Media Relations: Michele Davis 212-761-9621

Investor Relations: Kathleen McCabe 212-761-4469

Morgan Stanley Reports Fourth Quarter and Full Year 2015:


Fourth Quarter Net Revenues of $7.7 Billion and Earnings per Diluted Share of $0.39

Excluding DVA,1 Net Revenues of $7.9 Billion and Earnings per Diluted Share of$0.432,3,4

Full Year Net Revenues of $35.2 Billion and Earnings per Diluted Share of $2.90;
Excluding DVA, Net Revenues were $34.5 Billion and Earnings per Diluted Share of$2.702,3,4



Strong Full Year Performance in Equity Sales and Trading; Investment Banking Ranked#1 in Global IPOs and #2 in Global Announced M&A and Global Equity5

Record Full Year Wealth Management Profit Before Taxes of $3.3 Billion with Pre-Tax
Margin of 22%6

NEW YORK, January 19, 2016 – Morgan Stanley (NYSE: MS) today reported net revenues of $7.7 billion for
the fourth quarter ended December 31, 2015 compared with $7.8 billion a year ago. For the current quarter, net
income applicable to Morgan Stanley was $908 million, or $0.39 per diluted share,7 compared with net losses
of $1.6 billion, or $0.91 per diluted share,7 for the same period a year ago. The prior year quarter included
several significant items which aggregated to a net loss of $1.37 per diluted share.8
Results for the current quarter included negative revenue related to changes in Morgan Stanley’s debt-related
credit spreads and other credit factors (Debt Valuation Adjustment, DVA) of $124 million, compared withpositive revenue of $223 million a year ago.
Excluding DVA, net revenues for the current quarter were $7.9 billion compared with $7.5 billion a year ago.1,4
Net income applicable to Morgan Stanley in the current quarter was $986 million, or $0.43 per diluted share,compared with net losses of $1.8 billion, or $0.99 per diluted share in the prior year.3,4Compensation expense of $3.7 billion compared with $5.1 billion a year ago. Results for the current quarter
include severance expense of $155 million,9 while results for the prior period included compensation deferral
8
expense adjustments of approximately $1.1 billion. Excluding these items, compensation expense decreased
year over year reflecting disciplined compensation management.
Non-compensation expenses of $2.6 billion decreased from $5.6 billion a year ago. Excluding $3.1 billion of
litigation costs related to residential mortgage and credit crisis matters in the prior year period,8 non-compensation
expenses were $2.6 billion compared with $2.5 billion a year ago.
The annualized return on average common equity was 4.4 percent in the current quarter, or 4.9 percent excluding
DVA.1,101

As of December 31, 2015, the Firm estimates its pro forma fully phased-in Common Equity Tier 1 risk-based
capital and Supplementary Leverage ratios to be approximately 14.1% and 5.8%, respectively.11,12,13

Summary of Firm Results(dollars in millions)

Net

a)
b)

Excluding DVA 4
Net
Net Income

As Reported
Net Income

Revenue (a)App. to MS (b)Revenue (a)App. to MS (b)4Q 2015$7,738$908$7,862$986

3Q 2015$7,767$1,018$7,332$740

4Q 2014$7,764($1,630)$7,541$(1,775)

Revenues in 4Q 2014 included a pre-tax charge of $468 million related to the initial implementation of FVA.
Net income applicable to Morgan Stanley in 4Q 2014 included litigation costs of $2.9 billion (after-tax), compensation
deferral expense adjustments of $781 million (after-tax), FVA charge of $338 million (after-tax) and a net discrete tax
benefit of $1,380 million.

Fourth Quarter Business Overview
Institutional Securities net revenues, excluding DVA were $3.5 billion reflecting continued strength in
Equity sales and trading, solid results in Investment Banking and continued weakness in Fixed Income &Commodities sales and trading.14

Wealth Management net revenues were $3.8 billion and pre-tax margin was 20%.6 Fee based asset flows
for the quarter were $11.4 billion.



Investment Management reported net revenues of $621 million with assets under management or
supervision of $406 billion.

