Media Relations: Jeanmarie McFadden 212-761-2433

Investor Relations: Celeste Mellet Brown 212-761-3896

Subsequent to the release of Morgan Stanley’s fourth quarter earnings on
January 18, 2013, the Firm reported updated results in the Firm’s Annual
Report on Form 10-K for the year ended December 31, 2012, filed on
February 26, 2013. For updated information refer to the Firm’s 4Q 2012financial supplement and 2012 Form 10-K.

Morgan Stanley Reports Fourth Quarter and Full Year 2012:

Fourth Quarter Net Revenues of $7.0 Billion Included the Negative Impact of $511
Million from the Tightening of Morgan Stanley’s Debt-Related Credit Spreads(DVA); 1 Income from Continuing Operations of $0.28 per Diluted Share

Excluding DVA, Fourth Quarter Net Revenues were $7.5 Billion and Income from
Continuing Operations was $0.45 per Diluted Share 2, 3

Fourth Quarter Global Wealth Management Pre-Tax Margin of 17%, Highest
Since the Inception of the Joint Venture; Investment Banking Ranked #1 in Global
IPOs and #2 in Global Announced M&A and Global Equity; 4 Solid Results in
Equity Sales and Trading

Full Year Net Revenues of $26.1 Billion Included the Negative Impact of $4.4 Billion
from DVA; Loss from Continuing Operations of $0.03 per Diluted Share;
Excluding DVA, Net Revenues were $30.5 Billion and Income from Continuing
Operations was $1.59 per Diluted Share2, 3

NEW YORK, January 18, 2013 – Morgan Stanley (NYSE: MS) today reported net revenues of $7.0 billion for
the fourth quarter ended December 31, 2012 compared with $5.7 billion a year ago. For the current quarter,
income from continuing operations applicable to Morgan Stanley was $573 million, or $0.28 per diluted share, 5
which included a net tax benefit of approximately $155 million, 6 or $0.08 per diluted share, compared with aloss of $222 million, or a loss of $0.13 per diluted share,5 for the same period a year ago. The prior year fourth
quarter included a pre-tax loss of approximately $1.7 billion, or a loss of $0.58 per diluted share, related to thecomprehensive settlement with MBIA Insurance Corporation (MBIA).
Results for the current quarter included negative revenue of $511 million compared with positive revenue of$216 million a year ago related to changes in Morgan Stanley’s debt-related credit spreads and other credit
factors (Debt Valuation Adjustment, DVA).1
Excluding DVA, net revenues for the current quarter were $7.5 billion compared with $5.5 billion a year ago
and income from continuing operations applicable to Morgan Stanley was $894 million, or $0.45 per diluted
share, compared with a loss of $349 million, or $0.20 loss per diluted share a year ago.3, 5, 7Compensation expense of $3.6 billion in the current quarter declined from $3.8 billion a year ago. Noncompensation expenses of $2.5 billion increased from $2.3 billion a year ago.
For the current quarter, net income applicable to Morgan Stanley, including discontinued operations, was $0.25
per diluted share, compared with a net loss of $0.15 per diluted share in the fourth quarter of 2011. Discontinued
operations in the current quarter includes a provision of approximately $115 million related to a settlement with
the Federal Reserve Board concerning the independent foreclosure review related to Saxon. 8

1

Summary of Firm Results(dollars in millions)Excluding DVA (2), (3)As Reported

Net
Revenues

MS Earnings
Cont. Ops. (1)Net
Revenues

MS Earnings
Cont. Ops. (1)4Q 2012$6,966$547$7,477$867

3Q 2012$5,280$(1,032)$7,542$534

4Q 2011$5,675$(247)$5,459$(374)(1)

Represents income (loss) from continuing operations applicable to Morgan Stanley common shareholders less preferred dividends.
Net revenues for 4Q 2012, 3Q 2012 and 4Q 2011 exclude positive (negative) revenue from DVA of $(511) million, $(2,262) million and $216
million, respectively.
(3)
Earnings / (loss) from continuing operations applicable to Morgan Stanley common shareholders for 4Q 2012, 3Q 2012 and 4Q 2011 excludes
after-tax DVA impact of $(321) million, $(1,568) million and $127 million, respectively, and includes a related allocation of earnings toParticipating Restricted Stock Units of $1 million, $2 million and $0 million, respectively.
(2)

Fourth Quarter Business Overview
Global Wealth Management Group net revenues were $3.5 billion and pre-tax margin was 17%. 9 Averageannualized revenue per global representative was $824,000, highest since the inception of the Joint
Venture.



Institutional Securities net revenues excluding DVA were $3.5 billion reflecting strong performance inInvestment Banking, solid results in Equity sales and trading and a decline in Fixed Income &Commodities sales and trading.



Asset Management reported net revenues of $599 million with assets under management or supervision of$338 billion.

