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Published: 2025-01-16 08:59:53 ET
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EX-99.2 3 a4q24msfinancialsupplement.htm EX-99.2 Document
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Fourth Quarter 2024 Earnings Results
Quarterly Financial SupplementPage
Consolidated Financial Summary 1
Consolidated Financial Metrics, Ratios and Statistical Data2
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 Ratios5
Wealth Management Income Statement Information, Financial Metrics and Ratios6
Wealth Management Financial Information and Statistical Data 7
Investment Management Income Statement Information, Financial Metrics and Ratios8
Investment Management Financial Information and Statistical Data 9
Consolidated Loans and Lending Commitments 10
Consolidated Loans and Lending Commitments Allowance for Credit Losses11
Definition of U.S. GAAP to Non-GAAP Measures12
Definitions of Performance Metrics and Terms 13 - 14
Supplemental Quantitative Details and Calculations 15 - 16
Legal Notice 17

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Consolidated Financial Summary
(unaudited, dollars in millions)
Quarter EndedPercentage Change From:Twelve Months EndedPercentage
Dec 31, 2024Sep 30, 2024Dec 31, 2023Sep 30, 2024Dec 31, 2023Dec 31, 2024Dec 31, 2023Change
Net revenues
Institutional Securities$7,267 $6,815 $4,940 7 %47 %$28,080 $23,060 22 %
Wealth Management7,478 7,270 6,645 3 %13 %28,420 26,268 8 %
Investment Management1,643 1,455 1,464 13 %12 %5,861 5,370 9 %
Intersegment Eliminations(165)(157)(153)(5 %)(8 %)(600)(555)(8 %)
Net revenues (1)
$16,223 $15,383 $12,896 5 %26 %$61,761 $54,143 14 %
Provision for credit losses$115 $79 $3 46 % * $264 $532 (50 %)
Non-interest expenses
Institutional Securities$4,748 $4,836 $4,510 (2 %)5 %$19,129 $18,183 5 %
Wealth Management5,388 5,199 5,236 4 %3 %20,618 19,607 5 %
Investment Management1,229 1,195 1,199 3 %3 %4,724 4,528 4 %
Intersegment Eliminations(163)(147)(148)(11 %)(10 %)(570)(520)(10 %)
Non-interest expenses (1)(2)
$11,202 $11,083 $10,797 1 %4 %$43,901 $41,798 5 %
Income before provision for income taxes
Institutional Securities$2,441 $1,911 $408 28 % * $8,749 $4,476 95 %
Wealth Management2,053 2,060 1,428 — %44 %7,740 6,530 19 %
Investment Management414 260 265 59 %56 %1,137 842 35 %
Intersegment Eliminations(2)(10)(5)80 %60 %(30)(35)14 %
Income before provision for income taxes$4,906 $4,221 $2,096 16 %134 %$17,596 $11,813 49 %
Net Income applicable to Morgan Stanley
Institutional Securities$1,891 $1,436 $304 32 % * $6,666 $3,453 93 %
Wealth Management1,514 1,568 1,018 (3 %)49 %5,888 5,022 17 %
Investment Management310 192 199 61 %56 %859 639 34 %
Intersegment Eliminations(1)(8)(4)88 %75 %(23)(27)15 %
Net Income applicable to Morgan Stanley$3,714 $3,188 $1,517 16 %145 %$13,390 $9,087 47 %
Earnings applicable to Morgan Stanley common shareholders$3,564 $3,028 $1,383 18 %158 %$12,800 $8,530 50 %
Notes:
-Firm net revenues excluding mark‐to‐market gains and losses on deferred cash‐based compensation plans (DCP) were: 4Q24: $16,232 million, 3Q24: $15,144 million, 4Q23: $12,527 million, 4Q24 YTD: $61,398
million, 4Q23 YTD: $53,709 million.
-Firm compensation expenses excluding DCP were: 4Q24: $6,197 million, 3Q24: $6,457 million, 4Q23: $5,597 million, 4Q24 YTD: $25,506 million, 4Q23 YTD: $23,890 million.
-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.
