8-K - MS - Equibles

UNITED STATES

  SECURITIES AND EXCHANGE
    COMMISSION
  WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

  Pursuant To Section 13 or
    15\(d\) of
    the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 16, 2020
Morgan Stanley
(Exact Name of Registrant<br><br> as Specified in Charter)
Delaware	1-11758	36-3145972
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
1585 Broadway, New York, New York		10036
(Address of Principal Executive Offices)		(Zip Code)
Registrant’s telephone number, including area code: (212)<br> 761-4000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	MS	New York Stock Exchange
Depositary<br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br> Shares, each representing 1/1,000th interest in a share of Floating Rate<br><br> <br>Non-Cumulative Preferred Stock, Series A, $0.01 par value	MS/PA	New York Stock Exchange
Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate<br><br> <br>Non-Cumulative Preferred Stock, Series E, $0.01 par value	MS/PE	New York Stock Exchange
Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate<br><br> <br>Non-Cumulative Preferred Stock, Series F, $0.01 par value	MS/PF	New York Stock Exchange
Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate<br><br> <br>Non-Cumulative Preferred Stock, Series I, $0.01 par value	MS/PI	New York Stock Exchange
Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate<br><br> <br>Non-Cumulative Preferred Stock, Series K, $0.01 par value	MS/PK	New York Stock Exchange
Depositary Shares, each representing 1/1,000th interest in a share of 4.875%<br><br> <br>Non-Cumulative Preferred Stock, Series L, $0.01 par value	MS/PL	New York Stock Exchange
Global Medium-Term Notes, Series A, Fixed Rate Step-Up Senior Notes Due 2026<br><br> <br>of Morgan Stanley Finance LLC (and Registrant’s guarantee with respect thereto)	MS/26C	New York Stock Exchange
Morgan Stanley Cushing® MLP High Income Index ETNs due March 21, 2031	MLPY	NYSE Arca, Inc.

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02.	Results of Operations and Financial Condition.

On July 16, 2020, Morgan Stanley (the "Company") released financial information with respect to its quarter ended June 30, 2020. A copy of the press release containing this information is annexed as Exhibit 99.1 to this Report and by this reference incorporated herein and made a part hereof. In addition, a copy of the Company's Financial Data Supplement for its quarter ended June 30, 2020 is annexed as Exhibit 99.2 to this Report and by this reference incorporated herein and made a part hereof.

The information furnished under Item 2.02 of this Report, including Exhibit 99.1 and Exhibit 99.2, shall be deemed to be "filed" for purposes of the Securities Exchange Act of 1934, as amended.

Item 9.01.	Financial Statements and Exhibits.
(d)	Exhibits
Exhibit
Number	Description
99.1	Press release of the Company, dated July 16, 2020, containing financial information for the quarter ended June<br> 30, 2020.
99.2	Financial Data Supplement of the Company for the quarter ended June 30, 2020.
101	Interactive Data Files pursuant to Rule 406 of Regulation S-T formatted in Inline eXtensible Business Reporting Language (“Inline XBRL”).
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

		MORGAN STANLEY<br><br> (Registrant)
Date:	July 16, 2020	By:	/s/ Raja Akram
			Name:	Raja Akram
			Title:	Deputy Chief Financial Officer

Exhibit 99.1

Morgan Stanley Second Quarter 2020 Earnings Results

Morgan Stanley Reports Net Revenues of $13.4 Billion and EPS of $1.96

NEW YORK, July 16, 2020 – Morgan Stanley (NYSE: MS) today reported net revenues of $13.4 billion for the second quarter ended June 30, 2020 compared with $10.2 billion a year ago. Net income applicable to Morgan Stanley was $3.2 billion, or $1.96 per diluted share^1^,^^compared with net income of $2.2 billion, or $1.23 per diluted share^1^, for the same period a year ago. The current quarter included intermittent net discrete tax expenses of $134 million which had an impact of $0.08 per diluted share.

James P. Gorman, Chairman and Chief Executive Officer, said, “Our decade long business transformation was intended to provide stability during times of serious stress. The second quarter tested the model and we performed exceedingly well, delivering record results. This builds on the momentum of a very strong first quarter, while more than 90% of our employees continue to work from home, demonstrating the ongoing operational resilience of our platform. We remain focused on supporting our employees, communities, and clients, while managing our risk and continuing to invest in our businesses.”

Financial Summary2,3<br> ( millions, except per share data)
Firm	2Q 2019
Net revenues	$10,244
Compensation expense	$4,531
Non-compensation expenses	$2,810
Pre-tax income6	$2,903
Net income app. to MS	$2,201
Expense efficiency ratio7	72%
Earnings per diluted share	$1.23
Book value per share8	$44.13
Tangible book value per share9	$38.44
Return on equity10	11.2%
Return on tangible equity10	12.8%
Institutional Securities
Net revenues	$5,113
Investment Banking	$1,472
Sales & Trading	$3,304
Wealth Management
Net revenues	$4,408
Fee-based client assets ( billions)11	$1,159
Fee-based asset flows ( billions)12	$9.8
Loans ( billions)	$74.1
Investment Management
Net revenues	$839
AUM ( billions)13	$497
Long-term net flows ( billions)14	$4.9

All values are in US Dollars.

	Highlights
•	The Firm’s results reflect both record net revenues up ~30% and net income up ~45%^4^ with<br> contributions from all businesses and geographies.
•	The Firm delivered ROE of 15.7% and ROTCE of 17.8%.
•	The Firm’s allowance for credit losses on loans held for investment increased by 40% to $866 million as of<br> June 30, 2020 with a provision for credit losses of $246 million in the current quarter.
•	Our balance sheet, capital and liquidity remain strong and the Firm is well positioned to continue to<br> facilitate client activity.
•	Institutional Securities net revenues increased 56% reflecting outperformance across the businesses. Sales<br> and Trading up 68% on strong client engagement as markets stabilized; Underwriting up 64% as clients accessed the open capital markets to strengthen their balance sheets.
•	Wealth Management delivered a pre-tax income of $1.1 billion with a pre-tax margin of 24.4%^5^ despite a challenging market and rate environment. Bank lending increased 15% and brokerage sweep deposits were up $40 billion from a year ago.
•	Investment Management reported both record long-term net flows of $15.4 billion and AUM of $665 billion<br> driving revenue growth of 6%.

