||||||||||||||||||||||||||
|
Common Equity Tier 1 capital
|
$
|
67.9
|
$
|
70.2
|
$
|
75.8
|
(3
|
%)
|
(10
|
%)
|
||||||||||||||||||||||
|
Tier 1 capital
|
$
|
76.4
|
$
|
77.8
|
$
|
83.4
|
(2
|
%)
|
(8
|
%)
|
||||||||||||||||||||||
|
Standardized Approach
|
||||||||||||||||||||||||||||||||
|
Risk-weighted assets
|
$
|
459.7
|
$
|
461.0
|
$
|
473.0
|
--
|
(3
|
%)
|
|||||||||||||||||||||||
|
Common Equity Tier 1 capital ratio
|
14.8
|
%
|
15.2
|
%
|
16.0
|
%
|
||||||||||||||||||||||||||
|
Tier 1 capital ratio
|
16.6
|
%
|
16.9
|
%
|
17.6
|
%
|
||||||||||||||||||||||||||
|
Advanced Approach
|
||||||||||||||||||||||||||||||||
|
Risk-weighted assets
|
$
|
447.1
|
$
|
454.1
|
$
|
441.2
|
(2
|
%)
|
1
|
%
|
||||||||||||||||||||||
|
Common Equity Tier 1 capital ratio
|
15.2
|
%
|
15.5
|
%
|
17.2
|
%
|
||||||||||||||||||||||||||
|
Tier 1 capital ratio
|
17.1
|
%
|
17.1
|
%
|
18.9
|
%
|
||||||||||||||||||||||||||
|
Leverage-based capital
|
||||||||||||||||||||||||||||||||
|
Tier 1 leverage ratio
|
6.6
|
%
|
6.6
|
%
|
7.3
|
%
|
||||||||||||||||||||||||||
|
Supplementary Leverage Ratio
|
5.4
|
%
|
5.4
|
%
|
5.7
|
%
|
||||||||||||||||||||||||||
|
Institutional Securities
|
||||||||||||||||||||||||||||||||
|
Income Statement Information, Financial Metrics and Ratios
|
||||||||||||||||||||||||||||||||
|
(unaudited, dollars in millions)
|
||||||||||||||||||||||||||||||||
|
10/11/22 13:04
|
||||||||||||||||||||||||||||||||
|
Quarter Ended
|
Percentage Change From:
|
Nine Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
|
Sep 30, 2022
|
Jun 30, 2022
|
Sep 30, 2021
|
Jun 30, 2022
|
Sep 30, 2021
|
Sep 30, 2022
|
Sep 30, 2021
|
Change
|
|||||||||||||||||||||||||
|
Revenues:
|
||||||||||||||||||||||||||||||||
|
Advisory
|
$
|
693
|
$
|
598
|
$
|
1,272
|
16
|
%
|
(46
|
%)
|
$
|
2,235
|
$
|
2,416
|
(7
|
%)
|
||||||||||||||||
|
Equity
|
218
|
148
|
1,010
|
47
|
%
|
(78
|
%)
|
624
|
3,584
|
(83
|
%)
|
|||||||||||||||||||||
|
Fixed income
|
366
|
326
|
567
|
12
|
%
|
(35
|
%)
|
1,124
|
1,838
|
(39
|
%)
|
|||||||||||||||||||||
|
Underwriting
|
584
|
474
|
1,577
|
23
|
%
|
(63
|
%)
|
1,748
|
5,422
|
(68
|
%)
|
|||||||||||||||||||||
|
Investment banking
|
1,277
|
1,072
|
2,849
|
19
|
%
|
(55
|
%)
|
3,983
|
7,838
|
(49
|
%)
|
|||||||||||||||||||||
|
Equity
|
2,459
|
2,960
|
2,876
|
(17
|
%)
|
(14
|
%)
|
8,593
|
8,578
|
--
|
||||||||||||||||||||||
|
Fixed income
|
2,181
|
2,500
|
1,640
|
(13
|
%)
|
33
|
%
|
7,604
|
6,288
|
21
|
%
|
|||||||||||||||||||||
|
Other
|
(100
|
)
|
(413
|
)
|
130
|
76
|
%
|
*
|
(587
|
)
|
460
|
*
|
||||||||||||||||||||
|
Net revenues
|
5,817
|
6,119
|
7,495
|
(5
|
%)
|
(22
|
%)
|
19,593
|
23,164
|
(15
|
%)
|
|||||||||||||||||||||
|
Provision for credit losses
|
24
|
82
|
24
|
(71
|
%)
|
--
|
150
|
1
|
*
|
|||||||||||||||||||||||
|
Compensation and benefits
|
1,948
|
2,050
|
2,248
|
(5
|
%)
|
(13
|
%)
|
6,602
|
7,795
|
(15
|
%)
|
|||||||||||||||||||||
|
Non-compensation expenses
|
2,219
|
2,433
|
2,250
|
(9
|
%)
|
(1
|
%)
|
6,874
|
6,526
|
5
|
%
|
|||||||||||||||||||||
|
Total non-interest expenses
|
4,167
|
4,483
|
4,498
|
(7
|
%)
|
(7
|
%)
|
13,476
|
14,321
|
(6
|
%)
|
|||||||||||||||||||||
|
Income before provision for income taxes
|
1,626
|
1,554
|
2,973
|
5
|
%
|
(45
|
%)
|
5,967
|
8,842
|
(33
|
%)
|
|||||||||||||||||||||
|
Net income applicable to Morgan Stanley
|
$
|
1,274
|
$
|
1,121
|
$
|
2,229
|
14
|
%
|
(43
|
%)
|
$
|
4,586
|
$
|
6,734
|
(32
|
%)
|
||||||||||||||||
|
Pre-tax profit margin
|
28
|
%
|
25
|
%
|
40
|
%
|
30
|
%
|
38
|
%
|
||||||||||||||||||||||
|
Compensation and benefits as a % of net revenues
|
34
|
%
|
34
|
%
|
30
|
%
|
34
|
%
|
34
|
%
|
||||||||||||||||||||||
|
Non-compensation expenses as a % of net revenues
|
38
|
%
|
40
|
%
|
30
|
%
|
35
|
%
|
28
|
%
|
||||||||||||||||||||||
|
Return on Average Common Equity
|
10
|
%
|
9
|
%
|
20
|
%
|
12
|
%
|
20
|
%
|
||||||||||||||||||||||
|
Return on Average Tangible Common Equity (1)
|
10
|
%
|
9
|
%
|
20
|
%
|
12
|
%
|
20
|
%
|
||||||||||||||||||||||
|
Trading VaR (Average Daily 95% / One-Day VaR)
|
$
|
61
|
$
|
46
|
$
|
45
|
||||||||||||||||||||||||||
|
Wealth Management
|
||||||||||||||||||||||||||||||||
|
Income Statement Information, Financial Metrics and Ratios
|
||||||||||||||||||||||||||||||||
|
(unaudited, dollars in millions)
|
||||||||||||||||||||||||||||||||
|
Report dated:10/11/22 13:05
|
||||||||||||||||||||||||||||||||
|
Quarter Ended
|
Percentage Change From:
|
Nine Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
|
Sep 30, 2022
|
Jun 30, 2022
|
Sep 30, 2021
|
Jun 30, 2022
|
Sep 30, 2021
|
Sep 30, 2022
|
Sep 30, 2021
|
Change
|
|||||||||||||||||||||||||
|
Revenues:
|
||||||||||||||||||||||||||||||||
|
Asset management
|
$
|
3,389
|
$
|