1
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Consolidated Financial Metrics, Ratios and Statistical Data
(unaudited)
Quarter EndedPercentage Change From:Twelve Months EndedPercentage
Dec 31, 2024Sep 30, 2024Dec 31, 2023Sep 30, 2024Dec 31, 2023Dec 31, 2024Dec 31, 2023Change
Financial Metrics:
Earnings per basic share$2.25 $1.91 $0.86 18 %162 %$8.04 $5.24 53 %
Earnings per diluted share$2.22 $1.88 $0.85 18 %161 %$7.95 $5.18 53 %
Return on average common equity15.2 %13.1 %6.2 %14.0 %9.4 %
Return on average tangible common equity20.2 %17.5 %8.4 %18.8 %12.8 %
Book value per common share$58.98 $58.25 $55.50 $58.98 $55.50 
Tangible book value per common share$44.57 $43.76 $40.89 $44.57 $40.89 
Financial Ratios:
Pre-tax margin30 %27 %16 %28 %22 %
Compensation and benefits as a % of net revenues39 %44 %46 %42 %45 %
Non-compensation expenses as a % of net revenues30 %28 %38 %29 %32 %
Firm expense efficiency ratio (1)
69 %72 %84 %71 %77 %
Effective tax rate (2)
24.1 %23.6 %26.5 %23.1 %21.9 %
Statistical Data:
Period end common shares outstanding (millions)1,607 1,612 1,627 — %(1 %)
Average common shares outstanding (millions)
Basic1,583 1,588 1,606 — %(1 %)1,591 1,628 (2 %)
Diluted1,608 1,609 1,627 — %(1 %)1,611 1,646 (2 %)
Worldwide employees80,478 80,205 80,006 — %1 %
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.
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Consolidated and U.S. Bank Supplemental Financial Information
(unaudited, dollars in millions)
Quarter EndedPercentage Change From:Twelve Months EndedPercentage
Dec 31, 2024Sep 30, 2024Dec 31, 2023Sep 30, 2024Dec 31, 2023Dec 31, 2024Dec 31, 2023Change
Consolidated Balance sheet
Total assets$1,215,071 $1,258,027 $1,193,693 (3 %)2 %
Loans (1)
$246,814 $239,760 $226,828 3 %9 %
Deposits$376,007 $363,722 $351,804 3 %7 %
Long-term debt outstanding$284,307 $291,224 $260,544 (2 %)9 %
Maturities of long-term debt outstanding (next 12 months)$21,924 $25,097 $20,151 (13 %)9 %
Average liquidity resources$345,440 $342,620 $314,504 1 %10 %
Common equity$94,761 $93,897 $90,288 1 %5 %
Less: Goodwill and intangible assets(23,157)(23,354)(23,761)(1 %)(3 %)
Tangible common equity $71,604 $70,543 $66,527 2 %8 %
Preferred equity$9,750 $9,750 $8,750 — %11 %
U.S. Bank Supplemental Financial Information
Total assets$434,812 $420,923 $396,111 3 %10 %
Loans$232,903 $224,276 $212,207 4 %10 %
Investment securities portfolio (2)
$124,343 $124,551 $118,008 — %5 %
Deposits$369,730 $357,548 $346,103 3 %7 %
Regional revenues
Americas$12,537 $11,557 $10,198 8 %23 %$46,929 $41,651 13 %
EMEA (Europe, Middle East, Africa)1,672 1,828 1,342 (9 %)25 %7,197 6,058 19 %
Asia2,014 1,998 1,356 1 %49 %7,635 6,434 19 %
Consolidated net revenues$16,223 $15,383 $12,896 5 %26 %$61,761 $54,143 14 %
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.
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Consolidated Average Common Equity and Regulatory Capital Information
(unaudited, dollars in billions)
Quarter EndedPercentage Change From:Twelve Months EndedPercentage
Dec 31, 2024Sep 30, 2024Dec 31, 2023Sep 30, 2024Dec 31, 2023Dec 31, 2024Dec 31, 2023Change
Average Common Equity
Institutional Securities$45.0 $45.0 $45.6 — %(1 %)$45.0 $45.6 (1 %)
Wealth Management29.1 29.1 28.8 — %1 %29.1 28.8 1 %
Investment Management10.8 10.8 10.4 — %4 %10.8 10.4 4 %
Parent Company9.0 7.8 5.1 15 %76 %6.86.0 13 %
Firm$93.9 $92.7 $89.9 1 %4 %$91.7 $90.8 1 %
Regulatory Capital
Common Equity Tier 1 capital$75.1 $73.9 $69.4 2 %8 %
Tier 1 capital$84.8 $83.7 $78.2 1 %8 %
Standardized Approach
Risk-weighted assets$473.5 $490.3 $456.1 (3 %)4 %
Common Equity Tier 1 capital ratio15.9 %15.1 %15.2 %
Tier 1 capital ratio17.9 %17.1 %17.1 %
Advanced Approach
Risk-weighted assets$479.3 $495.0 $448.2 (3 %)7 %
Common Equity Tier 1 capital ratio15.7 %14.9 %15.5 %
Tier 1 capital ratio17.7 %16.9 %17.4 %
Leverage-based capital
Tier 1 leverage ratio6.9 %6.9 %6.7 %
Supplementary Leverage Ratio5.6 %5.5 %5.5 %
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.
