Equibles

8-K

MORGAN STANLEY (MS)

8-K 2020-10-15 For: 2020-10-15
View Original
Added on April 05, 2026

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): October 15, 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><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 October 15, 2020, Morgan Stanley (the "Company") released financial information with respect to its quarter ended September 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 September 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<br><br> <br>Number Description
99.1 Press release of the Company, dated October 15, 2020, containing<br> financial information for the quarter ended September 30, 2020.
99.2 Financial Data Supplement of the Company for the quarter<br> ended September 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: October 15, 2020 By: /s/   Raja Akram
Name: Raja Akram
Title: Deputy Chief Financial Officer

Exhibit 99.1

Morgan Stanley Third Quarter 2020 Earnings Results

Morgan Stanley Reports Net Revenues of $11.7 Billion, EPS of $1.66 and ROTCE of 15.0%

NEW YORK, October 15, 2020 – Morgan Stanley (NYSE: MS) today reported net revenues of $11.7 billion for the third quarter ended September 30, 2020 compared with $10.0 billion a year ago.  Net income applicable to Morgan Stanley was $2.7 billion, or $1.66 per diluted share,^1^^^compared with net income of $2.2 billion, or $1.27 per diluted share,^1^ for the same period a year ago. The current quarter included intermittent net discrete tax benefits of $113 million which had an impact of $0.07 per diluted share.

James P. Gorman, Chairman and Chief Executive Officer, said, “We delivered strong quarterly earnings as markets remained active through the summer months, and our balanced business model continued to deliver consistent, high returns. The completion of the E*TRADE acquisition, the subsequent ratings upgrade from Moody’s, and the recently announced acquisition of Eaton Vance significantly strengthen our Firm and position us well for future growth.”

Financial Summary2,3<br> ( millions, except per share data)
Firm 3Q 2019
Net revenues $10,032
Compensation expense $4,427
Non-compensation expenses $2,895
Pre-tax income6 $2,710
Net income app. to MS $2,173
Expense efficiency ratio8 73%
Earnings per diluted share $1.27
Book value per share9 $45.49
Tangible book value per share10 $39.73
Return on equity4 11.2%
Return on tangible equity4 12.9%
Institutional Securities
Net revenues $5,023
Investment Banking $1,535
Sales and Trading $3,455
Wealth Management
Net revenues $4,358
Fee-based client assets ( billions)11 $1,186
Fee-based asset flows ( billions)12 $15.5
Loans ( billions) $76.6
Investment Management
Net revenues $764
AUM ( billions)13 $507
Long-term net flows ( billions)14 $4.2

All values are in US Dollars.

Highlights
• Firm net revenues up 16% and net income up 25%, reflecting strength across all business segments.
• The Firm delivered ROTCE of 15.0%.^4^
• Our balance sheet, capital and liquidity remain strong and the Firm is well positioned to continue to invest<br> in our businesses and serve our clients.
• Common Equity Tier 1 capital standardized ratio of 17.3%.^5^
• Institutional Securities net revenues reflect strong performance across all businesses with higher results in<br> sales and trading and strength in equity underwriting.
• Wealth Management delivered pre-tax income of $1.1 billion^6^ with a reported pre-tax margin of 24.0%^7^<br> (or 25.3%^7^ excluding the impact of a regulatory charge in the third quarter).  Results reflect strong fee-based flows and significant increases in bank lending and deposits.
• Investment Management net revenues increased by 38% driven by record asset management fees and AUM.
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 $6.1 billion compared with $5.0 billion a year ago. Pre-tax income was $2.0 billion compared with $1.3 billion a year ago.^6^

Investment Banking revenues up 11% from a year ago:

• Advisory revenues decreased from a year ago due to lower completed M&A activity and fewer large transactions.
• Equity underwriting revenues increased significantly from a year ago on higher revenues from IPOs, follow-on offerings and blocks as clients<br> continued to access capital markets.
--- ---
• Fixed income underwriting revenues decreased from a year ago due to declines in loan issuances as large event-driven and M&A financings were<br> muted.
--- ---

Sales and Trading net revenues up 20% from a year ago:

• Equity sales and trading net revenues increased from a year ago reflecting strong performance across products on continued client engagement,<br> with notable strength in Asia.
• Fixed Income sales and trading net revenues increased from a year ago driven by strong performance across businesses and geographies with<br> particular strength in credit products benefitting from an active primary market.
--- ---
• Other sales and trading net revenues decreased from a year ago due to losses on economic hedges associated with certain of the Firm’s borrowings<br> and corporate lending activity, partially offset by gains on investments associated with certain employee deferred compensation plans (DCP).
--- ---

Investments and Other:

• Investments revenues in the current quarter include gains on certain business-related investments compared with losses in the prior year<br> quarter.
• Other revenues increased from a year ago primarily due to gains on loans held for sale related to corporate lending activity as credit spreads<br> tightened in the quarter, partially offset by an increase in the provision for credit losses for loans held for investment.
--- ---

Total Expenses:

• Compensation expenses increased from a year ago on higher revenues.
• Non-compensation expenses increased from a year ago driven by higher volume related expenses and an increase in the provision for credit losses<br> for unfunded lending commitments, partially offset by lower spending on business travel and entertainment.
--- ---
($ millions) 3Q 2020 3Q 2019
--- --- ---
Net Revenues $6,062 $5,023
Investment Banking $1,707 $1,535
Advisory $357 $550
Equity underwriting $874 $401
Fixed income underwriting $476 $584
Sales and Trading $4,154 $3,455
Equity $2,262 $1,991
Fixed Income $1,924 $1,430
Other $(32) $34
Investments and Other $201 $33
Investments $87 $(18)
Other $114 $51
Total Expenses $4,014 $3,716
Compensation $2,001 $1,768
Non-compensation $2,013 $1,948

2

Wealth Management

Wealth Management reported net revenues for the current quarter of $4.7 billion compared with $4.4 billion from a year ago.  Excluding the impact of DCP, net revenues increased slightly from a year ago.  Pre-tax income of $1.1 billion^6^ in the current quarter resulted in a reported pre-tax margin of 24.0%^7^ or 25.3%^7^ excluding the impact of a regulatory charge.

