Media Relations: Michele Davis 212-761-9621

Investor Relations: Sharon Yeshaya 212-761-1632

Morgan Stanley Reports Fourth Quarter and Full Year 2016:


Fourth Quarter Net Revenues of $9.0 Billion and Earnings per Diluted Share of $0.81

Fourth Quarter Results Reflect Continued Strength in Sales and Trading and M&A

Record Quarterly Wealth Management Net Revenues of $4.0 Billion; Pre-Tax Margin of
22%1,2



Full Year Net Revenues of $34.6 Billion and Earnings per Diluted Share of $2.92

NEW YORK, January 17, 2017 – Morgan Stanley (NYSE: MS) today reported net revenues of $9.0 billion for3
the fourth quarter ended December 31, 2016 compared with $7.7 billion a year ago. For the current quarter, net
4income applicable to Morgan Stanley was $1.7 billion, or $0.81 per diluted share, compared with income of
43$908 million, or $0.39 per diluted share, for the same period a year ago.
The prior year quarter included DVA losses of $124 million. Excluding DVA in the prior year quarter, net
revenues were $7.9 billion and income applicable to Morgan Stanley was $986 million, or $0.43 per diluted
5
share.
Compensation expense of $4.1 billion increased from $3.7 billion a year ago6 primarily driven by higher revenues.
Non-compensation expenses of $2.7 billion compared with $2.6 billion a year ago.
The effective tax rate for the current quarter was 25.2%, which reflected net discrete tax benefits of $135 million
primarily related to the remeasurement of reserves and related interest due to new information regarding the statusof a multi-year tax authority examination.
7

The annualized return on average common equity was 8.7 percent in the current quarter.

Fourth Quarter Business Overview
Institutional Securities net revenues were $4.6 billion reflecting strong results across our Sales and Trading
franchise and continued strength in M&A advisory.



Wealth Management net revenues were $4.0 billion and pre-tax margin was 22%. Fee-based asset flows forthe quarter were $17.1 billion.



Investment Management reported net revenues of $500 million with assets under management or supervisionof $417 billion.

2

James P. Gorman, Chairman and Chief Executive Officer, said, “Our quarterly results reflect consistent strong
performance, while our annual results show meaningful earnings growth over 2015. We reported solid results inSales & Trading and Advisory, and record revenues in Wealth Management, while managing expenses
prudently. We are optimistic about opportunities in 2017 and beyond and remain focused on serving our clientsand achieving our strategic objectives.”

1

FOURTH QUARTER RESULTS

Summary of Institutional Securities Results(dollars in millions)

Net

Revenues

IncomeRevenues

Income4Q 2016 (a)$4,614$1,326**

3Q 2016 (a)$4,553$1,383**(*)$3,419$548$3,543$672

4Q 2015a)Excluding DVA8Net
Pre-Tax

As Reported
Pre-Tax

Effective January 1, 2016, the Firm early adopted the provision of new accounting guidance that requires changes
in DVA to be presented in other comprehensive income as opposed to net revenues. Results for 2015 were notrestated pursuant to this guidance, and as such, 4Q 2015 is the only period where net revenues and pre-tax income3
are adjusted for the impact of DVA.

INSTITUTIONAL SECURITIESInstitutional Securities reported pre-tax income from continuing operations of $1.3 billion compared with pre-tax
3,8income of $548 million a year ago, or $672 million excluding DVA. Net revenues for the current quarter were3,8
$4.6 billion compared with $3.4 billion a year ago, or $3.5 billion excluding DVA. The following discussion forsales and trading excludes DVA from the prior year period.
Advisory revenues of $628 million increased from $516 million a year ago on higher levels of completed M&A
activity. Equity underwriting revenues of $225 million decreased from $352 million in the prior year quarteron lower IPO market volumes. Fixed income underwriting revenues of $421 million increased from $346
million in the prior year quarter driven primarily by higher non-investment grade loan and bond fees.

Sales and Trading net revenues of $3.2 billion increased from $2.3 billion a year ago:

3,9-Equity sales and trading net revenues of $2.0 billion increased from $1.8 billion a year ago reflecting solid
3,9results across products and regions, with particular strength in derivatives.

