EX-99.2 3 a52563520ex99_2.htm EXHIBIT 99.2
Exhibit 99.2




Fourth Quarter 2021 Earnings Results
  
   
   
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 2021 earnings results reflect the completed acquisitions of E*TRADE Financial Corporation ("E*TRADE") and Eaton Vance Corp. ("Eaton Vance") prospectively from the dates, October 2, 2020 and March 1, 2021, respectively. Comparisons between current year periods and prior year periods are impacted by the financial results of E*TRADE and Eaton Vance reported in the Wealth Management segment and Investment Management segment, respectively.


Consolidated Financial Summary
                                                
(unaudited, dollars in millions)
                                                
                                                 
                                                 
    
Quarter Ended
    
Percentage Change From:
    
Twelve Months Ended
    
Percentage
  
   
Dec 31, 2021
    
Sep 30, 2021
    
Dec 31, 2020
    
Sep 30, 2021
    
Dec 31, 2020
    
Dec 31, 2021
    
Dec 31, 2020
    
Change
  
Net revenues
                                                
Institutional Securities
  
$
6,669
    
$
7,495
    
$
6,970
      
(11
%)
    
(4
%)
  
$
29,833
    
$
26,476
      
13
%
Wealth Management
    
6,254
      
5,935
      
5,672
      
5
%
    
10
%
    
24,243
      
19,086
      
27
%
Investment Management
    
1,751
      
1,453
      
1,100
      
21
%
    
59
%
    
6,220
      
3,734
      
67
%
Intersegment Eliminations
    
(150
)
    
(130
)
    
(145
)
    
(15
%)
    
(3
%)
    
(541
)
    
(539
)
    
--
  
Net revenues
  
$
14,524
    
$
14,753
    
$
13,597
      
(2
%)
    
7
%
  
$
59,755
    
$
48,757
      
23
%
                                                                 
Provision for credit losses
  
$
5
    
$
24
    
$
4
      
(79
%)
    
25
%
  
$
4
    
$
761
      
(99
%)
                                                                 
Non-interest expenses
                                                                
Institutional Securities
  
$
3,705
    
$
4,498
    
$
3,797
      
(18
%)
    
(2
%)
  
$
18,026
    
$
16,594
      
9
%
Wealth Management
    
4,826
      
4,405
      
4,611
      
10
%
    
5
%
    
18,051
      
14,669
      
23
%
Investment Management
    
1,243
      
1,083
      
904
      
15
%
    
38
%
    
4,542
      
2,864
      
59
%
Intersegment Eliminations
    
(139
)
    
(131
)
    
(149
)
    
(6
%)
    
7
%
    
(536
)
    
(549
)
    
2
%
Non-interest expenses (1)
  
$
9,635
    
$
9,855
    
$
9,163
      
(2
%)
    
5
%
  
$
40,083
    
$
33,578
      
19
%
                                                                 
Income before taxes
                                                                
Institutional Securities
  
$
2,972
    
$
2,973
    
$
3,160
      
--
      
(6
%)
  
$
11,814
    
$
9,151
      
29
%
Wealth Management
    
1,415
      
1,530
      
1,070
      
(8
%)
    
32
%
    
6,181
      
4,387
      
41
%
Investment Management
    
508
      
370
      
196
      
37
%
    
159
%
    
1,678
      
870
      
93
%
Intersegment Eliminations
    
(11
)
    
1
      
4
      
*
      
*
      
(5
)
    
10
      
*
  
Income before taxes
  
$
4,884
    
$
4,874
    
$
4,430
      
--
      
10
%
  
$
19,668
    
$
14,418
      
36
%
                                                                 
Net Income applicable to Morgan Stanley
                                                               
Institutional Securities
  
$
2,223
    
$
2,229
    
$
2,422
      
--
      
(8
%)
  
$
8,957
    
$
7,012
      
28
%
Wealth Management
    
1,071
      
1,157
      
802
      
(7
%)
    
34
%
    
4,734
      
3,361
      
41
%
Investment Management
    
411
      
320
      
158
      
28
%
    
160
%
    
1,347
      
615
      
119
%
Intersegment Eliminations
    
(9
)
    
1
      
3
      
*
      
*
      
(4
)
    
8
      
*
  
Net Income applicable to Morgan Stanley
  
$
3,696
    
$
3,707
    
$
3,385
      
--
      
9
%
  
$
15,034
    
$
10,996
      
37
%
Earnings applicable to Morgan Stanley common shareholders
  
$
3,592
    
$
3,584
    
$
3,266
      
--
      
10
%
  
$
14,566
    
$
10,500
      
39
%
                                                                 
                                                                 
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
Consolidated Financial Metrics, Ratios and Statistical Data
                                      
(unaudited)
                                                
                                                 
                                                 
    
Quarter Ended
    
Percentage Change From:
    
Twelve Months Ended
    
Percentage
  
   
Dec 31, 2021
    
Sep 30, 2021
    
Dec 31, 2020
    
Sep 30, 2021
    
Dec 31, 2020
    
Dec 31, 2021
    
Dec 31, 2020
    
Change
  
                                                 
Financial Metrics:
                                                