Net revenues:

• Asset management revenues increased from a year ago reflecting higher asset levels and strong fee-based flows.
• Transactional revenues^15^ increased 5% excluding the impact of mark-to-market gains on investments associated with<br> employee deferred cash-based compensation plans, on seasonally strong third quarter results.
--- ---
• Net interest income decreased from a year ago reflecting the impact of lower average rates and higher mortgage securities<br> prepayment amortization expense, partially offset by growth in bank lending and increases in bank deposits.
--- ---

Total Expenses:

• Compensation expense increased from a year ago primarily driven by increases in the fair value of deferred cash-based compensation plan<br> referenced investments and increases in compensable revenues.
• Non-compensation expenses increased from a year ago primarily due to a $60 million regulatory charge in the third quarter and expenses<br> associated with the acquisition of E*TRADE, partially offset by lower spending on business travel and entertainment.
--- ---
($ millions) 3Q 2020 3Q 2019
--- --- ---
Net Revenues $4,657 $4,358
Asset management $2,793 $2,639
Transactional^15^ $880 $595
Net interest $889 $1,043
Other $95 $81
Total Expenses $3,537 $3,120
Compensation $2,684 $2,340
Non-compensation $853 $780

Investment Management

Investment Management reported net revenues of $1.1 billion compared with $764 million a year ago.  Pre-tax income was $315 million compared with $165 million a year ago.^6^

Net revenues increased 38% from a year ago:

• Asset management revenues increased 20% from a year ago driven by record AUM on strong investment performance and positive<br> long-term net flows.
• Investments revenues increased significantly from a year ago on higher accrued carried interest and investment gains primarily<br> in Asia private equity.
--- ---

Total Expenses:

• Compensation expense increased from a year ago on higher asset management revenues and an increase in carried interest.
• Non-compensation expenses increased from a year ago driven by higher brokerage and clearing costs.
--- ---
($ millions) 3Q 2020 3Q 2019
--- --- ---
Net Revenues $1,056 $764
Asset management $795 $664
Investments $258 $105
Other $3 $(5)
Total Expenses $741 $599
Compensation $401 $319
Non-compensation $340 $280

3

Other Matters

• The Board of Directors declared a $0.35 quarterly dividend per share, payable on November 13, 2020 to common shareholders of record on October<br> 30, 2020.
• On September 30, 2020, the Federal Reserve extended its requirement to suspend share repurchases through the end of the fourth quarter of 2020.
--- ---
• The effective tax rate for the quarter was 21.1%.  The current quarter includes intermittent net discrete tax benefits of $113 million,<br> primarily associated with the remeasurement of reserves and related interest in connection with closures of audits in certain tax jurisdictions.
--- ---
• The Firm’s provision for credit losses on loans and lending commitments was $111 million for the third quarter of 2020, compared with $51<br> million for the third quarter of 2019 and $239 million for the second quarter of 2020.  The allowance for credit losses on loans and lending commitments was $1.3 billion as of September 30, 2020, an increase of approximately 8% over the<br> previous quarter.
--- ---
3Q 2020 3Q 2019
--- --- ---
Capital^16^
Standardized Approach
Common Equity Tier 1 capital^5^ 17.3% 16.3%
Tier 1 capital^5^ 19.4% 18.5%
Advanced Approach
Common Equity Tier 1 capital^5^ 16.9% 16.6%
Tier 1 capital^5^ 19.0% 18.8%
Leverage-based capital
Tier 1 leverage^17^ 8.3% 8.2%
Supplementary leverage ratio^18^ 7.4% 6.3%
Common Stock Repurchases
Repurchases ($ millions) NA $1,500
Number of Shares (millions) NA 36
Average Price NA $41.92
Period End Shares (millions) 1,576 1,624
Tax Rate 21.1% 18.2%

4

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, such as statements about the consummation of the proposed transaction 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 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 with Eaton Vance will not be realized or will not be realized within the expected time period, (ii) the ability of Morgan Stanley and Eaton Vance 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 Morgan Stanley, Eaton Vance or their respective directors, (iv) the risk that disruptions from the proposed transaction will harm Morgan Stanley’s and Eaton Vance’s business, including current plans and operations, (v) the ability of Morgan Stanley or Eaton Vance 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 Eaton Vance’s financial performance, (x) certain restrictions during the pendency of the acquisition that may impact Morgan Stanley’s or Eaton Vance’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 Morgan Stanley’s or Eaton Vance’s management’s response to any of the aforementioned factors, (xii) dilution caused by Morgan Stanley’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 Morgan Stanley’s most recently filed Annual Report on Form 10-K and subsequent reports on Forms 10-Q and 8-K, (xv) those risks described in Item 1A of Eaton Vance’s most recently filed Annual Report on Form 10-K and subsequent reports on Forms 10-Q and 8-K and (xvi) those risks that will be described in the registration statement on Form S-4 available from the sources indicated above. These risks, as well as other risks associated with the proposed acquisition, will be more fully discussed in the registration statement on Form S-4 that will be filed with the SEC in connection with the proposed acquisition. While the list of factors presented here is, and the list of factors to be presented in the registration statement on Form S-4 will be, 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 Morgan Stanley’s or Eaton Vance’s consolidated financial condition, results of operations, credit rating or liquidity. Neither Morgan Stanley nor Eaton Vance 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.

5

^1^ Includes preferred dividends related to the calculation of earnings per share of $120 million and $113 million for the third 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^ 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.

^5^ 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 September 30, 2020 the Firm’s ratios are based on the Advanced Approach, while at September 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.

^6^ Pre-tax income represents income before taxes.

^7^ Pre-tax margin represents income before taxes divided by net revenues.  Pre-tax margin excluding the regulatory charge 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. Pre-tax margin excluding the regulatory charge represents income before taxes less the charge divided by net revenues.