James P. Gorman, Chairman and Chief Executive Officer, said, “After a year of significant challenges, Morgan
Stanley has reached a pivot point. We demonstrated meaningful progress in our Wealth Management Joint
Venture, reaching the highest pre-tax margin since the inception of the JV. We charted a path to acquire theremainder of the JV. We are ahead of our risk weighted asset reduction targets for Fixed Income andCommodities, while continuing to focus on our strengths within business and strategic linkages across the Firm
and investing for the evolving regulatory environment. We continued to demonstrate leadership in Investment
Banking and Equity sales and trading. Our Firm is now poised to reach the returns of which it is capable on
behalf of our shareholders.”2

FOURTH QUARTER RESULTS

Summary of Institutional Securities Results(dollars in millions)Excluding DVA (1)Net
Pre-Tax
Revenues
IncomeAs Reported
Net
Pre-Tax
Revenues
Income(1)

4Q 2012$2,951$57$3,462$568

3Q 2012$1,367$(1,920)$3,629$342

4Q 2011$2,068$(772)$1,852$(988)Net revenues and pre-tax income for 4Q 2012, 3Q 2012 and 4Q 2011 exclude positive (negative) revenue from DVA of $(511) million, $(2,262)
million and $216 million, respectively.

INSTITUTIONAL SECURITIESInstitutional Securities reported a pre-tax gain from continuing operations of $57 million compared with a pre-tax
loss of $772 million in the fourth quarter of last year. Net revenues for the current quarter were $3.0 billion
compared with $2.1 billion, inclusive of MBIA, a year ago. DVA resulted in negative revenue of $511 million in
the current quarter compared with positive revenue of $216 million a year ago. Excluding DVA, net revenues forthe current quarter were $3.5 billion compared with $1.9 billion a year ago. The following discussion for sales
and trading excludes DVA.


Advisory revenues were $454 million compared with $406 million a year ago reflecting higher levels ofmarket activity. Equity underwriting revenues were $237 million compared with $189 million a year ago
reflecting higher market volume. Fixed income underwriting revenues were $534 million, our highest
reported quarter, compared with $288 million a year ago.



Fixed Income & Commodities sales and trading net revenues were $811 million compared with losses of$493 million a year ago. Fixed Income, after considering the impact of MBIA, reflected a decline in rates,
partly offset by relative improvement in credit products. Commodities results declined meaningfully in achallenging market. 10Equity sales and trading net revenues of $1.3 billion were essentially unchanged from the prior year quarter,
although stronger performances were noted in the derivatives and prime brokerage businesses.10

Compensation expense for the current quarter was $1.5 billion compared with $1.6 billion in the prior year
quarter. Non-compensation expenses of $1.4 billion increased from $1.3 billion a year ago.

Morgan Stanley’s average trading Value-at-Risk (VaR) measured at the 95% confidence level was $78
million compared with $63 million in the third quarter of 2012 and $105 million in the fourth quarter of theprior year. 113

Summary of Global Wealth Management Group Results(dollars in millions)

(1)

Net
Revenues

Pre-Tax
Income (1)4Q 2012$3,461$581

3Q 2012$3,336$239

4Q 2011$3,219$238

3Q 2012 pre-tax income includes $193 million of non-recurring costs associated with the Morgan Stanley Wealth Management (MSWM)
integration and purchase of an additional 14% stake in the Joint Venture.

GLOBAL WEALTH MANAGEMENT GROUP
Global Wealth Management Group reported pre-tax income from continuing operations of $581 million
compared with $238 million in the fourth quarter of last year. The quarter’s pre-tax margin was 17%.9 Net
revenues for the current quarter were $3.5 billion compared with $3.2 billion a year ago. Income after thenoncontrolling interest allocation to Citigroup Inc. (Citi) and before taxes was $474 million. 12Asset management fee revenues of $1.9 billion increased 16% from last year’s fourth quarter primarilyreflecting an increase in fee based assets and positive flows.

Transactional revenues 13 of $1.1 billion decreased 3% from a year ago reflecting reduced commissions andfees and a decrease in principal trading revenues driven by lower gains from investments associated with the
Firm’s deferred compensation and co-investment plans, offset by higher investment banking revenues.

Compensation expense for the current quarter was $2.0 billion compared with $2.1 billion a year ago. Noncompensation expenses were $901 million compared with $922 million a year ago.



Total client assets were $1.8 trillion at quarter end. Client assets in fee based accounts were $573 billion, or
32% of total client assets. Global fee based asset flows for the quarter were $3.7 billion.

Global representatives of 16,780 were relatively unchanged from the prior quarter. Average annualized
revenue per global representative of $824,000 and total client assets per global representative of $106 million
increased 13% and 14%, respectively, compared with the prior year quarter.

Summary of Asset Management Results(dollars in millions)
Net
Revenues

Pre-Tax
Income4Q 2012

$599

$221

3Q 2012

$631

$198

4Q 2011$424$78

ASSET MANAGEMENT
Asset Management reported pre-tax income from continuing operations of $221 million compared with pre-tax
income of $78 million in last year’s fourth quarter. 14 The quarter’s pre-tax margin was 37%.9 Income after thenoncontrolling interest allocation and before taxes was $172 million.


Net revenues of $599 million increased from $424 million in last year’s fourth quarter primarily reflecting
higher results in the Traditional Asset Management business and gains on principal investments in the4Merchant Banking and Real Estate Investing businesses. 15Compensation expense for the current quarter was $168 million compared with $183 million a year ago.
Non-compensation expenses of $210 million increased from $163 million a year ago on higher brokerage andclearing expenses.



Assets under management or supervision at December 31, 2012 of $338 billion increased 18% from the prioryear. The increase primarily reflected positive net customer flows in Morgan Stanley’s liquidity funds andmarket appreciation.