Media Relations: Wesley McDade 212-761-2430

Investor Relations: Sharon Yeshaya 212-761-1632

Institutional Securities

Institutional Securities reported net revenues for the current quarter of $8.0 billion compared with $5.1 billion a year ago. Pre-tax income was $3.0 billion compared with $1.5 billion a year ago.^6^

Investment Banking revenues up 39% from a year ago:

•	Advisory revenues decreased from a year ago driven by lower completed M&A activity and fewer large transactions.
•	Equity underwriting revenues increased from a year ago on increased volumes and higher revenues from blocks, convertibles and follow-on<br> offerings.
---	---
•	Fixed income underwriting revenues increased from a year ago on higher investment grade and non-investment grade bond issuances as clients<br> continue to access the market to benefit from the lower rate environment and to raise liquidity.
---	---

Sales and Trading net revenues up 68% from a year ago:

•	Equity sales and trading net revenues increased from a year ago reflecting strong performance in cash equities and derivatives across all<br> regions driven by elevated client activity.
•	Fixed Income sales and trading net revenues increased significantly from a year ago reflecting strong performance across products and<br> geographies on higher client activity. The increase in credit products reflected robust global capital markets activity and credit spread movements. The foreign exchange and rates businesses benefited from elevated volatility and<br> wider bid-offer spreads while commodities revenues benefited from higher client activity in volatile markets.
---	---
•	Other sales and trading net revenues decreased from a year ago driven by losses on economic hedges associated with corporate lending activity.
---	---

Investments and Other:

• •

Investments revenues decreased from a year ago. The prior year quarter included gains associated with an investment’s initial public offering and subsequent mark-to-market gains on remaining holdings. Other revenues increased from a year ago primarily related to mark-to-market gains associated with corporate lending activity as credit spreads tightened in the quarter, partially offset by an increase in the allowance for credit losses for loans held for investment.

Total Expenses:

•<br><br> <br><br><br> <br>•	Compensation expenses increased from a year ago on higher revenues.<br> <br><br><br> <br>Non-compensation expenses increased from a year ago primarily on higher volume driven expenses and information processing costs partially offset by lower spending on business travel, entertainment and conferences.
($ millions)	2Q 2020	2Q 2019
---	---	---
Net Revenues	$7,977	$5,113
Investment Banking	$2,051	$1,472
Advisory	$462	$506
Equity underwriting	$882	$546
Fixed income underwriting	$707	$420
Sales and Trading	$5,553	$3,304
Equity	$2,619	$2,130
Fixed Income	$3,033	$1,133
Other	$(99)	$41
Investments and Other	$373	$337
Investments	$36	$194
Other	$337	$143
Total Expenses	$4,984	$3,650
Compensation	$2,952	$1,789
Non-compensation	$2,032	$1,861

Wealth Management

Wealth Management reported net revenues for the current quarter of $4.7 billion compared with $4.4 billion from a year ago. Pre-tax income of $1.1 billion^6^ in the current quarter resulted in a pre-tax margin of 24.4%.^5^

Net revenues increased 6% from a year ago:

•	Asset management revenues were essentially unchanged from a year ago reflecting lower markets and lower average fee rates primarily on<br> changes in asset mix, offset by positive flows.
•	Transactional revenues^15^ decreased slightly excluding the impact of mark-to-market gains on investments associated with employee<br> deferred cash-based compensation plans.
---	---
•	Net interest income remained essentially unchanged from a year ago reflecting growth in bank lending, increases in bank deposits and lower<br> mortgage securities prepayment amortization expense, partially offset by the impact of lower average interest rates. Wealth Management client liabilities^16^ were $94 billion at quarter end compared with $84 billion a year<br> ago.
---	---

Total Expenses:

•	Compensation expense increased from a year ago primarily driven by the increase in the fair value of deferred cash-based compensation plan<br> referenced investments.
•	Non-compensation expenses were essentially unchanged from a year ago.
---	---
($ millions)	2Q 2020	2Q 2019
---	---	---
Net Revenues	$4,680	$4,408
Asset management	$2,507	$2,544
Transactional^15^	$1,075	$728
Net interest	$1,030	$1,016
Other	$68	$120
Total Expenses	$3,538	$3,165
Compensation	$2,729	$2,382
Non-compensation	$809	$783

Investment Management

Investment Management reported net revenues of $886 million compared with $839 million a year ago. Pre-tax income was $216 million

compared with $199 million a year ago.^6^

Net revenues increased 6% from a year ago:

•	Asset management revenues increased 12% from a year ago driven by record AUM on continued strong performance and positive<br> net flows.
•	Investments revenues decreased slightly on lower accrued carried interest from Real Estate and Infrastructure funds.
---	---

Total Expenses:

•	Compensation expense decreased slightly from a year ago principally due to a decrease in carried interest.
•	Non-compensation expenses increased from a year ago driven by higher brokerage and clearing costs.
---	---
($ millions)	2Q 2020	2Q 2019
---	---	---
Net Revenues	$886	$839
Asset management	$684	$612
Investments	$231	$247
Other	$(29)	$(20)
Total Expenses	$670	$640
Compensation	$354	$360
Non-compensation	$316	$280

Other Matters

•	The Comprehensive Capital Analysis and Review (CCAR) results affirm the Firm’s strong capital position and reflect the stability of the business<br> model.
•	At June 30, 2020 the Firm’s Common Equity Tier 1^18^ and Tier 1^18^ risk-based capital ratios under the Advanced Approach were 16.1% and 18.1%, respectively and under the Standardized Approach the ratios were 16.5% and 18.6%, respectively.
---	---
•	Supplementary leverage ratio (SLR)^20^ and exposures in the current quarter include the<br> Federal Reserve interim final rule relief in effect until March 31, 2021. The impact of the interim rule on the SLR ratio was an improvement of 0.9%.^20^
---	---
•	The Board of Directors declared a $0.35 quarterly dividend per share, payable on August 14, 2020 to common shareholders of record on July 31,<br> 2020.
---	---
•	The effective tax rate for the quarter was 25.7%. The current quarter includes intermittent net discrete tax expenses of $134 million<br> principally associated with the remeasurement of reserves related to a foreign tax matter.
---	---
•	The Firm’s provision for credit losses on loans and lending commitments was $239 million for the second quarter of 2020, compared with $18<br> million for the second quarter of 2019 and $407 million for the first quarter of 2020. The allowance for credit losses on loans and lending commitments was $1.2 billion as of June 30, 2020, an increase of approximately 26% over the<br> previous quarter.
---	---
	2Q 2020	2Q 2019
---	---	---
Capital^17^
Common Equity Tier 1 capital^18^	16.1%	16.3%
Tier 1 capital^18^	18.1%	18.6%
Tier 1 leverage^19^	8.1%	8.4%
Supplementary leverage ratio^20^	7.3%	6.5%
Common Stock Repurchases
Repurchases ($ millions)	NA	$1,180
Number of Shares (millions)	NA	26
Average Price	NA	$44.53
Period End Shares (millions)	1,576	1,659
Tax Rate	25.7%	22.6%

Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in more than 41 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit www.morganstanley.com.

A financial summary follows. Financial, statistical and business-related information, as well as information regarding business and segment trends, is included in the Financial Supplement. Both the earnings release and the Financial Supplement are available online in the Investor Relations section at www.morganstanley.com.

NOTICE:

The information provided herein and in the financial supplement may include certain non-GAAP financial measures. The definition of such measures or reconciliation of such metrics to the comparable U.S. GAAP figures are included in this earnings release and the Financial Supplement, both of which are available on www.morganstanley.com.