-

Fixed Income sales and trading net revenues of $1.5 billion increased from $550 million a year ago
reflecting higher results across products on improved market conditions compared with the prior year
3,9
period.

-Other sales and trading net losses of $234 million compared with losses of $103 million a year ago
primarily reflecting higher costs associated with the Firm’s funding and liquidity and lower revenues
associated with corporate loan hedging activity.



Other revenues of $150 million increased from $31 million a year ago reflecting mark-to-market gains
associated with held for sale corporate loans.

Compensation expense of $1.6 billion increased from $1.2 billion a year ago on higher revenues. Noncompensation expenses of $1.7 billion for the current quarter increased from $1.6 billion a year ago primarilyreflecting higher litigation costs, partly offset by continued expense discipline.

6

Morgan Stanley’s average trading Value-at-Risk (VaR) measured at the 95% confidence level was $39 million
10
compared with $42 million from the third quarter of 2016 and $46 million in the fourth quarter of the prior year.

2Summary of Wealth Management Results(dollars in millions)
Net
Revenues

Pre-Tax
Income4Q 2016$3,990$891

3Q 2016$3,881$901

4Q 2015$3,751$768

WEALTH MANAGEMENT
Wealth Management reported pre-tax income from continuing operations of $891 million compared with $768
2
million in the fourth quarter of last year. The quarter’s pre-tax margin was 22%. Net revenues for the current
quarter were $4.0 billion compared with $3.8 billion a year ago.


Asset management fee revenues of $2.2 billion increased from $2.1 billion a year ago reflecting market
appreciation and positive flows.

Transactional revenues of $774 million decreased from $861 million a year ago. Results for the current
period reflect lower commissions and lower revenues related to investments associated with certain employee
deferred compensation plans.



Net interest income of $984 million increased from $779 million a year ago principally driven by higher
deposit and loan balances. Wealth Management client liabilities were $73 billion at quarter end, an increase of
12$9 billion compared with the prior year quarter.

Compensation expense for the current quarter of $2.2 billion increased from $2.1 billion a year ago driven byhigher revenues, partially offset by a decrease in the fair value of deferred compensation plan referenced
investments. Non-compensation expenses of $876 million increased from $837 million a year ago reflecting aprovision in connection with certain brokerage tax reporting issues that are being addressed, partly offset bylower professional services costs.

11

6

Total client assets for the quarter were $2.1 trillion and client assets in fee-based accounts were $877 billion atquarter end. Fee-based asset flows for the quarter were $17.1 billion.
Wealth Management representatives of 15,763 produced average annualized revenue per representative above $1.0
million in the current quarter.

3

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

Pre-Tax
Income4Q 2016$500$28

3Q 2016$552$97

4Q 2015

$621

$123

INVESTMENT MANAGEMENT
Investment Management reported pre-tax income from continuing operations of $28 million compared with $123
million in the fourth quarter of last year.
Net revenues of $500 million decreased from $621 million in the prior year, reflecting losses of approximately$60 million on sales and markdowns of legacy LP investments in third party sponsored funds in the current
quarter compared with investment gains in the prior year period. Asset management fees were essentiallyunchanged from a year ago.

Compensation expense for the current quarter of $249 million decreased from $278 million a year ago
principally due to a decrease in deferred compensation associated with carried interest. Non-compensation
expenses of $223 million were relatively unchanged from a year ago.



Assets under management or supervision at December 31, 2016 were $417 billion.

6

4

FULL YEAR RESULTS
3

Full year net revenues were $34.6 billion compared with $35.2 billion a year ago. Net income applicable to4
Morgan Stanley for the current year was $6.0 billion, or $2.92 per diluted share, compared with net income of $6.1
43
billion, or $2.90 per diluted share, a year ago.
Excluding DVA revenues of $618 million in the prior year, net revenues were $34.5 billion and income applicable5
to Morgan Stanley was $5.7 billion, or $2.70 per diluted share. The prior year also included approximately $564
13
million, or $0.29 per diluted share, of net discrete tax benefits.
6

The Firm’s compensation expense of $15.9 billion for the current year decreased from $16.0 billion a year ago.
Non-compensation expenses of $9.9 billion decreased from $10.6 billion a year ago driven by lower litigation costs
and expense management.
The effective tax rate from continuing operations for the full year was 30.8%.
The return on average common equity was 8.0 percent for the full year ended 2016.