3,510
|
$
|
3,628
|
(3
|
%)
|
(7
|
%)
|
$
|
10,525
|
$
|
10,266
|
3
|
%
|
||||||||||||||||
|
Transactional
|
616
|
291
|
832
|
112
|
%
|
(26
|
%)
|
1,542
|
3,232
|
(52
|
%)
|
|||||||||||||||||||||
|
Net interest income
|
2,004
|
1,747
|
1,348
|
15
|
%
|
49
|
%
|
5,291
|
3,988
|
33
|
%
|
|||||||||||||||||||||
|
Other
|
111
|
188
|
127
|
(41
|
%)
|
(13
|
%)
|
433
|
503
|
(14
|
%)
|
|||||||||||||||||||||
|
Net revenues
|
6,120
|
5,736
|
5,935
|
7
|
%
|
3
|
%
|
17,791
|
17,989
|
(1
|
%)
|
|||||||||||||||||||||
|
Provision for credit losses
|
11
|
19
|
-
|
(42
|
%)
|
*
|
43
|
(2
|
)
|
*
|
||||||||||||||||||||||
|
Compensation and benefits
|
3,171
|
2,895
|
3,159
|
10
|
%
|
--
|
9,191
|
9,604
|
(4
|
%)
|
||||||||||||||||||||||
|
Non-compensation expenses
|
1,289
|
1,301
|
1,246
|
(1
|
%)
|
3
|
%
|
3,814
|
3,621
|
5
|
%
|
|||||||||||||||||||||
|
Total non-interest expenses (1)
|
4,460
|
4,196
|
4,405
|
6
|
%
|
1
|
%
|
13,005
|
13,225
|
(2
|
%)
|
|||||||||||||||||||||
|
Income before provision for income taxes
|
1,649
|
1,521
|
1,530
|
8
|
%
|
8
|
%
|
4,743
|
4,766
|
--
|
||||||||||||||||||||||
|
Net income applicable to Morgan Stanley
|
$
|
1,253
|
$
|
1,190
|
$
|
1,157
|
5
|
%
|
8
|
%
|
$
|
3,715
|
$
|
3,663
|
1
|
%
|
||||||||||||||||
|
Pre-tax profit margin
|
27
|
%
|
27
|
%
|
26
|
%
|
27
|
%
|
26
|
%
|
||||||||||||||||||||||
|
Pre-tax profit margin excluding integration-related expenses
|
28
|
%
|
28
|
%
|
28
|
%
|
28
|
%
|
28
|
%
|
||||||||||||||||||||||
|
Compensation and benefits as a % of net revenues
|
52
|
%
|
50
|
%
|
53
|
%
|
52
|
%
|
53
|
%
|
||||||||||||||||||||||
|
Non-compensation expenses as a % of net revenues
|
21
|
%
|
23
|
%
|
21
|
%
|
21
|
%
|
20
|
%
|
||||||||||||||||||||||
|
Return on Average Common Equity
|
16
|
%
|
15
|
%
|
16
|
%
|
16
|
%
|
17
|
%
|
||||||||||||||||||||||
|
Return on Average Tangible Common Equity (2)
|
30
|
%
|
29
|
%
|
34
|
%
|
30
|
%
|
35
|
%
|
||||||||||||||||||||||
|
Notes:
|
|
|
‐
|
For the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021, Wealth Management's results include pre-tax integration-related expenses of $92 million, $96 million and $113 million ($70 million, $74 million and $87 million after-tax), respectively. The nine months ended September 30, 2022 and 2021 results include pre‐tax integration‐related expenses of $263 million and $237 million ($201 million and $182 million after‐tax), respectively. |
| - |
The End Notes are an integral part of this presentation. See pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and
Terms, Supplemental Quantitative Details and Calculations, and Legal Notice. |
|
Wealth Management
|
||||||||||||||||||||
|
Financial Information and Statistical Data
|
||||||||||||||||||||
|
(unaudited, dollars in billions)
|
||||||||||||||||||||
|
Vs. Report dated03/19/03 18:15
|
||||||||||||||||||||
|
Quarter Ended
|
Percentage Change From:
|
|||||||||||||||||||
|
Sep 30, 2022
|
Jun 30, 2022
|
Sep 30, 2021
|
Jun 30, 2022
|
Sep 30, 2021
|
||||||||||||||||
|
Wealth Management Metrics
|
||||||||||||||||||||
|
Total client assets (1)
|
$
|
4,134
|
$
|
4,246
|
$
|
4,666
|
(3
|
%)
|
(11
|
%)
|
||||||||||
|
Net new assets (2)
|
$
|
64.8
|
$
|
52.9
|
$
|
134.5
|
22
|
%
|
(52
|
%)
|
||||||||||
|
U.S. Bank loans
|
$
|
145.7
|
$
|
143.6
|
$
|
121.2
|
1
|
%
|
20
|
%
|
||||||||||
|
Margin and other lending (3)
|
$
|
24.3
|
$
|
24.8
|
$
|
28.6
|
(2
|
%)
|
(15
|
%)
|
||||||||||
|
Deposits (4)
|
$
|
332
|
$
|
340
|
$
|
327
|
(2
|
%)
|
2
|
%
|
||||||||||
|
Annualized weighted average cost of deposits
|
0.93
|
%
|
0.28
|
%
|
0.13
|
%
|
||||||||||||||
|
Advisor-led channel
|
||||||||||||||||||||
|
Advisor-led client assets
|
$
|
3,305
|
$
|
3,427
|
$
|
3,647
|
(4
|
%)
|
(9
|
%)
|
||||||||||
|
Fee-based client assets
|
$
|
1,628
|
$
|
1,717
|
$
|
1,752
|
(5
|
%)
|
(7
|
%)
|
||||||||||
|
Fee-based asset flows (2)
|
$
|
16.7
|
$
|
28.5
|
$
|
70.6
|
(41
|
%)
|
(76
|
%)
|
||||||||||
|
Fee-based assets as a % of advisor-led client assets
|
49
|
%
|
50
|
%
|
48
|
%
|
||||||||||||||
|
Self-directed channel
|
||||||||||||||||||||
|
Self-directed assets (1)
|
$
|
829
|
$
|
819
|
$
|
1,019
|
1
|
%
|
(19
|
%)
|
||||||||||
|
Daily average revenue trades (000's)
|
805
|
880
|
959
|
(9
|
%)
|
(16
|
%)
|
|||||||||||||
|
Self-directed households (millions)
|
7.8
|
7.8
|
7.4
|
--
|
5
|
%
|
||||||||||||||
|
Workplace channel
|
||||||||||||||||||||
|
Stock plan unvested assets
|
$
|
312
|
$
|
323
|
$
|
495
|
(3
|
%)
|
(37
|
%)
|
||||||||||
|
Number of stock plan participants (millions)
|
6.2
|
6.1
|
5.3
|
2
|
%
|
17
|
%
|
|||||||||||||
|
Investment Management
|
||||||||||||||||||||||||||||||||
|
Income Statement Information, Financial Metrics and Ratios
|
||||||||||||||||||||||||||||||||
