Media Relations: Michele Davis 212-761-9621

Investor Relations: Celeste Mellet Brown 212-761-3896

Morgan Stanley Reports Third Quarter 2014:


Net Revenues of $8.9 Billion and Earnings per Diluted Share from Continuing
Operations of $0.84

Excluding DVA,1 Net Revenues were $8.7 Billion and Earnings per Diluted Sharefrom Continuing Operations of $0.772,3

Strong Performance in Wealth Management with Pre-Tax Margin of 22%4; Record
Revenue per Financial Advisor



Investment Banking Ranked #1 in Global IPOs and #2 in Global Announced
M&A5; Continued Strength in Equity Sales & Trading

NEW YORK, October 17, 2014 – Morgan Stanley (NYSE: MS) today reported net revenues of $8.9 billion for
the third quarter ended September 30, 2014 compared with $8.0 billion a year ago. For the current quarter,
income from continuing operations applicable to Morgan Stanley was $1.7 billion, or $0.84 per diluted share,6
6
compared with income of $889 million, or $0.44 per diluted share , for the same period a year ago. The current
quarter included a net discrete tax benefit of $237 million or $0.12 per diluted share.7
Results for the current quarter included positive revenues related to the change in the fair value of certain of the
Firm’s long-term and short-term borrowings resulting from the fluctuation in the Firm’s credit spreads andother credit factors (Debt Valuation Adjustment, DVA) of $215 million, compared with negative revenues of$171 million a year ago.
Excluding DVA, net revenues for the current quarter were $8.7 billion compared with $8.1 billion a year ago.8
Income from continuing operations applicable to Morgan Stanley was $1.6 billion, or $0.77 per diluted share,
238
compared with income of $1.0 billion, or $0.50 per diluted share, a year ago. , ,Compensation expense of $4.2 billion increased from $4.0 billion a year ago primarily driven by higher revenues.
Non-compensation expenses of $2.4 billion decreased from $2.6 billion a year ago primarily reflecting lower
litigation costs.
For the current quarter, net income applicable to Morgan Stanley, including discontinued operations, was $1.7
6billion or $0.84 per diluted share, compared with net income of $906 million or $0.45 per diluted share in the6third quarter of 2013.

1

Summary of Firm Results(dollars in millions)Excluding DVA

As Reported

8

Net
Revenues

MS IncomeCont. Ops.

Net
Revenues

MS IncomeCont. Ops.

3Q 2014$8,907$1,718$8,692$1,581

2Q 2014$8,608$1,900$8,521$1,8393Q 2013$7,950$889$8,121$1,010Business Overview
Institutional Securities net revenues excluding DVA were $4.3 billion9 reflecting continued strength inInvestment Banking and Equity sales and trading and improved results in Fixed Income and Commodities
sales and trading.



Wealth Management net revenues were $3.8 billion and pre-tax margin was 22%. Fee based asset flows
for the quarter were $6.5 billion, with total client assets above $2.0 trillion at quarter end.



Investment Management reported net revenues of $655 million with assets under management or
supervision of $398 billion.

4

James P. Gorman, Chairman and Chief Executive Officer, said, “Morgan Stanley has delivered another quarter of
earnings growth and strong performance based on consistent execution for our clients. We are well positioned tocreate superior returns for our shareholders, particularly as the U.S. economy continues to strengthen.”2Summary of Institutional Securities Results(dollars in millions)Excluding DVA

9

As Reported
Net
Pre-Tax
Revenues
IncomeNet
Revenues

Pre-Tax
Income3Q 2014$4,516$1,225$4,301$1,010

2Q 2014$4,248$961$4,161$874

3Q 2013$3,704$396$3,875$567

INSTITUTIONAL SECURITIESInstitutional Securities reported pre-tax income from continuing operations of $1.2 billion compared with $396
49
million in the third quarter of last year. The quarter’s pre-tax margin was 27% (excluding DVA, 23%). , Income
10
after the noncontrolling interest allocation and before taxes was $1.2 billion. Net revenues for the current
quarter were $4.5 billion compared with $3.7 billion a year ago. DVA resulted in positive revenues of $215
million in the current quarter compared with negative revenues of $171 million a year ago. Excluding DVA, net
9revenues for the current quarter of $4.3 billion compared with $3.9 billion a year ago. The following discussion
for sales and trading excludes DVA.