This earnings release contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” similar expressions, and variations or negatives of these words. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, including the attainment of certain financial and other targets, objectives and goals of the Firm, as well as statements about the consummation of the proposed transaction with E*TRADE Financial Corporation (“E*TRADE”) and the anticipated benefits thereof. All such forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in such forward-looking statements. Important risk factors that may cause such a difference include, but are not limited to, (i) the completion of the proposed transaction on anticipated terms and timing, including obtaining required stockholder and regulatory approvals, anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of the combined company’s operations and other conditions to the completion of the acquisition, including the possibility that any of the anticipated benefits of the proposed transaction will not be realized or will not be realized within the expected time period, (ii) the ability of the Firm and E*TRADE to integrate the business successfully and to achieve anticipated synergies, risks and costs, (iii) potential litigation relating to the proposed transaction that could be instituted against the Firm, E*TRADE or their respective directors, (iv) the risk that disruptions from the proposed transaction will harm the Firm’s and E*TRADE’s business, including current plans and operations, (v) the ability of the Firm or E*TRADE to retain and hire key personnel, (vi) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the acquisition, (vii) continued availability of capital and financing and rating agency actions, (viii) legislative, regulatory and economic developments, (ix) potential business uncertainty, including changes to existing business relationships, during the pendency of the acquisition that could affect Morgan Stanley’s and/or E*TRADE’s financial performance, (x) certain restrictions during the pendency of the acquisition that may impact the Firm’s or E*TRADE’s ability to pursue certain business opportunities or strategic transactions, (xi) unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, as well as management’s response to any of the aforementioned factors, (xii) dilution caused by the Firm’s issuance of additional shares of its common stock in connection with the proposed transaction, (xiii) the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events, (xiv) those risks described in Item 1A of the Firm’s most recently filed Annual Report on Form 10-K and subsequent reports on Forms 10-Q and 8-K, including the risk factor under Item 8.01 “Other Matters” in the Current Report on Form 8-K dated April 16, 2020, and the additional risk factors under “Risk Factors” in the Registration Statement on Form S-4 filed on April 17, 2020, as amended (“Form S-4”), (xv) those risks described in Item 1A of E*TRADE’s most recently filed Annual Report on Form 10-K and subsequent reports on Forms 10-Q and 8-K and (xvi) those risks described in the proxy statement/prospectus on Form S-4 available from the sources indicated above. These risks, as well as other risks associated with the proposed acquisition, are more fully discussed in the proxy statement/prospectus included in the registration statement on Form S-4 filed with the SEC in connection with the proposed acquisition. While the list of factors presented here and the list of factors presented in the registration statement on Form S-4 are considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on the Firm’s or E*TRADE’s consolidated financial condition, results of operations, credit rating or liquidity. Neither the Firm nor E*TRADE assumes any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.

^1^ Includes preferred dividends related to the calculation of earnings per share of $149 million and $170 million for the second quarter of 2020 and 2019, respectively.

^2^ 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.

^3^ Our earnings releases, earnings conference calls, financial presentations and other communications may also include certain metrics which we believe to be useful to us, investors, analysts and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results.

^4^ Net revenues of $13.4 billion and net income applicable to Morgan Stanley of $3.2 billion represent records for a reported quarterly period after excluding the impact of debt valuation adjustments (DVA), which were previously reflected in net revenues in prior periods, and reflecting the current reporting structure of the Firm (i.e. exclusive of discontinued operations). Net revenues and net income applicable to Morgan Stanley, excluding the impact of DVA, were non-GAAP financial measures in those prior periods that were reconciled to the comparable GAAP financial measures in the respective quarterly reports filed on Form 10-Q.

^5^ Pre-tax margin represents income (loss) before taxes divided by net revenues.

^6^ Pre-tax income represents income (loss) before taxes.

^7^ The Firm expense efficiency ratio represents total non-interest expenses as a percentage of net revenues.

^8^ Book value per common share represents common equity divided by period end common shares outstanding.

^9^ Tangible book value per common share is a non-GAAP financial measure that the Firm considers useful for analysts, investors and other stakeholders to allow better comparability of period-to-period operating performance and capital adequacy. The calculation of tangible book value per common share represents tangible common equity divided by period end common shares outstanding. Tangible common equity, also a non-GAAP financial measure, represents common equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction.

^10^ The return on average tangible common equity and tangible common equity are non-GAAP financial measures that the Firm considers useful for analysts, investors and other stakeholders to allow better comparability of period-to-period operating performance and capital adequacy. The calculation of return on average common equity and return on average tangible common equity represents annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity and average tangible common equity, respectively. Tangible common equity represents common equity less goodwill and intangible assets net of certain allowable servicing rights deduction.

^11^ Wealth Management 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.

^12^ Wealth Management fee-based asset flows include net new fee-based assets, net account transfers, dividends, interest, and client fees and exclude institutional cash management related activity.

^13^ AUM is defined as assets under management.

^14^ Long-term net flows include the Equity, Fixed Income and Alternative/Other asset classes and exclude the Liquidity asset class.

^15^ Transactional revenues include investment banking, trading, and commissions and fee revenues.

^16^ Wealth Management client liabilities reflect U.S. Bank Subsidiaries’ lending and broker-dealer margin activity. 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.

^17^ Capital ratios are estimates as of the press release date, July 16, 2020.

^18^ The Firm’s risk-based capital ratios for purposes of determining regulatory compliance are the lower of the capital ratios computed under 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”). At June 30, 2020 the Firm’s ratios are based on the Advanced Approach, while at June 30, 2019, they were based on the Standardized Approach. For information on the calculation of regulatory capital and ratios for prior periods, please refer to “Liquidity and Capital Resources – Regulatory Requirements” in the Firm’s 2019 Form 10-K.

^19^ The Tier 1 leverage ratio is a non-risk based capital requirement that measures the Firm’s leverage. Tier 1 leverage ratio utilizes Tier 1 capital as the numerator and average adjusted assets as the denominator.

^20^ The Firm must maintain a Tier 1 supplementary leverage ratio of 5% inclusive of a capital buffer of at least 2% in order to avoid limitations on capital distributions, including dividends and stock repurchases, and discretionary bonus payments to executive officers. The Firm’s Supplementary Leverage Ratio utilizes a Tier 1 capital numerator of approximately $77.4 billion and $72.7 billion, and supplementary leverage exposure denominator of approximately $1.06 trillion and $1.12 trillion, for the second quarter of 2020 and 2019, respectively. Based on a Federal Reserve interim final rule in effect until March 31, 2021, our SLR and Supplementary leverage exposure as of June 30, 2020 reflect the exclusion of U.S. Treasury securities and deposits at Federal Reserve Banks. The exclusion of these assets had the effect of improving our SLR ratio by 0.9% as of June 30, 2020.