James P. Gorman, Chairman and Chief Executive Officer, said, “A strong overall performance in the first half ofthe year was impacted by difficult market conditions in the second half that dampened trading activity. In the
fourth quarter we took action to meaningfully restructure our Fixed Income business on a capital and expensebasis. We enter 2016 with a continued focus on managing expenses across the Firm and driving up returns forour shareholders.”2

FOURTH QUARTER RESULTS

Summary of Institutional Securities Results(dollars in millions)

Net

a)

As Reported
Pre-TaxNet

Excluding DVA 14
Pre-Tax

Revenue (a)Income (a)Revenue (a)Income (a)4Q 2015$3,419$548$3,543$672

3Q 2015$3,904$688$3,469$253

4Q 2014$3,430$(3,661)$3,207$(3,884)

Pre-tax income in 4Q 2014 included litigation costs of $3.1 billion, compensation deferral expense adjustments of $904
million and a charge (negative revenues) of $468 million related to the initial implementation of FVA.

INSTITUTIONAL SECURITIESInstitutional Securities reported pre-tax income from continuing operations of $548 million compared with a pretax loss of $3.7 billion in the fourth quarter of last year. Results for the prior year quarter included litigation costs
related to residential mortgage and credit crisis related matters, compensation deferral expense adjustments and a8charge related to the initial incorporation of funding valuation adjustments (FVA). Net revenues for both thecurrent and prior year quarters were $3.4 billion. DVA resulted in negative revenues of $124 million in thecurrent quarter compared with positive revenues of $223 million a year ago. Excluding DVA and the FVA charge
in the prior year quarter, net revenues of $3.5 billion for the current quarter decreased from $3.7 billion a year
ago.1,14 The following discussion for sales and trading excludes DVA in both periods and the prior year FVA
charge.
Advisory revenues of $516 million increased from $488 million a year ago on higher levels of M&A activity.
Equity underwriting revenues of $352 million were relatively unchanged from the prior year quarter. Fixed
income underwriting revenues of $346 million decreased from $462 million in the prior year quarterreflecting lower non-investment grade bond and loan fees.

Equity sales and trading net revenues of $1.8 billion increased from $1.6 billion from a year ago reflecting
higher results across products and regions.15

Fixed Income & Commodities sales and trading net revenues of $550 million decreased from $599 million a
8 15year ago reflecting challenging market conditions and lower results in securitized products. ,Other sales and trading net losses of $103 million compared with losses of $37 million a year ago primarilyreflecting lower revenues associated with corporate lending activity.



Other revenues were $31 million compared with $161 million a year ago, primarily reflecting lower results in
our Japanese joint venture Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., mark-to-market losses onloans and commitments and the absence of a commodities related gain in the prior year period.

Compensation expense of $1.2 billion decreased from $2.4 billion in the prior year quarter. The prior year
8
quarter included expense adjustments related to changes in discretionary incentive compensation deferrals.
Excluding the prior year compensation deferral expense adjustments, compensation expenses of $1.2 billion

93decreased from $1.5 billion a year ago reflecting disciplined compensation management.


Non-compensation expenses of $1.6 billion for the current quarter decreased from $4.7 billion a year ago.
Excluding $3.1 billion of litigation costs associated with residential mortgage and credit crisis related matters8in the prior year period, non-compensation expenses were relatively unchanged year over year.

Morgan Stanley’s average trading Value-at-Risk (VaR) measured at the 95% confidence level was $46
million compared with $53 million in the third quarter of 2015 and $47 million in the fourth quarter of theprior year.16

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

Pre-Tax
Income (a)4Q 2015$3,751$768

3Q 2015$3,640$824

4Q 2014$3,804$736

Pre-tax income in 4Q 2014 included compensation deferral expense adjustments of $88 million.

WEALTH MANAGEMENT
Wealth Management reported pre-tax income from continuing operations of $768 million compared with $736
million in the fourth quarter of last year. The quarter’s pre-tax margin was 20%, or 21% excluding severance
costs.6,9 Net revenues for the current quarter were $3.8 billion.


Asset management fee revenues of $2.1 billion were essentially unchanged from a year ago, reflecting theimpact of lower markets offset by positive flows.

Transactional revenues17 of $861 million decreased from $976 million a year ago primarily reflecting lower
commission revenues and lower levels of new issue activity.



Net interest income of $779 million increased from $625 million a year ago on higher deposit and loanbalances. Wealth Management client liabilities were $64 billion at quarter end, an increase of $13 billion
compared with the prior year quarter.18

Compensation expense for the current quarter of $2.1 billion9 compared with $2.3 billion a year ago. The
8prior year quarter included compensation deferral expense adjustments of $88 million. Excluding the prioryear compensation adjustments, compensation expenses of $2.1 billion decreased from $2.2 billion a year ago
on lower revenues.



