Morgan Stanley Second Quarter 2023 Earnings Results
Morgan Stanley Reports Net Revenues of $13.5 Billion, EPS of $1.24 and ROTCE of 12.1%
NEW YORK, July 18, 2023 – Morgan Stanley (NYSE: MS) today reported net revenues of $13.5 billion for thesecond quarter ended June 30, 2023 compared with $13.1 billion a year ago. Net income applicable to Morgan
Stanley was $2.2 billion, or $1.24 per diluted share,1 compared with net income of $2.5 billion, or $1.39 per diluted
share,1 for the same period a year ago. The second quarter of 2023 was impacted by severance costs of $308
million2 associated with an employee action.
James P. Gorman, Chairman and Chief Executive Officer, said, “The Firm delivered solid results in a challenging
market environment. The quarter started with macroeconomic uncertainties and subdued client activity, but ended
with a more constructive tone. Consistent with our strategy, we continued to attract client assets – Wealth andInvestment Management added $100 billion in net new assets, bringing in over $200 billion year-to-date. Our
Institutional businesses navigated the markets well through macro uncertainties. We finished the quarter in a strong
capital position and raised our quarterly common dividend by 7.5 cents for the second year in a row. We remain
confident in our ability to grow in various market environments while maintaining a strong capital position.”

Financial Summary3,4

Highlights

Firm ($ millions, except per share data)

2Q 2023

Net revenues

2Q 2022$13,457$13,132

Provision for credit losses

$161

$101

Compensation expense$6,262$5,550Non-compensation expenses$4,222$4,1629Pre-tax income$2,812$3,319Net income app. to MS$2,182$2,495

Expense efficiency ratio6

78%

74%

$1.24

$1.39

Book value per share$55.24$54.46

Tangible book value per share$40.79$40.07

8.9%

10.1%

12.1%

13.8%

Net revenues$5,654$6,119Investment Banking$1,075$1,072Equity$2,548$2,960

Fixed Income$1,716$2,500$6,660$5,736$1,856$1,717

$22.7

$28.5

Earnings per diluted share

1

Return on equity
Return on tangible equity

5

Institutional Securities

Wealth Management
Net revenues
Fee-based client assets ($ billions)10
11

Fee-based asset flows ($ billions)
Net new assets ($ billions)

7

Loans ($ billions)

$89.5

$52.9

$144.7$143.6$1,281$1,411$1,412$1,351$1.1$(3.5)• The Firm reported net revenues of $13.5 billion and net
income of $2.2 billion as our businesses navigated anenvironment that remains challenging.
• The Firm delivered ROTCE of 12.1%.5• The Firm expense efficiency ratio for the first half of the year
was 75%.6 Expenses for the quarter include severance costsof $308 million2 and integration-related expenses of $99
million.
• Standardized Common Equity Tier 1 capital ratio was
15.5%.16• Institutional Securities net revenues of $5.7 billion reflect
continued muted activity in Investment Banking and declines
in Equity and Fixed Income driven by lower client activity in aless favorable market environment compared to a year ago.

• Wealth Management delivered strong net new client assets
of $90 billion7 and record net revenues of $6.7 billion, whichreflect higher net interest income and the positive impact of
DCP. Pre-tax margin was 25.2%,8 reflecting higher
compensation expenses driven by severance costs2
associated with an employee action, integration-related
expenses and higher provisions for credit losses.

Investment Management
Net revenues
12

AUM ($ billions)13

Long-term net flows ($ billions)Media Relations: Wesley McDade 212-761-2430• Investment Management results reflect net revenues of $1.3
billion on AUM of $1.4 trillion and positive net flows.

Investor Relations: Leslie Bazos 212-761-5352

Institutional Securities
Institutional Securities reported net revenues for the current quarter of $5.7 billion compared with $6.1 billion a year
ago. Pre-tax income was $1.0 billion compared with $1.6 billion a year ago.9
Investment Banking revenues were overall unchanged
from a year ago:($ millions)

2Q 2023

2Q 2022• Advisory revenues decreased from a year ago driven by
fewer completed M&A transactions.

Net Revenues$5,654$6,119• Equity underwriting revenues increased from a year ago
primarily driven by higher follow-on and convertible
offerings.