                                                 
Earnings per basic share
  
$
2.05
    
$
2.01
    
$
1.84
      
2
%
    
11
%
  
$
8.16
    
$
6.55
      
25
%
Earnings per diluted share
  
$
2.01
    
$
1.98
    
$
1.81
      
2
%
    
11
%
  
$
8.03
    
$
6.46
      
24
%
                                                                 
Return on average common equity
    
14.7
%
    
14.5
%
    
14.7
%
                    
15.0
%
    
13.1
%
        
Return on average tangible common equity
    
19.8
%
    
19.6
%
    
17.7
%
                    
19.8
%
    
15.2
%
        
                                                                 
Book value per common share
  
$
55.12
    
$
54.56
    
$
51.13
                    
$
55.12
    
$
51.13
          
Tangible book value per common share
  
$
40.91
    
$
40.47
    
$
41.95
                    
$
40.91
    
$
41.95
          
                                                                 
Excluding integration-related expenses (1)
                                                                
Adjusted earnings per diluted share
  
$
2.08
    
$
2.04
    
$
1.92
      
2
%
    
8
%
  
$
8.22
    
$
6.58
      
25
%
Adjusted return on average common equity
    
15.2
%
    
15.0
%
    
15.6
%
                    
15.3
%
    
13.3
%
        
Adjusted return on average tangible common equity
    
20.4
%
    
20.2
%
    
18.7
%
                    
20.2
%
    
15.4
%
        
                                                                 
                                                                 
Financial Ratios:
                                                                
                                                                 
Pre-tax profit margin
    
34
%
    
33
%
    
33
%
                    
33
%
    
30
%
        
Compensation and benefits as a % of net revenues
    
38
%
    
40
%
    
40
%
                    
41
%
    
43
%
        
Non-compensation expenses as a % of net revenues
    
29
%
    
27
%
    
27
%
                    
26
%
    
26
%
        
Firm expense efficiency ratio
    
66
%
    
67
%
    
67
%
                    
67
%
    
69
%
        
Firm expense efficiency ratio excluding integration-related expenses (1)
    
65
%
    
66
%
    
66
%
                    
66
%
    
68
%
        
Effective tax rate
    
23.9
%
    
23.6
%
    
23.0
%
                    
23.1
%
    
22.5
%
        
                                                                 
                                                                 
Statistical Data:
                                                                
                                                                 
Period end common shares outstanding (millions)
    
1,772
      
1,799
      
1,810
      
(2
%)
    
(2
%)
                        
Average common shares outstanding (millions)
                                                                
Basic
    
1,751
      
1,781
      
1,774
      
(2
%)
    
(1
%)
    
1,785
      
1,603
      
11
%
Diluted
    
1,785
      
1,812
      
1,802
      
(1
%)
    
(1
%)
    
1,814
      
1,624
      
12
%
                                                                 
Worldwide employees
    
74,814
      
73,620
      
68,097
      
2
%
    
10
%
                        
                                                                 
                                                                 

Notes:
‐
For the quarters ended December 31, 2021 and September 30, 2021 and the full year ended December 31, 2021, Firm results include pre-tax integration-related expenses of $146 million, $145 million and $456 million ($114 million, $111 million and $352 million after‐tax) respectively, reported in the Wealth Management and Investment Management business segments. For the quarter and full year ended December 31, 2020, Firm results include pre-tax integration-related expenses of $231 million ($189 million after-tax) reported in the Wealth Management segment.
-
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.

2
Consolidated and U.S. Bank Supplemental Financial Information
                                      
(unaudited, dollars in millions)
                                                
                                                 
                                                 
   
Quarter Ended
    
Percentage Change From:
    
Twelve Months Ended
    
Percentage
  
   
Dec 31, 2021
    
Sep 30, 2021
    
Dec 31, 2020
    
Sep 30, 2021
    
Dec 31, 2020
    
Dec 31, 2021
    
Dec 31, 2020
    
Change
  
                                                 
Consolidated Balance sheet
                                                
                                                 
Total assets
  
$
1,188,140
    
$
1,190,476
    
$
1,115,862
      
--
      
6
%
                  
Loans (1)
  
$
200,761
    
$
188,274
    
$
161,745
      
7
%
    
24
%
                  
Deposits
  
$
347,574
    
$
329,041
    
$
310,782
      
6
%
    
12
%
                  
Liquidity resources
  
$
356,003
    
$
346,289
    
$
338,623
      
3
%
    
5
%
                  
Long-term debt outstanding
  
$
227,363
    
$
224,937
    
$
213,388
      
1
%
    
7
%
                  
Maturities of long-term debt outstanding (next 12 months)
  
$
14,074
    
$
13,899
    
$
24,241
      
1
%
    
(42
%)
                  
                                                           
Common equity
  
$
97,691
    
$
98,153
    
$
92,531
      
--
      
6
%
                  
Less: Goodwill and intangible assets
    
(25,192
)
    
(25,345
)
    
(16,615
)
    
(1
%)
    
52
%
                  
Tangible common equity
  
$
72,499
    
$
72,808
    
$
75,916
      
--
      
(5
%)
                  
                                                           
Preferred equity
  
$
7,750
    
$
7,750
    
$
9,250
      
--
      
(16
%)
                  
                                                           
U.S. Bank Supplemental Financial Information
                                                          
Total assets
  
$
386,059
    
$
367,111
    
$
346,515
      
5
%
    
11
%
                  
Loans
  
$
185,499
    
$
174,552
    
$
148,885
      
6
%
    
25
%
                  
Investment securities portfolio (2)
  
