Subsequent to the release of Morgan Stanley’s fourth quarter earnings
on January 18, 2018, the Firm’s results have been updated to reflect thelatest financial figures reported in the Firm’s Annual Report on Form
10-K for the year ended December 31, 2017. For updated information,refer to the Firm’s 4Q 2017 financial supplement and 2017 Form 10-K.

Morgan Stanley Reports Fourth Quarter and Full Year 2017•

Fourth Quarter Net Revenues of $9.5 Billion;
Earnings per Diluted Share of $0.29•

Full Year Net Revenues of $37.9 Billion;
Earnings per Diluted Share of $3.09•

Excluding the Net Discrete Tax Provision of$1.0 Billion, Earnings per Diluted Share of $0.841,2•

Full Year Earnings per Diluted Share of $3.60
Excluding the Net Discrete Tax Provision1,2•

Investment Banking Ranked #1 in Global IPOs andGlobal Equity; Continued Strength in Equity Sales
and Trading3•

Full Year Results Reflect Revenue and Pre-Tax
Income Growth Across All Segments•

Full Year Return on Equity of 8.1%, or 9.4%
Excluding the Impact of Net Discrete Tax
Provision1,5•

Record Quarterly Wealth Management Revenues
of $4.4 Billion; Pre-Tax Margin of 26%1,4James P. Gorman, Chairman and Chief Executive Officer, said, “Over the course of the full year we achieved thestrategic objectives outlined two years ago. In 2017, pre-tax earnings grew by 18%, driven by a 10% increase inrevenues, with growth across all our business segments. This, coupled with strong expense discipline demonstrates
the Firm’s operating leverage. We enter 2018 with strong momentum aided by rising interest rates, tax reform and an
evolving regulatory framework.”

Financial Overview
NEW YORK, January 18, 2018 – Morgan Stanley (NYSE: MS) today reported net revenues of $9.5 billion for the
fourth quarter ended December 31, 2017 compared with $9.0 billion a year ago. For the current quarter, net income
applicable to Morgan Stanley was $686 million, or $0.29 per diluted share.2,6 Results for the current quarter included a
net discrete tax provision of $990 million or a loss of $0.55 per diluted share as described below.2 Excluding net
discrete tax items, net income applicable to Morgan Stanley was $1.7 billion, or $0.84 per diluted share compared with
net income of $1.5 billion, or $0.74 per diluted share, for the same period a year ago.2,6
In the current quarter, the Firm recorded a net discrete tax provision of $990 million, comprised of an approximate $1.2
billion net discrete tax provision as a result of the enactment of the Tax Cuts and Jobs Act (“Tax Act”), primarily fromthe remeasurement of certain net deferred tax assets using the lower enacted corporate tax rate, partially offset by anapproximate $168 million net discrete tax benefit primarily associated with the remeasurement of reserves and related
interest relating to the status of multi-year Internal Revenue Service tax examinations. 7Compensation expense of $4.3 billion increased from $4.1 billion a year ago on higher revenues. Non-compensation
expenses of $2.8 billion compared with $2.7 billion a year ago. The Firm’s expense efficiency ratio for the current
quarter was 74%.8
The annualized return on average common equity in the current quarter was 2.9 percent, or 8.6 percent excluding theimpact of the net discrete tax provision.5

Summary of Firm Results
MS Net Income ($mm)9
As Reported
4Q17
FY17

Adjusted$686$6,154EPS(a)

As Reported

ROE
Adjusted(a)

As Reported

Adjusted(a)$1,676

$0.29

$0.84

2.9%

8.6%

$7,079

$3.09

$3.60

8.1%

9.4%

(a) Results adjusted to exclude the fourth quarter net discrete tax provision that resulted from the Tax Act and other intermittent
2,5,7,10
discrete tax benefits.

