EX-99.2 3 a52777919ex99_2.htm EXHIBIT 99.2
Exhibit 99.2


Second Quarter 2022 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 earnings results reflect the effect of the acquisition of Eaton Vance Corp. (“Eaton Vance”) prospectively from the March 1, 2021 acquisition date.  The comparisons of current year results to certain prior periods are impacted by the acquisition of Eaton Vance reported in the Investment Management segment.



Consolidated Financial Summary
                                                
(unaudited, dollars in millions)
                                                
                                                 
                                                 
                                                 
   
Quarter Ended
    
Percentage Change From:
    
Six Months Ended
    
Percentage
  
   
Jun 30, 2022
    
Mar 31, 2022
    
Jun 30, 2021
    
Mar 31, 2022
    
Jun 30, 2021
    
Jun 30, 2022
    
Jun 30, 2021
    
Change
  
Net revenues
                                                
Institutional Securities
  
$
6,119
    
$
7,657
    
$
7,092
      
(20
%)
    
(14
%)
  
$
13,776
    
$
15,669
      
(12
%)
Wealth Management
    
5,736
      
5,935
      
6,095
      
(3
%)
    
(6
%)
    
11,671
      
12,054
      
(3
%)
Investment Management
    
1,411
      
1,335
      
1,702
      
6
%
    
(17
%)
    
2,746
      
3,016
      
(9
%)
Intersegment Eliminations
    
(134
)
    
(126
)
    
(130
)
    
(6
%)
    
(3
%)
    
(260
)
    
(261
)
    
--
  
Net revenues
  
$
13,132
    
$
14,801
    
$
14,759
      
(11
%)
    
(11
%)
  
$
27,933
    
$
30,478
      
(8
%)
                                                                 
Provision for credit losses
  
$
101
    
$
57
    
$
73
      
77
%
    
38
%
  
$
158
    
$
(25
)
    
*
  
                                                                 
Non-interest expenses
                                                                
Institutional Securities
  
$
4,483
    
$
4,826
    
$
4,524
      
(7
%)
    
(1
%)
  
$
9,309
    
$
9,823
      
(5
%)
Wealth Management
    
4,196
      
4,349
      
4,456
      
(4
%)
    
(6
%)
    
8,545
      
8,820
      
(3
%)
Investment Management
    
1,162
      
1,107
      
1,272
      
5
%
    
(9
%)
    
2,269
      
2,216
      
2
%
Intersegment Eliminations
    
(129
)
    
(126
)
    
(132
)
    
(2
%)
    
2
%
    
(255
)
    
(266
)
    
4
%
Non-interest expenses (1)
  
$
9,712
    
$
10,156
    
$
10,120
      
(4
%)
    
(4
%)
  
$
19,868
    
$
20,593
      
(4
%)
                                                                 
Income before taxes
                                                                
Institutional Securities
  
$
1,554
    
$
2,787
    
$
2,498
      
(44
%)
    
(38
%)
  
$
4,341
    
$
5,869
      
(26
%)
Wealth Management
    
1,521
      
1,573
      
1,636
      
(3
%)
    
(7
%)
    
3,094
      
3,236
      
(4
%)
Investment Management
    
249
      
228
      
430
      
9
%
    
(42
%)
    
477
      
800
      
(40
%)
Intersegment Eliminations
    
(5
)
    
-
      
2
      
*
      
*
      
(5
)
    
5
      
*
  
Income before taxes
  
$
3,319
    
$
4,588
    
$
4,566
      
(28
%)
    
(27
%)
  
$
7,907
    
$
9,910
      
(20
%)
                                                                 
Net Income applicable to Morgan Stanley
                                                               
Institutional Securities
  
$
1,121
    
$
2,191
    
$
1,904
      
(49
%)
    
(41
%)
  
$
3,312
    
$
4,505
      
(26
%)
Wealth Management
    
1,190
      
1,272
      
1,264
      
(6
%)
    
(6
%)
    
2,462
      
2,506
      
(2
%)
Investment Management
    
188
      
203
      
341
      
(7
%)
    
(45
%)
    
391
      
616
      
(37
%)
Intersegment Eliminations
    
(4
)
    
-
      
2
      
*
      
*
      
(4
)
    
4
      
*
  
Net Income applicable to Morgan Stanley
  
$
2,495
    
$
3,666
    
$
3,511
      
(32
%)
    
(29
%)
  
$
6,161
    
$
7,631
      
(19
%)
Earnings applicable to Morgan Stanley common shareholders
  
$
2,391
    
$
3,542
    
$
3,408
      
(32
%)
    
(30
%)
  
$
5,933
    
$
7,390
      
(20
%)
                                                                 
                                                                 
                                                                 

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:
    
Six Months Ended
    
Percentage
  
   
Jun 30, 2022
    
Mar 31, 2022
    
Jun 30, 2021
    
Mar 31, 2022
    
Jun 30, 2021
    
Jun 30, 2022
    
Jun 30, 2021
    
Change
  
                                                 
Financial Metrics:
                                                
                                                 
Earnings per basic share
  
$
1.40
    
$
2.04
    
$
1.88
      
(31
%)
    
(26
%)
  
$
3.45
    
$
4.10
      
(16
%)
Earnings per diluted share
  
$
1.39
    
$
2.02
    
$
1.85
      
(31
%)
    
(25
%)
  
$
3.41
    
$
4.04
      
(16
%)
                                                                 
Return on average common equity
    
10.1
%
    
14.7
%
    
13.8
%
                    
12.4
%
    
15.3
%
        
Return on average tangible common equity
    
13.8
%
    
19.8
%
    
18.6
%
                    
16.8
%
    
19.8
%
        
                                                                 
Book value per common share
  
$
54.46
    
$
54.18
    
$
54.04
                    
$
54.46
    
$
54.04
          
Tangible book value per common share
  
$
40.07
    
$
39.91
    
$
40.12
                    
$
40.07
    
$
40.12
          
                                                                 
Excluding integration-related expenses
                                                                
Adjusted earnings per diluted share
  
$
1.44
    
$
2.06
    
$
1.89
      
(30
%)
    
