EX-99.2 3 a53609042ex99_2.htm EXHIBIT 99.2
Exhibit 99.2


Third Quarter 2023 Earnings Results
  
   
   
Quarterly Financial Supplement
Page
   
Consolidated Financial Summary
1
Consolidated Financial Metrics, Ratios and Statistical Data
2
Consolidated and U.S. Bank Supplemental Financial Information
3
Consolidated Average Common Equity and Regulatory Capital Information
4
Institutional Securities Income Statement Information, Financial Metrics and Ratios
5
Wealth Management Income Statement Information, Financial Metrics and Ratios
6
Wealth Management Financial Information and Statistical Data
7
Investment Management Income Statement Information, Financial Metrics and Ratios
8
Investment Management Financial Information and Statistical Data
9
Consolidated Loans and Lending Commitments
10
Consolidated Loans and Lending Commitments Allowance for Credit Losses
11
Definition of U.S. GAAP to Non-GAAP Measures
12
Definitions of Performance Metrics and Terms
13 - 14
Supplemental Quantitative Details and Calculations
15 - 16
Legal Notice
17


Consolidated Financial Summary
                                                
(unaudited, dollars in millions)
                                                
                                                 
                                                 
                                                 
    
Quarter Ended
  
Percentage Change From:
  
Nine Months Ended
  
Percentage
   
Sep 30, 2023
  
Jun 30, 2023
  
Sep 30, 2022
  
Jun 30, 2023
  
Sep 30, 2022
  
Sep 30, 2023
  
Sep 30, 2022
  
Change
Net revenues
                                                
Institutional Securities
  
$
5,669
    
$
5,654
    
$
5,817
      
--
      
(3
%)
  
$
18,120
    
$
19,593
      
(8
%)
Wealth Management
    
6,404
      
6,660
      
6,120
      
(4
%)
    
5
%
    
19,623
      
17,791
      
10
%
Investment Management
    
1,336
      
1,281
      
1,168
      
4
%
    
14
%
    
3,906
      
3,914
      
--
  
Intersegment Eliminations
    
(136
)
    
(138
)
    
(119
)
    
1
%
    
(14
%)
    
(402
)
    
(379
)
    
(6
%)
Net revenues (1)
  
$
13,273
    
$
13,457
    
$
12,986
      
(1
%)
    
2
%
  
$
41,247
    
$
40,919
      
1
%
                                                                 
Provision for credit losses
  
$
134
    
$
161
    
$
35
      
(17
%)
    
*
    
$
529
    
$
193
      
174
%
                                                                 
Non-interest expenses
                                                                
Institutional Securities
  
$
4,377
    
$
4,580
    
$
4,167
      
(4
%)
    
5
%
  
$
13,673
    
$
13,476
      
1
%
Wealth Management
    
4,654
      
4,915
      
4,460
      
(5
%)
    
4
%
    
14,371
      
13,005
      
11
%
Investment Management
    
1,095
      
1,111
      
1,052
      
(1
%)
    
4
%
    
3,329
      
3,321
      
--
  
Intersegment Eliminations
    
(132
)
    
(122
)
    
(116
)
    
(8
%)
    
(14
%)
    
(372
)
    
(371
)
    
--
  
Non-interest expenses (1)(2)
  
$
9,994
    
$
10,484
    
$
9,563
      
(5
%)
    
5
%
  
$
31,001
    
$
29,431
      
5
%
                                                                 
Income before provision for income taxes
                                                                
Institutional Securities
  
$
1,199
    
$
977
    
$
1,626
      
23
%
    
(26
%)
  
$
4,068
    
$
5,967
      
(32
%)
Wealth Management
    
1,709
      
1,681
      
1,649
      
2
%
    
4
%
    
5,102
      
4,743
      
8
%
Investment Management
    
241
      
170
      
116
      
42
%
    
108
%
    
577
      
593
      
(3
%)
Intersegment Eliminations
    
(4
)
    
(16
)
    
(3
)
    
75
%
    
(33
%)
    
(30
)
    
(8
)
    
*
  
Income before provision for income taxes
  
$
3,145
    
$
2,812
    
$
3,388
      
12
%
    
(7
%)
  
$
9,717
    
$
11,295
      
(14
%)
                                                                 
Net Income applicable to Morgan Stanley
                                                               
Institutional Securities
  
$
912
    
$
759
    
$
1,274
      
20
%
    
(28
%)
  
$
3,149
    
$
4,586
      
(31
%)
Wealth Management
    
1,320
      
1,308
      
1,253
      
1
%
    
5
%
    
4,004
      
3,715
      
8
%
Investment Management
    
179
      
127
      
107
      
41
%
    
67
%
    
440
      
498
      
(12
%)
Intersegment Eliminations
    
(3
)
    
(12
)
    
(2
)
    
75
%
    
(50
%)
    
(23
)
    
(6
)
    
*
  
Net Income applicable to Morgan Stanley
  
$
2,408
    
$
2,182
    
$
2,632
      
10
%
    
(9
%)
  
$
7,570
    
$
8,793
      
(14
%)
Earnings applicable to Morgan Stanley common shareholders
  
$
2,262
    
$
2,049
    
$
2,494
      
10
%
    
(9
%)
  
$
7,147
    
$
8,427
      
(15
%)
                                                                 
                                                                 

Notes:
-
Firm net revenues excluding mark-to-market gains and losses on deferred cash-based compensation plans (DCP) were: 3Q23: $13,475 million, 2Q23: $13,343 million, 3Q22: $13,222 million, 3Q23 YTD: $41,182 million, 3Q22 YTD: $42,311 million.
-
Firm compensation expenses excluding DCP were: 3Q23: $5,992 million, 2Q23: $6,084 million, 3Q22: $5,733 million, 3Q23 YTD: $18,293 million, 3Q22 YTD: $18,343 million.
-
The End Notes are an integral part of this presentation.  See pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice.