Advisory revenues of $392 million increased from $275 million a year ago on higher levels of completed
M&A activity. Equity underwriting revenues of $464 million increased from $236 million a year ago
reflecting higher IPO volumes. Fixed income underwriting revenues of $484 million were relatively
unchanged from the prior year quarter, continuing to reflect a favorable debt underwriting environment.



Equity sales and trading net revenues of $1.8 billion increased from $1.7 billion a year ago reflecting strong
performance in prime brokerage, partly offset by lower revenues in derivatives.11



Fixed Income & Commodities sales and trading net revenues of $997 million increased from $835 million a11year ago. Results reflected higher revenues in foreign exchange and securitized products, partly offset bylower results in commodities and credit products.



Other sales and trading net losses of $84 million compared with a net loss of $158 million a year ago
reflecting lower costs related to the Firm’s long-term debt and higher corporate lending and commitment
revenues, partly offset by losses related to investments in the Firm’s deferred compensation plans.



Investment revenues were $39 million compared with $337 million in the third quarter of last year. Results
for the prior year period reflected a gain resulting from the disposition of an investment in an insurance
broker.



Other revenues of $225 million increased from $159 million a year ago reflecting gains related to the sale ofTransMontaigne Inc. and a retail property space, partly offset by lower results in our Japanese joint venture
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.12

Compensation expense of $1.8 billion increased from $1.6 billion a year ago on higher revenues. Noncompensation expenses of $1.5 billion for the current quarter decreased from $1.7 billion a year ago driven
primarily by lower litigation costs.

Morgan Stanley’s average trading Value-at-Risk (VaR) measured at the 95% confidence level was $42
million compared with $48 million in the second quarter of 2014 and $52 million in the third quarter of theprior year.13

3

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

Pre-Tax
Income3Q 2014$3,785$836

2Q 2014$3,715$767

3Q 2013$3,481$668

WEALTH MANAGEMENT
Wealth Management reported pre-tax income from continuing operations of $836 million compared with $668
4
million in the third quarter of last year. The quarter’s pre-tax margin was 22%. Net revenues for the current
quarter were $3.8 billion compared with $3.5 billion a year ago.


Asset management fee revenues of $2.2 billion increased from $1.9 billion a year ago primarily reflecting
market appreciation and positive flows.

Transactional revenues 14 of $912 million decreased from $1.0 billion a year ago reflecting losses related toinvestments in the Firm’s deferred compensation plans and lower fixed income activity, partly offset by anincrease in closed-end fund and other new issue activity.



Other revenues of $112 million increased from $75 million a year ago principally driven by a gain related to12
the sale of a retail property space.



Net interest income of $601 million increased from $493 million a year ago on higher deposits and loanbalances.

Compensation expense for the current quarter of $2.2 billion increased from $2.0 billion a year ago on higher
net revenues, partly offset by a decrease in the fair value of deferred compensation plan referenced
investments. Non-compensation expenses of $767 million decreased from $796 million a year ago primarily
due to operating efficiencies resulting from the prior year’s completion of the joint venture acquisition as wellas continued expense discipline.

Total client assets exceeded $2.0 trillion at quarter end. Client assets in fee based accounts of $768 billion
increased 18% compared with the prior year quarter. Fee based asset flows for the quarter were $6.5 billion.



Wealth Management representatives of 16,162 decreased from 16,517 compared with the prior year quarter.
Average annualized revenue per representative of $932,000 and total client assets per representative of $124
million, both records, increased 10% and 13%, respectively, compared with the prior year quarter.

4

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

Pre-Tax
Income3Q 2014

$655

$188

2Q 2014

$692

$205

3Q 2013

$828

$300

INVESTMENT MANAGEMENT
Investment Management reported pre-tax income from continuing operations of $188 million compared with pre4
tax income of $300 million in the third quarter of last year.15 The quarter’s pre-tax margin was 29%. Income
after the noncontrolling interest allocation and before taxes was $170 million.


Net revenues of $655 million decreased from $828 million in the prior year. Results reflect lower investment
gains and carried interest in the Merchant Banking and Real Estate Investing businesses, partly offset byhigher results in Traditional Asset Management.16,17 The current quarter also reflects lower revenues in theReal Estate Investing business driven by the deconsolidation of certain legal entities associated with a realestate fund sponsored by the Firm.



Compensation expense for the current quarter of $253 million decreased from $332 million a year ago,
principally due to a decrease in the fair value of deferred compensation plan referenced investments. Noncompensation expenses of $214 million increased from $196 million a year ago driven by higher legal costs
and brokerage and clearing expenses.