^8^ The Firm expense efficiency ratio represents total non-interest expenses as a percentage of net revenues.

^9^ Book value per common share represents common equity divided by period end common shares outstanding.

^10^ 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.

^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.

6

^^

^^

^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.  Transactional revenues excluding the impact of mark-to-market gains on investments associated with employee deferred cash-based compensation plans 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.

^16^ Capital ratios are estimates as of the press release date, October 15, 2020.

^17^ 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.

^18^ The Firm must maintain a Tier 1 supplementary leverage ratio (SLR) 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 SLR utilizes a Tier 1 capital numerator of approximately $79.8 billion and $72.9 billion, and supplementary leverage exposure denominator of approximately $1.08 trillion and $1.16 trillion, for the third 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 September 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 by 0.9% as of September 30, 2020.

7

Consolidated Income Statement Information

(unaudited, dollars in millions)

Quarter Ended Percentage Change From: Nine Months Ended Percentage
Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Jun 30, 2020 Sep 30, 2019 Sep 30, 2020 Sep 30, 2019 Change
Revenues:
Investment banking $ 1,826 $ 2,142 $ 1,635 (15 %) 12 % $ 5,239 $ 4,467 17 %
Trading 3,092 4,683 2,608 (34 %) 19 % 10,831 8,781 23 %
Investments 346 275 87 26 % * 659 801 (18 %)
Commissions and fees 1,037 1,102 990 (6 %) 5 % 3,499 2,935 19 %
Asset management 3,664 3,265 3,363 12 % 9 % 10,346 9,632 7 %
Other 206 347 131 (41 %) 57 % (458 ) 685 *
Total non-interest revenues 10,171 11,814 8,814 (14 %) 15 % 30,116 27,301 10 %
Interest income 2,056 2,358 4,350 (13 %) (53 %) 7,917 13,146 (40 %)
Interest expense 570 758 3,132 (25 %) (82 %) 3,475 9,885 (65 %)
Net interest 1,486 1,600 1,218 (7 %) 22 % 4,442 3,261 36 %
Net revenues 11,657 13,414 10,032 (13 %) 16 % 34,558 30,562 13 %
Non-interest expenses:
Compensation and benefits 5,086 6,035 4,427 (16 %) 15 % 15,404 13,609 13 %
Non-compensation expenses:
Brokerage, clearing and exchange fees 697 716 637 (3 %) 9 % 2,153 1,860 16 %
Information processing and communications 616 589 557 5 % 11 % 1,768 1,627 9 %
Professional services 542 535 531 1 % 2 % 1,526 1,582 (4 %)
Occupancy and equipment 373 365 353 2 % 6 % 1,103 1,053 5 %
Marketing and business development 78 63 157 24 % (50 %) 273 460 (41 %)
Other 778 756 660 3 % 18 % 2,343 1,803 30 %
Total non-compensation expenses 3,084 3,024 2,895 2 % 7 % 9,166 8,385 9 %
Total non-interest expenses 8,170 9,059 7,322 (10 %) 12 % 24,570 21,994 12 %
Income before provision for income taxes 3,487 4,355 2,710 (20 %) 29 % 9,988 8,568 17 %
Provision for income taxes 736 1,119 492 (34 %) 50 % 2,221 1,636 36 %
Net income $ 2,751 $ 3,236 $ 2,218 (15 %) 24 % $ 7,767 $ 6,932 12 %
Net income applicable to nonredeemable noncontrolling interests 34 40 45 (15 %) (24 %) 156 129 21 %
Net income applicable to Morgan Stanley 2,717 3,196 2,173 (15 %) 25 % 7,611 6,803 12 %
Preferred stock dividend 120 149 113 (19 %) 6 % 377 376 --
Earnings applicable to Morgan Stanley common shareholders $ 2,597 $ 3,047 $ 2,060 (15 %) 26 % $ 7,234 $ 6,427 13 %

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

8

![](prlogo.jpg)

Consolidated Financial Metrics, Ratios and Statistical Data

(unaudited)

Quarter Ended Percentage Change From: Nine Months Ended Percentage
Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Jun 30, 2020 Sep 30, 2019 Sep 30, 2020 Sep 30, 2019 Change
Financial Metrics:
Earnings per basic share $ 1.68 $ 1.98 $ 1.28 (15 %) 31 % $ 4.68 $ 3.94 19 %
Earnings per diluted share $ 1.66 $ 1.96 $ 1.27 (15 %) 31 % $ 4.62 $ 3.89 19 %
Return on average common equity 13.2 % 15.7 % 11.2 % 12.6 % 11.8 %
Return on average tangible common equity 15.0 % 17.8 % 12.9 % 14.3 % 13.5 %
Book value per common share $ 50.67 $ 49.57 $ 45.49 $ 50.67 $ 45.49
Tangible book value per common share $ 44.81 $ 43.68 $ 39.73 $ 44.81 $ 39.73
Excluding intermittent net discrete tax provision / benefit
Adjusted earnings per diluted share $ 1.59 $ 2.04 $ 1.21 (22 %) 31 % $ 4.62 $ 3.77 23 %
Adjusted return on average common equity 12.6 % 16.4 % 10.7 % 12.5 % 11.5 %
Adjusted return on average tangible common equity 14.3 % 18.6 % 12.3 % 14.2 % 13.1 %
Financial Ratios:
Pre-tax profit margin 30 % 32 % 27 % 29 % 28 %
Compensation and benefits as a % of net revenues 44 % 45 % 44 % 45 % 45 %
Non-compensation expenses as a % of net revenues 26 % 23 % 29 % 27 % 27 %
Firm expense efficiency ratio 70 % 68 % 73 % 71 % 72 %
Effective tax rate 21.1 % 25.7 % 18.2 % 22.2 % 19.1 %
Statistical Data:
Period end common shares outstanding (millions) 1,576 1,576 1,624 -- (3 %)
Average common shares outstanding (millions)
Basic 1,542 1,541 1,604 -- (4 %) 1,546 1,632 (5 %)
Diluted 1,566 1,557 1,627 1 % (4 %) 1,565 1,653 (5 %)
Worldwide employees 63,051 61,596 60,532 2 % 4 %