|
(unaudited, dollars in millions)
|
||||||||||||||||||||||||||||||||
|
Report dated:10/11/22 13:05
|
||||||||||||||||||||||||||||||||
|
Quarter Ended
|
Percentage Change From:
|
Nine Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
|
Sep 30, 2022
|
Jun 30, 2022
|
Sep 30, 2021
|
Jun 30, 2022
|
Sep 30, 2021
|
Sep 30, 2022
|
Sep 30, 2021
|
Change
|
|||||||||||||||||||||||||
|
Revenues:
|
||||||||||||||||||||||||||||||||
|
Asset management and related fees
|
$
|
1,269
|
$
|
1,304
|
$
|
1,470
|
(3
|
%)
|
(14
|
%)
|
$
|
3,961
|
$
|
3,991
|
(1
|
%)
|
||||||||||||||||
|
Performance-based income and other
|
(101
|
)
|
107
|
(17
|
)
|
*
|
*
|
(47
|
)
|
478
|
*
|
|||||||||||||||||||||
|
Net revenues
|
1,168
|
1,411
|
1,453
|
(17
|
%)
|
(20
|
%)
|
3,914
|
4,469
|
(12
|
%)
|
|||||||||||||||||||||
|
Compensation and benefits
|
495
|
605
|
513
|
(18
|
%)
|
(4
|
%)
|
1,645
|
1,742
|
(6
|
%)
|
|||||||||||||||||||||
|
Non-compensation expenses
|
557
|
557
|
570
|
--
|
(2
|
%)
|
1,676
|
1,557
|
8
|
%
|
||||||||||||||||||||||
|
Total non-interest expenses (1)
|
1,052
|
1,162
|
1,083
|
(9
|
%)
|
(3
|
%)
|
3,321
|
3,299
|
1
|
%
|
|||||||||||||||||||||
|
Income before provision for income taxes
|
116
|
249
|
370
|
(53
|
%)
|
(69
|
%)
|
593
|
1,170
|
(49
|
%)
|
|||||||||||||||||||||
|
Net income applicable to Morgan Stanley
|
$
|
107
|
$
|
188
|
$
|
320
|
(43
|
%)
|
(67
|
%)
|
$
|
498
|
$
|
936
|
(47
|
%)
|
||||||||||||||||
|
Pre-tax profit margin
|
10
|
%
|
18
|
%
|
25
|
%
|
15
|
%
|
26
|
%
|
||||||||||||||||||||||
|
Pre-tax profit margin excluding integration-related expenses
|
13
|
%
|
19
|
%
|
28
|
%
|
17
|
%
|
28
|
%
|
||||||||||||||||||||||
|
Compensation and benefits as a % of net revenues
|
42
|
%
|
43
|
%
|
35
|
%
|
42
|
%
|
39
|
%
|
||||||||||||||||||||||
|
Non-compensation expenses as a % of net revenues
|
48
|
%
|
39
|
%
|
39
|
%
|
43
|
%
|
35
|
%
|
||||||||||||||||||||||
|
Return on Average Common Equity
|
4
|
%
|
7
|
%
|
12
|
%
|
6
|
%
|
15
|
%
|
||||||||||||||||||||||
|
Return on Average Tangible Common Equity (2)
|
56
|
%
|
99
|
%
|
161
|
%
|
87
|
%
|
128
|
%
|
||||||||||||||||||||||
|
Notes:
|
|
|
‐
|
Investment Management results reflect the effect of the acquisition of Eaton Vance Corp. (“Eaton Vance”) prospectively from the March 1, 2021 acquisition date. The comparison of current year-to-date results to the prior period is impacted by the acquisition. |
| - |
For the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021, Investment Management's results include pre-tax integration-related expenses of $31 million, $24 million and $32 million ($24 million, $18 million and $24 million after-tax), respectively. The nine months ended September 30, 2022 and 2021 results include pre‐tax integration‐related expenses of $87 million and $73 million ($67 million and $56 million after‐tax), respectively. |
| - |
The End Notes are an integral part of this presentation. See pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and
Terms, Supplemental Quantitative Details and Calculations, and Legal Notice. |
|
Investment Management
|
||||||||||||||||||||||||||||||||
|
Financial Information and Statistical Data
|
||||||||||||||||||||||||||||||||
|
(unaudited, dollars in billions)
|
||||||||||||||||||||||||||||||||
|
Vs. Report dated03/19/03 18:15
|
||||||||||||||||||||||||||||||||
|
Quarter Ended
|
Percentage Change From:
|
Nine Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
|
Sep 30, 2022
|
Jun 30, 2022
|
Sep 30, 2021
|
Jun 30, 2022
|
Sep 30, 2021
|
Sep 30, 2022
|
Sep 30, 2021
|
Change
|
|||||||||||||||||||||||||
|
Assets under management or supervision (AUM)
|
||||||||||||||||||||||||||||||||
|
Net flows by asset class (1)
|
||||||||||||||||||||||||||||||||
|
Equity
|
$
|
(3.9
|
)
|
$
|
(7.4
|
)
|
$
|
(0.9
|
)
|
47
|
%
|
*
|
$
|
(18.8
|
)
|
$
|
9.6
|
*
|
||||||||||||||
|
Fixed Income
|
(5.0
|
)
|
(2.6
|
)
|
(0.3
|
)
|
(92
|
%)
|
*
|
(11.5
|
)
|
6.6
|
*
|
|||||||||||||||||||
|
Alternatives and Solutions
|
7.0
|
6.5
|
(1.1
|
)
|
8
|
%
|
*
|
10.5
|
11.3
|
(7
|
%)
|
|||||||||||||||||||||
|
Long-Term Net Flows
|
(1.9
|
)
|
(3.5
|
)
|
(2.3
|
)
|
46
|
%
|
17
|
%
|
(19.8
|
)
|
27.5
|
*
|
||||||||||||||||||
|
Liquidity and Overlay Services
|
(32.5
|
)
|
31.3
|
14.6
|
*
|
*
|
(29.3
|
)
|
75.5
|
*
|
||||||||||||||||||||||
|
Total Net Flows
|
$
|
(34.4
|
)
|
$
|
27.8
|
$
|
12.3
|
*
|
*
|
$
|
(49.1
|
)
|
$
|
103.0
|
*
|
|||||||||||||||||
|
Assets under management or supervision by asset class (2)
|
||||||||||||||||||||||||||||||||
|
Equity
|
$
|
249
|
$
|
265
|
$
|
391
|
(6
|
%)
|
(36
|
%)
|
||||||||||||||||||||||
|
Fixed Income
|
171
|
181
|
206
|
(6
|
%)
|
(17
|
%)
|
|||||||||||||||||||||||||
|
Alternatives and Solutions
|
405
|
415
