Morgan Stanley
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(Exact name of Registrant as specified
in its charter)
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Delaware
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1-11758
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36-3145972
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(State or other jurisdiction of incorporation)
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(Commission
File Number)
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(I.R.S. Employer Identification No.)
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1585 Broadway, New York, New York 10036
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(Address of principal executive offices, including zip code)
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(Former address, if changed since last report)
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[ ]
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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[ ]
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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[ ]
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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[ ]
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02.
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Results of Operations and Financial Condition
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Item 9.01.
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Financial Statements and Exhibits
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99.1
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Press release of the Registrant, dated July 19, 2012, containing financial information for the quarter ended June 30, 2012.
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99.2
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Financial Data Supplement of the Registrant for the quarter ended June 30, 2012.
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MORGAN STANLEY
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(Registrant)
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By: /s/ Paul C. Wirth
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Paul C. Wirth | ||
Deputy Chief Financial Officer and Controller
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Media Relations: Jeanmarie McFadden 212-761-2433
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Investor Relations: Celeste Mellet Brown 212-761-3896
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●
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Net Revenues of $7.0 Billion and Income from Continuing Operations of $0.28 per Diluted Share
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●
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Excluding DVA,1 Net Revenues were $6.6 Billion and Income from Continuing Operations was $0.16 per Diluted Share2, 3
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●
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Ranked #1 in Global IPOs and #2 in Global Announced M&A; Improved Profitability in Global Wealth Management
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Summary of Firm Results
(dollars in millions)
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||||||
As Reported
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Excluding DVA (2), (3)
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|||||
Net
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MS Earnings
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Net
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MS Earnings
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|||
Revenues
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Cont. Ops (1)
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Revenues
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Cont. Ops (1)
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|||
2Q 2012
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$6,953
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$536
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$6,603
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$312
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||
1Q 2012
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$6,935
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($103)
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$8,913
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$1,344
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2Q 2011
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$9,207
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($530)
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$8,963
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($679)
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●
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Global Wealth Management Group net revenues were $3.3 billion despite the challenging markets. The pre-tax margin for the current quarter was 12% compared with 9% a year ago. Discontinued operations included a pre-tax gain of $108 million from the previously announced sale of Quilter & Co. Ltd. (Quilter) in the U.K. Global fee based asset flows were $4.1 billion. On June 1, 2012, the Firm advised Citigroup Inc. of its intention to exercise its right to purchase an additional 14% of Morgan Stanley Smith Barney (MSSB).
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●
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Investment Banking revenues were $884 million. The Firm ranked #1 in global IPOs, #2 in global announced M&A and #3 in global Equity.7
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●
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Sales and trading net revenues were $2.3 billion, or $1.9 billion excluding DVA.8 Fixed Income and Commodities and Equity sales and trading net revenues reflected the challenging global market environment with reduced levels of client activity.
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●
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Asset Management reported net revenues of $456 million and assets under management or supervision of $311 billion and positive net flows of $13.1 billion.
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Summary of Institutional Securities Results
(dollars in millions)
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||||||
As Reported
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Excluding DVA (1)
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|||||
Net
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Pre-Tax
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Net
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Pre-Tax
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|||
Revenues
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Income
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Revenues
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Income
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|||
2Q 2012
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$3,234
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$508
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$2,884
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$158
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1Q 2012
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$3,023
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($312)
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$5,001
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$1,666
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2Q 2011
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$5,159
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$1,485
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$4,915
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$1,241
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●
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Advisory revenues were $263 million compared with $533 million a year ago on lower levels of market activity. Fixed income and equity underwriting revenues were $621 million compared with $940 million a year ago primarily reflecting lower market volume.
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Fixed income and commodities sales and trading net revenues were $770 million compared with $1.9 billion a year ago. The decrease in net revenues from last year’s second quarter reflected reduced levels of client activity across geographies and most products.8
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Equity sales and trading net revenues were $1.1 billion compared with $1.8 billion in the prior year quarter primarily reflecting lower results in the derivatives and cash businesses.8
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Other sales and trading net losses were $11 million compared with losses of $507 million in last year’s second quarter reflecting gains on hedges associated with corporate lending activity and the net positive impact of $76 million representing an out of period gain of $300 million on the incorrect application of hedge accounting on certain derivative contracts previously designated as net investment hedges of certain foreign, non-U.S. dollar denominated subsidiaries, partially offset by a loss of $224 million resulting from fair value changes within the quarter of the related derivative positions not qualifying for net investment hedge accounting.9
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●
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Compensation expense was $1.4 billion compared with $2.2 billion a year ago. The current quarter reflects an adjustment of approximately $160 million to reduce previously accrued discretionary above base compensation due to an updated 2012 financial outlook. The reported compensation to net revenue ratio was 44%; excluding DVA, this ratio was 49%.10 Non-compensation expenses were $1.3 billion compared with $1.5 billion a year ago.
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●
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Morgan Stanley’s average trading Value-at-Risk measured at the 95% confidence level was $91 million compared with $84 million in the first quarter of 2012 and $145 million in the second quarter of the prior year.
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Summary of Global Wealth Management Group Results
(dollars in millions)
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Net
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Pre-Tax
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Revenues
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Income
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2Q 2012
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$3,305
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$393
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1Q 2012
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$3,414
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$387
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2Q 2011
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$3,440
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$317
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●
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Asset management fee revenues of $1.9 billion increased from $1.8 billion a year ago primarily reflecting an increase in fee based assets.
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Transactional revenues14 of $976 million declined from $1.2 billion a year ago primarily reflecting reduced commissions and fees from lower levels of client activity.
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Compensation expense for the current quarter was $2.0 billion with a compensation to net revenue ratio of 60%. Non-compensation expenses of $918 million decreased from $991 million a year ago.
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Total client assets were $1.7 trillion at quarter end. Client assets in fee-based accounts were $526 billion, or 31% of total client assets. Global fee based asset flows for the quarter were $4.1 billion.
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The 16,934 global representatives at quarter end achieved average annualized revenue per global representative of $775,000. Total client assets per global representative were $101 million.
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Summary of Asset Management Results
(dollars in millions)
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Net
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Pre-Tax
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Revenues
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Income
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2Q 2012
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$456
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$43
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1Q 2012
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$533
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$128
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2Q 2011
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$636
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$168
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●
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Net revenues of $456 million decreased from $636 million a year ago as results in the Traditional Asset Management business were primarily offset by losses on principal investments in the Merchant Banking business compared with gains in the prior year quarter and lower gains on principal investments in the Real Estate Investing business.16
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●
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Compensation expense for the current quarter was $214 million with a compensation to net revenue ratio of 47%. Non-compensation expenses of $199 million increased from $188 million a year ago.
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Assets under management or supervision at June 30, 2012 of $311 billion increased from $296 billion a year ago. The increase primarily reflected net customer inflows in Morgan Stanley’s liquidity and alternatives funds, partly offset by market depreciation. The business recorded strong net flows of $13.1 billion in the current quarter, including approximately $4.5 billion related to the conversion of MSSB client balances into liquidity funds.
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2Q 2012
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2Q 2011
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Income (loss) per diluted share applicable to MS – Non-GAAP
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$0.16
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$(0.46)
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DVA impact - 2Q12 DVA of $350, net of tax of $125
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$0.12
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$0.10
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Income (loss) per diluted share applicable to MS – GAAP
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$0.28
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$(0.36)
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Average diluted shares – Non-GAAP
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1,912
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1,464
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DVA impact
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0
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0
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Average diluted shares – GAAP
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1,912
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1,464
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2Q 2012
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1Q 2012
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2Q 2011
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Income (loss) applicable to MS – Non-GAAP
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$338
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$1,376
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$1,072
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DVA impact - 2Q12 DVA of $350, net of tax of $125
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$225
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$(1,454)
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$149
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Income (loss) applicable to MS – GAAP
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$563
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$(78)
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$1,221
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2Q 2012
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2Q 2011
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Sales & Trading – Non-GAAP
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$1,903
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$3,200
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DVA impact
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$350
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$244
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Sales & Trading – GAAP
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$2,253
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$3,444
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FIC Sales & Trading – Non-GAAP
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$770
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$1,906
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DVA impact
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$276
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$192
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FIC Sales & Trading – GAAP
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$1,046
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$2,098
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Equity Sales & Trading – Non-GAAP
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$1,144
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$1,801
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DVA impact
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$74
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$52
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Equity Sales & Trading – GAAP
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$1,218
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$1,853
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MORGAN STANLEY
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Quarterly Financial Summary
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(unaudited, dollars in millions)
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Quarter Ended
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Percentage Change From:
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Six Months Ended
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Percentage
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|||||||||||||||||||||||||||||
June 30, 2012
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Mar 31, 2012
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June 30, 2011
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Mar 31, 2012
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June 30, 2011
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June 30, 2012
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June 30, 2011
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Change
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|||||||||||||||||||||||||
Net revenues
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||||||||||||||||||||||||||||||||
Institutional Securities
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$ | 3,234 | $ | 3,023 | $ | 5,159 | 7 | % | (37 | %) | $ | 6,257 | $ | 8,727 | (28 | %) | ||||||||||||||||
Global Wealth Management Group
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3,305 | 3,414 | 3,440 | (3 | %) | (4 | %) | 6,719 | 6,844 | (2 | %) | |||||||||||||||||||||
Asset Management
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456 | 533 | 636 | (14 | %) | (28 | %) | 989 | 1,258 | (21 | %) | |||||||||||||||||||||
Intersegment Eliminations
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(42 | ) | (35 | ) | (28 | ) | (20 | %) | (50 | %) | (77 | ) | (48 | ) | (60 | %) | ||||||||||||||||
Consolidated net revenues
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$ | 6,953 | $ | 6,935 | $ | 9,207 | -- | (24 | %) | $ | 13,888 | $ | 16,781 | (17 | %) | |||||||||||||||||
Income (loss) from continuing operations before tax
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||||||||||||||||||||||||||||||||
Institutional Securities
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$ | 508 | $ | (312 | ) | $ | 1,485 | * | (66 | %) | $ | 196 | $ | 1,917 | (90 | %) | ||||||||||||||||
Global Wealth Management Group
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393 | 387 | 317 | 2 | % | 24 | % | 780 | 661 | 18 | % | |||||||||||||||||||||
Asset Management
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43 | 128 | 168 | (66 | %) | (74 | %) | 171 | 293 | (42 | %) | |||||||||||||||||||||
Intersegment Eliminations
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(4 | ) | 0 | 0 | * | * | (4 | ) | 0 | * | ||||||||||||||||||||||
Consolidated income (loss) from continuing operations before tax
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$ | 940 | $ | 203 | $ | 1,970 | * | (52 | %) | $ | 1,143 | $ | 2,871 | (60 | %) | |||||||||||||||||
Income (loss) applicable to Morgan Stanley
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||||||||||||||||||||||||||||||||
Institutional Securities
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$ | 381 | $ | (296 | ) | $ | 1,021 | * | (63 | %) | $ | 85 | $ | 1,755 | (95 | %) | ||||||||||||||||
Global Wealth Management Group
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172 | 193 | 178 | (11 | %) | (3 | %) | 365 | 360 | 1 | % | |||||||||||||||||||||
Asset Management
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14 | 25 | 22 | (44 | %) | (36 | %) | 39 | 90 | (57 | %) | |||||||||||||||||||||
Intersegment Eliminations
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(4 | ) | 0 | 0 | * | * | (4 | ) | 0 | * | ||||||||||||||||||||||
Consolidated income (loss) applicable to Morgan Stanley
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$ | 563 | $ | (78 | ) | $ | 1,221 | * | (54 | %) | $ | 485 | $ | 2,205 | (78 | %) | ||||||||||||||||
Earnings (loss) applicable to Morgan Stanley common shareholders
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$ | 564 | $ | (119 | ) | $ | (558 | ) | * | * | $ | 446 | $ | 188 | 137 | % | ||||||||||||||||
Earnings per basic share:
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||||||||||||||||||||||||||||||||
Income from continuing operations
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$ | 0.28 | $ | (0.05 | ) | $ | (0.36 | ) | * | * | $ | 0.23 | $ | 0.16 | 44 | % | ||||||||||||||||
Discontinued operations
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$ | 0.02 | $ | (0.01 | ) | $ | (0.02 | ) | * | * | $ | 0.01 | $ | (0.03 | ) | * | ||||||||||||||||
Earnings per basic share
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$ | 0.30 | $ | (0.06 | ) | $ | (0.38 | ) | * | * | $ | 0.24 | $ | 0.13 | 85 | % | ||||||||||||||||
Earnings per diluted share:
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||||||||||||||||||||||||||||||||
Income from continuing operations
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$ | 0.28 | $ | (0.05 | ) | $ | (0.36 | ) | * | * | $ | 0.23 | $ | 0.16 | 44 | % | ||||||||||||||||
Discontinued operations
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$ | 0.01 | $ | (0.01 | ) | $ | (0.02 | ) | * | * | $ | - | $ | (0.03 | ) | * | ||||||||||||||||
Earnings per diluted share
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$ | 0.29 | $ | (0.06 | ) | $ | (0.38 | ) | * | * | $ | 0.23 | $ | 0.13 | 77 | % | ||||||||||||||||
Financial Metrics:
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||||||||||||||||||||||||||||||||
Return on average common equity
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||||||||||||||||||||||||||||||||
from continuing operations
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3.5 | % | * | * | 1.4 | % | 1.0 | % | ||||||||||||||||||||||||
Return on average common equity
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3.7 | % | * | * | 1.5 | % | 0.8 | % | ||||||||||||||||||||||||
Tier 1 common capital ratio
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13.5 | % | 13.3 | % | 11.4 | % | ||||||||||||||||||||||||||
Tier 1 capital ratio
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17.1 | % | 16.8 | % | 14.5 | % | ||||||||||||||||||||||||||
Book value per common share
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$ | 31.02 | $ | 30.74 | $ | 30.17 | ||||||||||||||||||||||||||
Tangible book value per common share
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$ | 27.70 | $ | 27.37 | $ | 26.61 | ||||||||||||||||||||||||||
Notes:
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- |
Results for the quarters ended June 30, 2012, March 31, 2012 and June 30, 2011, include positive (negative) revenue of $350 million, $(1,978) million and $244 million, respectively, related to the movement in Morgan Stanley's credit spreads and other credit factors on certain long-term and short-term debt (Debt Valuation Adjustment, DVA).
