Media Relations: Wesley McDade 212-761-2430

Investor Relations: Celeste Mellet Brown 212-761-3896

Subsequent to the release of Morgan Stanley’s first quarter
earnings on April 18, 2013 the Firm reported updated results in the
Firm’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2013, filed on May 7, 2013. For updated informationrefer to the Firm’s 1Q 2013 financial supplement and Form 10-Q.

Morgan Stanley Reports First Quarter 2013:


Net Revenues of $8.2 Billion Included the Negative Impact of $317 Million from theTightening of Morgan Stanley’s Debt-Related Credit Spreads (DVA); 1 Income from
Continuing Operations of $0.50 per Diluted Share

Excluding DVA, Net Revenues were $8.5 Billion and Income from Continuing
Operations was $0.61 per Diluted Share 2, 3

Global Wealth Management Pre-Tax Margin of 17% and Fee Based Asset Flows of$15.3 Billion; 4, 5, 6 Investment Banking Ranked #2 in Global Completed M&A and#3 in Global Equity 7

NEW YORK, April 18, 2013 – Morgan Stanley (NYSE: MS) today reported net revenues of $8.2 billion for the
first quarter ended March 31, 2013 compared with $6.9 billion a year ago. For the current quarter, income fromcontinuing operations applicable to Morgan Stanley was $1.0 billion, or $0.50 per diluted share, 8 comparedwith a loss of $79 million, or a loss of $0.05 per diluted share,8 for the same period a year ago.
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)1 of $317 million, compared withnegative revenue of $2.0 billion a year ago.
Excluding DVA, net revenues for the current quarter were $8.5 billion compared with $8.9 billion a year ago
and income from continuing operations applicable to Morgan Stanley was $1.2 billion, or $0.61 per diluted
share, compared with income of $1.4 billion, or $0.71 per diluted share a year ago.3, 8, 9Compensation expense was $4.2 billion compared with $4.4 billion a year ago. 10 Non-compensation expenses of$2.3 billion were essentially unchanged from a year ago.
For the current quarter, net income applicable to Morgan Stanley, including discontinued operations, was $0.49
per diluted share, compared with a net loss of $0.06 per diluted share in the first quarter of 2012.8

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)1Q 2013$8,158$977$8,475$1,177

4Q 2012$6,966$634$7,477$953

1Q 2012$6,924$(104)$8,902$1,343(1)

Represents income (loss) from continuing operations applicable to Morgan Stanley common shareholders less preferred dividends.
Net revenues for 1Q 2013, 4Q 2012 and 1Q 2012 exclude positive (negative) revenue from DVA of $(317) million, $(511) million and $(1,978)million, respectively.
(3)
Earnings / (loss) from continuing operations applicable to Morgan Stanley common shareholders for 1Q 2013, 4Q 2012 and 1Q 2012 excludes
after-tax DVA impact of $(201) million, $(321) million and $(1,454) million, respectively, and includes a related allocation of earnings toParticipating Restricted Stock Units of $1 million, $2 million and $7 million, respectively.
(2)

Business Overview
Global Wealth Management Group net revenues were $3.5 billion and pre-tax margin was 17%.4 Averageannualized revenue per representative was $851,000 in the current quarter.5

Institutional Securities net revenues excluding DVA were $4.4 billion reflecting strength in underwriting
revenues and Equity sales and trading, and lower results in Fixed Income and Commodities sales andtrading.

Asset Management reported net revenues of $645 million with assets under management or supervision of$341 billion.