Non-compensation expenses of $837 million increased from $777 million a year ago on higher professional
services costs.



Total client assets were $2.0 trillion and client assets in fee based accounts were $795 billion at quarterend. Fee based asset flows for the quarter were $11.4 billion.



Wealth Management representatives of 15,889 produced average annualized revenue per representative of$947,000 in the current quarter.

4

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

Pre-Tax
Income (a)4Q 2015

$621

$123

3Q 2015

$274

$(38)

4Q 2014

$588

$(6)

Pre-tax income in 4Q 2014 included compensation deferral expense adjustments of $145 million.

INVESTMENT MANAGEMENT
Investment Management reported a pre-tax income from continuing operations of $123 million compared with apre-tax loss of $6 million in the fourth quarter of last year. The prior year quarter included expense adjustments of$145 million related to changes in discretionary incentive compensation deferrals.8
Net revenues of $621 million increased from $588 million in the prior year primarily reflecting higher resultsin the Merchant Banking and Real Estate Investing business, partly offset by lower results in Traditional
Asset Management.

Compensation expense for the current quarter of $278 million compared with $381 million a year ago.8
Excluding the prior year compensation deferral expense adjustments, compensation expenses of $278 million
increased from $236 million in the prior year quarter primarily due to an increase in the fair value of deferredcompensation plan referenced investments.



Assets under management or supervision at December 31, 2015 were $406 billion.

9

FULL YEAR RESULTS
Full year net revenues were $35.2 billion compared with $34.3 billion a year ago. Net income applicable toMorgan Stanley for the current year was $6.1 billion, or $2.90 per diluted share, compared with net income of$3.5 billion, or $1.60 per diluted share, a year ago.7 The current year included approximately $564 million, or$0.29 per diluted share, of net discrete tax benefits compared with approximately $2.2 billion, or $1.13 per diluted
8
share, of net discrete tax benefits in the prior year. The prior year also included litigation costs of $3.1 billion in
the fourth quarter, or a loss of $1.47 per diluted share, compensation deferral expense adjustments ofapproximately $1.1 billion or a loss of $0.39 per diluted share and a funding valuation adjustment charge of $468
8
million or a loss of $0.17 per diluted share.
Results for the year included positive revenue related to DVA of $618 million, compared with revenue of $651
million a year ago. Excluding DVA, net revenues for the current year were $34.5 billion compared with $33.6
billion a year ago and net income applicable to Morgan Stanley was $5.7 billion, or $2.70 per diluted share,compared with net income of $3.0 billion, or $1.39 per diluted share, a year ago.2,3,4
The Firm’s compensation expense of $16.0 billion9 for the current year decreased from $17.8 billion a year ago,5

which included approximately $1.1 billion related to the changes in discretionary incentive compensation
deferrals.8 Non-compensation expenses of $10.6 billion decreased from $12.9 billion a year ago driven by lower
litigation costs.8
The return on average common equity was 8.5 percent for the full year ended 2015, or 7.8 percent excluding
DVA.10

Summary of Firm Results(dollars in millions)Excluding DVA 4

As Reported
Net

Net Income

Net

Net Income

Revenues

App. To MS

Revenues

App. To MS

FY 2015$35,155$6,127$34,537$5,728FY 2014$34,275$3,467$33,624$3,049

Summary of Segment Results(dollars in millions)
As Reported
Net
Revenues (a)Pre-Tax
Income (b)Excluding DVA 14
Net
Pre-Tax
Revenues (a)Income (b)FY 2015

FY 2014

FY 2015

FY 2014

FY 2015

FY 2014

FY 2015

FY 2014

Institutional Securities$17,953$16,871$4,671($58)$17,335$16,220$4,053($709)

Wealth Management$15,100$14,888$3,332$2,985$15,100$14,888$3,332$2,985Investment Management$2,315$2,712$492$664$2,315$2,712

$492

$664

a)
b)

2014 Institutional Securities revenues included a pre-tax charge of $468 million related to the initial implementation of
FVA.
2014 Institutional Securities pre-tax income included 4Q 2014 litigation costs of $3.1 billion.