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

9

Exhibit 99.2

Third 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
Definitions 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: Nine Months Ended Percentage
Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Jun 30, 2020 Sep 30, 2019 Sep 30, 2020 Sep 30, 2019 Change
Net revenues
Institutional Securities $ 6,062 $ 7,977 $ 5,023 (24 %) 21 % $ 18,944 $ 15,332 24 %
Wealth Management 4,657 4,680 4,358 -- 7 % 13,374 13,155 2 %
Investment Management 1,056 886 764 19 % 38 % 2,634 2,407 9 %
Intersegment Eliminations (118 ) (129 ) (113 ) 9 % (4 %) (394 ) (332 ) (19 %)
Net revenues $ 11,657 $ 13,414 $ 10,032 (13 %) 16 % $ 34,558 $ 30,562 13 %
Non-interest expenses
Institutional Securities $ 4,014 $ 4,984 $ 3,716 (19 %) 8 % $ 12,953 $ 10,967 18 %
Wealth Management 3,537 3,538 3,120 -- 13 % 10,057 9,486 6 %
Investment Management 741 670 599 11 % 24 % 1,960 1,869 5 %
Intersegment Eliminations (122 ) (133 ) (113 ) 8 % (8 %) (400 ) (328 ) (22 %)
Non-interest expenses ^(1)^ $ 8,170 $ 9,059 $ 7,322 (10 %) 12 % $ 24,570 $ 21,994 12 %
Income before taxes
Institutional Securities $ 2,048 $ 2,993 $ 1,307 (32 %) 57 % $ 5,991 $ 4,365 37 %
Wealth Management 1,120 1,142 1,238 (2 %) (10 %) 3,317 3,669 (10 %)
Investment Management 315 216 165 46 % 91 % 674 538 25 %
Intersegment Eliminations 4 4 0 -- * 6 (4 ) *
Income before taxes $ 3,487 $ 4,355 $ 2,710 (20 %) 29 % $ 9,988 $ 8,568 17 %
Net Income applicable to Morgan Stanley
Institutional Securities $ 1,647 $ 2,186 $ 1,073 (25 %) 53 % $ 4,590 $ 3,565 29 %
Wealth Management 842 853 962 (1 %) (12 %) 2,559 2,839 (10 %)
Investment Management 225 154 138 46 % 63 % 457 402 14 %
Intersegment Eliminations 3 3 0 -- * 5 (3 ) *
Net Income applicable to Morgan Stanley $ 2,717 $ 3,196 $ 2,173 (15 %) 25 % $ 7,611 $ 6,803 12 %
Earnings applicable to Morgan Stanley common shareholders $ 2,597 $ 3,047 $ 2,060 (15 %) 26 % $ 7,234 $ 6,427 13 %
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<br> and Calculations, and Legal Notice.