1

Consolidated Financial Metrics, Ratios and Statistical Data
                                             
(unaudited)
                                                
    
Quarter Ended
  
Percentage Change From:
  
Nine Months Ended
  
Percentage
   
Sep 30, 2023
  
Jun 30, 2023
  
Sep 30, 2022
  
Jun 30, 2023
  
Sep 30, 2022
  
Sep 30, 2023
  
Sep 30, 2022
  
Change
                                                 
Financial Metrics:
                                                
                                                 
Earnings per basic share
  
$
1.39
    
$
1.25
    
$
1.49
      
11
%
    
(7
%)
  
$
4.37
    
$
4.95
      
(12
%)
Earnings per diluted share
  
$
1.38
    
$
1.24
    
$
1.47
      
11
%
    
(6
%)
  
$
4.33
    
$
4.88
      
(11
%)
                                                                 
Return on average common equity
    
10.0
%
    
8.9
%
    
10.7
%
                    
10.5
%
    
11.9
%
        
Return on average tangible common equity
    
13.5
%
    
12.1
%
    
14.6
%
                    
14.2
%
    
16.1
%
        
                                                                 
Book value per common share
  
$
55.08
    
$
55.24
    
$
54.46
                    
$
55.08
    
$
54.46
          
Tangible book value per common share
  
$
40.53
    
$
40.79
    
$
39.93
                    
$
40.53
    
$
39.93
          
                                                                 
Financial Ratios:
                                                                
                                                                 
Pre-tax profit margin
    
24
%
    
21
%
    
26
%
                    
24
%
    
28
%
        
Compensation and benefits as a % of net revenues
    
45
%
    
47
%
    
43
%
                    
45
%
    
43
%
        
Non-compensation expenses as a % of net revenues
    
31
%
    
31
%
    
30
%
                    
30
%
    
29
%
        
Firm expense efficiency ratio (1)
    
75
%
    
78
%
    
74
%
                    
75
%
    
72
%
        
Effective tax rate
    
22.6
%
    
21.0
%
    
21.4
%
                    
20.9
%
    
21.1
%
        
                                                                 
Statistical Data:
                                                                
                                                                 
Period end common shares outstanding (millions)
    
1,642
      
1,659
      
1,694
      
(1
%)
    
(3
%)
                        
Average common shares outstanding (millions)
                                                                
Basic
    
1,624
      
1,635
      
1,674
      
(1
%)
    
(3
%)
    
1,635
      
1,704
      
(4
%)
Diluted
    
1,643
      
1,651
      
1,697
      
--
      
(3
%)
    
1,653
      
1,725
      
(4
%)
                                                                 
Worldwide employees
    
80,710
      
82,006
      
81,567
      
(2
%)
    
(1
%)
                        
                                                                 
                                                                 

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

2

Consolidated and U.S. Bank Supplemental Financial Information
                                                           
(unaudited, dollars in millions)
                                                         
                                                               
                                                               
                                                               
   
Quarter Ended
  
Percentage Change From:
    
Nine Months Ended
  
Percentage
   
Sep 30, 2023
  
Jun 30, 2023
  
Sep 30, 2022
  
Jun 30, 2023
  
Sep 30, 2022
    
Sep 30, 2023
  
Sep 30, 2022
    Change
                                                               
Consolidated Balance sheet
                                                             
                                                               
Total assets
  
$
1,169,013
    
$
1,164,911
    
$
1,160,029
      
--
      
1
%
                          
Loans (1)
  
$
224,957
    
$
224,276
    
$
218,448
      
--
      
3
%
                          
Deposits
  
$
345,458
    
$
348,511
    
$
338,123
      
(1
%)
    
2
%
                          
Long-term debt outstanding
  
$
242,843
    
$
243,820
    
$
216,361
      
--
      
12
%
                          
Maturities of long-term debt outstanding (next 12 months)
  
$
21,514
    
$
22,326
    
$
18,755
      
(4
%)
    
15
%
                          
                                                                         
Average liquidity resources
  
$
307,367
    
$
310,724
    
$
308,001
      
(1
%)
    
--
                            
                                                                         
Common equity
  
$
90,461
    
$
91,636
    
$
92,261
      
(1
%)
    
(2
%)
                          
Less: Goodwill and intangible assets
    
(23,900
)
    
(23,973
)
    
(24,613
)
    
--
      
(3
%)
                          
Tangible common equity
  
$
66,561
    
$
67,663
    
$
67,648
      
(2
%)
    
(2
%)
                          
                                                                         
Preferred equity
  
$
8,750
    
$
8,750
    
$
8,750
      
--
      
--
                            
                                                                         
U.S. Bank Supplemental Financial Information
                                                                       
Total assets
  
$
388,098
    
$
385,596
    
$
371,165
      
1
%
    
5
%
                          
Loans
  
$
209,135
    
$
209,065
    
$
204,889
      
--
      
2
%
                          
Investment securities portfolio (2)
  
$
114,780
    
$
119,289
    
$
123,007
      
(4
%)
    
(7
%)
                          
Deposits
  
$
339,927
    
$
342,522
    
$
331,943
      
(1
%)
    
2
%
                          
                                                                         
Regional revenues
                                                                       
Americas
  
$
10,268
    
$
10,394
    
$
10,094
      
(1
%)
    
2
%
    
 $      31,453
      
 $      30,220
        
4%
EMEA (Europe, Middle East, Africa)
    
1,479
      
1,500
      
1,392
      
(1
%)
    
6
%
    
            4,716
      
            5,381
        
(12%)
Asia
    
1,526
      
1,563
      
1,500
      
(2
%)
    
2
%
    
            5,078
      
            5,318
        
(5%)
Consolidated net revenues
  
$
13,273
    
$
13,457
    
$
12,986
      
(1
%)
    
2
%
    
 $      41,247
      
 $      40,919
        
1%
                                                                         
                                                                         

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

3

Consolidated Average Common Equity and Regulatory Capital Information
                                      
(unaudited, dollars in billions)
                                                