Media Relations: Michele Davis 212-761-9621

Investor Relations: Sharon Yeshaya 212-761-1632

Business Highlights

Summary of Segment Results(dollars in millions)
Net Revenues

Pre-Tax Income

11

4Q 2017 4Q 2016 4Q 2017 4Q 2016
Institutional Securities$4,523$4,614$1,235$1,326

Wealth Management$4,407$3,990$1,150

$891

$637

$500

$80

$28

$9,500$9,021$2,471$2,246

Investment Management
Firm• Institutional Securities net revenues were $4.5
billion reflecting strength in both underwriting andequity sales and trading, with lower results in fixedincome sales and trading.
• Wealth Management net revenues were $4.4 billion
and pre-tax margin was 26%.4 Fee-based asset
flows for the quarter were a record $20.9 billion.
•

Investment Management net revenues were $637
million. Assets under management were $482
billion and reflect positive net flows of $23.9 billion.

Institutional Securities
Institutional Securities reported pre-tax income from continuing operations of $1.2 billion compared with pretax income of $1.3 billion a year ago. Net revenues for the current quarter were $4.5 billion compared with
$4.6 billion a year ago.
••

Investment Banking revenues of $1.4 billion increased from $1.3 billion a year ago:

Advisory revenues of $522 million decreased from $628 million a year ago on lower levels ofcompleted M&A activity.



Equity underwriting revenues of $416 million increased from $225 million in the prior year quarter
driven by higher revenues on IPOs and follow-on offerings.

Fixed income underwriting revenues of $499 million increased from $421 million in the prior year
quarter reflecting higher non-investment grade loan fees.

Sales and Trading net revenues of $2.7 billion decreased from $3.2 billion a year ago:

Equity sales and trading net revenues of $1.9 billion decreased from $2.0 billion a year ago reflecting
lower revenues in execution services driven by a decline in derivatives, partially offset by increases in
the financing business.

Fixed Income sales and trading net revenues of $808 million decreased from $1.5 billion a year ago
primarily driven by lower results in rates and foreign exchange, partially offset by increases in credit
products. Results in the prior year quarter reflected improved market conditions following the U.S.
elections.



Other sales and trading net losses of $43 million compared with net losses of $234 million in the prioryear period reflecting lower funding and liquidity costs and lower losses associated with corporate loan
hedging activity.

•

Investment revenues of $213 million increased from $3 million a year ago reflecting an increase in thevalue of Institutional Securities’ business-related investments.

•

Compensation expense of $1.6 billion and non-compensation expenses of $1.7 billion for the current
quarter were relatively unchanged from a year ago.

Morgan Stanley’s average trading Value-at-Risk (VaR) measured at the 95% confidence level was $38 million
compared with $43 million from the third quarter of 2017 and $39 million in the fourth quarter of the prioryear.122

Wealth Management
Wealth Management reported pre-tax income from continuing operations of $1.2 billion compared with $891
million in the fourth quarter of last year. The quarter’s pre-tax margin was 26%.4 Net revenues for the current
quarter were $4.4 billion compared with $4.0 billion a year ago.
•

Asset management revenues of $2.5 billion increased from $2.2 billion a year ago reflecting higher asset
levels and positive flows.

•

Transactional revenues13 of $790 million increased from $774 million a year ago primarily reflecting gains
on investments associated with certain employee deferred compensation plans, partially offset by lower
fixed income revenues.

•

Net interest income of $1.1 billion increased from $984 million a year ago driven by growth in bank lending
and higher interest rates. Wealth Management client liabilities were $80 billion at quarter end comparedwith $73 billion in the prior year quarter.14•

Compensation expense for the current quarter of $2.4 billion increased from $2.2 billion a year ago
primarily driven by higher revenues. Non-compensation expenses of $837 million decreased from $876
million a year ago. Results for the prior year quarter included a provision in connection with the reportingof incorrect cost basis tax information to the Internal Revenue Service and retail brokerage clients.

Total client assets were $2.4 trillion and client assets in fee-based accounts were $1.0 trillion at the end of thequarter. Fee-based asset flows for the quarter were $20.9 billion.
Wealth Management representatives of 15,712 produced average annualized revenue per representative of$1.1 million in the current quarter.15

Investment Management
Investment Management reported pre-tax income from continuing operations of $80 million compared with $28
million in the fourth quarter of last year. Net revenues of $637 million increased from $500 million in the prior
year.
•

Asset management revenues of $572 million increased from $512 million in the prior year quarter onhigher levels of assets under management.