FULL YEAR RESULTS
Full year net revenues were $26.1 billion compared with $32.2 billion a year ago. Income from continuing
operations applicable to Morgan Stanley for the current year was $48 million, or a loss of $0.03 per diluted
share,5 compared with income of $4.2 billion, or $1.26 per diluted share,5 a year ago. Results for the current
year included a net tax benefit of approximately $73 million or $0.04 per diluted share.6 The Firm’s prior year
earnings reflected the impact of several key actions executed in connection with strategic and other matters. 16
Results for the year included negative revenue of $4.4 billion compared with positive revenue of $3.7 billion ayear ago related to DVA. Excluding DVA, net revenues for the current year were $30.5 billion compared with$28.6 billion in 2011 and income from continuing operations applicable to Morgan Stanley was $3.2 billion, or$1.59 per diluted share, compared with income of $1.9 billion, or a loss of $0.08 per diluted share a year
ago.3,5,7
The Firm’s compensation expense of $15.6 billion for the current year decreased from $16.3 billion a year ago.
Non-compensation expenses of $10.0 billion increased from $9.8 billion a year ago.
For the current year, the net loss applicable to Morgan Stanley, including discontinued operations, was $0.06 perdiluted share, compared with net income of $1.23 per diluted share a year ago.8

Summary of Firm Results(dollars in millions)Excluding DVA (2), (3)As Reported

Net
Revenues

MS Earnings
Cont. Ops. (1)Net
Revenues

MS Earnings
Cont. Ops. (1)FY 2012$26,112$(50)$30,514$3,055FY 2011$32,236$2,117$28,555$(136)(1)

Represents income (loss) from continuing operations applicable to Morgan Stanley common shareholders less preferred dividends and a onetime negative adjustment of $1.7 billion in FY 2011 related to the conversion of the Firm’s Series B Preferred Stock held by Mitsubishi UFJ
Financial Group, Inc. (MUFG) into common stock.
(2)
Net revenues for FY 2012 and FY 2011 exclude positive (negative) revenue from DVA of $(4,402) million and $3,681 million, respectively.
(3)
Earnings / (loss) from continuing operations applicable to Morgan Stanley common shareholders for FY 2012 and FY 2011 excludes after-tax
DVA impact of $(3,118) million and $2,275 million, respectively, and includes a related allocation of earnings to Participating Restricted Stock
Units of $13 million and $(22) million, respectively.

5

Summary of Segments Results(dollars in millions)Excluding DVA (1)As Reported

Net Revenues(1)

Pre-Tax Income

Net Revenues

Pre-Tax Income

FY 2012FY 2011

FY 2012FY 2011

FY 2012FY 2011

FY 2012FY 2011

Institutional Securities$10,553$17,175$(1,671)$4,591$14,955$13,494$2,731$910

Global Wealth Management$13,516$13,289$1,600$1,255$13,516$13,289$1,600$1,255

Asset Management$2,219$1,887$590$253$2,219$1,887$590$253

Institutional Securities net revenues and pre-tax income for FY 2012 and FY 2011 exclude positive (negative) revenue from DVA of $(4,402)
million and $3,681 million, respectively.

INSTITUTIONAL SECURITIESInstitutional Securities reported a pre-tax loss from continuing operations of $1.7 billion compared with pre-tax
income of $4.6 billion in 2011. Net revenues for the current year were $10.6 billion compared with $17.2 billion,
inclusive of MBIA, a year ago. DVA resulted in negative revenue of $4.4 billion in the current year comparedwith positive revenue of $3.7 billion a year ago. Excluding DVA, net revenues for the current year were $15.0
billion compared with $13.5 billion a year ago. Compensation expense was $6.7 billion compared with $7.2
billion a year ago. Non-compensation expenses of $5.6 billion increased from $5.4 billion a year ago primarily
due to increased litigation costs.

GLOBAL WEALTH MANAGEMENT GROUP
Global Wealth Management Group reported pre-tax income from continuing operations of $1.6 billion comparedwith $1.3 billion a year ago. Net revenues for the current year were $13.5 billion compared with $13.3 billion ayear ago. The year’s pre-tax margin was 12%.9 Income after the noncontrolling interest allocation to Citi andbefore taxes was $1.3 billion.12 Compensation expense was $8.1 billion compared with $8.3 billion a year ago.
Non-compensation expenses of $3.8 billion increased from $3.7 billion a year ago reflecting non-recurring costs
of approximately $176 million primarily associated with the MSWM integration.

ASSET MANAGEMENT
Asset Management reported pre-tax income from continuing operations of $590 million compared with $253
million a year ago.14 The year’s reported pre-tax margin was 27%.9 Income after the noncontrolling interest
allocation and before taxes was $403 million. Net revenues of $2.2 billion increased from $1.9 billion a year ago
primarily reflecting higher results in the Traditional Asset Management business and gains on principal
investments in the Merchant Banking and Real Estate Investing businesses.15 Compensation expense of $841
million and non-compensation expenses of $788 million were essentially unchanged from a year ago.

