EX-99.2 3 a52683164ex99_2.htm EXHIBIT 99.2
Exhibit 99.2



First 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:
  
   
Mar 31, 2022
    
Dec 31, 2021
    
Mar 31, 2021
    
Dec 31, 2021
    
Mar 31, 2021
  
Net revenues
                              
Institutional Securities
  
$
7,657
    
$
6,669
    
$
8,577
      
15
%
    
(11
%)
Wealth Management
    
5,935
      
6,254
      
5,959
      
(5
%)
    
--
  
Investment Management
    
1,335
      
1,751
      
1,314
      
(24
%)
    
2
%
Intersegment Eliminations
    
(126
)
    
(150
)
    
(131
)
    
16
%
    
4
%
Net revenues
  
$
14,801
    
$
14,524
    
$
15,719
      
2
%
    
(6
%)
                                         
Provision for credit losses
  
$
57
    
$
5
    
$
(98
)
    
*
      
*
  
                                         
Non-interest expenses
                                        
Institutional Securities
  
$
4,826
    
$
3,705
    
$
5,299
      
30
%
    
(9
%)
Wealth Management
    
4,349
      
4,826
      
4,364
      
(10
%)
    
--
  
Investment Management
    
1,107
      
1,243
      
944
      
(11
%)
    
17
%
Intersegment Eliminations
    
(126
)
    
(139
)
    
(134
)
    
9
%
    
6
%
Non-interest expenses (1)
  
$
10,156
    
$
9,635
    
$
10,473
      
5
%
    
(3
%)
                                         
Income before taxes
                                        
Institutional Securities
  
$
2,787
    
$
2,972
    
$
3,371
      
(6
%)
    
(17
%)
Wealth Management
    
1,573
      
1,415
      
1,600
      
11
%
    
(2
%)
Investment Management
    
228
      
508
      
370
      
(55
%)
    
(38
%)
Intersegment Eliminations
    
-
      
(11
)
    
3
      
*
      
*
  
Income before taxes
  
$
4,588
    
$
4,884
    
$
5,344
      
(6
%)
    
(14
%)
                                         
Net Income applicable to Morgan Stanley
                                       
Institutional Securities
  
$
2,191
    
$
2,223
    
$
2,601
      
(1
%)
    
(16
%)
Wealth Management
    
1,272
      
1,071
      
1,242
      
19
%
    
2
%
Investment Management
    
203
      
411
      
275
      
(51
%)
    
(26
%)
Intersegment Eliminations
    
-
      
(9
)
    
2
      
*
      
*
  
Net Income applicable to Morgan Stanley
  
$
3,666
    
$
3,696
    
$
4,120
      
(1
%)
    
(11
%)
Earnings applicable to Morgan Stanley common shareholders
  
$
3,542
    
$
3,592
    
$
3,982
      
(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.

1


Consolidated Financial Metrics, Ratios and Statistical Data
                          
(unaudited)
                              
                               
                               
   
Quarter Ended
    
Percentage Change From:
  
   
Mar 31, 2022
    
Dec 31, 2021
    
Mar 31, 2021
    
Dec 31, 2021
    
Mar 31, 2021
  
                               
Financial Metrics:
                              
                               
Earnings per basic share
  
$
2.04
    
$
2.05
    
$
2.22
      
--
      
(8
%)
Earnings per diluted share
  
$
2.02
    
$
2.01
    
$
2.19
      
--
      
(8
%)
                                         
Return on average common equity
    
14.7
%
    
14.7
%
    
16.9
%
                
Return on average tangible common equity
    
19.8
%
    
19.8
%
    
21.1
%
                
                                         
Book value per common share
  
$
54.18
    
$
55.12
    
$
52.71
                  
Tangible book value per common share
  
$
39.91
    
$
40.91
    
$
38.97
                  
                                         
Excluding integration-related expenses (1)
                                        
Adjusted earnings per diluted share
  
$
2.06
    
$
2.08
    
$
2.22
      
(1
%)
    
