Morgan Stanley Second Quarter 2022 Earnings Results
Morgan Stanley Reports Net Revenues of $13.1 Billion, EPS of $1.39 and ROTCE of 13.8%
NEW YORK, July 14, 2022 – Morgan Stanley (NYSE: MS) today reported net revenues of $13.1 billion for thesecond quarter ended June 30, 2022 compared with $14.8 billion a year ago. Net income applicable to Morgan
Stanley was $2.5 billion, or $1.39 per diluted share,1 compared with net income of $3.5 billion, or $1.85 per diluted
share,1 for the same period a year ago.
James P. Gorman, Chairman and Chief Executive Officer, said, “Overall the Firm delivered a solid quarter in what
was a more volatile market environment than we have seen for some time. Strong results in Equity and Fixed Income
helped partially counter weaker investment banking activity. We continue to attract positive flows across our WealthManagement business, and Investment Management continues to benefit from its diversification. Finally, we finishedthe quarter in a strong capital position to ensure we move forward with confidence.”

Financial Summary2,3Highlights

Firm ($ millions, except per share data)

2Q 2022

2Q 2021

Net revenues$13,132$14,759

Provision for credit losses

$101

$73

Compensation expense$5,550$6,423

Non-compensation expenses
Pre-tax income8$4,162$3,697$3,319$4,566

Net income app. to MS$2,495$3,511

74%

69%

Earnings per diluted share

$1.39

$1.85

Book value per share$54.46$54.04

Tangible book value per share$40.07$40.12Return on equity

10.1%

13.8%

Return on tangible equity4

13.8%

18.6%

Net revenues$6,119$7,092

Investment Banking$1,072$2,376Equity$2,960$2,827

Fixed Income$2,500$1,682$5,736$6,095Fee-based client assets ($ billions)9$1,717$1,68010

Fee-based asset flows ($ billions)

$28.5

$33.7

Net new assets ($ billions)

$52.9

$71.2

Loans ($ billions)$143.6$114.7$1,411$1,702$1,351$1,524$(3.5)$13.5

Expense efficiency ratio

6

Institutional Securities

Wealth Management
Net revenues

Investment Management
Net revenues
AUM ($ billions)11
12

Long-term net flows ($ billions)Media Relations: Wesley McDade 212-761-2430

 The Firm reported solid results with net revenues of $13.1
billion demonstrating the strength of our diversified franchiseas the businesses navigated a challenging market
environment.
 The Firm delivered ROTCE of 13.8%, or 14.3% excluding theimpact of integration-related expenses.4,5
 The Firm’s expense efficiency ratio was 74%, impacted by$200 million related to a specific regulatory matter
concerning the use of unapproved personal devices and the
Firm’s record-keeping requirements. In the first half of theyear, the expense efficiency ratio was 71%, or 70%
excluding the impact of integration-related expenses.5,6
 The Firm remains in a strong capital position with aStandardized Common Equity Tier 1 capital ratio of 15.2%.
 Institutional Securities net revenues of $6.1 billion reflect
strong performance in Fixed Income and Equity as clientsremained engaged in volatile markets, while limited activity in
Investment Banking was impacted by the uncertain
macroeconomic environment.
 Wealth Management delivered a pre-tax margin of 26.5% or
28.2% excluding integration-related expenses.5,7 Net
revenues were $5.7 billion, negatively impacted by mark-tomarket losses on investments associated with certain
employee deferred compensation plans. The business added
net new assets of $53 billion in the quarter and $195 billion in
the first half of 2022. The quarter also saw continued growthin bank lending and $29 billion of fee-based flows.
 Investment Management net revenues were $1.4 billion. The
diversified business delivered solid results despite lower
equity markets.

Investor Relations: Leslie Bazos 212-761-5352

Institutional Securities
Institutional Securities reported net revenues for the current quarter of $6.1 billion compared with $7.1 billion a year
ago. Pre-tax income was $1.6 billion compared with $2.5 billion a year ago.8
Investment Banking revenues down 55% from a year ago:
 Advisory revenues decreased from a year ago driven bylower levels of completed M&A transactions.
 Equity underwriting revenues significantly decreased from ayear ago on lower issuances given uncertainty in themarkets.
 Fixed income underwriting revenues decreased from a year
ago as macroeconomic conditions contributed to lower
issuances.