Consolidated Income Statement Information
(unaudited, dollars in millions)
	Quarter Ended							Percentage Change From:						Six Months Ended					Percentage
	Jun 30, 2020		Mar 31, 2020			Jun 30, 2019		Mar 31, 2020			Jun 30, 2019			Jun 30, 2020			Jun 30, 2019		Change
Revenues:
Investment banking	$	2,142	$	1,271		$	1,590		69	%		35	%	$	3,413		$	2,832		21	%
Trading		4,683		3,056			2,732		53	%		71	%		7,739			6,173		25	%
Investments		275		38			441		*			(38	%)		313			714		(56	%)
Commissions and fees		1,102		1,360			979		(19	%)		13	%		2,462			1,945		27	%
Asset management		3,265		3,417			3,220		(4	%)		1	%		6,682			6,269		7	%
Other		347		(1,011	)		253		*			37	%		(664	)		554		*
Total non-interest revenues		11,814		8,131			9,215		45	%		28	%		19,945			18,487		8	%
Interest income		2,358		3,503			4,506		(33	%)		(48	%)		5,861			8,796		(33	%)
Interest expense		758		2,147			3,477		(65	%)		(78	%)		2,905			6,753		(57	%)
Net interest		1,600		1,356			1,029		18	%		55	%		2,956			2,043		45	%
Net revenues		13,414		9,487			10,244		41	%		31	%		22,901			20,530		12	%
Non-interest expenses:
Compensation and benefits		6,035		4,283			4,531		41	%		33	%		10,318			9,182		12	%
Non-compensation expenses:
Brokerage, clearing and exchange fees		716		740			630		(3	%)		14	%		1,456			1,223		19	%
Information processing and communications		589		563			538		5	%		9	%		1,152			1,070		8	%
Professional services		535		449			537		19	%		--			984			1,051		(6	%)
Occupancy and equipment		365		365			353		--			3	%		730			700		4	%
Marketing and business development		63		132			162		(52	%)		(61	%)		195			303		(36	%)
Other		756		809			590		(7	%)		28	%		1,565			1,143		37	%
Total non-compensation expenses		3,024		3,058			2,810		(1	%)		8	%		6,082			5,490		11	%
Total non-interest expenses		9,059		7,341			7,341		23	%		23	%		16,400			14,672		12	%
Income before provision for income taxes		4,355		2,146			2,903		103	%		50	%		6,501			5,858		11	%
Provision for income taxes		1,119		366			657		*			70	%		1,485			1,144		30	%
Net income (loss)	$	3,236	$	1,780		$	2,246		82	%		44	%	$	5,016		$	4,714		6	%
Net income applicable to nonredeemable noncontrolling interests		40		82			45		(51	%)		(11	%)		122			84		45	%
Net income (loss) applicable to Morgan Stanley		3,196		1,698			2,201		88	%		45	%		4,894			4,630		6	%
Preferred stock dividend		149		108			170		38	%		(12	%)		257			263		(2	%)
Earnings (loss) applicable to Morgan Stanley common shareholders	$	3,047	$	1,590		$	2,031		92	%		50	%	$	4,637		$	4,367		6	%

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, Definition of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations and Legal Notice for additional information.

Consolidated Financial Metrics, Ratios and Statistical Data
(unaudited)
	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020			Jun 30, 2019			Change
Financial Metrics:
Earnings per basic share	$	1.98		$	1.02		$	1.24			94	%		60	%	$	3.00		$	2.65			13	%
Earnings per diluted share	$	1.96		$	1.01		$	1.23			94	%		59	%	$	2.96		$	2.62			13	%
Return on average common equity		15.7	%		8.5	%		11.2	%								12.2	%		12.1	%
Return on average tangible common equity		17.8	%		9.7	%		12.8	%								13.9	%		13.8	%
Book value per common share	$	49.57		$	49.09		$	44.13								$	49.57		$	44.13
Tangible book value per common share	$	43.68		$	43.28		$	38.44								$	43.68		$	38.44
Excluding intermittent net discrete tax provision / benefit
Adjusted earnings per diluted share	$	2.04		$	0.99		$	1.23			106	%		66	%	$	3.03		$	2.56			18	%
Adjusted return on average common equity		16.4	%		8.3	%		11.2	%								12.5	%		11.8	%
Adjusted return on average tangible common equity		18.6	%		9.5	%		12.8	%								14.2	%		13.5	%
Financial Ratios:
Pre-tax profit margin		32	%		23	%		28	%								28	%		29	%
Compensation and benefits as a % of net revenues		45	%		45	%		44	%								45	%		45	%
Non-compensation expenses as a % of net revenues		23	%		32	%		27	%								27	%		27	%
Firm expense efficiency ratio		68	%		77	%		72	%								72	%		71	%
Effective tax rate		25.7	%		17.1	%		22.6	%								22.8	%		19.5	%
Statistical Data:
Period end common shares outstanding (millions)		1,576			1,576			1,659			--			(5	%)
Average common shares outstanding (millions)
Basic		1,541			1,555			1,634			(1	%)		(6	%)		1,548			1,646			(6	%)
Diluted		1,557			1,573			1,655			(1	%)		(6	%)		1,565			1,666			(6	%)
Worldwide employees		61,596			60,670			59,513			2	%		4	%

Exhibit 99.2

Second Quarter 2020 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
Definition of Performance Metrics and Terms	13 - 14
Supplemental Quantitative Details and Calculations	15 - 16
Legal Notice	17

Consolidated Financial Summary
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020			Jun 30, 2019			Change
Net revenues
Institutional Securities	$	7,977		$	4,905		$	5,113			63	%		56	%	$	12,882		$	10,309			25	%
Wealth Management		4,680			4,037			4,408			16	%		6	%		8,717			8,797			(1	%)
Investment Management		886			692			839			28	%		6	%		1,578			1,643			(4	%)
Intersegment Eliminations		(129	)		(147	)		(116	)		12	%		(11	%)		(276	)		(219	)		(26	%)
Net revenues	$	13,414		$	9,487		$	10,244			41	%		31	%	$	22,901		$	20,530			12	%
Non-interest expenses
Institutional Securities	$	4,984		$	3,955		$	3,650			26	%		37	%	$	8,939		$	7,251			23	%
Wealth Management		3,538			2,982			3,165			19	%		12	%		6,520			6,366			2	%
Investment Management		670			549			640			22	%		5	%		1,219			1,270			(4	%)
Intersegment Eliminations		(133	)		(145	)		(114	)		8	%		(17	%)		(278	)		(215	)		(29	%)
Non-interest expenses ^(1)^	$	9,059		$	7,341		$	7,341			23	%		23	%	$	16,400		$	14,672			12	%
Income (loss) before taxes
Institutional Securities	$	2,993		$	950		$	1,463			*			105	%	$	3,943		$	3,058			29	%
Wealth Management		1,142			1,055			1,243			8	%		(8	%)		2,197			2,431			(10	%)
Investment Management		216			143			199			51	%		9	%		359			373			(4	%)
Intersegment Eliminations		4			(2	)		(2	)		*			*			2			(4	)		*
Income (loss) before taxes	$	4,355		$	2,146		$	2,903			103	%		50	%	$	6,501		$	5,858			11	%
Net Income (loss) applicable to Morgan Stanley
Institutional Securities	$	2,186		$	757		$	1,121			189	%		95	%	$	2,943		$	2,492			18	%
Wealth Management		853			864			953			(1	%)		(10	%)		1,717			1,877			(9	%)
Investment Management		154			78			128			97	%		20	%		232			264			(12	%)
Intersegment Eliminations		3			(1	)		(1	)		*			*			2			(3	)		*
Net Income (loss) applicable to Morgan Stanley	$	3,196		$	1,698		$	2,201			88	%		45	%	$	4,894		$	4,630			6	%
Earnings (loss) applicable to Morgan Stanley common shareholders	$	3,047		$	1,590		$	2,031			92	%		50	%	$	4,637		$	4,367			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, Definition of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice.