Assets under management or supervision at September 30, 2014 of $398 billion increased from $360 billion ayear ago primarily due to market appreciation and positive flows. The business recorded net flows of $7.6
billion in the current quarter.

CAPITAL
As of September 30, 2014, the Firm’s Common Equity Tier 1 risk-based capital ratio was approximately 14.3%
and its Tier 1 risk-based capital ratio was approximately 16.1%. The Firm is subject to a “capital floor” such thatthese regulatory capital ratios currently reflect the U.S. Basel III Advanced Approaches (“Advanced Approach”)
transitional rules, which represent the lower of the Firm’s capital ratios calculated under the Advanced Approachand U.S. Basel I and Basel 2.5 capital rules, taking into consideration applicable transitional provisions under
U.S. Basel III.18
At September 30, 2014, book value and tangible book value per common share were $34.17 and $29.25,19
respectively, based on approximately 2.0 billion shares outstanding.

OTHER MATTERS
The effective tax rate from continuing operations for the current quarter was 21.0%. The quarter included a
discrete net tax benefit of approximately $237 million primarily associated with the repatriation of non-U.S.
earnings at a cost lower than originally estimated.
During the quarter ended September 30, 2014, the Firm repurchased approximately $195 million of its common

5stock or approximately 5.9 million shares.
The Firm declared a $0.10 quarterly dividend per common share, payable on November 14, 2014 to commonshareholders of record on October 31, 2014.
Morgan Stanley is a leading global financial services firm providing a wide range of investment banking,securities, investment management and wealth management services. With offices in more than 43 countries, theFirm’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 andthe Financial Supplement are available online in the Investor Relations section at www.morganstanley.com.

###(See Attached Schedules)
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, 2013 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.

6

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 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

Earnings (loss) per diluted share amounts, excluding DVA, are non-GAAP financial measures that the Firm considers
useful for 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 earnings (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):

Earnings (loss) per diluted share from cont. ops. – Non-GAAP
DVA impact
Earnings (loss) per diluted share from cont. ops. – GAAP
Average diluted shares – Non-GAAP
DVA impact
Average diluted shares – GAAP

3Q 2014
$0.77
$0.07
$0.84

3Q 2013$0.50($0.06)
$0.44

1,971
0
1,971

1,965
0
1,965

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

Source: Thomson Reuters – for the period of January 1, 2014 to September 30, 2014 as of October 1, 2014.

6

Includes preferred dividends and other adjustments related to the calculation of earnings per share for the third quarter of2014 and 2013 of approximately $64 million and $26 million, respectively. Refer to page 3 of Morgan Stanley’s Financial
Supplement accompanying this release for the calculation of earnings per share.
7

The impact to earnings per diluted share from continuing operations is calculated by dividing the net discrete tax benefit by
the average number of diluted shares outstanding.

7

8

Net revenues and income (loss) from continuing operations 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 income (loss) from continuing operations applicable to Morgan Stanleyfrom 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
Income (loss) applicable to MS – Non-GAAP
DVA after-tax impact
Income (loss) applicable to MS – GAAP

3Q 2014$8,692$215$8,907

2Q 2014$8,521$87$8,608

3Q 2013$8,121$(171)$7,950$1,581$137$1,718$1,839$61$1,900$1,010$(121)$889

9

Institutional Securities net revenues and pre-tax income (loss), 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 pre-tax income (loss) from a non-GAAP to GAAP basis is as follows (amounts arepresented in millions):

Net revenues – Non-GAAP
DVA impact
Net revenues – GAAP
Pre-tax income (loss) – Non-GAAP
DVA impact
Pre-tax income (loss) – GAAP10

3Q 2014$4,301$215$4,516

2Q 2014$4,161$87$4,248

3Q 2013$3,875$(171)$3,704$1,010$215$1,225

$874
$87
$961

$567
$(171)$396

Noncontrolling interests reported in the Institutional Securities business segment includes the allocation to Mitsubishi UFJ
Financial Group, Inc. of Morgan Stanley MUFG Securities Co., Ltd., which the Firm consolidates.