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- |
Income (loss) applicable to Morgan Stanley represents income (loss) from continuing operations, adjusted for the portion of net income (loss) applicable to noncontrolling interests related to continuing operations. For the quarter ended June 30, 2012, net income (loss) applicable to noncontrolling interests includes $8 million reported as a gain in discontinued operations.
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- |
The return on average common equity and tangible book value per common share are non-GAAP measures that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance and capital adequacy.
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- |
Tier 1 common capital ratio equals Tier 1 common equity divided by Risk Weighted Assets (RWA).
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Tier 1 capital ratio equals Tier 1 capital divided by RWA.
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- |
Book value per common share equals common equity divided by period end common shares outstanding.
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Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.
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See page 4 of the financial supplement for additional information related to the calculation of the financial metrics.
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MORGAN STANLEY
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Quarterly Consolidated Income Statement Information
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(unaudited, dollars in millions)
|
Quarter Ended
|
Percentage Change From:
|
Six Months Ended
|
Percentage
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|||||||||||||||||||||||||||||
June 30, 2012
|
Mar 31, 2012
|
June 30, 2011
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Mar 31, 2012
|
June 30, 2011
|
June 30, 2012
|
June 30, 2011
|
Change
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|||||||||||||||||||||||||
Revenues:
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||||||||||||||||||||||||||||||||
Investment banking
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$ | 1,104 | $ | 1,063 | $ | 1,695 | 4 | % | (35 | %) | $ | 2,167 | $ | 2,909 | (26 | %) | ||||||||||||||||
Principal transactions:
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||||||||||||||||||||||||||||||||
Trading
|
2,469 | 2,407 | 3,484 | 3 | % | (29 | %) | 4,876 | 6,461 | (25 | %) | |||||||||||||||||||||
Investments
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63 | 85 | 402 | (26 | %) | (84 | %) | 148 | 731 | (80 | %) | |||||||||||||||||||||
Commissions and fees
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1,040 | 1,177 | 1,283 | (12 | %) | (19 | %) | 2,217 | 2,722 | (19 | %) | |||||||||||||||||||||
Asset management, distribution and admin. fees
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2,268 | 2,152 | 2,174 | 5 | % | 4 | % | 4,420 | 4,257 | 4 | % | |||||||||||||||||||||
Other
|
170 | 110 | 237 | 55 | % | (28 | %) | 280 | (237 | ) | * | |||||||||||||||||||||
Total non-interest revenues
|
7,114 | 6,994 | 9,275 | 2 | % | (23 | %) | 14,108 | 16,843 | (16 | %) | |||||||||||||||||||||
Interest income
|
1,323 | 1,542 | 1,961 | (14 | %) | (33 | %) | 2,865 | 3,820 | (25 | %) | |||||||||||||||||||||
Interest expense
|
1,484 | 1,601 | 2,029 | (7 | %) | (27 | %) | 3,085 | 3,882 | (21 | %) | |||||||||||||||||||||
Net interest
|
(161 | ) | (59 | ) | (68 | ) | (173 | %) | (137 | %) | (220 | ) | (62 | ) | * | |||||||||||||||||
Net revenues
|
6,953 | 6,935 | 9,207 | -- | (24 | %) | 13,888 | 16,781 | (17 | %) | ||||||||||||||||||||||
Non-interest expenses:
|
||||||||||||||||||||||||||||||||
Compensation and benefits
|
3,633 | 4,431 | 4,622 | (18 | %) | (21 | %) | 8,064 | 8,907 | (9 | %) | |||||||||||||||||||||
Non-compensation expenses:
|
||||||||||||||||||||||||||||||||
Occupancy and equipment
|
380 | 392 | 395 | (3 | %) | (4 | %) | 772 | 792 | (3 | %) | |||||||||||||||||||||
Brokerage, clearing and exchange fees
|
405 | 403 | 410 | -- | (1 | %) | 808 | 811 | -- | |||||||||||||||||||||||
Information processing and communications
|
487 | 459 | 444 | 6 | % | 10 | % | 946 | 884 | 7 | % | |||||||||||||||||||||
Marketing and business development
|
156 | 146 | 151 | 7 | % | 3 | % | 302 | 293 | 3 | % | |||||||||||||||||||||
Professional services
|
478 | 412 | 467 | 16 | % | 2 | % | 890 | 870 | 2 | % | |||||||||||||||||||||
Other
|
474 | 489 | 748 | (3 | %) | (37 | %) | 963 | 1,353 | (29 | %) | |||||||||||||||||||||
Total non-compensation expenses
|
2,380 | 2,301 | 2,615 | 3 | % | (9 | %) | 4,681 | 5,003 | (6 | %) | |||||||||||||||||||||
Total non-interest expenses
|
6,013 | 6,732 | 7,237 | (11 | %) | (17 | %) | 12,745 | 13,910 | (8 | %) | |||||||||||||||||||||
Income (loss) from continuing operations before taxes
|
940 | 203 | 1,970 | * | (52 | %) | 1,143 | 2,871 | (60 | %) | ||||||||||||||||||||||
Income tax provision / (benefit) from continuing operations
|
226 | 54 | 538 | * | (58 | %) | 280 | 294 | (5 | %) | ||||||||||||||||||||||
Income (loss) from continuing operations
|
714 | 149 | 1,432 | * | (50 | %) | 863 | 2,577 | (67 | %) | ||||||||||||||||||||||
Gain (loss) from discontinued operations after tax
|
36 | (15 | ) | (26 | ) | * | * | 21 | (41 | ) | * | |||||||||||||||||||||
Net income (loss)
|
$ | 750 | $ | 134 | $ | 1,406 | * | (47 | %) | $ | 884 | $ | 2,536 | (65 | %) | |||||||||||||||||
Net income (loss) applicable to noncontrolling interests
|
159 | 228 | 213 | (30 | %) | (25 | %) | 387 | 375 | 3 | % | |||||||||||||||||||||
Net income (loss) applicable to Morgan Stanley
|
591 | (94 | ) | 1,193 | * | (50 | %) | 497 | 2,161 | (77 | %) | |||||||||||||||||||||
Preferred stock dividend / Other
|
27 | 25 | 1,751 | 8 | % | (98 | %) | 51 | 1,973 | (97 | %) | |||||||||||||||||||||
Earnings (loss) applicable to Morgan Stanley common shareholders
|
$ | 564 | $ | (119 | ) | $ | (558 | ) | * | * | $ | 446 | $ | 188 | 137 | % | ||||||||||||||||
Amounts applicable to Morgan Stanley:
|
||||||||||||||||||||||||||||||||
Income (loss) from continuing operations
|
563 | (78 | ) | 1,221 | * | (54 | %) | 485 | 2,205 | (78 | %) | |||||||||||||||||||||
Gain (loss) from discontinued operations after tax
|
28 | (16 | ) | (28 | ) | * | * | 12 | (44 | ) | * | |||||||||||||||||||||
Net income (loss) applicable to Morgan Stanley
|
$ | 591 | $ | (94 | ) | $ | 1,193 | * | (50 | %) | $ | 497 | $ | 2,161 | (77 | %) | ||||||||||||||||
Pre-tax profit margin
|
14 | % | 3 | % | 21 | % | 8 | % | 17 | % | ||||||||||||||||||||||
Compensation and benefits as a % of net revenues
|
52 | % | 64 | % | 50 | % | 58 | % | 53 | % | ||||||||||||||||||||||
Non-compensation expenses as a % of net revenues
|
34 | % | 33 | % | 28 | % | 34 | % | 30 | % | ||||||||||||||||||||||
Effective tax rate from continuing operations
|
24.0 | % | 26.5 | % | 27.3 | % | 24.5 | % | 10.2 | % | ||||||||||||||||||||||
Notes:
|
- |
Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance. Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
|
- |
For the quarter ended June 30, 2012, discontinued operations included operating results related to Saxon (reported in Institutional Securities segment) and a pre-tax gain of $108 million ($73 million after-tax) and other operating income related to the sale of Quilter & Co. Ltd. (Quilter) (reported in the Global Wealth Management business segment).
|
|
- |
For the quarter ended March 31, 2012, discontinued operations primarily reflected an after-tax loss related to the first phase of the previously announced disposition of Saxon and the operating results of Quilter.
|
|
- |
The quarter ended June 30, 2011, preferred stock dividend/other included a one-time negative adjustment of approximately $1.7 billion related to the conversion of Series B Non-Cumulative Non-Voting Perpetual Convertible Preferred Stock held by Mitsubishi UFJ Financial Group, Inc. (MUFG), into Morgan Stanley common stock (MUFG conversion).
|
|
- |
Preferred stock dividend / other includes allocation of earnings to Participating Restricted Stock Units (RSUs).
|
MORGAN STANLEY
|
Quarterly Earnings Per Share
|
(unaudited, dollars in millions, except for per share data)
|
Quarter Ended
|
Percentage Change From:
|
Six Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
June 30, 2012
|
Mar 31, 2012
|
June 30, 2011
|
Mar 31, 2012
|
June 30, 2011
|
June 30, 2012
|
June 30, 2011
|
Change
|
|||||||||||||||||||||||||
Income (loss) from continuing operations
|
$ | 714 | $ | 149 | $ | 1,432 | * | (50 | %) | $ | 863 | $ | 2,577 | (67 | %) | |||||||||||||||||
Net income (loss) from continuing operations applicable to noncontrolling interest
|
151 | 227 | 211 | (33 | %) | (28 | %) | 378 | 372 | 2 | % | |||||||||||||||||||||
Income from continuing operations applicable to Morgan Stanley
|
563 | (78 | ) | 1,221 | * | (54 | %) | 485 | 2,205 | (78 | %) | |||||||||||||||||||||
Less: Preferred Dividends
|
(24 | ) | (24 | ) | (24 | ) | -- | -- | (48 | ) | (244 | ) | 80 | % | ||||||||||||||||||
Less: MUFG preferred stock conversion
|
- | - | (1,726 | ) | -- | * | - | (1,726 | ) | * | ||||||||||||||||||||||
Income from continuing operations applicable to Morgan Stanley, prior to allocation of income to Participating Restricted Stock Units
|
539 | (102 | ) | (529 | ) | * | * | 437 | 235 | 86 | % | |||||||||||||||||||||
Basic EPS Adjustments:
|
||||||||||||||||||||||||||||||||
Less: Allocation of earnings to Participating Restricted Stock Units
|
3 | 1 | 1 | 200 | % | 200 | % | 3 | 4 | (25 | %) | |||||||||||||||||||||
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders
|
$ | 536 | $ | (103 | ) | $ | (530 | ) | * | * | $ | 434 | $ | 231 | 88 | % | ||||||||||||||||
Gain (loss) from discontinued operations after tax
|
36 | (15 | ) | (26 | ) | * | * | 21 | (41 | ) | * | |||||||||||||||||||||
Less: Gain (loss) from discontinued operations after tax applicable to noncontrolling interests
|
8 | 1 | 2 | * | * | 9 | 3 | 200 | % | |||||||||||||||||||||||
Gain (loss) from discontinued operations after tax applicable to Morgan Stanley
|
28 | (16 | ) | (28 | ) | * | * | 12 | (44 | ) | * | |||||||||||||||||||||
Less: Allocation of earnings to Participating Restricted Stock Units
|
0 | 0 | 0 | -- | -- | 0 | 1 | * | ||||||||||||||||||||||||
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders
|
28 | (16 | ) | (28 | ) | * | * | 12 | (43 | ) | * | |||||||||||||||||||||
Earnings (loss) applicable to Morgan Stanley common shareholders
|
$ | 564 | $ | (119 | ) | $ | (558 | ) | * | * | $ | 446 | $ | 188 | 137 | % | ||||||||||||||||
Average basic common shares outstanding (millions)
|
1,885 | 1,877 | 1,464 | -- | 29 | % | 1,881 | 1,460 | 29 | % | ||||||||||||||||||||||
Earnings per basic share:
|
||||||||||||||||||||||||||||||||
Income from continuing operations
|
$ | 0.28 | $ | (0.05 | ) | $ | (0.36 | ) | * | * | $ | 0.23 | $ | 0.16 | 44 | % | ||||||||||||||||
Discontinued operations
|
$ | 0.02 | $ | (0.01 | ) | $ | (0.02 | ) | * | * | $ | 0.01 | $ | (0.03 | ) | * | ||||||||||||||||
Earnings per basic share
|
$ | 0.30 | $ | (0.06 | ) | $ | (0.38 | ) | * | * | $ | 0.24 | $ | 0.13 | 85 | % | ||||||||||||||||
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders
|
$ | 536 | $ | (103 | ) | $ | (530 | ) | * | * | $ | 434 | $ | 231 | 88 | % | ||||||||||||||||
Diluted EPS Adjustments:
|
||||||||||||||||||||||||||||||||
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders
|
$ | 536 | $ | (103 | ) | $ | (530 | ) | * | * | $ | 434 | $ | 231 | 88 | % | ||||||||||||||||
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders
|
28 | (16 | ) | (28 | ) | * | * | 12 | (43 | ) | * | |||||||||||||||||||||
Earnings (loss) applicable to Morgan Stanley common shareholders
|
$ | 564 | $ | (119 | ) | $ | (558 | ) | * | * | $ | 446 | $ | 188 | 137 | % | ||||||||||||||||
Average diluted common shares outstanding and common stock equivalents (millions)
|
1,912 | 1,877 | 1,464 | 2 | % | 31 | % | 1,907 | 1,477 | 29 | % | |||||||||||||||||||||
Earnings per diluted share:
|
||||||||||||||||||||||||||||||||
Income from continuing operations
|
$ | 0.28 | $ | (0.05 | ) | $ | (0.36 | ) | * | * | $ | 0.23 | $ | 0.16 | 44 | % | ||||||||||||||||
Discontinued operations
|
$ | 0.01 | $ | (0.01 | ) | $ | (0.02 | ) | * | * | $ | - | $ | (0.03 | ) | * | ||||||||||||||||
Earnings per diluted share
|
$ | 0.29 | $ | (0.06 | ) | $ | (0.38 | ) | * | * | $ | 0.23 | $ | 0.13 | 77 | % | ||||||||||||||||
Notes: | - |
The Firm calculates earnings per share using the two-class method as described under the accounting guidance for earnings per share. For further discussion of the Firm's earnings per share calculations, see page 14 of the financial supplement and Note 2 to the consolidated financial statements in the Firm's Annual Report on Form 10-K for the year ended December 31, 2011.