($ millions)

2Q 2022

2Q 2021

Net Revenues$6,119$7,092

Investment Banking$1,072$2,376Advisory

$598

$664

Equity underwriting$148$1,072

Fixed income underwriting

$326

$640

Equity$2,960$2,827

Fixed Income$2,500$1,682

Other$(413)

$207

$82

$70

Total Expenses$4,483$4,524Compensation$2,050$2,433

Non-compensation$2,433$2,091Equity net revenues up 5% from a year ago:
• Equity net revenues increased from a year ago on continued
strong client engagement and elevated market volatility, withparticular strength in derivatives products and prime
brokerage.
Fixed Income net revenues up 49% from a year ago:
• Fixed Income net revenues increased substantially from ayear ago reflecting strength in our macro businesses and incommodities on increased client activity and volatility in themarkets.
Other:

Provision for credit losses• Other revenues decreased from a year ago driven by markto-market losses on corporate loans held for sale, net ofhedges, reflecting the widening of credit spreads in thequarter. Mark-to-market losses on investments associatedwith certain employee deferred compensation plans also
contributed to the decline.
Total Expenses:• Compensation expense decreased from a year ago primarily driven by a decline related to certain deferredcompensation plans linked to investment performance and the impact of lower revenues.
• Non-compensation expenses increased from a year ago primarily driven by higher litigation costs, including $200
million related to a specific regulatory matter concerning the use of unapproved personal devices and the Firm’srecord-keeping requirements, and higher volume-related expenses.

2

Wealth Management
Wealth Management reported net revenues of $5.7 billion compared with $6.1 billion a year ago. Pre-tax income was$1.5 billion compared with $1.6 billion a year ago.8 Pre-tax margin was 26.5% in the current quarter, or 28.2%
excluding the impact of integration-related expenses.5,7
Net revenues decreased 6% from a year ago:($ millions)

2Q 2022

2Q 2021• Asset management revenues increased 2% reflecting
higher asset levels driven by continued positive fee-based
flows, partially offset by lower market levels compared to ayear ago.

Net Revenues$5,736$6,095

Asset management$3,510$3,447$291$1,172• Transactional revenues13 decreased 17% excluding theimpact of mark-to-market losses on investments
associated with certain employee deferred compensationplans. The decrease was driven by lower client activity
from a strong prior year period.

Net interest income$1,747$1,255

Other

$188

$221

Provision for credit losses

$19

$3

• Net interest income increased from a year ago on higher
interest rates and continued bank lending growth.

Total Expenses$4,196$4,456Compensation$2,895$3,275

Non-compensation$1,301$1,181

Total Expenses:

Transactional13• Compensation expense decreased driven by a decline
primarily related to certain deferred compensation plans
linked to investment performance.
• Non-compensation expenses increased from a year ago primarily driven by investments in technology, as well as
higher marketing and business development costs and integration-related expenses.

Investment Management
Investment Management reported net revenues of $1.4 billion compared with $1.7 billion a year ago. Pre-tax income
was $249 million compared with $430 million a year ago.8
Net revenues down 17% from a year ago:($ millions)

2Q 2022

2Q 2021• Asset management and related fees decreased from ayear ago driven by lower AUM, primarily due to thedecline in equity markets.

Net Revenues$1,411$1,702

Asset management and related fees

$1,304$1,418Performance-based income and other

$107

$284

Total Expenses$1,162$1,272Compensation

$605

$715

Non-compensation

$557

$557

• Performance-based income and other revenues
decreased from a year ago primarily reflecting mark-tomarket losses on investments associated with certain
employee deferred compensation plans and lower
marks on public investments reflecting the decline in
the equity markets.
Total Expenses:•

Compensation expense decreased from a year ago primarily driven by a decline related to certain deferredcompensation plans linked to investment performance.

3

Other Matters•

The Firm repurchased $2.7 billion of its outstanding common
stock during the quarter, completing our $12 billion buybackplan that we announced last year.

• The Firm also announced a multi-year repurchaseauthorization of up to $20 billion of outstanding common
stock without a set expiration date.
• The Board of Directors declared a $0.775 quarterly dividend
per share, an 11% increase from the current $0.70 per share
dividend, payable on August 15, 2022 to commonshareholders of record on July 29, 2022.
• The Standardized Common Equity Tier 1 capital ratio was
15.2%, 190 basis points above the new aggregate
standardized approach CET1 requirement beginning October
1, 2022.