8

11

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):

3Q 2014

3Q 2013

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

$2,697$215$2,912$2,387$(171)$2,216FIC Sales & Trading – Non-GAAP
DVA impact
FIC Sales & Trading – GAAP

$997
$132
$1,129$835$(141)$694

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

$1,784$83$1,867$1,710$(30)$1,68012

The third quarter ended September 30, 2014 included a pre-tax gain of $141 million associated with the sale of a retailproperty space, which was reflected in other revenues in each of the business segments’ results as follows: Institutional
Securities: $84 million, Wealth Management: $40 million and Investment Management: $17 million.
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, 2013. Refer to page 7 of Morgan Stanley’s Financial Supplement accompanying this release for the VaR
disclosure.
14

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

15

Results for the third quarter of 2014 and 2013 included pre-tax income of $17 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 nonredeemable noncontrolling interests on page 10 of Morgan Stanley’s Financial
Supplement accompanying this release.

16

Net revenues for the current quarter included gains of $17 million compared with gains of $67 million in the prior year
third quarter related to investments held by certain consolidated real estate funds.

17

Carried interest represents an additional allocation of fund income to the Firm, as general partner upon exceeding
cumulative fund performance thresholds.

18

As an 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, an advanced
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 which have been approved by their regulators to exit the parallel run, such as theFirm, to a permanent “capital floor”. In calendar year 2014, the capital floor results in the Firm’s capital ratios being the9lower of the capital ratios computed under the Advanced Approach or the U.S. Basel I-based rules as supplemented by theexisting market risk rules known as “Basel 2.5”. For the current quarter, the Firm's capital floor is represented by the
Advanced Approach. Beginning on January 1, 2015, the capital floor will result in the Firm’s capital ratios being the lower ofthe capital ratios computed under the Advanced Approach or the Standardized Approach under U.S. Basel III. These
computations are preliminary estimates as of October 17, 2014 (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 September 30, 2014. The methods for calculating the
Firm’s risk-based capital ratios will change through 2022 as aspects of the U.S. Basel III final rule are phased in. The Firm’s
capital takes into consideration regulatory capital requirements as well as capital required for organic growth, acquisitions
and other business needs.
19

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.

10

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

Sept 30, 2014
Net revenues
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Consolidated net revenues
Income (loss) from continuing operations before tax
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Consolidated income (loss) from continuing operations before tax
Income (loss) applicable to Morgan Stanley
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Consolidated income (loss) applicable to Morgan Stanley

$

$

$

$

$

4,516
3,785
655
(49)
8,907

1,225
836
188
0
2,249

$

1,098
501
119
0
1,718

Earnings (loss) applicable to Morgan Stanley common shareholders$

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

Quarter Ended
June 30, 2014
$

$

$

$

$

4,248
3,715
692
(47)
8,608

961
767
205
0
1,933

Sept 30, 2013
$

$

$

$

3,704
3,481
828
(63)
7,950

6%
2%
(5%)
(4%)
3%

22%
9%
(21%)
22%
12%

396
668
300
0
1,364

27%
9%
(8%)
-16%

*
25%
(37%)
-65%

(15%)
6%
(12%)
-(10%)

*
17%
(12%)
-93%

$

1,294
471
135
0
1,900

$

324
430
135
0
889

1,649

$

1,820

$

880

(9%)

$
$
$

0.86
0.86

$
$
$

0.94
0.94

$
$
$

0.45
0.01
0.46

Earnings per diluted share:
Income from continuing operations

$

0.84

$
$

0.84

$
$
$

0.92

Discontinued operations
Earnings per diluted share

$
$
$

0.44
0.01
0.45

0.92

$

Percentage Change From:
June 30, 2014
Sept 30, 2013

Nine Months Ended
Sept 30, 2014
Sept 30, 2013
$

$

$

$

$

13,391
11,1222,087(138)
26,462

3,557
2,294
656
0
6,507

$

$

$

$

$

Percentage
Change12,161
10,482
2,146(156)
24,633

10%
6%
(3%)
12%
7%

2,194
1,920
647
0
4,761

62%
19%
1%
-37%

114%
38%
16%
-76%

$

3,317
1,395
372
0
5,084

$

1,549
1,012
320
0
2,881

87%

$

4,918

$

2,619

88%

(9%)
-(9%)

91%
*
87%

$
$
$

2.54
0.01
2.55

$
$
$

1.39
(0.02)
1.37

83%
*
86%

(9%)
-(9%)