(24
%)
  
$
3.51
    
$
4.11
      
(15
%)
Adjusted return on average common equity
    
10.5
%
    
15.0
%
    
14.1
%
                    
12.8
%
    
15.6
%
        
Adjusted return on average tangible common equity
    
14.3
%
    
20.3
%
    
19.0
%
                    
17.3
%
    
20.1
%
        
                                                                 
                                                                 
Financial Ratios:
                                                                
                                                                 
Pre-tax profit margin
    
25
%
    
31
%
    
31
%
                    
28
%
    
33
%
        
Compensation and benefits as a % of net revenues
    
42
%
    
42
%
    
44
%
                    
42
%
    
43
%
        
Non-compensation expenses as a % of net revenues
    
32
%
    
26
%
    
25
%
                    
29
%
    
24
%
        
Firm expense efficiency ratio
    
74
%
    
69
%
    
69
%
                    
71
%
    
68
%
        
Firm expense efficiency ratio excluding integration-related expenses
    
73
%
    
68
%
    
68
%
                    
70
%
    
67
%
        
Effective tax rate
    
23.6
%
    
19.0
%
    
23.1
%
                    
20.9
%
    
22.5
%
        
                                                                 
                                                                 
Statistical Data:
                                                                
                                                                 
Period end common shares outstanding (millions)
    
1,723
      
1,756
      
1,834
      
(2
%)
    
(6
%)
                        
Average common shares outstanding (millions)
                                                                
Basic
    
1,704
      
1,733
      
1,814
      
(2
%)
    
(6
%)
    
1,718
      
1,804
      
(5
%)
Diluted
    
1,723
      
1,755
      
1,841
      
(2
%)
    
(6
%)
    
1,739
      
1,829
      
(5
%)
                                                                 
Worldwide employees
    
78,386
      
76,541
      
71,826
      
2
%
    
9
%
                        
                                                                 
                                                                 

Notes:
-
 For the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021, Firm results include pre-tax integration-related expenses of $120 million, $107 million and $90 million ($92 million, $82 million and $69 million after-tax) respectively, reported in the Wealth Management and Investment Management business segments. The six months ended June 30, 2022 and 2021 results include pre-tax integration-related expenses of $227 million and $165 million ($174 million and $127 million after-tax), respectively.
-
 The End Notes are an integral part of this presentation.  Refer to the Financial Supplement on 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 for additional information.

2

Consolidated and U.S. Bank Supplemental Financial Information
                                                  
(unaudited, dollars in millions)
                                                      
                                                       
                                                       
                                                       
   
Quarter Ended
    
Percentage Change From:
    
Six Months Ended
      Percentage  
   
Jun 30, 2022
    
Mar 31, 2022
    
Jun 30, 2021
     Mar 31, 2022
    
Jun 30, 2021
    
Jun 30, 2022
     Jun 30, 2021
     Change

                                                       
Consolidated Balance sheet
                                                      
                                                       
Total assets
  
$
1,173,776
    
$
1,222,233
    
$
1,161,805
      
(4
%)
    
1
%
                        
Loans (1)
  
$
214,573
    
$
208,750
    
$
181,204
      
3
%
    
18
%
                        
Deposits
  
$
347,148
    
$
360,840
    
$
320,358
      
(4
%)
    
8
%
                        
Long-term debt outstanding
  
$
221,979
    
$
225,671
    
$
218,604
      
(2
%)
    
2
%
                        
Maturities of long-term debt outstanding (next 12 months)
  
$
19,737
    
$
21,335
    
$
16,891
      
(7
%)
    
17
%
                        
                                                                 
Average liquidity resources
  
$
306,370
    
$
338,281
    
$
351,914
      
(9
%)
    
(13
%)
                        
                                                                 
Common equity
  
$
93,846
    
$
95,151
    
$
99,120
      
(1
%)
    
(5
%)
                        
Less: Goodwill and intangible assets
    
(24,803
)
    
(25,068
)
    
(25,527
)
    
(1
%)
    
(3
%)
                        
Tangible common equity
  
$
69,043
    
$
70,083
    
$
73,593
      
(1
%)
    
(6
%)
                        
                                                                 
Preferred equity
  
$
7,750
    
$
7,750
    
$
7,750
      
--
      
--
                          
                                                                 
U.S. Bank Supplemental Financial Information
                                                                
Total assets
  
$
377,724
    
$
389,978
    
$
357,488
      
(3
%)
    
6
%
                        
Loans
  
$
201,853
    
$
194,791
    
$
167,628
      
4
%
    
20
%
                        
Investment securities portfolio (2)
  
$
125,785
    
$
129,886
    
$
136,218
      
(3
%)
    
(8
%)
                        
Deposits
  
$
339,575
    
$
352,078
    
$
318,689
      
(4
%)
    
7
%
                        
                                                                 
Regional revenues
                                                                
Americas
  
$
9,662
    
$
10,464
    
$
10,885
      
(8
%)
    
(11
%)
   $
20,126
     $ 22,076       (9
%)
EMEA (Europe, Middle East, Africa)
    
1,678
      
2,311
      
2,093
      
(27
%)
    
(20
%)
    
3,989
       4,252       (6
%) 
Asia
    
1,792
      
2,026
      
1,781
      
(12
%)
    
1
%
    
3,818
       4,150       (8
%) 
Consolidated net revenues
  
$
13,132
    
$
14,801
    
$
14,759
      
(11
%)
    
(11
%)
   $
27,933
     $ 30,478       (8
%)
                                                                 
 
                                                                

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:
    