$
143,292
    
$
144,056
    
$
142,929
      
(1
%)
    
--
                    
Deposits
  
$
346,221
    
$
326,941
    
$
309,712
      
6
%
    
12
%
                  
                                                           
Regional revenues
                                                          
Americas
  
$
11,274
    
$
11,255
    
$
10,166
      
--
      
11
%
  
$
44,605
    
$
35,459
      
26
%
EMEA (Europe, Middle East, Africa)
    
1,695
      
1,752
      
1,771
      
(3
%)
    
(4
%)
    
7,699
      
6,549
      
18
%
Asia
    
1,555
      
1,746
      
1,660
      
(11
%)
    
(6
%)
    
7,451
      
6,749
      
10
%
Consolidated net revenues
  
$
14,524
    
$
14,753
    
$
13,597
      
(2
%)
    
7
%
  
$
59,755
    
$
48,757
      
23
%
                                                                 
                                                                 
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.
  

3
Consolidated Average Common Equity and Regulatory Capital Information
                          
(unaudited, dollars in billions)
                                                
                                                 
                                                 
   
Quarter Ended
    
Percentage Change From:
    
Twelve Months Ended
    
Percentage
  
   
Dec 31, 2021
    
Sep 30, 2021
    
Dec 31, 2020
    
Sep 30, 2021
    
Dec 31, 2020
    
Dec 31, 2021
    
Dec 31, 2020
    
Change
  
                                                 
Average Common Equity
                                                
Institutional Securities
  
$
43.5
    
$
43.5
    
$
42.8
      
--
      
2
%
  
$
43.5
    
$
42.8
      
2
%
Wealth Management
    
28.6
      
28.6
      
26.5
      
--
      
8
%
    
28.6
      
20.8
      
38
%
Investment Management
    
10.7
      
10.7
      
2.6
      
--
      
*
      
8.8
      
2.6
      
*
  
Parent
    
15.0
      
15.8
      
16.7
      
(5
%)
    
(10
%)
    
16.2
      
14.0
      
16
%
Firm
  
$
97.8
    
$
98.6
    
$
88.6
      
(1
%)
    
10
%
  
$
97.1
    
$
80.2
      
21
%
                                                                 
                                                                 
                                                                 
Regulatory Capital (1)
                                                                
                                                                 
Common Equity Tier 1 capital
  
$
75.8
    
$
75.8
    
$
78.7
      
--
      
(4
%)
                        
Tier 1 capital
  
$
83.4
    
$
83.4
    
$
88.1
      
--
      
(5
%)
                        
                                                                 
Standardized Approach
                                                                
Risk-weighted assets
  
$
472.3
    
$
473.0
    
$
453.1
      
--
      
4
%
                        
Common Equity Tier 1 capital ratio
    
16.0
%
    
16.0
%
    
17.4
%
                                        
Tier 1 capital ratio
    
17.6
%
    
17.6
%
    
19.4
%
                                        
                                                                 
Advanced Approach
                                                                
Risk-weighted assets
  
$
432.4
    
$
441.2
    
$
445.2
      
(2
%)
    
(3
%)
                        
Common Equity Tier 1 capital ratio
    
17.5
%
    
17.2
%
    
17.7
%
                                        
Tier 1 capital ratio
    
19.3
%
    
18.9
%
    
19.8
%
                                        
                                                                 
Leverage-based capital
                                                                
Tier 1 leverage ratio
    
7.1
%
    
7.3
%
    
8.4
%
                                        
Supplementary Leverage Ratio (2)
    
5.6
%
    
5.7
%
    
7.4
%
                                        
                                                                 
                                                                 
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.
  

4
Institutional Securities
                                                
Income Statement Information, Financial Metrics and Ratios
                                      
(unaudited, dollars in millions)
                                                
                                                 
01/15/22 13:41
                                                
   
Quarter Ended
    
Percentage Change From:
    
Twelve Months Ended
    
Percentage
  
   
Dec 31, 2021
    
Sep 30, 2021
    
Dec 31, 2020
    
Sep 30, 2021
    
Dec 31, 2020
    
Dec 31, 2021
    
Dec 31, 2020
    
Change
  
Revenues:
                                                
                                                 
Advisory
  
$
1,071
    
$
1,272
    
$
827
      
(16
%)
    
30
%
  
$
3,487
    
$
2,008
      
74
%
Equity
    
853
      
1,010
      
1,000
      
(16
%)
    
(15
%)
    
4,437
      
3,092
      
43
%
Fixed income
    
510
      
567
      
475
      
(10
%)
    
7
%
    
2,348
      
2,104
      
12
%
Underwriting
    
1,363
      
1,577
      
1,475
      
(14
%)
    
(8
%)
    
6,785
      
5,196
      
31
%
Investment banking
    
2,434
      
2,849
      
2,302
      
(15
%)
    
6
%
    
10,272
      
7,204
      
43
%
                                                                 
Equity
    
2,857
      
2,876
      
2,534
      
(1
%)
    
13
%
    
11,435
      
9,921
      
15
%
Fixed income
    
1,228
      
1,640
      
1,790
      
(25
%)
    
(31
%)
    
7,516
      
8,847
      
(15
%)
Other
    
150
      
130
      
344
      
15
%
    
(56
%)
    