1

Consolidated Financial Metrics, Ratios and Statistical Data
(unaudited)
Quarter Ended Percentage Change From: Nine Months Ended Percentage
Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Jun 30, 2020 Sep 30, 2019 Sep 30, 2020 Sep 30, 2019 Change
Financial Metrics:
Earnings per basic share $ 1.68 $ 1.98 $ 1.28 (15 %) 31 % $ 4.68 $ 3.94 19 %
Earnings per diluted share $ 1.66 $ 1.96 $ 1.27 (15 %) 31 % $ 4.62 $ 3.89 19 %
Return on average common equity 13.2 % 15.7 % 11.2 % 12.6 % 11.8 %
Return on average tangible common equity 15.0 % 17.8 % 12.9 % 14.3 % 13.5 %
Book value per common share $ 50.67 $ 49.57 $ 45.49 $ 50.67 $ 45.49
Tangible book value per common share $ 44.81 $ 43.68 $ 39.73 $ 44.81 $ 39.73
Excluding intermittent net discrete tax provision / benefit ^(1)(2)^
Adjusted earnings per diluted share $ 1.59 $ 2.04 $ 1.21 (22 %) 31 % $ 4.62 $ 3.77 23 %
Adjusted return on average common equity 12.6 % 16.4 % 10.7 % 12.5 % 11.5 %
Adjusted return on average tangible common equity 14.3 % 18.6 % 12.3 % 14.2 % 13.1 %
Financial Ratios:
Pre-tax profit margin 30 % 32 % 27 % 29 % 28 %
Compensation and benefits as a % of net revenues 44 % 45 % 44 % 45 % 45 %
Non-compensation expenses as a % of net revenues 26 % 23 % 29 % 27 % 27 %
Firm expense efficiency ratio 70 % 68 % 73 % 71 % 72 %
Effective tax rate^(1)(2)^ 21.1 % 25.7 % 18.2 % 22.2 % 19.1 %
Statistical Data:
Period end common shares outstanding (millions) 1,576 1,576 1,624 -- (3 %)
Average common shares outstanding (millions)
Basic 1,542 1,541 1,604 -- (4 %) 1,546 1,632 (5 %)
Diluted 1,566 1,557 1,627 1 % (4 %) 1,565 1,653 (5 %)
Worldwide employees 63,051 61,596 60,532 2 % 4 %
The End Notes are an integral part of this presentation.  See pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and Terms, Supplemental<br> 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: Nine Months<br> Ended Percentage
Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Jun 30, 2020 Sep 30, 2019 Sep 30, 2020 Sep 30, 2019 Change
Consolidated Balance sheet
Total assets $ 955,940 $ 975,363 $ 902,604 (2 %) 6 %
Loans ^(1)^ $ 154,570 $ 150,723 $ 135,546 3 % 14 %
Deposits $ 239,253 $ 236,849 $ 180,738 1 % 32 %
Liquidity Resources^(2)^ $ 267,292 $ 301,407 $ 223,827 (11 %) 19 %
Long-term debt outstanding $ 198,891 $ 202,238 $ 192,362 (2 %) 3 %
Maturities of long-term debt outstanding (next 12 months) $ 20,247 $ 20,076 $ 23,498 1 % (14 %)
Common equity $ 79,874 $ 78,125 $ 73,862 2 % 8 %
Less: Goodwill and intangible assets (9,228 ) (9,286 ) (9,350 ) (1 %) (1 %)
Tangible common equity $ 70,646 $ 68,839 $ 64,512 3 % 10 %
Preferred equity $ 8,520 $ 8,520 $ 8,520 -- --
U.S. Bank Supplemental Financial Information
Total Assets $ 266,221 $ 263,934 $ 210,968 1 % 26 %
Loans $ 140,639 $ 136,613 $ 123,948 3 % 13 %
Investment securities portfolio ^(3)^ $ 91,096 $ 92,270 $ 70,668 (1 %) 29 %
Deposits $ 238,025 $ 235,959 $ 179,610 1 % 33 %
Regional revenues
Americas $ 8,387 $ 9,765 $ 7,489 (14 %) 12 % $ 24,798 $ 22,336 11 %
EMEA (Europe, Middle East, Africa) 1,473 2,049 1,409 (28 %) 5 % 4,670 4,687 --
Asia 1,797 1,600 1,134 12 % 58 % 5,090 3,539 44 %
Consolidated net revenues $ 11,657 $ 13,414 $ 10,032 (13 %) 16 % $ 34,558 $ 30,562 13 %
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<br> 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: Nine Months Ended Percentage
Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Jun 30, 2020 Sep 30, 2019 Sep 30, 2020 Sep 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 15.1 14.0 12.3 8 % 23 % 13.3 11.4 17 %
Firm $ 78.7 $ 77.6 $ 73.4 1 % 7 % $ 76.9 $ 72.5 6 %
Regulatory Capital
Common Equity Tier 1 capital $ 71.2 $ 68.7 $ 64.3 4 % 11 %
Tier 1 capital $ 79.8 $ 77.4 $ 72.9 3 % 9 %
Standardized Approach
Risk-weighted assets $ 410.7 $ 415.5 $ 394.9 (1 %) 4 %
Common Equity Tier 1 capital ratio 17.3 % 16.5 % 16.3 %
Tier 1 capital ratio 19.4 % 18.6 % 18.5 %
Advanced Approach
Risk-weighted assets $ 421.0 $ 427.0 $ 387.4 (1 %) 9 %
Common Equity Tier 1 capital ratio 16.9 % 16.1 % 16.6 %
Tier 1 capital ratio 19.0 % 18.1 % 18.8 %
Leverage-based capital
Tier 1 leverage ratio 8.3 % 8.1 % 8.2 %
Supplementary Leverage Ratio^(1)^ 7.4 % 7.3 % 6.3 %
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<br> 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: Nine Months Ended Percentage
Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Jun 30, 2020 Sep 30, 2019 Sep 30, 2020 Sep 30, 2019 Change
Revenues:
Advisory $ 357 $ 462 $ 550 (23 %) (35 %) $ 1,181 $ 1,462 (19 %)
Equity 874 882 401 (1 %) 118 % 2,092 1,286 63 %
Fixed income 476 707 584 (33 %) (18 %) 1,629 1,410 16 %
Underwriting 1,350 1,589 985 (15 %) 37 % 3,721 2,696 38 %
Investment Banking 1,707 2,051 1,535 (17 %) 11 % 4,902 4,158 18 %
Equity 2,262 2,619 1,991 (14 %) 14 % 7,303 6,136 19 %
Fixed Income 1,924 3,033 1,430 (37 %) 35 % 7,160 4,273 68 %
Other (32 ) (99 ) 34 68 % * 109 92 18 %
Sales and Trading 4,154 5,553 3,455 (25 %) 20 % 14,572 10,501 39 %
Investments 87 36 (18 ) 142 % * 98 257 (62 %)
Other 114 337 51 (66 %) 124 % (628 ) 416 *
Net revenues 6,062 7,977 5,023 (24 %) 21 % 18,944 15,332 24 %
Compensation and benefits 2,001 2,952 1,768 (32 %) 13 % 6,767 5,376 26 %
Non-compensation expenses 2,013 2,032 1,948 (1 %) 3 % 6,186 5,591 11 %
Total non-interest expenses 4,014 4,984 3,716 (19 %) 8 % 12,953 10,967 18 %
Income before taxes 2,048 2,993 1,307 (32 %) 57 % 5,991 4,365 37 %
Net income applicable to Morgan Stanley ^(1)^ $ 1,647 $ 2,186 $ 1,073 (25 %) 53 % $ 4,590 $ 3,565 29 %
Pre-tax profit margin 34 % 38 % 26 % 32 % 28 %
Compensation and benefits as a % of net revenues 33 % 37 % 35 % 36 % 35 %
Non-compensation expenses as a % of net revenues 33 % 25 % 39 % 33 % 36 %
Return on Average Common Equity 15 % 19 % 10 % 13 % 11 %
Return on Average Tangible Common Equity ^(2)^ 15 % 20 % 10 % 14 % 11 %
Trading VaR (Average Daily 95% / One-Day VaR) $ 58 $ 60 $ 42
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<br> 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: Nine Months Ended Percentage
Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Jun 30, 2020 Sep 30, 2019 Sep 30, 2020 Sep 30, 2019 Change
Revenues:
Asset management $ 2,793 $ 2,507 $ 2,639 11 % 6 % $ 7,980 $ 7,544 6 %
Transactional 880 1,075 595 (18 %) 48 % 2,354 2,140 10 %
Net interest income 889 1,030 1,043 (14 %) (15 %) 2,815 3,189 (12 %)
Other 95 68 81 40 % 17 % 225 282 (20 %)
Net revenues 4,657 4,680 4,358 -- 7 % 13,374 13,155 2 %
Compensation and benefits 2,684 2,729 2,340 (2 %) 15 % 7,625 7,184 6 %
Non-compensation expenses 853 809 780 5 % 9 % 2,432 2,302 6 %
Total non-interest expenses 3,537 3,538 3,120 -- 13 % 10,057 9,486 6 %
Income before taxes 1,120 1,142 1,238 (2 %) (10 %) 3,317 3,669 (10 %)
Net income applicable to Morgan Stanley ^(1)^ $ 842 $ 853 $ 962 (1 %) (12 %) $ 2,559 $ 2,839 (10 %)
Pre-tax profit margin 24 % 24 % 28 % 25 % 28 %
Compensation and benefits as a % of net revenues 58 % 58 % 54 % 57 % 55 %
Non-compensation expenses as a % of net revenues 18 % 17 % 18 % 18 % 17 %
Return on Average Common Equity 18 % 18 % 21 % 18 % 20 %
Return on Average Tangible Common Equity ^(2)^ 31 % 32 % 37 % 32 % 36 %
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<br> Details and Calculations, and Legal Notice.