6

CAPITAL
Morgan Stanley’s Tier 1 capital ratio under Basel I was approximately 17.9% and Tier 1 common ratio wasapproximately 14.7% at December 31, 2012. 17
At December 31, 2012, book value and tangible book value per common share were $30.65 and $26.81, 18
respectively, based on approximately 2.0 billion shares outstanding.

OTHER MATTERS
The effective tax rate from continuing operations for the current quarter was 11.1%. The current quarter includes
a net tax benefit of approximately $155 million consisting of a discrete benefit from remeasurement of reserves
and an out of period tax provision to adjust previously recorded deferred tax assets.6
The Firm declared a $0.05 quarterly dividend per common share. The dividend is payable on February 15, 2013
to common shareholders of record on February 5, 2013.
Morgan Stanley is a leading global financial services firm providing a wide range of investment banking,securities, investment management and wealth management services. The Firm’s employees serve clientsworldwide including corporations, governments, institutions and individuals from more than 1,200 offices in 43
countries. 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 andthe Financial Supplement are available online in the Investor Relations section at www.morganstanley.com.

###(See Attached Schedules)
The information above contains forward-looking statements. Readers are cautioned not to place undue
reliance on forward-looking statements, which speak only as of the date on which they are made and whichreflect management's current estimates, projections, expectations or beliefs and which are subject to risks anduncertainties that may cause actual results to differ materially. For a discussion of additional risks anduncertainties that may affect the future results of the Company, please see “Forward-Looking Statements”
immediately preceding Part I, Item 1, “Competition” and “Supervision and Regulation” in Part I, Item 1,“Risk Factors” in Part I, Item 1A, “Legal Proceedings” in Part I, Item 3, “Management’s Discussion andAnalysis of Financial Condition and Results of Operations” in Part II, Item 7 and “Quantitative andQualitative Disclosures about Market Risk” in Part II, Item 7A, each of the Company's Annual Report on
Form 10-K for the year ended December 31, 2011 and other items throughout the Form 10-K, theCompany’s Quarterly Reports on Form 10-Q, including “Risk Factors” in Part II, Item 1A therein, and theCompany’s Current Reports on Form 8-K, including any amendments thereto.

7

1

Represents the change in the fair value of certain of Morgan Stanley’s long-term and short-term borrowings resulting fromfluctuations in its credit spreads and other credit factors (commonly referred to as “DVA”).
2

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. For these purposes, “GAAP” refers to generally
accepted accounting principles in the United States. The Securities and Exchange Commission (SEC) defines a “non-GAAP
financial measure” as a numerical measure of historical or future financial performance, financial positions, or cash flowsthat is subject to adjustments that effectively exclude, or include amounts from the most directly comparable measurecalculated and presented in accordance with GAAP. Non-GAAP financial measures disclosed by Morgan Stanley areprovided as additional information to investors in order to provide them with greater transparency about, or an alternative
method for assessing our financial condition and operating results. These measures are not in accordance with, or asubstitute for, GAAP, and may be different from or inconsistent with non-GAAP financial measures used by othercompanies. Whenever we refer to a non-GAAP financial measure, we will also generally present the most directlycomparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation of thedifferences between the non-GAAP financial measure we reference with such comparable GAAP financial measure.

3

Income (loss) per diluted share amounts, excluding DVA, are non-GAAP financial measures that the Firm considers usefulfor investors to allow better comparability of period to period operating performance. Such exclusions are provided todifferentiate revenues associated with Morgan Stanley borrowings, regardless of whether the impact is either positive, or
negative, that result solely from fluctuations in credit spreads and other credit factors. The reconciliation of income (loss) per
diluted share from continuing operations applicable to Morgan Stanley common shareholders and average diluted sharesfrom a non-GAAP to GAAP basis is as follows (shares and DVA are presented in millions):

Income (loss) per diluted share applicable to MS – Non-GAAP
DVA impact
Income (loss) per diluted share applicable to MS – GAAP
Average diluted shares – Non-GAAP
DVA impact
Average diluted shares – GAAP
4

4Q 2012$0.45$(0.17)$0.28

4Q 2011$(0.20)$0.07$(0.13)

FY 2012$1.59$(1.62)$(0.03)

FY 2011$(0.08)
$1.34
$1.26

1,937
0
1,937

1,850
0
1,850

1,919
(33)
1,886

1,655
20
1,675

Source: Thomson Reuters – for the period of January 1, 2012 to December 31, 2012 as of January 3, 2013.

5

Includes preferred dividends and other adjustments related to the calculation of earnings per share for the fourth quarter of2012 and 2011 of approximately $26 million and $25 million, respectively. Includes preferred dividends and otheradjustments related to the calculation of earnings per share for the year ended 2012 and 2011 of approximately $98 million
and $2.0 billion, respectively. Refer to page 3 of Morgan Stanley’s Financial Supplement accompanying this release for the
calculation of earnings per share.