(7
%)
Adjusted return on average common equity
    
15.0
%
    
15.2
%
    
17.1
%
                
Adjusted return on average tangible common equity
    
20.3
%
    
20.4
%
    
21.4
%
                
                                         
                                         
Financial Ratios:
                                        
                                         
Pre-tax profit margin
    
31
%
    
34
%
    
34
%
                
Compensation and benefits as a % of net revenues
    
42
%
    
38
%
    
43
%
                
Non-compensation expenses as a % of net revenues
    
26
%
    
29
%
    
23
%
                
Firm expense efficiency ratio
    
69
%
    
66
%
    
67
%
                
Firm expense efficiency ratio excluding integration-related expenses (1)
    
68
%
    
65
%
    
66
%
                
Effective tax rate (2)
    
19.0
%
    
23.9
%
    
22.0
%
                
                                         
                                         
Statistical Data:
                                        
                                         
Period end common shares outstanding (millions)
    
1,756
      
1,772
      
1,869
      
(1
%)
    
(6
%)
Average common shares outstanding (millions)
                                        
Basic
    
1,733
      
1,751
      
1,795
      
(1
%)
    
(3
%)
Diluted
    
1,755
      
1,785
      
1,818
      
(2
%)
    
(3
%)
                                         
Worldwide employees
    
76,541
      
74,814
      
70,975
      
2
%
    
8
%
                                         
                                         

Notes:
-
For the quarters ended March 31, 2022, December 31, 2021 and March 31, 2021, Firm results include pre-tax integration-related expenses of $107 million, $146 million and $75 million ($82 million, $114 million and $58 million after‐tax) respectively, reported in the Wealth Management and Investment Management business segments.
-
 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:
  
   
Mar 31, 2022
    
Dec 31, 2021
    
Mar 31, 2021
    
Dec 31, 2021
    
Mar 31, 2021
  
                               
Consolidated Balance sheet
                              
                               
Total assets
  
$
1,222,233
    
$
1,188,140
    
$
1,158,772
      
3
%
    
5
%
Loans (1)
  
$
208,750
    
$
200,761
    
$
171,812
      
4
%
    
21
%
Deposits
  
$
360,840
    
$
347,574
    
$
323,138
      
4
%
    
12
%
Liquidity resources
  
$
323,227
    
$
356,003
    
$
353,304
      
(9
%)
    
(9
%)
Long-term debt outstanding
  
$
225,671
    
$
227,363
    
$
208,267
      
(1
%)
    
8
%
Maturities of long-term debt outstanding (next 12 months)
  
$
21,335
    
$
14,197
    
$
18,976
      
50
%
    
12
%
                                         
Common equity
  
$
95,151
    
$
97,691
    
$
98,509
      
(3
%)
    
(3
%)
Less: Goodwill and intangible assets
    
(25,068
)
    
(25,192
)
    
(25,681
)
    
--
      
(2
%)
Tangible common equity
  
$
70,083
    
$
72,499
    
$
72,828
      
(3
%)
    
(4
%)
                                         
Preferred equity
  
$
7,750
    
$
7,750
    
$
7,750
      
--
      
--
  
                                         
U.S. Bank Supplemental Financial Information
                                        
Total assets
  
$
389,978
    
$
386,059
    
$
357,217
      
1
%
    
9
%
Loans
  
$
194,791
    
$
185,499
    
$
157,354
      
5
%
    
24
%
Investment securities portfolio (2)
  
$
129,886
    
$
143,292
    
$
149,423
      
(9
%)
    
(13
%)
Deposits
  
$
352,078
    
$
346,221
    
$
321,630
      
2
%
    
9
%
                                         
Regional revenues
                                        
Americas
  
$
10,464
    
$
11,274
    
$
11,191
      
(7
%)
    
(6
%)
EMEA (Europe, Middle East, Africa)
    