Investment Banking$1,075$1,072Advisory

$455

$598

• Fixed income underwriting revenues increased from a year
ago primarily driven by higher investment grade bondissuances.

Equity underwriting

$225

$148

Fixed income underwriting

$395

$326

Equity$2,548$2,960

Fixed Income$1,716$2,500

Other

$315

$(413)

Provision for credit losses

$97

$82

Total Expenses$4,580$4,483Compensation$2,215$2,050Non-compensation$2,365$2,433Equity net revenues down 14% from a year ago:
• Equity net revenues decreased from a year ago, primarily
driven by declines in cash and derivative products on lower
client activity and lower volatility in the markets.

Fixed Income net revenues down 31% from a year ago:
• Fixed Income net revenues decreased from a year ago
driven by declines across most products, with the
exception of rates, as a result of lower client activity andlower market volatility compared with elevated levels ayear ago.
Other:• Other revenues increased primarily driven by lower markto-market losses, net of loan hedges, and higher net
interest income and fees on corporate loans, and mark-tomarket gains on investments associated with certain
employee deferred compensation plans (DCP) comparedto losses in the prior year.
Provision for credit losses:• Increases in provisions for credit losses were primarily driven by credit deteriorations in the commercial real estate
sector as well as modest growth across the portfolio.
Total Expenses:• Compensation expenses increased on severance costs2 associated with an employee action and expenses related
to certain deferred compensation plans linked to investment performance, partially offset by a decline indiscretionary compensation on lower revenues.
• Non-compensation expenses decreased from a year ago primarily driven by lower litigation costs, partially offset byhigher investments in technology and higher execution-related expenses.

2

Wealth Management
Wealth Management reported record net revenues for the current quarter of $6.7 billion compared with $5.7 billion froma year ago. Pre-tax income of $1.7 billion9 in the current quarter resulted in a reported pre-tax margin of 25.2%.8
Net revenues increased 16% from a year ago:($ millions)

2Q 2023

2Q 2022• Asset management revenues decreased 2% from a year
ago reflecting lower asset levels primarily due to declines
in the markets.

Net Revenues$6,660$5,736

Asset management$3,452$3,510$869$291$2,156$1,747

Other

$183

$188

Provision for credit losses

$64

$19

Total Expenses$4,915$4,196Compensation$3,503$2,895

Non-compensation$1,412$1,301• Transactional revenues14 decreased 2% excluding theimpact of mark-to-market gains on investments
associated with certain employee deferred compensationplans compared to losses in the prior year quarter. The
decrease was due to lower client activity compared to ayear ago.
• Net interest income increased from a year ago on higher
interest rates, partially offset by the impact of lower
brokerage sweep deposits as clients continue to redeploy
balances.

Transactional14
Net interest income

Provision for credit losses:• Increases in provisions for credit losses were largely
driven by credit deterioration in the commercial real estate
sector.
Total Expenses:• Compensation expenses increased from a year ago driven by severance costs2 associated with an employee actionand expenses related to certain deferred compensation plans linked to investment performance.
• Non-compensation expenses increased from a year ago primarily driven by higher investments in technology,
litigation, occupancy costs, and professional services.

Investment Management
Investment Management reported net revenues of $1.3 billion, down 9% from a year ago. Pre-tax income was $170
million compared with $249 million a year ago.9
Net revenues decreased 9% from a year ago:($ millions)

2Q 2023

2Q 2022• Asset management and related fees decreased froma year ago driven primarily by lower average AUM
due to the decline in asset values from the prior year
quarter and the cumulative effect of outflows.

Net Revenues$1,281$1,411

Asset management and related fees

$1,268$1,304

Performance-based income and other

$13

$107

Total Expenses$1,111$1,162Compensation

$544

$605

Non-compensation

$567

$557

• Performance-based income and other revenues
decreased from a year ago due to lower accrued
carried interest across private funds, partially offset bymark-to-market gains on investments associated withcertain employee deferred compensation compared tolosses in the prior year quarter.
Total Expenses:• Compensation expenses decreased from a year ago primarily driven by lower compensation associated with carriedinterest, partially offset by expenses related to certain deferred compensation plans linked to investment
performance and severance costs2 associated with an employee action.
3

Other Matters• The Firm repurchased $1 billion of its outstanding common
stock during the quarter as part of its Share Repurchase
Program.