91%
*
87%

$
$
$

2.48
0.02
2.50

$
$
$

1.36
(0.02)
1.34

82%
*
87%

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

10.0%
10.0%

11.3%
11.3%

5.6%
5.7%

10.1%
10.2%

5.8%
5.7%

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

9.0%
9.0%

10.7%
10.7%

6.3%
6.4%

9.4%
9.4%

6.1%
6.0%

Common Equity Tier 1 capital ratio Advanced (Transitional)
Tier 1 capital ratio Advanced (Transitional)

14.3%
16.1%

13.9%
15.4%

12.6%
15.3%

Book value per common share
Tangible book value per common share

$
$

34.17
29.25

$
$

33.46
28.51

$
$

32.13
26.96

Notes: - Results for the quarters ended September 30, 2014, June 30, 2014 and September 30, 2013, include positive (negative) revenue of $215 million, $87 million and $(171) million, respectively, related to the change in the fair value of certain of the
Firm's long-term and short-term borrowings resulting from the fluctuation in the Firm's credit spreads and other credit factors (Debt Valuation Adjustment, DVA). The nine months ended September 30, 2014 and September 30, 2013, include
positive (negative) revenue of of $428 million and $(313) million, respectively, related to the movement in DVA.
- The return on average common equity metrics, return on average common equity excluding DVA metrics, 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.
- In the quarter ended June 30, 2014, the Firm began using the U.S. Basel III Advanced Approaches (Advanced Approach) to calculate its regulatory capital requirements. Prior periods have not been recast to reflect the new requirements.
- Common Equity Tier 1 capital ratio Advanced (Transitional) and the Tier 1 capital ratio Advanced (Transitional) equals Common Equity Tier 1 capital divided by risk-weighted assets (RWAs) and Tier 1 capital divided by RWAs, respectively.
- 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 and related End Notes of the Financial Supplement for additional information related to the calculation of the financial metrics.
11

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

Sept 30, 2014

Quarter Ended
June 30, 2014

Sept 30, 2013

$

$

$

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

1,551
2,448
138
1,124
2,716
373
8,350

1,160
2,259
728
1,079
2,389
225
7,840

(5%)
(3%)
(39%)
(1%)
4%
81%
--

34%
8%
(81%)
4%
14%
66%
7%

Nine Months Ended
Sept 30, 2014
Sept 30, 2013
$

4,492
7,926
724
3,478
7,886
824
25,330$Percentage
Change

3,687
7,847
1,254
3,463
7,139
747
24,137

22%
1%
(42%)
-10%
10%
5%

1,384
827
557
8,907

1,250
983
267
8,608

1,261
1,151
110
7,950

11%
(16%)
109%
3%

10%
(28%)
*
12%

3,977
2,845
1,132
26,462

3,873
3,377
496
24,633

3%
(16%)
128%
7%

4,215

4,200

3,965

--

6%

12,72012,282

4%

349
437
396
160
522
579
2,443

359
458
411
165
532
550
2,475

372
416
404
151
447
831
2,621

(3%)
(5%)
(4%)
(3%)
(2%)
5%
(1%)

(6%)
5%
(2%)
6%
17%
(30%)
(7%)

1,067
1,338
1,231
472
1,506
1,621
7,235

1,123
1,300
1,322
448
1,345
2,052
7,590

(5%)
3%
(7%)
5%
12%
(21%)
(5%)

6,658

6,675

6,586

--

1%

19,95519,872

--

2,249
472
1,777

1,933
15
1,918

1,364
363
1,001

$

17
1,018
0
112
906
26
880

16%
*
(7%)
*
(8%)
-*
(10%)
(19%)
(9%)

65%
30%
78%
*
74%
-(47%)
89%
146%
87%

$

6,507
1,267
5,240
33
5,273
0
156
5,117
199
4,918

$

4,761
1,288
3,473
(33)
3,440
222
370
2,848
229
2,619

37%
(2%)
51%
*
53%
*
(58%)
80%
(13%)
88%

$

889
17
906

(10%)
*
(10%)

