モルガンスタンレーの適時開示・決算・その他

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 18, 2023

Morgan Stanley
(Exact Name of Registrant 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) 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 Shares, each representing 1/1,000th interest in a share of Floating Rate 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 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 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 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 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% Non-Cumulative Preferred Stock, Series L, $0.01 par value	MS/PL	New York Stock Exchange
Depositary Shares, each representing 1/1,000th interest in a share of 4.250% Non-Cumulative Preferred Stock, Series O, $0.01 par value	MS/PO	New York Stock Exchange
Depositary Shares, each representing 1/1,000th interest in a share of 6.500% Non-Cumulative Preferred Stock, Series P, $0.01 par value	MS/PP	New York Stock Exchange
Global Medium-Term Notes, Series A, Fixed Rate Step-Up Senior Notes Due 2026 of Morgan Stanley Finance LLC (and Registrant’s guarantee with respect thereto)	MS/26C	New York Stock Exchange
Global Medium-Term Notes, Series A, Floating Rate Notes Due 2029 of Morgan Stanley Finance LLC (and Registrant’s guarantee with respect thereto)	MS/29	New York Stock Exchange

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 18, 2023, Morgan Stanley (the "Company") released financial information with respect to its quarter ended September 30, 2023. 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, 2023 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)

Exhibit
Number	Description

99.1	Press release of the Company, dated October 18, 2023, containing financial information for the quarter ended September 30, 2023.

99.2	Financial Data Supplement of the Company for the quarter ended September 30, 2023.

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 (Registrant)
Date:	October 18, 2023	By:	/s/ Raja Akram
			Name:	Raja Akram
			Title:	Deputy Chief Financial Officer

EX-99.1 2 a53609042ex99_1.htm EXHIBIT 99.1

Exhibit 99.1

Morgan Stanley Third Quarter 2023 Earnings Results

Morgan Stanley Reports Net Revenues of $13.3 Billion, EPS of $1.38 and ROTCE of 13.5%

NEW YORK, October 18, 2023 – Morgan Stanley (NYSE: MS) today reported net revenues of $13.3 billion for the third quarter ended September 30, 2023 compared to $13.0 billion a year ago. Net income applicable to Morgan Stanley was $2.4 billion, or $1.38 per diluted share,1 compared to net income of $2.6 billion, or $1.47 per diluted share,1 for the same period a year ago.

James P. Gorman, Chairman and Chief Executive Officer, said, “While the market environment remained mixed this quarter, the Firm delivered solid results with an ROTCE of 13.5%. Our Equity and Fixed Income businesses navigated markets well, and both Wealth and Investment Management produced higher revenues and profits year-over-year. We completed the integration of E*TRADE in the quarter, further executing on our strategy of building revenue synergies across channels and attracting clients to our best-in-class advice offering. Our ability to gather assets, together with our strong capital position and leading client franchises, position us to deliver continued growth and strong shareholder returns going forward.”

Financial Summary2, 3
Firm ($ millions, except per share data)	3Q 2023			3Q 2022

Net revenues	$	13,273		$	12,986
Provision for credit losses	$	134		$	35
Compensation expense	$	5,935		$	5,614
Non-compensation expenses	$	4,059		$	3,949
Pre-tax income7	$	3,145		$	3,388
Net income app. to MS	$	2,408		$	2,632
Expense efficiency ratio5		75	%		74	%
Earnings per diluted share1	$	1.38		$	1.47
Book value per share	$	55.08		$	54.46
Tangible book value per share	$	40.53		$	39.93
Return on equity		10.0	%		10.7	%
Return on tangible equity4		13.5	%		14.6	%
Institutional Securities
Net revenues	$	5,669		$	5,817
Investment Banking	$	938		$	1,277
Equity	$	2,507		$	2,459
Fixed Income	$	1,947		$	2,181
Wealth Management
Net revenues	$	6,404		$	6,120
Fee-based client assets ($ billions)8	$	1,857		$	1,628
Fee-based asset flows ($ billions)9	$	22.5		$	16.7
Net new assets ($ billions)10	$	35.7		$	64.8
U.S. Bank loans ($ billions)	$	145.8		$	145.7
Investment Management
Net revenues	$	1,336		$	1,168
AUM ($ billions)11	$	1,388		$	1,279
Long-term net flows ($ billions)12	$	(6.8	)	$	(1.9	)

Highlights


•	The Firm reported net revenues of $13.3 billion and net income of $2.4 billion.

•	The Firm delivered ROTCE of 13.5%.4

•	The Firm expense efficiency ratio year-to-date was 75%.5 The quarter included integration-related expenses of $68 million.

•	Standardized Common Equity Tier 1 capital ratio was 15.5%.15

•	Institutional Securities net revenues of $5.7 billion reflect solid results in Equity and Fixed Income and muted completed activity in Investment Banking.

•	Wealth Management delivered a pre-tax margin of 26.7%.6 Net revenues were $6.4 billion, reflecting increased asset management revenues on higher average asset levels compared to a year ago. The quarter included continued strong positive fee-based flows of $22.5 billion.9

•	Investment Management net revenues of $1.3 billion increased compared to a year ago on higher asset management revenues and AUM of $1.4 trillion.11

Media Relations: Wesley McDade 212-761-2430

Investor Relations: Leslie Bazos 212-761-5352

Institutional Securities

Institutional Securities reported net revenues for the current quarter of $5.7 billion compared to $5.8 billion a year ago. Pre-tax income was $1.2 billion compared to $1.6 billion a year ago.7

Investment Banking revenues down 27% compared to a year ago:


•	Advisory revenues decreased driven by fewer completed M&A transactions.

•	Equity underwriting revenues increased primarily driven by higher block offerings, partially offset by lower revenues from IPOs.

•	Fixed income underwriting revenues decreased primarily driven by lower event-driven non-investment grade activity.

Equity net revenues up 2% compared to a year ago:

•	Equity net revenues reflected solid results across businesses. Mark-to-market gains on business-related investments compared to losses a year ago were offset by prime brokerage due to changes in the mix of client balances.

Fixed Income net revenues down 11% compared to a year ago:

•	Fixed Income net revenues decreased as lower client activity and less favorable market conditions drove declines in rates and foreign exchange. These declines were partially offset by constructive trading environments in commodities, as well as agency and non-agency trading.

Other:

•	Other revenues increased primarily driven by lower mark-to-market losses on corporate loans, net of loan hedges, and higher net interest income and fees from corporate loans.

($ millions)	3Q 2023		3Q 2022

Net Revenues	$	5,669	$	5,817

Investment Banking	$	938	$	1,277
Advisory	$	449	$	693
Equity underwriting	$	237	$	218
Fixed income underwriting	$	252	$	366

Equity	$	2,507	$	2,459
Fixed Income	$	1,947	$	2,181
Other	$	277	$	(100	)

Provision for credit losses	$	93	$	24

Total Expenses	$	4,377	$	4,167
Compensation	$	2,057	$	1,948
Non-compensation	$	2,320	$	2,219

Provision for credit losses:

•	Provision for credit losses increased primarily driven by deteriorating conditions in the commercial real estate sector, including provisions for certain specific loans.

Total Expenses:

•	Compensation expenses increased on higher discretionary compensation, partially offset by lower expenses related to outstanding deferred equity compensation.

•	Non-compensation expenses increased primarily driven by higher execution-related, technology and professional services expenses.