6

Wealth Management
Financial Information and Statistical Data
(unaudited)
Quarter Ended Percentage Change From:
Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Jun 30, 2020 Sep 30, 2019
Wealth Management Metrics
Wealth Management representatives 15,469 15,399 15,553 -- (1 %)
Annualized revenue per representative (000's) $ 1,207 $ 1,214 $ 1,118 (1 %) 8 %
Client assets (billions) $ 2,852 $ 2,661 $ 2,565 7 % 11 %
Client assets per representative (millions) $ 184 $ 173 $ 165 6 % 12 %
Client liabilities (billions) $ 100 $ 94 $ 86 6 % 16 %
Fee-based client assets (billions) $ 1,333 $ 1,236 $ 1,186 8 % 12 %
Fee-based asset flows (billions) $ 23.8 $ 11.1 $ 15.5 114 % 54 %
Fee-based assets as a % of client assets 47 % 46 % 46 %
Retail locations 584 584 590 -- (1 %)
The End Notes are an integral part of this presentation.  See pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and Terms, Supplemental<br> 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: Nine Months Ended Percentage
Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Jun 30, 2020 Sep 30, 2019 Sep 30, 2020 Sep 30, 2019 Change
Revenues:
Asset management $ 795 $ 684 $ 664 16 % 20 % $ 2,144 $ 1,893 13 %
Investments^(1)^ 258 231 105 12 % 146 % 552 543 2 %
Other 3 (29 ) (5 ) * * (62 ) (29 ) (114 %)
Net revenues 1,056 886 764 19 % 38 % 2,634 2,407 9 %
Compensation and benefits 401 354 319 13 % 26 % 1,012 1,049 (4 %)
Non-compensation expenses 340 316 280 8 % 21 % 948 820 16 %
Total non-interest expenses 741 670 599 11 % 24 % 1,960 1,869 5 %
Income before taxes 315 216 165 46 % 91 % 674 538 25 %
Net income applicable to Morgan Stanley ^(2)^ $ 225 $ 154 $ 138 46 % 63 % $ 457 $ 402 14 %
Pre-tax profit margin 30 % 24 % 22 % 26 % 22 %
Compensation and benefits as a % of net revenues 38 % 40 % 42 % 38 % 44 %
Non-compensation expenses as a % of net revenues 32 % 36 % 37 % 36 % 34 %
Return on Average Common Equity 34 % 23 % 22 % 23 % 22 %
Return on Average Tangible Common Equity ^(3)^ 53 % 36 % 36 % 36 % 35 %
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<br> Quantitative Details and Calculations, and Legal Notice.

8

Investment Management
Financial Information and Statistical Data
(unaudited, dollars in billions)
Quarter Ended Percentage Change From: Nine Months Ended Percentage
Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Jun 30, 2020 Sep 30, 2019 Sep 30, 2020 Sep 30, 2019 Change
Assets under management or supervision (AUM)
Net flows by asset class ^(1)^
Equity $ 10.0 $ 9.0 $ 2.1 11 % * $ 20.6 $ 4.9 *
Fixed Income 3.1 4.4 2.3 (30 %) 35 % 8.8 2.4 *
Alternative / Other (2.7 ) 2.0 (0.2 ) * * 3.1 1.4 121 %
Long-Term Net Flows 10.4 15.4 4.2 (32 %) 148 % 32.5 8.7 *
Liquidity 2.1 20.7 9.1 (90 %) (77 %) 73.4 6.3 *
Total net flows $ 12.5 $ 36.1 $ 13.3 (65 %) (6 %) $ 105.9 $ 15.0 *
Assets under management or supervision by asset class^(2)^
Equity $ 202 $ 168 $ 126 20 % 60 %
Fixed Income 92 84 74 10 % 24 %
Alternative / Other 150 145 135 3 % 11 %
Long‐Term Assets Under Management or Supervision 444 397 335 12 % 33 %
Liquidity 271 268 172 1 % 58 %
Total Assets Under Management or Supervision $ 715 $ 665 $ 507 8 % 41 %
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<br> Quantitative Details and Calculations, and Legal Notice.

9

Consolidated Loans and Lending Commitments
(unaudited, dollars in billions)
Quarter Ended Percentage Change From:
Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Jun 30, 2020 Sep 30, 2019
Institutional Securities
Loans:
Corporate $ 15.8 $ 19.0 $ 13.3 (17 %) 19 %
Secured lending facilities 30.3 28.9 27.7 5 % 9 %
Commercial and residential real estate 9.6 10.2 10.5 (6 %) (9 %)
Securities-based lending and other 7.0 6.9 7.4 1 % (5 %)
Total Loans 62.7 65.0 58.9 (4 %) 6 %
Lending Commitments 105.5 98.5 108.6 7 % (3 %)
Institutional Securities Loans and Lending Commitments $ 168.2 $ 163.5 $ 167.5 3 % --
Wealth Management
Loans:
Securities-based lending and other $ 57.7 $ 53.1 $ 47.4 9 % 22 %
Residential real estate 33.6 32.1 29.2 5 % 15 %
Total Loans 91.3 85.2 76.6 7 % 19 %
Lending Commitments 14.6 14.4 11.7 1 % 25 %
Wealth Management Loans and Lending Commitments $ 105.9 $ 99.6 $ 88.3 6 % 20 %
Consolidated Loans and Lending Commitments ^(1)^ $ 274.1 $ 263.1 $ 255.8 4 % 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<br> Details and Calculations, and Legal Notice.