7

Summary of Segment Results(dollars in millions)Excluding DVA8

As Reported
Net
Revenues

Pre-Tax
IncomeNet
Revenues

Pre-Tax
IncomeFY 2016

FY 2015

FY 2016

FY 2015

FY 2016 (a)FY 2015

FY 2016 (a)FY 2015

Institutional Securities$17,459$17,953$5,123$4,671*$17,335*$4,053

Wealth Management$15,350$15,100$3,437$3,332****

Investment Management$2,112$2,315

$287

$492

*

*

*

*

a)

Effective January 1, 2016, the Firm early adopted the provision of new accounting guidance that requires changes
in DVA to be presented in other comprehensive income as opposed to net revenues. Results for 2015 were not restatedpursuant to this guidance, and as such, full year 2015 net revenues and pre-tax income for the Institutional Securities segment
3
are adjusted for the impact of DVA.

INSTITUTIONAL SECURITIESInstitutional Securities reported pre-tax income from continuing operations of $5.1 billion compared with $4.7
3,8
billion a year ago, or $4.1 billion excluding DVA. Net revenues for the current year were $17.5 billion compared
3,8
with $18.0 billion a year ago, or $17.3 billion excluding DVA. Compensation expense of $6.3 billion decreased
6
from $6.5 billion a year ago reflecting continued disciplined compensation management. The compensation to net
revenue ratio for the current year was 36%.14 Non-compensation expenses of $6.1 billion decreased from $6.8
billion a year ago primarily driven by lower litigation costs and expense management.

5

WEALTH MANAGEMENT
Wealth Management reported pre-tax income from continuing operations of $3.4 billion compared with $3.3 billion
a year ago. Net revenues for the current year were $15.4 billion compared with $15.1 billion a year ago. The
2
6year’s pre-tax margin was 22%. Compensation expense was $8.7 billion compared with $8.6 billion a year ago.
Non-compensation expenses of $3.2 billion for the current year were relatively unchanged from a year ago.

INVESTMENT MANAGEMENT
Investment Management reported pre-tax income from continuing operations of $287 million compared with $492
million a year ago. Net revenues of $2.1 billion decreased from $2.3 billion a year ago. Compensation expense6
was $937 million compared with $954 million a year ago. Non-compensation expenses of $888 million comparedwith $869 million a year ago.

CAPITAL
As of December 31, 2016, the Firm’s Common Equity Tier 1 and Tier 1 risk-based capital ratios under Advanced
15
Approach transitional provisions were approximately 16.8% and 19.0%, respectively.
As of December 31, 2016, the Firm estimates its pro forma fully phased-in Common Equity Tier 1 risk-based
capital ratio under the Advanced Approach and pro forma fully phased-in Supplementary Leverage Ratio to be
15,16,17
approximately 15.8% and 6.3%, respectively.
18

At December 31, 2016, book value and tangible book value per common share were $36.99 and $31.98,
respectively, based on approximately 1.9 billion shares outstanding.

OTHER MATTERS
During the quarter ended December 31, 2016, the Firm repurchased approximately $1.0 billion of its common stock
or approximately 27 million shares. During the year ended December 31, 2016, the Firm repurchased $3.5 billionof its common stock or approximately 117 million shares compared with $2.1 billion of its common stock orapproximately 59 million shares during the year ended December 31, 2015.
The Board of Directors declared a $0.20 quarterly dividend per share, payable on February 15, 2017 to commonshareholders of record on January 31, 2017.

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 more than 42 countries, the Firm’s
employees serve clients worldwide including corporations, governments, institutions and individuals. For further
information about Morgan Stanley, please visit www.morganstanley.com.
A financial summary follows. Financial, statistical and business-related information, as well as information
regarding business and segment trends, is included in the Financial Supplement. Both the earnings release and the
Financial Supplement are available online in the Investor Relations section at www.morganstanley.com.