2Q 2022

2Q 2021

CET1 capital15

15.2%

16.6%

Tier 1 capital15

16.9%

18.3%

CET1 capital15

15.4%

17.7%

Tier 1 capital15

17.1%

19.5%

Tier 1 leverage16

6.6%

7.5%

SLR17

5.4%

5.9%

$2,738$2,93933

34

Average Price$82.05$86.21

Period End Shares (millions)

1,723

1,834

Tax Rate

23.6%

23.1%

Capital14Standardized Approach

Advanced Approach

Leverage-based capital

Common Stock Repurchases
Repurchases ($ millions)
Number of Shares (millions)4Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities,
wealth management and investment management services. With offices in 41 countries, the Firm’s employees serve
clients worldwide including corporations, governments, institutions and individuals. For further information about
Morgan Stanley, please visit www.morganstanley.com.
A financial summary follows. Financial, statistical and business-related information, as well as information regarding
business and segment trends, is included in the financial supplement. Both the earnings release and the financial
supplement are available online in the Investor Relations section at www.morganstanley.com.
NOTICE:The information provided herein and in the financial supplement, including information provided on the Firm’s earnings
conference calls, may include certain non-GAAP financial measures. The definition of such measures or reconciliationof such measures to the comparable U.S. GAAP figures are included in this earnings release and the financial
supplement, both of which are available on www.morganstanley.com.
This earnings release may contain forward-looking statements, including the attainment of certain financial and othertargets, objectives and goals. Readers are cautioned not to place undue reliance on forward-looking statements, which
speak only as of the date on which they are made, which reflect management’s current estimates, projections,
expectations, assumptions, interpretations or beliefs and which are subject to risks and uncertainties that may cause
actual results to differ materially. For a discussion of risks and uncertainties that may affect the future results of theFirm, please see “Forward-Looking Statements” preceding Part I, Item 1, “Competition” and “Supervision andRegulation” in Part I, Item 1, “Risk Factors” in Part I, Item 1A, “Legal Proceedings” in Part I, Item 3, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and “Quantitative andQualitative Disclosures about Risk” in Part II, Item 7A in the Firm’s Annual Report on Form 10-K for the year ended
December 31, 2021 and other items throughout the Form 10-K, the Firm’s Quarterly Reports on Form 10-Q and the
Firm’s Current Reports on Form 8-K, including any amendments thereto.

5

1Includes preferred dividends related to the calculation of earnings per share of $104 million and $103 million for the second quarter of2022 and 2021, respectively.
2

The Firm prepares its Consolidated Financial Statements using accounting principles generally accepted in the United States (U.S.
GAAP). From time to time, Morgan Stanley may disclose certain “non-GAAP financial measures” in the course of its earnings releases,
earnings conference calls, financial presentations and otherwise. The Securities and Exchange Commission defines a “non-GAAP financial
measure” as a numerical measure of historical or future financial performance, financial position, or cash flows that is subject to adjustmentsthat 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 otherstakeholders in order to provide them with greater transparency about, or an alternative method for assessing our financial condition,
operating results, or capital adequacy. These measures are not in accordance with, or a substitute for U.S. GAAP, and may be different
from or inconsistent with non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, wewill also generally define it or present the most directly comparable financial measure calculated and presented in accordance with U.S.
GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable U.S.
GAAP financial measure.

3

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

4

Return on average tangible common equity and return on average tangible common equity excluding integration-related expenses are
non-GAAP financial measures that the Firm considers useful for analysts, investors and other stakeholders to allow comparability of periodto-period operating performance and capital adequacy. The calculation of return on average tangible common equity represents full year or
annualized net income applicable to Morgan Stanley less preferred dividends as a percentage of average tangible common equity.
Tangible common equity, also a non-GAAP financial measure, represents common equity less goodwill and intangible assets net ofallowable mortgage servicing rights deduction. The calculation of return on average tangible common equity excluding integration-related
expenses is adjusted in both the numerator and the denominator to exclude the integration-related expenses associated with theacquisitions of E*TRADE and Eaton Vance.
5

The Firm’s and business segment’s second quarter results for 2022 and 2021 include integration-related expenses as a result of the
E*TRADE and Eaton Vance acquisitions reported in the Wealth Management segment and Investment Management segment, respectively.
The amounts are presented as follows (in millions):
2Q 2022