                                                 
                                                 
                                                 
   
Quarter Ended
  
Percentage Change From:
  
Nine Months Ended
  
Percentage
   
Sep 30, 2023
  
Jun 30, 2023
  
Sep 30, 2022
  
Jun 30, 2023
  
Sep 30, 2022
  
Sep 30, 2023
  
Sep 30, 2022
  
Change
                                                 
Average Common Equity
                                                
Institutional Securities
  
$
45.6
    
$
45.6
    
$
48.8
      
--
      
(7
%)
  
$
45.6
    
$
48.8
      
(7
%)
Wealth Management
    
28.8
      
28.8
      
31.0
      
--
      
(7
%)
    
28.8
      
31.0
      
(7
%)
Investment Management
    
10.4
      
10.4
      
10.6
      
--
      
(2
%)
    
10.4
      
10.6
      
(2
%)
Parent
    
6.0
      
6.8
      
2.5
      
(12
%)
    
140
%
    
6.3
      
4.3
      
47
%
Firm
  
$
90.8
    
$
91.6
    
$
92.9
      
(1
%)
    
(2
%)
  
$
91.1
    
$
94.7
      
(4
%)
                                                                 
                                                                 
                                                                 
Regulatory Capital
                                                                
                                                                 
Common Equity Tier 1 capital
  
$
69.1
    
$
69.9
    
$
67.9
      
(1
%)
    
2
%
                        
Tier 1 capital
  
$
77.7
    
$
78.4
    
$
76.4
      
(1
%)
    
2
%
                        
                                                                 
Standardized Approach
                                                                
Risk-weighted assets
  
$
444.8
    
$
449.8
    
$
457.9
      
(1
%)
    
(3
%)
                        
Common Equity Tier 1 capital ratio
    
15.5
%
    
15.5
%
    
14.8
%
                                        
Tier 1 capital ratio
    
17.5
%
    
17.4
%
    
16.7
%
                                        
                                                                 
Advanced Approach
                                                                
Risk-weighted assets
  
$
430.0
    
$
441.9
    
$
447.8
      
(3
%)
    
(4
%)
                        
Common Equity Tier 1 capital ratio
    
16.1
%
    
15.8
%
    
15.2
%
                                        
Tier 1 capital ratio
    
18.1
%
    
17.8
%
    
17.1
%
                                        
                                                                 
Leverage-based capital
                                                                
Tier 1 leverage ratio
    
6.7
%
    
6.7
%
    
6.6
%
                                        
Supplementary Leverage Ratio
    
5.5
%
    
5.5
%
    
5.4
%
                                        
                                                                 
                                                                 

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

4

Institutional Securities
                                                
Income Statement Information, Financial Metrics and Ratios
                                             
(unaudited, dollars in millions)
                                                
                                                 
                                                 
   
Quarter Ended
  
Percentage Change From:
  
Nine Months Ended
  
Percentage
   
Sep 30, 2023
  
Jun 30, 2023
  
Sep 30, 2022
  
Jun 30, 2023
  
Sep 30, 2022
  
Sep 30, 2023
  
Sep 30, 2022
  
Change
Revenues:
                                                
                                                 
Advisory
  
$
449
    
$
455
    
$
693
      
(1
%)
    
(35
%)
  
$
1,542
    
$
2,235
      
(31
%)
Equity
    
237
      
225
      
218
      
5
%
    
9
%
    
664
      
624
      
6
%
Fixed income
    
252
      
395
      
366
      
(36
%)
    
(31
%)
    
1,054
      
1,124
      
(6
%)
Underwriting
    
489
      
620
      
584
      
(21
%)
    
(16
%)
    
1,718
      
1,748
      
(2
%)
Investment banking
    
938
      
1,075
      
1,277
      
(13
%)
    
(27
%)
    
3,260
      
3,983
      
(18
%)
                                                                 
Equity
    
2,507
      
2,548
      
2,459
      
(2
%)
    
2
%
    
7,784
      
8,593
      
(9
%)
Fixed income
    
1,947
      
1,716
      
2,181
      
13
%
    
(11
%)
    
6,239
      
7,604
      
(18
%)
Other
    
277
      
315
      
(100
)
    
(12
%)
    
*
      
837
      
(587
)
    
*
  
                                                                 
Net revenues
    
5,669
      
5,654
      
5,817
      
--
      
(3
%)
    
18,120
      
19,593
      
(8
%)
                                                                 
Provision for credit losses
    
93
      
97
      
24
      
(4
%)
    
*
      
379
      
150
      
153
%
                                                                 
Compensation and benefits
    
2,057
      
2,215
      
1,948
      
(7
%)
    
6
%
    
6,637
      
6,602
      
1
%
Non-compensation expenses
    
2,320
      
2,365
      
2,219
      
(2
%)
    
5
%
    
7,036
      
6,874
      
2
%
Total non-interest expenses
    
4,377
      
4,580
      
4,167
      
(4
%)
    
5
%
    
13,673
      
13,476
      
1
%
                                                                 
Income before provision for income taxes
    
1,199
      
977
      
1,626
      
23
%
    
(26
%)
    
4,068
      
5,967
      
(32
%)
Net income applicable to Morgan Stanley
  
$
912
    
$
759
    
$
1,274
      
20
%
    
(28
%)
  
$
3,149
    
$
4,586
      
(31
%)
                                                                 
Pre-tax profit margin
    
21
%
    
17
%
    
28
%
                    
22
%
    
30
%
        
Compensation and benefits as a % of net revenues
    
36
%
    
39
%
    
34
%
                    
37
%
    
34
%
        
Non-compensation expenses as a % of net revenues
    
41
%
    
42
%
    
38
%
                    
39
%
    
35
%
        
                                                                 
Return on Average Common Equity
    
7
%
    
6
%
    
10
%
                    
8
%
    
12
%
        
Return on Average Tangible Common Equity (1)
    