Six Months Ended
    
Percentage
  
   
Jun 30, 2022
    
Mar 31, 2022
    
Jun 30, 2021
    
Mar 31, 2022
    
Jun 30, 2021
    
Jun 30, 2022
    
Jun 30, 2021
    
Change
  
                                                 
Average Common Equity
                                                
Institutional Securities
  
$
48.8
    
$
48.8
    
$
43.5
      
--
      
12
%
  
$
48.8
    
$
43.5
      
12
%
Wealth Management
    
31.0
      
31.0
      
28.6
      
--
      
8
%
    
31.0
      
28.6
      
8
%
Investment Management
    
10.6
      
10.6
      
10.7
      
--
      
(1
%)
    
10.6
      
7.1
      
49
%
Parent
    
3.9
      
6.3
      
16.0
      
(38
%)
    
(76
%)
    
5.1
      
17.1
      
(70
%)
Firm
  
$
94.3
    
$
96.7
    
$
98.8
      
(2
%)
    
(5
%)
  
$
95.5
    
$
96.3
      
(1
%)
                                                                 
                                                                 
                                                                 
Regulatory Capital (1)
                                                                
                                                                 
Common Equity Tier 1 capital
  
$
70.2
    
$
72.5
    
$
76.8
      
(3
%)
    
(9
%)
                        
Tier 1 capital
  
$
77.8
    
$
80.1
    
$
84.6
      
(3
%)
    
(8
%)
                        
                                                                 
Standardized Approach
                                                                
Risk-weighted assets
  
$
461.2
    
$
501.4
    
$
462.8
      
(8
%)
    
--
                          
Common Equity Tier 1 capital ratio
    
15.2
%
    
14.5
%
    
16.6
%
                                        
Tier 1 capital ratio
    
16.9
%
    
16.0
%
    
18.3
%
                                        
                                                                 
Advanced Approach
                                                                
Risk-weighted assets
  
$
455.3
    
$
456.5
    
$
434.7
      
--
      
5
%
                        
Common Equity Tier 1 capital ratio
    
15.4
%
    
15.9
%
    
17.7
%
                                        
Tier 1 capital ratio
    
17.1
%
    
17.6
%
    
19.5
%
                                        
                                                                 
Leverage-based capital
                                                                
Tier 1 leverage ratio
    
6.6
%
    
6.8
%
    
7.5
%
                                        
Supplementary Leverage Ratio
    
5.4
%
    
5.5
%
    
5.9
%
                                        
                                                                 
                                                                 

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)
                                                
                                                 
07/11/22 16:25
                                                
   
Quarter Ended
    
Percentage Change From:
    
Six Months Ended
    
Percentage
  
   
Jun 30, 2022
    
Mar 31, 2022
    
Jun 30, 2021
    
Mar 31, 2022
    
Jun 30, 2021
    
Jun 30, 2022
    
Jun 30, 2021
    
Change
  
Revenues:
                                                
                                                 
Advisory
  
$
598
    
$
944
    
$
664
      
(37
%)
    
(10
%)
  
$
1,542
    
$
1,144
      
35
%
Equity
    
148
      
258
      
1,072
      
(43
%)
    
(86
%)
    
406
      
2,574
      
(84
%)
Fixed income
    
326
      
432
      
640
      
(25
%)
    
(49
%)
    
758
      
1,271
      
(40
%)
Underwriting
    
474
      
690
      
1,712
      
(31
%)
    
(72
%)
    
1,164
      
3,845
      
(70
%)
Investment banking
    
1,072
      
1,634
      
2,376
      
(34
%)
    
(55
%)
    
2,706
      
4,989
      
(46
%)
                                                                 
Equity
    
2,960
      
3,174
      
2,827
      
(7
%)
    
5
%
    
6,134
      
5,702
      
8
%
Fixed income
    
2,500
      
2,923
      
1,682
      
(14
%)
    
49
%
    
5,423
      
4,648
      
17
%
Other
    
(413
)
    
(74
)
    
207
      
*
      
*
      
(487
)
    
330
      
*
  
                                                                 
Net revenues
    
6,119
      
7,657
      
7,092
      
(20
%)
    
(14
%)
    
13,776
      
15,669
      
(12
%)
                                                                 
Provision for credit losses
    
82
      
44
      
70
      
86
%
    
17
%
    
126
      
(23
)
    
*
  
                                                                 
Compensation and benefits
    
2,050
      
2,604
      
2,433
      
(21
%)
    
(16
%)
    
4,654
      
5,547
      
(16
%)
Non-compensation expenses
    
2,433
      
2,222
      
2,091
      
9
%
    
16
%
    
4,655
      
4,276
      
9
%
Total non-interest expenses
    
4,483
      
4,826
      
4,524
      
(7
%)
    
(1
%)
    
9,309
      
9,823
      
(5
%)
                                                                 
                                                                 
Income before taxes
    
1,554
      
2,787
      
2,498
      
(44
%)
    
(38
%)
    
4,341
      
5,869
      
(26
%)
Net income applicable to Morgan Stanley
  
$
1,121
    
$
2,191
    
$
1,904
      
(49
%)
    
(41
%)
  
$
3,312
    
$
4,505
      
(26
%)
                                                                 
                                                                 
Pre-tax profit margin
    
25
%
    
36
%
    
35
%
                    
32
%
    
37
%
        
Compensation and benefits as a % of net revenues
    
34
%
    
34
%
    
34
%
                    
34
%
    
35
%
        
Non-compensation expenses as a % of net revenues
    
40
%
    
29
%
    
29
%
                    
34
%
    
27
%
        
                                                                 
Return on Average Common Equity
    
9
%
    
17
%
    
17
%
                    
13
%
    
20
%
        
Return on Average Tangible Common Equity (1)
    
9
%
    
17
%
    
17
%
                    
13
%
    
20
%
        
                                                                 
Trading VaR (Average Daily 95% / One-Day VaR)
  
$
46
    
$
39
    
$
48
                                          
                                                                 
                                                                 
                                                                 

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:07/11/22 16:26
                                                
                                                 
   
Quarter Ended
    
Percentage Change From:
    