Wealth Management

Wealth Management reported net revenues for the current quarter of $6.4 billion compared to $6.1 billion a year ago. Pre-tax income of $1.7 billion7 in the current quarter resulted in a reported pre-tax margin of 26.7%.6

Net revenues increased 5% compared to a year ago:


•	Asset management revenues increased 7% compared to a year ago reflecting higher average asset levels and the impact of cumulative positive fee-based asset flows.

•	Transactional revenues13 increased 7% excluding the impact of mark-to-market gains on investments associated with certain employee deferred compensation plans. The increase primarily reflects higher activity associated with alternative products compared to a year ago.

•	Net interest income decreased 3% driven by changes in deposit mix, partially offset by higher interest rates.

Provision for credit losses:

•	Provision for credit losses increased primarily driven by provisions for certain specific commercial real estate loans.

($ millions)	3Q 2023		3Q 2022
Net Revenues	$	6,404	$	6,120
Asset management	$	3,629	$	3,389
Transactional 13	$	678	$	616
Net interest income	$	1,952	$	2,004
Other	$	145	$	111
Provision for credit losses	$	41	$	11
Total Expenses	$	4,654	$	4,460
Compensation	$	3,352	$	3,171
Non-compensation	$	1,302	$	1,289

Total Expenses:

•	Compensation expense increased driven by higher compensable revenues and expenses related to certain deferred compensation plans linked to investment performance.

Investment Management

Investment Management reported net revenues of $1.3 billion, up 14% compared to a year ago. Pre-tax income was $241 million compared to $116 million a year ago.7

Net revenues increased 14% compared to a year ago:


•	Asset management and related fees increased on higher average AUM driven by increased asset values.

•	Performance-based income and other revenues increased due to higher carried interest and mark-to-market gains in certain of our private funds compared to losses a year ago.

($ millions)	3Q 2023		3Q 2022
Net Revenues	$	1,336	$	1,168
Asset management and related fees	$	1,312	$	1,269
Performance-based income and other	$	24	$	(101	)
Total Expenses	$	1,095	$	1,052
Compensation	$	526	$	495
Non-compensation	$	569	$	557

Total Expenses:

•	Compensation expense increased primarily driven by higher compensation associated with carried interest.

Other Matters

•	The Firm repurchased $1.5 billion of its outstanding common stock during the quarter as part of its Share Repurchase Program.

•	The Board of Directors declared a $0.85 quarterly dividend per share, payable on November 15, 2023 to common shareholders of record on October 31, 2023.

•	Standardized Common Equity Tier 1 capital ratio was 15.5%, approximately 260 basis points above the aggregate standardized approach CET1 requirement that took effect as of October 1, 2023.

	3Q 2023			3Q 2022
Capital14
Standardized Approach
CET1 capital15		15.5	%		14.8	%
Tier 1 capital15		17.5	%		16.7	%
Advanced Approach
CET1 capital15		16.1	%		15.2	%
Tier 1 capital15		18.1	%		17.1	%
Leverage-based capital
Tier 1 leverage16		6.7	%		6.6	%
SLR17		5.5	%		5.4	%
Common Stock Repurchases
Repurchases ($ millions)	$	1,500		$	2,555
Number of Shares (millions)		17			30
Average Price	$	87.59		$	85.79
Period End Shares (millions)		1,642			1,694
Effective Tax Rate		22.6	%		21.4	%

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 42 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, including information provided on the Firm’s earnings conference calls, may include certain non-GAAP financial measures. The definition of such measures or reconciliation of such measures 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 may contain forward-looking statements, including the attainment of certain financial and other targets, objectives and goals. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management’s current estimates, projections, expectations, assumptions, interpretations or beliefs and which are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of risks and uncertainties that may affect the future results of the Firm, please see “Forward-Looking Statements” preceding Part I, Item 1, “Competition” and “Supervision and Regulation” in Part I, Item 1, “Risk Factors” in Part I, Item 1A, “Legal Proceedings” in Part I, Item 3, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and “Quantitative and Qualitative Disclosures about Risk” in Part II, Item 7A in the Firm’s Annual Report on Form 10-K for the year ended December 31, 2022 and other items throughout the Form 10-K, the Firm’s Quarterly Reports on Form 10-Q and the Firm’s Current Reports on Form 8-K, including any amendments thereto.

1 Includes preferred dividends related to the calculation of earnings per share of $146 million and $138 million for the third quarter of 2023 and 2022, 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 position, 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 capital adequacy. 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, analysts, investors, and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results.

4 Return on average tangible common equity is a non-GAAP financial measure that the Firm considers useful for analysts, investors and other stakeholders to allow comparability of period-to-period operating performance and capital adequacy. The calculation of return on average tangible common equity represents full year or annualized net income applicable to Morgan Stanley less preferred dividends as a percentage of average tangible common equity. Tangible common equity, also a non-GAAP financial measure, represents common equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction.

5 The Firm expense efficiency ratio represents total non-interest expenses as a percentage of net revenues. For the quarter ended September 30, 2023, Firm results include pre-tax integration-related expenses of $68 million, of which $43 million is reported in the Wealth Management business segment and $25 million is reported in the Investment Management business segment.

6 Pre-tax margin represents income before provision for income taxes divided by net revenues.

7 Pre-tax income represents income before provision for income taxes.

8 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.

9 Wealth Management fee-based asset flows include net new fee-based assets (including asset acquisitions), net account transfers, dividends, interest, and client fees, and exclude institutional cash management-related activity.

10 Wealth Management net new assets represent client inflows, including dividends and interest, and asset acquisitions, less client outflows, and exclude activity from business combinations/divestitures and the impact of fees and commissions.

11 AUM is defined as assets under management.

12 Long-term net flows include the Equity, Fixed Income and Alternative and Solutions asset classes and excludes the Liquidity and Overlay Services asset class.

13 Transactional revenues include investment banking, trading, and commissions and fee revenues.

14 Capital ratios are estimates as of the press release date, October 18, 2023.

15 CET1 capital is defined as Common Equity Tier 1 capital. The Firm’s risk-based capital ratios are computed under each of the (i) standardized approaches for calculating credit risk and market risk risk‐weighted assets (RWAs) (the “Standardized Approach”) and (ii) applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (the “Advanced Approach”). For information on the calculation of regulatory capital and ratios, and associated regulatory requirements, please refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Regulatory Requirements" in the Firm’s Annual Report on Form 10-K for the year ended December 31, 2022 (2022 Form 10-K).

16 The Tier 1 leverage ratio is a leverage-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.

17 The Firm’s supplementary leverage ratio (SLR) utilizes a Tier 1 capital numerator of approximately $77.7 billion and $76.4 billion, and supplementary leverage exposure denominator of approximately $1.42 trillion and $1.41 trillion, for the third quarter of 2023 and 2022, respectively.