6###(See Attached Schedules)

NOTICE:The information provided herein may include certain non-GAAP financial measures. The definition of suchmeasures or reconciliation of such metrics 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 contains forward-looking statements. Readers are cautioned not to place undue relianceon forward-looking statements, which speak only as of the date on which they are made and which reflect
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 Firm, 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 and Analysis ofFinancial Condition and Results of Operations” in Part II, Item 7 and “Quantitative and Qualitative Disclosuresabout Market Risk” in Part II, Item 7A in the Firm’s Annual Report on Form 10-K for the year ended
December 31, 2015 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.

7

1

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 directlycomparable measure calculated and presented in accordance with U.S. GAAP. Non-GAAP financial measures disclosed by
Morgan Stanley are provided as additional information to investors and analysts in order to provide them with greatertransparency 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 orinconsistent 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 inaccordance 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.

2

Pre-tax margin is a non-GAAP financial measure that the Firm considers useful for investors and analysts to assess operating
performance. Pre-tax margin represents income (loss) from continuing operations before taxes divided by net revenues.
3

Effective January 1, 2016, the Firm early adopted the provision of new accounting guidance that requires unrealized gains andlosses from Morgan Stanley’s debt-related credit spreads and other credit factors (Debt Valuation Adjustments, or DVA) to bepresented in Other comprehensive income as opposed to net revenues and net income. Results for 2015 are not restatedpursuant to that guidance.
4

Includes preferred dividends and other adjustments related to the calculation of earnings per share for the fourth quarter of2016 and 2015 of approximately $157 million and $155 million, respectively. Includes preferred dividends and otheradjustments related to the calculation of earnings per share for the years ended 2016 and 2015 of approximately $471 million
and $456 million, respectively. Refer to page 13 of Morgan Stanley’s Financial Supplement accompanying this release for the
calculation of earnings per share.
5

Excluding DVA from net revenues, net income applicable to Morgan Stanley and earnings (loss) per diluted share amounts
are non-GAAP financial measures that the Firm considers useful for investors and analysts to allow better comparability of
period-to-period operating performance. The reconciliation of net revenues, net income (loss) applicable to Morgan Stanleyand earnings (loss) per diluted share applicable to Morgan Stanley common shareholders from a U.S. GAAP to non-GAAP
basis is as follows (Net revenues, net income (loss) reconciliation and average diluted shares are presented in millions – also
see footnote 3):

4Q 2015$7,738$(124)$7,862

FY 2015$35,155$618$34,537

Net income (loss) applicable to MS - U.S. GAAP
DVA impact
Net income (loss) applicable to MS - Non-GAAP

$908
$(78)
$986

$6,127$399$5,728

Earnings (loss) per diluted share - U.S. GAAP
DVA impact
Earnings (loss) per diluted share - Non-GAAP$0.39($0.04)
$0.43

$2.90
$0.20
$2.70

Average diluted shares - U.S. GAAP

1,939

1,953

Net revenues - U.S. GAAP
DVA impact
Net revenues - Non-GAAP8

6The fourth quarter of 2015 included severance expense of $155 million associated with the Firm’s restructuring actions,which was recorded in the business segments as follows: Institutional Securities: $125 million, Wealth Management: $20
million and Investment Management: $10 million.

7

Annualized return on average common equity and return on average common equity are non-GAAP financial measures that
the Firm considers useful for investors and analysts to allow better comparability of period-to-period operating performance.
The calculation of return on average common equity uses annualized net income for the quarter or full year net income
applicable to Morgan Stanley less preferred dividends as a percentage of average common equity.
8

Institutional Securities net revenues and pre-tax income (loss), excluding DVA, is a non-GAAP financial measure that the
Firm considers useful for investors and analysts to allow for better comparability of period-to-period operating performance.
The reconciliation of net revenues and pre-tax income (loss) from a U.S. GAAP to non-GAAP basis is as follows (amounts arepresented in millions - also see footnote 3):

Net revenues - U.S. GAAP
DVA impact
Net revenues - Non-GAAP
Pre-tax income (loss) - U.S. GAAP
DVA impact
Pre-tax income (loss) - Non-GAAP