Six Months Ended
    
Percentage
  
   
Jun 30, 2022
    
Mar 31, 2022
    
Jun 30, 2021
    
Mar 31, 2022
    
Jun 30, 2021
    
Jun 30, 2022
    
Jun 30, 2021
    
Change
  
Revenues:
                                                
Asset management
  
$
3,510
    
$
3,626
    
$
3,447
      
(3
%)
    
2
%
  
$
7,136
    
$
6,638
      
8
%
Transactional
    
291
      
635
      
1,172
      
(54
%)
    
(75
%)
    
926
      
2,400
      
(61
%)
Net interest income
    
1,747
      
1,540
      
1,255
      
13
%
    
39
%
    
3,287
      
2,640
      
25
%
Other
    
188
      
134
      
221
      
40
%
    
(15
%)
    
322
      
376
      
(14
%)
Net revenues
    
5,736
      
5,935
      
6,095
      
(3
%)
    
(6
%)
    
11,671
      
12,054
      
(3
%)
                                                                 
Provision for credit losses
    
19
      
13
      
3
      
46
%
    
*
      
32
      
(2
)
    
*
  
                                                                 
Compensation and benefits
    
2,895
      
3,125
      
3,275
      
(7
%)
    
(12
%)
    
6,020
      
6,445
      
(7
%)
Non-compensation expenses
    
1,301
      
1,224
      
1,181
      
6
%
    
10
%
    
2,525
      
2,375
      
6
%
Total non-interest expenses (1)
    
4,196
      
4,349
      
4,456
      
(4
%)
    
(6
%)
    
8,545
      
8,820
      
(3
%)
                                                                 
Income before taxes
    
1,521
      
1,573
      
1,636
      
(3
%)
    
(7
%)
    
3,094
      
3,236
      
(4
%)
Net income applicable to Morgan Stanley
  
$
1,190
    
$
1,272
    
$
1,264
      
(6
%)
    
(6
%)
  
$
2,462
    
$
2,506
      
(2
%)
                                                                 
Pre-tax profit margin
    
27
%
    
27
%
    
27
%
                    
27
%
    
27
%
        
Pre-tax profit margin excluding integration-related expenses
    
28
%
    
28
%
    
28
%
                    
28
%
    
28
%
        
Compensation and benefits as a % of net revenues
    
50
%
    
53
%
    
54
%
                    
52
%
    
53
%
        
Non-compensation expenses as a % of net revenues
    
23
%
    
21
%
    
19
%
                    
22
%
    
20
%
        
                                                                 
Return on Average Common Equity
    
15
%
    
16
%
    
17
%
                    
15
%
    
17
%
        
Return on Average Tangible Common Equity (2)
    
29
%
    
30
%
    
37
%
                    
29
%
    
36
%
        
                                                                 
                                                                 

Notes:
-
 For the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021, Wealth Management's results include pre-tax integration-related expenses of $96 million, $75 million and $60 million ($74 million, $57 million and $46 million after-tax), respectively. The six months ended June 30, 2022 and 2021 results include pre‐tax integration‐related expenses of $171 million and $124 million ($131 million and $95 million after‐tax), respectively.
-
 The End Notes are an integral part of this presentation.  See pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice.

6

Wealth Management
                              
Financial Information and Statistical Data
                    
(unaudited, dollars in billions)
                              
Vs. Report dated03/19/03 18:15
                              
                               
                               
   
Quarter Ended
    
Percentage Change From:
  
   
Jun 30, 2022
    
Mar 31, 2022
    
Jun 30, 2021
    
Mar 31, 2022
    
Jun 30, 2021
  
                               
                               
Wealth Management Metrics
                              
                               
Total client assets (1)
  
$
4,246
    
$
4,869
    
$
4,577
      
(13
%)
    
(7
%)
Net new assets (2)
  
$
52.9
    
$
142.0
    
$
71.2
      
(63
%)
    
(26
%)
U.S. Bank loans
  
$
143.6
    
$
136.7
    
$
114.7
      
5
%
    
25
%
Margin and other lending (3)
  
$
24.8
    
$
29.2
    
$
27.0
      
(15
%)
    
(8
%)
Deposits (4)
  
$
340
    
$
352
    
$
319
      
(3
%)
    
7
%
Annualized weighted average cost of deposits
    
0.28
%
    
0.09
%
    
0.16
%
                
                                         
Advisor-led channel
                                        
                                         
Advisor-led client assets
  
$
3,427
    
$
3,835
    
$
3,553
      
(11
%)
    
(4
%)
                                         
Fee-based client assets
  
$
1,717
    
$
1,873
    
$
1,680
      
(8
%)
    
2
%
Fee-based asset flows (2)
  
$
28.5
    
$
97.2
    
$
33.7
      
(71
%)
    
(15
%)
Fee-based assets as a % of advisor-led client assets
    
50
%
    
49
%
    
47
%
                
                                         
 Self-directed channel
                                        
                                         
Self-directed assets (1)
  
$
819
    
$
1,034
    
$
1,024
      
(21
%)
    
(20
%)
Daily average revenue trades (000's)
    
880
      
1,016
      
1,042
      
(13
%)
    
(16
%)
Self-directed households (millions)
    
7.8
      
7.6
      
7.4
      
3
%
    
5
%
                                         
Workplace channel
                                        
                                         
Stock plan unvested assets
  
$
323
    
$
454
    
$
480
      
(29
%)
    
(33
%)
Number of stock plan participants (millions)
    
6.1
      
5.8
      
5.2
      
5
%
    
17
%
                                         

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:07/11/22 16:27
                                                
   
Quarter Ended
    
Percentage Change From:
    
Six Months Ended
    
Percentage
  
   
Jun 30, 2022
    
Mar 31, 2022
    
Jun 30, 2021
    
Mar 31, 2022
    
Jun 30, 2021
    
Jun 30, 2022
    
Jun 30, 2021
    
Change
  
Revenues:
                                                
Asset management and related fees
  
$
1,304
    
$
1,388
    
$
1,418
      
(6
%)
    
(8
%)
  