Consolidated Income Statement Information
(unaudited, dollars in millions)

	Quarter Ended							Percentage Change From:						Nine Months Ended					Percentage
	Sep 30, 2023		Jun 30, 2023		Sep 30, 2022			Jun 30, 2023			Sep 30, 2022			Sep 30, 2023		Sep 30, 2022			Change
Revenues:
Investment banking	$	1,048	$	1,155	$	1,373			(9	%)		(24	%)	$	3,533	$	4,281			(17	%)
Trading		3,679		3,802		3,331			(3	%)		10	%		11,958		10,911			10	%
Investments		144		95		(168	)		52	%		*			384		(70	)		*
Commissions and fees		1,098		1,090		1,133			1	%		(3	%)		3,427		3,769			(9	%)
Asset management		5,031		4,817		4,744			4	%		6	%		14,576		14,775			(1	%)
Other		296		488		63			(39	%)		*			1,036		245			*
Total non-interest revenues		11,296		11,447		10,476			(1	%)		8	%		34,914		33,911			3	%

Interest income		13,305		12,048		6,101			10	%		118	%		36,223		12,363			193	%
Interest expense		11,328		10,038		3,591			13	%		*			29,890		5,355			*
Net interest		1,977		2,010		2,510			(2	%)		(21	%)		6,333		7,008			(10	%)
Net revenues		13,273		13,457		12,986			(1	%)		2	%		41,247		40,919			1	%

Provision for credit losses		134		161		35			(17	%)		*			529		193			174	%

Non-interest expenses:
Compensation and benefits		5,935		6,262		5,614			(5	%)		6	%		18,607		17,438			7	%

Non-compensation expenses:
Brokerage, clearing and exchange fees		855		875		847			(2	%)		1	%		2,611		2,607			--
Information processing and communications		947		926		874			2	%		8	%		2,788		2,560			9	%
Professional services		759		767		755			(1	%)		1	%		2,236		2,217			1	%
Occupancy and equipment		456		471		429			(3	%)		6	%		1,367		1,286			6	%
Marketing and business development		191		236		215			(19	%)		(11	%)		674		610			10	%
Other		851		947		829			(10	%)		3	%		2,718		2,713			--
Total non-compensation expenses		4,059		4,222		3,949			(4	%)		3	%		12,394		11,993			3	%

Total non-interest expenses		9,994		10,484		9,563			(5	%)		5	%		31,001		29,431			5	%

Income before provision for income taxes		3,145		2,812		3,388			12	%		(7	%)		9,717		11,295			(14	%)
Provision for income taxes		710		591		726			20	%		(2	%)		2,028		2,382			(15	%)
Net income	$	2,435	$	2,221	$	2,662			10	%		(9	%)	$	7,689	$	8,913			(14	%)
Net income applicable to nonredeemable noncontrolling interests		27		39		30			(31	%)		(10	%)		119		120			(1	%)
Net income applicable to Morgan Stanley		2,408		2,182		2,632			10	%		(9	%)		7,570		8,793			(14	%)
Preferred stock dividend		146		133		138			10	%		6	%		423		366			16	%
Earnings applicable to Morgan Stanley common shareholders	$	2,262	$	2,049	$	2,494			10	%		(9	%)	$	7,147	$	8,427			(15	%)

Notes:
-	Firm net revenues excluding mark-to-market gains and losses on deferred cash-based compensation plans (DCP) were: 3Q23: $13,475 million, 2Q23: $13,343 million, 3Q22: $13,222 million, 3Q23 YTD: $41,182 million, 3Q22 YTD: $42,311 million.
-	Firm compensation expenses excluding DCP were: 3Q23: $5,992 million, 2Q23: $6,084 million, 3Q22: $5,733 million, 3Q23 YTD: $18,293 million, 3Q22 YTD: $18,343 million.
-	The End Notes are an integral part of this presentation. Refer to pages 12 - 17 of the Financial Supplement 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:						Nine Months Ended						Percentage
	Sep 30, 2023			Jun 30, 2023			Sep 30, 2022			Jun 30, 2023			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022			Change

Financial Metrics:

Earnings per basic share	$	1.39		$	1.25		$	1.49			11	%		(7	%)	$	4.37		$	4.95			(12	%)
Earnings per diluted share	$	1.38		$	1.24		$	1.47			11	%		(6	%)	$	4.33		$	4.88			(11	%)

Return on average common equity		10.0	%		8.9	%		10.7	%								10.5	%		11.9	%
Return on average tangible common equity		13.5	%		12.1	%		14.6	%								14.2	%		16.1	%

Book value per common share	$	55.08		$	55.24		$	54.46								$	55.08		$	54.46
Tangible book value per common share	$	40.53		$	40.79		$	39.93								$	40.53		$	39.93

Financial Ratios:

Pre-tax profit margin		24	%		21	%		26	%								24	%		28	%
Compensation and benefits as a % of net revenues		45	%		47	%		43	%								45	%		43	%
Non-compensation expenses as a % of net revenues		31	%		31	%		30	%								30	%		29	%
Firm expense efficiency ratio		75	%		78	%		74	%								75	%		72	%
Effective tax rate		22.6	%		21.0	%		21.4	%								20.9	%		21.1	%

Statistical Data:

Period end common shares outstanding (millions)		1,642			1,659			1,694			(1	%)		(3	%)
Average common shares outstanding (millions)
Basic		1,624			1,635			1,674			(1	%)		(3	%)		1,635			1,704			(4	%)
Diluted		1,643			1,651			1,697			--			(3	%)		1,653			1,725			(4	%)

Worldwide employees		80,710			82,006			81,567			(2	%)		(1	%)

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

EX-99.2 3 a53609042ex99_2.htm EXHIBIT 99.2

Exhibit 99.2

Third Quarter 2023 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, 2023			Jun 30, 2023			Sep 30, 2022			Jun 30, 2023			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022			Change
Net revenues
Institutional Securities	$	5,669		$	5,654		$	5,817			--			(3	%)	$	18,120		$	19,593			(8	%)
Wealth Management		6,404			6,660			6,120			(4	%)		5	%		19,623			17,791			10	%
Investment Management		1,336			1,281			1,168			4	%		14	%		3,906			3,914			--
Intersegment Eliminations		(136	)		(138	)		(119	)		1	%		(14	%)		(402	)		(379	)		(6	%)
Net revenues (1)	$	13,273		$	13,457		$	12,986			(1	%)		2	%	$	41,247		$	40,919			1	%

Provision for credit losses	$	134		$	161		$	35			(17	%)		*		$	529		$	193			174	%

Non-interest expenses
Institutional Securities	$	4,377		$	4,580		$	4,167			(4	%)		5	%	$	13,673		$	13,476			1	%
Wealth Management		4,654			4,915			4,460			(5	%)		4	%		14,371			13,005			11	%
Investment Management		1,095			1,111			1,052			(1	%)		4	%		3,329			3,321			--
Intersegment Eliminations		(132	)		(122	)		(116	)		(8	%)		(14	%)		(372	)		(371	)		--
Non-interest expenses (1)(2)	$	9,994		$	10,484		$	9,563			(5	%)		5	%	$	31,001		$	29,431			5	%

Income before provision for income taxes
Institutional Securities	$	1,199		$	977		$	1,626			23	%		(26	%)	$	4,068		$	5,967			(32	%)
Wealth Management		1,709			1,681			1,649			2	%		4	%		5,102			4,743			8	%
Investment Management		241			170			116			42	%		108	%		577			593			(3	%)
Intersegment Eliminations		(4	)		(16	)		(3	)		75	%		(33	%)		(30	)		(8	)		*
Income before provision for income taxes	$	3,145		$	2,812		$	3,388			12	%		(7	%)	$	9,717		$	11,295			(14	%)