|
443
|
(2
|
%)
|
(9
|
%)
|
|||||||||||||||||||||||||
|
Long-Term Assets Under Management or Supervision
|
$
|
825
|
$
|
861
|
$
|
1,040
|
(4
|
%)
|
(21
|
%)
|
||||||||||||||||||||||
|
Liquidity and Overlay Services
|
454
|
490
|
482
|
(7
|
%)
|
(6
|
%)
|
|||||||||||||||||||||||||
|
Total Assets Under Management or Supervision
|
$
|
1,279
|
$
|
1,351
|
$
|
1,522
|
(5
|
%)
|
(16
|
%)
|
||||||||||||||||||||||
|
Consolidated Loans and Lending Commitments
|
||||||||||||||||||||
|
(unaudited, dollars in billions)
|
||||||||||||||||||||
|
Quarter Ended
|
Percentage Change From:
|
|||||||||||||||||||
|
Sep 30, 2022
|
Jun 30, 2022
|
Sep 30, 2021
|
Jun 30, 2022
|
Sep 30, 2021
|
||||||||||||||||
|
Institutional Securities
|
||||||||||||||||||||
|
Loans:
|
||||||||||||||||||||
|
Corporate
|
$
|
14.3
|
$
|
12.9
|
$
|
13.6
|
11
|
%
|
5
|
%
|
||||||||||
|
Secured lending facilities
|
38.3
|
36.8
|
31.2
|
4
|
%
|
23
|
%
|
|||||||||||||
|
Commercial and residential real estate
|
11.8
|
12.7
|
12.7
|
(7
|
%)
|
(7
|
%)
|
|||||||||||||
|
Securities-based lending and other
|
7.8
|
8.3
|
9.4
|
(6
|
%)
|
(17
|
%)
|
|||||||||||||
|
Total Loans
|
72.2
|
70.7
|
66.9
|
2
|
%
|
8
|
%
|
|||||||||||||
|
Lending Commitments
|
119.7
|
125.7
|
122.2
|
(5
|
%)
|
(2
|
%)
|
|||||||||||||
|
Institutional Securities Loans and Lending Commitments
|
$
|
191.9
|
$
|
196.4
|
$
|
189.1
|
(2
|
%)
|
1
|
%
|
||||||||||
|
Wealth Management
|
||||||||||||||||||||
|
Loans:
|
||||||||||||||||||||
|
Securities-based lending and other
|
$
|
93.0
|
$
|
93.3
|
$
|
79.8
|
--
|
17
|
%
|
|||||||||||
|
Residential real estate
|
52.8
|
50.4
|
41.4
|
5
|
%
|
28
|
%
|
|||||||||||||
|
Total Loans
|
145.8
|
143.7
|
121.2
|
1
|
%
|
20
|
%
|
|||||||||||||
|
Lending Commitments
|
16.9
|
15.4
|
15.0
|
10
|
%
|
13
|
%
|
|||||||||||||
|
Wealth Management Loans and Lending Commitments
|
$
|
162.7
|
$
|
159.1
|
$
|
136.2
|
2
|
%
|
19
|
%
|
||||||||||
|
Consolidated Loans and Lending
Commitments (1)
|
$
|
354.6
|
$
|
355.5
|
$
|
325.3
|
--
|
9
|
%
|
|||||||||||
|
Consolidated Loans and Lending Commitments
|
||||||||||||||||
|
Allowance for Credit Losses (ACL) as of September 30, 2022
|
||||||||||||||||
|
(unaudited, dollars in millions)
|
||||||||||||||||
|
Loans and Lending Commitments
|
ACL (1)
|
ACL %
|
Q3 Provision
|
|||||||||||||
|
(Gross)
|
||||||||||||||||
|
Loans:
|
||||||||||||||||
|
Held For Investment (HFI)
|
||||||||||||||||
|
Corporate
|
$
|
6,858
|
$
|
211
|
3.1
|
%
|
$
|
(1
|
)
|
|||||||
|
Secured lending facilities
|
34,788
|
156
|
0.4
|
%
|
(11
|
)
|
||||||||||
|
Commercial and residential real estate
|
8,191
|
224
|
2.7
|
%
|
(1
|
)
|
||||||||||
|
Other
|
2,728
|
11
|
0.4
|
%
|
4
|
|||||||||||
|
Institutional Securities - HFI
|
$
|
52,565
|
$
|
602
|
1.1
|
%
|
$
|
(9
|
)
|
|||||||
|
Wealth Management - HFI
|
145,763
|
147
|
0.1
|
%
|
15
|
|||||||||||
|
Held For Investment
|
$
|
198,328
|
$
|
749
|
0.4
|
%
|
$
|
6
|
||||||||
|
Held For Sale
|
13,353
|
|||||||||||||||
|
Fair Value
|
7,064
|
|||||||||||||||
|
Total Loans
|
218,745
|
749
|
6
|
|||||||||||||
|
Lending Commitments
|
136,605
|
487
|
0.4
|
%
|
29
|
|||||||||||
|
Consolidated Loans and Lending Commitments
|
$
|
355,350
|
$
|
1,236
|
$
|
35
|
||||||||||
| Definition of U.S. GAAP to Non-GAAP Measures | |||
|
(a)
|
The Firm prepares its Consolidated Financial Statements using accounting principles generally accepted in the United States
(U.S. GAAP). From time to time, Morgan Stanley may disclose certain “non-GAAP financial measures” in the course of its earnings releases, earnings conference calls, financial presentations and otherwise. The Securities and
Exchange Commission defines a “non-GAAP financial measure” as a numerical measure of historical or future financial performance, financial positions, or cash flows that is subject to adjustments that effectively exclude, or include
amounts from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. Non-GAAP financial measures disclosed by Morgan Stanley are provided as additional information to analysts, investors and
other stakeholders in order to provide them with greater transparency about, or an alternative method for assessing, our financial condition, operating results, or prospective regulatory capital requirements. These measures are not
in accordance with, or a substitute for U.S. GAAP, and may be different from or inconsistent with non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we will also generally define
it or present the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such
comparable U.S. GAAP financial measure. In addition to the following notes, please also refer to the Firm's Annual Report on Form 10-K for the year ended December 31, 2021.