7
%
    
6
%
    
10
%
                    
8
%
    
12
%
        
                                                                 
Trading VaR (Average Daily 95% / One-Day VaR)
  
$
48
    
$
52
    
$
61
                                          
                                                                 
                                                                 

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

5

Wealth Management
                                                
Income Statement Information, Financial Metrics and Ratios
                                               
(unaudited, dollars in millions)
                                                
                                                 
                                                 
   
Quarter Ended
  
Percentage Change From:
  
Nine Months Ended
  
Percentage
   
Sep 30, 2023
  
Jun 30, 2023
  
Sep 30, 2022
  
Jun 30, 2023
  
Sep 30, 2022
  
Sep 30, 2023
  
Sep 30, 2022
  
Change
Revenues:
                                                
Asset management
  
$
3,629
    
$
3,452
    
$
3,389
      
5
%
    
7
%
  
$
10,463
    
$
10,525
      
(1
%)
Transactional
    
678
      
869
      
616
      
(22
%)
    
10
%
    
2,468
      
1,542
      
60
%
Net interest income
    
1,952
      
2,156
      
2,004
      
(9
%)
    
(3
%)
    
6,266
      
5,291
      
18
%
Other
    
145
      
183
      
111
      
(21
%)
    
31
%
    
426
      
433
      
(2
%)
Net revenues (1)
    
6,404
      
6,660
      
6,120
      
(4
%)
    
5
%
    
19,623
      
17,791
      
10
%
                                                                 
Provision for credit losses
    
41
      
64
      
11
      
(36
%)
    
*
      
150
      
43
      
*
  
                                                                 
Compensation and benefits (1)
    
3,352
      
3,503
      
3,171
      
(4
%)
    
6
%
    
10,332
      
9,191
      
12
%
Non-compensation expenses
    
1,302
      
1,412
      
1,289
      
(8
%)
    
1
%
    
4,039
      
3,814
      
6
%
Total non-interest expenses
    
4,654
      
4,915
      
4,460
      
(5
%)
    
4
%
    
14,371
      
13,005
      
11
%
                                                                 
Income before provision for income taxes
    
1,709
      
1,681
      
1,649
      
2
%
    
4
%
    
5,102
      
4,743
      
8
%
Net income applicable to Morgan Stanley
  
$
1,320
    
$
1,308
    
$
1,253
      
1
%
    
5
%
  
$
4,004
    
$
3,715
      
8
%
                                                                 
Pre-tax profit margin
    
27
%
    
25
%
    
27
%
                    
26
%
    
27
%
        
Compensation and benefits as a % of net revenues
    
52
%
    
53
%
    
52
%
                    
53
%
    
52
%
        
Non-compensation expenses as a % of net revenues
    
20
%
    
21
%
    
21
%
                    
21
%
    
21
%
        
                                                                 
Return on Average Common Equity
    
18
%
    
18
%
    
16
%
                    
18
%
    
16
%
        
Return on Average Tangible Common Equity (2)
    
35
%
    
34
%
    
30
%
                    
35
%
    
30
%
        
                                                                 
                                                                 

Notes:
-
Wealth Management net revenues excluding DCP were: 3Q23: $6,547 million, 2Q23: $6,578 million, 3Q22: $6,273 million, 3Q23 YTD: $19,583 million, 3Q22 YTD: $18,755 million.
-
Wealth Management compensation expenses excluding DCP were: 3Q23: $3,400 million, 2Q23: $3,396 million, 3Q22: $3,257 million, 3Q23 YTD: $10,154 million, 3Q22 YTD: $9,836 million.
-
The End Notes are an integral part of this presentation.  See pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice.

6

Wealth Management
                              
Financial Information and Statistical Data
                              
(unaudited, dollars in billions)
                              
                               
                               
   
Quarter Ended
  
Percentage Change From:
   
Sep 30, 2023
  
Jun 30, 2023
  
Sep 30, 2022
  
Jun 30, 2023
  
Sep 30, 2022
                               
Wealth Management Metrics
                              
                               
Total client assets
  
$
4,798
    
$
4,885
    
$
4,134
      
(2
%)
    
16
%
Net new assets
  
$
35.7
    
$
89.5
    
$
64.8
      
(60
%)
    
(45
%)
U.S. Bank loans
  
$
145.8
    
$
144.7
    
$
145.7
      
1
%
    
--
  
Margin and other lending (1)
  
$
23.1
    
$
21.7
    
$
24.3
      
6
%
    
(5
%)
Deposits (2)
  
$
340
    
$
343
    
$
332
      
(1
%)
    
2
%
Annualized weighted average cost of deposits
                                        
Period end
    
2.86
%
    
2.53
%
    
0.93
%
                
Period average
    
2.69
%
    
2.32
%
    
0.56
%
                
                                         
Advisor-led channel
                                        
                                         
Advisor-led client assets
  
$
3,755
    
$
3,784
    
$
3,305
      
(1
%)
    
14
%
                                         
Fee-based client assets
  
$
1,857
    
$
1,856
    
$
1,628
      
--
      
14
%
Fee-based asset flows
  
$
22.5
    
$
22.7
    
$
16.7
      
(1
%)
    
35
%
Fee-based assets as a % of advisor-led client assets
    
49
%
    
49
%
    
49
%
                
                                         
Self-directed channel
                                        
                                         
Self-directed client assets
  
$
1,043
    
$
1,101
    
$
829
      
(5
%)
    
26
%
Daily average revenue trades (000's)
    
735
      
765
      
805
      
(4
%)
    
(9
%)
Self-directed households (millions)
    
8.1
      
8.1
      
7.8
      
--
      
4
%
                                         
Workplace channel
                                        
                                         
Stock plan unvested assets
  
$
377
    
$
402
    
$
312
      
(6
%)
    
21
%
Number of stock plan participants (millions)
    
6.6
      
6.5
      
6.2
      
2
%
    
6
%
                                         
                                         

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

7

Investment Management
                                                
Income Statement Information, Financial Metrics and Ratios
                                        
(unaudited, dollars in millions)
                                                