Net Income applicable to Morgan Stanley
Institutional Securities	$	912		$	759		$	1,274			20	%		(28	%)	$	3,149		$	4,586			(31	%)
Wealth Management		1,320			1,308			1,253			1	%		5	%		4,004			3,715			8	%
Investment Management		179			127			107			41	%		67	%		440			498			(12	%)
Intersegment Eliminations		(3	)		(12	)		(2	)		75	%		(50	%)		(23	)		(6	)		*
Net Income applicable to Morgan Stanley	$	2,408		$	2,182		$	2,632			10	%		(9	%)	$	7,570		$	8,793			(14	%)
Earnings applicable to Morgan Stanley common shareholders	$	2,262		$	2,049		$	2,494			10	%		(9	%)	$	7,147		$	8,427			(15	%)

Notes:
-	Firm net revenues excluding mark-to-market gains and losses on deferred cash-based compensation plans (DCP) were: 3Q23: $13,475 million, 2Q23: $13,343 million, 3Q22: $13,222 million, 3Q23 YTD: $41,182 million, 3Q22 YTD: $42,311 million.
-	Firm compensation expenses excluding DCP were: 3Q23: $5,992 million, 2Q23: $6,084 million, 3Q22: $5,733 million, 3Q23 YTD: $18,293 million, 3Q22 YTD: $18,343 million.
-	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:						Nine Months Ended						Percentage
	Sep 30, 2023			Jun 30, 2023			Sep 30, 2022			Jun 30, 2023			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022			Change

Financial Metrics:

Earnings per basic share	$	1.39		$	1.25		$	1.49			11	%		(7	%)	$	4.37		$	4.95			(12	%)
Earnings per diluted share	$	1.38		$	1.24		$	1.47			11	%		(6	%)	$	4.33		$	4.88			(11	%)

Return on average common equity		10.0	%		8.9	%		10.7	%								10.5	%		11.9	%
Return on average tangible common equity		13.5	%		12.1	%		14.6	%								14.2	%		16.1	%

Book value per common share	$	55.08		$	55.24		$	54.46								$	55.08		$	54.46
Tangible book value per common share	$	40.53		$	40.79		$	39.93								$	40.53		$	39.93

Financial Ratios:

Pre-tax profit margin		24	%		21	%		26	%								24	%		28	%
Compensation and benefits as a % of net revenues		45	%		47	%		43	%								45	%		43	%
Non-compensation expenses as a % of net revenues		31	%		31	%		30	%								30	%		29	%
Firm expense efficiency ratio (1)		75	%		78	%		74	%								75	%		72	%
Effective tax rate		22.6	%		21.0	%		21.4	%								20.9	%		21.1	%

Statistical Data:

Period end common shares outstanding (millions)		1,642			1,659			1,694			(1	%)		(3	%)
Average common shares outstanding (millions)
Basic		1,624			1,635			1,674			(1	%)		(3	%)		1,635			1,704			(4	%)
Diluted		1,643			1,651			1,697			--			(3	%)		1,653			1,725			(4	%)

Worldwide employees		80,710			82,006			81,567			(2	%)		(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, Definition of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice.

Consolidated and U.S. Bank Supplemental Financial Information
(unaudited, dollars in millions)



	Quarter Ended									Percentage Change From:						Nine Months Ended			Percentage
	Sep 30, 2023			Jun 30, 2023			Sep 30, 2022			Jun 30, 2023			Sep 30, 2022			Sep 30, 2023	Sep 30, 2022		Change

Consolidated Balance sheet

Total assets	$	1,169,013		$	1,164,911		$	1,160,029			--			1	%
Loans (1)	$	224,957		$	224,276		$	218,448			--			3	%
Deposits	$	345,458		$	348,511		$	338,123			(1	%)		2	%
Long-term debt outstanding	$	242,843		$	243,820		$	216,361			--			12	%
Maturities of long-term debt outstanding (next 12 months)	$	21,514		$	22,326		$	18,755			(4	%)		15	%

Average liquidity resources	$	307,367		$	310,724		$	308,001			(1	%)		--

Common equity	$	90,461		$	91,636		$	92,261			(1	%)		(2	%)
Less: Goodwill and intangible assets		(23,900	)		(23,973	)		(24,613	)		--			(3	%)
Tangible common equity	$	66,561		$	67,663		$	67,648			(2	%)		(2	%)

Preferred equity	$	8,750		$	8,750		$	8,750			--			--

U.S. Bank Supplemental Financial Information
Total assets	$	388,098		$	385,596		$	371,165			1	%		5	%
Loans	$	209,135		$	209,065		$	204,889			--			2	%
Investment securities portfolio (2)	$	114,780		$	119,289		$	123,007			(4	%)		(7	%)
Deposits	$	339,927		$	342,522		$	331,943			(1	%)		2	%

Regional revenues
Americas	$	10,268		$	10,394		$	10,094			(1	%)		2	%	$ 31,453		$ 30,220		4%
EMEA (Europe, Middle East, Africa)		1,479			1,500			1,392			(1	%)		6	%	4,716		5,381		(12%)
Asia		1,526			1,563			1,500			(2	%)		2	%	5,078		5,318		(5%)
Consolidated net revenues	$	13,273		$	13,457		$	12,986			(1	%)		2	%	$ 41,247		$ 40,919		1%

Consolidated Average Common Equity and Regulatory Capital Information
(unaudited, dollars in billions)



	Quarter Ended									Percentage Change From:						Nine Months Ended				Percentage
	Sep 30, 2023			Jun 30, 2023			Sep 30, 2022			Jun 30, 2023			Sep 30, 2022			Sep 30, 2023		Sep 30, 2022		Change

Average Common Equity
Institutional Securities	$	45.6		$	45.6		$	48.8			--			(7	%)	$	45.6	$	48.8		(7	%)
Wealth Management		28.8			28.8			31.0			--			(7	%)		28.8		31.0		(7	%)
Investment Management		10.4			10.4			10.6			--			(2	%)		10.4		10.6		(2	%)
Parent		6.0			6.8			2.5			(12	%)		140	%		6.3		4.3		47	%
Firm	$	90.8		$	91.6		$	92.9			(1	%)		(2	%)	$	91.1	$	94.7		(4	%)



Regulatory Capital

Common Equity Tier 1 capital	$	69.1		$	69.9		$	67.9			(1	%)		2	%
Tier 1 capital	$	77.7		$	78.4		$	76.4			(1	%)		2	%

Standardized Approach
Risk-weighted assets	$	444.8		$	449.8		$	457.9			(1	%)		(3	%)
Common Equity Tier 1 capital ratio		15.5	%		15.5	%		14.8	%
Tier 1 capital ratio		17.5	%		17.4	%		16.7	%

Advanced Approach
Risk-weighted assets	$	430.0		$	441.9		$	447.8			(3	%)		(4	%)
Common Equity Tier 1 capital ratio		16.1	%		15.8	%		15.2	%
Tier 1 capital ratio		18.1	%		17.8	%		17.1	%

Leverage-based capital
Tier 1 leverage ratio		6.7	%		6.7	%		6.6	%
Supplementary Leverage Ratio		5.5	%		5.5	%		5.4	%

Institutional Securities
Income Statement Information, Financial Metrics and Ratios
(unaudited, dollars in millions)


	Quarter Ended									Percentage Change From:						Nine Months Ended						Percentage
	Sep 30, 2023			Jun 30, 2023			Sep 30, 2022			Jun 30, 2023			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022			Change
Revenues:

Advisory	$	449		$	455		$	693			(1	%)		(35	%)	$	1,542		$	2,235			(31	%)
Equity		237			225			218			5	%		9	%		664			624			6	%
Fixed income		252			395			366			(36	%)		(31	%)		1,054			1,124			(6	%)
Underwriting		489			620			584			(21	%)		(16	%)		1,718			1,748			(2	%)
Investment banking		938			1,075			1,277			(13	%)		(27	%)		3,260			3,983			(18	%)

Equity		2,507			2,548			2,459			(2	%)		2	%		7,784			8,593			(9	%)
Fixed income		1,947			1,716			2,181			13	%		(11	%)		6,239			7,604			(18	%)
Other		277			315			(100	)		(12	%)		*			837			(587	)		*

Net revenues		5,669			5,654			5,817			--			(3	%)		18,120			19,593			(8	%)

Provision for credit losses		93			97			24			(4	%)		*			379			150			153	%

Compensation and benefits		2,057			2,215			1,948			(7	%)		6	%		6,637			6,602			1	%
Non-compensation expenses		2,320			2,365			2,219			(2	%)		5	%		7,036			6,874			2	%
Total non-interest expenses		4,377			4,580			4,167			(4	%)		5	%		13,673			13,476			1	%

Income before provision for income taxes		1,199			977			1,626			23	%		(26	%)		4,068			5,967			(32	%)
Net income applicable to Morgan Stanley	$	912		$	759		$	1,274			20	%		(28	%)	$	3,149		$	4,586			(31	%)

Pre-tax profit margin		21	%		17	%		28	%								22	%		30	%
Compensation and benefits as a % of net revenues		36	%		39	%		34	%								37	%		34	%
Non-compensation expenses as a % of net revenues		41	%		42	%		38	%								39	%		35	%

Return on Average Common Equity		7	%		6	%		10	%								8	%		12	%
Return on Average Tangible Common Equity (1)		7	%		6	%		10	%								8	%		12	%

Trading VaR (Average Daily 95% / One-Day VaR)	$	48		$	52		$	61

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


	Quarter Ended									Percentage Change From:						Nine Months Ended						Percentage
	Sep 30, 2023			Jun 30, 2023			Sep 30, 2022			Jun 30, 2023			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022			Change
Revenues:
Asset management	$	3,629		$	3,452		$	3,389			5	%		7	%	$	10,463		$	10,525			(1	%)
Transactional		678			869			616			(22	%)		10	%		2,468			1,542			60	%
Net interest income		1,952			2,156			2,004			(9	%)		(3	%)		6,266			5,291			18	%
Other		145			183			111			(21	%)		31	%		426			433			(2	%)
Net revenues (1)		6,404			6,660			6,120			(4	%)		5	%		19,623			17,791			10	%

Provision for credit losses		41			64			11			(36	%)		*			150			43			*

Compensation and benefits (1)		3,352			3,503			3,171			(4	%)		6	%		10,332			9,191			12	%
Non-compensation expenses		1,302			1,412			1,289			(8	%)		1	%		4,039			3,814			6	%
Total non-interest expenses		4,654			4,915			4,460			(5	%)		4	%		14,371			13,005			11	%

Income before provision for income taxes		1,709			1,681			1,649			2	%		4	%		5,102			4,743			8	%
Net income applicable to Morgan Stanley	$	1,320		$	1,308		$	1,253			1	%		5	%	$	4,004		$	3,715			8	%

Pre-tax profit margin		27	%		25	%		27	%								26	%		27	%
Compensation and benefits as a % of net revenues		52	%		53	%		52	%								53	%		52	%
Non-compensation expenses as a % of net revenues		20	%		21	%		21	%								21	%		21	%

Return on Average Common Equity		18	%		18	%		16	%								18	%		16	%
Return on Average Tangible Common Equity (2)		35	%		34	%		30	%								35	%		30	%

Notes:
-	Wealth Management net revenues excluding DCP were: 3Q23: $6,547 million, 2Q23: $6,578 million, 3Q22: $6,273 million, 3Q23 YTD: $19,583 million, 3Q22 YTD: $18,755 million.
-	Wealth Management compensation expenses excluding DCP were: 3Q23: $3,400 million, 2Q23: $3,396 million, 3Q22: $3,257 million, 3Q23 YTD: $10,154 million, 3Q22 YTD: $9,836 million.
-	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.

Wealth Management
Financial Information and Statistical Data
(unaudited, dollars in billions)


	Quarter Ended									Percentage Change From:
	Sep 30, 2023			Jun 30, 2023			Sep 30, 2022			Jun 30, 2023			Sep 30, 2022

Wealth Management Metrics

Total client assets	$	4,798		$	4,885		$	4,134			(2	%)		16	%
Net new assets	$	35.7		$	89.5		$	64.8			(60	%)		(45	%)
U.S. Bank loans	$	145.8		$	144.7		$	145.7			1	%		--
Margin and other lending (1)	$	23.1		$	21.7		$	24.3			6	%		(5	%)
Deposits (2)	$	340		$	343		$	332			(1	%)		2	%
Annualized weighted average cost of deposits
Period end		2.86	%		2.53	%		0.93	%
Period average		2.69	%		2.32	%		0.56	%

Advisor-led channel

Advisor-led client assets	$	3,755		$	3,784		$	3,305			(1	%)		14	%

Fee-based client assets	$	1,857		$	1,856		$	1,628			--			14	%
Fee-based asset flows	$	22.5		$	22.7		$	16.7			(1	%)		35	%
Fee-based assets as a % of advisor-led client assets		49	%		49	%		49	%

Self-directed channel

Self-directed client assets	$	1,043		$	1,101		$	829			(5	%)		26	%
Daily average revenue trades (000's)		735			765			805			(4	%)		(9	%)
Self-directed households (millions)		8.1			8.1			7.8			--			4	%

Workplace channel

Stock plan unvested assets	$	377		$	402		$	312			(6	%)		21	%
Number of stock plan participants (millions)		6.6			6.5			6.2			2	%		6	%

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


	Quarter Ended									Percentage Change From:						Nine Months Ended						Percentage
	Sep 30, 2023			Jun 30, 2023			Sep 30, 2022			Jun 30, 2023			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022			Change
Revenues:
Asset management and related fees	$	1,312		$	1,268		$	1,269			3	%		3	%	$	3,828		$	3,961			(3	%)
Performance-based income and other		24			13			(101	)		85	%		*			78			(47	)		*
Net revenues		1,336			1,281			1,168			4	%		14	%		3,906			3,914			--

Compensation and benefits		526			544			495			(3	%)		6	%		1,638			1,645			--
Non-compensation expenses		569			567			557			--			2	%		1,691			1,676			1	%
Total non-interest expenses		1,095			1,111			1,052			(1	%)		4	%		3,329			3,321			--

Income before provision for income taxes		241			170			116			42	%		108	%		577			593			(3	%)
Net income applicable to Morgan Stanley	$	179		$	127		$	107			41	%		67	%	$	440		$	498			(12	%)

Pre-tax profit margin		18	%		13	%		10	%								15	%		15	%
Compensation and benefits as a % of net revenues		39	%		42	%		42	%								42	%		42	%
Non-compensation expenses as a % of net revenues		43	%		44	%		48	%								43	%		43	%

Return on Average Common Equity		7	%		5	%		4	%								6	%		6	%
Return on Average Tangible Common Equity (1)		98	%		70	%		56	%								80	%		87	%

Investment Management
Financial Information and Statistical Data
(unaudited, dollars in billions)