2Q 2021

Firm
Compensation
Non-compensation
Total non-interest expenses
Total non-interest expenses (after-tax)

$ 11
109
$ 120
$ 92

$ 25
65
$ 90
$ 69

Wealth Management
Compensation
Non-compensation
Total non-interest expenses
Total non-interest expenses (after-tax)

$4
92
$ 96
$ 74

$9
51
$ 60
$ 46

Investment Management
Compensation
Non-compensation
Total non-interest expenses
Total non-interest expenses (after-tax)

$7
17
$ 24
$ 18

$ 16
14
$ 30
$ 23

6

The Firm expense efficiency ratio represents total non-interest expenses as a percentage of net revenues. The Firm expense efficiency
ratio excluding integration-related expenses is a non-GAAP financial measure that the Firm considers useful for analysts, investors andother stakeholders to allow comparability of period-to-period operating performance.
7

Pre-tax margin represents income before taxes divided by net revenues. Wealth Management pre-tax margin excluding the integrationrelated expenses represents income before taxes less those expenses divided by net revenues. Wealth Management pre-tax margin
excluding integration-related expenses is a non-GAAP financial measure that the Firm considers useful for analysts, investors and otherstakeholders to allow comparability of period-to-period operating performance.

68

Pre-tax income represents income before taxes.

9
Wealth Management fee-based client assets represent the amount of assets in client accounts where the basis of payment for services isa fee calculated on those assets.
10

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

11

AUM is defined as assets under management or supervision.

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

13

Transactional revenues include investment banking, trading, and commissions and fee revenues. Transactional revenues excluding theimpact of mark-to-market gains/losses on investments associated with certain employee deferred compensation plans is a non-GAAP
financial measure that the Firm considers useful for analysts, investors and other stakeholders to allow better comparability of period-toperiod operating performance and capital adequacy.
14

Capital ratios are estimates as of the press release date, July 14, 2022.

15

CET1 capital is defined as Common Equity Tier 1 capital. The Firm’s risk-based capital ratios are computed under each of the (i)standardized approaches for calculating credit risk and market risk risk-weighted assets (RWAs) (the “Standardized Approach”) and (ii)applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (the “Advanced Approach”). For
information on the calculation of regulatory capital and ratios, and associated regulatory requirements, please refer to "Management’s
Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Regulatory Requirements" inthe Firm’s Annual Report on Form 10-K for the year ended December 31, 2021 (2021 Form 10-K).
16

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

17

The Firm’s supplementary leverage ratio (SLR) utilizes a Tier 1 capital numerator of approximately $77.8 billion and $84.6 billion, andsupplementary leverage exposure denominator of approximately $1.45 trillion and $1.44 trillion, for the second quarter of 2022 and 2021,
respectively.

7

Consolidated Income Statement Information(unaudited, dollars in millions)

Revenues:
Investment banking
Trading
Investments
Commissions and fees
Asset management
Other
Total non-interest revenues

Jun 30, 2022

Quarter Ended
Mar 31, 2022 Jun 30, 2021$$

Interest income
Interest expense
Net interest
Net revenues
Provision for credit losses
Non-interest expenses:
Compensation and benefits
Non-compensation expenses:
Brokerage, clearing and exchange fees
Information processing and communications
Professional services
Occupancy and equipment
Marketing and business development
Other
Total non-compensation expenses
Total non-interest expenses
Income before provision for income taxes
Provision for income taxes
Net income
Net income applicable to nonredeemable noncontrolling interests
Net income applicable to Morgan Stanley
Preferred stock dividend
Earnings applicable to Morgan Stanley common shareholders

$

$

1,150
3,597
23
1,220
4,912
(52)
10,850

1,758
3,983
75
1,416
5,119
234
12,585$Percentage Change From:Mar 31, 2022 Jun 30, 2021

2,560
3,330
381
1,308
4,973
342
12,894

(35%)
(10%)
(69%)
(14%)
(4%)
*
(14%)

(55%)
8%
(94%)
(7%)
(1%)
*
(16%)

Six Months Ended
Jun 30, 2022 Jun 30, 2021
$

2,908
7,580
98
2,636
10,031
182
23,435$Percentage
Change

5,400
7,555
699
2,934
9,371
626
26,585(46%)-(86%)
(10%)
7%
(71%)
(12%)
35%
133%
16%
(8%)