10

Consolidated Loans and Lending Commitments
Allowance for Credit Losses (ACL) as of September 30, 2020
(unaudited, dollars in millions)
Loans and Lending Commitments ACL^(1)^ ACL % Q3 Provision ^(2)^
(Gross)
Loans:
Held For Investment (HFI)
Corporate $ 7,628 $ 367 4.8 % $ (17 )
Secured lending facilities 26,496 191 0.7 % 68
Commercial and residential real estate 7,265 222 3.1 % 18
Other 1,277 26 2.0 % (3 )
Institutional Securities - HFI $ 42,666 $ 806 1.9 % $ 66
Wealth Management - HFI 91,397 107 0.1 % (3 )
Held For Investment $ 134,063 $ 913 0.7 % $ 63
Held For Sale 13,070
Fair Value 7,781
Total Loans 154,914 913 63
Lending Commitments 120,098 347 0.3 % 48
Consolidated Loans and Lending Commitments $ 275,012 $ 1,260 $ 111
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,<br> Supplemental Quantitative Details and Calculations, and Legal Notice.

11

    ![](mslogo.jpg)
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 comparability of operating<br> performance and capital adequacy.  These measures are calculated as follows:
- Earnings per diluted share, excluding intermittent net discrete tax provision / benefit represents net income applicable to Morgan Stanley, adjusted for the impact of the intermittent net<br> 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<br> 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 intermittent net discrete tax provision / benefit are adjusted in both the numerator and the<br> 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 applicable to Morgan Stanley<br> 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<br> 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<br> assets net of certain mortgage servicing rights deduction.
- Tangible book value per common share represents tangible common equity divided by period end common shares<br> outstanding.

12

Definitions 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 1:
(a) Net income applicable to Morgan Stanley represents net income, less net income applicable to nonredeemable noncontrolling<br> interests.
(b) Earnings applicable to Morgan Stanley common shareholders represents net income applicable to Morgan Stanley, less<br> preferred dividends.
Page 2:
(a) The return on average common equity represents annualized earnings applicable to Morgan Stanley common shareholders as a<br> 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<br> 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<br> 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<br> 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,<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<br> the 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-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<br> 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<br> 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<br> remain fixed throughout the year until the next annual reset unless a significant business change occurs (e.g., acquisition or disposition).  We are currently evaluating potential updates to our Required Capital framework to take into<br> account changes to our risk-based capital requirements resulting from the stress capital buffer and we will continue to evaluate the framework with respect to the impact of other future regulatory requirements as appropriate.  For<br> further discussion of the framework, refer to "Quantitative and Qualitative Disclosures about Risk" in the Firm's 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 September 30, 2020 and June 30, 2020, the Firm's ratios were based on the Advanced Approach, while at September 30, 2019 were based on the Standardized Approach.  For information on<br> the calculation 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 and Trading net revenues includes trading, net interest income (interest income less<br> interest 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 unrealized loss in portfolio value that one would not expect to exceed, on average, more than five times<br> 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<br> "Quantitative and Qualitative Disclosures about Risk" included in the Firm's 2019 Form 10-K.