2,311
      
1,695
      
2,159
      
36
%
    
7
%
Asia
    
2,026
      
1,555
      
2,369
      
30
%
    
(14
%)
Consolidated net revenues
  
$
14,801
    
$
14,524
    
$
15,719
      
2
%
    
(6
%)
                                         
                                         

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:
  
   
Mar 31, 2022
    
Dec 31, 2021
    
Mar 31, 2021
    
Dec 31, 2021
    
Mar 31, 2021
  
                               
Average Common Equity
                              
Institutional Securities
  
$
48.8
    
$
43.5
    
$
43.5
      
12
%
    
12
%
Wealth Management
    
31.0
      
28.6
      
28.5
      
8
%
    
9
%
Investment Management
    
10.6
      
10.7
      
4.4
      
(1
%)
    
141
%
Parent
    
6.3
      
15.0
      
17.9
      
(58
%)
    
(65
%)
Firm
  
$
96.7
    
$
97.8
    
$
94.3
      
(1
%)
    
3
%
                                         
                                         
                                         
Regulatory Capital (1)
                                        
                                         
Common Equity Tier 1 capital
  
$
72.5
    
$
75.7
    
$
76.2
      
(4
%)
    
(5
%)
Tier 1 capital
  
$
80.2
    
$
83.3
    
$
84.1
      
(4
%)
    
(5
%)
                                         
Standardized Approach
                                        
Risk-weighted assets
  
$
500.3
    
$
471.9
    
$
455.1
      
6
%
    
10
%
Common Equity Tier 1 capital ratio
    
14.5
%
    
16.0
%
    
16.7
%
                
Tier 1 capital ratio
    
16.0
%
    
17.7
%
    
18.5
%
                
                                         
Advanced Approach
                                        
Risk-weighted assets
  
$
455.4
    
$
435.7
    
$
438.8
      
5
%
    
4
%
Common Equity Tier 1 capital ratio
    
15.9
%
    
17.4
%
    
17.4
%
                
Tier 1 capital ratio
    
17.6
%
    
19.1
%
    
19.2
%
                
                                         
Leverage-based capital
                                        
Tier 1 leverage ratio
    
6.8
%
    
7.1
%
    
7.5
%
                
Supplementary Leverage Ratio (2)
    
5.5
%
    
5.6
%
    
6.7
%
                
                                         
                                         

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)
                              
                               

                             
   
Quarter Ended
    
Percentage Change From:
  
   
Mar 31, 2022
    
Dec 31, 2021
    
Mar 31, 2021
    
Dec 31, 2021
    
Mar 31, 2021
  
Revenues:
                              
                               
Advisory
  
$
944
    
$
1,071
    
$
480
      
(12
%)
    
97
%
Equity
    
258
      
853
      
1,502
      
(70
%)
    
(83
%)
Fixed income
    
432
      
510
      
631
      
(15
%)
    
(32
%)
Underwriting
    
690
      
1,363
      
2,133
      
(49
%)
    
(68
%)
Investment banking
    
1,634
      
2,434
      
2,613
      
(33
%)
    
(37
%)
                                         
Equity
    
3,174
      
2,857
      
2,875
      
11
%
    
10
%
Fixed income
    
2,923
      
1,228
      
2,966
      
138
%
    
(1
%)
Other
    
(74
)
    
150
      
123
      
*
      
*
  
                                         
Net revenues
    
7,657
      
6,669
      
8,577
      
15
%
    
(11
%)
                                         
Provision for credit losses
    
44
      
(8
)
    
(93
)
    
*
      
*
  
                                         
Compensation and benefits
    
2,604
      
1,370
      
3,114
      
90
%
    
(16
%)
Non-compensation expenses
    
2,222
      
2,335
      
2,185
      
(5
%)
    
2
%
Total non-interest expenses
    
4,826
      
3,705
      
5,299
      
30
%
    
(9
%)
                                         
                                         
Income before taxes
    
2,787
      
2,972
      
3,371
      
(6
%)
    
(17
%)
Net income applicable to Morgan Stanley
  
$
2,191
    
$
2,223
    
$
2,601
      
(1
%)
    