610
      
504
      
21
%
                                                                 
Net revenues
    
6,669
      
7,495
      
6,970
      
(11
%)
    
(4
%)
    
29,833
      
26,476
      
13
%
                                                                 
Provision for credit losses
    
(8
)
    
24
      
13
      
*
      
*
      
(7
)
    
731
      
*
  
                                                                 
Compensation and benefits
    
1,370
      
2,248
      
1,575
      
(39
%)
    
(13
%)
    
9,165
      
8,342
      
10
%
Non-compensation expenses
    
2,335
      
2,250
      
2,222
      
4
%
    
5
%
    
8,861
      
8,252
      
7
%
Total non-interest expenses
    
3,705
      
4,498
      
3,797
      
(18
%)
    
(2
%)
    
18,026
      
16,594
      
9
%
                                                                 
                                                                 
Income before taxes
    
2,972
      
2,973
      
3,160
      
--
      
(6
%)
    
11,814
      
9,151
      
29
%
Net income applicable to Morgan Stanley
  
$
2,223
    
$
2,229
    
$
2,422
      
--
      
(8
%)
  
$
8,957
    
$
7,012
      
28
%
                                                                 
                                                                 
Pre-tax profit margin
    
45
%
    
40
%
    
45
%
                    
40
%
    
35
%
        
Compensation and benefits as a % of net revenues
    
21
%
    
30
%
    
23
%
                    
31
%
    
32
%
        
Non-compensation expenses as a % of net revenues
    
35
%
    
30
%
    
32
%
                    
30
%
    
31
%
        
                                                                 
Return on Average Common Equity
    
20
%
    
20
%
    
22
%
                    
20
%
    
15
%
        
Return on Average Tangible Common Equity (1)
    
20
%
    
20
%
    
22
%
                    
20
%
    
16
%
        
                                                                 
Trading VaR (Average Daily 95% / One-Day VaR)
  
$
40
    
$
45
    
$
55
                                          
                                                                 
                                                                 
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.
  

5
Wealth Management
                                                
Income Statement Information, Financial Metrics and Ratios
                                            
(unaudited, dollars in millions)
                                                
Report dated:01/15/22 13:42
                                                
                                                 
   
Quarter Ended
    
Percentage Change From:
    
Twelve Months Ended
    
Percentage
  
   
Dec 31, 2021
    
Sep 30, 2021
    
Dec 31, 2020
    
Sep 30, 2021
    
Dec 31, 2020
    
Dec 31, 2021
    
Dec 31, 2020
    
Change
  
Revenues:
                                                
Asset management
  
$
3,700
    
$
3,628
    
$
2,975
      
2
%
    
24
%
  
$
13,966
    
$
10,955
      
27
%
Transactional
    
1,027
      
832
      
1,340
      
23
%
    
(23
%)
    
4,259
      
3,694
      
15
%
Net interest income
    
1,405
      
1,348
      
1,207
      
4
%
    
16
%
    
5,393
      
4,022
      
34
%
Other
    
122
      
127
      
150
      
(4
%)
    
(19
%)
    
625
      
415
      
51
%
Net revenues
    
6,254
      
5,935
      
5,672
      
5
%
    
10
%
    
24,243
      
19,086
      
27
%
                                                                 
Provision for credit losses
    
13
      
-
      
(9
)
    
*
      
*
      
11
      
30
      
(63
%)
                                                                 
Compensation and benefits
    
3,486
      
3,159
      
3,345
      
10
%
    
4
%
    
13,090
      
10,970
      
19
%
Non-compensation expenses
    
1,340
      
1,246
      
1,266
      
8
%
    
6
%
    
4,961
      
3,699
      
34
%
Total non-interest expenses (1)
    
4,826
      
4,405
      
4,611
      
10
%
    
5
%
    
18,051
      
14,669
      
23
%
                                                                 
Income before taxes
    
1,415
      
1,530
      
1,070
      
(8
%)
    
32
%
    
6,181
      
4,387
      
41
%
Net income applicable to Morgan Stanley
  
$
1,071
    
$
1,157
    
$
802
      
(7
%)
    
34
%
  
$
4,734
    
$
3,361
      
41
%
                                                                 
Pre-tax profit margin
    
23
%
    
26
%
    
19
%
                    
25
%
    
23
%
        
Pre-tax profit margin excluding integration-related expenses
    
24
%
    
28
%
    
23
%
                    
27
%
    
24
%
        
Compensation and benefits as a % of net revenues
    
56
%
    
53
%
    
59
%
                    
54
%
    
57
%
        
Non-compensation expenses as a % of net revenues
    
21
%
    
21
%
    
22
%
                    
20
%
    
19
%
        
                                                                 
Return on Average Common Equity
    
15
%
    
16
%
    
12
%
                    
16
%
    
16
%
        
Return on Average Tangible Common Equity (2)
    
31
%
    
34
%
    
23
%
                    
34
%
    
29
%
        
                                                                 
                                                                 

Notes:
‐
For the quarters ended December 31, 2021 and September 30, 2021 and the full year ended December 31, 2021, Wealth Management's results include pre-tax integration-related expenses of $109 million, $113 million and $346 million ($85 million, $87 million and $267 million after-tax), respectively. For the quarter and full year ended  December 31, 2020, Wealth Management's results include pre-tax integration-related expenses of $231 million ($189 million after-tax).
-
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 Calculations, and Legal Notice.