                                                 
                                                 
   
Quarter Ended
  
Percentage Change From:
  
Nine Months Ended
  
Percentage
   
Sep 30, 2023
  
Jun 30, 2023
  
Sep 30, 2022
  
Jun 30, 2023
  
Sep 30, 2022
  
Sep 30, 2023
  
Sep 30, 2022
  
Change
Revenues:
                                                
Asset management and related fees
  
$
1,312
    
$
1,268
    
$
1,269
      
3
%
    
3
%
  
$
3,828
    
$
3,961
      
(3
%)
Performance-based income and other
    
24
      
13
      
(101
)
    
85
%
    
*
      
78
      
(47
)
    
*
  
Net revenues
    
1,336
      
1,281
      
1,168
      
4
%
    
14
%
    
3,906
      
3,914
      
--
  
                                                                 
Compensation and benefits
    
526
      
544
      
495
      
(3
%)
    
6
%
    
1,638
      
1,645
      
--
  
Non-compensation expenses
    
569
      
567
      
557
      
--
      
2
%
    
1,691
      
1,676
      
1
%
Total non-interest expenses
    
1,095
      
1,111
      
1,052
      
(1
%)
    
4
%
    
3,329
      
3,321
      
--
  
                                                                 
Income before provision for income taxes
    
241
      
170
      
116
      
42
%
    
108
%
    
577
      
593
      
(3
%)
Net income applicable to Morgan Stanley
  
$
179
    
$
127
    
$
107
      
41
%
    
67
%
  
$
440
    
$
498
      
(12
%)
                                                                 
Pre-tax profit margin
    
18
%
    
13
%
    
10
%
                    
15
%
    
15
%
        
Compensation and benefits as a % of net revenues
    
39
%
    
42
%
    
42
%
                    
42
%
    
42
%
        
Non-compensation expenses as a % of net revenues
    
43
%
    
44
%
    
48
%
                    
43
%
    
43
%
        
                                                                 
Return on Average Common Equity
    
7
%
    
5
%
    
4
%
                    
6
%
    
6
%
        
Return on Average Tangible Common Equity (1)
    
98
%
    
70
%
    
56
%
                    
80
%
    
87
%
        
                                                                 
                                                                 

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

8

Investment Management
                                                
Financial Information and Statistical Data
                                                 
(unaudited, dollars in billions)
                                                
                                                 
                                                 
   
Quarter Ended
  
Percentage Change From:
  
Nine Months Ended
  
Percentage
   
Sep 30, 2023
  
Jun 30, 2023
  
Sep 30, 2022
  
Jun 30, 2023
  
Sep 30, 2022
  
Sep 30, 2023
  
Sep 30, 2022
  
Change
                                                 
                                                 
Assets under management or supervision (AUM)(1)
                                                
                                                 
Net flows by asset class
                                                
Equity
  
$
(5.5
)
  
$
(5.3
)
  
$
(3.9
)
    
(4
%)
    
(41
%)
  
$
(12.9
)
  
$
(18.8
)
    
31
%
Fixed Income
    
(2.1
)
    
(5.0
)
    
(5.0
)
    
58
%
    
58
%
    
(9.1
)
    
(11.5
)
    
21
%
Alternatives and Solutions
    
0.8
      
11.4
      
7.0
      
(93
%)
    
(89
%)
    
13.9
      
10.5
      
32
%
Long-Term Net Flows
    
(6.8
)
    
1.1
      
(1.9
)
    
*
      
*
      
(8.1
)
    
(19.8
)
    
59
%
                                                                 
Liquidity and Overlay Services
    
5.7
      
9.7
      
(32.5
)
    
(41
%)
    
*
      
29.3
      
(29.3
)
    
*
  
                                                                 
Total Net Flows
  
$
(1.1
)
  
$
10.8
    
$
(34.4
)
    
*
      
97
%
  
$
21.2
    
$
(49.1
)
    
*
  
                                                                 
Assets under management or supervision by asset class
                                                                
Equity
  
$
272
    
$
289
    
$
249
      
(6
%)
    
9
%
                        
Fixed Income
    
163
      
165
      
171
      
(1
%)
    
(5
%)
                        
Alternatives and Solutions
    
472
      
482
      
405
      
(2
%)
    
17
%
                        
Long-Term Assets Under Management or Supervision
  
$
907
    
$
936
    
$
825
      
(3
%)
    
10
%
                        
                                                                 
Liquidity and Overlay Services
    
481
      
476
      
454
      
1
%
    
6
%
                        
                                                                 
Total Assets Under Management or Supervision
  
$
1,388
    
$
1,412
    
$
1,279
      
(2
%)
    
9
%
                        
                                                                 
                                                                 

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

9

Consolidated Loans and Lending Commitments
                              
(unaudited, dollars in billions)
                              
                               
                               
   
Quarter Ended
  
Percentage Change From:
   
Sep 30, 2023
  
Jun 30, 2023
  
Sep 30, 2022
  
Jun 30, 2023
  
Sep 30, 2022
                               
Institutional Securities
                              
                               
Loans:
                              
Corporate
  
$
18.0
    
$
17.8
    
$
14.3
      
1
%
    
26
%
Secured lending facilities
    
41.8
      
41.2
      
38.3
      
1
%
    
9
%
Commercial and residential real estate
    
11.4
      
12.1
      
11.8
      
(6
%)
    
(3
%)
Securities-based lending and other
    
7.4
      
8.1
      
7.8
      
(9
%)
    
(5
%)
                                         
Total Loans
    
78.6
      
79.2
      
72.2
      
(1
%)
    
9
%
                                         
Lending Commitments
    
128.7
      
127.1
      
119.7
      
1
%
    
8
%
                                         
Institutional Securities Loans and Lending Commitments
  
$
207.3
    
$
206.3
    
$
191.9
      
--
      
8
%
                                         
                                         
Wealth Management
                                        
                                         
Loans:
                                        