Consolidated Financial Metrics, Ratios and Statistical Data
(unaudited)
	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020			Jun 30, 2019			Change
Financial Metrics:
Earnings per basic share	$	1.98		$	1.02		$	1.24			94	%		60	%	$	3.00		$	2.65			13	%
Earnings per diluted share	$	1.96		$	1.01		$	1.23			94	%		59	%	$	2.96		$	2.62			13	%
Return on average common equity		15.7	%		8.5	%		11.2	%								12.2	%		12.1	%
Return on average tangible common equity		17.8	%		9.7	%		12.8	%								13.9	%		13.8	%
Book value per common share	$	49.57		$	49.09		$	44.13								$	49.57		$	44.13
Tangible book value per common share	$	43.68		$	43.28		$	38.44								$	43.68		$	38.44
Excluding intermittent net discrete tax provision / benefit ^(1)(2)^
Adjusted earnings per diluted share	$	2.04		$	0.99		$	1.23			106	%		66	%	$	3.03		$	2.56			18	%
Adjusted return on average common equity		16.4	%		8.3	%		11.2	%								12.5	%		11.8	%
Adjusted return on average tangible common equity		18.6	%		9.5	%		12.8	%								14.2	%		13.5	%
Financial Ratios:
Pre-tax profit margin		32	%		23	%		28	%								28	%		29	%
Compensation and benefits as a % of net revenues		45	%		45	%		44	%								45	%		45	%
Non-compensation expenses as a % of net revenues		23	%		32	%		27	%								27	%		27	%
Firm expense efficiency ratio		68	%		77	%		72	%								72	%		71	%
Effective tax rate^(1)(2)^		25.7	%		17.1	%		22.6	%								22.8	%		19.5	%
Statistical Data:
Period end common shares outstanding (millions)		1,576			1,576			1,659			--			(5	%)
Average common shares outstanding (millions)
Basic		1,541			1,555			1,634			(1	%)		(6	%)		1,548			1,646			(6	%)
Diluted		1,557			1,573			1,655			(1	%)		(6	%)		1,565			1,666			(6	%)
Worldwide employees		61,596			60,670			59,513			2	%		4	%

Consolidated and U.S. Bank Supplemental Financial Information
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Six Months Ended				Percentage
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020		Jun 30, 2019		Change
Consolidated Balance sheet
Total assets	$	975,363		$	947,795		$	891,959			3	%		9	%
Loans ^(1)^	$	150,723		$	158,759		$	131,957			(5	%)		14	%
Deposits	$	236,849		$	235,239		$	176,593			1	%		34	%
Liquidity Resources^(2)^	$	301,407		$	255,134		$	219,337			18	%		37	%
Long-term debt outstanding	$	202,238		$	192,645		$	196,072			5	%		3	%
Maturities of long-term debt outstanding (next 12 months)	$	20,076		$	17,153		$	26,621			17	%		(25	%)
Common equity	$	78,125		$	77,340		$	73,204			1	%		7	%
Less: Goodwill and intangible assets		(9,286	)		(9,146	)		(9,433	)		2	%		(2	%)
Tangible common equity	$	68,839		$	68,194		$	63,771			1	%		8	%
Preferred equity	$	8,520		$	8,520		$	8,520			--			--
U.S. Bank Supplemental Financial Information
Total Assets	$	263,934		$	265,383		$	205,897			(1	%)		28	%
Loans	$	136,613		$	141,712		$	119,754			(4	%)		14	%
Investment securities portfolio ^(3)^	$	92,270		$	77,747		$	70,712			19	%		30	%
Deposits	$	235,959		$	234,055		$	175,765			1	%		34	%
Regional revenues
Americas	$	9,765		$	6,646		$	7,526			47	%		30	%	$	16,411	$	14,847		11	%
EMEA (Europe, Middle East, Africa)		2,049			1,148			1,576			78	%		30	%		3,197		3,278		(2	%)
Asia		1,600			1,693			1,142			(5	%)		40	%		3,293		2,405		37	%
Consolidated net revenues	$	13,414		$	9,487		$	10,244			41	%		31	%	$	22,901	$	20,530		12	%

Consolidated Average Common Equity and Regulatory Capital Information
(unaudited, dollars in billions)
	Quarter Ended									Percentage Change From:						Six Months Ended				Percentage
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020		Jun 30, 2019		Change
Average Common Equity
Institutional Securities	$	42.8		$	42.8		$	40.4			--			6	%	$	42.8	$	40.4		6	%
Wealth Management		18.2			18.2			18.2			--			--			18.2		18.2		--
Investment Management		2.6			2.6			2.5			--			4	%		2.6		2.5		4	%
Parent		14.0			11.1			11.5			26	%		22	%		12.4		11.0		13	%
Firm	$	77.6		$	74.7		$	72.6			4	%		7	%	$	76.0	$	72.1		5	%
Regulatory Capital
Common Equity Tier 1 capital	$	68.7		$	65.2		$	64.0			5	%		7	%
Tier 1 capital	$	77.4		$	73.9		$	72.7			5	%		6	%
Standardized Approach
Risk-weighted assets	$	416.0		$	415.0		$	391.5			--			6	%
Common Equity Tier 1 capital ratio		16.5	%		15.7	%		16.3	%
Tier 1 capital ratio		18.6	%		17.8	%		18.6	%
Advanced Approach
Risk-weighted assets	$	426.7		$	427.8		$	384.0			--			11	%
Common Equity Tier 1 capital ratio		16.1	%		15.2	%		16.7	%
Tier 1 capital ratio		18.1	%		17.3	%		18.9	%
Leverage-based capital
Tier 1 leverage ratio		8.1	%		8.1	%		8.4	%
Supplementary Leverage Ratio^(1)^		7.3	%		6.2	%		6.5	%