93%
*
89%

$

5,084
33
5,117

$

2,881
(33)
2,848

76%
*
80%

$

(5)
1,772
0
59
1,713
64
1,649

$

1,718
(5)
1,713

$

1,633
2,516
227
1,138
2,621
206
8,341

Percentage Change From:
June 30, 2014
Sept 30, 2013

$

(1)
1,917
0
18
1,899
79
1,820

$

1,900
(1)
1,899

$

$

$

$

25%
47%
27%

23%
49%
29%

17%
50%
33%

25%
48%
27%

19%
50%
31%

21.0%

0.8%

26.6%

19.5%

27.1%

Notes: - Pre-tax profit margin and return on average common equity are non-GAAP financial measures that the Firm considers to be a useful measure to assess operating performance.
- Other revenues for the quarter ended September 30, 2014 included a gain of $141 million related to the sale of a retail property space (allocated to the business segments as follows: Institutional Securities:$ 84 million,
Wealth Management: $40 million and Investment Management: $17 million), and a gain related to the sale of TransMontaigne Inc. reported in the Institutional Securities business segment.
- In the quarter ended September 30, 2014, income tax provision / (benefit) from continuing operations included a net discrete tax benefit of $237 million (reported in the Institutional Securities business segment)
primarily associated with the repatriation of non-U.S. earnings at a cost lower than originally estimated.
- In the quarter ended June 30, 2014, income tax provision / (benefit) from continuing operations included a net discrete tax benefit of $609 million (primarily reported in the Institutional Securities business segment)
principally related to the remeasurement of reserves and related interest due to new information regarding the status of a multi-year tax authority examination.
- The quarter ended September 30, 2013 included a discrete net tax benefit of $73 million attributable to tax planning strategies to optimize foreign tax credit utilization in anticipation of the repatriation of earnings
from certain non-U.S. subsidiaries.
12

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

Quarter Ended
Sept 30, 2014

Income (loss) from continuing operations$

Basic EPS Adjustments:
Less: Allocation of earnings to Participating Restricted Stock Units
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders$

Average basic common shares outstanding (millions)

Sept 30, 2013

Nine Months Ended
Sept 30, 2014

Percentage

Sept 30, 2013

Change

1,001

(7%)

78%

3,473

51%

0
112
112

-*
*

-(47%)
(47%)

0
156
156

222
370
592

*
(58%)
(74%)

1,718
62
-

1,900
76
-

889
24
-

(10%)
(18%)
--

93%
158%
--

5,084
192
-

2,881
72
151

76%
167%
*

1,656

1,824

865

(9%)

91%

4,892

2,658

2
863

(33%)
(9%)

-92%

17
0
17
0
17

*
-*
-*

*
-*
-*

880

(9%)

87%

1,909

--

1%

2
1,654

$

$

(5)
0
(5)
0
(5)
$

June 30, 2014

0
18
18

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
Earnings (loss) applicable to Morgan Stanley common shareholders

Sept 30, 2013

0
59
59

1,777

Net income applicable to redeemable noncontrolling interests
Net income applicable to nonredeemable noncontrolling interests
Net income (loss) from continuing operations applicable to noncontrolling interests
Income (loss) from continuing operations applicable to Morgan Stanley
Less: Preferred Dividends
Less: Morgan Stanley Smith Barney Joint Venture Redemption Adjustment
Income (loss) from continuing operations applicable to Morgan Stanley, prior to allocation of income toParticipating Restricted Stock Units

Percentage Change From:

June 30, 2014

1,649

1,918

3
1,821

$

$

(1)
0
(1)
0
(1)
$

1,923

1,820

$

1,928

$

$

5,240

7
4,885

$

$

33
0
33
0
33
$

4,918

6
2,652
(33)
0
(33)
0
(33)

$

1,925

84%

17%
84%
*
-*
-*

2,619

88%

1,906

1%

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

$
$
$

0.86
0.86

$
$
$

0.94
0.94

$
$
$

0.45
0.01
0.46

(9%)
-(9%)

91%
*
87%

$
$
$

2.54
0.01
2.55

$
$
$

1.39
(0.02)
1.37

83%
*
86%

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

$

1,654

$

1,821

$

863

(9%)

92%

$

4,885

$

2,652

84%

17

*

*

880

(9%)

87%

1,965

--

--

0.44
0.01
0.45

(9%)
-(9%)

91%
*
87%

Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders
Earnings (loss) applicable to Morgan Stanley common shareholders(5)$

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

1,649

(1)
$

1,971

$
$
$

0.84
0.84

1,820

$

1,969

$
$
$

0.92
0.92

$
$
$

33
$

4,918

(33)
$

1,970

$
$
$

2.48
0.02
2.50

$
$
$

2,619

88%

1,952

1%

1.36
(0.02)
1.34

82%
*
87%

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 13 of the Financial Supplement and Note 15 to theconsolidated financial statements in the Firm's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.

13*