Securities-based lending and other
  
$
87.0
    
$
87.6
    
$
93.0
      
(1
%)
    
(6
%)
Residential real estate
    
58.9
      
57.1
      
52.8
      
3
%
    
12
%
                                         
Total Loans
    
145.9
      
144.7
      
145.8
      
1
%
    
--
  
                                         
Lending Commitments
    
19.1
      
18.8
      
16.9
      
2
%
    
13
%
                                         
Wealth Management Loans and Lending Commitments
  
$
165.0
    
$
163.5
    
$
162.7
      
1
%
    
1
%
                                         
Consolidated Loans and Lending Commitments (1)
  
$
372.3
    
$
369.8
    
$
354.6
      
1
%
    
5
%
                                         
                                         

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

10

Consolidated Loans and Lending Commitments
                        
Allowance for Credit Losses (ACL) as of September 30, 2023
                        
(unaudited, dollars in millions)
                        
                         
                         
   
Loans and Lending Commitments
    
ACL (1)
    
ACL %
    
Q3 Provision
  
   
(Gross)
                    
Loans:
                        
Held For Investment (HFI)
                        
                         
Corporate
  
$
7,181
    
$
248
      
3.5
%
  
$
(6
)
Secured lending facilities
    
39,119
      
154
      
0.4
%
    
(1
)
Commercial and residential real estate
    
8,389
      
426
      
5.1
%
    
84
  
Other
    
3,039
      
17
      
0.6
%
    
3
  
Institutional Securities - HFI
  
$
57,728
    
$
845
      
1.5
%
  
$
80
  
                                 
Wealth Management - HFI
    
146,167
      
312
      
0.2
%
    
43
  
                                 
Held For Investment
  
$
203,895
    
$
1,157
      
0.6
%
  
$
123
  
                                 
Held For Sale
    
14,230
                          
                                 
Fair Value
    
7,558
                          
                                 
Total Loans
    
225,683
      
1,157
              
123
  
                                 
Lending Commitments
    
147,800
      
569
      
0.4
%
    
11
  
                                 
Consolidated Loans and Lending Commitments
  
$
373,483
    
$
1,726
            
$
134
  
                                 
                                 

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

11

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

12

Definitions of Performance Metrics and Terms
   
Our earnings releases, earnings conference calls, financial presentations and other communications may also include certain metrics which we believe to be useful to us, analysts, investors and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results.
   
Page 1:
(a)
Provision for credit losses represents the provision for credit losses on loans held for investment and unfunded lending commitments.
(b)
Net income applicable to Morgan Stanley represents net income, less net income applicable to nonredeemable noncontrolling interests.
(c)
Earnings applicable to Morgan Stanley common shareholders represents net income applicable to Morgan Stanley, less preferred dividends.
   
Page 2:
(a)
The return on average common equity represents annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity.
(b)
Book value per common share represents common equity divided by period end common shares outstanding.
(c)
Tangible book value per common share represents tangible common equity divided by period end common shares outstanding.
(d)
Pre-tax profit margin percentages represent income before provision for income taxes as percentages of net revenues.
(e)
The Firm expense efficiency ratio represents total non‐interest expenses as a percentage of net revenues.
   
Page 3:
(a)
Liquidity Resources, which are primarily held within the Parent and its major operating subsidiaries, are comprised of high quality liquid assets (HQLA) and cash deposits with banks ("Liquidity Resources"). The total amount of Liquidity Resources is actively managed by us considering the following components: unsecured debt maturity profile; balance sheet size and composition; funding needs in a stressed environment, inclusive of contingent cash outflows; legal entity, regional and segment liquidity requirements; regulatory requirements; and collateral requirements. Average Liquidity Resources represents the average daily balance for the three months ended September 30, 2023, June 30, 2023 and September 30, 2022.
(b)
The Firm's goodwill and intangible balances utilized in the calculation of tangible common equity are net of certain mortgage servicing rights deduction.
(c)
U.S. Bank refers to the Firm's U.S. Bank operating subsidiaries Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association, and excludes balances between Bank subsidiaries, as well as deposits from the Parent and affiliates.
(d)
Firmwide regional revenues reflect the Firm's consolidated net revenues on a managed basis.  Further discussion regarding the geographic methodology for net revenues is disclosed in Note 23 to the consolidated financial statements included in the Firm's 2022 Form 10-K.
   
Page 4:
(a)
The Firm's attribution of average common equity to the business segments is based on the Required Capital Framework, an internal capital adequacy measure. This framework is a risk-based and leverage-based capital measure, which is compared with the Firm's regulatory capital to ensure that the Firm maintains an amount of going concern capital after absorbing potential losses from stress events, where applicable, at a point in time. The Required Capital Framework is based on the Firm's regulatory capital requirements. The Firm defines the difference between its total average common equity and the sum of the average common equity amounts allocated to its business segments as Parent common equity. The amount of capital allocated to the business segments is generally set at the beginning of the year, and will remain fixed throughout the year until the next annual reset unless a significant business change occurs (e.g., acquisition or disposition). The Firm continues to evaluate its Required Capital Framework with respect to the impact of evolving regulatory requirements, as appropriate. For further discussion of the framework, refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Regulatory Requirements" in the Firm’s 2022 Form 10‐K.
(b)
The Firm's risk‐based capital ratios are computed under each of the (i) standardized approaches for calculating credit risk and market risk risk‐weighted assets (RWAs) (the “Standardized Approach”) and (ii) applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (the “Advanced Approach”). For information on the calculation of regulatory capital and ratios, and associated regulatory requirements, please refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Regulatory Requirements" in the Firm’s 2022 Form 10‐K.
(c)
Supplementary leverage ratio represents Tier 1 capital divided by the total supplementary leverage exposure.
   