|
||
| (b) |
The following are considered non-GAAP financial measures that the Firm considers useful for analysts, investors and other stakeholders to allow comparability of
operating performance and capital adequacy. These measures are calculated as follows: |
||
| - |
Earnings per diluted share excluding integration-related expenses represents net income applicable to Morgan Stanley,
adjusted for the impact of the integration-related expenses associated with the acquisitions of E*TRADE and Eaton Vance, less preferred dividends divided by the average number of diluted shares outstanding.
|
||
| - |
The return on average tangible common equity represents annualized earnings applicable to Morgan Stanley common shareholders
as a percentage of average tangible common equity.
|
||
| - |
The return on average common equity and the return on average tangible common equity excluding integration-related expenses
are adjusted in both the numerator and the denominator to exclude the integration-related expenses associated with the acquisitions of E*TRADE and Eaton Vance.
|
||
| - |
Segment return on average common equity and return on average tangible common equity represent full year net income or
annualized net income for the quarter applicable to Morgan Stanley for each segment, less preferred dividend segment allocation, divided by average common equity and average tangible common equity for each respective segment. The
segment adjustments to common equity to derive segment average tangible common equity are generally set at the beginning of the year, and will remain fixed throughout the year until the next annual reset unless a significant
business change occurs (e.g., acquisition or disposition).
|
||
| - |
Tangible common equity represents common equity less goodwill and intangible assets net of certain mortgage servicing rights deduction. | ||
| - |
Tangible book value per common share represents tangible common equity divided by period end common shares outstanding. | ||
| - |
Pre-tax profit margin excluding integration-related expenses represents income before provision for income taxes less
integration-related expenses associated with the acquisitions of E*TRADE and Eaton Vance as percentages of net revenues.
|
||
| - |
The Firm expense efficiency ratio excluding integration-related expenses represents total non‐interest expenses less
integration-related expenses associated with the acquisitions of E*TRADE and Eaton Vance as a percentage of net revenues.
|
||
|
Definitions of Performance Metrics and Terms
|
|
|
Our earnings releases, earnings conference calls, financial presentations and other communications may also include
certain metrics which we believe to be useful to us, analysts, investors and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results.
|
|
|
Page 1:
|
|
|
(a)
|
Provision for credit losses represents the provision for credit losses on loans held for investment and unfunded lending
commitments.
|
|
(b)
|
Net income applicable to Morgan Stanley represents net income, less net income applicable to nonredeemable noncontrolling
interests.
|
|
(c)
|
Earnings applicable to Morgan Stanley common shareholders represents net income applicable to Morgan Stanley, less
preferred dividends.
|
|
Page 2:
|
|
|
(a)
|
The return on average common equity represents annualized earnings applicable to Morgan Stanley common shareholders as a
percentage of average common equity.
|
|
(b)
|
Book value per common share represents common equity divided by period end common shares outstanding.
|
|
(c)
|
Tangible book value per common share represents tangible common equity divided by period end common shares outstanding.
|
|
(d)
|
Pre-tax profit margin percentages represent income before provision for income taxes as percentages of net revenues.
|
|
(e)
|
The Firm expense efficiency ratio represents total non‐interest expenses as a percentage of net revenues.
|
|
Page 3:
|
|
|
(a)
|
Liquidity Resources, which are primarily held within the Parent and its major operating subsidiaries, are comprised of
high quality liquid assets (HQLA) and cash deposits with banks ("Liquidity Resources"). The total amount of Liquidity Resources is actively managed by us considering the following components: unsecured debt maturity profile;
balance sheet size and composition; funding needs in a stressed environment, inclusive of contingent cash outflows; legal entity, regional and segment liquidity requirements; regulatory requirements; and collateral requirements.