6
Wealth Management
                              
Financial Information and Statistical Data
                              
(unaudited, dollars in billions)
                              
                               
                               
   
Quarter Ended
    
Percentage Change From:
  
   
Dec 31, 2021
    
Sep 30, 2021
    
Dec 31, 2020
    
Sep 30, 2021
    
Dec 31, 2020
  
                               
                               
Wealth Management Metrics
                              
                               
Total client assets
  
$
4,930
    
$
4,629
    
$
3,999
      
7
%
    
23
%
Net new assets (1)
  
$
127.1
    
$
134.5
    
$
73.4
      
(6
%)
    
73
%
U.S. Bank loans
  
$
129.2
    
$
121.2
    
$
98.1
      
7
%
    
32
%
Margin and other lending (2)
  
$
31.0
    
$
28.6
    
$
23.1
      
8
%
    
34
%
Deposits (3)
  
$
346
    
$
327
    
$
306
      
6
%
    
13
%
Annualized weighted average cost of deposits
    
0.10
%
    
0.13
%
    
0.24
%
                
                                         
Advisor-led channel
                                        
                                         
Advisor-led client assets
  
$
3,886
    
$
3,647
    
$
3,167
      
7
%
    
23
%
                                         
Fee-based client assets
  
$
1,839
    
$
1,752
    
$
1,472
      
5
%
    
25
%
Fee-based asset flows (1)
  
$
37.8
    
$
70.6
    
$
24.1
      
(46
%)
    
57
%
Fee-based assets as a % of advisor-led client assets
    
47
%
    
48
%
    
46
%
                
                                         
Self-directed channel
                                        
                                         
Self-directed assets
  
$
1,044
    
$
982
    
$
832
      
6
%
    
25
%
Daily average revenue trades (000's)
    
1,044
      
959
      
1,106
      
9
%
    
(6
%)
Self-directed households (millions)
    
7.4
      
7.4
      
6.7
      
--
      
10
%
                                         
Workplace channel
                                        
                                         
Workplace unvested assets
  
$
509
    
$
495
    
$
435
      
3
%
    
17
%
Number of participants (millions)
    
5.6
      
5.3
      
4.9
      
6
%
    
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.

7

Investment Management
                                                
Income Statement Information, Financial Metrics and Ratios
                                            
(unaudited, dollars in millions)
                                                
                                                 
Report dated:01/15/22 13:42
                                                
   
Quarter Ended
    
Percentage Change From:
    
Twelve Months Ended
    
Percentage
  
   
Dec 31, 2021
    
Sep 30, 2021
    
Dec 31, 2020
    
Sep 30, 2021
    
Dec 31, 2020
    
Dec 31, 2021
    
Dec 31, 2020
    
Change
  
Revenues:
                                                
Asset management and related fees
  
$
1,585
    
$
1,470
    
$
869
      
8
%
    
82
%
  
$
5,576
    
$
3,013
      
85
%
Performance-based income and other
    
166
      
(17
)
    
231
      
*
      
(28
%)
    
644
      
721
      
(11
%)
Net revenues
    
1,751
      
1,453
      
1,100
      
21
%
    
59
%
    
6,220
      
3,734
      
67
%
                                                                 
Compensation and benefits
    
631
      
513
      
530
      
23
%
    
19
%
    
2,373
      
1,542
      
54
%
Non-compensation expenses
    
612
      
570
      
374
      
7
%
    
64
%
    
2,169
      
1,322
      
64
%
Total non-interest expenses (1)
    
1,243
      
1,083
      
904
      
15
%
    
38
%
    
4,542
      
2,864
      
59
%
                                                                 
Income before taxes
    
508
      
370
      
196
      
37
%
    
159
%
    
1,678
      
870
      
93
%
Net income applicable to Morgan Stanley
  
$
411
    
$
320
    
$
158
      
28
%
    
160
%
  
$
1,347
    
$
615
      
119
%
                                                                 
Pre-tax profit margin
    
29
%
    
25
%
    
18
%
                    
27
%
    
23
%
        
Pre-tax profit margin excluding integration-related expenses
    
31
%
    
28
%
    
18
%
                    
29
%
    
23
%
        
Compensation and benefits as a % of net revenues
    
36
%
    
35
%
    
48
%
                    
38
%
    
41
%
        
Non-compensation expenses as a % of net revenues
    
35
%
    
39
%
    
34
%
                    
35
%
    
35
%
        
                                                                 
Return on Average Common Equity
    
15
%
    
12
%
    
24
%
                    
15
%
    
23
%
        
Return on Average Tangible Common Equity (2)
    
207
%
    
161
%
    
37
%
                    
144
%
    
36
%
        
                                                                 
                                                                 
Notes:
‐
For the quarters ended December 31, 2021 and September 30, 2021, Investment Management's results include pre-tax integration-related expenses of $37 million and $32 million ($29 million and $24 million after-tax), respectively. The full year ended December 31, 2021 results include pre-tax integration-related expenses of $110 million ($85 million after-tax).
-
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.