Page 5:
(a)
Institutional Securities Equity and Fixed income net revenues include trading, net interest income (interest income less interest expense), asset management, commissions and fees, investments and other revenues which are directly attributable to those businesses.
(b)
Pre-tax profit margin percentages represent income before provision for income taxes as percentages of net revenues.
(c)
VaR represents the unrealized loss in portfolio value that one would not expect to exceed, on average, more than five times every one hundred trading days in the Firm's trading positions if the portfolio were held constant for a one-day period. Further discussion of the calculation of VaR and the limitations of the Firm's VaR methodology, is disclosed in "Quantitative and Qualitative Disclosures about Risk" included in the Firm's 2022 Form 10-K.
   
Page 6:
(a)
Transactional revenues for the Wealth Management segment includes investment banking, trading, and commissions and fee revenues.
(b)
Net interest income represents interest income less interest expense.
(c)
Other revenues for the Wealth Management segment includes investments and other revenues.
(d)
Pre-tax profit margin percentages represent income before provision for income taxes as percentages of net revenues.

13

Definitions of Performance Metrics and Terms
   
Our earnings releases, earnings conference calls, financial presentations and other communications may also include certain metrics which we believe to be useful to us, analysts, investors and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results.
   
Page 7:
(a)
Client assets represent those for which Wealth Management is providing services including financial advisor-led brokerage, custody, administrative and investment advisory services; self-directed brokerage services; financial and wealth planning services; workplace services, including stock plan administration, and retirement plan services.
(b)
Net new assets represent client inflows, including dividends and interest, and asset acquisitions, less client outflows, and exclude activity from business combinations/divestitures and the impact of fees and commissions.
(c)
Margin and other lending represents margin lending arrangements, which allow customers to borrow against the value of qualifying securities and other lending which includes non‐purpose securities-based lending on non‐bank entities.
(d)
Deposits reflect liabilities sourced from Wealth Management clients and other sources of funding on the U.S. Bank Subsidiaries. Deposits include sweep deposit programs, savings and other, and time deposits.
(e)
Annualized weighted average cost of deposits represents the total annualized weighted average cost of the various deposit products, excluding the effect of related hedging derivatives. The period end cost of deposits is based upon balances and rates as of September 30, 2023, June 30, 2023 and September 30, 2022. The period average is based on both daily average deposit balances and rates for the period.
(f)
Advisor-led client assets represent client assets in accounts that have a Wealth Management representative assigned.
(g)
Fee‐based client assets represent the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets.
(h)
Fee-based asset flows include net new fee-based assets (including asset acquisitions), net account transfers, dividends, interest and client fees, and exclude institutional cash management related activity. For a description of the Inflows and Outflows included in Fee-based asset flows, see Fee-based client assets in the 2022 Form 10-K.
(i)
Self-directed client assets represent active accounts which are not advisor led. Active accounts are defined as having at least $25 in assets.
(j)
Daily average revenue trades (DARTs) represent the total self-directed trades in a period divided by the number of trading days during that period.
(k)
Self-directed households represent the total number of households that include at least one account with self-directed client assets. Individual households or participants that are engaged in one or more of our Wealth Management channels are included in each of the respective channel counts.
(l)
The workplace channel assets includes equity compensation solutions for companies, their executives and employees. Stock plan unvested assets represent the market value of public company securities at the end of the period.
(m)
Stock plan participants represent total accounts with vested and/or unvested stock plan assets in the workplace channel. Individuals with accounts in multiple plans are counted as participants in each plan.
   
Page 8:
(a)
Asset management and related fees represents management and administrative fees, distribution fees, and performance-based fees, not in the form of carried interest. Asset management and related fees represents Asset management as reported on the Firm’s consolidated income statement.
(b)
Performance-based income and other includes performance-based fees in the form of carried interest, gains and losses from investments, gains and losses from hedges on seed capital and certain employee deferred compensation plans, net interest, and other revenues. Performance-based income and other represents investments, investment banking, trading, net interest and other revenues as reported on the Firm’s consolidated income statement.
(c)
Pre-tax profit margin percentages represent income before provision for income taxes as percentages of net revenues.
   
Page 9:
(a)
Investment Management Alternatives and Solutions asset class includes products in Fund of Funds, Real Estate, Private Equity and Credit strategies, Multi‐Asset portfolios, as well as Custom Separate Account portfolios.
(b)
Investment Management net flows include new commitments, investments or reinvestments, net of client redemptions, returns of capital post-fund investment period and dividends not reinvested and excludes the impact of the transition of funds from their commitment period to the invested capital period.
(c)
Overlay Services represents investment strategies that use passive exposure instruments to obtain, offset, or substitute specific portfolio exposures beyond those provided by the underlying holdings of the fund.
(d)
Total assets under management or supervision excludes shares of minority stake assets which represent the Investment Management business segment’s proportional share of assets managed by third-party asset managers in which we hold investments accounted for under the equity method.
   
Page 10 and 11:
(a)
Corporate loans include relationship and event-driven loans and typically consist of revolving lines of credit, term loans and bridge loans.
(b)
Secured lending facilities include loans provided to clients, which are primarily secured by loans, which are, in turn, collateralized by various assets including residential real estate, commercial real estate, corporate and financial assets.
(c)
Securities-based lending and other includes financing extended to sales and trading customers and corporate loans purchased in the secondary market.
(d)
Institutional Securities Lending Commitments principally include Corporate lending activity.