6

For the quarter ended December 31, 2012, the Firm recognized, in income from continuing operations, a net tax benefit ofapproximately $155 million. This included a discrete benefit of approximately $299 million related to the remeasurement ofreserves due to either the expiration of the applicable statute of limitations, or new information regarding the status of certain
Internal Revenue Service examinations. The Firm also recognized, in the quarter ended December 31, 2012, an out of period
net tax provision of approximately $144 million, principally in the Asset Management business segment, primarily related tothe overstatement of deferred tax assets associated with partnership investments in prior periods. For the full year ended
December 31, 2012, the Firm recognized, in income from continuing operations, the discrete tax benefit noted above and anout of period net tax provision of approximately $226 million to adjust previously recorded deferred tax assets. The Firm has
evaluated the effects of the understatement of the income tax provision both qualitatively and quantitatively and concluded
that it did not have a material impact on any prior annual or quarterly consolidated results. A comprehensive review of the8Firm’s deferred tax accounts continues, and as such, the net tax provisions noted above could be subject to revision.
7

Income (loss) applicable to Morgan Stanley, excluding DVA, is a non-GAAP financial measure that the Firm considers
useful for investors to allow for better comparability of period-to-period operating performance. The reconciliation of income(loss) from continuing operations applicable to Morgan Stanley from a non-GAAP to GAAP basis is as follows (amounts arepresented in millions):

Income (loss) applicable to MS – Non-GAAP
DVA after-tax impact
Income (loss) applicable to MS – GAAP

4Q 2012$894$(321)$573

3Q 2012$560$(1,568)$(1,008)

4Q 2011$(349)$127$(222)FY 2012$3,166$(3,118)$48

FY 2011$1,886$2,275$4,1618

Discontinued operations for the current year primarily reflected an after-tax gain and other operating income related to
Quilter Holdings Ltd. (reported in the Global Wealth Management business segment), and an after-tax loss and operating
results related to Saxon (reported in the Institutional Securities business segment), which includes the fourth quarter
provision of approximately $115 million related to a settlement with the Federal Reserve Board concerning the independent
foreclosure review related to Saxon. The independent foreclosure review was one of the requirements imposed by the April
2, 2012 Consent Order that the Firm entered into with the Federal Reserve Board. The other requirements of the Consent
Order are not impacted by the settlement and the settlement does not include civil money penalties which may be imposed by
the Federal Reserve Board.
9

Pre-tax margin is a non-GAAP financial measure that the Firm considers useful for investors to assess operating
performance. Pre-tax margin represents income (loss) from continuing operations before taxes, divided by net revenues.

10

Sales and trading net revenues, including Fixed Income & Commodities (FIC) and Equity sales and trading net revenues
excluding DVA, are non-GAAP financial measures that the Firm considers useful for investors to allow better comparabilityof period-to-period operating performance. The reconciliation of sales and trading, including FIC and Equity sales andtrading net revenues from a non-GAAP to GAAP basis is as follows (amounts are presented in millions):
4Q 2012$2,047$(511)$1,536

4Q 2011$867$216$1,083

FY 2012$10,612$(4,402)$6,210FY 2011$9,268$3,681$12,949

FIC Sales & Trading – Non-GAAP
DVA impact
FIC Sales & Trading – GAAP

$811$(330)$481$(493)$239$(254)$5,631$(3,273)$2,358$4,444$3,062$7,506Equity Sales & Trading – Non-GAAP
DVA impact
Equity Sales & Trading – GAAP

$1,271$(181)$1,090$1,277$(23)$1,254$5,477$(1,130)$4,347$6,151$619$6,770

Sales & Trading – Non-GAAP
DVA impact
Sales & Trading – GAAP

11

VaR 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. Further discussion of thecalculation of VaR and the limitations of the Firm's VaR methodology will be disclosed in Part II, Item 7A “Quantitative andQualitative Disclosures about Market Risk” included in Morgan Stanley’s Annual Report on Form 10-K for the year ended
December 31, 2012. Refer to page 8 of Morgan Stanley’s Financial Supplement accompanying this release for the VaR
disclosure.

9

12

During the quarter ended September 30, 2012, Morgan Stanley completed the purchase of an additional 14% stake in the
Joint Venture from Citi, increasing the Firm’s interest from 51% to 65%. Prior to September 17, 2012, Citi’s results related
to its 49% interest were reported in net income (loss) applicable to nonredeemable noncontrolling interests on page 10 ofMorgan Stanley’s Financial Supplement accompanying this release. Due to the terms of the revised agreement with Citi,
subsequent to the purchase of the additional 14% stake, Citi’s results related to the 35% interest are reported in net income(loss) applicable to redeemable noncontrolling interests on page 10 of Morgan Stanley’s Financial Supplement
accompanying this release.
13

Transactional revenues include investment banking, principal transactions - trading and commissions and fee revenues.

14

Results for the fourth quarter of 2012 and 2011 included pre-tax income of $49 million and $44 million, respectively,
related to principal investments held by certain consolidated real estate funds. Results for the full year ended 2012 and 2011
included pre-tax income of $185 million and $145 million, respectively, related to principal investments held by certain
consolidated real estate funds. The limited partnership interests in these funds are reported in net income (loss) applicable tononcontrolling interests on page 12 of Morgan Stanley’s Financial Supplement accompanying this release.
15

Results for the current quarter included gains of $50 million compared with gains of $45 million in the prior year quarter
related to principal investments held by certain consolidated real estate funds. Results for the current year included gains of$192 million compared with gains of $169 million in the prior year related to principal investments held by certain
consolidated real estate funds.
16

Morgan Stanley executed several key strategic actions in 2011 which affected earnings including the conversion of the
Firm’s Series B Preferred Stock held by MUFG into common stock which resulted in a negative adjustment to earnings per
share of approximately $1.7 billion, a pre-tax loss of approximately $1.7 billion related to MBIA and the restructuring of thesale of Revel Entertainment Group, LLC (Revel) which resulted in a discrete net tax benefit of $447 million. Also impacting
the Firm’s 2011 earnings was a pre-tax loss of approximately $783 million arising from the Firm’s 40% stake in a Japanese
securities joint venture (Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. or MUMSS) controlled and managed by ourpartner, MUFG.