•

Investment revenues of $112 million compared with investment losses of $24 million in the prior year
quarter. Results for the prior year quarter included sales and markdowns of legacy assets.

•

Other revenues were a loss of $46 million compared with revenue of $3 million in the prior year reflecting
an impairment of Investment Management’s non-controlling interest in a third party asset manager.

•

Compensation expense for the current quarter of $303 million increased from $249 million a year ago
principally due to an increase in deferred compensation associated with carried interest. Noncompensation expenses of $254 million increased from $223 million a year ago on higher brokerage andclearing expenses.

•

Assets under management or supervision at December 31, 2017 were $482 billion compared with $417
billion a year ago.

3

FULL YEAR RESULTS
Full year net revenues were $37.9 billion compared with $34.6 billion a year ago. Net income applicable toMorgan Stanley for the current year was $6.2 billion, or $3.09 per diluted share.2,6 Results for the current year
included a net discrete tax provision of $925 million or a loss of $0.51 per diluted share as described below.2
Excluding net discrete tax items, net income applicable to Morgan Stanley was $7.1 billion, or $3.60 per
diluted share compared with net income of $5.9 billion, or $2.88 per diluted share, a year ago.2,6
For the current year, the Firm recorded a net discrete tax provision of approximately $925 million, comprised ofan approximate $1.2 billion net discrete tax provision as a result of the enactment of the Tax Act, primarily
from the remeasurement of certain net deferred tax assets using the lower enacted corporate tax rate, partially
offset by an approximate $233 million net discrete tax benefit primarily associated with the remeasurement ofreserves and related interest relating to the status of multi-year Internal Revenue Service tax examinations.7
The Firm’s compensation expense of $17.2 billion for the current year increased from $15.9 billion a year ago.
Non-compensation expenses of $10.4 billion compared with $9.9 billion a year ago. The Firm’s expense
efficiency ratio for the full year was 73%.8
The return on average common equity in the current year was 8.1 percent or 9.4 percent excluding the impactof the net discrete tax provision for the full year ended 2017.5

Full Year Summary of Segment Results(dollars in millions)

Net Revenues
FY 2017

FY 2016

Pre-Tax Income11
FY 2017

FY 2016

Institutional Securities$18,813$17,459$5,644$5,123

Wealth Management$16,836$15,350$4,299$3,437

Investment Management$2,586$2,112

$456

$287

Firm

$37,945$34,631$10,403$8,848Institutional Securities
Institutional Securities reported pre-tax income from continuing operations of $5.6 billion compared with $5.1
billion a year ago. Net revenues for the current year were $18.8 billion compared with $17.5 billion a year ago.
Compensation expense of $6.6 billion increased from $6.3 billion a year ago on higher revenues. The
compensation to net revenue ratio for the current year was 35%. Non-compensation expenses of $6.5 billion
compared with $6.1 billion a year ago.

Wealth Management
Wealth Management reported pre-tax income from continuing operations of $4.3 billion compared with $3.4
billion a year ago. Net revenues for the current year were $16.8 billion compared with $15.4 billion a year ago.
The current year’s pre-tax margin was 25.5%.4 Compensation expense was $9.4 billion compared with $8.7
billion a year ago. The compensation to net revenue ratio for the current year was 56%. Non-compensation
expenses of $3.2 billion for the current year were relatively unchanged from a year ago.

Investment Management
Investment Management reported pre-tax income from continuing operations of $456 million compared with
$287 million a year ago. Net revenues of $2.6 billion increased from $2.1 billion a year ago. Compensation
expense was $1.2 billion compared with $937 million a year ago. Non-compensation expenses of $949 million
compared with $888 million a year ago.

4

Capital
As of December 31, 2017, the Firm’s Common Equity Tier 1 and Tier 1 risk-based capital ratios underStandardized Approach transitional provisions were approximately 16.5% and 18.9%, respectively.16
As of December 31, 2017, the Firm estimates its pro forma fully phased-in Common Equity Tier 1 risk-based
capital ratio under the Standardized Approach and pro forma fully phased-in Supplementary Leverage Ratio tobe approximately 16.0% and 6.4%, respectively.16,17,18
At December 31, 2017, book value and tangible book value per common share were $38.54 and $33.48,19
respectively, based on approximately 1.8 billion shares outstanding.