8
Investment Management
                                                
Financial Information and Statistical Data
                                                
(unaudited, dollars in billions)
                                                
Vs. Report dated03/19/03 18:15
                                                
                                                 
                                                 
   
Quarter Ended
    
Percentage Change From:
    
Twelve Months Ended
    
Percentage
  
   
Dec 31, 2021
    
Sep 30, 2021
    
Dec 31, 2020
    
Sep 30, 2021
    
Dec 31, 2020
    
Dec 31, 2021
    
Dec 31, 2020
    
Change
  
                                                 
                                                 
Assets under management or supervision (AUM)
                                                
                                                 
Net flows by asset class (1)
                                                
Equity
  
$
(5.7
)
  
$
(0.9
)
  
$
12.2
      
*
      
*
    
$
3.9
    
$
32.8
      
(88
%)
Fixed Income
    
2.3
      
(0.3
)
    
(1.3
)
    
*
      
*
      
8.9
      
7.5
      
19
%
Alternatives and Solutions
    
2.3
      
(1.1
)
    
(2.4
)
    
*
      
*
      
13.6
      
0.7
      
*
  
Long-Term Net Flows
    
(1.1
)
    
(2.3
)
    
8.5
      
52
%
    
*
      
26.4
      
41.0
      
(36
%)
                                                                 
Liquidity and Overlay Services
    
12.6
      
14.6
      
16.5
      
(14
%)
    
(24
%)
    
88.1
      
89.9
      
(2
%)
                                                                 
Total Net Flows
  
$
11.5
    
$
12.3
    
$
25.0
      
(7
%)
    
(54
%)
  
$
114.5
    
$
130.9
      
(13
%)
                                                                 
Assets under management or supervision by asset class(2)
                                                          
Equity
  
$
395
    
$
391
    
$
242
      
1
%
    
63
%
                        
Fixed Income
    
207
      
206
      
98
      
--
      
111
%
                        
Alternatives and Solutions
    
466
      
443
      
153
      
5
%
    
*
                          
Long-Term Assets Under Management or Supervision
  
$
1,068
    
$
1,040
    
$
493
      
3
%
    
117
%
                        
                                                                 
Liquidity and Overlay Services
    
497
      
482
      
288
      
3
%
    
73
%
                        
                                                                 
Total Assets Under Management or Supervision
  
$
1,565
    
$
1,522
    
$
781
      
3
%
    
100
%
                        
                                                                 
                                                                 
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.
  

9
Consolidated Loans and Lending Commitments
                              
(unaudited, dollars in billions)
                              
                               
                               
   
Quarter Ended
    
Percentage Change From:
  
   
Dec 31, 2021
    
Sep 30, 2021
    
Dec 31, 2020
    
Sep 30, 2021
    
Dec 31, 2020
  
                               
Institutional Securities
                              
                               
Loans:
                              
Corporate
  
$
13.5
    
$
13.6
    
$
14.3
      
(1
%)
    
(6
%)
Secured lending facilities
    
35.2
      
31.2
      
29.5
      
13
%
    
19
%
Commercial and residential real estate
    
13.6
      
12.7
      
11.1
      
7
%
    
23
%
Securities-based lending and other
    
9.0
      
9.4
      
8.3
      
(4
%)
    
8
%
                                         
Total Loans
    
71.3
      
66.9
      
63.2
      
7
%
    
13
%
                                         
Lending Commitments
    
120.3
      
122.2
      
113.5
      
(2
%)
    
6
%
                                         
Institutional Securities Loans and Lending Commitments
  
$
191.6
    
$
189.1
    
$
176.7
      
1
%
    
8
%
                                         
                                         
Wealth Management
                                        
                                         
Loans:
                                        
Securities-based lending and other
  
$
85.1
    
$
79.8
    
$
62.9
      
7
%
    
35
%
Residential real estate
    
44.2
      
41.4
      
35.2
      
7
%
    
26
%
                                         
Total Loans
    
129.3
      
121.2
      
98.1
      
7
%
    
32
%
                                         
Lending Commitments
    
14.7
      
15.0
      
14.4
      
(2
%)
    
2
%
                                         
Wealth Management Loans and Lending Commitments
  
$
144.0
    
$
136.2
    
$
112.5
      
6
%
    
28
%
                                         
Consolidated Loans and Lending Commitments (1)
  
$
335.6
    
$
325.3
    
$
289.2
      
3
%
    
16
%

   
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.

10
Consolidated Loans and Lending Commitments
                    
Allowance for Credit Losses (ACL) as of December 31, 2021
                    
(unaudited, dollars in millions)
                        
                         
                         
   
Loans and Lending Commitments
    
ACL (1)
    
ACL %
    
Q4 Provision
  
   
(Gross)
                    
Loans:
                        
Held For Investment (HFI)
                        
                         
Corporate
  
$
5,567
    
$
165
      
3.0
%
  
$
(28
)
Secured lending facilities
    
31,471
      
163
      
0.5
%
    
(12
)
Commercial and residential real estate
    
7,227
      
206
      
2.9
%
    
19
  
Other
    
1,292
      
9
      
0.7
%
    
2
  
Institutional Securities - HFI
  
$
45,557
    
$
543
      
1.2
%
  
$
(19
)
                                 
Wealth Management - HFI
    
129,394
      
111
      
0.1
%
    
8
  
                                 
Held For Investment
  
$
174,951
    
$
654
      
0.4
%
  
$
(11
)
                                 
Held For Sale
    
13,832
                          
                                 
Fair Value
    
12,492
                          
                                 
Total Loans
    
201,275
      
654
              
(11
)
                                 
Lending Commitments
    
134,934
      
444
      
0.3
%
    
16
  
                                 
Consolidated Loans and Lending Commitments
  
$
336,209
    
$
1,098
            
$
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.