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Institutional Securities
Income Statement Information, Financial Metrics and Ratios
(unaudited, dollars in millions)
Quarter Ended Percentage Change From:Twelve Months EndedPercentage
Dec 31, 2024Sep 30, 2024Dec 31, 2023Sep 30, 2024Dec 31, 2023Dec 31, 2024Dec 31, 2023Change
Revenues:
Advisory$779 $546 $702 43 %11 %$2,378 $2,244 6 %
Equity455 362 225 26 %102 %1,599 889 80 %
Fixed income407 555 391 (27 %)4 %2,193 1,445 52 %
Underwriting862 917 616 (6 %)40 %3,792 2,334 62 %
Investment banking1,641 1,463 1,318 12 %25 %6,170 4,578 35 %
Equity3,325 3,045 2,202 9 %51 %12,230 9,986 22 %
Fixed income 1,931 2,003 1,434 (4 %)35 %8,418 7,673 10 %
Other370 304 (14)22 % * 1,262 823 53 %
Net revenues7,267 6,815 4,940 7 %47 %28,080 23,060 22 %
Provision for credit losses78 68 22 15 % * 202 401 (50 %)
Compensation and benefits 1,764 2,271 1,732 (22 %)2 %8,669 8,369 4 %
Non-compensation expenses2,984 2,565 2,778 16 %7 %10,460 9,814 7 %
Total non-interest expenses4,748 4,836 4,510 (2 %)5 %19,129 18,183 5 %
Income before provision for income taxes2,441 1,911 408 28 % * 8,749 4,476 95 %
Net income applicable to Morgan Stanley$1,891 $1,436 $304 32 % * $6,666 $3,453 93 %
Pre-tax margin34 %28 %8 %31 %19 %
Compensation and benefits as a % of net revenues24 %33 %35 %31 %36 %
Non-compensation expenses as a % of net revenues41 %38 %56 %37 %43 %
Return on Average Common Equity16 %12 %2 %14 %7 %
Return on Average Tangible Common Equity (1)
16 %12 %2 %14 %7 %
Trading VaR (Average Daily 95% / One-Day VaR)$46 $46 $46 
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.
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Wealth Management
Income Statement Information, Financial Metrics and Ratios
(unaudited, dollars in millions)
Quarter Ended
Percentage Change From:Twelve Months EndedPercentage
Dec 31, 2024Sep 30, 2024Dec 31, 2023Sep 30, 2024Dec 31, 2023Dec 31, 2024Dec 31, 2023Change
Revenues:
Asset management$4,417 $4,266 $3,556 4 %24 %$16,501 $14,019 18 %
Transactional973 1,076 1,088 (10 %)(11 %)3,864 3,556 9 %
Net interest income1,885 1,774 1,852 6 %2 %7,313 8,118 (10 %)
Other203 154 149 32 %36 %742 575 29 %
Net revenues (1)
7,478 7,270 6,645 3 %13 %28,420 26,268 8 %
Provision for credit losses37 11 (19) *  * 62 131 (53 %)
Compensation and benefits (1)
3,950 3,868 3,640 2 %9 %15,207 13,972 9 %
Non-compensation expenses1,438 1,331 1,596 8 %(10 %)5,411 5,635 (4 %)
Total non-interest expenses5,388 5,199 5,236 4 %3 %20,618 19,607 5 %
Income before provision for income taxes2,053 2,060 1,428 — %44 %7,740 6,530 19 %
Net income applicable to Morgan Stanley$1,514 $1,568 $1,018 (3 %)49 %$5,888 $5,022 17 %
Pre-tax margin27 %28 %21 %27 %25 %
Compensation and benefits as a % of net revenues53 %53 %55 %54 %53 %
Non-compensation expenses as a % of net revenues19 %18 %24 %19 %21 %
Return on Average Common Equity 20 %21 %14 %20 %17 %
Return on Average Tangible Common Equity (2)
38 %39 %27 %37 %33 %
Notes:
-Wealth Management net revenues excluding DCP were: 4Q24: $7,504 million, 3Q24: $7,100 million, 4Q23: $6,403 million, 4Q24 YTD: $28,181 million, 4Q23 YTD: $25,986 million.