Average Liquidity Resources represents the average daily balance for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021.
|
|
(b)
|
The Firm's goodwill and intangible balances utilized in the calculation of tangible common equity are net of certain
mortgage servicing rights deduction.
|
|
(c)
|
U.S. Bank refers to the Firm's U.S. Bank operating subsidiaries Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank,
National Association, and excludes balances between Bank subsidiaries, as well as deposits from the Parent and affiliates.
|
|
(d)
|
Firmwide regional revenues reflect the Firm's consolidated net revenues on a managed basis. Further discussion regarding
the geographic methodology for net revenues is disclosed in Note 23 to the consolidated financial statements included in the Firm's Annual Report on Form 10-K for the year ended December 31, 2021 (2021 Form 10-K).
|
|
Page 4:
|
|
|
(a)
|
The Firm's attribution of average common equity to the business segments is based on the Required Capital framework, an
internal capital adequacy measure. This framework is a risk-based and leverage-based capital measure, which is compared with the Firm's regulatory capital to ensure that the Firm maintains an amount of going concern capital after
absorbing potential losses from stress events, where applicable, at a point in time. The Required Capital Framework is based on the Firm's regulatory capital requirements. The Firm defines the difference between its total average
common equity and the sum of the average common equity amounts allocated to its business segments as Parent common equity. The amount of capital allocated to the business segments is generally set at the beginning of the year, and
will remain fixed throughout the year until the next annual reset unless a significant business change occurs (e.g., acquisition or disposition). The Firm continues to evaluate its required capital framework with respect to the
impact of evolving regulatory requirements, as appropriate. For further discussion of the framework, refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources
– Regulatory Requirements" in the Firm’s 2021 Form 10‐K.
|
|
(b)
|
The Firm's risk‐based capital ratios are computed under each of the (i) standardized approaches for calculating credit
risk and market risk risk‐weighted assets (RWAs) (the “Standardized Approach”) and (ii) applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (the “Advanced Approach”). For information
on the calculation of regulatory capital and ratios, and associated regulatory requirements, please refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources
– Regulatory Requirements" in the Firm’s 2021 Form 10‐K.
|
|
(c)
|
Supplementary leverage ratio represents Tier 1 capital divided by the total supplementary leverage exposure.
|
|
Page 5:
|
|
|
(a)
|
Institutional Securities Equity and Fixed income net revenues include trading, net interest income (interest income less
interest expense), asset management, commissions and fees, investments and other revenues which are directly attributable to those businesses.
|
|
(b)
|
Pre-tax profit margin percentages represent income before provision for income taxes as percentages of net revenues.
|
|
(c)
|
VaR represents the unrealized loss in portfolio value that one would not expect to exceed, on average, more than five
times every one hundred trading days in the Firm's trading positions if the portfolio were held constant for a one-day period. Further discussion of the calculation of VaR and the limitations of the Firm's VaR methodology, is
disclosed in "Quantitative and Qualitative Disclosures about Risk" included in the Firm's 2021 Form 10-K.
|
|
Page 6:
|
|
|
(a)
|
Transactional revenues for the Wealth Management segment includes investment banking, trading, and commissions and fee
revenues.
|
|
(b)
|
Net interest income represents interest income less interest expense.
|
|
(c)
|
Other revenues for the Wealth Management segment includes investments and other revenues.
|
|
(d)
|
Pre-tax profit margin percentages represent income before provision for income taxes as percentages of net revenues.
|
|
Definitions of Performance Metrics and Terms
|
|
|
Our earnings releases, earnings conference calls, financial presentations and other communications may also include
certain metrics which we believe to be useful to us, analysts, investors and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results.
|
|
|
Page 7:
|
|
|
(a)
|
Net new assets represent client inflows, including dividends and interest, and asset acquisitions, less client outflows,
and exclude activity from business combinations/divestitures and the impact of fees and commissions.
|
|
(b)
|
Margin and other lending represents margin lending arrangements, which allow customers to borrow against the value of
qualifying securities and other lending which includes non‐purpose securities-based lending on non‐bank entities.
|
|
(c)
|
Deposits reflect liabilities sourced from Wealth Management clients and other sources of funding on the U.S. Bank
Subsidiaries. Deposits include sweep deposit programs, savings and other, and time deposits.
|
|
(d)
|
Annualized weighted average cost of deposits reflects deposit balances and costs as of September 30, 2022, June 30, 2022
and September 30, 2021.
|
|
(e)
|
Advisor-led client assets represent client assets in accounts that have a Wealth Management representative assigned.
|
|
(f)
|
Fee‐based client assets represent the amount of assets in client accounts where the basis of payment for services is a fee
calculated on those assets.
|
|
(g)
|
Fee-based asset flows include net new fee-based assets (including asset acquisitions), net account transfers, dividends,
interest and client fees, and exclude institutional cash management related activity. For a description of the Inflows and Outflows included in Fee-based asset flows, see Fee-based client assets in the 2021 Form 10-K.
|
|
(h)
|
Self-directed assets represent active accounts which are not advisor led. Active accounts are defined as having at least
$25 in assets.
|
|
(i)
|
Daily average revenue trades (DARTs) represent the total self-directed trades in a period divided by the number of trading
days during that period.
|
|
(j)
|
Self-directed households represent the total number of households that include at least one account with self-directed
assets. Individual households or participants that are engaged in one or more of our Wealth Management channels are included in each of the respective channel counts.
|
|
(k)
|
The workplace channel assets includes equity compensation solutions for companies, their executives and employees. Stock
plan unvested assets represent the market value of public company securities at the end of the period.
|
|
(l)
|
Stock plan participants represent total accounts with vested and/or unvested stock plan assets in the workplace channel.
Individuals with accounts in multiple plans are counted as participants in each plan.
|
|
Page 8:
|
|
|
(a)
|
Asset management and related fees represents management and administrative fees, distribution fees, and performance-based
fees, not in the form of carried interest. Asset management and related fees represents Asset management as reported on the Firm’s consolidated income statement.
|
|
(b)
|
Performance-based income and other includes performance-based fees in the form of carried interest, gains and losses from
investments, gains and losses from hedges on seed capital and certain employee deferred compensation plans, net interest, and other revenues. Performance-based income and other represents investments, investment banking, trading,
net interest and other revenues as reported on the Firm’s consolidated income statement.
|
|
(c)
|
Pre-tax profit margin percentages represent income before provision for income taxes as percentages of net revenues.
|
|
Page 9:
|
|
|
(a)
|
Investment Management Alternatives and Solutions asset class includes products in Fund of Funds, Real Estate, Private
Equity and Credit strategies, Multi‐Asset portfolios, as well as Custom Separate Account portfolios.
|
|
(b)
|
Investment Management net flows include new commitments, investments or reinvestments, net of client redemptions, returns
of capital post-fund investment period and dividends not reinvested and excludes the impact of the transition of funds from their commitment period to the invested capital period.
|
|
(c)
|
Overlay Services represents investment strategies that use passive exposure instruments to obtain, offset, or substitute
specific portfolio exposures beyond those provided by the underlying holdings of the fund.
|
|
(d)
|
Total assets under management or supervision excludes shares of minority stake assets which represent the Investment
Management business segment’s proportional share of assets managed by third-party asset managers in which we hold investments accounted for under the equity method.