(16
%)
                                         
                                         
Pre-tax profit margin
    
36
%
    
45
%
    
39
%
                
Compensation and benefits as a % of net revenues
    
34
%
    
21
%
    
36
%
                
Non-compensation expenses as a % of net revenues
    
29
%
    
35
%
    
25
%
                
                                         
Return on Average Common Equity
    
17
%
    
20
%
    
23
%
                
Return on Average Tangible Common Equity (1)
    
17
%
    
20
%
    
23
%
                
                                         
Trading VaR (Average Daily 95% / One-Day VaR)
  
$
39
    
$
40
    
$
69
                  
                                         
                                         
                                         

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)
                              

                             
                               
   
Quarter Ended
    
Percentage Change From:
  
   
Mar 31, 2022
    
Dec 31, 2021
    
Mar 31, 2021
    
Dec 31, 2021
    
Mar 31, 2021
  
Revenues:
                              
Asset management
  
$
3,626
    
$
3,700
    
$
3,191
      
(2
%)
    
14
%
Transactional
    
635
      
1,027
      
1,228
      
(38
%)
    
(48
%)
Net interest income
    
1,540
      
1,405
      
1,385
      
10
%
    
11
%
Other
    
134
      
122
      
155
      
10
%
    
(14
%)
Net revenues
    
5,935
      
6,254
      
5,959
      
(5
%)
    
--
  
                                         
Provision for credit losses
    
13
      
13
      
(5
)
    
--
      
*
  
                                         
Compensation and benefits
    
3,125
      
3,486
      
3,170
      
(10
%)
    
(1
%)
Non-compensation expenses
    
1,224
      
1,340
      
1,194
      
(9
%)
    
3
%
Total non-interest expenses (1)
    
4,349
      
4,826
      
4,364
      
(10
%)
    
--
  
                                         
Income before taxes
    
1,573
      
1,415
      
1,600
      
11
%
    
(2
%)
Net income applicable to Morgan Stanley
  
$
1,272
    
$
1,071
    
$
1,242
      
19
%
    
2
%
                                         
Pre-tax profit margin
    
27
%
    
23
%
    
27
%
                
Pre-tax profit margin excluding integration-related expenses
    
28
%
    
24
%
    
28
%
                
Compensation and benefits as a % of net revenues
    
53
%
    
56
%
    
53
%
                
Non-compensation expenses as a % of net revenues
    
21
%
    
21
%
    
20
%
                
                                         
Return on Average Common Equity
    
16
%
    
15
%
    
17
%
                
Return on Average Tangible Common Equity (2)
    
30
%
    
31
%
    
36
%
                
                                         
                                         

Notes:
-
For the quarters ended March 31, 2022, December 31, 2021 and March 31, 2021, Wealth Management's results include pre-tax integration-related expenses of $75 million, $109 million and $64 million ($57 million, $85 million and $49 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)
                              

                             
                               
                               
   
Quarter Ended
    
Percentage Change From:
  
   
Mar 31, 2022
    
Dec 31, 2021
    
Mar 31, 2021
    
Dec 31, 2021
    
Mar 31, 2021
  
                               
                               
Wealth Management Metrics
                              
                               
Total client assets
  
$
4,800
    
$
4,930
    
$
4,231
      
(3
%)
    
13
%
Net new assets (1)
  
$
142.0
    
$
127.1
    
$
104.9
      
12
%
    
35
%
U.S. Bank loans
  
$
136.7
    
$
129.2
    
$
104.9
      
6
%
    
30
%
Margin and other lending (2)
  
$
29.2
    
$
31.0
    
$
26.6
      
(6
%)
    
10
%
Deposits (3)
  
$
352
    
$
346
    
$
322
      
2
%
    
9
%
Annualized weighted average cost of deposits
    
0.09
%
    
0.10
%
    
0.18
%
                
                                         
Advisor-led channel
                                        
                                         
Advisor-led client assets
  
$
3,835
    
$
3,886
    
$
3,349
      
(1
%)
    