13

Definitions of Performance Metrics and Terms
Our earnings releases, earnings conference calls, financial presentations and other<br> 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<br> operating results.
Page 6:
(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<br> representative headcount.
(b) Client assets per representative represents total client assets divided by period end representative headcount.
(c) Client liabilities reflect securities-based and other loans (including tailored lending), residential real estate loans and<br> margin lending.
(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<br> Credit strategies, as well as Multi-Asset portfolios.
(b) Investment Management net flows include new commitments, investments or reinvestments, net of client redemptions, returns<br> 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) 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<br> and 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<br> 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:
3Q20 2Q20 3Q19 3Q20 YTD 3Q19 YTD
--- --- --- --- --- --- --- --- --- --- ---
Compensation and benefits $ 5,086 $ 6,035 $ 4,427 $ 15,404 $ 13,609
Non-compensation expenses:
Brokerage, clearing and exchange fees 697 716 637 2,153 1,860
Information processing and communications 616 589 557 1,768 1,627
Professional services 542 535 531 1,526 1,582
Occupancy and equipment 373 365 353 1,103 1,053
Marketing and business development 78 63 157 273 460
Other 778 756 660 2,343 1,803
Total non-compensation expenses 3,084 3,024 2,895 9,166 8,385
Total non-interest expenses $ 8,170 $ 9,059 $ 7,322 $ 24,570 $ 21,994
Page 2:
--- ---
(1) The third quarter ended September 30, 2020 included intermittent net discrete tax benefits of $113 million, primarily<br> associated with the remeasurement of reserves and related interest in connection with closures of audits in certain tax jurisdictions. The second quarter ended June 30, 2020 included intermittent net discrete tax expenses of $134<br> million, principally associated with the remeasurement of reserves related to a foreign tax matter.  The quarter ended September 30, 2019 included intermittent net discrete tax benefits of $89 million primarily associated with the<br> filing of the 2018 federal tax return and the remeasurement of reserves and related interest. The nine months ended September 30, 2019 included intermittent net discrete tax benefits of $190 million primarily associated with the<br> remeasurement of reserves and related interest.
The following sets forth the impact of the intermittent net discrete tax items to earnings per diluted share, return on average common equity and return on average<br> tangible common equity (which are excluded):
3Q20 2Q20 3Q19 3Q20 YTD 3Q19 YTD
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Earnings per diluted share impact $ 0.07 $ (0.08 ) $ 0.06 $ 0.00 $ 0.12
Return on average common equity impact 0.6 % (0.7 )% 0.5 % 0.1 % 0.3 %
Return on average tangible common equity impact 0.7 % (0.8 )% 0.6 % 0.1 % 0.4 %
(2) The income tax consequences related to employee share-based payments, which are recurring-type discrete tax items, are<br> recognized 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<br> year.  The impacts of recognizing excess tax benefits upon conversion of awards, are as follows: 3Q20 YTD $94 million and 3Q19 YTD $127 million.  The impact of intermittent net discrete tax provisions and benefits reflected above do<br> not include the recurring-type discrete tax benefits related to employee share‐based payments as we anticipate conversion activity each year.
--- ---
Page 3:
(1) Includes loans held for investment (net of allowance), loans held for sale and also includes loans at fair value which<br> are included in Trading assets on the balance sheet.
(2) Beginning in the quarter ended March 31, 2020, the internal measure of liquidity was changed from Global Liquidity<br> Reserve to Liquidity Resources to be more aligned with the current regulatory definition HQLA. September 30, 2019 has been recast.
(3) As of September 30, 2020, June 30, 2020 and September 30, 2019, the U.S. Bank investment securities portfolio included<br> held to maturity investment securities of $28.2 billion, $28.5 billion and $26.7 billion, respectively.
Page 4:
(1) Based on a Federal Reserve interim final rule in effect until March 31, 2021,  our supplementary leverage ratio (SLR)<br> and supplementary leverage exposure, effective 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 by 0.9% as of<br> September 30, 2020.
Page 5:
--- ---
(1) For the third quarter ended September 30, 2020, the Institutional Securities segment net income applicable to Morgan<br> Stanley included intermittent net discrete tax benefits of $115 million, primarily associated with the remeasurement of reserves and related interest in connection with closures of audits in certain tax jurisdictions. The second<br> quarter ended June 30, 2020 included intermittent net discrete tax expenses of $125 million, principally associated with the remeasurement of reserves related to a foreign tax matter. The quarter ended September 30, 2019 included<br> intermittent net discrete tax benefits of $67 million primarily associated with the filing of the 2018 federal tax return and the remeasurement of reserves and related interest. The nine months ended September 30, 2019 included<br> intermittent net discrete tax benefits of $168 million primarily associated with the remeasurement of reserves and related interest.
(2) Institutional Securities average tangible common equity represents average common equity adjusted to exclude goodwill<br> and intangible assets net of allowable mortgage servicing rights deduction.  The adjustments are as follows:  3Q20: $484mm;  2Q20: $484mm;  3Q19: $536mm; 3Q20 YTD: $484mm; 3Q19 YTD: $536mm
Page 6:
(1) For the quarter and nine months ended September 30, 2019, the Wealth Management segment net income applicable to Morgan<br> Stanley included intermittent net discrete tax benefits of $13 million primarily associated with the filing of the 2018 federal tax return.
(2) Wealth 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:  3Q20: $7,802mm;  2Q20: $7,802mm;  3Q19: $8,088mm; 3Q20 YTD: $7,802mm; 3Q19 YTD: $8,088mm

15

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<br> which the limited partnership interests in these gains or losses were reported in net income applicable to nonredeemable noncontrolling interests.
(2) For the quarter and nine months ended September 30, 2019, the Investment Management segment net income applicable to Morgan Stanley included<br> intermittent net discrete tax benefits of $9 million primarily associated with the filing of the 2018 federal tax return.
(3) Investment Management average tangible common equity represents average common equity adjusted to exclude goodwill and intangible assets net<br> of allowable mortgage servicing rights deduction.  The adjustments are as follows:  3Q20: $932mm;  2Q20: $932mm;  3Q19: $940mm; 3Q20 YTD: $932mm; 3Q19 YTD: $940mm
Page 9:
--- ---
(1) Net Flows by region for the quarters ended September 30, 2020, June 30, 2020 and September 30, 2019 were:
North America: $(3.5) billion, $17.7 billion and $6.4 billion
International: $16.0 billion, $18.4 billion and $6.9 billion
(2) Assets under management or supervision by region for the quarters ended  September 30, 2020, June 30, 2020 and<br> September 30, 2019 were:
North America: $409 billion, $397 billion and $282 billion
International: $306 billion, $268 billion and $225 billion
Page 10:
(1) For the quarters ended September 30, 2020, June 30, 2020 and September 30, 2019, Investment Management reflected loan<br> balances of $568 million, $522 million and $43 million, respectively. No material lending commitments were recorded by Investment Management for the quarters ended September 30, 2020, June 30, 2020 and September 30, 2019, which was<br> not included in the Consolidated Loans and Lending Committments balance.
Page 11:
--- ---
(1) For the quarter ended September 30, 2020 the Allowance Rollforward for Loans and Lending Commitments is as follows:
Institutional<br><br> <br>Securities Wealth<br><br> <br>Management Total
--- --- --- --- --- --- --- --- --- ---
Loans
Allowance for Credit Losses (ACL)
Beginning Balance - June 30, 2020 $ 756 $ 110 $ 866
Net Charge Offs (23 ) (0 ) (23 )
Provision 66 (3 ) 63
Other 7 0 7
Ending Balance - September 30, 2020 $ 806 $ 107 $ 913
Lending Commitments
Allowance for Credit Losses (ACL)
Beginning Balance - June 30, 2020 $ 293 $ 4 $ 297
Net Charge Offs 0 0 0
Provision 47 1 48
Other 2 0 2
Ending Balance - September 30, 2020 $ 342 $ 5 $ 347
Loans and Lending Commitments
Allowance for Credit Losses (ACL)
Beginning Balance - June 30, 2020 $ 1,049 $ 114 $ 1,163
Net Charge Offs (23 ) (0 ) (23 )
Provision 113 (2 ) 111
Other 9 0 9
Ending Balance - September 30, 2020 $ 1,148 $ 112 $ 1,260
(2) The provision for credit losses associated with loans held for investment is reported in other revenues while the<br> provision for credit losses related to lending commitments is reported in other expenses.
--- ---

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 third quarter earnings press release issued October 15, 2020.

17

Report a Problem

Category
Description
Email (optional, for follow-up)