|
MORGAN STANLEY
|
Financial Supplement - 2Q 2012
|
Table of Contents
|
Page #
|
||||
1
|
…………….
|
Quarterly Financial Summary
|
||
2
|
…………….
|
Quarterly Consolidated Income Statement Information
|
||
3
|
…………….
|
Quarterly Earnings Per Share Summary
|
||
4 - 5
|
…………….
|
Quarterly Consolidated Financial Information and Statistical Data
|
||
6
|
…………….
|
Quarterly Institutional Securities Income Statement Information
|
||
7 - 8
|
…………….
|
Quarterly Institutional Securities Financial Information and Statistical Data
|
||
9
|
…………….
|
Quarterly Global Wealth Management Group Income Statement Information
|
||
10
|
…………….
|
Quarterly Global Wealth Management Group Financial Information and Statistical Data
|
||
11
|
…………….
|
Quarterly Asset Management Income Statement Information
|
||
12
|
…………….
|
Quarterly Asset Management Financial Information and Statistical Data
|
||
13
|
…………….
|
Country Risk Exposure - European Peripherals and France Appendix I
|
||
14
|
…………….
|
Earnings Per Share Appendix II
|
||
15 - 16
|
…………….
|
End Notes
|
||
17
|
…………….
|
Legal Notice
|
MORGAN STANLEY
|
Quarterly Financial Summary
|
(unaudited, dollars in millions)
|
Quarter Ended
|
Percentage Change From:
|
Six Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
June 30, 2012
|
Mar 31, 2012
|
June 30, 2011
|
Mar 31, 2012
|
June 30, 2011
|
June 30, 2012
|
June 30, 2011
|
Change
|
|||||||||||||||||||||||||
Net revenues
|
||||||||||||||||||||||||||||||||
Institutional Securities
|
$ | 3,234 | $ | 3,023 | $ | 5,159 | 7 | % | (37 | %) | $ | 6,257 | $ | 8,727 | (28 | %) | ||||||||||||||||
Global Wealth Management Group
|
3,305 | 3,414 | 3,440 | (3 | %) | (4 | %) | 6,719 | 6,844 | (2 | %) | |||||||||||||||||||||
Asset Management
|
456 | 533 | 636 | (14 | %) | (28 | %) | 989 | 1,258 | (21 | %) | |||||||||||||||||||||
Intersegment Eliminations
|
(42 | ) | (35 | ) | (28 | ) | (20 | %) | (50 | %) | (77 | ) | (48 | ) | (60 | %) | ||||||||||||||||
Consolidated net revenues
|
$ | 6,953 | $ | 6,935 | $ | 9,207 | -- | (24 | %) | $ | 13,888 | $ | 16,781 | (17 | %) | |||||||||||||||||
Income (loss) from continuing operations before tax
|
||||||||||||||||||||||||||||||||
Institutional Securities
|
$ | 508 | $ | (312 | ) | $ | 1,485 | * | (66 | %) | $ | 196 | $ | 1,917 | (90 | %) | ||||||||||||||||
Global Wealth Management Group
|
393 | 387 | 317 | 2 | % | 24 | % | 780 | 661 | 18 | % | |||||||||||||||||||||
Asset Management
|
43 | 128 | 168 | (66 | %) | (74 | %) | 171 | 293 | (42 | %) | |||||||||||||||||||||
Intersegment Eliminations
|
(4 | ) | 0 | 0 | * | * | (4 | ) | 0 | * | ||||||||||||||||||||||
Consolidated income (loss) from continuing operations before tax
|
$ | 940 | $ | 203 | $ | 1,970 | * | (52 | %) | $ | 1,143 | $ | 2,871 | (60 | %) | |||||||||||||||||
Income (loss) applicable to Morgan Stanley
|
||||||||||||||||||||||||||||||||
Institutional Securities
|
$ | 381 | $ | (296 | ) | $ | 1,021 | * | (63 | %) | $ | 85 | $ | 1,755 | (95 | %) | ||||||||||||||||
Global Wealth Management Group
|
172 | 193 | 178 | (11 | %) | (3 | %) | 365 | 360 | 1 | % | |||||||||||||||||||||
Asset Management
|
14 | 25 | 22 | (44 | %) | (36 | %) | 39 | 90 | (57 | %) | |||||||||||||||||||||
Intersegment Eliminations
|
(4 | ) | 0 | 0 | * | * | (4 | ) | 0 | * | ||||||||||||||||||||||
Consolidated income (loss) applicable to Morgan Stanley
|
$ | 563 | $ | (78 | ) | $ | 1,221 | * | (54 | %) | $ | 485 | $ | 2,205 | (78 | %) | ||||||||||||||||
Financial Metrics:
|
||||||||||||||||||||||||||||||||
Return on average common equity
|
||||||||||||||||||||||||||||||||
from continuing operations
|
3.5 | % | * | * | 1.4 | % | 1.0 | % | ||||||||||||||||||||||||
Return on average common equity
|
3.7 | % | * | * | 1.5 | % | 0.8 | % | ||||||||||||||||||||||||
Tier 1 common capital ratio
|
13.5 | % | 13.3 | % | 11.4 | % | ||||||||||||||||||||||||||
Tier 1 capital ratio
|
17.1 | % | 16.8 | % | 14.5 | % | ||||||||||||||||||||||||||
Book value per common share
|
$ | 31.02 | $ | 30.74 | $ | 30.17 | ||||||||||||||||||||||||||
Tangible book value per common share
|
$ | 27.70 | $ | 27.37 | $ | 26.61 | ||||||||||||||||||||||||||
Notes:
|
- |
Results for the quarters ended June 30, 2012, March 31, 2012 and June 30, 2011, include positive (negative) revenue of $350 million, $(1,978) million and $244 million, respectively, related to the movement in Morgan Stanley's credit spreads and other credit factors on certain long-term and short-term debt (Debt Valuation Adjustment, DVA).
|
- |
Income (loss) applicable to Morgan Stanley represents income (loss) from continuing operations, adjusted for the portion of net income (loss) applicable to noncontrolling interests related to continuing operations. For the quarter ended June 30, 2012, net income (loss) applicable to noncontrolling interests includes $8 million reported as a gain in discontinued operations.
|
|
- |
The return on average common equity and tangible book value per common share are non-GAAP measures that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance and capital adequacy.
|
|
- |
Tier 1 common capital ratio equals Tier 1 common equity divided by Risk Weighted Assets (RWA).
|
|
- |
Tier 1 capital ratio equals Tier 1 capital divided by RWA.
|
|
- |
Book value per common share equals common equity divided by period end common shares outstanding.
|
|
- |
Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.
|
|
- |
See page 4 of the financial supplement for additional information related to the calculation of the financial metrics.
|
|
- |
Refer to Legal Notice on page 17.
|
MORGAN STANLEY
|
Quarterly Consolidated Income Statement Information
|
(unaudited, dollars in millions)
|
Quarter Ended
|
Percentage Change From:
|
Six Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
June 30, 2012
|
Mar 31, 2012
|
June 30, 2011
|
Mar 31, 2012
|
June 30, 2011
|
June 30, 2012
|
June 30, 2011
|
Change
|
|||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Investment banking
|
$ | 1,104 | $ | 1,063 | $ | 1,695 | 4 | % | (35 | %) | $ | 2,167 | $ | 2,909 | (26 | %) | ||||||||||||||||
Principal transactions:
|
||||||||||||||||||||||||||||||||
Trading
|
2,469 | 2,407 | 3,484 | 3 | % | (29 | %) | 4,876 | 6,461 | (25 | %) | |||||||||||||||||||||
Investments
|
63 | 85 | 402 | (26 | %) | (84 | %) | 148 | 731 | (80 | %) | |||||||||||||||||||||
Commissions and fees
|
1,040 | 1,177 | 1,283 | (12 | %) | (19 | %) | 2,217 | 2,722 | (19 | %) | |||||||||||||||||||||
Asset management, distribution and admin. fees
|
2,268 | 2,152 | 2,174 | 5 | % | 4 | % | 4,420 | 4,257 | 4 | % | |||||||||||||||||||||
Other
|
170 | 110 | 237 | 55 | % | (28 | %) | 280 | (237 | ) | * | |||||||||||||||||||||
Total non-interest revenues
|
7,114 | 6,994 | 9,275 | 2 | % | (23 | %) | 14,108 | 16,843 | (16 | %) | |||||||||||||||||||||
Interest income
|
1,323 | 1,542 | 1,961 | (14 | %) | (33 | %) | 2,865 | 3,820 | (25 | %) | |||||||||||||||||||||
Interest expense
|
1,484 | 1,601 | 2,029 | (7 | %) | (27 | %) | 3,085 | 3,882 | (21 | %) | |||||||||||||||||||||
Net interest
|
(161 | ) | (59 | ) | (68 | ) | (173 | %) | (137 | %) | (220 | ) | (62 | ) | * | |||||||||||||||||
Net revenues
|
6,953 | 6,935 | 9,207 | -- | (24 | %) | 13,888 | 16,781 | (17 | %) | ||||||||||||||||||||||
Non-interest expenses:
|
||||||||||||||||||||||||||||||||
Compensation and benefits
|
3,633 | 4,431 | 4,622 | (18 | %) | (21 | %) | 8,064 | 8,907 | (9 | %) | |||||||||||||||||||||
Non-compensation expenses:
|
||||||||||||||||||||||||||||||||
Occupancy and equipment
|
380 | 392 | 395 | (3 | %) | (4 | %) | 772 | 792 | (3 | %) | |||||||||||||||||||||
Brokerage, clearing and exchange fees
|
405 | 403 | 410 | -- | (1 | %) | 808 | 811 | -- | |||||||||||||||||||||||
Information processing and communications
|
487 | 459 | 444 | 6 | % | 10 | % | 946 | 884 | 7 | % | |||||||||||||||||||||
Marketing and business development
|
156 | 146 | 151 | 7 | % | 3 | % | 302 | 293 | 3 | % | |||||||||||||||||||||
Professional services
|
478 | 412 | 467 | 16 | % | 2 | % | 890 | 870 | 2 | % | |||||||||||||||||||||
Other
|
474 | 489 | 748 | (3 | %) | (37 | %) | 963 | 1,353 | (29 | %) | |||||||||||||||||||||
Total non-compensation expenses
|
2,380 | 2,301 | 2,615 | 3 | % | (9 | %) | 4,681 | 5,003 | (6 | %) | |||||||||||||||||||||
Total non-interest expenses
|
6,013 | 6,732 | 7,237 | (11 | %) | (17 | %) | 12,745 | 13,910 | (8 | %) | |||||||||||||||||||||
Income (loss) from continuing operations before taxes
|
940 | 203 | 1,970 | * | (52 | %) | 1,143 | 2,871 | (60 | %) | ||||||||||||||||||||||
Income tax provision / (benefit) from continuing operations
|
226 | 54 | 538 | * | (58 | %) | 280 | 294 | (5 | %) | ||||||||||||||||||||||
Income (loss) from continuing operations
|
714 | 149 | 1,432 | * | (50 | %) | 863 | 2,577 | (67 | %) | ||||||||||||||||||||||
Gain (loss) from discontinued operations after tax
|
36 | (15 | ) | (26 | ) | * | * | 21 | (41 | ) | * | |||||||||||||||||||||
Net income (loss)
|
$ | 750 | $ | 134 | $ | 1,406 | * | (47 | %) | $ | 884 | $ | 2,536 | (65 | %) | |||||||||||||||||
Net income (loss) applicable to noncontrolling interests
|
159 | 228 | 213 | (30 | %) | (25 | %) | 387 | 375 | 3 | % | |||||||||||||||||||||
Net income (loss) applicable to Morgan Stanley
|
591 | (94 | ) | 1,193 | * | (50 | %) | 497 | 2,161 | (77 | %) | |||||||||||||||||||||
Preferred stock dividend / Other
|
27 | 25 | 1,751 | 8 | % | (98 | %) | 51 | 1,973 | (97 | %) | |||||||||||||||||||||
Earnings (loss) applicable to Morgan Stanley common shareholders
|
$ | 564 | $ | (119 | ) | $ | (558 | ) | * | * | $ | 446 | $ | 188 | 137 | % | ||||||||||||||||
Amounts applicable to Morgan Stanley:
|
||||||||||||||||||||||||||||||||
Income (loss) from continuing operations
|
563 | (78 | ) | 1,221 | * | (54 | %) | 485 | 2,205 | (78 | %) | |||||||||||||||||||||
Gain (loss) from discontinued operations after tax
|
28 | (16 | ) | (28 | ) | * | * | 12 | (44 | ) | * | |||||||||||||||||||||
Net income (loss) applicable to Morgan Stanley
|
$ | 591 | $ | (94 | ) | $ | 1,193 | * | (50 | %) | $ | 497 | $ | 2,161 | (77 | %) | ||||||||||||||||
Pre-tax profit margin
|
14 | % | 3 | % | 21 | % | 8 | % | 17 | % | ||||||||||||||||||||||
Compensation and benefits as a % of net revenues
|
52 | % | 64 | % | 50 | % | 58 | % | 53 | % | ||||||||||||||||||||||
Non-compensation expenses as a % of net revenues
|
34 | % | 33 | % | 28 | % | 34 | % | 30 | % | ||||||||||||||||||||||
Effective tax rate from continuing operations
|
24.0 | % | 26.5 | % | 27.3 | % | 24.5 | % | 10.2 | % | ||||||||||||||||||||||
Notes:
|
- |
Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance. Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
|
- |
For the quarter ended June 30, 2012, discontinued operations included operating results related to Saxon (reported in Institutional Securities segment) and a pre-tax gain of $108 million ($73 million after-tax) and other operating income related to the sale of Quilter & Co. Ltd. (Quilter) (reported in the Global Wealth Management business segment).