-Wealth Management compensation expenses excluding DCP were: 4Q24: $3,892 million, 3Q24: $3,684 million, 4Q23: $3,406 million, 4Q24 YTD: $14,776 million, 4Q23 YTD: $13,560 million.
-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.
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Wealth Management
Financial Information and Statistical Data
(unaudited, dollars in billions)
Quarter EndedPercentage Change From:
Dec 31, 2024Sep 30, 2024Dec 31, 2023Sep 30, 2024Dec 31, 2023
Wealth Management Metrics
Total client assets$6,194 $5,974 $5,129 4 %21 %
Net new assets $56.5 $63.9 $47.5 (12 %)19 %
U.S. Bank loans$159.5 $155.2 $146.5 3 %9 %
Margin and other lending (1)
$28.3 $25.7 $21.4 10 %32 %
Deposits (2)
$370 $358 $346 3 %7 %
Annualized weighted average cost of deposits
Period end2.73 %2.99 %2.92 %
Period average2.94 %3.19 %2.86 %
Advisor-led channel
Advisor-led client assets$4,758 $4,647 $3,979 2 %20 %
Fee-based client assets$2,347 $2,302 $1,983 2 %18 %
Fee-based asset flows$35.2 $35.7 $41.6 (1 %)(15 %)
Fee-based assets as a % of advisor-led client assets49 %50 %50 %
 Self-directed channel
Self-directed client assets$1,437 $1,327 $1,150 8 %25 %
Daily average revenue trades (000's)911 815 705 12 %29 %
Self-directed households (millions)8.3 8.2 8.1 1 %2 %
Workplace channel
Stock plan unvested assets$475 $461 $416 3 %14 %
Number of stock plan participants (millions)6.6 6.7 6.6 (1 %)— %
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.
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Investment Management
Income Statement Information, Financial Metrics and Ratios
(unaudited, dollars in millions)
Quarter EndedPercentage Change From:Twelve Months EndedPercentage
Dec 31, 2024Sep 30, 2024Dec 31, 2023Sep 30, 2024Dec 31, 2023Dec 31, 2024Dec 31, 2023Change
Revenues:
Asset management and related fees$1,555 $1,384 $1,403 12 %11 %$5,627 $5,231 8 %
Performance-based income and other88 71 61 24 %44 %234 139 68 %
Net revenues1,643 1,455 1,464 13 %12 %5,861 5,370 9 %
Compensation and benefits575 594 579 (3 %)(1 %)2,302 2,217 4 %
Non-compensation expenses654 601 620 9 %5 %2,422 2,311 5 %
Total non-interest expenses 1,229 1,195 1,199 3 %3 %4,724 4,528 4 %
Income before provision for income taxes414 260 265 59 %56 %1,137 842 35 %
Net income applicable to Morgan Stanley$310 $192 $199 61 %56 %$859 $639 34 %
Pre-tax margin25 %18 %18 %19 %16 %
Compensation and benefits as a % of net revenues35 %41 %40 %39 %41 %
Non-compensation expenses as a % of net revenues40 %41 %42 %41 %43 %
Return on Average Common Equity11 %7 %8 %8 %6 %
Return on Average Tangible Common Equity (1)
109 %68 %110 %76 %88 %
The End Notes are an integral part of this presentation. See pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice.
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Investment Management
Financial Information and Statistical Data
(unaudited, dollars in billions)
Quarter EndedPercentage Change From:Twelve Months EndedPercentage
Dec 31, 2024Sep 30, 2024Dec 31, 2023Sep 30, 2024Dec 31, 2023Dec 31, 2024Dec 31, 2023Change
Assets Under Management or Supervision (AUM)
Net Flows by Asset Class
Equity$(6.7)$(5.6)$(6.5)(20 %)(3 %)$(27.0)$(19.4)(39 %)
Fixed Income8.0 4.4 (0.2)82 % * 16.2 (9.3) *
Alternatives and Solutions3.0 8.5 (0.4)(65 %) * 28.8 13.5 113 %
Long-Term Net Flows4.3 7.3 (7.1)(41 %) * $18.0 $(15.2) *
Liquidity and Overlay Services66.8 9.3 (6.6) *  * 64.5 22.7 184 %
Total Net Flows$71.1 $16.6 $(13.7) *  * $82.5 $7.5  *
Assets Under Management or Supervision by Asset Class
Equity$312 $316 $295 (1 %)6 %
Fixed Income192 188 171 2 %12 %
Alternatives and Solutions593 591 508 — %17 %
Long‐Term Assets Under Management or Supervision1,097 1,095 974 — %13 %
Liquidity and Overlay Services569 503 485 13 %17 %
Total Assets Under Management or Supervision$1,666 $1,598 $1,459 4 %14 %
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.