|
|
Page 10 and 11:
|
|
|
(a)
|
Corporate loans include relationship and event-driven loans and typically consist of revolving lines of credit, term loans
and bridge loans.
|
|
(b)
|
Secured lending facilities include loans provided to clients, which are primarily secured by loans, which are, in turn,
collateralized by various assets including residential real estate, commercial real estate, corporate and financial assets.
|
|
(c)
|
Securities-based lending and other includes financing extended to sales and trading customers and corporate loans
purchased in the secondary market.
|
|
(d)
|
Institutional Securities Lending Commitments principally include Corporate lending activity.
|
| Page 1: |
|
|
(1)
|
The Firm non-interest expenses by category are as follows:
|
|
3Q22
|
2Q22
|
3Q21
|
3Q22 YTD
|
3Q21 YTD
|
||||||||||||||||
|
Compensation and benefits
|
$
|
5,614
|
$
|
5,550
|
$
|
5,920
|
$
|
17,438
|
$
|
19,141
|
||||||||||
|
Non-compensation expenses:
|
||||||||||||||||||||
|
Brokerage, clearing and exchange fees
|
847
|
878
|
825
|
2,607
|
2,530
|
|||||||||||||||
|
Information processing and communications
|
874
|
857
|
788
|
2,560
|
2,286
|
|||||||||||||||
|
Professional services
|
755
|
757
|
734
|
2,217
|
2,104
|
|||||||||||||||
|
Occupancy and equipment
|
429
|
430
|
427
|
1,286
|
1,246
|
|||||||||||||||
|
Marketing and business development
|
215
|
220
|
146
|
610
|
438
|
|||||||||||||||
|
Other
|
829
|
1,020
|
1,015
|
2,713
|
2,703
|
|||||||||||||||
|
Total non-compensation expenses
|
3,949
|
4,162
|
3,935
|
11,993
|
11,307
|
|||||||||||||||
|
Total non-interest expenses
|
$
|
9,563
|
$
|
9,712
|
$
|
9,855
|
$
|
29,431
|
$
|
30,448
|
||||||||||
| Page 2: |
|
|
(1)
|
For the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021, Firm results include pre-tax
integration-related expenses of $123 million, $120 million and $145 million ($94 million, $92 million and $111 million after‐tax) respectively, reported in the Wealth Management and Investment Management business segments.
The nine months ended September 30, 2022 and 2021 results include pre‐tax integration‐related expenses of $350 million and $310 million ($268 million and $238 million after‐tax), respectively. The following sets forth the
impact of the integration-related expenses to earnings per diluted share, return on average common equity and return on average tangible common equity (which are excluded):
|
|
3Q22
|
2Q22
|
3Q21
|
3Q22 YTD
|
3Q21 YTD
|
||||||||||||||||
|
Earnings per diluted share - GAAP
|
$
|
1.47
|
$
|
1.39
|
$
|
1.98
|
$
|
4.88
|
$
|
6.02
|
||||||||||
|
Impact of adjustments
|
0.06
|
0.05
|
0.06
|
0.16
|
0.13
|
|||||||||||||||
|
Earnings per diluted share excluding integration-related expenses - Non-GAAP
|
$
|
1.53
|
$
|
1.44
|
$
|
2.04
|
$
|
5.04
|
$
|
6.15
|
||||||||||
|
Return on average common equity - GAAP
|
10.7
|
%
|
10.1
|
%
|
14.5
|
%
|
11.9
|
%
|
15.1
|
%
|
||||||||||
|
Impact of adjustments
|
0.4
|
%
|
0.4
|
%
|
0.5
|
%
|
0.3
|
%
|
0.3
|
%
|
||||||||||
|
Return on average common equity excluding integration-related expenses - Non-GAAP
|
11.1
|
%
|
10.5
|
%
|
15.0
|
%
|
12.2
|
%
|
15.4
|
%
|
||||||||||
|
Return on average tangible common equity - GAAP
|
14.6
|
%
|
13.8
|
%
|
19.6
|
%
|
16.1
|
%
|
19.7
|
%
|
||||||||||
|
Impact of adjustments
|
0.6
|
%
|
0.5
|
%
|
0.6
|
%
|
0.5
|
%
|
0.5
|
%
|
||||||||||
|
Return on average tangible common equity excluding integration-related expenses - Non-GAAP
|
15.2
|
%
|
14.3
|
%
|
20.2
|
%
|
16.6
|
%
|
20.2
|
%
|
||||||||||
|
Firm expense efficiency ratio - GAAP
|
73.6
|
%
|
74.0
|
%
|
66.8
|
%
|
71.9
|
%
|
67.3
|
%
|
||||||||||
|
Impact of adjustments
|
(0.9
|
)%
|
(1.0
|
)%
|
(1.0
|
)%
|
(0.8
|
)%
|
(0.7
|
)%
|
||||||||||
|
Firm expense efficiency ratio excluding integration-related expenses - Non-GAAP
|
72.7
|
%
|
73.0
|
%
|
65.8
|
%
|
71.1
|
%
|
66.6
|
%
|
||||||||||
| Page 3: |
|
|
(1)
|
Includes loans held for investment (net of allowance), loans held for sale and also includes loans at fair value
which are included in Trading assets on the balance sheet.
|
| (2) |
As of September 30, 2022, June 30, 2022 and September 30, 2021, the U.S. Bank investment securities portfolio included held to maturity investment securities of $57.4 billion, $58.7 billion and $63.0 billion, respectively. |
| Page 4: |
|
|
(1)
|
The Firm early adopted the standardized approach for counterparty credit risk (SA-CCR) under Basel III on December
1, 2021. SA-CCR replaced the previous exposure method used to measure derivatives counterparty exposure within the Standardized Approach risk-weighted assets (RWAs) and Supplementary Leverage Ratio exposure calculations in
the regulatory capital framework.