$
2,692
    
$
2,521
      
7
%
Performance-based income and other
    
107
      
(53
)
    
284
      
*
      
(62
%)
    
54
      
495
      
(89
%)
Net revenues
    
1,411
      
1,335
      
1,702
      
6
%
    
(17
%)
    
2,746
      
3,016
      
(9
%)
                                                                 
Compensation and benefits
    
605
      
545
      
715
      
11
%
    
(15
%)
    
1,150
      
1,229
      
(6
%)
Non-compensation expenses
    
557
      
562
      
557
      
(1
%)
    
--
      
1,119
      
987
      
13
%
Total non-interest expenses (1)
    
1,162
      
1,107
      
1,272
      
5
%
    
(9
%)
    
2,269
      
2,216
      
2
%
                                                                 
Income before taxes
    
249
      
228
      
430
      
9
%
    
(42
%)
    
477
      
800
      
(40
%)
Net income applicable to Morgan Stanley
  
$
188
    
$
203
    
$
341
      
(7
%)
    
(45
%)
  
$
391
    
$
616
      
(37
%)
                                                                 
Pre-tax profit margin
    
18
%
    
17
%
    
25
%
                    
17
%
    
27
%
        
Pre-tax profit margin excluding integration-related expenses
    
19
%
    
19
%
    
27
%
                    
19
%
    
28
%
        
Compensation and benefits as a % of net revenues
    
43
%
    
41
%
    
42
%
                    
42
%
    
41
%
        
Non-compensation expenses as a % of net revenues
    
39
%
    
42
%
    
33
%
                    
41
%
    
33
%
        
                                                                 
Return on Average Common Equity
    
7
%
    
8
%
    
13
%
                    
7
%
    
17
%
        
Return on Average Tangible Common Equity (2)
    
99
%
    
106
%
    
172
%
                    
102
%
    
117
%
        
                                                                 

Notes:
-
 For the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021, Investment Management's results include pre-tax integration-related expenses of $24 million, $32 million and $30 million ($18 million, $25 million and $23 million after-tax), respectively. The six months ended June 30, 2022 and 2021 results include pre‐tax integration‐related expenses of $56 million and $41 million ($43 million and $32 million after‐tax), respectively.
-
 The End Notes are an integral part of this presentation.  See pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice.

8

Investment Management
                                                
Financial Information and Statistical Data
                                      
(unaudited, dollars in billions)
                                                
Vs. Report dated03/19/03 18:15
                                                
                                                 
                                                 
   
Quarter Ended
    
Percentage Change From:
    
Six Months Ended
    
Percentage
  
   
Jun 30, 2022
    
Mar 31, 2022
    
Jun 30, 2021
    
Mar 31, 2022
    
Jun 30, 2021
    
Jun 30, 2022
    
Jun 30, 2021
    
Change
  
                                                 
                                                 
Assets under management or supervision (AUM)
                                                
                                                 
Net flows by asset class (1)
                                                
Equity
  
$
(7.4
)
  
$
(7.5
)
  
$
2.7
      
1
%
    
*
    
$
(14.9
)
  
$
10.5
      
*
  
Fixed Income
    
(2.6
)
    
(3.9
)
    
3.0
      
33
%
    
*
      
(6.5
)
    
6.9
      
*
  
Alternatives and Solutions
    
6.5
      
(3.0
)
    
7.8
      
*
      
(17
%)
    
3.5
      
12.4
      
(72
%)
Long-Term Net Flows
    
(3.5
)
    
(14.4
)
    
13.5
      
76
%
    
*
      
(17.9
)
    
29.8
      
*
  
                                                                 
Liquidity and Overlay Services
    
31.3
      
(28.1
)
    
35.0
      
*
      
(11
%)
    
3.2
      
60.9
      
(95
%)
                                                                 
Total Net Flows
  
$
27.8
    
$
(42.5
)
  
$
48.5
      
*
      
(43
%)
  
$
(14.7
)
  
$
90.7
      
*
  
                                                                 
Assets under management or supervision by asset class (2)
                                                                
Equity
  
$
265
    
$
337
    
$
404
      
(21
%)
    
(34
%)
                        
Fixed Income
    
181
      
195
      
207
      
(7
%)
    
(13
%)
                        
Alternatives and Solutions
    
415
      
449
      
445
      
(8
%)
    
(7
%)
                        
Long-Term Assets Under Management or Supervision
  
$
861
    
$
981
    
$
1,056
      
(12
%)
    
(18
%)
                        
                                                                 
Liquidity and Overlay Services
    
490
      
466
      
468
      
5
%
    
5
%
                        
                                                                 
Total Assets Under Management or Supervision
  
$
1,351
    
$
1,447
    
$
1,524
      
(7
%)
    
(11
%)
                        
                                                                 
                                                                 
                                                                 
                                                                 

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:
  
   
Jun 30, 2022
    
Mar 31, 2022
    
Jun 30, 2021
    
Mar 31, 2022
    
Jun 30, 2021
  
                               
Institutional Securities
                              
                               
Loans:
                              
Corporate
  
$
12.9
    
$
13.0
    
$
11.6
      
(1
%)
    
11
%
Secured lending facilities
    
36.8
      
34.4
      
32.7
      
7
%
    
13
%
Commercial and residential real estate
    
12.7
      
14.6
      
11.4
      
(13
%)
    
11
%
Securities-based lending and other
    
8.3
      
9.7
      
9.9
      
(14
%)
    
(16
%)
                                         
Total Loans
    
70.7
      
71.7
      
65.6
      
(1
%)
    
8
%
                                         
Lending Commitments
    
125.7
      
128.0
      
124.9
      
(2
%)
    
1
%
                                         
Institutional Securities Loans and Lending Commitments
  
$
196.4
    
$
199.7
    
$
190.5
      
(2
%)
    
3
%
                                         
                                         
Wealth Management
                                        
                                         
Loans:
                                        