17

The Firm calculates its Tier 1 capital ratio and risk-weighted assets in accordance with the capital adequacy standards forfinancial holding companies adopted by the Federal Reserve Board. These standards are based upon a framework describedin the International Convergence of Capital Measurement and Capital Standards, July 1988, as amended, also referred to as
Basel I. In accordance with the Federal Reserve Board’s definition, Tier 1 common capital is defined as Tier 1 capital lessnon-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. These computations are preliminary
estimates as of January 18, 2013 (the date of this release) and could be subject to revision in Morgan Stanley’s Annual
Report on Form 10-K for the year ended December 31, 2012.
18

Tangible common equity and tangible book value per common share are non-GAAP financial measures that the Firm
considers to be useful measures of capital adequacy. Tangible common equity equals common equity less goodwill andintangible assets net of allowable mortgage servicing rights deduction and includes only the Firm’s share of the Joint
Venture’s goodwill and intangible assets. Tangible book value per common share equals tangible common equity divided byperiod end common shares outstanding.

10

MORGAN STANLEY
Quarterly Financial Summary(unaudited, dollars in millions)

Dec 31, 2012
Net revenues
Institutional Securities
Global Wealth Management Group
Asset Management
Intersegment Eliminations
Consolidated net revenues
Income (loss) from continuing operations before tax
Institutional Securities
Global Wealth Management Group
Asset Management
Intersegment Eliminations
Consolidated income (loss) from continuing operations before tax
Income (loss) applicable to Morgan Stanley
Institutional Securities
Global Wealth Management Group
Asset Management
Intersegment Eliminations
Consolidated income (loss) applicable to Morgan Stanley

$

$

$

$

$

Quarter Ended
Sept 30, 2012

2,951
3,461
599
(45)
6,966

$

1,367
3,336
631
(54)
5,280

$

57
581
221
0
859

$

(1,920)239
198
0(1,483)

$

$

$

$
$

(1,269)157
104
0(1,008)(1,047)$$

Percentage Change From:
Dec 31, 2011
Sept 30, 2012

Dec 31, 2011

Twelve Months Ended
Dec 31, 2012
Dec 31, 2011

2,068
3,219
424
(36)
5,675

116%
4%
(5%)
17%
32%

43%
8%
41%
(25%)
23%

$

(772)
238
78
0
(456)

*
143%
12%
-*

*
144%
183%
-*

$

*
76%
*
-*
*

*
111%
*
-*
*

$

$
$

(359)
131
6
0
(222)
(275)

$

$

10,553
13,516
2,219(176)
26,112$(1,671)
1,600
590
(4)
515

$

$

$
$

(833)
799
86
(4)
48
(117)

$

$

Percentage
Change17,175
13,2891,887(115)
32,236

(39%)
2%
18%
(53%)
(19%)

4,591
1,255
253
0
6,099

*
27%
133%
*
(92%)

$
$

3,468
658
35
0
4,161
2,067

*
21%
146%
*
(99%)
*

$

$

Earnings (loss) applicable to Morgan Stanley common shareholders

$
$

353
277
(57)
0
573
481

Earnings per basic share:
Income from continuing operations
Discontinued operations
Earnings per basic share

$
$
$

0.29
(0.04)
0.25$$$(0.55)(0.55)$$$(0.13)(0.02)(0.15)****(100%)*$$$(0.03)(0.03)(0.06)$$$

1.28(0.03)
1.25*-*

Earnings per diluted share:
Income from continuing operations
Discontinued operations
Earnings per diluted share

$
$
$

0.28
(0.03)
0.25$$$(0.55)(0.55)$$$(0.13)(0.02)(0.15)

*
*
*

*
(50%)
*

$
$
$

(0.03)(0.03)(0.06)$$$

1.26(0.03)
1.23*-*

Financial Metrics:
Return on average common equityfrom continuing operations
Return on average common equity

3.6%
3.2%

*
*

*
*

Tier 1 common capital ratio
Tier 1 capital ratio

14.7%
17.9%

13.9%
16.9%

12.6%
16.2%

Book value per common share
Tangible book value per common share

$
$

30.65
26.81

$
$

30.53
26.65

$
$

*
*

31.42
27.95

Notes: - Results for the quarters ended December 31, 2012, September 30, 2012 and December 31, 2011, include positive (negative) revenue of $(511) million, $(2,262) million and $216 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). The twelve months ended December 31, 2012 andDecember 31, 2011 include positive (negative) revenue of $(4,402) million and $3,681 million, respectively, related to the movement in 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 quarters ended December 31, 2012, September 30, 2012 and December 31, 2011 net income (loss) applicable to noncontrolling interests include $3 million, $17 million, and $2 million
respectively, reported as a gain in discontinued operations. The twelve months ended December 31, 2012 and December 31, 2011 net income (loss) applicable to noncontrolling interests include $29 million and$7 million respectively, reported as a gain in discontinued operations.
- 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.
- 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.
- See page 4 of the financial supplement for additional information related to the calculation of the financial metrics.
11