|
| Page 5: |
|
|
(1)
|
Institutional Securities average tangible common equity represents average common equity adjusted to exclude
goodwill and intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 3Q22: $576mm; 2Q22: $576mm; 3Q21: $603mm; 3Q22 YTD: $576mm; 3Q21 YTD: $603mm
|
| Page 6: |
|
|
(1)
|
For the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021 and nine months ended September
30, 2022 and 2021, integration-related compensation and non-compensation expenses associated with the acquisition of E*TRADE are as follows:
|
|
3Q22
|
2Q22
|
3Q21
|
3Q22 YTD
|
3Q21 YTD
|
||||||||||||||||
|
Compensation expenses
|
$
|
3
|
$
|
4
|
$
|
9
|
$
|
8
|
$
|
48
|
||||||||||
|
Non-compensation expenses
|
89
|
92
|
104
|
255
|
189
|
|||||||||||||||
|
Total non-interest expenses
|
$
|
92
|
$
|
96
|
$
|
113
|
$
|
263
|
$
|
237
|
||||||||||
|
Income tax provision
|
22
|
22
|
26
|
62
|
55
|
|||||||||||||||
|
Total non-interest expenses (after-tax)
|
$
|
70
|
$
|
74
|
$
|
87
|
$
|
201
|
$
|
182
|
||||||||||
|
(2)
|
Wealth Management average tangible common equity represents average common equity adjusted to exclude goodwill
and intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 3Q22: $14,746mm; 2Q22: $14,746mm; 3Q21: $15,270mm; 3Q22 YTD: $14,746mm; 3Q21 YTD: $15,202mm
|
| Page 7: |
|
|
(1)
|
The quarter ended September 30, 2021 has been revised to include certain vested client employee stock options on
the E*TRADE platform to align the timing of recognition with other existing Morgan Stanley client assets.
|
| (2) |
The quarter ended September 30, 2021 includes $43 billion of fee-based assets acquired in an asset acquisition. |
| (3) |
Wealth Management other lending includes $3 billion of non-purpose securities based lending on non-bank entities in each period ended September 30, 2022, June 30, 2022 and September 30, 2021. |
| (4) |
For the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021, Wealth Management deposits of $332 billion, $340 billion and $327 billion, respectively, exclude off-balance sheet deposits of $8 billion, $8 billion and $9 billion, respectively, held by third parties outside of Morgan Stanley. Total deposits details are as follows: |
|
3Q22
|
2Q22
|
3Q21
|
||||||||||
|
Brokerage sweep deposits
|
$
|
228
|
$
|
279
|
$
|
273
|
||||||
|
Other deposits
|
104
|
61
|
54
|
|||||||||
|
Total balance sheet deposits
|
332
|
340
|
327
|
|||||||||
|
Off-balance sheet deposits
|
8
|
8
|
9
|
|||||||||
|
Total deposits
|
$
|
340
|
$
|
348
|
$
|
336
|
| Page 8: |
|
|
(1)
|
For the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021 and nine months ended September
30, 2022 and 2021, integration-related compensation and non-compensation expenses associated with the acquisition of Eaton Vance are as follows:
|
|
3Q22
|
2Q22
|
3Q21
|
3Q22 YTD
|
3Q21 YTD
|
||||||||||||||||
|
Compensation expenses
|
$
|
7
|
$
|
7
|
$
|
10
|
$
|
23
|
$
|
29
|
||||||||||
|
Non-compensation expenses
|
24
|
17
|
22
|
64
|
44
|
|||||||||||||||
|
Total non-interest expenses
|
$
|
31
|
$
|
24
|
$
|
32
|
$
|
87
|
$
|
73
|
||||||||||
|
Income tax provision
|
7
|
6
|
8
|
20
|
17
|
|||||||||||||||
|
Total non-interest expenses (after-tax)
|
$
|
24
|
$
|
18
|
$
|
24
|
$
|
67
|
$
|
56
|
||||||||||
|
(2)
|
Investment Management average tangible common equity represents average common equity adjusted to exclude goodwill
and intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 3Q22: $9,815mm; 2Q22: $9,815mm; 3Q21: $9,924mm; 3Q22 YTD: $9,815mm; 3Q21 YTD: $7,224mm
|
| Page 9: |
|
|
(1)
|
Net Flows by region for the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021 were:
North America: $(35.7) billion, $22.7 billion and $12.6 billion
International: $1.3 billion, $5.1 billion and $(0.3) billion
|
| (2) |
Assets under management or supervision by region for the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021 were:
North America: $998 billion, $1,059 billion and $1,148 billion
International: $281 billion, $292 billion and $374 billion
|
| Page 10: |
|
|
(1)
|
For the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021, Investment Management reflected
loan balances of $452 million, $220 million and $132 million, respectively.
|
| Page 11: |
|
|
(1)
|
For the quarter ended September 30, 2022, the Allowance Rollforward for Loans and Lending Commitments is as
follows:
|
|
Institutional Securities
|
Wealth
Management |
Total
|
||||||||||
|
Loans
|
||||||||||||
|
Allowance for Credit Losses (ACL)
|
||||||||||||
|
Beginning Balance - June 30, 2022
|
$
|
621
|
$
|
141
|
$
|
762
|
||||||
|
Net Charge Offs
|
(3
|
)
|
(8
|
)
|
(11
|
)
|
||||||
|
Provision
|
(9
|
)
|
15
|
6
|
||||||||
|
Other
|
(7
|
)
|
(1
|
)
|
(8
|
)
|
||||||
|
Ending Balance - September 30, 2022
|
$
|
602
|
$
|
147
|
$
|
749
|
||||||
|
Lending Commitments
|
||||||||||||
|
Allowance for Credit Losses (ACL)
|
||||||||||||
|
Beginning Balance - June 30, 2022
|
$
|
449
|
$
|
15
|
$
|
464
|
||||||
|
Net Charge Offs
|
-
|
-
|
-
|
|||||||||
|
Provision
|
33
|
(4
|
)
|
29
|
||||||||
|
Other
|
(7
|
)
|
1
|
(6
|
)
|
|||||||
|
Ending Balance - September 30, 2022
|
$
|
475
|
$
|
12
|
$
|
487
|
||||||
|
Loans and Lending Commitments
|
||||||||||||
|
Allowance for Credit Losses (ACL)
|
||||||||||||
|
Beginning Balance - June 30, 2022
|
$
|
1,070
|
$
|
156
|
$
|
1,226
|
||||||
|
Net Charge Offs
|
(3
|
)
|
(8
|
)
|
(11
|
)
|
||||||
|
Provision
|
24
|
11
|
35
|
|||||||||
|
Other
|
(14
|
)
|
-
|
(14
|
)
|
|||||||
|
Ending Balance - September 30, 2022
|
$
|
1,077
|
$
|
159
|
$
|
1,236
|
||||||
|
Legal Notice
|
|
This Financial Supplement contains financial, statistical and business-related information, as
well as business and segment trends.
|
|||||||||||||||||
|
The information should be read in conjunction with the Firm's third quarter earnings press
release issued October 14, 2022.
|