	Quarter Ended									Percentage Change From:						Nine Months Ended						Percentage
	Sep 30, 2023			Jun 30, 2023			Sep 30, 2022			Jun 30, 2023			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022			Change


Assets under management or supervision (AUM)(1)

Net flows by asset class
Equity	$	(5.5	)	$	(5.3	)	$	(3.9	)		(4	%)		(41	%)	$	(12.9	)	$	(18.8	)		31	%
Fixed Income		(2.1	)		(5.0	)		(5.0	)		58	%		58	%		(9.1	)		(11.5	)		21	%
Alternatives and Solutions		0.8			11.4			7.0			(93	%)		(89	%)		13.9			10.5			32	%
Long-Term Net Flows		(6.8	)		1.1			(1.9	)		*			*			(8.1	)		(19.8	)		59	%

Liquidity and Overlay Services		5.7			9.7			(32.5	)		(41	%)		*			29.3			(29.3	)		*

Total Net Flows	$	(1.1	)	$	10.8		$	(34.4	)		*			97	%	$	21.2		$	(49.1	)		*

Assets under management or supervision by asset class
Equity	$	272		$	289		$	249			(6	%)		9	%
Fixed Income		163			165			171			(1	%)		(5	%)
Alternatives and Solutions		472			482			405			(2	%)		17	%
Long-Term Assets Under Management or Supervision	$	907		$	936		$	825			(3	%)		10	%

Liquidity and Overlay Services		481			476			454			1	%		6	%

Total Assets Under Management or Supervision	$	1,388		$	1,412		$	1,279			(2	%)		9	%

Consolidated Loans and Lending Commitments
(unaudited, dollars in billions)


	Quarter Ended						Percentage Change From:
	Sep 30, 2023		Jun 30, 2023		Sep 30, 2022		Jun 30, 2023			Sep 30, 2022

Institutional Securities

Loans:
Corporate	$	18.0	$	17.8	$	14.3		1	%		26	%
Secured lending facilities		41.8		41.2		38.3		1	%		9	%
Commercial and residential real estate		11.4		12.1		11.8		(6	%)		(3	%)
Securities-based lending and other		7.4		8.1		7.8		(9	%)		(5	%)

Total Loans		78.6		79.2		72.2		(1	%)		9	%

Lending Commitments		128.7		127.1		119.7		1	%		8	%

Institutional Securities Loans and Lending Commitments	$	207.3	$	206.3	$	191.9		--			8	%


Wealth Management

Loans:
Securities-based lending and other	$	87.0	$	87.6	$	93.0		(1	%)		(6	%)
Residential real estate		58.9		57.1		52.8		3	%		12	%

Total Loans		145.9		144.7		145.8		1	%		--

Lending Commitments		19.1		18.8		16.9		2	%		13	%

Wealth Management Loans and Lending Commitments	$	165.0	$	163.5	$	162.7		1	%		1	%

Consolidated Loans and Lending Commitments (1)	$	372.3	$	369.8	$	354.6		1	%		5	%

Consolidated Loans and Lending Commitments
Allowance for Credit Losses (ACL) as of September 30, 2023
(unaudited, dollars in millions)


	Loans and Lending Commitments		ACL (1)		ACL %			Q3 Provision
	(Gross)
Loans:
Held For Investment (HFI)

Corporate	$	7,181	$	248		3.5	%	$	(6	)
Secured lending facilities		39,119		154		0.4	%		(1	)
Commercial and residential real estate		8,389		426		5.1	%		84
Other		3,039		17		0.6	%		3
Institutional Securities - HFI	$	57,728	$	845		1.5	%	$	80

Wealth Management - HFI		146,167		312		0.2	%		43

Held For Investment	$	203,895	$	1,157		0.6	%	$	123

Held For Sale		14,230

Fair Value		7,558

Total Loans		225,683		1,157					123

Lending Commitments		147,800		569		0.4	%		11

Consolidated Loans and Lending Commitments	$	373,483	$	1,726				$	134

Definition of U.S. GAAP to Non-GAAP Measures

(a)	The Firm prepares its Consolidated Financial Statements using accounting principles generally accepted in the United States (U.S. GAAP). From time to time, Morgan Stanley may disclose certain “non-GAAP financial measures” in the course of its earnings releases, earnings conference calls, financial presentations and otherwise. The Securities and Exchange Commission defines a “non-GAAP financial measure” as a numerical measure of historical or future financial performance, financial positions, or cash flows that is subject to adjustments that effectively exclude, or include amounts from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. Non-GAAP financial measures disclosed by Morgan Stanley are provided as additional information to analysts, investors and other stakeholders in order to provide them with greater transparency about, or an alternative method for assessing, our financial condition, operating results, or prospective regulatory capital requirements. These measures are not in accordance with, or a substitute for U.S. GAAP, and may be different from or inconsistent with non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we will also generally define it or present the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable U.S. GAAP financial measure. In addition to the following notes, please also refer to the Firm's Annual Report on Form 10-K for the year ended December 31, 2022 (2022 Form 10-K).
(b)	The following are considered non-GAAP financial measures that the Firm considers useful for analysts, investors and other stakeholders to allow comparability of operating performance and capital adequacy. These measures are calculated as follows:
	-	The return on average tangible common equity represents annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average tangible common equity.
	-	Segment return on average common equity and return on average tangible common equity represent full year net income or annualized net income for the quarter applicable to Morgan Stanley for each segment, less preferred dividend segment allocation, divided by average common equity and average tangible common equity for each respective segment. The segment adjustments to common equity to derive segment average tangible common equity are generally set at the beginning of the year, and will remain fixed throughout the year until the next annual reset unless a significant business change occurs (e.g., acquisition or disposition).
	-	Tangible common equity represents common equity less goodwill and intangible assets net of certain mortgage servicing rights deduction.
	-	Tangible book value per common share represents tangible common equity divided by period end common shares outstanding.
	-	Net revenues excluding DCP represents net revenues adjusted for the impact of mark-to-market gains/losses on economic hedges associated with certain employee deferred cash-based compensation plans.
	-	Compensation expense excluding DCP represents compensation adjusted for the impact related to certain deferred cash-based compensation plans linked to investment performance.

Definitions of Performance Metrics and Terms

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

Page 1:
(a)	Provision for credit losses represents the provision for credit losses on loans held for investment and unfunded lending commitments.
(b)	Net income applicable to Morgan Stanley represents net income, less net income applicable to nonredeemable noncontrolling interests.
(c)	Earnings applicable to Morgan Stanley common shareholders represents net income applicable to Morgan Stanley, less preferred dividends.

Page 2:
(a)	The return on average common equity represents annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity.
(b)	Book value per common share represents common equity divided by period end common shares outstanding.
(c)	Tangible book value per common share represents tangible common equity divided by period end common shares outstanding.
(d)	Pre-tax profit margin percentages represent income before provision for income taxes as percentages of net revenues.
(e)	The Firm expense efficiency ratio represents total non‐interest expenses as a percentage of net revenues.