James P. Gorman, Chairman and Chief Executive Officer, said, “Morgan Stanley demonstrated solid momentum
across the Firm this quarter, consistent with the strategic objectives we laid out at the beginning of the year. In
Global Wealth Management, our operating pre-tax profit was the highest in our history, and we look forward tocompleting the acquisition of the remaining 35% of our wealth management joint venture once we have obtained
full regulatory approval. Our institutional businesses continue to rebound from the lows of 2012. The program to
reduce non-strategic risk-weighted assets in our Fixed Income and Commodities businesses remains onschedule. Our joint ventures with Mitsubishi UFJ Financial Group present exciting opportunities – across theglobe and specifically in Japan, given the economic policy changes taking place in that country. Looking
forward, while the global environment continues to have moments of fragility, we believe the broad economic
outlook for the next several years is stronger than in the recent past.”2

Summary of Institutional Securities Results(dollars in millions)
As Reported (1)Net
Pre-Tax
Revenues
IncomeExcluding DVA (1), (2)Net
Pre-Tax
Revenues
Income1Q 2013$4,089$830$4,406

4Q 2012$3,087$76$3,598$587

1Q 2012$3,135$(329)$5,113$1,649$1,147(1)

Results for all periods have been recast to reflect the International Wealth Management business previously reported in the Global WealthManagement Group business segment.
(2)
Net revenues and pre-tax income for 1Q 2013, 4Q 2012 and 1Q 2012 exclude positive (negative) revenue from DVA of $(317) million, $(511)
million and $(1,978) million, respectively.

INSTITUTIONAL SECURITIESInstitutional Securities reported a pre-tax gain from continuing operations of $830 million compared with a pretax loss of $329 million in the first quarter of last year. Net revenues for the current quarter were $4.1 billion
compared with $3.1 billion a year ago. DVA resulted in negative revenue of $317 million in the current quartercompared with negative revenue of $2.0 billion a year ago. Excluding DVA, net revenues for the current quarter
were $4.4 billion compared with $5.1 billion a year ago. Income after the noncontrolling interest allocation andbefore taxes was $733 million. 11 The following discussion for sales and trading excludes DVA.


Advisory revenues were $251 million compared with $313 million a year ago, primarily reflecting lower
levels of market activity. Equity underwriting revenues of $283 million increased from $172 million a year
ago reflecting higher market volume. Fixed income underwriting revenues were $411 million compared with$366 million a year ago reflecting a favorable debt underwriting environment.



Fixed Income & Commodities sales and trading net revenues were $1.5 billion compared with $2.6 billion ayear ago reflecting declines in commodities and rates, partly offset by higher results in securitized products
and relative strength in corporate credit. 12Equity sales and trading net revenues of $1.6 billion compared with $2.0 billion in the prior year quarter
primarily reflecting lower market volumes, partly offset by strength in prime brokerage.12



Other sales and trading net revenues were $73 million compared with negative revenue of $286 million in theprior year. Results in the prior year quarter primarily reflected losses on economic hedges related to theFirm’s long-term debt.



Other revenues were $137 million compared with $51 million in the first quarter of last year, principally
driven by strength in our Japanese securities joint venture, Mitsubishi UFJ Morgan Stanley Securities Co.,Ltd.



Compensation expense for the current quarter was $1.9 billion compared with $2.2 billion in the prior year
quarter driven in part by lower headcount.10 Non-compensation expenses of $1.4 billion increased from $1.3
billion a year ago reflecting higher volume driven expenses.

Morgan Stanley’s average trading Value-at-Risk (VaR) measured at the 95% confidence level was $72
million compared with $78 million in the fourth quarter of 2012. 13

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

(1)

Net
Revenues (1)Pre-Tax
Income (1)1Q 2013$3,470$597

4Q 2012$3,325$562

1Q 2012$3,291$403

Results for all periods have been recast to exclude the International Wealth Management business, currently reported in the Institutional
Securities business segment.

GLOBAL WEALTH MANAGEMENT GROUP
Global Wealth Management Group reported pre-tax income from continuing operations of $597 million
compared with $403 million in the first quarter of last year. The quarter’s pre-tax margin was 17%.4 Net
revenues for the current quarter were $3.5 billion compared with $3.3 billion a year ago. Income after thenoncontrolling interest allocation to Citigroup Inc. (Citi) and before taxes was $476 million. 14
Asset management fee revenues of $1.9 billion increased 8% from last year’s first quarter primarily reflecting
an increase in fee based assets and positive flows.