4Q2015$3,419$(124)$3,543

FY 2015$17,953$618$17,335$548$(124)$672$4,671$618$4,053

9

Sales and trading net revenues, including Fixed Income and Equity sales and trading net revenues excluding DVA are nonGAAP financial measures that the Firm considers useful for investors and analysts to allow better comparability of period-toperiod operating performance. The reconciliation of sales and trading, including Fixed Income and Equity sales and trading net
revenues from a U.S. GAAP to non-GAAP basis is as follows (amounts are presented in millions – also see footnote 3):
4Q 2015$2,141$(124)$2,265FY 2015$12,450$618$11,832

Fixed Income Sales & Trading - U.S. GAAP
DVA impact
Fixed Income Sales & Trading - Non-GAAP

$460
$(90)
$550

$4,758$455$4,303Equity Sales & Trading - U.S. GAAP
DVA impact
Equity Sales & Trading - Non-GAAP$1,784$(34)$1,818$8,288$163$8,125

Sales & Trading - U.S. GAAP
DVA impact
Sales & Trading - Non-GAAP

10

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 is disclosed in Part II, Item 7A “Quantitative andQualitative Disclosures about Market Risk” included in the Annual Report on Form 10-K for the year ended December 31,
2015 (2015 Form 10-K). Refer to page 6 of Morgan Stanley’s Financial Supplement accompanying this release for the VaR
disclosure.
11

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

12

Wealth Management client liabilities reflect U.S. Bank lending and broker dealer margin activity.

9

13

The impact to earnings per diluted share is calculated by dividing each of the net discrete tax benefit and the net after-tax
impact of DVA by the average number of shares outstanding of approximately 2.0 billion.

14

Institutional Securities full year 2016 compensation ratio of 36% is calculated based on compensation expense of $6,275
million divided by net revenues of $17,459 million.

15

The Firm’s binding risk-based capital ratios for regulatory purposes are the lower of the capital ratios computed under the (i)standardized approaches for calculating credit risk risk-weighted assets (RWAs) and market risk RWAs (the “Standardized
Approach”); and (ii) applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (the“Advanced Approach”). At December 31, 2016, the binding ratio is based on the Advanced Approach transitional rules. For
information on the calculation of regulatory capital and ratios for prior periods, please refer to Part II, Item 7 “Liquidity andCapital Resources - Regulatory Requirements” in the Firm’s 2015 10-K and Part I, Item 2 “Liquidity and Capital Resources –Regulatory Requirements” in the Firm’s 10-Q for the quarter ended September 30, 2016.
16

The pro forma fully phased-in Common Equity Tier 1 risk-based capital ratio and pro forma fully phased-in Supplementary
Leverage Ratio are non-GAAP financial measures that the Firm considers to be useful measures for investors and analysts toevaluate compliance with new regulatory capital requirements that have not yet become effective.

17

The Firm is required to disclose information related to its supplementary leverage ratio, which through to the end of 2017
will include the effects of transitional provisions. The supplementary leverage ratio will become effective as a capital standard
on January 1, 2018. Specifically, beginning on January 1, 2018, the Firm must maintain a Tier 1 supplementary leverage
capital buffer of at least 2% in addition to the 3% minimum supplementary leverage ratio (for a total of at least 5%), in order toavoid limitations on capital distributions, including dividends and stock repurchases, and discretionary bonus payments to
executive officers. The Firm’s pro forma Supplementary Leverage Ratio estimate utilizes a fully phased-in Tier 1 capital
numerator of approximately $66.4 billion and a fully phased-in supplementary leverage exposure denominator of
approximately $1.06 trillion. The Firm’s estimates are subject to risks and uncertainties that may cause actual results to differ
materially from estimates based on these regulations. Further, these expectations should not be taken as projections of what the
Firm’s supplementary leverage ratios or earnings, assets or exposures will actually be at future dates. See “Risk Factors” inPart I, Item 1A in the 2015 Form 10-K for a discussion of risks and uncertainties that may affect the future results of the Firm.

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 for investors and analysts. Tangible common equity equals common
equity less goodwill and intangible assets net of allowable mortgage servicing rights deduction. Tangible book value percommon share equals tangible common equity divided by period end common shares outstanding.