INSTITUTIONAL SECURITIESInstitutional Securities reported pre-tax income from continuing operations of $4.7 billion compared with a pretax loss of $58 million a year ago. Net revenues for the current year were $18.0 billion compared with $16.9
billion a year ago. Net revenues for the prior year included the impact of a pre-tax charge of approximately $468
million related to the initial incorporation of FVA into the fair value measurements of certain over-the-counter8
derivatives. DVA resulted in positive revenue of $618 million in the current year compared with revenue of$651 million a year ago.
Excluding DVA and the FVA charge in the prior year, net revenues for the current year were $17.3 billion
compared with $16.7 billion a year ago.8,14 Compensation expense of $6.5 billion9 compared with $7.8 billion ayear ago which included compensation deferral expense adjustments of $904 million.8 Excluding DVA, the6compensation to net revenue ratio for the current year was 37%,19 reflecting disciplined compensation
management. Non-compensation expenses of $6.8 billion decreased from $9.1 billion a year ago on lower
litigation related costs.8

WEALTH MANAGEMENT
Wealth Management reported pre-tax income from continuing operations of $3.3 billion compared with $3.0
billion a year ago. Net revenues for the current year were $15.1 billion compared with $14.9 billion a year ago.
6
9
The year’s pre-tax margin was 22%. Compensation expense was $8.6 billion compared with $8.8 billion a year
8
ago. Non-compensation expenses of $3.2 billion increased from $3.1 billion a year ago.

INVESTMENT MANAGEMENT
Investment Management reported pre-tax income from continuing operations of $492 million compared with
$664 million a year ago. Net revenues of $2.3 billion decreased from $2.7 billion a year ago primarily reflecting
lower investment revenues in the Merchant Banking and Real Estate Investing business. Compensation expense
was $954 million9 compared with $1.2 billion a year ago.8 Non-compensation expenses of $869 million
compared with $835 million a year ago.

CAPITAL
As of December 31, 2015, the Firm’s Common Equity Tier 1 and Tier 1 risk-based capital ratios under U.S. Basel
III Advanced Approach transitional provisions were approximately 15.4% and 17.3%, respectively.11
As of December 31, 2015, the Firm estimates its pro forma fully phased-in Common Equity Tier 1 risk-based
capital ratio (under U.S. Basel III Advanced Approach) and pro forma fully phased-in Supplementary Leverage
Ratio to be approximately 14.1% and 5.8%, respectively.11,12,13
At December 31, 2015, book value and tangible book value per common share were $35.24 and $30.26,20
respectively, based on approximately 1.9 billion shares outstanding.

OTHER MATTERS
The effective tax rate from continuing operations for the current quarter was 34.5%, reflecting an increase fromthe prior quarter due to a change in the geographic mix of earnings. The effective tax rate from continuing
operations for the full year was 25.9%.
During the quarter ended December 31, 2015, the Firm repurchased approximately $625 million of its common
stock or approximately 19 million shares. During the year ended December 31, 2015, the Firm repurchased
approximately $2.1 billion of its common stock or approximately 59 million shares.
The Board of Directors declared a $0.15 quarterly dividend per share payable on February 15, 2016 to commonshareholders of record on January 29, 2016.
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 43 countries, theFirm’s employees serve clients worldwide including corporations, governments, institutions and individuals. For

7

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)

NOTICE:The information provided herein may include certain non-GAAP financial measures. The reconciliation ofsuch measure to the comparable 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 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 in the Company's Annual Report on Form 10K for the year ended December 31, 2014 and other items throughout the Form 10-K, the Company’s
Quarterly Reports on Form 10-Q and the Company’s Current Reports on Form 8-K, including any
amendments thereto.

8

1

Represents the change in the fair value of certain of the Firm’s long-term and short-term borrowings resulting from thefluctuation in the Firm’s credit spreads and other credit factors (Debt Valuation Adjustment, 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, operating results, or prospective regulatory capital requirements. These
measures are not in accordance with, or a substitute for GAAP, and may be different from or inconsistent with non-GAAP
financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we will also generally
define it or present the most directly comparable financial measure calculated and presented in accordance with GAAP, alongwith a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable GAAP
financial measure.
3

Earnings (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. The DVA exclusion is 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 earnings (loss)
per diluted share applicable to Morgan Stanley common shareholders from a non-GAAP to GAAP basis is as follows(number of shares are presented in millions):