3,612
1,330
2,282
13,132

2,650
434
2,216
14,801

2,212
347
1,865
14,759

36%
*
3%
(11%)

63%
*
22%
(11%)

6,262
1,764
4,498
27,933

4,649
756
3,893
30,478

101

57

73

77%

38%

158

(25)

5,550

6,274

6,423

(12%)

(14%)

11,824

13,221

(11%)

878
857
757
430
220
1,020
4,162

882
829
705
427
175
864
3,882

795
765
746
414
146
831
3,697

-3%
7%
1%
26%
18%
7%

10%
12%
1%
4%
51%
23%
13%

1,760
1,686
1,462
857
395
1,884
8,044

1,705
1,498
1,370
819
292
1,688
7,372

3%
13%
7%
5%
35%
12%
9%

9,712

10,156

10,120(4%)(4%)

19,86820,593

(4%)

3,319
783
2,536
41
2,495
104
2,391

4,588
873
3,715
49
3,666
124
3,542

4,566
1,054
3,512
1
3,511
103
3,408

(28%)
(10%)
(32%)
(16%)
(32%)
(16%)
(32%)

(27%)
(26%)
(28%)
*
(29%)
1%
(30%)

7,907
1,656
6,251
90
6,161
228
5,933

9,910
2,230
7,680
49
7,631
241
7,390

(20%)
(26%)
(19%)
84%
(19%)
(5%)
(20%)

$

$

$

$

$

$

$

$

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

8*

Consolidated Financial Metrics, Ratios and Statistical Data
(unaudited)Jun 30, 2022

Quarter Ended
Mar 31, 2022 Jun 30, 2021

$
$

$
$

Percentage Change From:Mar 31, 2022 Jun 30, 2021

Six Months Ended
Jun 30, 2022 Jun 30, 2021

Percentage
ChangeFinancial Metrics:
Earnings per basic share
Earnings per diluted share
Return on average common equity
Return on average tangible common equity
Book value per common share
Tangible book value per common share

Excluding integration-related expenses
Adjusted earnings per diluted share
Adjusted return on average common equity
Adjusted return on average tangible common equity

1.40
1.39

2.04
2.02

10.1%
13.8%

$
$

14.7%
19.8%

1.88
1.85

(31%)
(31%)

(26%)
(25%)

$
$

13.8%
18.6%

$
$

54.46
40.07

$
$

54.18
39.91

$
$

54.04
40.12

$

1.44
10.5%
14.3%

$

2.06
15.0%
20.3%

$

1.89
14.1%
19.0%

3.45
3.41

$
$

12.4%
16.8%

(30%)

(24%)

4.10
4.04

(16%)
(16%)

15.3%
19.8%

$
$

54.46
40.07

$
$

54.04
40.12

$

3.51
12.8%
17.3%

$

4.11
15.6%
20.1%

(15%)

Financial Ratios:
Pre-tax profit margin
Compensation and benefits as a % of net revenues
Non-compensation expenses as a % of net revenues
Firm expense efficiency ratio
Firm expense efficiency ratio excluding integration-related expenses
Effective tax rate

25%
42%
32%
74%
73%
23.6%

31%
42%
26%
69%
68%
19.0%

31%
44%
25%
69%
68%
23.1%

28%
42%
29%
71%
70%
20.9%

33%
43%
24%
68%
67%
22.5%

1,718
1,739

1,804
1,829

Statistical Data:
Period end common shares outstanding (millions)Average common shares outstanding (millions)
Basic
Diluted

1,723

1,756

1,834

(2%)

(6%)

1,704
1,723

1,733
1,755

1,814
1,841

(2%)
(2%)

(6%)
(6%)

Worldwide employees

78,38676,541

71,8262%

9%Notes:- For the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021, Firm results include pre-tax integration-related expenses of $120 million, $107 million and $90 million ($92 million, $82 million and $69 million
after-tax) respectively, reported in the Wealth Management and Investment Management business segments. The six months ended June 30, 2022 and 2021 results include pre-tax integration-related expenses of $227 million
and $165 million ($174 million and $127 million after-tax), respectively.
- The End Notes are an integral part of this presentation. Refer to the Financial Supplement on pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and Terms, Supplemental
Quantitative Details and Calculations, and Legal Notice for additional information.

9

(5%)
(5%)