Morgan Stanley First Quarter 2021 Earnings Results
Morgan Stanley Reports Net Revenues of $15.7 Billion, EPS of $2.19 and ROTCE of 21.1%
NEW YORK, April 16, 2021 – Morgan Stanley (NYSE: MS) today reported net revenues of $15.7 billion for the firstquarter ended March 31, 2021 compared with $9.8 billion a year ago. Net income applicable to Morgan Stanley was$4.1 billion, or $2.19 per diluted share,1 compared with net income of $1.7 billion, or $1.01 per diluted share,1 for thesame period a year ago. The comparisons of current year results to prior periods were impacted by the acquisitions ofEaton Vance Corp. (“Eaton Vance”) completed on March 1, 2021, reported in the Investment Management segment
and E*TRADE Financial Corporation (“E*TRADE”) completed in the fourth quarter of 2020, reported in the WealthManagement segment.
James P. Gorman, Chairman and Chief Executive Officer, said, “The Firm delivered record results. The integrated
Investment Bank continues to thrive. We closed the acquisition of Eaton Vance which takes Investment Management
to over $1.4 trillion of assets. Wealth Management brought in record flows of $105 billion. The Firm is very well
positioned for growth in the years ahead.”

Financial Summary2,3,4
Firm ($ millions, except per share data)

1Q 2021

1Q 2020

Net revenues$15,719$9,779Provision for credit losses

$(98)

$407

Compensation expense$6,798$4,283

Non-compensation expenses
Pre-tax income10$3,675$2,943$5,344$2,146

Net income app. to MS$4,120$1,698

Expense efficiency ratio

67%

74%

Earnings per diluted share

$2.19

$1.01

Book value per share$52.71$49.09Tangible book value per share$38.97$43.28Return on equity

16.9%

8.5%

Return on tangible equity6

21.1%

9.7%

8

Institutional Securities
Net revenues$8,577$5,178Investment Banking$2,613$1,144Equity$2,875$2,449Fixed Income$2,966$2,062$5,959$4,056

Fee-based client assets ($ billions)11$1,574$1,134Fee-based asset flows ($ billions)

$37.2

$18.4

Net new assets ($ billions)$104.9$37.1

Loans ($ billions)$104.9$82.5$1,314$692$1,419

$584

$16.3

$6.7

Wealth Management
Net revenues
12

13

Investment Management
Net revenues
AUM ($ billions)14
Long-term net flows ($ billions)

15

Media Relations: Wesley McDade 212-761-2430

Highlights• The Firm achieved record net revenues and net income5 withstrong contributions across each of our business segments.
• The Firm delivered ROTCE of 21.1% or 21.4% excluding theimpact of integration-related expenses.6,7• The Firm expense efficiency ratio was 67% or 66% excluding
the impact of integration-related expenses.7,8• Common Equity Tier 1 capital standardized ratio was 16.8%.
• The Firm repurchased $2.1 billion of its outstanding common
stock.
• Institutional Securities reported record net revenues5 up 66%
reflecting strength across businesses and geographies oncontinued strong client engagement and higher volumes in aconstructive market environment, notwithstanding losses
related to a single client event in the quarter.
• Wealth Management delivered a pre-tax margin of 26.9% or
27.9% excluding integration-related expenses.7,9 Results
reflect strong levels of client engagement, record net new
assets and fee-based flows of $105 billion and $37 billion,
respectively, and growth in bank lending.

• Investment Management results reflect strong asset
management fees on AUM of $1.4 trillion, which include theimpact of the Eaton Vance acquisition, along with strong
positive net flows across all asset classes.

Investor Relations: Sharon Yeshaya 212-761-1632

Institutional Securities
Institutional Securities reported net revenues for the current quarter of $8.6 billion compared with $5.2 billion a year
ago. Pre-tax income was $3.4 billion compared with $950 million a year ago.10
Investment Banking revenues up 128% from a year ago:
• Advisory revenues increased from a year ago on higher
completed M&A volumes.
• Equity underwriting reported record revenues driven byhigher volumes in IPOs, blocks and follow-on offerings as
issuers and sellers took advantage of the strong market
conditions.
• Fixed income underwriting revenues increased from a year
ago on higher non-investment grade bond and loan
issuances driven by a favorable market environment
characterized by improved credit spreads.