Securities-based lending and other
  
$
93.3
    
$
89.5
    
$
75.8
      
4
%
    
23
%
Residential real estate
    
50.4
      
47.2
      
38.9
      
7
%
    
30
%
                                         
Total Loans
    
143.7
      
136.7
      
114.7
      
5
%
    
25
%
                                         
Lending Commitments
    
15.4
      
14.5
      
14.4
      
6
%
    
7
%
                                         
Wealth Management Loans and Lending Commitments
  
$
159.1
    
$
151.2
    
$
129.1
      
5
%
    
23
%
                                         
Consolidated Loans and Lending Commitments (1)
  
$
355.5
    
$
350.9
    
$
319.6
      
1
%
    
11
%
                                         
                                         

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 June 30, 2022
                        
(unaudited, dollars in millions)
                        
                         
                         
   
Loans and Lending Commitments
    
ACL (1)
    
ACL %
    
Q2 Provision
  
   
(Gross)
                    
Loans:
                        
Held For Investment (HFI)
                        
                         
Corporate
  
$
6,739
    
$
212
      
3.1
%
  
$
41
  
Secured lending facilities
    
32,687
      
167
      
0.5
%
    
(4
)
Commercial and residential real estate
    
8,434
      
229
      
2.7
%
    
30
  
Other
   
2,681
      
13
      
0.5
%
    
6
  
Institutional Securities - HFI
  
$
50,541
    
$
621
      
1.2
%
  
$
73
  
                                 
Wealth Management - HFI
    
143,670
      
141
      
0.1
%
    
19
  
                                 
Held For Investment
  
$
194,211
    
$
762
      
0.4
%
  
$
92
  
                                 
Held For Sale
    
13,029
                          
                                 
Fair Value
    
7,875
                          
                                 
Total Loans
    
215,115
      
762
              
92
  
                                 
Lending Commitments
    
141,123
      
464
      
0.3
%
    
9
  
                                 
Consolidated Loans and Lending Commitments
  
$
356,238
    
$
1,226
            
$
101
  
                                 
                                 

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, 2021.
     
(b)
 The following are considered non-GAAP financial measures that the Firm considers useful for analysts, investors and other stakeholders to allow comparability of operating performance and capital adequacy.  These measures are calculated as follows:
  -
Earnings per diluted share excluding integration-related expenses represents net income applicable to Morgan Stanley, adjusted for the impact of the integration-related expenses associated with the acquisitions of E*TRADE and Eaton Vance, less preferred dividends divided by the average number of diluted shares outstanding.
  -
The return on average tangible common equity represents annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average tangible common equity.
  -
The return on average common equity and the return on average tangible common equity excluding integration-related expenses are adjusted in both the numerator and the denominator to exclude the integration-related expenses associated with the acquisitions of E*TRADE and Eaton Vance.
  -
Segment return on average common equity and return on average tangible common equity represent full year net income or annualized net income for the quarter applicable to Morgan Stanley for each segment, less preferred dividend segment allocation, divided by average common equity and average tangible common equity for each respective segment.  The segment adjustments to common equity to derive segment average tangible common equity are generally set at the beginning of the year, and will remain fixed throughout the year until the next annual reset unless a significant business change occurs (e.g., acquisition or disposition).
  -
Tangible common equity represents common equity less goodwill and intangible assets net of certain mortgage servicing rights deduction.
  -
Tangible book value per common share represents tangible common equity divided by period end common shares outstanding.
  -
Pre-tax profit margin excluding integration-related expenses represents income before 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 primarily held within the Parent and its major operating subsidiaries, are comprised of high quality liquid assets (HQLA) and cash deposits with banks ("Liquidity Resources"). The total amount of Liquidity Resources is actively managed by us considering the following components: unsecured debt maturity profile; balance sheet size and composition; funding needs in a stressed environment, inclusive of contingent cash outflows; legal entity, regional and segment liquidity requirements; regulatory requirements; and collateral requirements. Average Liquidity Resources represents the average daily balance for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021.
(b)
The Firm's goodwill and intangible balances utilized in the calculation of tangible common equity are net of certain mortgage servicing rights deduction.
(c)
U.S. Bank refers to the Firm's U.S. Bank operating subsidiaries Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association, and excludes balances between Bank subsidiaries, as well as deposits from the Parent and affiliates.
(d)
Firmwide regional revenues reflect the Firm's consolidated net revenues on a managed basis.  Further discussion regarding the geographic methodology for net revenues is disclosed in Note 23 to the consolidated financial statements included in the Firm's Annual Report on Form 10-K for the year ended December 31, 2021 (2021 Form 10-K).
   
Page 4:
(a)
The Firm's attribution of average common equity to the business segments is based on the Required Capital framework, an internal capital adequacy measure. This framework is a risk-based and leverage-based capital measure, which is compared with the Firm's regulatory capital to ensure that the Firm maintains an amount of going concern capital after absorbing potential losses from stress events, where applicable, at a point in time. The Required Capital Framework is based on the Firm's regulatory capital requirements. The Firm defines the difference between its total average common equity and the sum of the average common equity amounts allocated to its business segments as Parent common equity. The amount of capital allocated to the business segments is generally set at the beginning of the year, and will remain fixed throughout the year until the next annual reset unless a significant business change occurs (e.g., acquisition or disposition). The Firm continues to evaluate its required capital framework with respect to the impact of evolving regulatory requirements, as appropriate. For further discussion of the framework, refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Regulatory Requirements" in the Firm’s 2021 Form 10‐K.
(b)
The Firm's risk‐based capital ratios are computed under each of the (i) standardized approaches for calculating credit risk and market risk risk‐weighted assets (RWAs) (the “Standardized Approach”) and (ii) applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (the “Advanced Approach”). For information on the calculation of regulatory capital and ratios, and associated regulatory requirements, please refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Regulatory Requirements" in the Firm’s 2021 Form 10‐K.
(c)
Supplementary leverage ratio represents Tier 1 capital divided by the total supplementary leverage exposure.
   