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Consolidated Loans and Lending Commitments
(unaudited, dollars in billions)
Quarter EndedPercentage Change From:
Dec 31, 2024Sep 30, 2024Dec 31, 2023Sep 30, 2024Dec 31, 2023
Institutional Securities
Loans:
Corporate $15.9 $15.2 $18.4 5 %(14 %)
Secured lending facilities51.2 49.2 42.5 4 %20 %
Commercial and residential real estate11.1 11.8 11.7 (6 %)(5 %)
Securities-based lending and other8.9 7.8 7.2 14 %24 %
Total Loans87.1 84.0 79.8 4 %9 %
Lending Commitments156.9 151.9 130.4 3 %20 %
Institutional Securities Loans and Lending Commitments $244.0 $235.9 $210.2 3 %16 %
Wealth Management
Loans:
Securities-based lending and other$92.9 $90.4 $86.2 3 %8 %
Residential real estate66.6 64.9 60.3 3 %10 %
Total Loans159.5 155.3 146.5 3 %9 %
Lending Commitments19.3 18.4 19.6 5 %(2 %)
Wealth Management Loans and Lending Commitments $178.8 $173.7 $166.1 3 %8 %
Consolidated Loans and Lending Commitments (1)
$422.8 $409.6 $376.3 3 %12 %
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.
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Consolidated Loans and Lending Commitments
Allowance for Credit Losses (ACL) as of December 31, 2024
(unaudited, dollars in millions)
Loans and Lending Commitments
ACL (1)
ACL %Q4 Provision
(Gross)
Loans:
Held For Investment (HFI)
Corporate$6,889 $200 2.9 %$(22)
Secured lending facilities48,842 140 0.3 %13 
Commercial and residential real estate8,412 373 4.4 %33 
Other2,876 17 0.6 %3 
Institutional Securities - HFI$67,019 $730 1.1 %$27 
Wealth Management - HFI159,877 336 0.2 %38 
Held For Investment$226,896 $1,066 0.5 %$65 
Held For Sale12,319 
Fair Value8,461 
Total Loans247,676 1,066 65 
Lending Commitments176,206 656 0.4 %50 
Consolidated Loans and Lending Commitments$423,882 $1,722 $115 
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.
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Definition of U.S. GAAP to Non-GAAP Measures
(a) We prepare our financial statements using U.S. GAAP. From time to time, we may disclose certain “non‐GAAP financial measures” in this document or in the course of our earnings releases, earnings and other conference calls, financial presentations, definitive proxy statements and other public disclosures. A “non‐GAAP financial measure” excludes, or includes, amounts from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. We consider the non‐GAAP financial measures we disclose to be useful to us, investors, analysts and other stakeholders by providing further transparency about, or an alternate means of assessing or comparing our financial condition, operating results and capital adequacy. 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 U.S. GAAP financial measure and the non‐GAAP financial measure. We present certain non‐GAAP financial measures that exclude the impact of mark‐to-market gains and losses on DCP investments from net revenues and compensation expenses. The impact of DCP is primarily reflected in our Wealth Management business segment results. These measures allow for better comparability of period‐to‐period underlying operating performance and revenue trends, especially in our Wealth Management business segment. By excluding the impact of these items, we are better able to describe the business drivers and resulting impact to net revenues and corresponding change to the associated compensation expenses. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Summary” in the 2023 Form 10‐K.
(b) The following are considered non‐GAAP financial measures:
-Tangible common equity represents common shareholders’ equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction. In addition, we believe that certain ratios that utilize tangible common equity, such as return on average tangible common equity (“ROTCE”) and tangible book value per common share, also non‐GAAP financial measures, are useful for evaluating the operating performance and capital adequacy of the business period‐to‐period, respectively.
-ROTCE represents annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average tangible common equity.
-Tangible book value per common share represents tangible common equity divided by common shares outstanding.
-Segment return on average common equity and return on average tangible common equity represent net income applicable to Morgan Stanley by segment less preferred dividends allocated to each segment, annualized as a percentage of average common equity and average tangible common equity, respectively, allocated to each segment. The amount of capital allocated to the business segments is generally set at the beginning of each year and remains fixed throughout the year until the next annual reset unless a significant business change occurs (e.g., acquisition or disposition).