($ millions)

1Q 2021

1Q 2020

Net Revenues4$8,577$5,178Investment Banking$2,613$1,144$480$362$1,502

$336

$631

$446

Equity$2,875$2,449Fixed Income$2,966$2,062

Other

$123

$(477)

Provision for credit losses

$(93)

$388

Total Expenses4$5,299$3,840Compensation$3,114$1,814Non-compensation$2,185$2,026Advisory
Equity underwriting
Fixed income underwriting

Equity net revenues up 17% from a year ago:
• Equity net revenues increased from a year ago reflecting
strong performance across products and geographies, withnotable strength in derivatives, driven by continued client
engagement and elevated volumes. The current quarter
includes a loss of $644 million related to a credit event for asingle prime brokerage client, and $267 million ofsubsequent trading losses through the end of the quarter
related to the same event.
Fixed Income net revenues up 44% from a year ago:
• Fixed Income net revenues increased significantly from ayear ago reflecting strong performance in credit products,
which benefitted from robust client activity particularly insecuritized products, partially offset by lower revenues inrates and foreign exchange primarily due to more stable bidoffer spreads versus a year ago.
Other:• Other revenues increased from a year ago primarily driven by lower mark-to-market losses on corporate loans held
for sale, net of related hedges, and gains on investments associated with certain employee deferred compensationplans, compared with losses on the investments in the prior year quarter.
Provision for credit losses:• Provision for credit losses on loans and lending commitments of $(93) million in the current quarter compared with
$388 million in the prior year reflects a release in the allowance for credit losses driven by improvements in theoutlook for macroeconomic conditions.
Total Expenses:• Compensation expense increased from a year ago on higher revenues and increases in the fair value of deferredcompensation plan referenced investments.
• Non-compensation expenses increased from a year ago primarily driven by higher volume related expenses.

2

Wealth Management
Wealth Management reported net revenues for the current quarter of $6.0 billion compared with $4.1 billion from a year
ago. Pre-tax income of $1.6 billion10 in the current quarter resulted in a reported pre-tax margin of 26.9% or 27.9%
excluding the impact of integration-related expenses.7,9 The comparisons of current year results to prior periods were
impacted by the acquisition of E*TRADE.
Net revenues increased 47% from a year ago:
• Asset management revenues increased from a year ago
reflecting higher asset levels and record fee-based flows.
• Transactional revenues16 increased 40% excluding theimpact of mark-to-market gains on investments associatedwith certain employee deferred compensation plans.
Results reflect incremental revenues as a result of the
E*TRADE acquisition and strong client activity.
• Net interest income (NII) increased from a year ago driven
by incremental NII as a result of the E*TRADE acquisition,
improved mortgage securities prepayment impact andhigher bank lending partially offset by the impact of lower
rates.

($ millions)

1Q 2021

1Q 2020

Net Revenues4$5,959$4,056

Asset management$3,191$2,680Transactional16$1,228$399

Net interest income$1,385

$896

Other

$155

$81

Provision for credit losses

$(5)

$19

Total Expenses4$4,364$2,982Compensation$3,170$2,212

Non-compensation$1,194$770

Total Expenses:• Compensation expense increased from a year ago driven by increases in the fair value of certain deferredcompensation plan referenced investments, higher compensable revenues, and incremental compensation as aresult of the E*TRADE acquisition.7• Non-compensation expenses increased from a year ago primarily driven by incremental operating and otherexpenses as a result of the E*TRADE acquisition.7

Investment Management
Investment Management reported net revenues of $1.3 billion compared with $692 million a year ago. Pre-tax income
was $370 million compared with $143 million a year ago.10 The comparisons of current year results to prior periods
were impacted by the acquisition of Eaton Vance which closed on March 1, 2021.
Net revenues increased 90% from a year ago:($ millions)• Asset management and related fees increased from ayear ago driven by higher AUM on strong performanceand positive net flows across all asset classes, as wellas incremental revenues as a result of the Eaton
Vance acquisition.
• Performance-based income and other revenues
increased from a year ago primarily on higher accrued
carried interest in real estate funds.