Earnings (loss) per diluted share - Non-GAAP
DVA Impact
Earnings (loss) per diluted share - GAAP
Average diluted shares - GAAP

4Q 2015$0.43($0.04)$0.39

4Q 2014($0.99)$0.08($0.91)

FY 2015
$2.70
$0.20
$2.90

FY 2014
$1.39
$0.21
$1.60

1,939

1,920

1,953

1,971

4

Net revenues, excluding DVA and net income (loss) applicable to Morgan Stanley, excluding DVA, are non-GAAP
financial measures that the Firm considers useful for investors to allow for better comparability of period-to-period operating
performance. The reconciliation of net revenues and net income (loss) applicable to Morgan Stanley from a non-GAAP to
GAAP basis is as follows (amounts are presented in millions):

Firm net revenues - Non-GAAP
DVA impact
Firm net revenues - GAAP

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

3Q 2015$7,332$435$7,767

4Q 2014$7,541$223$7,764

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

FY 2014$33,624$651$34,275

$986
$(78)
$908

$740
$278
$1,018$(1,775)$145$(1,630)$5,728$399$6,127$3,049$418$3,467

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

5

Source: Thomson Reuters – for the period of January 1, 2015 to December 31, 2015 as of January 4, 2016.

6

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.

9

7

Includes preferred dividends and other adjustments related to the calculation of earnings per share for the fourth quarter of2015 and 2014 of approximately $155 million and $119 million, respectively. Includes preferred dividends and otheradjustments related to the calculation of earnings per share for the years ended 2015 and 2014 of approximately $456 million
and $315 million, respectively. Refer to page 13 of Morgan Stanley’s Financial Supplement accompanying this release forthe calculation of earnings per share.

8

The prior year fourth quarter included several significant items which impacted earnings as follows:i.

Litigation costs of $3.1 billion related to residential mortgage backed securities and credit crisis related matters.

ii.

A net discrete tax benefit of approximately $1.4 billion related to a legal entity restructuring that included achange in tax status of Morgan Stanley Smith Barney Holdings LLC (MSSBH) from a partnership to a
corporation, which resulted in the release of a deferred tax liability which was previously established.

iii.

Compensation expense adjustments of approximately $1.1 billion. The compensation deferral expense
adjustments were recorded in the business segments as follows: Institutional Securities: $904 million, WealthManagement: $88 million and Investment Management: $145 million. On December 1, 2014, the Firm’s
Compensation, Management Development and Succession (CMDS) Committee of the Board of Directors
approved an approach for awards of discretionary incentive compensation for the 2014 performance year to be
granted in 2015 that would reduce the average deferral of such awards to an approximate baseline of 50%.
Additionally, the CMDS Committee approved the acceleration of vesting for certain outstanding deferred cashbased incentive compensation awards.

iv.

A charge of $468 million related to the incorporation of funding valuation adjustments (FVA) into the fair value
measurements of over-the-counter uncollateralized or partially collateralized derivatives, and in collateralized
derivatives where the terms of the agreement do not permit the reuse of the collateral received. The pre-tax
charge of approximately $468 million represented a change in accounting estimate, of which $466 million wasreflected as a reduction to Institutional Securities Fixed Income & Commodities sales and trading net revenues.

The impact to earnings per diluted share of the significant items noted above is calculated by dividing the after-tax impact ofeach item by the average number of diluted shares outstanding for each period noted:

Litigation costs
Net discrete tax benefit
Compensation deferral expense adjustments
FVA
Total Significant Items

4Q 2014$(1.50)$0.72$(0.41)$(0.18)$(1.37)FY 2014$(1.47)$0.70$(0.39)$(0.17)$(1.33)

In addition to the fourth quarter net discrete tax benefit noted above, there were additional tax benefits recognized during thecourse of 2014. Full year 2014 net discrete tax benefits aggregated to $2.2 billion, or $1.13 per diluted share.
9

The severance expense is associated with the Firm’s restructuring actions in the current quarter and is recorded in thebusiness segments approximately as follows: Institutional Securities: $125 million, Wealth Management: $20 million and
Investment Management: $10 million. After adjusting Wealth Management’s income (loss) from continuing operations by
excluding the severance expense, the pre-tax margin was 21% in the fourth quarter