15
%
                                         
Fee-based client assets
  
$
1,873
    
$
1,839
    
$
1,574
      
2
%
    
19
%
Fee-based asset flows (1)
  
$
97.2
    
$
37.8
    
$
37.2
      
157
%
    
161
%
Fee-based assets as a % of advisor-led client assets
    
49
%
    
47
%
    
47
%
                
                                         
Self-directed channel
                                        
                                         
Self-directed assets
  
$
965
    
$
1,044
    
$
882
      
(8
%)
    
9
%
Daily average revenue trades (000's)
    
1,016
      
1,044
      
1,619
      
(3
%)
    
(37
%)
Self-directed households (millions)
    
7.6
      
7.4
      
7.2
      
3
%
    
6
%
                                         
Workplace channel
                                        
                                         
Stock plan unvested assets
  
$
454
    
$
509
    
$
461
      
(11
%)
    
(2
%)
Number of stock plan participants (millions)
    
5.8
      
5.6
      
5.1
      
4
%
    
14
%
                                         

The End Notes are an integral part of this presentation. See pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice.

7

Investment Management
                              
Income Statement Information, Financial Metrics and Ratios
              
(unaudited, dollars in millions)
                              
                               

                             
   
Quarter Ended
    
Percentage Change From:
  
   
Mar 31, 2022
    
Dec 31, 2021
    
Mar 31, 2021
    
Dec 31, 2021
    
Mar 31, 2021
  
Revenues:
                              
Asset management and related fees
  
$
1,388
    
$
1,585
    
$
1,103
      
(12
%)
    
26
%
Performance-based income and other
    
(53
)
    
166
      
211
      
*
      
*
  
Net revenues
    
1,335
      
1,751
      
1,314
      
(24
%)
    
2
%
                                         
Compensation and benefits
    
545
      
631
      
514
      
(14
%)
    
6
%
Non-compensation expenses
    
562
      
612
      
430
      
(8
%)
    
31
%
Total non-interest expenses (1)
    
1,107
      
1,243
      
944
      
(11
%)
    
17
%
                                         
Income before taxes
    
228
      
508
      
370
      
(55
%)
    
(38
%)
Net income applicable to Morgan Stanley
  
$
203
    
$
411
    
$
275
      
(51
%)
    
(26
%)
                                         
Pre-tax profit margin
    
17
%
    
29
%
    
28
%
                
Pre-tax profit margin excluding integration-related expenses
    
19
%
    
31
%
    
29
%
                
Compensation and benefits as a % of net revenues
    
41
%
    
36
%
    
39
%
                
Non-compensation expenses as a % of net revenues
    
42
%
    
35
%
    
33
%
                
                                         
Return on Average Common Equity
    
8
%
    
15
%
    
25
%
                
Return on Average Tangible Common Equity (2)
    
106
%
    
207
%
    
88
%
                
                                         

Notes:
-
For the quarters ended March 31, 2022, December 31, 2021 and March 31, 2021, Investment Management's results include pre-tax integration-related expenses of $32 million, $37 million and $11 million ($25 million, $29 million and $9 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)
                              

                             
                               
                               
   
Quarter Ended
    
Percentage Change From:
  
   
Mar 31, 2022
    
Dec 31, 2021
    
Mar 31, 2021
    
Dec 31, 2021
    
Mar 31, 2021
  
                               
                               
Assets under management or supervision (AUM)
                              
                               
Net flows by asset class (1)
                              
Equity
  
$
(7.5
)
  
$
(5.7
)
  
$
7.8
      
(32
%)
    
*
  
Fixed Income
    
(3.9
)
    
2.3
      
3.9
      
*
      
*
  
Alternatives and Solutions
    
(3.0
)
    
2.3
      
4.6
      
*
      
*
  
Long-Term Net Flows
    
(14.4
)
    
(1.1
)
    
16.3
      
*
      
*
  
                                         
Liquidity and Overlay Services
    
(28.1
)
    