2Q 2023

2Q 2022

CET1 capital16

15.5%

15.2%

Tier 1 capital16

17.4%

16.9%

CET1 capital16

15.9%

15.5%

Tier 1 capital16

17.8%

17.1%

Tier 1 leverage17

6.7%

6.6%

SLR18

5.5%

5.4%

$1,000$2,73812

33

Average Price$83.86$82.05Period End Shares (millions)

1,659

1,723

Effective Tax Rate

21.0%

23.6%

Capital15Standardized Approach• The Firm reauthorized a multi-year repurchase program of up
to $20 billion of outstanding common stock without a set
expiration date.
• The Board of Directors declared a $0.85 quarterly dividend
per share, representing an increase of 7.5 cents per share,payable on August 15, 2023 to common shareholders ofrecord on July 31, 2023.

Advanced Approach• Standardized Common Equity Tier 1 capital ratio was 15.5%,
220 basis points above the aggregate standardized approach
CET1 requirement inclusive of buffers as of June 30 and 260
basis points above the estimated aggregate standardized
approach CET1 requirement that will take effect as of
October 1, 2023.

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

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” preceding Part I, Item 1, “Competition” and “Supervision andRegulation” 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, 2022 and other items throughout the Form 10-K, the Firm’s Quarterly Reports on Form 10-Q and the
Firm’s Current Reports on Form 8-K, including any amendments thereto.

5

1Includes preferred dividends related to the calculation of earnings per share of $133 million and $104 million for the second quarter of2023 and 2022, respectively.
2

The Firm recorded severance costs of $308 million in the second quarter of 2023, associated with an employee action, which werereported in business segments' results as follows: Institutional Securities $207 million, Wealth Management $78 million and Investment
Management $23 million.
3

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.
4

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.
5

Return on average tangible common equity is a non-GAAP financial measure that the Firm considers useful for analysts, investors andother stakeholders to allow comparability of period-to-period operating performance and capital adequacy. The calculation of return on
average tangible common equity represents full year or annualized net income applicable to Morgan Stanley less preferred dividends as apercentage 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.
6

The Firm expense efficiency ratio represents total non-interest expenses as a percentage of net revenues. For the quarter ended June 30,
2023, Firm results include pre-tax integration-related expenses of $99 million, of which $75 million is reported in the Wealth Managementbusiness segment and $24 million is reported in the Investment Management business segment.
7

Wealth Management net new assets represent client inflows, including dividends and interest, and asset acquisitions, less client outflows, andexclude activity from business combinations/divestitures and the impact of fees and commissions.
8

Pre-tax margin represents income before provision for income taxes divided by net revenues.

9

Pre-tax income represents income before provision for income taxes.

10

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 (including asset acquisitions), net account transfers,
dividends, interest, and client fees, and exclude institutional cash management-related activity.
12

AUM is defined as assets under management.

13

Long-term net flows include the Equity, Fixed Income and Alternative and Solutions asset classes and excludes the Liquidity and Overlay
Services asset class.
14

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

15

Capital ratios are estimates as of the press release date, July 18, 2023.

6

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, 2022 (2022 Form 10-K).
16

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.
17

The Firm’s supplementary leverage ratio (SLR) utilizes a Tier 1 capital numerator of approximately $78.5 billion and $77.8 billion, andsupplementary leverage exposure denominator of approximately $1.4 trillion and $1.5 trillion, for the second quarter of 2023 and 2022,
respectively.
18

7

Consolidated Income Statement Information(unaudited, dollars in millions)

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

Jun 30, 2023

Quarter Ended
Mar 31, 2023

Jun 30, 2022

$

$

$

1,155
3,802
95
1,090
4,817
488
11,447

1,330
4,477
145
1,239
4,728
252
12,171

Percentage Change From:Mar 31, 2023
Jun 30, 2022

1,150
3,597
23
1,220
4,912
(52)
10,850

(13%)
(15%)
(34%)
(12%)
2%
94%
(6%)

-6%
*
(11%)
(2%)
*
6%

Six Months Ended
Jun 30, 2023
Jun 30, 2022
$

2,485
8,279
240
2,329
9,545
740
23,618$Percentage
Change

2,908
7,580
98
2,636
10,031
182
23,435

(15%)
9%
145%
(12%)
(5%)
*
1%

Interest income
Interest expense
Net interest
Net revenues

12,04810,0382,010
13,457

10,8708,524
2,346
14,517

3,612
1,330
2,282
13,132

11%
18%
(14%)
(7%)