-Net revenues excluding DCP represents net revenues adjusted for the impact of mark‐to‐market gains and losses on economic hedges associated with certain employee deferred cash‐based compensation plans.
-Compensation expense excluding DCP represents compensation adjusted for the impact related to certain employee deferred cash‐based compensation plans linked to investment performance.
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Definitions of Performance Metrics and Terms
Our earnings releases, earnings conference calls, financial presentations and other communications may also include certain metrics that we believe to be useful to us, investors, analysts and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results.
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(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.
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(a) Return on average common equity represents annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity.
(b) Return on average tangible common equity represents a non‐GAAP financial measure.
(c) Book value per common share represents common equity divided by period end common shares outstanding.
(d) Tangible book value per common share represents a non‐GAAP financial measure.
(e) Pre‐tax margin represents income before provision for income taxes as a percentage of net revenues.
(f)The Firm expense efficiency ratio represents total non‐interest expenses as a percentage of net revenues.
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(a) Liquidity Resources, which are primarily held within the Parent Company and its major operating subsidiaries, are comprised of high quality liquid assets (HQLA) and cash deposits with banks. 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 December 31, 2024, September 30, 2024 and December 31, 2023.
(b) Our goodwill and intangible balances utilized in the calculation of tangible common equity are net of allowable mortgage servicing rights deduction.
(c) Tangible common equity represents a non‐GAAP financial measure.
(d) U.S. Bank refers to our U.S. Bank Subsidiaries, Morgan Stanley Bank N.A. and Morgan Stanley Private Bank, National Association, and excludes transactions between the bank subsidiaries, as well as deposits from the Parent Company and affiliates.
(e)Firmwide regional revenues reflect our consolidated net revenues on a managed basis. Further discussion regarding the geographic methodology for net revenues is disclosed in Note 22 to the consolidated financial statements included in the 2023 Form 10‐K.
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(a) Our 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 our regulatory capital to ensure that we maintain an amount of going concern capital after absorbing potential losses from stress events, where applicable, at a point in time. The amount of capital allocated to the business segments is generally set at the beginning of each year and remains fixed throughout the year until the next annual reset unless a significant business change occurs (e.g., acquisition or disposition). We define the difference between our total average common equity and the sum of the average common equity amounts allocated to our business segments as Parent Company common equity. The Required Capital framework is based on our regulatory capital requirements. We continue to evaluate our 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 2023 Form 10‐K.
(b) Our risk‐based capital ratios are computed under each of (i) the standardized approaches for calculating credit risk and market risk risk‐weighted assets (RWAs) (“Standardized Approach”) and (ii) the applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (“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 2023 Form 10‐K.
(c) Supplementary leverage ratio represents Tier 1 capital divided by the total supplementary leverage exposure.
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(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 margin represents income before provision for income taxes as a percentage of net revenues.
(c) VaR represents the unrealized loss in portfolio value that, based on historically observed market risk factor movements, would have been exceeded with a frequency of 5%, or five times in every 100 trading days, if the portfolio were held constant for one day. Further discussion of the calculation of VaR and the limitations of our VaR methodology, is disclosed in "Quantitative and Qualitative Disclosures about Risk" included in the 2023 Form 10‐K.
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(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 margin represents income before provision for income taxes as a percentage of net revenues.
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Definitions of Performance Metrics and Terms
Our earnings releases, earnings conference calls, financial presentations and other communications may also include certain metrics that we believe to be useful to us, investors, analysts and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results.
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(a)Client assets represent those for which Wealth Management is providing services including financial advisor‐led brokerage, custody, administrative and investment advisory services; self-directed brokerage and investment advisory services; financial and wealth planning services; workplace services, including stock plan administration, and retirement plan services.
(b) Net new assets represent client asset inflows, inclusive of interest, dividends and asset acquisitions, less client asset outflows, and exclude the impact of business combinations/divestitures and the impact of fees and commissions.
(c) 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.
(d) Deposits reflect liabilities sourced from Wealth Management clients and other sources of funding on our U.S. Bank Subsidiaries. Deposits include sweep deposit programs, savings and other deposits, and time deposits.