Transactional revenues 15 of $1.1 billion were essentially unchanged from a year ago primarily reflecting
higher investment banking revenues, offset by a decrease in trading revenues driven by lower gains frominvestments associated with the Firm’s deferred compensation and co-investment plans.



Compensation expense for the current quarter was $2.1 billion compared with $2.0 billion a year ago on
higher revenues.10 Non-compensation expenses of $808 million decreased from $879 million a year ago
partly driven by the absence of platform integration costs.



Total client assets were $1.8 trillion at quarter end. Client assets in fee based accounts were $621 billion, or
35% of total client assets. Fee based asset flows for the quarter were $15.3 billion.5, 6, 16

Wealth Management representatives were 16,284 for the quarter, essentially unchanged from 16,352 as ofDecember 31, 2012 (recast).5 Average annualized revenue per representative of $851,000 and total client
assets per representative of $110 million increased 9% and 10%, respectively, compared with the prior year
quarter.5, 16
Summary of Asset Management Results(dollars in millions)
Net
Revenues

Pre-Tax
Income1Q 2013

$645

$187

4Q 2012

$599

$221

1Q 2012

$533

$128

ASSET MANAGEMENT
Asset Management reported pre-tax income from continuing operations of $187 million compared with pre-tax
income of $128 million in last year’s first quarter. 17 The quarter’s pre-tax margin was 29%.4 Income after thenoncontrolling interest allocation and before taxes was $136 million.

4

Net revenues of $645 million increased 21% from the prior year reflecting higher results in the Traditional
Asset Management business and gains on investments in the Merchant Banking and Real Estate Investing
businesses. 18Compensation expense for the current quarter was $259 million compared with $218 million a year ago on
higher revenues.10 Non-compensation expenses of $199 million increased from $187 million a year ago on
higher volume driven brokerage and clearing expenses.



Assets under management or supervision at March 31, 2013 of $341 billion increased from $304 billion ayear ago primarily reflecting market appreciation and positive flows.

CAPITAL
Morgan Stanley’s Tier 1 capital ratio under Basel I was approximately 13.9% and Tier 1 common ratio wasapproximately 11.5% at March 31, 2013. Both of these ratios reflect the implementation of the BaselCommittee’s market risk capital framework, commonly referred to as “Basel 2.5”, which became effective
January 1, 2013. 19
At March 31, 2013, book value and tangible book value per common share were $31.22 and $27.39, 20
respectively, based on approximately 2.0 billion shares outstanding.

OTHER MATTERS
The effective tax rate from continuing operations for the current quarter was 21.2%. The current quarter includes
a net tax benefit of approximately $142 million consisting of a discrete net tax benefit from the remeasurement ofreserves and related interest and a benefit resulting from a retroactive change in U.S. tax law. 21
The Firm declared a $0.05 quarterly dividend per common share, payable on May 15, 2013 to commonshareholders of record on April 30, 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.

###

5(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, 2012 and other items throughout the Form 10-K, and theCompany’s Current Reports on Form 8-K, including any amendments thereto.

6

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 other companies.
Whenever we refer to a non-GAAP financial measure, we will also generally present the most directly comparable financial
measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the nonGAAP financial measure we reference and 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

1Q 2013$0.61$(0.11)$0.50

1Q 2012$0.71$(0.76)$(0.05)

1,940
0
1,940

1,903
(26)
1,877

4

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.

5

On January 1, 2013, the International Wealth Management business was transferred from the Global Wealth Management
Group to the Equity Division within Institutional Securities. Accordingly, all results and statistical data have been recast for
all periods to reflect the International Wealth Management business as part of the Institutional Securities business segment.