3.9%
3.8%

MORGAN STANLEY
Quarterly Consolidated Income Statement Information(unaudited, dollars in millions)

Revenues:
Investment banking
Principal transactions:
Trading
Investments
Commissions and fees
Asset management, distribution and admin. fees
Other
Total non-interest revenues

Dec 31, 2012

Quarter Ended
Sept 30, 2012

Dec 31, 2011

$

$

$

Interest income
Interest expense
Net interest
Net revenues
Non-interest expenses:
Compensation and benefits
Non-compensation expenses:
Occupancy and equipment
Brokerage, clearing and exchange fees
Information processing and communications
Marketing and business development
Professional services
Other
Total non-compensation expenses
Total non-interest expenses

1,439

4,991

(5%)

149%
5%
6%
3%
8%
25%

56%
117%
(8%)
16%
65%
26%

6,991
742
4,257
9,008
555
26,311

12,384
573
5,347
8,410
175
31,880

(44%)
29%
(20%)
7%
*
(17%)

1,744
1,569
175
6,966

1,379
1,534
(155)
5,280

1,685
1,415
270
5,675

26%
2%
*
32%

4%
11%
(35%)
23%

5,988
6,187
(199)
26,112

7,258
6,902
356
32,236

(17%)
(10%)
*
(19%)

3,633

3,928

3,792

(8%)

(4%)

15,622

16,333

(4%)

394
369
474
163
558
516
2,474

386
359
493
138
476
983
2,835

381
379
471
160
487
461
2,339

2%
3%
(4%)
18%
17%
(48%)
(13%)

3%
(3%)
1%
2%
15%
12%
6%

1,546
1,536
1,913
602
1,923
2,455
9,975

1,548
1,633
1,811
595
1,794
2,423
9,804

-(6%)
6%
1%
7%
1%
2%

6,107

6,763

6,131

(10%)

--

25,597

26,137(2%)$(1,483)
(525)
(958)
2
(956)
8
59
(1,023)24(1,047)

$

(456)
(298)
(158)
(26)
(184)
0
66
(250)
25
(275)

*
*
*
*
*
*
32%
*
8%
*

*
*
*
(142%)
*
*
18%
*
4%
*

$

515
(152)
667
(38)
629
124
524
(19)
98
(117)

$

6,099
1,410
4,689
(44)
4,645
0
535
4,110
2,043
2,067

(92%)
*
(86%)
14%
(86%)
*
(2%)
*
(95%)
*

$

(1,008)(15)(1,023)

$

(222)
(28)
(250)

*
*
*

*
(136%)
*

$

48
(67)
(19)

$

4,161
(51)
4,110

(99%)
(31%)
*

Amounts applicable to Morgan Stanley:
Income (loss) from continuing operations
Gain (loss) from discontinued operations after tax
Net income (loss) applicable to Morgan Stanley

$

573
(66)
507

Notes:

37%

969
140
1,149
2,004
92
5,405

$

Pre-tax profit margin
Compensation and benefits as a % of net revenues
Non-compensation expenses as a % of net revenues
Effective tax rate from continuing operations

25%

12%
52%
36%
11.1%

$

*
74%
54%
35.4%

$

*
67%
41%
65.4%

$

$

4,758

2%
60%
38%
*

$

Percentage
Change

607
290
988
2,257
141
5,435

859
95
764
(63)
701
116
78
507
26
481

$

1,051

Twelve Months Ended
Dec 31, 2012
Dec 31, 2011

1,513
304
1,052
2,331
152
6,791

Income (loss) from continuing operations before taxes
Income tax provision / (benefit) from continuing operations
Income (loss) from continuing operations
Gain (loss) from discontinued operations after tax
Net income (loss)
Net income applicable to redeemable noncontrolling interests
Net income applicable to nonredeemable noncontrolling interests
Net income (loss) applicable to Morgan Stanley
Preferred stock dividend / Other
Earnings (loss) applicable to Morgan Stanley common shareholders