|
|
- |
For the quarter ended March 31, 2012, discontinued operations primarily reflected an after-tax loss related to the first phase of the previously announced disposition of Saxon and the operating results of Quilter.
|
|
- |
The quarter ended June 30, 2011, preferred stock dividend/other included a one-time negative adjustment of approximately $1.7 billion related to the conversion of Series B Non-Cumulative Non-Voting Perpetual Convertible Preferred Stock held by Mitsubishi UFJ Financial Group, Inc. (MUFG), into Morgan Stanley common stock (MUFG conversion).
|
|
- |
Preferred stock dividend / other includes allocation of earnings to Participating Restricted Stock Units (RSUs).
|
|
- |
Refer to Legal Notice on page 17.
|
MORGAN STANLEY
|
Quarterly Earnings Per Share
|
(unaudited, dollars in millions, except for per share data)
|
Quarter Ended
|
Percentage Change From:
|
Six Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
June 30, 2012
|
Mar 31, 2012
|
June 30, 2011
|
Mar 31, 2012
|
June 30, 2011
|
June 30, 2012
|
June 30, 2011
|
Change
|
|||||||||||||||||||||||||
Income (loss) from continuing operations
|
$ | 714 | $ | 149 | $ | 1,432 | * | (50 | %) | $ | 863 | $ | 2,577 | (67 | %) | |||||||||||||||||
Net income (loss) from continuing operations applicable to noncontrolling interest
|
151 | 227 | 211 | (33 | %) | (28 | %) | 378 | 372 | 2 | % | |||||||||||||||||||||
Income from continuing operations applicable to Morgan Stanley
|
563 | (78 | ) | 1,221 | * | (54 | %) | 485 | 2,205 | (78 | %) | |||||||||||||||||||||
Less: Preferred Dividends
|
(24 | ) | (24 | ) | (24 | ) | -- | -- | (48 | ) | (244 | ) | 80 | % | ||||||||||||||||||
Less: MUFG preferred stock conversion
|
- | - | (1,726 | ) | -- | * | - | (1,726 | ) | * | ||||||||||||||||||||||
Income from continuing operations applicable to Morgan Stanley, prior to allocation of income to Participating Restricted Stock Units
|
539 | (102 | ) | (529 | ) | * | * | 437 | 235 | 86 | % | |||||||||||||||||||||
Basic EPS Adjustments:
|
||||||||||||||||||||||||||||||||
Less: Allocation of earnings to Participating Restricted Stock Units
|
3 | 1 | 1 | 200 | % | 200 | % | 3 | 4 | (25 | %) | |||||||||||||||||||||
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders
|
$ | 536 | $ | (103 | ) | $ | (530 | ) | * | * | $ | 434 | $ | 231 | 88 | % | ||||||||||||||||
Gain (loss) from discontinued operations after tax
|
36 | (15 | ) | (26 | ) | * | * | 21 | (41 | ) | * | |||||||||||||||||||||
Less: Gain (loss) from discontinued operations after tax applicable to noncontrolling interests
|
8 | 1 | 2 | * | * | 9 | 3 | 200 | % | |||||||||||||||||||||||
Gain (loss) from discontinued operations after tax applicable to Morgan Stanley
|
28 | (16 | ) | (28 | ) | * | * | 12 | (44 | ) | * | |||||||||||||||||||||
Less: Allocation of earnings to Participating Restricted Stock Units
|
0 | 0 | 0 | -- | -- | 0 | 1 | * | ||||||||||||||||||||||||
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders
|
28 | (16 | ) | (28 | ) | * | * | 12 | (43 | ) | * | |||||||||||||||||||||
Earnings (loss) applicable to Morgan Stanley common shareholders
|
$ | 564 | $ | (119 | ) | $ | (558 | ) | * | * | $ | 446 | $ | 188 | 137 | % | ||||||||||||||||
Average basic common shares outstanding (millions)
|
1,885 | 1,877 | 1,464 | -- | 29 | % | 1,881 | 1,460 | 29 | % | ||||||||||||||||||||||
Earnings per basic share:
|
||||||||||||||||||||||||||||||||
Income from continuing operations
|
$ | 0.28 | $ | (0.05 | ) | $ | (0.36 | ) | * | * | $ | 0.23 | $ | 0.16 | 44 | % | ||||||||||||||||
Discontinued operations
|
$ | 0.02 | $ | (0.01 | ) | $ | (0.02 | ) | * | * | $ | 0.01 | $ | (0.03 | ) | * | ||||||||||||||||
Earnings per basic share
|
$ | 0.30 | $ | (0.06 | ) | $ | (0.38 | ) | * | * | $ | 0.24 | $ | 0.13 | 85 | % | ||||||||||||||||
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders
|
$ | 536 | $ | (103 | ) | $ | (530 | ) | * | * | $ | 434 | $ | 231 | 88 | % | ||||||||||||||||
Diluted EPS Adjustments:
|
||||||||||||||||||||||||||||||||
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders
|
$ | 536 | $ | (103 | ) | $ | (530 | ) | * | * | $ | 434 | $ | 231 | 88 | % | ||||||||||||||||
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders
|
28 | (16 | ) | (28 | ) | * | * | 12 | (43 | ) | * | |||||||||||||||||||||
Earnings (loss) applicable to Morgan Stanley common shareholders
|
$ | 564 | $ | (119 | ) | $ | (558 | ) | * | * | $ | 446 | $ | 188 | 137 | % | ||||||||||||||||
Average diluted common shares outstanding and common stock equivalents (millions)
|
1,912 | 1,877 | 1,464 | 2 | % | 31 | % | 1,907 | 1,477 | 29 | % | |||||||||||||||||||||
Earnings per diluted share:
|
||||||||||||||||||||||||||||||||
Income from continuing operations
|
$ | 0.28 | $ | (0.05 | ) | $ | (0.36 | ) | * | * | $ | 0.23 | $ | 0.16 | 44 | % | ||||||||||||||||
Discontinued operations
|
$ | 0.01 | $ | (0.01 | ) | $ | (0.02 | ) | * | * | $ | - | $ | (0.03 | ) | * | ||||||||||||||||
Earnings per diluted share
|
$ | 0.29 | $ | (0.06 | ) | $ | (0.38 | ) | * | * | $ | 0.23 | $ | 0.13 | 77 | % | ||||||||||||||||
Notes:
|
- | The Firm calculates earnings per share using the two-class method as described under the accounting guidance for earnings per share. For further discussion of the Firm's earnings per share calculations, see page 14 of the financial supplement and Note 2 to the consolidated financial statements in the Firm's Annual Report on Form 10-K for the year ended December 31, 2011. |
|
- | Refer to Legal Notice on page 17. |
MORGAN STANLEY
|
Quarterly Consolidated Financial Information and Statistical Data
|
(unaudited)
|
Quarter Ended
|
Percentage Change From:
|
Six Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
June 30, 2012
|
Mar 31, 2012
|
June 30, 2011
|
Mar 31, 2012
|
June 30, 2011
|
June 30, 2012
|
June 30, 2011
|
Change
|
|||||||||||||||||||||||||
Regional revenues (1)
|
||||||||||||||||||||||||||||||||
Americas
|
$ | 5,114 | $ | 4,790 | $ | 6,599 | 7 | % | (23 | %) | $ | 9,904 | $ | 12,065 | (18 | %) | ||||||||||||||||
EMEA (Europe, Middle East, Africa)
|
978 | 1,154 | 1,527 | (15 | %) | (36 | %) | 2,132 | 3,194 | (33 | %) | |||||||||||||||||||||
Asia
|
861 | 991 | 1,081 | (13 | %) | (20 | %) | 1,852 | 1,522 | 22 | % | |||||||||||||||||||||
Consolidated net revenues
|
$ | 6,953 | $ | 6,935 | $ | 9,207 | -- | (24 | %) | $ | 13,888 | $ | 16,781 | (17 | %) | |||||||||||||||||
Worldwide employees
|
58,627 | 59,200 | 62,577 | (1 | %) | (6 | %) | |||||||||||||||||||||||||
Firmwide deposits
|
$ | 68,252 | $ | 66,441 | $ | 65,525 | 3 | % | 4 | % | ||||||||||||||||||||||
Total assets
|
$ | 753,757 | $ | 781,030 | $ | 830,747 | (3 | %) | (9 | %) | ||||||||||||||||||||||
Risk weighted assets (2)
|
$ | 317,188 | $ | 317,693 | $ | 353,323 | -- | (10 | %) | |||||||||||||||||||||||
Global Liquidity Reserve (Billions) (3)
|
$ | 173 | $ | 179 | $ | 182 | (3 | %) | (5 | %) | ||||||||||||||||||||||
Long-Term Debt Outstanding
|
$ | 167,828 | $ | 176,723 | $ | 196,106 | (5 | %) | (14 | %) | ||||||||||||||||||||||
Maturities of Long-Term Debt Outstanding (next 12 months)
|
$ | 25,356 | $ | 29,458 | $ | 35,848 | (14 | %) | (29 | %) | ||||||||||||||||||||||
Common equity
|
61,333 | 60,816 | 58,199 | 1 | % | 5 | % | |||||||||||||||||||||||||
Preferred equity
|
1,508 | 1,508 | 1,508 | -- | -- | |||||||||||||||||||||||||||
Morgan Stanley shareholders' equity
|
62,841 | 62,324 | 59,707 | 1 | % | 5 | % | |||||||||||||||||||||||||
Junior subordinated debt issued to capital trusts
|
4,851 | 4,838 | 4,826 | -- | 1 | % | ||||||||||||||||||||||||||
Less: Goodwill and intangible assets (4)
|
(6,568 | ) | (6,660 | ) | (6,860 | ) | 1 | % | 4 | % | ||||||||||||||||||||||
Tangible Morgan Stanley shareholders' equity
|
$ | 61,124 | $ | 60,502 | $ | 57,673 | 1 | % | 6 | % | ||||||||||||||||||||||
Tangible common equity
|
$ | 54,765 | $ | 54,156 | $ | 51,339 | 1 | % | 7 | % | ||||||||||||||||||||||
Leverage ratio
|
12.3 | x | 12.9 | x | 14.4 | x | ||||||||||||||||||||||||||
Tier 1 common capital (5)
|
$ | 42,801 | $ | 42,151 | $ | 40,262 | 2 | % | 6 | % | ||||||||||||||||||||||
Tier 1 capital (6)
|
$ | 54,281 | $ | 53,527 | $ | 51,170 | 1 | % | 6 | % | ||||||||||||||||||||||
Tier 1 common capital ratio
|
13.5 | % | 13.3 | % | 11.4 | % | ||||||||||||||||||||||||||
Tier 1 capital ratio
|
17.1 | % | 16.8 | % | 14.5 | % | ||||||||||||||||||||||||||
Tier 1 leverage ratio
|
7.1 | % | 7.0 | % | 6.0 | % | ||||||||||||||||||||||||||
Period end common shares outstanding (000's)
|
1,977,403 | 1,978,338 | 1,929,033 | -- | 3 | % | ||||||||||||||||||||||||||
Book value per common share
|
$ | 31.02 | $ | 30.74 | $ | 30.17 | ||||||||||||||||||||||||||
Tangible book value per common share
|
$ | 27.70 | $ | 27.37 | $ | 26.61 | ||||||||||||||||||||||||||
Notes:
|
- |
All data presented in millions except number of employees, liquidity, ratios and book values.
|
- |
The number of worldwide employees for all periods has been restated to exclude employees of Quilter.
|
|
- |
The goodwill and intangible assets deduction include the Firm's share of Morgan Stanley Smith Barney (MSSB) goodwill and intangible assets.
|
|
- |
Tangible common equity equals common equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction.
|
|
- |
Leverage ratio equals total assets divided by tangible Morgan Stanley shareholders' equity.
|
|
- |
Tier 1 leverage ratio equals Tier 1 capital divided by adjusted average total assets (which reflects adjustments for disallowed goodwill, certain intangible assets, deferred tax assets and financial and non-financial equity investments).
|
|
- |
Refer to End Notes on pages 15-16 and Legal Notice on page 17.