12.6
      
25.9
      
*
      
*
  
                                         
Total Net Flows
  
$
(42.5
)
  
$
11.5
    
$
42.2
      
*
      
*
  
                                         
Assets under management or supervision by asset class (2)
                                        
Equity
  
$
337
    
$
395
    
$
371
      
(15
%)
    
(9
%)
Fixed Income
    
195
      
207
      
201
      
(6
%)
    
(3
%)
Alternatives and Solutions
    
449
      
466
      
418
      
(4
%)
    
7
%
Long-Term Assets Under Management or Supervision
  
$
981
    
$
1,068
    
$
990
      
(8
%)
    
(1
%)
                                         
Liquidity and Overlay Services
    
466
      
497
      
429
      
(6
%)
    
9
%
                                         
Total Assets Under Management or Supervision
  
$
1,447
    
$
1,565
    
$
1,419
      
(8
%)
    
2
%
                                         
                                         
                                         
                                         

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:
  
   
Mar 31, 2022
    
Dec 31, 2021
    
Mar 31, 2021
    
Dec 31, 2021
    
Mar 31, 2021
  
                               
Institutional Securities
                              
                               
Loans:
                              
Corporate
  
$
13.0
    
$
13.5
    
$
16.8
      
(4
%)
    
(23
%)
Secured lending facilities
    
34.4
      
35.2
      
29.6
      
(2
%)
    
16
%
Commercial and residential real estate
    
14.6
      
13.6
      
10.5
      
7
%
    
39
%
Securities-based lending and other
    
9.7
      
9.0
      
8.8
      
8
%
    
10
%
                                         
Total Loans
    
71.7
      
71.3
      
65.7
      
1
%
    
9
%
                                         
Lending Commitments
    
128.0
      
120.3
      
118.8
      
6
%
    
8
%
                                         
Institutional Securities Loans and Lending Commitments
  
$
199.7
    
$
191.6
    
$
184.5
      
4
%
    
8
%
                                         
                                         
Wealth Management
                                        
                                         
Loans:
                                        
Securities-based lending and other
  
$
89.5
    
$
85.1
    
$
68.1
      
5
%
    
31
%
Residential real estate
    
47.2
      
44.2
      
36.8
      
7
%
    
28
%
                                         
Total Loans
    
136.7
      
129.3
      
104.9
      
6
%
    
30
%
                                         
Lending Commitments
    
14.5
      
14.7
      
14.0
      
(1
%)
    
4
%
                                         
Wealth Management Loans and Lending Commitments
  
$
151.2
    
$
144.0
    
$
118.9
      
5
%
    
27
%
                                         
Consolidated Loans and Lending Commitments (1)
  
$
350.9
    
$
335.6
    
$
303.4
      
5
%
    
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 March 31, 2022
                        
(unaudited, dollars in millions)
                        
                         
                         
   
Loans and Lending Commitments
    
ACL (1)
    
ACL %
    
Q1 Provision
  
   
(Gross)
                    
Loans:
                        
Held For Investment (HFI)
                        
                         
Corporate
  
$
6,105
    
$
170
      
2.8
%
  
$
6
  
Secured lending facilities
    
29,896
      
172
      
0.6
%
    
12
  
Commercial and residential real estate
    
8,276
      
203
      
2.5
%
    
6
  
Other
    
1,972
      
9
      
0.5
%
    
-
  
Institutional Securities - HFI
  
$
46,249
    
$
554
      
1.2
%
  
$
24
  
                                 
Wealth Management - HFI
    
136,672
      
125
      
0.1
%
    
15
  
                                 
Held For Investment
  
$
182,921
    
$
679
      
0.4
%
  
$
39
  
                                 
Held For Sale
    
14,013
                          
                                 
Fair Value
    
12,133
                          
                                 
Total Loans
    
209,067
      
679
              
39
  
                                 
Lending Commitments
    
142,492
      
459
      
0.3
%
    
18
  
                                 
Consolidated Loans and Lending Commitments
  
$
351,559
    
$
1,138
            
$
57
  
                                 
                                 