11
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, 2020.
(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 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.

12
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 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 held within the bank and non-bank 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.
(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, E*TRADE Bank, and E*TRADE Savings Bank, 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, 2020 (2020 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 has made updates to its required capital framework for 2021 and continues to evaluate 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 2020 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 2020 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 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 2020 Form 10-K.

13
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 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 income taxes as percentages of net revenues.
   
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 December 31, 2021, September 30, 2021 and December 31, 2020.
(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 2020 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 will be included in each of the respective channel counts.
(k)
The workplace channel assets includes equity compensation solutions for companies, their executives and employees. Workplace unvested assets represent the market value of public company securities at the end of the period.
(l)
Workplace participants represent total accounts with vested and/or unvested 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 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.

14
Supplemental Quantitative Details and Calculations
                            

Page 1:
(1)
The Firm non-interest expenses by category are as follows:

     
4Q21
      
3Q21
      
4Q20
    
4Q21 YTD
    
4Q20 YTD
  
Compensation and benefits
  
$
5,487
    
$
5,920
    
$
5,450
    
$
24,628
    
$
20,854
  
                                         
Non-compensation expenses:
                                        
Brokerage, clearing and exchange fees
    
811
      
825
      
776
      
3,341
      
2,929
  
Information processing and communications
    
833
      
788
      
697
      
3,119
      
2,465
  
Professional services
    
829
      
734
      
679
      
2,933
      
2,205
  
Occupancy and equipment
    
479
      
427
      
456
      
1,725
      
1,559
  
Marketing and business development
    
205
      
146
      
161
      
643
      
434
  
Other
    
991
      
1,015
      
944
      
3,694
      
3,132
  
Total non-compensation expenses
    
4,148
      
3,935
      
3,713
      
15,455
      
12,724
  
                                         
Total non-interest expenses
  
$
9,635
    
$
9,855
    
$
9,163
    
$
40,083
    
$
33,578
  

Page 2:
(1)
For the quarters ended December 31, 2021 and September 30, 2021 and the full year ended December 31, 2021, Firm results include pre-tax integration-related expenses of $146 million, $145 million and $456 million ($114 million, $111 million and $352 million after‐tax) respectively, reported in the Wealth Management and Investment Management business segments. For the quarter and full year ended December 31, 2020, Firm results include pre-tax integration-related expenses of $231 million ($189 million after-tax) reported in the Wealth Management segment. 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):

     
4Q21
      
3Q21
      
4Q20
    
4Q21 YTD
    
4Q20 YTD
  
Earnings per diluted share - GAAP
  
$
2.01
    
$
1.98
    
$
1.81
    
$
8.03
    
$
6.46
  
Impact of adjustments
    
0.07
      
0.06
      
0.11
      
0.19
      
0.12
  
Earnings per diluted share excluding integration-related expenses - Non-GAAP
  
$
2.08
    
$
2.04
    
$
1.92
    
$
8.22
    
$
6.58
  
                                         
Return on average common equity - GAAP
    
14.7
%
    
14.5
%
    
14.7
%
    
15.0
%
    
13.1
%
Impact of adjustments
    
0.5
%
    
0.5
%
    
0.9
%
    
0.3
%
    
0.2
%
Return on average common equity excluding integration-related expenses - Non-GAAP
    
15.2
%
    
15.0
%
    
15.6
%
    
15.3
%
    
13.3
%
                                         
Return on average tangible common equity - GAAP
    
19.8
%
    
19.6
%
    
17.7
%
    
19.8
%
    
15.2
%
Impact of adjustments
    
0.6
%
    
0.6
%
    
1.0
%
    
0.4
%
    
0.2
%
Return on average tangible common equity excluding integration-related expenses - Non-GAAP
    
20.4
%
    
20.2
%
    
18.7
%
    
20.2
%
    
15.4
%
                                         
Firm expense efficiency ratio - GAAP
    
66.3
%
    
66.8
%
    
67.4
%
    
67.1
%
    
68.9
%
Impact of adjustments
    
(1.0
)%
    
(1.0
)%
    
(1.7
)%
    
(0.8
)%
    
(0.5
)%
Firm expense efficiency ratio excluding integration-related expenses - Non-GAAP
    
65.3
%
    
65.8
%
    
65.7
%
    
66.3
%
    
68.4
%

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 December 31, 2021, September 30, 2021 and December 31, 2020, the U.S. Bank investment securities portfolio included held to maturity investment securities of $61.7 billion, $63.0 billion and $52.6 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 current 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.  As a result of the adoption, as of December 31, 2021 our risk-weighted assets under the Standardized Approach increased by $23 billion and our Standardized CET1 capital ratio decreased by 82 basis points.
(2)
Based on a Federal Reserve interim final rule that was in effect until March 31, 2021, our SLR and supplementary leverage exposure as of December 31, 2020 reflects the exclusion of U.S. Treasury securities and deposits at Federal Reserve Banks. The exclusion of these assets had the effect of increasing our SLR by 0.8% as of December 31, 2020.