Page 5:
(a)
Institutional Securities Equity and Fixed income net revenues include trading, net interest income (interest income less interest expense), asset management, commissions and fees, investments and other revenues which are directly attributable to those businesses.
(b)
Pre-tax profit margin percentages represent income before income taxes as percentages of net revenues.
(c)
VaR represents the unrealized loss in portfolio value that one would not expect to exceed, on average, more than five times every one hundred trading days in the Firm's trading positions if the portfolio were held constant for a one-day period. Further discussion of the calculation of VaR and the limitations of the Firm's VaR methodology, is disclosed in "Quantitative and Qualitative Disclosures about Risk" included in the Firm's 2021 Form 10-K.

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 June 30, 2022, March 31, 2022 and June 30, 2021.
(e)
Advisor-led client assets represent client assets in accounts that have a Wealth Management representative assigned.
(f)
Fee‐based client assets represent the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets.
(g)
Fee-based asset flows include net new fee-based assets (including asset acquisitions), net account transfers, dividends, interest and client fees, and exclude institutional cash management related activity. For a description of the Inflows and Outflows included in Fee-based asset flows, see Fee-based client assets in the 2021 Form 10-K.
(h)
Self-directed assets represent active accounts which are not advisor led. Active accounts are defined as having at least $25 in assets.
(i)
Daily average revenue trades (DARTs) represent the total self-directed trades in a period divided by the number of trading days during that period.
(j)
Self-directed households represent the total number of households that include at least one account with self-directed assets. Individual households or participants that are engaged in one or more of our Wealth Management channels are included in each of the respective channel counts.
(k)
The workplace channel assets includes equity compensation solutions for companies, their executives and employees. Stock plan unvested assets represent the market value of public company securities at the end of the period.
(l)
Stock plan participants represent total accounts with vested and/or unvested stock plan assets in the workplace channel. Individuals with accounts in multiple plans are counted as participants in each plan.
   
Page 8:
(a)
Asset management and related fees represents management and administrative fees, distribution fees, and performance-based fees, not in the form of carried interest. Asset management and related fees represents Asset management as reported on the Firm’s consolidated income statement.
(b)
Performance-based income and other includes performance-based fees in the form of carried interest, gains and losses from investments, gains and losses from hedges on seed capital and certain employee deferred compensation plans, net interest, and other revenues. Performance-based income and other represents investments, investment banking, trading, net interest and other revenues as reported on the Firm’s consolidated income statement.
(c)
Pre-tax profit margin percentages represent income before 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:

     
2Q22
      
1Q22
      
2Q21
    
2Q22 YTD
    
2Q21 YTD
  
Compensation and benefits
  
$
5,550
    
$
6,274
    
$
6,423
    
$
11,824
    
$
13,221
  
                                         
Non-compensation expenses:
                                        
Brokerage, clearing and exchange fees
    
878
      
882
      
795
      
1,760
      
1,705
  
Information processing and communications
    
857
      
829
      
765
      
1,686
      
1,498
  
Professional services
    
757
      
705
      
746
      
1,462
      
1,370
  
Occupancy and equipment
    
430
      
427
      
414
      
857
      
819
  
Marketing and business development
    
220
      
175
      
146
      
395
      
292
  
Other
    
1,020
      
864
      
831
      
1,884
      
1,688
  
Total non-compensation expenses
    
4,162
      
3,882
      
3,697
      
8,044
      
7,372
  
                                         
Total non-interest expenses
  
$
9,712
    
$
10,156
    
$
10,120
    
$
19,868
    
$
20,593
  

Page 2:
(1)
For the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021, Firm results include pre-tax integration-related expenses of $120 million, $107 million and $90 million ($92 million, $82 million and $69 million after‐tax) respectively, reported in the Wealth Management and Investment Management business segments. The six months ended June 30, 2022 and 2021 results include pre‐tax integration‐related expenses of $227 million and $165 million ($174 million and $127 million after‐tax), respectively. The following sets forth the impact of the integration-related expenses to earnings per diluted share, return on average common equity and return on average tangible common equity (which are excluded):

     
2Q22
      
1Q22
      
2Q21
    
2Q22 YTD
    
2Q21 YTD
  
Earnings per diluted share - GAAP
  
$
1.39
    
$
2.02
    
$
1.85
    
$
3.41
    
$
4.04
  
Impact of adjustments
    
0.05
      
0.04
      
0.04
      
0.10
      
0.07
  
Earnings per diluted share excluding integration-related expenses - Non-GAAP
  
$
1.44
    
$
2.06
    
$
1.89
    
$
3.51
    
$
4.11
  
                                         
Return on average common equity - GAAP
    
10.1
%
    
14.7
%
    
13.8
%
    
12.4
%
    
15.3
%
Impact of adjustments
    
0.4
%
    
0.3
%
    
0.3
%
    
0.4
%
    
0.3
%
Return on average common equity excluding integration-related expenses - Non-GAAP
    
10.5
%
    
15.0
%
    
14.1
%
    
12.8
%
    
15.6
%
                                         
Return on average tangible common equity - GAAP
    
13.8
%
    
19.8
%
    
18.6
%
    
16.8
%
    
19.8
%
Impact of adjustments
    
0.5
%
    
0.5
%
    
0.4
%
    
0.5
%
    
0.3
%
Return on average tangible common equity excluding integration-related expenses - Non-GAAP
    
14.3
%
    
20.3
%
    
19.0
%
    
17.3
%
    
20.1
%
                                         
Firm expense efficiency ratio - GAAP
    
74.0
%
    
68.6
%
    
68.6
%
    
71.1
%
    
67.6
%
Impact of adjustments
    
(1.0
)%
    
(0.7
)%
    
(0.6
)%
    
(0.8
)%
    
(0.6
)%
Firm expense efficiency ratio excluding integration-related expenses - Non-GAAP
    
73.0
%
    
67.9
%
    
68.0
%
    
70.3
%
    
67.0
%


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 June 30, 2022, March 31, 2022 and June 30, 2021, the U.S. Bank investment securities portfolio included held to maturity investment securities of $58.7 billion, $60.6 billion and $62.8 billion, respectively.
   