Institutional Securities
Income Statement Information, Financial Metrics and Ratios
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020			Jun 30, 2019			Change
Revenues:
Advisory	$	462		$	362		$	506			28	%		(9	%)	$	824		$	912			(10	%)
Equity		882			336			546			163	%		62	%		1,218			885			38	%
Fixed income		707			446			420			59	%		68	%		1,153			826			40	%
Underwriting		1,589			782			966			103	%		64	%		2,371			1,711			39	%
Investment Banking		2,051			1,144			1,472			79	%		39	%		3,195			2,623			22	%
Equity		2,619			2,422			2,130			8	%		23	%		5,041			4,145			22	%
Fixed Income		3,033			2,203			1,133			38	%		168	%		5,236			2,843			84	%
Other		(99	)		240			41			*			*			141			58			143	%
Sales and Trading		5,553			4,865			3,304			14	%		68	%		10,418			7,046			48	%
Investments		36			(25	)		194			*			(81	%)		11			275			(96	%)
Other		337			(1,079	)		143			*			136	%		(742	)		365			*
Net revenues		7,977			4,905			5,113			63	%		56	%		12,882			10,309			25	%
Compensation and benefits		2,952			1,814			1,789			63	%		65	%		4,766			3,608			32	%
Non-compensation expenses		2,032			2,141			1,861			(5	%)		9	%		4,173			3,643			15	%
Total non-interest expenses		4,984			3,955			3,650			26	%		37	%		8,939			7,251			23	%
Income (loss) before taxes		2,993			950			1,463			*			105	%		3,943			3,058			29	%
Net income (loss) applicable to Morgan Stanley ^(1)^	$	2,186		$	757		$	1,121			189	%		95	%	$	2,943		$	2,492			18	%
Pre-tax profit margin		38	%		19	%		29	%								31	%		30	%
Compensation and benefits as a % of net revenues		37	%		37	%		35	%								37	%		35	%
Non-compensation expenses as a % of net revenues		25	%		44	%		36	%								32	%		35	%
Return on Average Common Equity		19	%		6	%		10	%								13	%		11	%
Return on Average Tangible Common Equity ^(2)^		20	%		6	%		10	%								13	%		11	%
Trading VaR (Average Daily 95% / One-Day VaR)	$	60		$	40		$	46

Wealth Management
Income Statement Information, Financial Metrics and Ratios
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020			Jun 30, 2019			Change
Revenues:
Asset management		2,507			2,680			2,544			(6	%)		(1	%)		5,187			4,905			6	%
Transactional		1,075			399			728			169	%		48	%		1,474			1,545			(5	%)
Net interest income		1,030			896			1,016			15	%		1	%		1,926			2,146			(10	%)
Other		68			62			120			10	%		(43	%)		130			201			(35	%)
Net revenues		4,680			4,037			4,408			16	%		6	%		8,717			8,797			(1	%)
Compensation and benefits		2,729			2,212			2,382			23	%		15	%		4,941			4,844			2	%
Non-compensation expenses		809			770			783			5	%		3	%		1,579			1,522			4	%
Total non-interest expenses		3,538			2,982			3,165			19	%		12	%		6,520			6,366			2	%
Income (loss) before taxes		1,142			1,055			1,243			8	%		(8	%)		2,197			2,431			(10	%)
Net income (loss) applicable to Morgan Stanley	$	853		$	864		$	953			(1	%)		(10	%)	$	1,717		$	1,877			(9	%)
Pre-tax profit margin		24	%		26	%		28	%								25	%		28	%
Compensation and benefits as a % of net revenues		58	%		55	%		54	%								57	%		55	%
Non-compensation expenses as a % of net revenues		17	%		19	%		18	%								18	%		17	%
Return on Average Common Equity		18	%		18	%		20	%								18	%		20	%
Return on Average Tangible Common Equity ^(1)^		32	%		32	%		36	%								32	%		36	%

Wealth Management
Financial Information and Statistical Data
(unaudited)
	Quarter Ended									Percentage Change From:
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019
Wealth Management Metrics
Wealth Management representatives		15,399			15,432			15,633			--			(1	%)
Annualized revenue per representative (000's)	$	1,214		$	1,045		$	1,125			16	%		8	%
Client assets (billions)	$	2,661		$	2,397		$	2,570			11	%		4	%
Client assets per representative (millions)	$	173		$	155		$	164			12	%		5	%
Client liabilities (billions)	$	94		$	92		$	84			2	%		12	%
Fee-based client assets (billions)	$	1,236		$	1,134		$	1,159			9	%		7	%
Fee-based asset flows (billions)	$	11.1		$	18.4		$	9.8			(40	%)		13	%
Fee-based assets as a % of client assets		46	%		47	%		45	%
Retail locations		584			591			589			(1	%)		(1	%)

  ![](mslogo.jpg)

Investment Management
Income Statement Information, Financial Metrics and Ratios
(unaudited, dollars in millions)
	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020			Jun 30, 2019			Change
Revenues:
Asset management	$	684		$	665		$	612			3	%		12	%	$	1,349		$	1,229			10	%
Investments^(1)^		231			63			247			*			(6	%)		294			438			(33	%)
Other		(29	)		(36	)		(20	)		19	%		(45	%)		(65	)		(24	)		(171	%)
Net revenues		886			692			839			28	%		6	%		1,578			1,643			(4	%)
Compensation and benefits		354			257			360			38	%		(2	%)		611			730			(16	%)
Non-compensation expenses		316			292			280			8	%		13	%		608			540			13	%
Total non-interest expenses		670			549			640			22	%		5	%		1,219			1,270			(4	%)
Income (loss) before taxes		216			143			199			51	%		9	%		359			373			(4	%)
Net income (loss) applicable to Morgan Stanley	$	154		$	78		$	128			97	%		20	%	$	232		$	264			(12	%)
Pre-tax profit margin		24	%		21	%		24	%								23	%		23	%
Compensation and benefits as a % of net revenues		40	%		37	%		43	%								39	%		44	%
Non-compensation expenses as a % of net revenues		36	%		42	%		33	%								39	%		33	%
Return on Average Common Equity		23	%		12	%		20	%								18	%		21	%
Return on Average Tangible Common Equity ^(2)^		36	%		18	%		33	%								27	%		34	%

Investment Management
Financial Information and Statistical Data
(unaudited, dollars in billions)
	Quarter Ended						Percentage Change From:						Six Months Ended					Percentage
	Jun 30, 2020		Mar 31, 2020		Jun 30, 2019		Mar 31, 2020			Jun 30, 2019			Jun 30, 2020		Jun 30, 2019			Change
Assets under management or supervision (AUM)
Net flows by asset class ^(1)^
Equity	$	9.0	$	1.6	$	1.4		*			*		$	10.6	$	2.8			*
Fixed Income		4.4		1.3		1.3		*			*			5.7		0.1			*
Alternative / Other		2.0		3.8		2.2		(47	%)		(9	%)		5.8		1.6			*
Long-Term Net Flows		15.4		6.7		4.9		130	%		*			22.1		4.5			*
Liquidity		20.7		50.6		3.0		(59	%)		*			71.3		(2.8	)		*
Total net flows	$	36.1	$	57.3	$	7.9		(37	%)		*		$	93.4	$	1.7			*
Assets under management or supervision by asset class^(2)(3)^
Equity	$	168	$	121	$	128		39	%		31	%
Fixed Income		84		75		71		12	%		18	%
Alternative / Other		145		141		135		3	%		7	%
Long‐Term Assets Under Management or Supervision		397		337		334		18	%		19	%
Liquidity		268		247		163		9	%		64	%
Total Assets Under Management or Supervision	$	665	$	584	$	497		14	%		34	%