Page 3:
(a)	Liquidity Resources, which are primarily held within the Parent and its major operating subsidiaries, are comprised of high quality liquid assets (HQLA) and cash deposits with banks ("Liquidity Resources"). The total amount of Liquidity Resources is actively managed by us considering the following components: unsecured debt maturity profile; balance sheet size and composition; funding needs in a stressed environment, inclusive of contingent cash outflows; legal entity, regional and segment liquidity requirements; regulatory requirements; and collateral requirements. Average Liquidity Resources represents the average daily balance for the three months ended September 30, 2023, June 30, 2023 and September 30, 2022.
(b)	The Firm's goodwill and intangible balances utilized in the calculation of tangible common equity are net of certain mortgage servicing rights deduction.
(c)	U.S. Bank refers to the Firm's U.S. Bank operating subsidiaries Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association, and excludes balances between Bank subsidiaries, as well as deposits from the Parent and affiliates.
(d)	Firmwide regional revenues reflect the Firm's consolidated net revenues on a managed basis. Further discussion regarding the geographic methodology for net revenues is disclosed in Note 23 to the consolidated financial statements included in the Firm's 2022 Form 10-K.

Page 4:
(a)	The Firm's attribution of average common equity to the business segments is based on the Required Capital Framework, an internal capital adequacy measure. This framework is a risk-based and leverage-based capital measure, which is compared with the Firm's regulatory capital to ensure that the Firm maintains an amount of going concern capital after absorbing potential losses from stress events, where applicable, at a point in time. The Required Capital Framework is based on the Firm's regulatory capital requirements. The Firm defines the difference between its total average common equity and the sum of the average common equity amounts allocated to its business segments as Parent common equity. The amount of capital allocated to the business segments is generally set at the beginning of the year, and will remain fixed throughout the year until the next annual reset unless a significant business change occurs (e.g., acquisition or disposition). The Firm continues to evaluate its Required Capital Framework with respect to the impact of evolving regulatory requirements, as appropriate. For further discussion of the framework, refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Regulatory Requirements" in the Firm’s 2022 Form 10‐K.
(b)	The Firm's risk‐based capital ratios are computed under each of the (i) standardized approaches for calculating credit risk and market risk risk‐weighted assets (RWAs) (the “Standardized Approach”) and (ii) applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (the “Advanced Approach”). For information on the calculation of regulatory capital and ratios, and associated regulatory requirements, please refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Regulatory Requirements" in the Firm’s 2022 Form 10‐K.
(c)	Supplementary leverage ratio represents Tier 1 capital divided by the total supplementary leverage exposure.

Page 5:
(a)	Institutional Securities Equity and Fixed income net revenues include trading, net interest income (interest income less interest expense), asset management, commissions and fees, investments and other revenues which are directly attributable to those businesses.
(b)	Pre-tax profit margin percentages represent income before provision for income taxes as percentages of net revenues.
(c)	VaR represents the unrealized loss in portfolio value that one would not expect to exceed, on average, more than five times every one hundred trading days in the Firm's trading positions if the portfolio were held constant for a one-day period. Further discussion of the calculation of VaR and the limitations of the Firm's VaR methodology, is disclosed in "Quantitative and Qualitative Disclosures about Risk" included in the Firm's 2022 Form 10-K.

Page 6:
(a)	Transactional revenues for the Wealth Management segment includes investment banking, trading, and commissions and fee revenues.
(b)	Net interest income represents interest income less interest expense.
(c)	Other revenues for the Wealth Management segment includes investments and other revenues.
(d)	Pre-tax profit margin percentages represent income before provision for income taxes as percentages of net revenues.

Definitions of Performance Metrics and Terms

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

Page 7:
(a)	Client assets represent those for which Wealth Management is providing services including financial advisor-led brokerage, custody, administrative and investment advisory services; self-directed brokerage services; financial and wealth planning services; workplace services, including stock plan administration, and retirement plan services.
(b)	Net new assets represent client inflows, including dividends and interest, and asset acquisitions, less client outflows, and exclude activity from business combinations/divestitures and the impact of fees and commissions.
(c)	Margin and other lending represents margin lending arrangements, which allow customers to borrow against the value of qualifying securities and other lending which includes non‐purpose securities-based lending on non‐bank entities.
(d)	Deposits reflect liabilities sourced from Wealth Management clients and other sources of funding on the U.S. Bank Subsidiaries. Deposits include sweep deposit programs, savings and other, and time deposits.
(e)	Annualized weighted average cost of deposits represents the total annualized weighted average cost of the various deposit products, excluding the effect of related hedging derivatives. The period end cost of deposits is based upon balances and rates as of September 30, 2023, June 30, 2023 and September 30, 2022. The period average is based on both daily average deposit balances and rates for the period.
(f)	Advisor-led client assets represent client assets in accounts that have a Wealth Management representative assigned.
(g)	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.
(h)	Fee-based asset flows include net new fee-based assets (including asset acquisitions), net account transfers, dividends, interest and client fees, and exclude institutional cash management related activity. For a description of the Inflows and Outflows included in Fee-based asset flows, see Fee-based client assets in the 2022 Form 10-K.
(i)	Self-directed client assets represent active accounts which are not advisor led. Active accounts are defined as having at least $25 in assets.
(j)	Daily average revenue trades (DARTs) represent the total self-directed trades in a period divided by the number of trading days during that period.
(k)	Self-directed households represent the total number of households that include at least one account with self-directed client assets. Individual households or participants that are engaged in one or more of our Wealth Management channels are included in each of the respective channel counts.
(l)	The workplace channel assets includes equity compensation solutions for companies, their executives and employees. Stock plan unvested assets represent the market value of public company securities at the end of the period.
(m)	Stock plan participants represent total accounts with vested and/or unvested stock plan assets in the workplace channel. Individuals with accounts in multiple plans are counted as participants in each plan.

Page 8:
(a)	Asset management and related fees represents management and administrative fees, distribution fees, and performance-based fees, not in the form of carried interest. Asset management and related fees represents Asset management as reported on the Firm’s consolidated income statement.
(b)	Performance-based income and other includes performance-based fees in the form of carried interest, gains and losses from investments, gains and losses from hedges on seed capital and certain employee deferred compensation plans, net interest, and other revenues. Performance-based income and other represents investments, investment banking, trading, net interest and other revenues as reported on the Firm’s consolidated income statement.
(c)	Pre-tax profit margin percentages represent income before provision for income taxes as percentages of net revenues.

Page 9:
(a)	Investment Management Alternatives and Solutions asset class includes products in Fund of Funds, Real Estate, Private Equity and Credit strategies, Multi‐Asset portfolios, as well as Custom Separate Account portfolios.
(b)	Investment Management net flows include new commitments, investments or reinvestments, net of client redemptions, returns of capital post-fund investment period and dividends not reinvested and excludes the impact of the transition of funds from their commitment period to the invested capital period.
(c)	Overlay Services represents investment strategies that use passive exposure instruments to obtain, offset, or substitute specific portfolio exposures beyond those provided by the underlying holdings of the fund.
(d)	Total assets under management or supervision excludes shares of minority stake assets which represent the Investment Management business segment’s proportional share of assets managed by third-party asset managers in which we hold investments accounted for under the equity method.

Page 10 and 11:
(a)	Corporate loans include relationship and event-driven loans and typically consist of revolving lines of credit, term loans and bridge loans.
(b)	Secured lending facilities include loans provided to clients, which are primarily secured by loans, which are, in turn, collateralized by various assets including residential real estate, commercial real estate, corporate and financial assets.
(c)	Securities-based lending and other includes financing extended to sales and trading customers and corporate loans purchased in the secondary market.
(d)	Institutional Securities Lending Commitments principally include Corporate lending activity.