1Q 2021

1Q 2020

Net Revenues4$1,314$692

Asset management and related fees

$1,103$665

Performance-based income and other

$211

$27

Total Expenses

$944

$549

Compensation

$514

$257

Non-compensation

$430

$292

Total Expenses:• Compensation expense increased from a year ago on higher asset management revenues and carried interest as
well as incremental compensation expenses as a result of the Eaton Vance acquisition.7• Non-compensation expenses increased from a year ago primarily driven by higher brokerage and clearing costs,
and incremental operating and other expenses as a result of the Eaton Vance acquisition.73

Other Matters• The Firm resumed its Share Repurchase Program in the firstquarter of 2021, subject to limitations on distributions from theFederal Reserve. The Firm repurchased $2.1 billion of its
outstanding common stock in the quarter.
• The Board of Directors declared a $0.35 quarterly dividend
per share, payable on May 14, 2021 to common shareholdersof record on April 30, 2021.

1Q 2021

1Q 2020

CET1 capital18

16.8%

15.7%

Tier 1 capital18

18.5%

17.8%

CET1 capital18

17.3%

15.2%

Tier 1 capital18

19.1%

17.3%

Tier 1 leverage19

7.5%

8.1%

SLR20

6.7%

6.2%

$2,135$1,34728

29

Average Price$77.47$46.01

Period End Shares (millions)

1,869

1,576

Tax Rate21

22.0%

17.1%

Capital17Standardized Approach

Advanced Approach

Leverage-based capital

Common Stock Repurchases
Repurchases ($ millions)
Number of Shares (millions)4Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities,
wealth management and investment management services. With offices in more than 41 countries, the Firm’s
employees serve clients worldwide including corporations, governments, institutions and individuals. For further
information about Morgan Stanley, please visit www.morganstanley.com.
A financial summary follows. Financial, statistical and business-related information, as well as information regarding
business and segment trends, is included in the financial supplement. Both the earnings release and the financial
supplement are available online in the Investor Relations section at www.morganstanley.com.
NOTICE:The information provided herein and in the financial supplement, including information provided on the Firm’s earnings
conference calls, may include certain non-GAAP financial measures. The definition of such measures or reconciliationof such measures to the comparable U.S. GAAP figures are included in this earnings release and the financial
supplement, both of which are available on www.morganstanley.com.
This earnings release may contain forward-looking statements, including the attainment of certain financial and othertargets, objectives and goals. Readers are cautioned not to place undue reliance on forward-looking statements, which
speak only as of the date on which they are made, which reflect management’s current estimates, projections,
expectations, assumptions, interpretations or beliefs and which are subject to risks and uncertainties that may cause
actual results to differ materially. For a discussion of risks and uncertainties that may affect the future results of theFirm, please see “Forward-Looking Statements” 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 of Financial Condition and Results of Operations” in Part II, Item 7 and “Quantitative andQualitative Disclosures about Risk” in Part II, Item 7A in the Firm’s Annual Report on Form 10-K for the year ended
December 31, 2020 and other items throughout the Form 10-K and the Firm’s Current Reports on Form 8-K, including
any amendments thereto.

5Includes preferred dividends related to the calculation of earnings per share of $138 million and $108 million for the first quarter of 2021
and 2020, respectively.

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 position, or cash flows that is subject to adjustmentsthat effectively exclude, or include amounts from the most directly comparable measure calculated and presented in accordance with U.S.
GAAP. Non-GAAP financial measures disclosed by Morgan Stanley are provided as additional information to analysts, investors and otherstakeholders in order to provide them with greater transparency about, or an alternative method for assessing our financial condition,
operating results, or capital adequacy. These measures are not in accordance with, or a substitute for U.S. GAAP, and may be different
from or inconsistent with non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, wewill also generally define it or present the most directly comparable financial measure calculated and presented in accordance with U.S.
GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable U.S.
GAAP financial measure.