*
*
(12%)
2%

22,91818,562
4,356
27,974

6,262
1,764
4,498
27,933

*
*
(3%)
--

Provision for credit losses

161

234

101

(31%)

59%

395

158

150%

6,262

6,410

5,550

(2%)

13%

12,672

11,824

7%

875
926
767
471
236
947
4,222

881
915
710
440
247
920
4,113

878
857
757
430
220
1,020
4,162

(1%)
1%
8%
7%
(4%)
3%
3%

-8%
1%
10%
7%
(7%)
1%

1,756
1,841
1,477
911
483
1,867
8,335

1,760
1,686
1,462
857
395
1,884
8,044

-9%
1%
6%
22%
(1%)
4%

10,484

10,523

9,712

--

8%

21,007

19,868

6%

2,812
591
2,221
39
2,182
133
2,049

3,760
727
3,033
53
2,980
144
2,836

3,319
783
2,536
41
2,495
104
2,391

(25%)
(19%)
(27%)
(26%)
(27%)
(8%)
(28%)

(15%)
(25%)
(12%)
(5%)
(13%)
28%
(14%)

6,572
1,318
5,254
92
5,162
277
4,885

7,907
1,656
6,251
90
6,161
228
5,933

(17%)
(20%)
(16%)
2%
(16%)
21%
(18%)

Non-interest expenses:
Compensation and benefits
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

$

$

$

$

$

$

$

$

$

$

Notes:- Firm net revenues excluding mark-to-market gains and losses on deferred cash-based compensation plans (DCP) were: 2Q23: $13,343 million, 1Q23: $14,364 million, 2Q22: $13,847 million, 2Q23 YTD:
$27,707 million, 2Q22 YTD: $29,089 million.
- Firm compensation expenses excluding DCP were: 2Q23: $6,084 million, 1Q23: $6,217 million, 2Q22: $6,048 million, 2Q23 YTD: $12,301 million, 2Q22 YTD: $12,610 million.
- The End Notes are an integral part of this presentation. Refer to pages 12 - 17 of the Financial Supplement for Definition of U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Terms, Supplemental
Quantitative Details and Calculations, and Legal Notice.

8

Consolidated Financial Metrics, Ratios and Statistical Data
(unaudited)Jun 30, 2023

Quarter Ended
Mar 31, 2023 Jun 30, 2022

Percentage Change From:Mar 31, 2023 Jun 30, 2022

Six Months Ended
Jun 30, 2023 Jun 30, 2022

Percentage
ChangeFinancial Metrics:
Earnings per basic share
Earnings per diluted share$$

Return on average common equity
Return on average tangible common equity
Book value per common share
Tangible book value per common share

1.25
1.24

$
$

8.9%
12.1%
$
$

55.24
40.79

1.72
1.70

$
$

12.4%
16.9%
$
$

1.40
1.39

(27%)
(27%)

(11%)
(11%)

$
$

10.1%
13.8%

55.13
40.68

$
$

2.98
2.95

$
$

10.7%
14.5%

54.46
40.07

$
$

55.24
40.79

3.45
3.41

(14%)
(13%)

12.4%
16.8%
$
$

54.46
40.07

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
Effective tax rate

21%
47%
31%
78%

26%
44%
28%
72%

25%
42%
32%
74%

23%
45%
30%
75%

28%
42%
29%
71%

21.0%

19.3%

23.6%

20.1%

20.9%

1,640
1,657

1,718
1,739

Statistical Data:
Period end common shares outstanding (millions)Average common shares outstanding (millions)
Basic
Diluted

1,659

1,670

1,723

(1%)

(4%)

1,635
1,651

1,645
1,663

1,704
1,723

(1%)
(1%)

(4%)
(4%)

Worldwide employees

82,00682,26678,386

--

5%

(5%)
(5%)

The End Notes are an integral part of this presentation. Refer to pages 12 - 17 of the Financial Supplement for Definition of U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics andTerms, Supplemental Quantitative Details and Calculations, and Legal Notice.

9