10Consolidated Financial Summary(unaudited, dollars in millions, except for per share data)

Net revenues
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Net revenues
Income (loss) from continuing operations before tax
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Income (loss) from continuing operations before tax
Net Income (loss) applicable to Morgan Stanley
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Net Income (loss) applicable to Morgan Stanley
Earnings (loss) applicable to Morgan Stanley common shareholders

Dec 31, 2016

Quarter Ended
Sept 30, 2016 Dec 31, 2015

$

$

$

$

$

$

4,614
3,990
500
(83)
9,021

1,326
891
28
1
2,246

$

1,104
531
30
1
1,666

$

$
$

$

$

$

$

4,553
3,881
552
(77)
8,909

1,383
901
97
0
2,381

$

$

$

$

$

Percentage Change From:
Sept 30, 2016 Dec 31, 2015

3,419
3,751
621
(53)
7,738

1%
3%
(9%)
(8%)
1%

35%
6%
(19%)
(57%)
17%

548
768
123
0
1,439

(4%)
(1%)
(71%)
*
(6%)

142%
16%
(77%)
*
56%

14%
(6%)
(55%)
*
4%

*
11%
(66%)
*
83%

$

966
564
67
0
1,597

$

341
480
87
0
908

1,509

$

1,518

$

753

(1%)

0.81
0.81

$
$

0.81
0.81

$
$

0.39
0.43

---

Twelve Months Ended
Dec 31, 2016 Dec 31, 2015
$

$

$

$

$

17,45915,3502,112(290)
34,631

5,123
3,437
287
1
8,848

$

$

$

$

$

Percentage
Change17,953
15,1002,315(213)
35,155

(3%)
2%
(9%)
(36%)
(1%)

4,671
3,332
492
0
8,495

10%
3%
(42%)
*
4%

(1%)
1%
(35%)
*
(2%)

$

3,649
2,104
225
1
5,979

$

3,696
2,085
346
0
6,127

100%

$

5,508

$

5,671

(3%)

108%
88%

$
$

2.92
2.92

$
$

2.90
2.70

1%
8%

Financial Metrics:
Earnings per diluted share
Earnings per diluted share excluding DVA
Return on average common equity
Return on average common equity excluding DVA

8.7%
8.7%

8.7%
8.7%

4.4%
4.9%

8.0%
8.0%

8.5%
7.8%

Notes: - Effective January 1, 2016, the Firm early adopted the provision of new accounting guidance that requires unrealized gains and losses from Morgan Stanley’s debt-related credit spreads
and other credit factors (Debt Valuation Adjustments, or DVA) to be presented in other comprehensive income as opposed to net revenues and net income. This change is reflected in
the consolidated results and the Institutional Securities segment for 2016. Results for 2015 were not restated pursuant to this guidance.
- Refer to End Notes, U.S. GAAP to Non-GAAP Measures and Definition of Performance Metrics on pages 14 - 16 from the Financial Supplement for additional information related to thecalculation of the financial metrics.
11

Consolidated Income Statement Information(unaudited, dollars in millions)

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

Dec 31, 2016

Quarter Ended
Sept 30, 2016

Dec 31, 2015

$

$

$

1,377
2,789
(19)
1,043
2,754
194
8,138

1,225
2,609
87
991
2,686
308
7,906

Percentage Change From:
Sept 30, 2016 Dec 31, 2015

1,310
1,465
133
1,095
2,611
87
6,701

12%
7%
*
5%
3%
(37%)
3%

5%
90%
*
(5%)
5%
123%
21%

Twelve Months Ended
Dec 31, 2016 Dec 31, 2015$

4,933
10,209160
4,109
10,697825
30,933$

Percentage
Change5,594
10,114541
4,554
10,766493
32,062

(12%)
1%
(70%)
(10%)
(1%)
67%
(4%)

Interest income
Interest expense
Net interest
Net revenues

1,868
985
883
9,021

1,734
731
1,003
8,909

1,514
477
1,037
7,738

8%
35%
(12%)
1%

23%
106%
(15%)
17%

7,016
3,318
3,698
34,631

5,835
2,742
3,093
35,155

20%
21%
20%
(1%)