Other Matters
The effective tax rate from continuing operations for the quarter was 71.5%, or 31.4% excluding the impact of
the net discrete tax provision.10,20 The effective tax rate from continuing operations for the full year was 39.7%,
or 30.8% excluding the impact of the net discrete tax provision.10,20
During the quarter ended December 31, 2017, the Firm repurchased approximately $1.25 billion of its common
stock or approximately 25 million shares. During the year ended December 31, 2017, the Firm repurchased$3.75 billion of its common stock or approximately 80 million shares.
The Board of Directors declared a $0.25 quarterly dividend per share, payable on February 15, 2018 tocommon shareholders of record on January 31, 2018.

5

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 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 releaseand the Financial Supplement are available online in the Investor Relations section atwww.morganstanley.com.

###(See Attached Schedules)

NOTICE:The information provided herein and in the financial supplement may include certain non-GAAP financial
measures. The definition of such measures or reconciliation of such metrics 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 andother targets, 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 anduncertainties that may cause actual results to differ materially. For a discussion of risks and uncertainties that
may affect the future results of the Firm, 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 and Qualitative Disclosures about Market Risk” inPart II, Item 7A in the Firm’s Annual Report on Form 10-K for the year ended December 31, 2016 and otheritems 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.

6

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 andotherwise. The Securities and Exchange Commission defines a “non-GAAP financial measure” as a numericalmeasure of historical or future financial performance, financial positions, or cash flows that is subject toadjustments that effectively exclude, or include amounts from the most directly comparable measurecalculated and presented in accordance with U.S. GAAP. Non-GAAP financial measures disclosed by Morgan
Stanley are provided as additional information to investors and analysts in order to provide them with greatertransparency about, or an alternative method for assessing, our financial condition, operating results, orprospective regulatory capital requirements. 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 othercompanies. Whenever we refer to a non-GAAP financial measure, we will also generally define it or present
the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP,
along with a reconciliation of the differences between the non-GAAP financial measure we reference and suchcomparable U.S. GAAP financial measure.

2

Net income (loss) applicable to Morgan Stanley and earnings (loss) per diluted share, excluding intermittent
net discrete tax items are non-GAAP financial measures that the Firm considers useful for investors to allow
better comparability of operating performance. The 2017 intermittent net discrete tax provision adjustment iscomprised of an approximate $1.2 billion net discrete tax provision as a result of the enactment of the Tax Act,
partially offset by a net discrete tax benefit of $168 million for the quarter and $233 million for the full year,
primarily associated with the remeasurement of reserves and related interest relating to the status of multiyear Internal Revenue Service (IRS) tax examinations. The 2017 intermittent net discrete tax provisionadjustment does not include the recurring-type discrete tax benefit associated with the accounting guidance
related to employee share-based payments (refer to footnote 10). The fourth quarter and full year of 2016reflected a net discrete tax benefit of $135 million and $68 million, respectively, also related to theremeasurement of reserves and related interest due to new information regarding the status of a multi-year
IRS tax examination. The reconciliation of these financial measures from a reported to adjusted basis are as
follows (net income and number of shares are presented in millions):

3

4Q 2017

4Q 2016

FY 2017

FY 2016

Net income (loss) applicable to MS
Impact of Net Discrete Tax Items
Net income (loss) applicable to MS - Adjusted$686$(990)$1,676$1,666$135$1,531$6,154$(925)$7,079$5,979$68$5,911

Earnings (loss) per diluted share
Impact of Net Discrete Tax Items
Earnings (loss) per diluted share - Adjusted$0.29$(0.55)
$0.84

$0.81
$0.07
$0.74

$3.09
$(0.51)
$3.60

$2.92
$0.04
$2.88

Average diluted shares

1,796

1,853

1,821

1,887

Source: Thomson Reuters – for the period of January 1, 2017 to December 31, 2017 as of January 2, 2018.