Consolidated Loans and Lending Commitments
(unaudited, dollars in billions)
	Quarter Ended						Percentage Change From:
	Jun 30, 2020		Mar 31, 2020		Jun 30, 2019		Mar 31, 2020			Jun 30, 2019
Institutional Securities
Loans:
Corporate	$	19.0	$	26.8	$	13.3		(29	%)		43	%
Secured lending facilities		28.9		30.4		24.9		(5	%)		16	%
Commercial and residential real estate		10.2		11.4		11.7		(11	%)		(13	%)
Securities-based lending and other		6.9		7.1		8.0		(3	%)		(14	%)
Total Loans		65.0		75.7		57.9		(14	%)		12	%
Lending Commitments		98.5		92.9		114.0		6	%		(14	%)
Institutional Securities Loans and Lending Commitments	$	163.5	$	168.6	$	171.9		(3	%)		(5	%)
Wealth Management
Loans:
Securities-based lending and other	$	53.1	$	51.4	$	45.5		3	%		17	%
Residential real estate		32.1		31.1		28.6		3	%		12	%
Total Loans		85.2		82.5		74.1		3	%		15	%
Lending Commitments		14.4		13.4		12.3		7	%		17	%
Wealth Management Loans and Lending Commitments	$	99.6	$	95.9	$	86.4		4	%		15	%
Consolidated Loans and Lending Commitments ^(1)^	$	263.1	$	264.5	$	258.3		(1	%)		2	%

Consolidated Loans and Lending Commitments
Allowance for Credit Losses (ACL) as of June 30, 2020
(unaudited, dollars in millions)
	Loans and Lending Commitments		ACL^(1)^		ACL %			Q2 Provision ^(2)^
	(Gross)
Loans:
Held For Investment (HFI)
Corporate	$	9,974	$	379		3.8	%	$	121
Secured lending facilities		24,733		122		0.5	%		34
Commercial and residential real estate		7,207		226		3.1	%		89
Other		1,012		29		2.9	%		(21	)
Institutional Securities - HFI	$	42,926	$	756		1.8	%		223
Wealth Management - HFI		85,358		110		0.1	%		23
Held For Investment	$	128,284	$	866		0.7	%		246
Held For Sale		14,543
Fair Value		8,240
Total Loans		151,067		866					246
Lending Commitments		112,841		297		0.3	%		(7	)
Consolidated Loans and Lending Commitments ^(3)^	$	263,908	$	1,163				$	239

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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<br> (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<br> 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<br> 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<br> 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<br> 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<br> 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<br> 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, 2019.
(b)	The following are considered non-GAAP financial measures that the Firm considers useful for analysts, investors and other stakeholders to allow better<br> comparability of operating performance and capital adequacy. These measures are calculated as follows:
	-	Earnings per diluted share, excluding intermittent net discrete tax provision / benefit represents net income (loss) applicable to Morgan Stanley, adjusted for<br> the impact of the intermittent net discrete tax provision / benefit, 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<br> common equity.
	-	The return on average common equity and the return on average tangible common equity excluding intermittent net discrete tax provision / benefit are adjusted in<br> both the numerator and the denominator to exclude the intermittent net discrete tax provision / benefit.
	-	Segment return on average common equity and return on average tangible common equity represents full year net income or annualized net income for the quarter<br> 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<br> 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<br> disposition).
	-	Tangible common equity represents common equity less goodwill and intangible assets net<br> of certain mortgage servicing rights deduction.
	-	Tangible book value per common share represents tangible common equity divided by period<br> end common shares outstanding.

Definition of Performance Metrics and Terms
Our earnings releases, earnings conference calls, financial presentations and other communications may also<br> include certain metrics which we believe to be useful to us, investors, analysts and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results.
Page 1:
(a)	Net income (loss) applicable to Morgan Stanley represents net income, less net income applicable to nonredeemable<br> noncontrolling interests.
(b)	Earnings (loss) applicable to Morgan Stanley common shareholders represents net income (loss) applicable to Morgan Stanley,<br> less preferred dividends.
Page 2:
(a)	The return on average common equity represents annualized earnings applicable to Morgan Stanley common shareholders<br> 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.
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(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<br> 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<br> 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<br> 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,<br> 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<br> geographic methodology for net revenues is disclosed in Note 21 to the consolidated financial statements included in the Firm's Annual Report on Form 10-K for the year ended December 31, 2019 (2019 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<br> internal capital adequacy measure. This framework is a risk-based and leverage use-of-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<br> 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<br> 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<br> throughout the year until the next annual reset unless a significant business change occurs (e.g., acquisition or disposition). The Required Capital framework is expected to evolve over time in response to changes in the business and<br> regulatory environment, for example, to incorporate changes in stress testing or enhancements to modeling techniques. For further discussion of the framework, refer to "Quantitative and Qualitative Disclosures about Risk" in the Firm's<br> Annual Report on Form 10-K for the year ended December 31, 2019.
(b)	The Firm's risk-based capital ratios for purposes of determining regulatory compliance are the lower of the capital ratios<br> computed under 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<br> operational risk RWAs (the “Advanced Approach”). At June 30, 2020 and March 31, 2020, the Firm's ratios are based on the Advanced Approach, while at June 30, 2019 were based on the Standardized Approach. For information on the calculation<br> of regulatory capital and ratios for prior periods, please refer to "Quantitative and Qualitative Disclosures about Risk" in the Firm's 2019 Form 10-K.
(c)	Supplementary leverage ratio represents Tier 1 capital divided by the total supplementary leverage exposure.
Page 5:
(a)	Institutional Securities Sales & Trading net revenues includes trading, net interest income (interest income less interest<br> expense), asset management and commissions and fees revenues.
(b)	Pre-tax profit margin percentages represent income before income taxes as percentages of net revenues.
(c)	VaR represents the loss amount that one would not expect to exceed, on average, more than five times every one hundred trading<br> 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<br> Disclosures about Risk" included in the Firm's 2019 Form 10-K.

Definition of Performance Metrics and Terms
Our earnings releases, earnings conference calls, financial presentations and other communications may<br> also include certain metrics which we believe to be useful to us, investors, analysts and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results.
Page 6:
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(a)	Transactional revenues for the Wealth Management segment includes investment banking, trading, and commissions and fee<br> 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)	The average annualized revenue per representative metric represents annualized net revenues divided by average representative<br> headcount.
(b)	Client assets per representative represents total client assets divided by period end representative headcount.
(c)	Client liabilities reflect U.S. Bank lending and broker dealer margin activity.
(d)	Fee-based client assets represent the amount of assets in client accounts where the basis of payment for services is a fee<br> calculated on those assets.
(e)	Fee-based asset flows include net new fee-based assets, net account transfers, dividends, interest, and client fees and<br> exclude institutional cash management related activity.
Page 8:
(a)	Other revenues for the Investment Management segment includes investment banking, trading, net interest and other revenues.
(b)	Pre-tax profit margin percentages represent income before income taxes as percentages of net revenues.
Page 9:
(a)	Investment Management Alternative/Other asset class includes products in Fund of Funds, Real Estate, Private Equity and Credit<br> strategies, as well as Multi-Asset portfolios.
(b)	Investment Management net flows include new commitments, investments or reinvestments, net of client redemptions, returns of<br> 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)	Total assets under management or supervision excludes shares of minority stake assets which represent the Investment<br> 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<br> bridge loans.
(b)	Secured lending facilities include loans provided to clients, which are primarily secured by loans, which are, in turn,<br> 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<br> the secondary market.
(d)	Institutional Securities Lending Commitments principally include Corporate lending activity.