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 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, 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 March 31, 2022, December 31, 2021 and March 31, 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 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. 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:

       
1Q22
      
4Q21
      
1Q21
  
 
Compensation and benefits
  
$
6,274
    
$
5,487
    
$
6,798
  
                           
 
Non-compensation expenses:
                        
 
Brokerage, clearing and exchange fees
    
882
      
811
      
910
  
 
Information processing and communications
    
829
      
833
      
733
  
 
Professional services
    
705
      
829
      
624
  
 
Occupancy and equipment
    
427
      
479
      
405
  
 
Marketing and business development
    
175
      
205
      
146
  
 
Other
    
864
      
991
      
857
  
 
Total non-compensation expenses
    
3,882
      
4,148
      
3,675
  
                           
 
Total non-interest expenses
  
$
10,156
    
$
9,635
    
$
10,473
  

Page 2:
(1)
For the quarters ended March 31, 2022, December 31, 2021 and March 31, 2021, Firm results include pre-tax integration-related expenses of $107 million, $146 million and $75 million ($82 million, $114 million and $58 million after‐tax) respectively, reported in the Wealth Management and Investment Management business segments. 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):

       
1Q22
      
4Q21
      
1Q21
  
 
Earnings per diluted share - GAAP
  
$
2.02
    
$
2.01
    
$
2.19
  
 
Impact of adjustments
    
0.04
      
0.07
      
0.03
  
 
Earnings per diluted share excluding integration-related expenses - Non-GAAP
  
$
2.06
    
$
2.08
    
$
2.22
  
                           
 
Return on average common equity - GAAP
    
14.7
%
    
14.7
%
    
16.9
%
 
Impact of adjustments
    
0.3
%
    
0.5
%
    
0.2
%
 
Return on average common equity excluding integration-related expenses - Non-GAAP
    
15.0
%
    
15.2
%
    
17.1
%
                           
 
Return on average tangible common equity - GAAP
    
19.8
%
    
19.8
%
    
21.1
%
 
Impact of adjustments
    
0.5
%
    
0.6
%
    
0.3
%
 
Return on average tangible common equity excluding integration-related expenses - Non-GAAP
    
20.3
%
    
20.4
%
    
21.4
%
                           
 
Firm expense efficiency ratio - GAAP
    
68.6
%
    
66.3
%
    
66.6
%
 
Impact of adjustments
    
(0.7
)%
    
(1.0
)%
    
(0.5
)%
 
Firm expense efficiency ratio excluding integration-related expenses - Non-GAAP
    
67.9
%
    
65.3
%
    
66.1
%

(2)
 The income tax consequences related to employee share-based payments are recognized in Provision for income taxes in the consolidated income statement, and may be either a benefit or a provision. The impacts of recognizing excess tax benefits upon conversion of awards are $205 million and $82 million for the first quarter of 2022 and 2021, respectively.
   
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 March 31, 2022, December 31, 2021 and March 31, 2021, the U.S. Bank investment securities portfolio included held to maturity investment securities of $60.6 billion, $61.7 billion and $64.6 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 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.
(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 March 31, 2021 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 0.7% as of March 31, 2021.
   
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: 1Q22: $576mm; 4Q21: $603mm; 1Q21: $603mm
   
Page 6:
(1)
For the quarters ended March 31, 2022, December 31, 2021 and March 31, 2021, integration-related compensation and non-compensation expenses associated with the acquisition of E*TRADE are as follows:

       
1Q22
      
4Q21
      
1Q21
  
 
Compensation expenses
  
$
1
    
$
10
    
$
30
  
 
Non-compensation expenses
    
74
      
99
      
34
  
 
Total non-interest expenses
  
$
75
    
$
109
    
$
64
  
 
Income tax provision
    
18
      
24
      
15
  
 
Total non-interest expenses (after-tax)
  