1,152

Percentage Change From:
Sept 30, 2012
Dec 31, 2011

$

19%
51%
30%
23.1%

- 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.
- The quarter and full year ended December 31, 2011, Principal Transactions - Trading included a loss of $1,742 million related to the comprehensive settlement with MBIA Insurance Corporation (MBIA).
- Other revenues for the full year ended December 31, 2011, included a loss of approximately $783 million related to the 40% stake in a Japanese securities joint venture, Mitsubishi UFJ Morgan Stanley
Securities Co., Ltd. ("MUMSS") controlled and managed by our partner, Mitsubishi UFJ Financial Group Inc. (MUFG).
- In the quarter ended December 31, 2012, discontinued operations included the provision of $115 million related to a settlement with the Federal Reserve Board concerning the independent foreclosure
review related to Saxon. For the full year ended December 31, 2012, discontinued operations primarily reflected an after-tax gain and other operating income related to Quilter Holdings Ltd. (reported in
the Global Wealth Management business segment), and an after-tax loss and operating results related to Saxon (reported in the Institutional Securities business segment), which includes the provision
related to a settlement with the Federal Reserve Board concerning Saxon.
- For the quarter ended December 31, 2012, the effective tax rate from continuing operations was 11.1%. The current quarter includes a net tax benefit of approximately $155 million consisting of adiscrete benefit from remeasurement of reserves and an out of period tax provision to adjust previously recorded deferred tax assets.
- During the quarter ended September 30, 2012, Morgan Stanley completed the purchase of an additional 14% stake in Morgan Stanley Smith Barney (Joint Venture) from Citigroup Inc. (Citi), increasing
the Firm’s interest from 51% to 65%. Prior to September 17, 2012, Citi’s results related to its 49% interest were reported in net income (loss) applicable to nonredeemable noncontrolling interests.
Due to the terms of the revised agreement with Citi, subsequent to the purchase of the additional 14% stake, Citi’s results related to the 35% interest are reported in net income (loss) applicable
to redeemable noncontrolling interests.
- The portion of net income attributable to noncontrolling interests for consolidated entities is presented as either net income (loss) applicable to redeemable noncontrolling interests or net income (loss)
applicable to nonredeemable noncontrolling interests.
- The full year ended December 31, 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 MUFG, into Morgan Stanley common stock (MUFG conversion).
- Preferred stock dividend / other includes allocation of earnings to Participating Restricted Stock Units (RSUs).
12

MORGAN STANLEY
Quarterly Earnings Per Share(unaudited, dollars in millions, except for per share data)

Quarter Ended
Sept 30, 2012

Dec 31, 2012

Income (loss) from continuing operations
Net income applicable to redeemable noncontrolling interests
Net income applicable to nonredeemable noncontrolling interests
Net income (loss) from continuing operations applicable to noncontrolling interest
Income (loss) from continuing operations applicable to Morgan Stanley
Less: Preferred Dividends
Less: MUFG preferred stock conversion
Income from continuing operations applicable to Morgan Stanley, prior to allocation of income toParticipating Restricted Stock Units
Basic EPS Adjustments:
Less: Allocation of earnings to Participating Restricted Stock Units
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders

$

764
116
75
191
573
24
549

$

2
547

Gain (loss) from discontinued operations after tax
Less: Gain (loss) from discontinued operations after tax applicable to noncontrolling interests
Gain (loss) from discontinued operations after tax applicable to Morgan Stanley
Less: Allocation of earnings to Participating Restricted Stock Units
Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders
Earnings (loss) applicable to Morgan Stanley common shareholders$

Average basic common shares outstanding (millions)481$(1,032)

$

(63)
3
(66)
0
(66)
$

(958)
8
42
50
(1,008)24-

Dec 31, 2011

0
(1,032)

1,892(1,047)

*
*
79%
*
*
---

*
*
17%
198%
*
---

*

*

1
(247)

*
*

100%
*

(26)
2
(28)
0
(28)

*
(82%)
*
-*

(142%)
50%(136%)-(136%)

(275)

*

*

1,850

--

2%

(246)

$

2
17
(15)
0
(15)
$

(158)
0
64
64
(222)
24
-

$

1,889

Percentage Change From:
Sept 30, 2012
Dec 31, 2011

Twelve Months Ended
Dec 31, 2012
Dec 31, 2011

$

667
124
495
619
48
96
-

$

(48)

$

2
(50)

2,143

$

(38)
29
(67)
0
(67)
$

(117)

4,689
0
528
528
4,161
292
1,726

$

1,886

Percentage
Change

(86%)
*
(6%)
17%
(99%)
(67%)
*
*

26
2,117

(92%)
*

(44)
7
(51)
(1)
(50)

14%
*
(31%)
*
(34%)

2,067

*

1,655

14%

Earnings per basic share:
Income from continuing operations
Discontinued operations
Earnings per basic share

$
$
$

0.29
(0.04)
0.25$$$(0.55)(0.55)$$$(0.13)(0.02)(0.15)****(100%)*$$$(0.03)(0.03)(0.06)$$$

1.28(0.03)
1.25*-*

Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders

$

547

$

(1,032)

$

(247)

*

*

$

(50)

$

2,117

*

Diluted EPS Adjustments:
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders

$

547

$

(1,032)

$

(247)

*

*

$

(50)

$

2,117

*

(28)

*

(136%)

(50)

(34%)

(275)

*

*

2,067

*

1,850

3%

5%

1,675

13%

(0.13)(0.02)(0.15)

*
*
*

*
(50%)
*

1.26
(0.03)
1.23*-*

Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders
Earnings (loss) applicable to Morgan Stanley common shareholders(66)$

Average diluted common shares outstanding and common stock equivalents (millions)
Earnings per diluted share:
Income from continuing operations
Discontinued operations
Earnings per diluted share

481

(15)
$

1,937

$
$
$

0.28
(0.03)
0.25(1,047)

$

1,889

$
$
$

(0.55)(0.55)

$
$
$

(67)
$

(117)

$

1,886

$
$
$

(0.03)(0.03)(0.06)$$$

Notes: - The portion of net income attributable to noncontrolling interests for consolidated entities is presented as either net income (loss) applicable to redeemable noncontrolling interests or net income (loss) applicable to nonredeemablenoncontrolling interests.
- 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 pages 15 and 16 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.

13