10

10

Annualized return on average common equity (ROE) and ROE excluding DVA are non-GAAP financial measures that the
Firm considers useful for investors to allow better comparability of period-to-period operating performance. The calculationof ROE uses net income applicable to Morgan Stanley less preferred dividends as a percentage of average common equity.
To determine the ROE excluding DVA, both the numerator and denominator were adjusted to exclude this item. The
reconciliation of ROE to ROE excluding DVA is as follows:

4Q 2015
4.9%
-0.5%
4.4%

ROE excluding DVA
DVA impact
ROE

FY 2015
7.8%
0.7%
8.5%

11

As a U.S. Basel III Advanced Approach banking organization, the Firm is required to compute risk-based capital ratios
using both (i) standardized approaches for calculating credit risk weighted assets (“RWAs”) and market risk RWAs (the“Standardized Approach”); and (ii) an advanced internal ratings-based approach for calculating credit risk RWAs, anadvanced measurement approach for calculating operational risk RWAs, and an advanced approach for market risk RWAs
calculated under Basel III (the “Advanced Approach”). To implement a provision of the Dodd-Frank Act, U.S. Basel III
subjects Advanced Approach banking organizations that have been approved by their regulators to exit the parallel run, suchas the Firm, to a permanent “capital floor”. Beginning on January 1, 2015, the capital floor is the lower of the capital ratios
computed under the Advanced Approach or the Standardized Approach under U.S. Basel III, taking into consideration
applicable transitional provisions. As of December 31, 2015, the lower ratio is represented by the U.S. Basel III Advanced
Approach. These computations are preliminary estimates as of January 19, 2016 (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, 2015. The methods
for calculating the Firm’s risk-based capital ratios will change through January 1, 2022 as aspects of the U.S. Basel III final
rule are phased in. For information on the calculation of regulatory capital and ratios for prior periods, please refer to Part II,
Item 7 "Liquidity and Capital Resources - Regulatory Requirements" in the 2014 Form 10-K and Part I, Item 2 "Liquidity
and Capital Resources - Regulatory Requirements" in Morgan Stanley's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2015.

12

U.S. Basel III requires the Firm to disclose information related to its supplementary leverage ratio beginning on January 1,
2015, 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 to avoid 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 U.S. Basel III Tier 1 capital numerator and a denominator of approximately $1.10 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” in Part I, Item 1A in the2014 Form 10-K for a discussion of risks and uncertainties that may affect the future results of the Firm.

13

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 Company considers to be useful measures forevaluating compliance with new regulatory capital requirements that have not yet become effective.

11

14

Institutional Securities net revenues and pre-tax income (loss), excluding DVA, and excluding DVA and the initial
implementation of FVA, are non-GAAP financial measures that the Firm considers useful for investors to allow for better
comparability of period-to-period operating performance. The reconciliation of net revenues and pre-tax income (loss) from a
non-GAAP to GAAP basis is as follows (amounts are presented in millions):

Net revenues - ex. DVA/FVA - Non-GAAPFVA impact
Net revenues - ex. DVA - Non-GAAP
DVA impact
Net revenues - GAAP
Pre-tax income (loss) - ex. DVA/FVA - Non-GAAPFVA impact
Pre-tax income (loss) - ex. DVA Non-GAAP
DVA impact
Pre-tax income (loss) - GAAP

4Q 2015$3,543$0$3,543$(124)$3,4193Q 2015$3,469$0$3,469$435$3,904

4Q 2014$3,675$(468)$3,207$223$3,430FY 2015$17,335$0$17,335$618$17,953

FY 2014$16,688($468)$16,220$651$16,871

$672
$0
$672
$(124)
$548

$253
$0
$253
$435
$688

($3,416)$(468)$(3,884)$223$(3,661)$4,053$0$4,053$618$4,671($241)$(468)$(709)
$651
($58)

15

Sales and trading net revenues, including Fixed Income & Commodities (FIC) and Equity sales and trading net revenues
excluding DVA, and excluding DVA and the initial implementation of FVA, are non-GAAP financial measures that the Firm
considers useful for investors to allow better comparability of period-to-period operating performance. The reconciliation ofsales and trading, including FIC and Equity sales and trading net revenues from a non-GAAP to GAAP basis is as follows(amounts are presented in millions):