2

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

3

As part of the Firm’s effort to continually improve the transparency and comparability of our external financial reporting, several updates toour financial presentation were implemented in the first quarter of 2021. The presentation changes are as follows:4(i)

The Provision for credit losses for loans and lending commitments is now presented as a separate line in the
consolidated income statements.

(ii)

Gains and losses on external economic derivative hedges associated with held-for-sale and held-for-investment
corporate loans, which were previously reported in Trading revenues, are now reported within Other revenues in the
consolidated income statements.

(iii)

In the Institutional Securities segment, sales and trading net revenues have been reorganized and reported into thefollowing categories, Equity, Fixed Income and Other. In addition, Equity and Fixed Income now include certain
Investments and Other revenues to the extent directly attributable to those businesses. The remaining Investments andOther revenues, along with amounts previously disclosed as “Other sales and trading” will be shown as “Other”.

(iv)

In the Investment Management segment, we have renamed the previously disclosed revenue line “Asset management”
to “Asset management and related fees” and combined the remaining revenue categories under a new line named“Performance-based income and other”.

The corresponding reclassifications have been made to prior periods to conform to the current presentation. For further information about
these changes, see the Firm’s first quarter 2021 financial supplement available online in the Investor Relations section atwww.morganstanley.com.
Firm and Institutional Securities net revenues and Firm net income applicable to Morgan Stanley represent records for a reported quarterly
period after excluding the impact of debt valuation adjustments (DVA), which were previously reflected in net revenues in prior periods, andreflecting the current reporting structure of the Firm (i.e. exclusive of discontinued operations). Net revenues and net income applicable toMorgan Stanley, excluding the impact of DVA, were non-GAAP financial measures in those prior periods that were reconciled to thecomparable GAAP financial measures in the respective quarterly reports filed on Form 10-Q.

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

6

The Firm’s first quarter results include $75 million of integration-related expenses on a pre-tax basis ($58 million after-tax) as a result of
the E*TRADE and Eaton Vance acquisitions. The integration-related expenses include $33 million in compensation expense and $42
million in non-compensation expense. Wealth Management and Investment Management integration-related expenses include $30 million
and $3 million in compensation expense, respectively, and $34 million and $8 million in non-compensation expense, respectively.

7

6

The Firm expense efficiency ratio of 67% represents total non-interest expenses as a percentage of net revenues. The Firm expense
efficiency ratio excluding integration-related expenses of 66% represents total non-interest expenses adjusted for integration-related
expenses as a percentage of net revenues. The Firm expense efficiency ratio excluding integration-related expenses is a non-GAAP
financial measure that the Firm considers useful for analysts, investors and other stakeholders to allow comparability of period-to-period
operating performance.
8

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

910

Pre-tax income represents income before taxes.

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

11

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

12

Wealth Management net new assets represents client inflows (including dividend and interest) less client outflows (excluding activity frombusiness combinations/divestitures and impact of fees and commissions).

13

14

AUM is defined as assets under management.

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

15

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

16

17

Capital ratios are estimates as of the press release date, April 16, 2021.

CET1 capital is defined as Common Equity Tier 1 capital. The Firm’s risk-based capital ratios are computed under each of the (i)standardized approaches for calculating credit risk and market risk risk‐weighted assets (RWAs) (the “Standardized Approach”) and (ii)applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (the “Advanced Approach”). For
information on the calculation of regulatory capital and ratios, and associated regulatory requirements, please refer to "Management’s
Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Regulatory Requirements" inthe Firm’s Annual Report on Form 10-K for the year ended December 31, 2020 (2020 Form 10-K).

18

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

19

The Firm’s supplementary leverage ratio (SLR) utilizes a Tier 1 capital numerator of approximately $84.1 billion and $73.9 billion, andsupplementary leverage exposure denominator of approximately $1.26 trillion and $1.19 trillion, for the first quarter of 2021 and 2020,
respectively. Based on a Federal Reserve interim final rule in effect until March 31, 2021, our SLR and supplementary leverage exposure
as of March 31, 2021 reflect the exclusion of U.S. Treasury securities and deposits at Federal Reserve Banks. The exclusion of theseassets had the effect of increasing our SLR by 0.7% as of March 31, 2021.