4

Pre-tax margin is a non-GAAP financial measure that the Firm considers useful for investors and analysts toassess operating performance. Pre-tax margin represents income (loss) from continuing operations before
taxes divided by net revenues.

7

5

Annualized return on average common equity and return on average common equity are non-GAAP financial
measures that the Firm considers useful for investors and analysts to allow better comparability of period-toperiod operating performance. The calculation of return on average common equity uses annualized net
income for the quarter or full year net income applicable to Morgan Stanley less preferred dividends as apercentage of average common equity. To determine the ROE, excluding the impact of the net discrete tax
provision, both the numerator and denominator were adjusted to exclude the impact of those items:

ROE
Impact of Net Discrete Tax Provision
ROE - Adjusted

4Q 2017

FY 2017

2.9%

8.1%

(5.7%)
8.6%(1.3%)
9.4%

6

Includes preferred dividends and other adjustments related to the calculation of earnings per share for the
fourth quarter of 2017 and 2016 of approximately $170 million and $157 million, respectively. Includes
preferred dividends and other adjustments related to the calculation of earnings per share for the years ended
2017 and 2016 of approximately $523 million and $471 million, respectively.

7

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted that significantly revises U.S.
corporate income tax law by, among other things, reducing the corporate income tax rate to 21% andimplementing a modified territorial tax system, that includes a one-time transition tax on deemed repatriatedearnings of foreign subsidiaries. The estimated enactment net discrete tax provision incorporates
assumptions made based upon the Firm’s current interpretation of the Tax Act, and may change as it receives
additional clarification and implementation guidance and as the interpretation of the Tax Act evolves over
time.

8

The Firm Expense Efficiency Ratio is a non-GAAP financial measure that the Firm considers useful forinvestors and analysts to assess operating performance. The Firm Expense Efficiency Ratio represents total
non-interest expenses as a percentage of net revenues.

9

Morgan Stanley net income represents net income (loss) applicable to Morgan Stanley adjusted for net
income (loss) applicable to noncontrolling interests.
10

Effective January 1, 2017, the Firm adopted new accounting guidance related to employee share-based
payments whereby the income tax consequences related to share-based payments are required to berecognized in Provision for income taxes in the consolidated income statement instead of additional paid-in
capital. The impact of the income tax consequences may be either a benefit or a provision. Conversion of
employee share-based awards to Firm shares will primarily occur in the first quarter of each year. The impactof recognizing excess tax benefits upon conversion of awards was a benefit of $16 million in the fourth quarterof 2017 and a benefit of $155 million in the full year 2017 recorded to the Provision for income taxes. Resultsfor 2016 have not been restated pursuant to the guidance.
11

Pre-tax income represents income (loss) from continuing operations before taxes.

12

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 the calculation of VaR and the limitations of the Firm’s VaR methodology isdisclosed in Part II, Item 7A “Quantitative and Qualitative Disclosures about Market Risk” included in the
Annual Report on Form 10-K for the year ended December 31, 2016 (“2016 Form 10-K”). Refer to page 7 ofMorgan Stanley’s Financial Supplement accompanying this release for the VaR disclosure.

813Transactional revenues include investment banking, trading, and commissions and fee revenues.

14

Wealth Management client liabilities reflect U.S. Bank Subsidiaries’ lending and broker dealer margin
activity.
15

Annualized revenue per Wealth Management representative is defined as annualized revenue divided byaverage representative headcount.
16

The Firm’s risk-based capital ratios for purposes of determining regulatory compliance are the lower of thecapital ratios computed under the (i) standardized approaches for calculating credit risk risk-weighted assets(RWAs) and market risk RWAs (the “Standardized Approach”); and (ii) applicable advanced approaches forcalculating credit risk, market risk and operational risk RWAs (the “Advanced Approach”). At December 31,
2017, the Firm’s ratio is based on the Standardized Approach transitional rules. For information on thecalculation of regulatory capital and ratios for prior periods, please refer to Part II, Item 7 “Liquidity and Capital
Resources – Regulatory Requirements” in the Firm’s 2016 10-K and Part I, Item 2 “Liquidity and Capital
Resources – Regulatory Requirements” in the Firm’s 10-Q for the quarter ended September 30, 2017.
17