4Q 2015$2,265$0$2,265($124)$2,141

4Q 2014$2,189($468)$1,721$223$1,944

FY 2015$11,832$0$11,832$618$12,450

FY 2014$10,561($468)$10,093$651$10,744

FIC Sales & Trading - ex. DVA/FVA - Non-GAAPFVA Impact
FIC Sales & Trading - ex. DVA - Non-GAAP
DVA Impact
FIC Sales & Trading - GAAP

$550
$0
$550
($90)
$460

$599
($466)
$133
$161
$294

$4,303$0$4,303$455$4,758$4,261($466)$3,795$419$4,214Equity Sales & Trading - ex. DVA/FVA - Non-GAAPFVA Impact
Equity Sales & Trading - ex. DVA - Non-GAAP
DVA Impact
Equity Sales & Trading - GAAP

$1,818$0$1,818($34)$1,784$1,627($2)$1,625$62$1,687$8,125$0$8,125$163$8,288$6,905($2)$6,903$232$7,135

Sales & Trading - ex. DVA/FVA - Non-GAAPFVA Impact
Sales & Trading - ex. DVA - Non-GAAP
DVA Impact
Sales & Trading - GAAP

16

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 2014 Form 10-K. Refer to page 6 of Morgan Stanley’s Financial
Supplement accompanying this release for the VaR disclosure.
17

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

12

18

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

19

Institutional Securities full year 2015 compensation ratio of 37% is calculated based on compensation expense of $6,467
million divided by net revenues, excluding DVA of $17,335 million (net revenues of $17,953 million less positive DVA of$618 million).

20

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. Tangible book value per common share equals
tangible common equity divided by period end common shares outstanding.

13

MORGAN STANLEY
Quarterly Consolidated Financial Summary(unaudited, dollars in millions, except for per share data)

Dec 31, 2015
Net revenues
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Net revenues

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

$

548
768
123
0
1,439

$

$

$

341
480
87
0
908

$

Earnings per diluted share from continuing operations
Earnings per diluted share
Earnings per diluted share from continuing operations excluding DVA
Earnings per diluted share excluding DVA

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$

Quarter Ended
Sept 30, 2015
3,904
3,640
274
(51)
7,767

$

688
824
(38)
0
1,474

$

$

$

518
509
(9)
0
1,018

753

$

$
$

0.39
0.39

$
$

0.43
0.43

$

$

$

$

Percentage Change From:
Sept 30, 2015
Dec 31, 2014

Dec 31, 2014

Twelve Months Ended
Dec 31, 2015
Dec 31, 2014

3,430
3,804
588
(58)
7,764

(12%)
3%
127%
(4%)
--

-(1%)
6%
9%
--

$

(3,661)736(6)
0(2,931)

(20%)
(7%)
*
-(2%)

*
4%
*
-*

$

(34%)
(6%)
*
-(11%)

*
(74%)
*
-*

$

$

(3,440)
1,825
(15)
0
(1,630)939$(1,749)

(20%)

$
$

0.48
0.48

$
$

(0.91)(0.91)

$
$

0.34
0.34

$
$

(0.98)(0.99)$$$$

17,953
15,1002,315(213)
35,155

$

4,671
3,332
492
0
8,495

$

$

$

3,696
2,085
346
0
6,127

*

$

(19%)
(19%)

*
*

26%
26%

*
*

Percentage
Change16,871
14,8882,712(196)
34,275

6%
1%
(15%)
(9%)
3%

(58)
2,985
664
0
3,591

*
12%
(26%)
-137%

$

(96)
3,192
371
0
3,467

*
(35%)
(7%)
-77%

5,671

$

3,152

80%

$
$

2.91
2.90

$
$

1.61
1.60

81%
81%

$
$

2.71
2.70

$
$

1.39
1.39

95%
94%

$

$

$

$

Financial Metrics:

Return on average common equity from continuing operations
Return on average common equity

4.5%
4.4%

5.6%
5.6%

*
*

8.5%
8.5%

4.9%
4.8%

Return on average common equity from continuing operations excluding DVA
Return on average common equity excluding DVA

4.9%
4.9%

3.9%
3.9%

*
*

7.8%
7.8%

4.1%
4.1%

Notes: - Refer to End Notes and Definition of Performance Metrics and GAAP to Non-GAAP Measures on pages 14-16 from the Financial Supplement for additional information related to the calculation of the financial metrics.