|
MORGAN STANLEY
|
Quarterly Consolidated Financial Information and Statistical Data
|
(unaudited, dollars in billions)
|
Quarter Ended
|
Percentage Change From:
|
Six Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
June 30, 2012
|
Mar 31, 2012
|
June 30, 2011
|
Mar 31, 2012
|
June 30, 2011
|
June 30, 2012
|
June 30, 2011
|
Change:
|
|||||||||||||||||||||||||
Average Tier 1 Common Capital (1)
|
||||||||||||||||||||||||||||||||
Institutional Securities
|
$ | 22.3 | $ | 22.1 | $ | 27.5 | 1 | % | (19 | %) | $ | 22.3 | $ | 26.7 | (16 | %) | ||||||||||||||||
Global Wealth Management Group
|
3.8 | 3.6 | 3.4 | 6 | % | 12 | % | 3.7 | 3.3 | 12 | % | |||||||||||||||||||||
Asset Management
|
1.3 | 1.3 | 1.5 | -- | (13 | %) | 1.3 | 1.5 | (13 | %) | ||||||||||||||||||||||
Parent capital
|
15.1 | 13.9 | (0.4 | ) | 9 | % | * | 14.4 | 0.0 | * | ||||||||||||||||||||||
Total - continuing operations
|
42.5 | 40.9 | 32.0 | 4 | % | 33 | % | 41.7 | 31.5 | 32 | % | |||||||||||||||||||||
Discontinued operations
|
0.0 | 0.0 | 0.0 | -- | -- | 0.0 | 0.0 | -- | ||||||||||||||||||||||||
Firm
|
$ | 42.5 | $ | 40.9 | $ | 32.0 | 4 | % | 33 | % | $ | 41.7 | $ | 31.5 | 32 | % | ||||||||||||||||
Average Common Equity (1)
|
||||||||||||||||||||||||||||||||
Institutional Securities
|
$ | 29.4 | $ | 29.5 | $ | 33.9 | -- | (13 | %) | $ | 29.5 | $ | 33.5 | (12 | %) | |||||||||||||||||
Global Wealth Management Group
|
13.3 | 13.3 | 13.4 | -- | (1 | %) | 13.3 | 13.2 | 1 | % | ||||||||||||||||||||||
Asset Management
|
2.5 | 2.5 | 2.7 | -- | (7 | %) | 2.5 | 2.7 | (7 | %) | ||||||||||||||||||||||
Parent capital
|
16.2 | 15.2 | (0.4 | ) | 7 | % | * | 15.7 | (0.5 | ) | * | |||||||||||||||||||||
Total - continuing operations
|
61.4 | 60.5 | 49.6 | 1 | % | 24 | % | 61.0 | 48.9 | 25 | % | |||||||||||||||||||||
Discontinued operations
|
0.0 | 0.0 | 0.0 | -- | -- | 0.0 | 0.0 | -- | ||||||||||||||||||||||||
Firm
|
$ | 61.4 | $ | 60.5 | $ | 49.6 | 1 | % | 24 | % | $ | 61.0 | $ | 48.9 | 25 | % | ||||||||||||||||
Return on average Tier 1 common capital
|
||||||||||||||||||||||||||||||||
Institutional Securities
|
6 | % | * | * | 0 | % | 0 | % | ||||||||||||||||||||||||
Global Wealth Management Group
|
18 | % | 21 | % | * | 19 | % | 8 | % | |||||||||||||||||||||||
Asset Management
|
4 | % | 7 | % | * | 6 | % | * | ||||||||||||||||||||||||
Total - continuing operations
|
5 | % | * | * | 2 | % | 1 | % | ||||||||||||||||||||||||
Firm
|
5 | % | * | * | 2 | % | 1 | % | ||||||||||||||||||||||||
Return on average common equity
|
||||||||||||||||||||||||||||||||
Institutional Securities
|
5 | % | * | * | 0 | % | 0 | % | ||||||||||||||||||||||||
Global Wealth Management Group
|
5 | % | 6 | % | * | 5 | % | 2 | % | |||||||||||||||||||||||
Asset Management
|
2 | % | 4 | % | * | 3 | % | * | ||||||||||||||||||||||||
Total - continuing operations
|
4 | % | * | * | 1 | % | 1 | % | ||||||||||||||||||||||||
Firm
|
4 | % | * | * | 1 | % | 1 | % | ||||||||||||||||||||||||
Notes:
|
- |
Beginning in the quarter ended March 31, 2012, Firm and segment required Capital is met by Tier 1 common capital. Prior to the current quarter, the Firm's required Capital was met by regulatory Tier 1 capital or Tier 1 common equity. Segment capital for prior quarters has been recast under this framework. Tier 1 common capital is defined as Tier 1 capital less non-common elements in Tier 1 capital, including perpetual preferred stock and related surplus, minority interest in subsidiaries, trust preferred securities and mandatory convertible preferred securities.
|
- |
The return on average common equity and average Tier 1 common capital are non-GAAP measures that the Firm considers to be useful measures that the Firm and investors use to assess operating performance.
|
|
- |
The MUFG conversion which occurred on June 30, 2011, did not have a material effect on firm or business segment average common equity for the three and six months ended June 30, 2011.
|
|
- |
For the quarter and six months ended June 30, 2011, the negative adjustment of $1.7 billion related to the MUFG conversion was allocated to the business segments and included in the numerator for the purpose of calculating the return on average common equity as follows: Institutional Securities $1.4 billion, Global Wealth Management $0.2 billion and Asset Management $0.1 billion. Excluding this negative adjustment, the return on average common equity for the quarter and six months ended June 30, 2011, would have been:
|
|
Quarter: Firm: 10%, Institutional Securities: 12%, Global Wealth Management: 5% and Asset Management: 3%
|
||
Six Months: Firm: 8%, Institutional Secuties: 9%, Global Wealth Management: 5% and Asset Management: 6%
|
||
- |
Refer to End Notes on pages 15-16 and Legal Notice on page 17.
|
MORGAN STANLEY
|
Quarterly Institutional Securities Income Statement Information
|
(unaudited, dollars in millions)
|
Quarter Ended
|
Percentage Change From:
|
Six Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
June 30, 2012
|
Mar 31, 2012
|
June 30, 2011
|
Mar 31, 2012
|
June 30, 2011
|
June 30, 2012
|
June 30, 2011
|
Change
|
|||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Investment banking
|
$ | 884 | $ | 851 | $ | 1,473 | 4 | % | (40 | %) | $ | 1,735 | $ | 2,481 | (30 | %) | ||||||||||||||||
Principal transactions:
|
||||||||||||||||||||||||||||||||
Trading
|
2,254 | 2,044 | 3,208 | 10 | % | (30 | %) | 4,298 | 5,855 | (27 | %) | |||||||||||||||||||||
Investments
|
46 | (49 | ) | 150 | * | (69 | %) | (3 | ) | 293 | * | |||||||||||||||||||||
Commissions and fees
|
509 | 548 | 605 | (7 | %) | (16 | %) | 1,057 | 1,274 | (17 | %) | |||||||||||||||||||||
Asset management, distribution and admin. fees
|
33 | 32 | 35 | 3 | % | (6 | %) | 65 | 65 | -- | ||||||||||||||||||||||
Other
|
51 | 58 | 92 | (12 | %) | (45 | %) | 109 | (510 | ) | * | |||||||||||||||||||||
Total non-interest revenues
|
3,777 | 3,484 | 5,563 | 8 | % | (32 | %) | 7,261 | 9,458 | (23 | %) | |||||||||||||||||||||
Interest income
|
931 | 1,145 | 1,579 | (19 | %) | (41 | %) | 2,076 | 3,065 | (32 | %) | |||||||||||||||||||||
Interest expense
|
1,474 | 1,606 | 1,983 | (8 | %) | (26 | %) | 3,080 | 3,796 | (19 | %) | |||||||||||||||||||||
Net interest
|
(543 | ) | (461 | ) | (404 | ) | (18 | %) | (34 | %) | (1,004 | ) | (731 | ) | (37 | %) | ||||||||||||||||
Net revenues
|
3,234 | 3,023 | 5,159 | 7 | % | (37 | %) | 6,257 | 8,727 | (28 | %) | |||||||||||||||||||||
Compensation and benefits
|
1,425 | 2,108 | 2,210 | (32 | %) | (36 | %) | 3,533 | 4,133 | (15 | %) | |||||||||||||||||||||
Non-compensation expenses
|
1,301 | 1,227 | 1,464 | 6 | % | (11 | %) | 2,528 | 2,677 | (6 | %) | |||||||||||||||||||||
Total non-interest expenses
|
2,726 | 3,335 | 3,674 | (18 | %) | (26 | %) | 6,061 | 6,810 | (11 | %) | |||||||||||||||||||||
Income (loss) from continuing operations before taxes
|
508 | (312 | ) | 1,485 | * | (66 | %) | 196 | 1,917 | (90 | %) | |||||||||||||||||||||
Income tax provision / (benefit) from continuing operations
|
72 | (105 | ) | 347 | * | (79 | %) | (33 | ) | (16 | ) | (106 | %) | |||||||||||||||||||
Income (loss) from continuing operations
|
436 | (207 | ) | 1,138 | * | (62 | %) | 229 | 1,933 | (88 | %) | |||||||||||||||||||||
Gain (loss) from discontinued operations after tax
|
(29 | ) | (17 | ) | (30 | ) | (71 | %) | 3 | % | (46 | ) | (53 | ) | 13 | % | ||||||||||||||||
Net income (loss)
|
407 | (224 | ) | 1,108 | * | (63 | %) | 183 | 1,880 | (90 | %) | |||||||||||||||||||||
Net income (loss) applicable to noncontrolling interests
|
55 | 89 | 117 | (38 | %) | (53 | %) | 144 | 178 | (19 | %) | |||||||||||||||||||||
Net income (loss) applicable to Morgan Stanley
|
$ | 352 | $ | (313 | ) | $ | 991 | * | (64 | %) | $ | 39 | $ | 1,702 | (98 | %) | ||||||||||||||||
Amounts applicable to Morgan Stanley:
|
||||||||||||||||||||||||||||||||
Income (loss) from continuing operations
|
381 | (296 | ) | 1,021 | * | (63 | %) | 85 | 1,755 | (95 | %) | |||||||||||||||||||||
Gain (loss) from discontinued operations after tax
|
(29 | ) | (17 | ) | (30 | ) | (71 | %) | 3 | % | (46 | ) | (53 | ) | 13 | % | ||||||||||||||||
Net income (loss) applicable to Morgan Stanley
|
$ | 352 | $ | (313 | ) | $ | 991 | * | (64 | %) | $ | 39 | $ | 1,702 | (98 | %) | ||||||||||||||||
Return on average common equity
|
||||||||||||||||||||||||||||||||
from continuing operations
|
5 | % | * | * | 0 | % | 0 | % | ||||||||||||||||||||||||
Pre-tax profit margin
|
16 | % | * | 29 | % | 3 | % | 22 | % | |||||||||||||||||||||||
Compensation and benefits as a % of net revenues
|
44 | % | 70 | % | 43 | % | 57 | % | 47 | % | ||||||||||||||||||||||
Notes:
|
- |
Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance. Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
|
- |
For the quarter ended June 30, 2012, discontinued operations included operating results related to Saxon.
|
|
- |
For the quarter ended March 31, 2012, discontinued operations included an after-tax loss related to the first phase of the previously announced disposition of Saxon.
|
|
- |
For the quarter and six months ended June 30, 2011, the negative adjustment related to the MUFG conversion was included in the numerator in the calculation of the return on average common equity. Excluding this negative adjustment, the return on average common equity for Institutional Securities would have been 12% and 9%, respectively for the quarter and six months ended June 30, 2011.
|
|
- |
Refer to Legal Notice on page 17.