14

Supplemental Quantitative Details and Calculations


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

     
3Q23
      
2Q23
      
3Q22
    
3Q23 YTD
    
3Q22 YTD
  
Net revenues
  
$
13,273
    
$
13,457
    
$
12,986
    
$
41,247
    
$
40,919
  
Adjustment for mark-to-market on DCP
    
202
      
(114
)
    
236
      
(65
)
    
1,392
  
Adjusted Net revenues - non-GAAP
  
$
13,475
    
$
13,343
    
$
13,222
    
$
41,182
    
$
42,311
  
                                         
Compensation expense
  
$
5,935
    
$
6,262
    
$
5,614
    
$
18,607
    
$
17,438
  
Adjustment for mark-to-market on DCP
    
57
      
(178
)
    
119
      
(314
)
    
905
  
Adjusted Compensation expense - non-GAAP
  
$
5,992
    
$
6,084
    
$
5,733
    
$
18,293
    
$
18,343
  

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

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

     
3Q23
      
2Q23
      
3Q22
    
3Q23 YTD
    
3Q22 YTD
  
Compensation and benefits (a)
  
$
5,935
    
$
6,262
    
$
5,614
    
$
18,607
    
$
17,438
  
                                         
Non-compensation expenses:
                                        
Brokerage, clearing and exchange fees
    
855
      
875
      
847
      
2,611
      
2,607
  
Information processing and communications
    
947
      
926
      
874
      
2,788
      
2,560
  
Professional services
    
759
      
767
      
755
      
2,236
      
2,217
  
Occupancy and equipment
    
456
      
471
      
429
      
1,367
      
1,286
  
Marketing and business development
    
191
      
236
      
215
      
674
      
610
  
Other
    
851
      
947
      
829
      
2,718
      
2,713
  
Total non-compensation expenses
    
4,059
      
4,222
      
3,949
      
12,394
      
11,993
  
Total non-interest expenses
  
$
9,994
    
$
10,484
    
$
9,563
    
$
31,001
    
$
29,431
  

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

Page 2:
(1)
For the quarter and nine months ended September 30, 2023, Firm results include pre-tax integration-related expenses of $68 million and $244 million, respectively, of which $43 million and $171 million, respectively, are reported in the Wealth Management business segment, and $25 million and $73 million, respectively, are reported in the Investment Management business segment.
   
Page 3:
(1)
 Includes loans held for investment (net of allowance), loans held for sale and also includes loans at fair value which are included in Trading assets on the balance sheet.
(2)
 As of September 30, 2023, June 30, 2023 and September 30, 2022, the U.S. Bank investment securities portfolio included held to maturity investment securities of $54.0 billion, $54.9 billion and $57.4 billion, respectively.
   
Page 5:
(1)
 Institutional Securities average tangible common equity represents average common equity adjusted to exclude goodwill and intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 3Q23: $471mm; 2Q23: $471mm; 3Q22: $576mm; 3Q23 YTD: $471mm; 3Q22 YTD: $576mm
   
Page 6:
(1)
 The following sets forth the net revenue impact of mark-to-market gains and losses on investments associated with DCP and compensation expense impact related to DCP:

     
3Q23
      
2Q23
      
3Q22
    
3Q23 YTD
    
3Q22 YTD
  
Net revenues
  
$
6,404
    
$
6,660
    
$
6,120
    
$
19,623
    
$
17,791
  
Adjustment for mark-to-market on DCP
    
143
      
(82
)
    
153
      
(40
)
    
964
  
Adjusted Net revenues - non-GAAP
  
$
6,547
    
$
6,578
    
$
6,273
    
$
19,583
    
$
18,755
  
                                         
Compensation expense
  
$
3,352
    
$
3,503
    
$
3,171
    
$
10,332
    
$
9,191
  
Adjustment for mark-to-market on DCP
    
48
      
(107
)
    
86
      
(178
)
    
645
  
Adjusted Compensation expense - non-GAAP
  
$
3,400
    
$
3,396
    
$
3,257
    
$
10,154
    
$
9,836
  

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

15


Supplemental Quantitative Details and Calculations
 

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

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

Page 8:
(1)
Investment Management average tangible common equity represents average common equity adjusted to exclude goodwill and intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 3Q23: $9,687mm; 2Q23: $9,687mm; 3Q22: $9,815mm; 3Q23 YTD: $9,687mm; 3Q22 YTD: $9,815mm
   
Page 9:
(1)
 In the second quarter of 2023, our Retail Municipal and Corporate Fixed Income business (FIMS) was combined with our Parametric retail customized solutions business. The impact of the prospective change is a $6 billion movement of end of period AUM from Fixed Income to the Alternatives and Solutions asset class.
   
Page 10:
(1)
For the quarters ended September 30, 2023, June 30, 2023 and September 30, 2022, Investment Management reflected loan balances of $431 million, $386 million and $452 million, respectively.
   
Page 11:
(1)
For the quarter ended September 30, 2023, the Allowance Rollforward for Loans and Lending Commitments is as follows:

                   
   
Institutional
Securities
    
Wealth
Management
    
Total
  
Loans
                  
                   
Allowance for Credit Losses (ACL)
                  
Beginning Balance - June 30, 2023
  
$
812
    
$
269
    
$
1,081
  
Net Charge Offs
    
(39
)
    
-
      
(39
)
Provision
    
80
      
43
      
123
  
Other
    
(8
)
    
-
      
(8
)
Ending Balance - September 30, 2023
  
$
845
    
$
312
    
$
1,157
  
                         
                         
Lending Commitments
                        
                         
Allowance for Credit Losses (ACL)
                        
Beginning Balance - June 30, 2023
  
$
538
    
$
24
    
$
562
  
Net Charge Offs
    
-
      
-
      
-
  
Provision
    
13
      
(2
)
    
11
  
Other
    
(4
)
    
-
      
(4
)
Ending Balance - September 30, 2023
  
$
547
    
$
22
    
$
569
  
                         
                         
Loans and Lending Commitments
                        
                         
Allowance for Credit Losses (ACL)
                        
Beginning Balance - June 30, 2023
  
$
1,350
    
$
293
    
$
1,643
  
Net Charge Offs
    
(39
)
    
-
      
(39
)
Provision
    
93
      
41
      
134
  
Other
    
(12
)
    
-
      
(12
)
Ending Balance - September 30, 2023
  
$
1,392
    
$
334
    
$
1,726
  

16

Legal Notice





This Financial Supplement contains financial, statistical and business-related information, as well as business and segment trends.
The information should be read in conjunction with the Firm's third quarter earnings press release issued October 18, 2023.


17