(e) Annualized weighted average cost of deposits represents the total annualized weighted average cost of the various deposit products. Amounts at December 31, 2024 include the effect of related hedging derivatives. Amounts at September 30, 2024 and December 31, 2023 exclude the effect of related hedging derivatives, which increased period end costs by 0.06% and 0.03%, respectively, and period average costs by 0.04% for both periods. The period end cost of deposits is based upon balances and rates as of December 31, 2024, September 30, 2024 and December 31, 2023. The period average is based on daily balances and rates for the period.
(f) Advisor‐led client assets represent client assets in accounts that have a Wealth Management representative assigned.
(g) 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.
(h) 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 2023 Form 10‐K.
(i) Self‐directed client assets represent active accounts which are not advisor-led. Active accounts are defined as having at least $25 in assets.
(j) Daily average revenue trades (DARTs) represent the total self‐directed trades in a period divided by the number of trading days during that period.
(k) Self‐directed households represent the total number of households that include at least one active 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.
(l) 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.
(m)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.
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(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 our 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 our consolidated income statement.
(c) Pre‐tax margin represents income before provision for income taxes as a percentage of net revenues.
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(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.
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(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.
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Supplemental Quantitative Details and Calculations
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(1)The following sets forth the net revenue impact of mark‐to‐market gains and losses on investments associated with DCP and compensation expense impact related to DCP:
4Q243Q244Q234Q24 YTD4Q23 YTD
Net revenues$16,223 $15,383 $12,896 61,761 54,143 
Adjustment for mark-to-market on DCP9 (239)(369)(363)(434)
Adjusted Net revenues - non-GAAP$16,232 $15,144 $12,527 $61,398 $53,709 
Compensation expense$6,289 $6,733 $5,951 $26,178 $24,558 
Adjustment for mark-to-market on DCP(92)(276)(354)(672)(668)
Adjusted Compensation expense - non-GAAP$6,197 $6,457 $5,597 $25,506 $23,890 
-Compensation expense for deferred cash‐based compensation plans awards is calculated based on the notional value of the award granted, adjusted for changes in the fair value of the referenced investments that employees select. Compensation expense is recognized over the vesting period relevant to each separately vesting portion of deferred awards. The table above presents non-GAAP adjusted Compensation expense which excludes amounts recognized in Compensation expense associated with certain cash-based deferred compensation plans.
-We invest directly, as principal, in financial instruments and other investments to economically hedge certain of our obligations under these deferred cash‐based compensation plans. Changes in the fair value of such investments, net of financing costs, are recorded in net revenues, and included in Transactional revenues in the Wealth Management business segment. Although changes in compensation expense resulting from changes in the fair value of the referenced investments will generally be offset by changes in the fair value of investments recognized in net revenues, there is typically a timing difference between the immediate recognition of gains and losses on our investments and the deferred recognition of the related compensation expense over the vesting period. While this timing difference may not be material to our Income before provision for income taxes in any individual period, it may impact the Wealth Management business segment reported ratios and operating metrics in certain periods due to potentially significant impacts to net revenues and compensation expenses. The table above presents non-GAAP adjusted Net revenues which excludes amounts recognized in Net revenues related to mark-to-market gains and losses, net of financing costs, on investments associated with certain cash-based deferred compensation plans.
(2)The Firm non-interest expenses by category are as follows:
4Q243Q244Q234Q24 YTD4Q23 YTD
Compensation and benefits (a) (b)
$6,289 $6,733 $5,951 $26,178 $24,558 
Non-compensation expenses:
Brokerage, clearing and exchange fees1,180 1,044 865 4,140 3,476 
Information processing and communications1,059 1,042 987 4,088 3,775 
Professional services798 711 822 2,901 3,058 
Occupancy and equipment527 473 528 1,905 1,895 
Marketing and business development279 224 224 965 898 
Other1,070 856 1,420 3,724 4,138 
Total non-compensation expenses (b) (c) (d)
4,913 4,350 4,846 17,723 17,240 
Total non-interest expenses$11,202 $11,083 $10,797 $43,901 $41,798 
(a)For the quarter and twelve months ended December 31, 2023, Firm results include severance costs of $30 million and $353 million, respectively, associated with employee actions. The severance costs were reported in the business segments' results as follows: Institutional Securities: 4Q23: $3 million, 4Q23 YTD: $220 million; Wealth Management: 4Q23: $25 million, 4Q23 YTD: $105 million; Investment Management: 4Q23: $2 million, 4Q23 YTD: $28 million.