Non-interest expenses:
Compensation and benefits

4,083

4,097

3,650

--

12%

15,87816,016(1%)

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

311
480
460
169
578
694
2,692

339
491
456
130
489
526
2,431

348
457
467
194
638
545
2,649

(8%)
(2%)
1%
30%
18%
32%
11%

(11%)
5%
(1%)
(13%)
(9%)
27%
2%

1,308
1,920
1,787
587
2,128
2,175
9,905

1,382
1,892
1,767
681
2,298
2,624
10,644

(5%)
1%
1%
(14%)
(7%)
(17%)
(7%)

6,775

6,528

6,299

4%

8%

25,783

26,660

(3%)

2,246
566
1,680
0
1,680
14
1,666
157
1,509

2,381
749
1,632
8
1,640
43
1,597
79
1,518

1,439
496
943
(7)
936
28
908
155
753

(6%)
(24%)
3%
*
2%
(67%)
4%
99%
(1%)

56%
14%
78%
*
79%
(50%)
83%
1%
100%

8,848
2,726
6,122
1
6,123
144
5,979
471
5,508

8,495
2,200
6,295
(16)
6,279
152
6,127
456
5,671

4%
24%
(3%)
*
(2%)
(5%)
(2%)
3%
(3%)

Total non-interest expenses
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 nonredeemable noncontrolling interests
Net income (loss) applicable to Morgan Stanley
Preferred stock dividend / Other
Earnings (loss) applicable to Morgan Stanley common shareholders
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%
45%
30%

27%
46%
27%

19%
47%
34%

26%
46%
29%

24%
46%
30%

25.2%

31.5%

34.5%

30.8%

25.9%

Notes: - Refer to End Notes, U.S. GAAP to Non-GAAP Measures and Definition of Performance Metrics on pages 14 - 16 from the Financial Supplement for additional information.
12

Earnings Per Share Summary(unaudited, dollars in millions, except for per share data)

Dec 31, 2016

Income (loss) from continuing operations
Net income applicable to nonredeemable noncontrolling interests
Income (loss) from continuing operations applicable to Morgan Stanley
Less: Preferred Dividends and allocation of earnings to Participating
Restricted Stock Units
Income (loss) from continuing operations applicable to Morgan Stanley
common shareholders$

Gain (loss) from discontinued operations after tax
Less: Gain (loss) from discontinued operations after tax applicable tononcontrolling interests
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)
Earnings per basic share:
Income from continuing operations
Discontinued operations
Earnings per basic share

$

1,632
43
1,589

$
$
$

943
28
915

3%
(67%)
5%

78%
(50%)
82%

Twelve Months Ended
Dec 31, 2016 Dec 31, 2015

$

6,122
144
5,978

$

Percentage
Change

6,295
152
6,143

(3%)
(5%)
(3%)

79

155

99%

1%

471

456

3%

1,509

1,510

760

--

99%

5,507

5,687

(3%)

0

8

(7)

*

*

1

(16)

*

0
0

0
0

0
0

---

---

0
0

0
0

---

0

8

(7)

*

*

1

(16)

*

753

(1%)

100%

5,671

(3%)

1,889

(2%)

(4%)

1,909

(3%)

0.40
0.40

2%
*
1%

110%
-110%

2.98
(0.01)
2.97

-*
--

1,939

(1%)

(4%)

1,953

(3%)

0.39
0.39

1%
*
--

108%
-108%

2.91
(0.01)
2.90

-*
1%

1,509

$

1,518

0.84
0.84

0.81
0.81

$

1,838
$
$
$

0.82
0.01
0.83

1,853
$
$
$

$

Percentage Change From:
Sept 30, 2016 Dec 31, 2015

157

1,806

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

1,680
14
1,666

Quarter Ended
Sept 30, 2016 Dec 31, 2015

$
$
$

1,879
$
$
$

0.80
0.01
0.81

$
$
$

$

5,508
1,849

$
$
$

2.98
2.98

$
$
$

1,887
$
$
$

2.92
2.92

Notes: - Refer to End Notes, U.S. GAAP to Non-GAAP Measures and Definition of Performance Metrics on pages 14 - 16 from the Financial Supplement for additional information.
13

$

$
$
$