$
57
    
$
85
    
$
49
  

(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: 1Q22: $14,746mm; 4Q21: $15,270mm; 1Q21: $15,101mm  

15

Supplemental Quantitative Details and Calculations

Page 7:
(1)
Includes $75 billion of fee‐based assets acquired in an asset acquisition in the current quarter ended March 31, 2022.
(2)
Wealth Management other lending includes $3 billion of non-purpose securities based lending on non-bank entities in each period ended March 31, 2022, December 31, 2021 and March 31, 2021.
(3)
For the quarters ended March 31, 2022, December 31, 2021 and March 31, 2021, Wealth Management deposits of $352 billion, $346 billion and $322 billion, respectively, exclude off-balance sheet deposits of $8 billion, $9 billion and $8 billion, respectively, held by third parties outside of Morgan Stanley. Total deposits details are as follows:

       
1Q22
      
4Q21
      
1Q21
  
 
Brokerage sweep deposits
  
$
309
    
$
298
    
$
253
  
 
Other deposits
    
43
      
48
      
69
  
 
Total balance sheet deposits
    
352
      
346
      
322
  
 
Off-balance sheet deposits
    
8
      
9
      
8
  
 
Total deposits
  
$
360
    
$
355
    
$
330
  

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

       
1Q22
      
4Q21
      
1Q21
  
 
Compensation expenses
  
$
9
    
$
15
    
$
3
  
 
Non-compensation expenses
    
23
      
22
      
8
  
 
Total non-interest expenses
  
$
32
    
$
37
    
$
11
  
 
Income tax provision
    
7
      
8
      
2
  
 
Total non-interest expenses (after-tax)
  
$
25
    
$
29
    
$
9
  

(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: 1Q22: $9,815mm; 4Q21: $9,924mm; 1Q21: $3,174mm
   
Page 9:
(1)
Net Flows by region for the quarters ended March 31, 2022, December 31, 2021 and March 31, 2021 were:
 
North America: $(16.6) billion, $10.2 billion and $35.0 billion
 
International: $(25.9) billion, $1.3 billion and $7.2 billion
(2)
Assets under management or supervision by region for the quarters ended March 31, 2022, December 31, 2021 and March 31, 2021 were:
 
North America: $1,123 billion, $1,188 billion and $1,058 billion
 
International: $324 billion, $377 billion and $361 billion
   
Page 10:
(1)
For the quarters ended March 31, 2022, December 31, 2021 and March 31, 2021, Investment Management reflected loan balances of $362 million, $140 million and $1,132 million, respectively.
   
Page 11:
(1)
For the quarter ended March 31, 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 - December 31, 2021
  
$
543
    
$
111
    
$
654
  
 
Net Charge Offs
    
(10
)
    
(1
)
    
(11
)
 
Provision
    
24
      
15
      
39
  
 
Other
    
(3
)
    
-
      
(3
)
 
Ending Balance - March 31, 2022
  
$
554
    
$
125
    
$
679
  
                           
                           
 
Lending Commitments
                        
                           
 
Allowance for Credit Losses (ACL)
                        
 
Beginning Balance - December 31, 2021
  
$
426
    
$
18
    
$
444
  
 
Net Charge Offs
    
-
      
-
      
-
  
 
Provision
    
20
      
(2
)
    
18
  
 
Other
    
(3
)
    
-
      
(3
)
 
Ending Balance - March 31, 2022
  
$
443
    
$
16
    
$
459
  
                           
                           
 
Loans and Lending Commitments
                        
                           
 
Allowance for Credit Losses (ACL)
                        
 
Beginning Balance - December 31, 2021
  
$
969
    
$
129
    
$
1,098
  
 
Net Charge Offs
    
(10
)
    
(1
)
    
(11
)
 
Provision
    
44
      
13
      
57
  
 
Other
    
(6
)
    
-
      
(6
)
 
Ending Balance - March 31, 2022
  
$
997
    
$
141
    
$
1,138
  

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 first quarter earnings press release issued April 14, 2022.



17