The pro forma fully phased-in Common Equity Tier 1 risk-based capital ratio and pro forma fully phased-in
Supplementary Leverage Ratio are non-GAAP financial measures that the Firm considers to be usefulmeasures for investors and analysts to evaluate compliance with new regulatory capital requirements thathave not yet become effective.
18

The Firm is required to disclose information related to its supplementary leverage ratio, which through theend of 2017 included the effects of transitional provisions. The supplementary leverage ratio will become
effective as a capital standard on January 1, 2018. Specifically, beginning on January 1, 2018, the Firm must
maintain a Tier 1 supplementary leverage capital buffer of at least 2% in addition to the 3% minimum
supplementary leverage ratio (for a total of at least 5%), in order to avoid limitations on capital distributions,
including dividends and stock repurchases, and discretionary bonus payments to executive officers. The
Firm’s pro forma Supplementary Leverage Ratio estimate utilizes a fully phased-in Tier 1 capital numerator of
approximately $69.0 billion and a fully phased-in supplementary leverage exposure denominator of
approximately $1.08 trillion. The Firm’s estimates are subject to risks and uncertainties that may cause actual
results to differ materially from estimates based on these regulations. Further, these expectations should not
be taken as projections of what the Firm’s supplementary leverage ratios or earnings, assets or exposures will
actually be at future dates. See “Risk Factors” in Part I, Item 1A in the 2016 Form 10-K for a discussion ofrisks and uncertainties that may affect the future results of the Firm.

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 for investors and analysts. Tangible common
equity equals common equity less goodwill and intangible 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.

20

The reconciliation of the effective tax rate from continuing operations excluding the intermittent net discrete
tax provision is as follows:

Effective Tax Rate
Impact of Net Discrete Tax Provision
Effective Tax Rate - Adjusted

4Q 2017

FY 2017

71.5%

39.7%

(40.1%)
31.4%(8.9%)
30.8%

9

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

Net revenues
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Net revenues
Income (loss) from continuing operations before tax
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Income (loss) from continuing operations before tax
Net Income (loss) applicable to Morgan Stanley
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Net Income (loss) applicable to Morgan Stanley
Earnings (loss) applicable to Morgan Stanley common shareholders

Dec 31, 2017

Quarter Ended
Sept 30, 2017 Dec 31, 2016

$

4,523
4,407
637
(67)
9,500

$

1,235
1,150
80
6
2,471

$

$

$

312
404
(36)
6
686

$

$
$
$

$

$

$

$

$

4,376
4,220
675
(74)
9,197

$

$

Percentage Change From:
Sept 30, 2017 Dec 31, 2016

4,614
3,990
500
(83)
9,021

3%
4%
(6%)
9%
3%

(2%)
10%
27%
19%
5%

1,326
891
28
1
2,246

‐‐
3%
(39%)
*
‐‐

(7%)
29%
186%
*
10%

$

(68%)
(42%)
*
*
(61%)

(72%)
(24%)
*
*
(59%)

$

1,236
1,119
131
(4)
2,482

$

$

$

973
698
114
(4)
1,781

$

1,104
531
30
1
1,666

516

$

1,688

$

1,509

(69%)

0.29
0.29
0.84

$
$
$

0.95
0.93
0.88

$
$
$

0.84
0.81
0.74

(69%)
(69%)
(5%)

$

$

Twelve Months Ended
Dec 31, 2017 Dec 31, 2016$$

18,813
16,8362,586(290)
37,945$$Percentage
Change17,45915,3502,112(290)
34,631

8%
10%
22%
‐‐
10%

5,123
3,437
287
1
8,848

10%
25%
59%
*
18%

(4%)
15%
9%
*
3%

5,644
4,299
456
4
10,403

$

$

$

3,491
2,414
245
4
6,154

$

3,649
2,104
225
1
5,979

(66%)

$

5,631

$

5,508

2%

(65%)
(64%)
14%

$
$
$

3.16
3.09
3.60

$
$
$

2.98
2.92
2.88

6%
6%
25%

$

$

Financial Metrics:
Earnings per basic share
Earnings per diluted share
Earnings per diluted share excluding net discrete tax provision / benefit
Return on average common equity
Return on average common equity excluding net discrete tax provision / benefit
Book value per common share
Tangible book value per common share