|
MORGAN STANLEY
|
Quarterly Financial Information and Statistical Data
|
Institutional Securities
|
(unaudited, dollars in millions)
|
Quarter Ended
|
Percentage Change From:
|
Six Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
June 30, 2012
|
Mar 31, 2012
|
June 30, 2011
|
Mar 31, 2012
|
June 30, 2011
|
June 30, 2012
|
June 30, 2011
|
Change
|
|||||||||||||||||||||||||
Investment Banking
|
||||||||||||||||||||||||||||||||
Advisory revenues
|
$ | 263 | $ | 313 | $ | 533 | (16 | %) | (51 | %) | $ | 576 | $ | 918 | (37 | %) | ||||||||||||||||
Underwriting revenues
|
||||||||||||||||||||||||||||||||
Equity
|
283 | 172 | 419 | 65 | % | (32 | %) | 455 | 704 | (35 | %) | |||||||||||||||||||||
Fixed income
|
338 | 366 | 521 | (8 | %) | (35 | %) | 704 | 859 | (18 | %) | |||||||||||||||||||||
Total underwriting revenues
|
621 | 538 | 940 | 15 | % | (34 | %) | 1,159 | 1,563 | (26 | %) | |||||||||||||||||||||
Total investment banking revenues
|
$ | 884 | $ | 851 | $ | 1,473 | 4 | % | (40 | %) | $ | 1,735 | $ | 2,481 | (30 | %) | ||||||||||||||||
Sales & Trading
|
||||||||||||||||||||||||||||||||
Equity
|
$ | 1,218 | $ | 1,452 | $ | 1,853 | (16 | %) | (34 | %) | $ | 2,670 | $ | 3,555 | (25 | %) | ||||||||||||||||
Fixed Income and Commodities
|
1,046 | 997 | 2,098 | 5 | % | (50 | %) | 2,043 | 3,875 | (47 | %) | |||||||||||||||||||||
Other
|
(11 | ) | (286 | ) | (507 | ) | 96 | % | 98 | % | (297 | ) | (967 | ) | 69 | % | ||||||||||||||||
Total sales & trading net revenues
|
$ | 2,253 | $ | 2,163 | $ | 3,444 | 4 | % | (35 | %) | $ | 4,416 | $ | 6,463 | (32 | %) | ||||||||||||||||
Investments & Other
|
||||||||||||||||||||||||||||||||
Investments
|
$ | 46 | $ | (49 | ) | $ | 150 | * | (69 | %) | $ | (3 | ) | $ | 293 | * | ||||||||||||||||
Other
|
51 | 58 | 92 | (12 | %) | (45 | %) | 109 | (510 | ) | * | |||||||||||||||||||||
Total investments & other revenues
|
$ | 97 | $ | 9 | $ | 242 | * | (60 | %) | $ | 106 | $ | (217 | ) | * | |||||||||||||||||
Total Institutional Securities net revenues
|
$ | 3,234 | $ | 3,023 | $ | 5,159 | 7 | % | (37 | %) | $ | 6,257 | $ | 8,727 | (28 | %) | ||||||||||||||||
Average Daily 95% / One-Day Value-at-Risk ("VaR") (1)
|
||||||||||||||||||||||||||||||||
Primary Market Risk Category ($ millions, pre-tax)
|
||||||||||||||||||||||||||||||||
Interest rate and credit spread
|
$ | 75 | $ | 57 | $ | 117 | ||||||||||||||||||||||||||
Equity price
|
$ | 36 | $ | 33 | $ | 31 | ||||||||||||||||||||||||||
Foreign exchange rate
|
$ | 16 | $ | 16 | $ | 20 | ||||||||||||||||||||||||||
Commodity price
|
$ | 34 | $ | 31 | $ | 29 | ||||||||||||||||||||||||||
Aggregation of Primary Risk Categories
|
$ | 81 | $ | 72 | $ | 135 | ||||||||||||||||||||||||||
Credit Portfolio VaR
|
$ | 33 | $ | 40 | $ | 97 | ||||||||||||||||||||||||||
Trading VaR
|
$ | 91 | $ | 84 | $ | 145 | ||||||||||||||||||||||||||
Notes:
|
- |
For the periods noted below, sales and trading net revenues included positive (negative) revenue related to DVA as follows:
|
June 30, 2012: Total QTD: $350 million; Fixed Income & Commodities: $276 million; Equity: $74 million
|
||
March 31, 2012: Total: $(1,978) million; Fixed Income & Commodities: $(1,597) million; Equity: $(381) million
|
||
June 30, 2011: Total QTD: $244 million; Fixed Income & Commodities: $192 million; Equity: $52 million
|
||
June 30, 2012: Total YTD: $(1,628) million; Fixed Income & Commodities: $(1,321) million; Equity: $(307) million
|
||
June 30, 2011: Total YTD: $55 million; Fixed Income & Commodities: $33 million; Equity: $22 million
|
||
- |
Refer to End Notes on pages 15-16 and Legal Notice on page 17.
|
MORGAN STANLEY
|
Quarterly Financial Information and Statistical Data
|
Institutional Securities - Corporate Loans and Commitments
|
(unaudited, dollars in billions)
|
Quarter Ended
|
Percentage Change From:
|
|||||||||||||||||||
June 30, 2012
|
Mar 31, 2012
|
June 30, 2011
|
Mar 31, 2012
|
June 30, 2011
|
||||||||||||||||
Loans and commitments at fair value
|
||||||||||||||||||||
Corporate funded loans:
|
||||||||||||||||||||
Investment grade
|
$ | 5.2 | $ | 6.4 | $ | 7.2 | (19 | %) | (28 | %) | ||||||||||
Non-investment grade
|
5.9 | 6.8 | 7.1 | (13 | %) | (17 | %) | |||||||||||||
Total corporate funded loans
|
$ | 11.1 | $ | 13.2 | $ | 14.3 | (16 | %) | (22 | %) | ||||||||||
Corporate lending commitments:
|
||||||||||||||||||||
Investment grade
|
$ | 29.5 | $ | 41.5 | $ | 53.2 | (29 | %) | (45 | %) | ||||||||||
Non-investment grade
|
9.3 | 12.2 | 18.5 | (24 | %) | (50 | %) | |||||||||||||
Total corporate lending commitments
|
$ | 38.8 | $ | 53.7 | $ | 71.7 | (28 | %) | (46 | %) | ||||||||||
Corporate funded loans plus lending commitments:
|
||||||||||||||||||||
Investment grade
|
$ | 34.7 | $ | 47.9 | $ | 60.4 | (28 | %) | (43 | %) | ||||||||||
Non-investment grade
|
15.2 | 19.0 | 25.6 | (20 | %) | (41 | %) | |||||||||||||
Total loans and commitments at fair value
|
$ | 49.9 | $ | 66.9 | $ | 86.0 | (25 | %) | (42 | %) | ||||||||||
% investment grade
|
70 | % | 72 | % | 70 | % | ||||||||||||||
% non-investment grade
|
30 | % | 28 | % | 30 | % | ||||||||||||||
Held for investment (HFI) portfolio
|
$ | 32.9 | $ | 18.1 | $ | 1.6 | 82 | % | * | |||||||||||
Held for sale (HFS) portfolio
|
$ | 8.1 | $ | 0.5 | $ | - | * | * | ||||||||||||
Total Corporate Lending Exposure
|
$ | 90.9 | $ | 85.5 | $ | 87.6 | 6 | % | 4 | % | ||||||||||
Hedges
|
$ | 24.4 | $ | 33.8 | $ | 34.0 | (28 | %) | (28 | %) | ||||||||||
Notes:
|
- |
In connection with certain of its Institutional Securities business activities, the Firm provides loans or lending commitments to select clients related to its event driven or relationship lending activities. For a further discussion of this activity, see the Firm's Annual Report on Form 10-K for the year ended December 31, 2011.
|
- |
Total Corporate Lending exposure represents the Firm's potential loss assuming the market price of funded loans and lending commitments was zero.
|
|
- |
On June 30, 2012, March 31, 2012 and June 30, 2011, the "event-driven" portfolio of pipeline commitments and closed deals to non-investment grade borrowers were $4.8 billion, $3.8 billion, and $7.2 billion, respectively.
|
|
- |
On June 30, 2012, March 31, 2012 and June 30, 2011, the HFI portfolio allowance for loan losses for funded loans was $58 million, $15 million and $0.6 million, respectively.
|
|
- |
On June 30, 2012, March 31, 2012 and June 30, 2011, the HFI portfolio allowance for credit losses for loan commitments was $27 million, $12 million and $0.4 million, respectively.
|
|
- |
Held for sale portfolio reflects loans and commitments carried at the lower of cost or fair market value.
|
|
- |
The hedge balance reflects the notional amount utilized by the corporate lending business.
|
|
- |
Refer to Legal Notice on page 17.
|
MORGAN STANLEY
|
Quarterly Global Wealth Management Group Income Statement Information
|
(unaudited, dollars in millions)
|
Quarter Ended
|
Percentage Change From:
|
Six Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
June 30, 2012
|
Mar 31, 2012
|
June 30, 2011
|
Mar 31, 2012
|
June 30, 2011
|
June 30, 2012
|
June 30, 2011
|
Change
|
|||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Investment banking
|
$ | 223 | $ | 205 | $ | 219 | 9 | % | 2 | % | $ | 428 | $ | 423 | 1 | % | ||||||||||||||||
Principal transactions:
|
||||||||||||||||||||||||||||||||
Trading
|
222 | 371 | 289 | (40 | %) | (23 | %) | 593 | 622 | (5 | %) | |||||||||||||||||||||
Investments
|
1 | 2 | 5 | (50 | %) | (80 | %) | 3 | 9 | (67 | %) | |||||||||||||||||||||
Commissions and fees
|
531 | 630 | 679 | (16 | %) | (22 | %) | 1,161 | 1,449 | (20 | %) | |||||||||||||||||||||
Asset management, distribution and admin. fees
|
1,857 | 1,739 | 1,755 | 7 | % | 6 | % | 3,596 | 3,417 | 5 | % | |||||||||||||||||||||
Other
|
80 | 57 | 147 | 40 | % | (46 | %) | 137 | 237 | (42 | %) | |||||||||||||||||||||
Total non-interest revenues
|
2,914 | 3,004 | 3,094 | (3 | %) | (6 | %) | 5,918 | 6,157 | (4 | %) | |||||||||||||||||||||
Interest income
|
489 | 490 | 464 | -- | 5 | % | 979 | 917 | 7 | % | ||||||||||||||||||||||
Interest expense
|
98 | 80 | 118 | 23 | % | (17 | %) | 178 | 230 | (23 | %) | |||||||||||||||||||||
Net interest
|
391 | 410 | 346 | (5 | %) | 13 | % | 801 | 687 | 17 | % | |||||||||||||||||||||
Net revenues
|
3,305 | 3,414 | 3,440 | (3 | %) | (4 | %) | 6,719 | 6,844 | (2 | %) | |||||||||||||||||||||
Compensation and benefits
|
1,994 | 2,105 | 2,132 | (5 | %) | (6 | %) | 4,099 | 4,241 | (3 | %) | |||||||||||||||||||||
Non-compensation expenses
|
918 | 922 | 991 | -- | (7 | %) | 1,840 | 1,942 | (5 | %) | ||||||||||||||||||||||
Total non-interest expenses
|
2,912 | 3,027 | 3,123 | (4 | %) | (7 | %) | 5,939 | 6,183 | (4 | %) | |||||||||||||||||||||
Income (loss) from continuing operations before taxes
|
393 | 387 | 317 | 2 | % | 24 | % | 780 | 661 | 18 | % | |||||||||||||||||||||
Income tax provision / (benefit) from continuing operations
|
148 | 121 | 137 | 22 | % | 8 | % | 269 | 226 | 19 | % | |||||||||||||||||||||
Income (loss) from continuing operations
|
245 | 266 | 180 | (8 | %) | 36 | % | 511 | 435 | 17 | % | |||||||||||||||||||||
Gain (loss) from discontinued operations after tax
|
61 | 1 | 4 | * | * | 62 | 6 | * | ||||||||||||||||||||||||
Net income (loss)
|
306 | 267 | 184 | 15 | % | 66 | % | 573 | 441 | 30 | % | |||||||||||||||||||||
Net income (loss) applicable to noncontrolling interests
|
81 | 74 | 4 | 9 | % | * | 155 | 78 | 99 | % | ||||||||||||||||||||||
Net income (loss) applicable to Morgan Stanley
|
$ | 225 | $ | 193 | $ | 180 | 17 | % | 25 | % | $ | 418 | $ | 363 | 15 | % | ||||||||||||||||
Amounts applicable to Morgan Stanley:
|
||||||||||||||||||||||||||||||||
Income (loss) from continuing operations
|
172 | 193 | 178 | (11 | %) | (3 | %) | 365 | 360 | 1 | % | |||||||||||||||||||||
Gain (loss) from discontinued operations after tax
|
53 | 0 | 2 | * | * | 53 | 3 | * | ||||||||||||||||||||||||
Net income (loss) applicable to Morgan Stanley
|
$ | 225 | $ | 193 | $ | 180 | 17 | % | 25 | % | $ | 418 | $ | 363 | 15 | % | ||||||||||||||||
Return on average common equity
|
||||||||||||||||||||||||||||||||
from continuing operations
|
5 | % | 6 | % | * | 5 | % | 2 | % | |||||||||||||||||||||||
Pre-tax profit margin
|
12 | % | 11 | % | 9 | % | 12 | % | 10 | % | ||||||||||||||||||||||
Compensation and benefits as a % of net revenues
|
60 | % | 62 | % | 62 | % | 61 | % | 62 | % | ||||||||||||||||||||||
Notes:
|
- |
Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance. Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
|
- |
For the quarter ended June 30, 2012, discontinued operations included a pre-tax gain of $108 million ($73 million after-tax) and other operating income related to the sale of Quilter.
|
|
- |
For the quarter and six months ended June 30, 2011, the negative adjustment related to the MUFG conversion was included in the numerator in the caluclation of the return on average common equity. Excluding this negative adjustment, the return on average common equity for Global Wealth Management would have been 5% and 5%, respectively, for the quarter and six months ended June 30, 2011.
|
|
- |
Net income (loss) applicable to noncontrolling interests reflects the 49% allocation of MSSB's pre-tax results to Citigroup.
|
|
- |
Refer to Legal Notice on page 17.
|
MORGAN STANLEY
|
||||||||||||||||||||
Quarterly Financial Information and Statistical Data
|
||||||||||||||||||||
Global Wealth Management Group
|
||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||
Quarter Ended
|
Percentage Change From:
|
|||||||||||||||||||
June 30, 2012
|
Mar 31, 2012
|
June 30, 2011
|
Mar 31, 2012
|
June 30, 2011
|
||||||||||||||||
Global representatives
|
16,934 | 17,193 | 17,987 | (2 | %) | (6 | %) | |||||||||||||
Annualized revenue per global
|
||||||||||||||||||||
representative (000's)
|
$ | 775 | $ | 787 | $ | 762 | (2 | %) | 2 | % | ||||||||||
Assets by client segment (billions)
|
||||||||||||||||||||
$10m or more
|
560 | 588 | 538 | (5 | %) | 4 | % | |||||||||||||
$1m - $10m | 704 | 735 | 729 | (4 | %) | (3 | %) | |||||||||||||
Subtotal - > $1m
|
1,264 | 1,323 | 1,267 | (4 | %) | -- | ||||||||||||||
$100k - $1m | 399 | 381 | 392 | 5 | % | 2 | % | |||||||||||||
< $100k
|
44 | 40 | 38 | 10 | % | 16 | % | |||||||||||||
Total client assets (billions)
|
$ | 1,707 | $ | 1,744 | $ | 1,697 | (2 | %) | 1 | % | ||||||||||
% of assets by client segment > $1m
|
74 | % | 76 | % | 75 | % | ||||||||||||||
Fee-based client account assets (billions)
|
$ | 526 | $ | 531 | $ | 498 | (1 | %) | 6 | % | ||||||||||
Fee-based assets as a % of client assets
|
31 | % | 30 | % | 29 | % | ||||||||||||||
Bank deposit program (millions)
|
$ | 112,418 | $ | 111,981 | $ | 110,354 | -- | 2 | % | |||||||||||
Client assets per global
|
||||||||||||||||||||
representative (millions)
|
$ | 101 | $ | 101 | $ | 94 | -- | 7 | % | |||||||||||
Global fee based asset flows (billions)
|
$ | 4.1 | $ | 8.7 | $ | 9.5 | (53 | %) | (57 | %) | ||||||||||
Global retail locations
|
740 | 743 | 792 | -- | (7 | %) | ||||||||||||||
Notes: | - |
Annualized revenue per global representative is defined as annualized revenue divided by average global representative headcount.