14

MORGAN STANLEY
Quarterly 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, 2015

Quarter Ended
Sept 30, 2015

Dec 31, 2014

$

$

$

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
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

$

$

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

1,313
2,026
(119)
1,115
2,732
(62)
7,005

Percentage Change From:
Sept 30, 2015
Dec 31, 2014

1,456
1,451
112
1,235
2,684
223
7,161

-(28%)
*
(2%)
(4%)
*
(4%)

(10%)
1%
19%
(11%)
(3%)
(61%)
(6%)

Twelve Months Ended
Dec 31, 2015
Dec 31, 2014$

5,594
10,114541
4,554
10,766493
32,062$

Percentage
Change

5,948
9,377
836
4,713
10,5701,096
32,540

(6%)
8%
(35%)
(3%)
2%
(55%)
(1%)

1,514
477
1,037
7,738

1,451
689
762
7,767

1,436
833
603
7,764

4%
(31%)
36%
--

5%
(43%)
72%
--

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

5,413
3,678
1,735
34,275

8%
(25%)
78%
3%

3,650

3,437

5,104

6%

(28%)

16,016

17,824

(10%)

348
457
467
194
638
545
2,649

341
485
447
158
576
849
2,856

364
468
404
186
611
3,558
5,591

2%
(6%)
4%
23%
11%
(36%)
(7%)

(4%)
(2%)
16%
4%
4%
(85%)
(53%)

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

1,433
1,806
1,635
658
2,117
5,211
12,860

(4%)
5%
8%
3%
9%
(50%)
(17%)

6,299

6,293

10,695--(41%)

26,66030,684

(13%)

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

1,474
423
1,051
(2)
1,049
31
1,018
79
939

(2,931)(1,353)(1,578)(8)(1,586)44(1,630)119(1,749)

(2%)
17%
(10%)
*
(11%)
(10%)
(11%)
96%
(20%)

*
*
*
13%
*
(36%)
*
30%
*

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

3,591
(90)
3,681
(14)
3,667
200
3,467
315
3,152

137%
*
71%
(14%)
71%
(24%)
77%
45%
80%

$

$

$

$

$

$

$

$

19%
47%
34%

19%
44%
37%

*
66%
72%

24%
46%
30%

10%
52%
38%

34.5%

28.7%

46.2%

25.9%

*

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

15

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

Quarter Ended
Dec 31, 2015

Income (loss) from continuing operations
Net income applicable to nonredeemable noncontrolling interests

$

943
28

Percentage Change From:

Sept 30, 2015

$

1,051
31

Dec 31, 2014$

Sept 30, 2015

Dec 31, 2014

(10%)
(10%)
(10%)
96%
(19%)

*
(36%)
*
30%
*

*
--*

12%
--13%

(1,749)

(20%)

*

1,920

(1%)

(2%)

(0.91)(0.91)(18%)-(18%)

*
-*

1,920

(1%)

1%

(0.91)(0.91)(19%)-(19%)*-*(1,578)44

Income (loss) from continuing operations applicable to Morgan Stanley
Less: Preferred Dividends and allocation of earnings to Participating Restricted Stock Units

915
155

1,020
79

(1,622)
119

Income (loss) from continuing operations applicable to Morgan Stanley

760

941

(1,741)

(7)
0
0
(7)

(2)
0
0
(2)

(8)
0
0
(8)

Gain (loss) from discontinued operations after tax
Less: Gain (loss) from discontinued operations after tax applicable to noncontrolling 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

$

1,889

$
$
$

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

753

0.40
0.40

0.39
0.39

$

1,904

$
$
$

1,939

$
$
$

939

0.49
0.49

$
$
$

1,949

$
$
$

0.48
0.48

$
$
$

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

16

Twelve Months Ended
Dec 31, 2015

$

$

6,295
152

$

6,143
456

3,481
315

5,687

3,166

(16)
0
0
(16)

(14)
0
0
(14)

(14%)
--(14%)

3,152

80%

1,924

(1%)

1.65
(0.01)
1.64

81%
-81%

1,971

(1%)

1.61
(0.01)
1.60

81%
-81%

5,671

$

2.98
(0.01)
2.97

$
$
$

1,953

$
$
$

3,681
200

Change

71%
(24%)
76%
45%
80%

1,909

$
$
$

Percentage

Dec 31, 2014

2.91
(0.01)
2.90$$$