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: 4Q21: $603mm; 3Q21: $603mm; 4Q20: $484mm; 4Q21 YTD: $603mm; 4Q20 YTD: $484mm
   
Page 6:
(1)
For the quarters ended December 31, 2021, September 30, 2021 and December 31, 2020 and the full year ended December 31, 2021 and 2020, integration-related compensation and non-compensation expenses associated with the acquisition of E*TRADE are as follows:

     
4Q21
      
3Q21
      
4Q20
    
4Q21 YTD
    
4Q20 YTD
  
Compensation expenses
  
$
10
    
$
9
    
$
151
    
$
58
    
$
151
  
Non-compensation expenses
    
99
      
104
      
80
      
288
      
80
  
Total non-interest expenses
  
$
109
    
$
113
    
$
231
    
$
346
    
$
231
  
Income tax provision
    
24
      
26
      
42
      
79
      
42
  
Total non-interest expenses (after-tax)
  
$
85
    
$
87
    
$
189
    
$
267
    
$
189
  

(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: 4Q21: $15,270mm; 3Q21: $15,270mm; 4Q20: $13,440mm; 4Q21 YTD: $15,218mm; 4Q20 YTD: $9,536mm

15
Supplemental Quantitative Details and Calculations

Page 7:
(1)
The quarter ended September 30, 2021 includes $43 billion of fee‐based assets acquired in an asset acquisition.
(2)
Wealth Management other lending includes $3 billion of non-purpose securities based lending on non-bank entities in each period ended December 31, 2021, September 30, 2021 and December 31, 2020.
(3)
For the quarters ended December 31, 2021, September 30, 2021 and December 31, 2020, Wealth Management deposits of $346 billion, $327 billion and $306 billion, respectively, exclude off-balance sheet deposits of $9 billion, $9 billion and $25 billion, respectively, held by third parties outside of Morgan Stanley. Total deposits details are as follows:

     
4Q21
      
3Q21
      
4Q20
  
Brokerage sweep deposits
  
$
298
    
$
273
    
$
232
  
Other deposits
    
48
      
54
      
74
  
Total balance sheet deposits
    
346
      
327
      
306
  
Off-balance sheet deposits
    
9
      
9
      
25
  
Total deposits
  
$
355
    
$
336
    
$
331
  

Page 8:
(1)
For the quarters ended December 31, 2021 and September 30, 2021 and the full year ended December 31, 2021, integration-related compensation and non-compensation expenses associated with the acquisition of Eaton Vance are as follows:

     
4Q21
      
3Q21
    
4Q21 YTD
  
Compensation expenses
  
$
15
    
$
10
    
$
44
  
Non-compensation expenses
    
22
      
22
      
66
  
Total non-interest expenses
  
$
37
    
$
32
    
$
110
  
Income tax provision
    
8
      
8
      
25
  
Total non-interest expenses (after-tax)
  
$
29
    
$
24
    
$
85
  

(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: 4Q21: $9,924mm; 3Q21: $9,924mm; 4Q20: $932mm; 4Q21 YTD: $7,848mm; 4Q20 YTD: $932mm

Page 9:
(1)
Net Flows by region for the quarters ended December 31, 2021, September 30, 2021 and December 31, 2020 were:
  North America: $10.2 billion, $12.6 billion and $21.4 billion
  International: $1.3 billion, $(0.3) billion and $3.6 billion
(2)
Assets under management or supervision by region for the quarters ended December 31, 2021, September 30, 2021, and December 31, 2020 were:
  North America: $1,188 billion, $1,148 billion and $449 billion
  International: $377 billion, $374 billion and $332 billion
   
Page 10:
(1)
For the quarters ended December 31, 2021, September 30, 2021 and December 31, 2020, Investment Management reflected loan balances of $140 million, $132 million and $443 million, respectively.

Page 11:
(1)
For the quarter ended December 31, 2021, the Allowance Rollforward for Loans and Lending Commitments is as follows:

                   
   
Institutional
Securities
    
Wealth
Management
    
Total
  
Loans
                  
                   
Allowance for Credit Losses (ACL)
                  
Beginning Balance - September 30, 2021
  
$
575
    
$
109
    
$
684
  
Net Charge Offs
    
(13
)
    
(6
)
    
(19
)
Provision
    
(19
)
    
8
      
(11
)
Other
    
-
      
-
      
-
  
Ending Balance - December 31, 2021
  
$
543
    
$
111
    
$
654
  
                         
                         
Lending Commitments
                        
                         
Allowance for Credit Losses (ACL)
                        
Beginning Balance - September 30, 2021
  
$
416
    
$
13
    
$
429
  
Net Charge Offs
    
-
      
-
      
-
  
Provision
    
11
      
5
      
16
  
Other
    
(1
)
    
-
      
(1
)
Ending Balance - December 31, 2021
  
$
426
    
$
18
    
$
444
  
                         
                         
Loans and Lending Commitments
                        
                         
Allowance for Credit Losses (ACL)
                        
Beginning Balance - September 30, 2021
  
$
991
    
$
122
    
$
1,113
  
Net Charge Offs
    
(13
)
    
(6
)
    
(19
)
Provision
    
(8
)
    
13
      
5
  
Other
    
(1
)
    
-
      
(1
)
Ending Balance - December 31, 2021
  
$
969
    
$
129
    
$
1,098
  

16
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 19, 2022.
17