6

Beginning January 1, 2013, the Firm enhanced its definition of fee based asset flows. Fee based asset flows have beenrecast for all periods to include dividends, interest and client fees, and to exclude cash management related activity. Thechange reflects a better representation of asset flows in fee based accounts.

7

Source: Thomson Reuters – for the period of January 1, 2013 to March 31, 2013 as of April 2, 2013.

8

Includes preferred dividends and other adjustments related to the calculation of earnings per share for the first quarter of2013 and 2012 of approximately $26 million and $25 million, respectively. Refer to page 3 of Morgan Stanley’s Financial
Supplement accompanying this release for the calculation of earnings per share.

7

9

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

1Q 2013$1,204$(201)$1,003

4Q 2012$981$(321)$660

1Q 2012$1,375$(1,454)$(79)

10

Compensation in the current quarter included severance expense of $132 million associated with the Firm’s reduction inforce in January 2013 which was reflected in the business segments’ results as follows: Institutional Securities: $113 million,
Global Wealth Management Group: $15 million and Asset Management: $4 million. The first quarter of 2012 included
severance expense of $138 million associated with the Firm’s reduction in force in January 2012 which was reflected in thebusiness segments’ results as follows: Institutional Securities: $108 million, Global Wealth Management Group: $25 millionand Asset Management: $5 million.
11

Noncontrolling interests reported in the Institutional Securities business segment primarily represents allocation to Morgan
Stanley MUFG Securities Co., Ltd. Noncontrolling interests also have been recast for all periods to reflect the International
Wealth Management transfer to Institutional Securities.
12

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):

1Q 2013$3,182$(317)$2,865

1Q 2012$4,260$(1,978)$2,282FIC Sales & Trading – Non-GAAP
DVA impact
FIC Sales & Trading – GAAP

$1,515$(238)$1,277$2,590$(1,597)$993

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

$1,594$(79)$1,515$1,956$(381)$1,575

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

13

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 Morgan Stanley’s Annual Report on Form 10-K for the year ended
December 31, 2012. Refer to page 7 of Morgan Stanley’s Financial Supplement accompanying this release for the VaR
disclosure.

8

14

During the quarter ended September 30, 2012, Morgan Stanley completed the purchase of an additional 14% stake in thewealth management 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 noncontrollinginterests on page 9 of Morgan 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 arereported in net income (loss) applicable to redeemable noncontrolling interests on page 9 of Morgan Stanley’s Financial
Supplement accompanying this release.
15

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

16

Effective for the quarter ended March 31, 2013, client assets also include certain additional non-custodied assets as a resultof the completion of the Morgan Stanley Smith Barney platform conversion.

17

Results for the first quarter of 2013 and 2012 included pre-tax income of $50 million and $65 million, respectively, related
to investments held by certain consolidated real estate funds. The limited partnership interests in these funds are reported in
net income (loss) applicable to noncontrolling interests on page 11 of Morgan Stanley’s Financial Supplement accompanying
this release.
18

Results for the current quarter included gains of $52 million compared with gains of $67 million in the prior year quarter
related to investments held by certain consolidated real estate funds.
19

The Firm calculates its Tier 1 capital ratio and risk-weighted assets (“RWAs”) in accordance with the capital adequacy
standards for financial holding companies adopted by the Federal Reserve Board. These standards are based upon aframework described in the International Convergence of Capital Measurement and Capital Standards, July 1988, as
amended, also referred to as Basel I. On January 1, 2013, the U.S. banking regulators’ rules to implement the BaselCommittee’s market risk capital framework, commonly referred to as “Basel 2.5”, became effective, which increases capitalrequirements for securitizations and correlation trading within the Firm's trading book, as well as incorporating add-ons forstressed VaR and incremental risk requirement. The Firm’s Tier 1 capital ratio and RWAs for the current quarter were
calculated under this revised framework. The Firm’s Tier 1 capital and RWAs for prior quarters have not been recalculated
under this revised framework. In accordance with the Federal Reserve Board’s definition, Tier 1 common capital is definedas Tier 1 capital less non-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 April 18, 2013 (the date of this release) and could be subject to revision in
Morgan Stanley’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.
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 and includes only the Firm’s share of the wealthmanagement joint venture’s goodwill and intangible assets. Tangible book value per common share equals tangible common
equity divided by period end common shares outstanding.
21