|
- |
Fee-based client account assets represent the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets.
|
|
- |
For the quarters ended June 30, 2012, March 31, 2012 and June 30, 2011, approximately $58 billion, $57 billion and $56 billion, respectively, of the assets in the bank deposit program are attributable to Morgan Stanley.
|
|
- |
Global fee based asset flows represent the net asset flows, excluding interest and dividends, in client accounts where the basis of payment for services is a fee calculated on those assets.
|
|
- |
Client assets per global representative represents total client assets divided by period end global representative headcount.
|
|
- |
Refer to Legal Notice on page 17.
|
MORGAN STANLEY
|
||||||||||||||||||||||||||||||||
Quarterly Asset Management Income Statement Information
|
||||||||||||||||||||||||||||||||
(unaudited, dollars in millions)
|
||||||||||||||||||||||||||||||||
Quarter Ended
|
Percentage Change From:
|
Six Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
June 30, 2012
|
Mar 31, 2012
|
June 30, 2011
|
Mar 31, 2012
|
June 30, 2011
|
June 30, 2012
|
June 30, 2011
|
Change
|
|||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Investment banking
|
$ | 1 | $ | 7 | $ | 3 | (86 | %) | (67 | %) | $ | 8 | $ | 5 | 60 | % | ||||||||||||||||
Principal transactions:
|
||||||||||||||||||||||||||||||||
Trading
|
(3 | ) | (6 | ) | (11 | ) | 50 | % | 73 | % | (9 | ) | (12 | ) | 25 | % | ||||||||||||||||
Investments (1)
|
16 | 132 | 247 | (88 | %) | (94 | %) | 148 | 429 | (66 | %) | |||||||||||||||||||||
Commissions and fees
|
0 | 0 | 0 | -- | -- | 0 | 0 | -- | ||||||||||||||||||||||||
Asset management, distribution and admin. fees
|
408 | 411 | 406 | (1 | %) | -- | 819 | 811 | 1 | % | ||||||||||||||||||||||
Other
|
43 | (3 | ) | 1 | * | * | 40 | 43 | (7 | %) | ||||||||||||||||||||||
Total non-interest revenues
|
465 | 541 | 646 | (14 | %) | (28 | %) | 1,006 | 1,276 | (21 | %) | |||||||||||||||||||||
Interest income
|
2 | 3 | 3 | (33 | %) | (33 | %) | 5 | 7 | (29 | %) | |||||||||||||||||||||
Interest expense
|
11 | 11 | 13 | -- | (15 | %) | 22 | 25 | (12 | %) | ||||||||||||||||||||||
Net interest
|
(9 | ) | (8 | ) | (10 | ) | (13 | %) | 10 | % | (17 | ) | (18 | ) | 6 | % | ||||||||||||||||
Net revenues
|
456 | 533 | 636 | (14 | %) | (28 | %) | 989 | 1,258 | (21 | %) | |||||||||||||||||||||
Compensation and benefits
|
214 | 218 | 280 | (2 | %) | (24 | %) | 432 | 533 | (19 | %) | |||||||||||||||||||||
Non-compensation expenses
|
199 | 187 | 188 | 6 | % | 6 | % | 386 | 432 | (11 | %) | |||||||||||||||||||||
Total non-interest expenses
|
413 | 405 | 468 | 2 | % | (12 | %) | 818 | 965 | (15 | %) | |||||||||||||||||||||
Income (loss) from continuing operations before taxes
|
43 | 128 | 168 | (66 | %) | (74 | %) | 171 | 293 | (42 | %) | |||||||||||||||||||||
Income tax provision / (benefit) from continuing operations
|
6 | 38 | 54 | (84 | %) | (89 | %) | 44 | 84 | (48 | %) | |||||||||||||||||||||
Income (loss) from continuing operations
|
37 | 90 | 114 | (59 | %) | (68 | %) | 127 | 209 | (39 | %) | |||||||||||||||||||||
Gain (loss) from discontinued operations after tax
|
0 | 1 | 0 | * | -- | 1 | 6 | (83 | %) | |||||||||||||||||||||||
Net income (loss)
|
37 | 91 | 114 | (59 | %) | (68 | %) | 128 | 215 | (40 | %) | |||||||||||||||||||||
Net income (loss) applicable to noncontrolling interests (1)
|
23 | 65 | 92 | (65 | %) | (75 | %) | 88 | 119 | (26 | %) | |||||||||||||||||||||
Net income (loss) applicable to Morgan Stanley
|
$ | 14 | $ | 26 | $ | 22 | (46 | %) | (36 | %) | $ | 40 | $ | 96 | (58 | %) | ||||||||||||||||
Amounts applicable to Morgan Stanley:
|
||||||||||||||||||||||||||||||||
Income (loss) from continuing operations
|
14 | 25 | 22 | (44 | %) | (36 | %) | 39 | 90 | (57 | %) | |||||||||||||||||||||
Gain (loss) from discontinued operations after tax
|
0 | 1 | 0 | * | -- | 1 | 6 | (83 | %) | |||||||||||||||||||||||
Net income (loss) applicable to Morgan Stanley
|
$ | 14 | $ | 26 | $ | 22 | (46 | %) | (36 | %) | $ | 40 | $ | 96 | (58 | %) | ||||||||||||||||
Return on average common equity
|
||||||||||||||||||||||||||||||||
from continuing operations
|
2 | % | 4 | % | * | 3 | % | * | ||||||||||||||||||||||||
Pre-tax profit margin
|
9 | % | 24 | % | 26 | % | 17 | % | 23 | % | ||||||||||||||||||||||
Compensation and benefits as a % of net revenues
|
47 | % | 41 | % | 44 | % | 44 | % | 42 | % | ||||||||||||||||||||||
Notes:
|
- |
Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure that the Firm and investors use to assess operating performance.
|
- |
For the quarter and six months ended June 30, 2011, the negative adjustment related to the MUFG conversion was included in the numerator in the calculation of the return on average common equity. Excluding this negative adjustment, the return on average common equity for Asset Management would have been 3% and 6%, respectively, for the quarter and six months ended June 30, 2011.
|
|
Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
|
||
- |
Refer to End Notes on pages 15-16 and Legal Notice on page 17.
|
MORGAN STANLEY
|
||||||||||||||||||||||||||||||||
Quarterly Financial Information and Statistical Data
|
||||||||||||||||||||||||||||||||
Asset Management
|
||||||||||||||||||||||||||||||||
(unaudited, dollars in billions)
|
||||||||||||||||||||||||||||||||
Quarter Ended
|
Percentage Change From:
|
Six Months Ended
|
Percentage
|
|||||||||||||||||||||||||||||
June 30, 2012
|
Mar 31, 2012
|
June 30, 2011
|
Mar 31, 2012
|
June 30, 2011
|
June 30, 2012
|
June 30, 2011
|
Change
|
|||||||||||||||||||||||||
Net Revenues
|
||||||||||||||||||||||||||||||||
Traditional Asset Management
|
$ | 337 | $ | 342 | $ | 366 | (1 | %) | (8 | %) | $ | 679 | $ | 692 | (2 | %) | ||||||||||||||||
Real Estate Investing (1)
|
122 | 146 | 166 | (16 | %) | (27 | %) | 268 | 279 | (4 | %) | |||||||||||||||||||||
Merchant Banking
|
(3 | ) | 45 | 104 | * | * | 42 | 287 | (85 | %) | ||||||||||||||||||||||
Total Asset Management
|
$ | 456 | $ | 533 | $ | 636 | (14 | %) | (28 | %) | $ | 989 | $ | 1,258 | (21 | %) | ||||||||||||||||
Assets under management or supervision
|
||||||||||||||||||||||||||||||||
Net flows by asset class (2)
|
||||||||||||||||||||||||||||||||
Traditional Asset Management
|
||||||||||||||||||||||||||||||||
Equity
|
$ | 1.2 | $ | (0.9 | ) | $ | 1.4 | * | (14 | %) | $ | 0.3 | $ | 3.4 | (91 | %) | ||||||||||||||||
Fixed Income
|
(0.4 | ) | (0.7 | ) | (2.4 | ) | 43 | % | 83 | % | (1.1 | ) | (3.0 | ) | 63 | % | ||||||||||||||||
Liquidity
|
11.5 | 1.2 | 16.5 | * | (30 | %) | 12.7 | 18.1 | (30 | %) | ||||||||||||||||||||||
Alternatives
|
0.8 | (0.1 | ) | 0.2 | * | * | 0.7 | 0.1 | * | |||||||||||||||||||||||
Total Traditional Asset Management
|
13.1 | (0.5 | ) | 15.7 | * | (17 | %) | 12.6 | 18.6 | (32 | %) | |||||||||||||||||||||
Real Estate Investing
|
0.0 | 0.7 | (0.1 | ) | * | * | 0.7 | 0.1 | * | |||||||||||||||||||||||
Merchant Banking
|
0.0 | 0.0 | 0.1 | -- | * | 0.0 | (1.6 | ) | * | |||||||||||||||||||||||
Total net flows
|
$ | 13.1 | $ | 0.2 | $ | 15.7 | * | (17 | %) | $ | 13.3 | $ | 17.1 | (22 | %) | |||||||||||||||||
Assets under management or supervision by asset class (3)
|
||||||||||||||||||||||||||||||||
Traditional Asset Management
|
||||||||||||||||||||||||||||||||
Equity
|
$ | 113 | $ | 117 | $ | 119 | (3 | %) | (5 | %) | ||||||||||||||||||||||
Fixed Income
|
58 | 58 | 61 | -- | (5 | %) | ||||||||||||||||||||||||||
Liquidity
|
86 | 75 | 72 | 15 | % | 19 | % | |||||||||||||||||||||||||
Alternatives
|
26 | 26 | 18 | -- | 44 | % | ||||||||||||||||||||||||||
Total Traditional Asset Management
|
283 | 276 | 270 | 3 | % | 5 | % | |||||||||||||||||||||||||
Real Estate Investing
|
19 | 19 | 17 | -- | 12 | % | ||||||||||||||||||||||||||
Merchant Banking
|
9 | 9 | 9 | -- | -- | |||||||||||||||||||||||||||
Total Assets Under Management or Supervision
|
$ | 311 | $ | 304 | $ | 296 | 2 | % | 5 | % | ||||||||||||||||||||||
Share of minority stake assets
|
5 | 6 | 7 | (17 | %) | (29 | %) | |||||||||||||||||||||||||
Notes:
|
- |
The alternatives asset class includes a range of investment products such as funds of hedge funds, funds of private equity funds and funds of real estate funds.
|
- |
The share of minority stake assets represents Asset Management's proportional share of assets managed by entities in which it owns a minority stake.
|
|
- |
Refer to End Notes on pages 15-16 and Legal Notice on page 17.