Supplemental Quantitative Details and Calculations

Page 1:
(1)	The following sets forth the net revenue impact of mark-to-market gains and losses on investments associated with DCP and compensation expense impact related to DCP:

		3Q23		2Q23			3Q22	3Q23 YTD			3Q22 YTD
Net revenues	$	13,273	$	13,457		$	12,986	$	41,247		$	40,919
Adjustment for mark-to-market on DCP		202		(114	)		236		(65	)		1,392
Adjusted Net revenues - non-GAAP	$	13,475	$	13,343		$	13,222	$	41,182		$	42,311

Compensation expense	$	5,935	$	6,262		$	5,614	$	18,607		$	17,438
Adjustment for mark-to-market on DCP		57		(178	)		119		(314	)		905
Adjusted Compensation expense - non-GAAP	$	5,992	$	6,084		$	5,733	$	18,293		$	18,343

Compensation expense for deferred cash-based compensation awards is calculated based on the notional value of the award granted, adjusted for changes in the fair value of the referenced investments that employees select. Compensation expense is recognized over the vesting period relevant to each separately vesting portion of deferred awards.

The Firm invests directly, as a principal, in financial instruments and other investments to economically hedge certain of its obligations under these deferred cash-based compensation plans. Changes in the fair value of such investments, net of financing costs, are recorded in Net revenues, and included in Transactional revenues in the Wealth Management business segment. Although changes in compensation expense resulting from changes in the fair value of the referenced investments will generally be offset by changes in the fair value of investments recognized in net revenues, there is typically a timing difference between the immediate recognition of gains and losses on the Firm’s investments and the deferred recognition of the related compensation expense over the vesting period. While this timing difference may not be material to Income before provision for income taxes for the Firm in any individual period, it may impact the Wealth Management business segment reported ratios and operating metrics in certain periods due to potentially significant impacts to net revenues and compensation expenses.

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

		3Q23		2Q23		3Q22	3Q23 YTD		3Q22 YTD
Compensation and benefits (a)	$	5,935	$	6,262	$	5,614	$	18,607	$	17,438

Non-compensation expenses:
Brokerage, clearing and exchange fees		855		875		847		2,611		2,607
Information processing and communications		947		926		874		2,788		2,560
Professional services		759		767		755		2,236		2,217
Occupancy and equipment		456		471		429		1,367		1,286
Marketing and business development		191		236		215		674		610
Other		851		947		829		2,718		2,713
Total non-compensation expenses		4,059		4,222		3,949		12,394		11,993
Total non-interest expenses	$	9,994	$	10,484	$	9,563	$	31,001	$	29,431

(a)

The Firm recorded severance costs of $308 million in the second quarter of 2023, associated with an employee action, which were reported in business segments' results as follows: Institutional Securities $207 million, Wealth Management $78 million and Investment Management $23 million.

Page 2:
(1)	For the quarter and nine months ended September 30, 2023, Firm results include pre-tax integration-related expenses of $68 million and $244 million, respectively, of which $43 million and $171 million, respectively, are reported in the Wealth Management business segment, and $25 million and $73 million, respectively, are reported in the Investment Management business segment.

Page 3:
(1)	Includes loans held for investment (net of allowance), loans held for sale and also includes loans at fair value which are included in Trading assets on the balance sheet.
(2)	As of September 30, 2023, June 30, 2023 and September 30, 2022, the U.S. Bank investment securities portfolio included held to maturity investment securities of $54.0 billion, $54.9 billion and $57.4 billion, respectively.

Page 5:
(1)	Institutional Securities average tangible common equity represents average common equity adjusted to exclude goodwill and intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 3Q23: $471mm; 2Q23: $471mm; 3Q22: $576mm; 3Q23 YTD: $471mm; 3Q22 YTD: $576mm

Page 6:
(1)	The following sets forth the net revenue impact of mark-to-market gains and losses on investments associated with DCP and compensation expense impact related to DCP:

		3Q23		2Q23			3Q22	3Q23 YTD			3Q22 YTD
Net revenues	$	6,404	$	6,660		$	6,120	$	19,623		$	17,791
Adjustment for mark-to-market on DCP		143		(82	)		153		(40	)		964
Adjusted Net revenues - non-GAAP	$	6,547	$	6,578		$	6,273	$	19,583		$	18,755

Compensation expense	$	3,352	$	3,503		$	3,171	$	10,332		$	9,191
Adjustment for mark-to-market on DCP		48		(107	)		86		(178	)		645
Adjusted Compensation expense - non-GAAP	$	3,400	$	3,396		$	3,257	$	10,154		$	9,836

(2)

Wealth Management average tangible common equity represents average common equity adjusted to exclude goodwill and intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 3Q23: $14,075mm; 2Q23: $14,075mm; 3Q22: $14,746mm; 3Q23 YTD: $14,075mm; 3Q22 YTD: $14,746mm

Supplemental Quantitative Details and Calculations

Page 7:
(1)	Wealth Management other lending includes $2 billion, $2 billion and $3 billion, respectively, of non-purpose securities based lending on non-bank entities in the periods ended September 30, 2023, June 30, 2023 and September 30, 2022.
(2)	For the quarters ended September 30, 2023, June 30, 2023 and September 30, 2022, Wealth Management deposits of $340 billion, $343 billion and $332 billion, respectively, exclude off-balance sheet deposits of $0, $0 and $8 billion, respectively, held by third parties outside of Morgan Stanley. Total deposits details are as follows:

		3Q23		2Q23		3Q22
Brokerage sweep deposits	$	143	$	158	$	228
Other deposits		197		185		104
Total balance sheet deposits		340		343		332
Off-balance sheet deposits		-		-		8
Total deposits	$	340	$	343	$	340

Page 8:
(1)	Investment Management average tangible common equity represents average common equity adjusted to exclude goodwill and intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 3Q23: $9,687mm; 2Q23: $9,687mm; 3Q22: $9,815mm; 3Q23 YTD: $9,687mm; 3Q22 YTD: $9,815mm

Page 9:
(1)	In the second quarter of 2023, our Retail Municipal and Corporate Fixed Income business (FIMS) was combined with our Parametric retail customized solutions business. The impact of the prospective change is a $6 billion movement of end of period AUM from Fixed Income to the Alternatives and Solutions asset class.

Page 10:
(1)	For the quarters ended September 30, 2023, June 30, 2023 and September 30, 2022, Investment Management reflected loan balances of $431 million, $386 million and $452 million, respectively.

Page 11:
(1)	For the quarter ended September 30, 2023, the Allowance Rollforward for Loans and Lending Commitments is as follows:


	Institutional Securities			Wealth Management			Total
Loans

Allowance for Credit Losses (ACL)
Beginning Balance - June 30, 2023	$	812		$	269		$	1,081
Net Charge Offs		(39	)		-			(39	)
Provision		80			43			123
Other		(8	)		-			(8	)
Ending Balance - September 30, 2023	$	845		$	312		$	1,157


Lending Commitments

Allowance for Credit Losses (ACL)
Beginning Balance - June 30, 2023	$	538		$	24		$	562
Net Charge Offs		-			-			-
Provision		13			(2	)		11
Other		(4	)		-			(4	)
Ending Balance - September 30, 2023	$	547		$	22		$	569


Loans and Lending Commitments

Allowance for Credit Losses (ACL)
Beginning Balance - June 30, 2023	$	1,350		$	293		$	1,643
Net Charge Offs		(39	)		-			(39	)
Provision		93			41			134
Other		(12	)		-			(12	)
Ending Balance - September 30, 2023	$	1,392		$	334		$	1,726

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 18, 2023.