The American Taxpayer Relief Act of 2012 (the “Act”) was enacted on January 2, 2013. Among other things, the Act
extends with retroactive effect to January 1, 2012 a provision of U.S. tax law that defers the imposition of tax on certain
active financial services income of certain foreign subsidiaries earned outside of the U.S. until such income is repatriated to
the United States as a dividend. Accordingly, the Firm recorded a benefit of approximately $81 million attributable to theAct’s retroactive extension of these provisions as part of income taxes from continuing operations in the quarter ending
March 31, 2013. In addition, the Firm recorded a net discrete benefit of approximately $61 million related to theremeasurement of reserves and related interest due to new information regarding the status of certain tax authority
examinations.

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

Mar 31, 2013
Net revenues
Institutional Securities
Global Wealth Management Group
Asset Management
Intersegment Eliminations
Consolidated net revenues

4,089
3,470
645
(46)
8,158

$

830
597
187
0
1,614

$

$

$

663
256
84
0
1,003

Earnings (loss) applicable to Morgan Stanley common shareholders$

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

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
Dec 31, 2012
3,087
3,325
599
(45)
6,966

$

76
562
221
0
859

$

$

$

401
266
(7)
0
660

958

$

$
$
$

0.51
(0.01)
0.50

$
$
$

0.50
(0.01)
0.49

$

$

$

$

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

Percentage Change From:
Dec 31, 2012
Mar 31, 2012

Mar 31, 2012
3,135
3,291
533
(35)
6,924

32%
4%
8%
(2%)
17%

30%
5%
21%
(31%)
18%

(329)
403
128
0
202

*
6%
(15%)
-88%

*
48%
46%
-*

$

(302)
198
25
0
(79)

65%
(4%)
*
-52%

*
29%
*
-*

568

$

(119)

69%

*

$
$
$

0.33
(0.03)
0.30$$$(0.05)(0.01)(0.06)

55%
67%
67%

*
-*

$
$
$

0.33
(0.04)
0.29$$$(0.05)(0.01)(0.06)

52%
75%
69%

*
-*

$

$

$

$

6.4%
6.3%

4.2%
3.8%

*
*

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

7.6%
7.5%

6.3%
5.8%

9.2%
9.1%

Tier 1 common capital ratio
Tier 1 capital ratio

11.5%
13.9%

14.6%
17.7%

13.3%
16.9%

Book value per common share
Tangible book value per common share

$
$

31.22
27.39

$
$

30.70
26.86

$
$

30.74
27.37

Notes: - Effective January 1, 2013, in accordance with the U.S. banking regulators’ rules, the Firm implemented the Basel Committee’s market risk capital framework, commonly referred
to as “Basel 2.5”.
- Results for the quarters ended March 31, 2013, December 31, 2012 and March 31, 2012, include positive (negative) revenue of $(317) million, $(511) million and $(1,978) 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 return on average common equity, return on average common equity excluding DVA and tangible book value per common share are non-GAAP measures that the Firm
considers to be useful measures to assess operating performance and capital adequacy.
- Tier 1 common capital ratio equals Tier 1 common equity divided by risk-weighted assets (RWAs).
- Tier 1 capital ratio equals Tier 1 capital divided by RWAs.
- 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.
- See page 4 of the financial supplement for additional information related to the calculation of the financial metrics.
10

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

Mar 31, 2013

Quarter Ended
Dec 31, 2012

Mar 31, 2012

$

$

$

1,224
2,694
338
1,168
2,346
203
7,973

15%
12%
*
(1%)
9%
95%
14%

1,542
1,601
(59)
6,924

(6%)
(7%)
6%
17%

(9%)
(24%)
*
18%

4,216

3,633

4,430

16%

(5%)