20

The income tax consequences related to employee share-based payments are recognized in Provision for income taxes in the
consolidated income statement, and may be either a benefit or a provision. The impacts of recognizing excess tax benefits upon conversionof awards are $82 million and $99 million for the first quarter of 2021 and 2020, respectively.
21

7

Consolidated Income Statement Information(unaudited, dollars in millions)

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

Mar 31, 2021

Quarter Ended
Dec 31, 2020

Mar 31, 2020

$

$

$

Interest income
Interest expense
Net interest
Net revenues

2,840
4,225
318
1,626
4,398
284
13,691

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

$

$

1,271
2,801
38
1,360
3,417
(464)
8,423

17%
31%
(3%)
20%
12%
(38%)
17%

123%
51%
*
20%
29%
*
63%

2,437
409
2,028
15,719

2,245
374
1,871
13,597

3,503
2,147
1,356
9,779

9%
9%
8%
16%

(30%)
(81%)
50%
61%

(98)

4

407

*

*

6,798

5,450

4,283

25%

59%

910
733
624
405
146
857
3,675

776
697
679
456
161
944
3,713

740
563
449
365
132
694
2,943

17%
5%
(8%)
(11%)
(9%)
(9%)
(1%)

23%
30%
39%
11%
11%
23%
25%

10,473

9,163

7,226

14%

45%

5,344
1,176
4,168
48
4,120
138
3,982

4,430
1,018
3,412
27
3,385
119
3,266

2,146
366
1,780
82
1,698
108
1,590

21%
16%
22%
78%
22%
16%
22%

149%
*
134%
(41%)
143%
28%
150%

Provision for credit losses
Non-interest expenses:
Compensation and benefits

2,435
3,229
327
1,352
3,926
457
11,726Percentage Change From:
Dec 31, 2020
Mar 31, 2020

$

$

$

$

The End Notes are an integral part of this presentation. Refer to the Financial Supplement on pages 14 - 19 for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance
Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice for additional information.

8

Consolidated Financial Metrics, Ratios and Statistical Data

(unaudited)

Mar 31, 2021

Quarter Ended
Dec 31, 2020

Mar 31, 2020

$
$

$
$

$
$

Percentage Change From:
Dec 31, 2020
Mar 31, 2020

Financial Metrics:
Earnings per basic share
Earnings per diluted share

2.22
2.19

Return on average common equity
Return on average tangible common equity
Book value per common share
Tangible book value per common share
Excluding integration-related expenses
Adjusted earnings per diluted share
Adjusted return on average common equity
Adjusted return on average tangible common equity

16.9%
21.1%

1.84
1.81
14.7%
17.7%

1.02
1.01

21%
21%

118%
117%

16%

120%

8.5%
9.7%

$
$

52.71
38.97

$
$

51.13
41.95

$
$

49.09
43.28

$

2.22
17.1%
21.4%

$

1.92
15.6%
18.7%

$

1.01
8.5%
9.7%

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

34%
43%
23%
67%
66%
22.0%

33%
40%
27%
67%
66%
23.0%

22%
44%
30%
74%
74%
17.1%

Period end common shares outstanding (millions)Average common shares outstanding (millions)
Basic
Diluted

1,869

1,810

1,576

3%

19%

1,795
1,818

1,774
1,802

1,555
1,573

1%
1%

15%
16%

Worldwide employees

70,97568,09760,670

4%

17%

Statistical Data:

Notes:- The Firm’s first quarter 2021 results include pre-tax integration-related expenses of $75 million ($58 million after-tax) reported in the Wealth Management and Investment Management business segments.
The Firm's fourth quarter 2020 results include pre-tax integration-related expenses of $231 million ($189 million after-tax) reported in the Wealth Management business segment.
- The End Notes are an integral part of this presentation. Refer to the Financial Supplement on pages 14 - 19 for Definition of U.S. GAAP to Non-GAAP Measures, Definitions of Performance Metrics and Terms,
Supplemental Quantitative Details and Calculations, and Legal Notice for additional information.

9