Supplemental Quantitative Details and Calculations
Page 1:
(1)	The Firm non-interest expenses by category are as follows:
		2Q20		1Q20		2Q19	2Q20 YTD		2Q19 YTD
---	---	---	---	---	---	---	---	---	---	---
Compensation and benefits	$	6,035	$	4,283	$	4,531	$	10,318	$	9,182
Non-compensation expenses:
Brokerage, clearing and exchange fees		716		740		630		1,456		1,223
Information processing and communications		589		563		538		1,152		1,070
Professional services		535		449		537		984		1,051
Occupancy and equipment		365		365		353		730		700
Marketing and business development		63		132		162		195		303
Other		756		809		590		1,565		1,143
Total non-compensation expenses		3,024		3,058		2,810		6,082		5,490
Total non-interest expenses	$	9,059	$	7,341	$	7,341	$	16,400	$	14,672
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(1)	The second quarter ended June 30, 2020 included intermittent net discrete tax expenses of $134 million principally<br> associated with the remeasurement of reserves related to a foreign tax matter. The first quarter ended March 31, 2020 included intermittent net discrete tax benefits of $31 million associated with the remeasurement of prior years' tax<br> liability.
	The following sets forth the impact of the intermittent net discrete tax items to earnings per<br> diluted share, return on average common equity and return on average tangible common equity (which are excluded):
		2Q20			1Q20		2Q20 YTD			2Q19 YTD
---	---	---	---	---	---	---	---	---	---	---	---	---
Earnings per diluted share impact	$	(0.08	)	$	0.02		$	(0.07	)	$	0.06
Return on average common equity impact		(0.7	)%		0.2	%		(0.3	)%		0.3	%
Return on average tangible common equity impact		(0.8	)%		0.2	%		(0.3	)%		0.3	%
(2)	The income tax consequences related to employee share-based payments, which are recurring-type tax items, are recognized<br> in Provision for income taxes in the consolidated income statement, and may be either a benefit or a provision. Conversion of employee share-based awards to Firm shares will primarily occur in the first quarter of each year. The<br> impacts of recognizing excess tax benefits / (cost) upon conversion of awards, are as follows: 2Q20 $(5) million; 1Q20: $99 million, 2Q19: $20 million, 2Q20 YTD: $94 million and 2Q19 YTD $127 million. The impact of intermittent net<br> discrete tax provisions and benefits reflected above do not include the recurring-type discrete tax benefits related to employee share‐based payments as we anticipate conversion activity each year.
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(1)	Includes loans held for investment (net of allowance), loans held for sale and also includes loans at fair value which are included in Trading<br> assets on the balance sheet.
(2)	Beginning in the quarter ended March 31, 2020, the internal measure of liquidity was changed from Global Liquidity Reserve<br> to Liquidity Resources to be more aligned with the current regulatory definition HQLA. June 30, 2019 has been recast. Refer to page 13 for additional information on the change in methodology.
(3)	For the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019, the U.S. Bank investment securities portfolio<br> included held to maturity investment securities of $28.5 billion, $28.8 billion and $27.2 billion, respectively.
Page 4:
(1)	Based on a Federal Reserve interim final rule in effect until March 31, 2021, our Supplementary leverage ratio and<br> Supplementary leverage exposure as of June 30, 2020 reflect the exclusion of U.S. Treasury securities and deposits at Federal Reserve Banks. The exclusion of these assets had the effect of improving our SLR ratio by 0.9% as of June 30,<br> 2020.
Page 5:
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(1)	For the second quarter ended June 30, 2020, the Institutional Securities segment net income applicable to Morgan Stanley<br> included intermittent net discrete tax expenses of $125 million principally associated with the remeasurement of reserves related to a foreign tax matter. The first quarter ended March 31, 2020 included intermittent net discrete tax<br> benefits of $27 million associated with the remeasurement of prior years' tax liability.
(2)	Institutional Securities average tangible common equity represents average common equity adjusted to exclude goodwill and<br> intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 2Q20: $484mm; 1Q20: $484mm; 2Q19: $536mm; 2Q20 YTD: $484mm, 2Q19 YTD: $536mm
Page 6:
(1)	Wealth Management average tangible common equity represents average common equity adjusted to exclude goodwill and<br> intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 2Q20: $7,802mm; 1Q20: $7,802mm; 2Q19: $8,088mm, 2Q20 YTD: $7,802mm; 2Q19 YTD: $8,088mm

Supplemental Quantitative Details and Calculations
Page 8:
(1)	Includes investment gains or losses for certain funds included in the Firm's consolidated financial statements for which<br> the limited partnership interests in these gains or losses were reported in net income (loss) applicable to nonredeemable noncontrolling interests.
(2)	Investment Management average tangible common equity represents average common equity adjusted to exclude goodwill and intangible assets net of<br> allowable mortgage servicing rights deduction. The adjustments are as follows: 2Q20: $932mm; 1Q20: $932mm; 2Q19: $940mm; 2Q20 YTD: $932mm; 2Q19 YTD: $940mm
Page 9:
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(1)	Net Flows by region for the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019 were:
	North America: $17.7 billion, $57.9 billion and $4.3 billion
	International: $18.4 billion, $(0.6) billion and $3.6 billion
(2)	Assets under management or supervision by region for the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019<br> were:
	North America: $268 billion, $359 billion and $277 billion
	International: $397 billion, $225 billion and $220 billion
(3)	For the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019, the shares of minority stake assets were $5 billion, $6 billion and<br> $6 billion, respectively.
Page 10:
(1)	For the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019, Investment Management reflected loan balances of<br> $521 million, $499 million and $27 million, respectively. No material lending commitments were recorded by Investment Management for the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019.
Page 11:
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(1)	For the quarter ended June 30, 2020 the Allowance Rollforward for Loans and Lending Commitments is as follows:
	Institutional<br><br> Securities			Wealth<br><br> <br>Management			Total
---	---	---	---	---	---	---	---	---	---
Loans
Allowance for Credit Losses (ACL)
Beginning Balance - March 31, 2020	$	530		$	87		$	617
Net Charge Offs		2			0			2
Provision		223			23			246
Other		1			(0	)		1
Ending Balance - June 30, 2020	$	756		$	110		$	866
Lending Commitments
Allowance for Credit Losses (ACL)
Beginning Balance - March 31, 2020	$	298		$	6		$	304
Net Charge Offs		0			0			0
Provision		(5	)		(2	)		(7	)
Other		(0	)		0			0
Ending Balance - June 30, 2020	$	293		$	4		$	297
Loans and Lending Commitments
Allowance for Credit Losses (ACL)
Beginning Balance - March 31, 2020	$	828		$	93		$	921
Net Charge Offs		2			0			2
Provision		218			21			239
Other		1			(0	)		1
Ending Balance - June 30, 2020	$	1,049		$	114		$	1,163
(2)	The provision for credit losses associated with loans held for investment are reported in other revenues while the provision<br> for credit losses related to lending commitments are reported in other expenses.
---	---
(3)	For the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019, Investment Management reflected loan balances of<br> $521 million, $499 million and $27 million, respectively. No material lending commitments were recorded by Investment Management for the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019.

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 16, 2020.