379
428
448
134
440
499
2,328

394
369
474
163
558
516
2,474

388
403
459
146
412
484
2,292

(4%)
16%
(5%)
(18%)
(21%)
(3%)
(6%)

(2%)
6%
(2%)
(8%)
7%
3%
2%

6,544

6,107

6,722

7%

(3%)

$

1,614
342
1,272
(19)
1,253
122
147
984
26
958

$

859
8
851
(63)
788
116
78
594
26
568

$

202
54
148
(14)
134
0
228
(94)
25
(119)

88%
*
49%
70%
59%
5%
88%
66%
-69%

*
*
*
(36%)
*
*
(36%)
*
4%
*

$

1,003
(19)
984

$

660
(66)
594

$

(79)
(15)
(94)

52%
71%
66%

*
(27%)
*

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$

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

Notes:

(15%)
78%
11%
11%
1%
34%
17%

1,481
1,306
175
6,966

Non-interest expenses:
Compensation and benefits

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

1,063
2,402
85
1,177
2,152
104
6,983

1,398
1,213
185
8,158

Interest income
Interest expense
Net interest
Net revenues

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

1,439
1,513
304
1,052
2,331
152
6,791

Percentage Change From:
Dec 31, 2012
Mar 31, 2012

$

$

20%
52%
29%

12%
52%
36%

3%
64%
33%

21.2%

0.9%

26.7%

- Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure to assess operating performance.
Percentages represent income from continuing operations before income taxes as a percentage of net revenues.
- For the quarter ended March 31, 2013, the income tax provision from continuing operations included a net tax benefit of approximately $142 million
consisting of a discrete net tax benefit from the remeasurement of reserves and related interest and a benefit resulting from a retroactive change in
U.S. tax law (reported in the Institutional Securities business segment).
- For the quarter ended December 31, 2012, the income tax provision from continuing operations included a net tax benefit of approximately $224 million
consisting of a discrete 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 Barneyfrom 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 werereported 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 redeemablenoncontrolling interests.
- Preferred stock dividend / other includes allocation of earnings to Participating Restricted Stock Units (RSUs).

11

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

Quarter Ended
Mar 31, 2013

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
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$

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$

Average basic common shares outstanding (millions)

Mar 31, 2012

Dec 31, 2012

Mar 31, 2012

148

49%

122
147
269

116
75
191

0
227
227

5%

*

96%
41%

(35%)
19%

1,003
24

660
24

(79)
24

52%

*

--

--

979

636

(103)

54%

*

1
(104)

-54%

100%
*

(14)
1
(15)
0
(15)

70%
*
71%
-71%

(36%)
*
(27%)
-(27%)

(119)

69%

*

1,877

1%

1%

1,272

2
977

$

$

(19)
0
(19)
0
(19)

Earnings (loss) applicable to Morgan Stanley common shareholders

Percentage Change From:

Dec 31, 2012

958

851

2
634

$

$

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

1,901

568

$

1,892

*

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

$
$
$

0.51
(0.01)
0.50

$
$
$

0.33
(0.03)
0.30$$$(0.05)(0.01)(0.06)

55%
67%
67%

*
-*

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

$

977

$

634

$

(104)

54%

*

-

--

--

(104)

54%

*

(15)

71%

(27%)

(119)

69%

*

1,877

--

3%

(0.05)(0.01)(0.06)

52%
75%
69%

*
-*

Diluted EPS Adjustments:-

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

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

977

$

(19)

Earnings (loss) applicable to Morgan Stanley common shareholders$

Average diluted common shares outstanding and common stock equivalents (millions)

958

$
$
$

0.50
(0.01)
0.49

$

(66)
$

1,940

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

634

568

$

1,937

$
$
$

0.33
(0.04)
0.29$$$

Notes: - 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 page 14 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, 2012.

12