Page 4:
(1)
 The Firm early adopted the standardized approach for counterparty credit risk (SA-CCR) under Basel III on December 1, 2021. SA-CCR replaced the previous exposure method used to measure derivatives counterparty exposure within the Standardized Approach risk-weighted assets (RWAs) and Supplementary Leverage Ratio exposure calculations in the regulatory capital framework.
   
Page 5:
(1)
 Institutional Securities average tangible common equity represents average common equity adjusted to exclude goodwill and intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 2Q22: $576mm; 1Q22: $576mm; 2Q21: $603mm; 2Q22 YTD: $576mm; 2Q21 YTD: $603mm
   
Page 6:
(1)
 For the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021 and six months ended June 30, 2022 and 2021, integration-related compensation and non-compensation expenses associated with the acquisition of E*TRADE are as follows:

     
2Q22
      
1Q22
      
2Q21
    
2Q22 YTD
    
2Q21 YTD
  
Compensation expenses
  
$
4
    
$
1
    
$
9
    
$
5
    
$
39
  
Non-compensation expenses
    
92
      
74
      
51
      
166
      
85
  
Total non-interest expenses
  
$
96
    
$
75
    
$
60
    
$
171
    
$
124
  
Income tax provision
    
22
      
18
      
14
      
40
      
29
  
Total non-interest expenses (after-tax)
  
$
74
    
$
57
    
$
46
    
$
131
    
$
95
  

(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: 2Q22: $14,746mm; 1Q22: $14,746mm; 2Q21: $15,270mm; 2Q22 YTD: $14,746mm; 2Q21 YTD: $15,173mm

15


Supplemental Quantitative Details and Calculations


Page 7:
(1)
The prior periods have been revised to include certain vested client employee stock options on the E*TRADE platform to align the timing of recognition with other existing Morgan Stanley client assets.
(2)
The quarter ended March 31, 2022 includes $75 billion of fee-based assets acquired in an asset acquisition.
(3)
Wealth Management other lending includes $3 billion of non-purpose securities based lending on non-bank entities in each period ended June 30, 2022, March 31, 2022 and June 30, 2021.
(4)
For the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021, Wealth Management deposits of $340 billion, $352 billion and $319 billion, respectively, exclude off-balance sheet deposits of $8 billion in each period, held by third parties outside of Morgan Stanley. Total deposits details are as follows:

     
2Q22
      
1Q22
      
2Q21
  
Brokerage sweep deposits
  
$
279
    
$
309
    
$
257
  
Other deposits
    
61
      
43
      
62
  
Total balance sheet deposits
    
340
      
352
      
319
  
Off-balance sheet deposits
    
8
      
8
      
8
  
Total deposits
  
$
348
    
$
360
    
$
327
  

Page 8:
(1)
 For the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021 and six months ended June 30, 2022 and 2021, integration-related compensation and non-compensation expenses associated with the acquisition of Eaton Vance are as follows:

     
2Q22
      
1Q22
      
2Q21
    
2Q22 YTD
    
2Q21 YTD
  
Compensation expenses
  
$
7
    
$
9
    
$
16
    
$
16
    
$
19
  
Non-compensation expenses
    
17
      
23
      
14
      
40
      
22
  
Total non-interest expenses
  
$
24
    
$
32
    
$
30
    
$
56
    
$
41
  
Income tax provision
    
6
      
7
      
7
      
13
      
9
  
Total non-interest expenses (after-tax)
  
$
18
    
$
25
    
$
23
    
$
43
    
$
32
  

(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: 2Q22: $9,815mm; 1Q22: $9,815mm; 2Q21: $9,924mm; 2Q22 YTD: $9,815mm; 2Q21 YTD: $6,067mm

Page 9:
(1)
Net Flows by region for the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021 were:
North America: $22.7 billion, $(16.6) billion and $40.5 billion
International: $5.1 billion, $(25.9) billion and $8.0 billion
(2)
Assets under management or supervision by region for the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021 were:
North America: $1,059 billion, $1,123 billion and $1,142 billion
International: $292 billion, $324 billion and $382 billion
   
Page 10:
(1)
For the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021, Investment Management reflected loan balances of $220 million, $362 million and $865 million, respectively.
   
Page 11:
(1)
 For the quarter ended June 30, 2022, the Allowance Rollforward for Loans and Lending Commitments is as follows:

                   
   
Institutional Securities
    
Wealth
Management
    
Total
  
Loans
                  
                   
Allowance for Credit Losses (ACL)
                  
Beginning Balance - March 31, 2022
  
$
554
    
$
125
    
$
679
  
Net Charge Offs
    
2
      
(4
)
    
(2
)
Provision
    
73
      
19
      
92
  
Other
    
(8
)
    
1
      
(7
)
Ending Balance - June 30, 2022
  
$
621
    
$
141
    
$
762
  
                         
                         
Lending Commitments
                        
                         
Allowance for Credit Losses (ACL)
                        
Beginning Balance - March 31, 2022
  
$
443
    
$
16
    
$
459
  
Net Charge Offs
    
-
      
-
      
-
  
Provision
    
9
      
-
      
9
  
Other
    
(3
)
    
(1
)
    
(4
)
Ending Balance - June 30, 2022
  
$
449
    
$
15
    
$
464
  
                         
                         
Loans and Lending Commitments
                        
                         
Allowance for Credit Losses (ACL)
                        
Beginning Balance - March 31, 2022
  
$
997
    
$
141
    
$
1,138
  
Net Charge Offs
    
2
      
(4
)
    
(2
)
Provision
    
82
      
19
      
101
  
Other
    
(11
)
    
-
      
(11
)
Ending Balance - June 30, 2022
  
$
1,070
    
$
156
    
$
1,226
  

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 second quarter earnings press release issued July 14, 2022.






17