(b)For the quarter and twelve months ended December 31, 2023, Firm results include pre‐tax integration‐related expenses of $49 million and $293 million, respectively. The pre‐tax integration‐related expenses were reported in the business segments' results as follows: Wealth Management: 4Q23: $30 million, 4Q23 YTD: $201 million; Investment Management: 4Q23: $19 million, 4Q23 YTD: $92 million.
(c)For the quarters ended December 31, 2024, September 30, 2024, and twelve months ended December 31, 2024, Firm results included an FDIC Special Assessment of $(4) million, $(10) million and $36 million, respectively, and $286 million for the quarter and twelve months ended December 31, 2023. This FDIC Special Assessment was reported in the business segments' results as follows: Institutional Securities: 4Q24: $(2) million, 3Q24: $(4) million, 4Q24 YTD: $15 million, 4Q23 and 4Q23 YTD: $121 million; Wealth Management: 4Q24: $(2) million, 3Q24: $(6) million, 4Q24 YTD: $21 million, 4Q23 and 4Q23 YTD: $165 million.
(d)For the quarter and twelve months ended December 31, 2023, Firm results included a litigation reserve of $249 million related to a specific legal matter, reported in the Institutional Securities business segment.
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(1)Refer to page 1(2) End Notes from above.
(2)The effective tax rate for the prior year quarter reflects the non‐deductibility of a specific legal matter.
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(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 December 31, 2024, September 30, 2024 and December 31, 2023, the U.S. Bank investment securities portfolio included held to maturity investment securities of $47.8 billion, $48.8 billion and $51.4 billion, respectively.
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(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: 4Q24: $482mm; 3Q24: $482mm; 4Q23: $471mm; 4Q24 YTD: $482mm; 4Q23 YTD: $471mm.
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Supplemental Quantitative Details and Calculations
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(1)The following sets forth the net revenue impact of mark-to-market gains and losses on investments associated with DCP and compensation expense impact related to DCP:
4Q243Q244Q234Q24 YTD4Q23 YTD
Net revenues$7,478 $7,270 $6,645 $28,420 $26,268 
Adjustment for mark-to-market on DCP26 (170)(242)(239)(282)
Adjusted Net revenues - non-GAAP$7,504 $7,100 $6,403 $28,181 $25,986 
Compensation expense$3,950 $3,868 $3,640 $15,207 $13,972 
Adjustment for mark-to-market on DCP(58)(184)(234)(431)(412)
Adjusted Compensation expense - non-GAAP$3,892 $3,684 $3,406 $14,776 $13,560 
(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: 4Q24: $13,582mm; 3Q24: $13,582mm; 4Q23: $14,075mm; 4Q24 YTD: $13,582mm; 4Q23 YTD: $14,075mm.
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(1)Wealth Management other lending included $2 billion of non‐purpose securities based lending on non‐bank entities in each period ended December 31, 2024, September 30, 2024 and December 31, 2023.
(2)Wealth Management deposits details for the quarters ended December 31, 2024, September 30, 2024 and December 31, 2023, are as follows:
4Q243Q244Q23
Brokerage sweep deposits$140 $131 $145 
Other deposits230 227 201 
Total deposits$370 $358 $346 
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(1)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: 4Q24: $9,676mm; 3Q24: $9,676mm; 4Q23: $9,687mm; 4Q24 YTD: $9,676mm; 4Q23 YTD: $9,687mm.
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(1)For the quarters ended December 31, 2024, September 30, 2024 and December 31, 2023, Investment Management reflected loan balances of $204 million, $507 million and $459 million, respectively.
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(1)For the quarter ended December 31, 2024, the Allowance Rollforward for Loans and Lending Commitments is as follows:
Institutional SecuritiesWealth ManagementTotal
Loans
Allowance for Credit Losses (ACL)
Beginning Balance - September 30, 2024$782 $322 $1,104 
Net Charge Offs(62)(25)(87)
Provision27 38 65 
Other(17)1 (16)
Ending Balance - December 31, 2024$730 $336 $1,066 
Lending Commitments
Allowance for Credit Losses (ACL)
Beginning Balance - September 30, 2024$602 $17 $619 
Net Charge Offs— — — 
Provision51 (1)50 
Other(13)— (13)
Ending Balance - December 31, 2024$640 $16 $656 
Loans and Lending Commitments
Allowance for Credit Losses (ACL)
Beginning Balance - September 30, 2024$1,384 $339 $1,723 
Net Charge Offs(62)(25)(87)
Provision78 37 115 
Other(30)1 (29)
Ending Balance - December 31, 2024$1,370 $352 $1,722 
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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 fourth quarter earnings press release issued January 16, 2025.
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