|
MORGAN STANLEY
|
||||||||||||||||||||||||||||||||
Country Risk Exposure (1) - European Peripherals and France
|
||||||||||||||||||||||||||||||||
As of June 30, 2012
|
||||||||||||||||||||||||||||||||
(unaudited, dollars in millions)
|
||||||||||||||||||||||||||||||||
Net
|
Exposure
|
|||||||||||||||||||||||||||||||
Net
|
Counterparty
|
Funded
|
Unfunded
|
CDS
|
Before
|
|||||||||||||||||||||||||||
Inventory (2)
|
Exposure (3)
|
Lending
|
Commitments
|
Adjustment (4)
|
Hedges
|
Hedges (5)
|
Net Exposure
|
|||||||||||||||||||||||||
Greece
|
||||||||||||||||||||||||||||||||
Sovereigns
|
$ | 24 | $ | 13 | $ | - | $ | - | $ | - | $ | 37 | $ | - | $ | 37 | ||||||||||||||||
Non-sovereigns
|
86 | 5 | 34 | - | - | 125 | (34 | ) | 91 | |||||||||||||||||||||||
Sub-total
|
110 | 18 | 34 | - | - | 162 | (34 | ) | 128 | |||||||||||||||||||||||
Ireland
|
||||||||||||||||||||||||||||||||
Sovereigns
|
34 | 10 | - | - | 4 | 48 | (2 | ) | 46 | |||||||||||||||||||||||
Non-sovereigns
|
103 | 96 | 73 | 3 | 16 | 291 | (18 | ) | 273 | |||||||||||||||||||||||
Sub-total
|
137 | 106 | 73 | 3 | 20 | 339 | (20 | ) | 319 | |||||||||||||||||||||||
Italy
|
||||||||||||||||||||||||||||||||
Sovereigns
|
(610 | ) | 279 | - | - | 279 | (52 | ) | (183 | ) | (235 | ) | ||||||||||||||||||||
Non-sovereigns
|
322 | 668 | 426 | 1,406 | 166 | 2,988 | (505 | ) | 2,483 | |||||||||||||||||||||||
Sub-total
|
(288 | ) | 947 | 426 | 1,406 | 445 | 2,936 | (688 | ) | 2,248 | ||||||||||||||||||||||
Spain
|
||||||||||||||||||||||||||||||||
Sovereigns
|
(336 | ) | 16 | - | - | 506 | 186 | (16 | ) | 170 | ||||||||||||||||||||||
Non-sovereigns
|
225 | 472 | 77 | 777 | 184 | 1,735 | (306 | ) | 1,429 | |||||||||||||||||||||||
Sub-total
|
(111 | ) | 488 | 77 | 777 | 690 | 1,921 | (322 | ) | 1,599 | ||||||||||||||||||||||
Portugal
|
||||||||||||||||||||||||||||||||
Sovereigns
|
(285 | ) | 29 | - | - | 26 | (230 | ) | (83 | ) | (313 | ) | ||||||||||||||||||||
Non-sovereigns
|
66 | 33 | 127 | - | 54 | 280 | (85 | ) | 195 | |||||||||||||||||||||||
Sub-total
|
(219 | ) | 62 | 127 | - | 80 | 50 | (168 | ) | (118 | ) | |||||||||||||||||||||
Total Euro Peripherals (6)
|
||||||||||||||||||||||||||||||||
Sovereigns
|
(1,173 | ) | 347 | - | - | 815 | (11 | ) | (284 | ) | (295 | ) | ||||||||||||||||||||
Non-sovereigns
|
802 | 1,274 | 737 | 2,186 | 420 | 5,419 | (948 | ) | 4,471 | |||||||||||||||||||||||
Sub-total
|
(371 | ) | 1,621 | 737 | 2,186 | 1,235 | 5,408 | (1,232 | ) | 4,176 | ||||||||||||||||||||||
France (6)
|
||||||||||||||||||||||||||||||||
Sovereigns
|
(1,879 | ) | 237 | - | - | 11 | (1,631 | ) | (319 | ) | (1,950 | ) | ||||||||||||||||||||
Non-sovereigns
|
11 | 2,060 | 258 | 1,718 | 326 | 4,373 | (1,071 | ) | 3,302 | |||||||||||||||||||||||
Sub-total
|
$ | (1,868 | ) | $ | 2,297 | $ | 258 | $ | 1,718 | $ | 337 | $ | 2,742 | $ | (1,390 | ) | $ | 1,352 | ||||||||||||||
(1)
|
Country risk exposure is measured in accordance with the Firm’s internal risk management standards and includes obligations from sovereign and non-sovereigns, which includes governments, corporations, clearinghouses and financial institutions.
|
(2)
|
Net inventory representing exposure to both long and short single name and index positions (i.e., bonds and equities at fair value and CDS based on notional amount assuming zero recovery adjusted for any fair value receivable or payable).
|
(3)
|
Net counterparty exposure (i.e., repurchase transactions, securities lending and OTC derivatives) taking into consideration legally enforceable master netting agreements and collateral.
|
(4)
|
CDS adjustment represents credit protection purchased from European peripheral banks on European peripheral sovereign and financial institution risk, or French banks on French sovereign and financial institution risk.
|
Based on the CDS notional amount assuming zero recovery adjusted for any fair value receivable or payable.
|
|
(5)
|
Represents CDS hedges on net counterparty exposure and funded lending. Based on the CDS notional amount assuming zero recovery adjusted for any fair value receivable or payable.
|
(6)
|
In addition, at June 30, 2012, the Firm had European Peripherals and French exposure for overnight deposits with banks of approximately $84 million and $19 million, respectively.
|
- Refer to Legal Notice on page 17.
|
MORGAN STANLEY
|
||||||||
Earnings Per Share Calculation Under Two-Class Method
|
||||||||
Three Months Ended June 30, 2012
|
||||||||
(unaudited, in millions, except for per share data)
|
||||||||
Allocation of net income from continuing operations
|
||||||||
(A)
|
(B)
|
(C)
|
(D)
|
(E)
|
(F)
|
(G)
|
||
(D)+(E)
|
(F)/(A)
|
|||||||
Weighted Average # of
Shares
|
% Allocation (2)
|
Net income from
continuing operations
applicable to Morgan
Stanley (3)
|
Distributed Earnings (4)
|
Undistributed Earnings (5)
|
Total Earnings
Allocated
|
Basic EPS (8)
|
||
Basic Common Shares
|
1,885
|
99%
|
$94
|
$442
|
$536
|
(6)
|
$0.28
|
|
Participating Restricted Stock Units (1)
|
10
|
1%
|
$1
|
$2
|
$3
|
(7)
|
N/A
|
|
1,895
|
100%
|
$539
|
$95
|
$444
|
$539
|
|||
Allocation of gain (loss) from discontinued operations
|
||||||||
(A)
|
(B)
|
(C)
|
(D)
|
(E)
|
(F)
|
(G)
|
||
(D)+(E)
|
(F)/(A)
|
|||||||
Weighted Average # of
Shares
|
% Allocation (2)
|
Gain (loss) from
Discontinued Operations
Applicable to Common
Shareholders, after Tax (3)
|
Distributed Earnings (4)
|
Undistributed Earnings (5)
|
Total Earnings
Allocated
|
Basic EPS (8)
|
||
Basic Common Shares
|
1,885
|
99%
|
$0
|
$28
|
$28
|
(6)
|
$0.02
|
|
Participating Restricted Stock Units (1)
|
10
|
1%
|
$0
|
$0
|
$0
|
(7)
|
N/A
|
|
1,895
|
100%
|
$28
|
$0
|
$28
|
$28
|
|||
Allocation of net income applicable to common shareholders
|
||||||||
(A)
|
(B)
|
(C)
|
(D)
|
(E)
|
(F)
|
(G)
|
||
(D)+(E)
|
(F)/(A)
|
|||||||
Weighted Average # of
Shares
|
% Allocation (2)
|
Net income applicable to
Morgan Stanley (3)
|
Distributed Earnings (4)
|
Undistributed Earnings (5)
|
Total Earnings
Allocated
|
Basic EPS (8)
|
||
Basic Common Shares
|
1,885
|
99%
|
$94
|
$470
|
$564
|
(6)
|
$0.30
|
|
Participating Restricted Stock Units (1)
|
10
|
1%
|
$1
|
$2
|
$3
|
(7)
|
N/A
|
|
1,895
|
100%
|
$567
|
$95
|
$472
|
$567
|
|||
Note: | - |
Refer to End Notes on pages 15-16 and Legal Notice on page 17.
|
Page 4:
|
|
(1)
|
Reflects the regional view of the Firm's consolidated net revenues, on a managed basis, based on the following methodology:
|
Institutional Securities: investment banking - client location, equity capital markets - client location, debt capital markets - revenue
|
|
recording location, sales & trading - trading desk location. Global Wealth Management: financial advisor location. Asset Management:
|
|
client location except for the merchant banking business which is based on asset location.
|
|
(2)
|
Risk weighted assets (RWA) are calculated in accordance with the regulatory capital requirements of the Federal Reserve. RWAs reflect both on
|
and off-balance sheet risk of the Firm. Market RWAs reflect capital charges attributable to the risk of loss resulting from adverse changes
|
|
in market prices and other factors. Credit RWAs reflect capital charges attributable to the risk of loss arising from a borrower or counterparty
|
|
failing to meet its financial obligations.
|
|
(3)
|
The Global Liquidity Reserve, which is held within the Parent and operating subsidiaries, is comprised of highly liquid and diversified cash and cash
|
equivalents and unencumbered securities. Eligible unencumbered securities include U.S. government securities, U.S. agency securities, U.S.
|
|
agency mortgage-backed securities, FDIC-guaranteed corporate debt and non-U.S. government securities. For a further discussion of the Firm's
|
|
Global Liquidity Reserve, see the Firm's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.
|
|
(4)
|
Goodwill and intangible balances net of allowable mortgage servicing rights deduction for quarters ended June 30, 2012, March 31, 2012
|
and June 30, 2011 of $7 million, $89 million and $120 million, respectively.
|
|
(5)
|
In accordance with the Federal Reserve Board's formalized definition as of December 30, 2011, Tier 1 common capital is defined as Tier 1
|
capital less non-common elements in Tier 1 capital, including perpetual preferred stock and related surplus, minority interest in subsidiaries, trust
|
|
preferred securities and mandatory convertible preferred securities. Prior periods have been recast to conform to this definition. This computation
|
|
is a preliminary estimate as of July 19, 2012 (the date of this release) and could be subject to revision in Morgan Stanley’s Quarterly Report on
|
|
Form 10-Q for the quarter ended June 30, 2012.
|
|
(6)
|
Tier 1 capital consists predominately of common shareholders' equity as well as qualifying preferred stock and qualifying restricted core capital
|
elements (trust preferred securities and noncontrolling interests) less goodwill, non-servicing intangible assets (excluding allowable mortgage
|
|
servicing rights), net deferred tax assets (recoverable in excess of one year), an after-tax debt valuation adjustment and certain other deductions,
|
|
including equity investments. This computation is a preliminary estimate as of July 19, 2012 (the date of this release) and could be subject to
|
|
revision in Morgan Stanley’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012.
|
|
Page 5:
|
|
(1)
|
The Firm’s capital estimation is based on the Required Capital framework, an internal capital adequacy measure which considers a risk-based
|
going concern capital after absorbing potential losses from extreme stress events at a point in time. Beginning in the quarter ended March 31,
|
|
2012, the Firm's Required Capital is met by Tier 1 common capital. Tier 1 common capital and common equity attribution to business segment is
|
|
based on capital usage calculated by the framework. The difference between the Firm's Tier 1 common capital and aggregate Required Capital is
|
|
the Firm's Parent capital. The Firm generally holds parent capital for prospective regulatory requirements, including Basel III, organic growth,
|
|
acquisitions and other capital needs. The Required Capital framework will continue to evolve over time in response to changes in the business
|
|
and regulatory environment and to incorporate enhancements in modeling techniques.
|
|
Page 7:
|
|
(1)
|
Represents the loss amount 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. Trading VaR for all primary market risk categories
|
|
has been recast for all periods to exclude Credit Portfolio VaR which includes mark-to-market relationship lending exposures and associated
|
|
hedges as well as counterparty credit risk valuation adjustments including its related hedges. Credit Portfolio VaR is disclosed as a separate
|
|
category. The Firm considers this new allocation method to be a more transparent view of the Firm's traded market risk. For further
|
|
discussion of the calculation of VaR and the limitations of the Firm's VaR methodology, see Part II, Item 7A "Quantitative and Qualitative
|
|
Disclosures about Market Risk" included in the Firm's 10-K for the year ended December 31, 2011.
|
|
Page 11:
|
|
(1)
|
The quarters ended June 30, 2012, March 31, 2012 and June 30, 2011, include investment gains (losses) for certain funds
|
included in the Firm's consolidated financial statements. The limited partnership interests in these gains were reported in net income (loss)
|
|
applicable to noncontrolling interests.
|
Page 12:
|
|
(1)
|
Real Estate Investing revenues include gains or losses related to principal investments held by certain consolidated real estate funds.
|
These gains or losses are offset in the net income (loss) applicable to noncontrolling interest. The investment gains (losses) for the
|
|
quarters ended June 30, 2012, March 31, 2012 and June 30, 2011, are $24 million, $67 million and $95 million, respectively.
|
(2)
|
Net Flows by region [inflow / (outflow)] for the quarters ended June 30, 2012, March 31, 2012 and June 30, 2011 are:
|
North America: $7.0 billion, $(2.5) billion and $14.5 billion
|
|
International: $6.1 billion, $2.7 billion and $1.2 billion
|
|
(3)
|
Assets under management or supervision by region for the quarters ended June 30, 2012, March 31, 2012 and June 30, 2011 are:
|
North America: $198 billion, $195 billion and $193 billion
|
|
International: $113 billion, $109 billion and $103 billion
|
|
Page 14:
|
|
(1)
|
Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid)
|
are participating securities and are included in the computation of EPS pursuant to the two-class method. Restricted Stock Units ("RSUs")
|
|
that pay dividend equivalents subject to vesting are not deemed participating securities and are included in diluted shares outstanding
|
|
(if dilutive) under the treasury stock method.
|
|
(2)
|
The percentage of weighted basic common shares and participating RSUs to the total weighted average of basic common shares
|
and participating RSUs.
|
|
(3)
|
Represents net income from continuing operations, gain (loss) from discontinued operations (after-tax), and net income applicable
|
to Morgan Stanley for the quarter ended June 30, 2012 prior to allocations to participating RSUs.
|
|
(4)
|
Distributed earnings represent the dividends declared on common shares and participating RSUs for the quarter ended June 30, 2012.
|
The amount of dividends declared is based upon the number of common shares outstanding as of the dividend record date. During
|
|
the quarter ended June 30, 2012, a $0.05 dividend was declared on common shares outstanding and participating RSUs.
|
|
(5)
|
The two-class method assumes all of the earnings for the reporting period are distributed and allocated to the participating RSUs
|
what they would be entitled to based on their contractual rights and obligations of the participating security.
|
|
(6)
|
Total income applicable to common shareholders to be allocated to the common shares in calculating basic and diluted EPS for
|
common shares.
|
|
(7)
|
Total income applicable to common shareholders to be allocated to the participating RSUs reflected as a deduction to the numerator in
|
determining basic and diluted EPS for common shares.
|
|
(8)
|
Basic and diluted EPS data are required to be presented only for classes of common stock, as described under the accounting guidance
|
for earnings per share.
|
17 |