2.9%
8.6%
$
$

38.54
33.48

9.6%
9.1%
$
$

38.87
33.86

8.7%
8.0%
$
$

36.99
31.98

8.1%
9.4%
$
$

38.54
33.48

8.0%
7.9%
$
$

36.99
31.98

Note ‐ Refer to End Notes, Definition of U.S. GAAP to Non‐GAAP Measures and Definition of Performance Metrics on pages 13 ‐ 16 from the Financial Supplement for additional information related to the calculation of thefinancial metrics.
10

Consolidated Income Statement Information(unaudited, dollars in millions)

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

Dec 31, 2017

Quarter Ended
Sept 30, 2017 Dec 31, 2016

$

$

1,548
2,246
325
1,064
3,102
220
8,505

1,380
2,704
167
937
3,026
200
8,414

$

Percentage Change From:
Sept 30, 2017 Dec 31, 2016

1,377
2,789
(19)
1,043
2,754
194
8,138

12%
(17%)
95%
14%
3%
10%
1%

12%
(19%)
*
2%
13%
13%
5%

Twelve Months Ended
Dec 31, 2017 Dec 31, 2016$

6,003
11,116820
4,061
11,797848
34,645$Percentage
Change4,933
10,209160
4,109
10,697825
30,933

22%
9%
*
(1%)
10%
3%
12%

Interest income
Interest expense
Net interest
Net revenues

2,586
1,591
995
9,500

2,340
1,557
783
9,197

1,868
985
883
9,021

11%
2%
27%
3%

38%
62%
13%
5%

8,997
5,697
3,300
37,945

7,016
3,318
3,698
34,631

28%
72%
(11%)
10%

Non‐interest expenses:
Compensation and benefits

4,279

4,169

4,083

3%

5%

17,166

15,8788%

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

339
537
471
190
547
666
2,750

330
522
459
128
534
573
2,546

311
480
460
169
578
694
2,692

3%
3%
3%
48%
2%
16%
8%

9%
12%
2%
12%
(5%)
(4%)
2%

1,329
2,093
1,791
609
2,169
2,385
10,376

1,308
1,920
1,787
587
2,128
2,175
9,905

2%
9%
‐‐
4%
2%
10%
5%

7,029

6,715

6,775

5%

4%

27,54225,783

7%

2,471
1,767
704
2
706
20
686
170
516

2,482
697
1,785
6
1,791
10
1,781
93
1,688

2,246
566
1,680
0
1,680
14
1,666
157
1,509

‐‐
154%
(61%)
(67%)
(61%)
100%
(61%)
83%
(69%)

10%
*
(58%)
*
(58%)
43%
(59%)
8%
(66%)

10,403
4,125
6,278
(19)
6,259
105
6,154
523
5,631

8,848
2,726
6,122
1
6,123
144
5,979
471
5,508

18%
51%
3%
*
2%
(27%)
3%
11%
2%

Total non‐interest expenses
Income (loss) from continuing operations before taxes
Income tax provision / (benefit) from continuing operations
Income (loss) from continuing operations
Gain (loss) from discontinued operations after tax
Net income (loss)
Net income applicable to nonredeemable noncontrolling interests
Net income (loss) applicable to Morgan Stanley
Preferred stock dividend / Other
Earnings (loss) applicable to Morgan Stanley common shareholders
Pre‐tax profit margin
Compensation and benefits as a % of net revenues
Non‐compensation expenses as a % of net revenues
Firm expense efficiency ratio
Effective tax rate from continuing operations

$

$

$

$

$

$

$

$

$

$

26%
45%
29%
74%

27%
45%
28%
73%

25%
45%
30%
75%

27%
45%
27%
73%

26%
46%
29%
74%

71.5%

28.1%

25.2%

39.7%

30.8%

Notes: ‐ Refer to End Notes, Definition of U.S. GAAP to Non‐GAAP Measures and Definition of Performance Metrics on pages 13 ‐ 16 from the Financial Supplement for additional information.
11