Media Relations: Michele Davis 212-761-9621

Investor Relations: Celeste Mellet Brown 212-761-3896

Morgan Stanley Reports Second Quarter 2013:


Net Revenues of $8.5 Billion Included the Positive Impact of $175 Million from the
Widening of Morgan Stanley’s Debt-Related Credit Spreads (DVA);1 Excluding
DVA, Net Revenues were $8.3 Billion2

Earnings per Diluted Share from Continuing Operations of $0.43; Excluding DVA,
$0.37 per Diluted Share;3 Earnings per Share Amounts Included a Negative
Adjustment of $0.08 per Diluted Share Related to the Acquisition of the Remaining
35% Stake in the Morgan Stanley Smith Barney Joint Venture4

Strong Performance in Equity Sales & Trading; Investment Banking Ranked #2 in
Global Completed M&A and Global IPOs;5 Wealth Management6 Pre-Tax Marginof 18.5%, Highest Since the Inception of the Joint Venture7

Firm to Commence $500 Million Share Repurchase

Acquisition of the Remaining 35% Stake in Morgan Stanley Smith Barney Joint
Venture was Completed in June8

NEW YORK, July 18, 2013 – Morgan Stanley (NYSE: MS) today reported net revenues of $8.5 billion for thesecond quarter ended June 30, 2013 compared with $6.9 billion a year ago. For the current quarter, income
from continuing operations applicable to Morgan Stanley was $1.0 billion, or $0.43 per diluted share,9compared with income of $562 million, or $0.28 per diluted share,9 for the same period a year ago. The
earnings per share calculation for the current quarter included a negative adjustment of approximately $152
million, or $0.08 per diluted share, related to the previously announced purchase of the remaining interest in theMorgan Stanley Smith Barney Joint Venture.4
Results for the current quarter included positive revenue related to changes in Morgan Stanley’s debt-related
credit spreads and other credit factors (Debt Valuation Adjustment, DVA)1 of $175 million, compared with$350 million a year ago.
Excluding DVA, net revenues for the current quarter were $8.3 billion compared with $6.6 billion a year ago
and income from continuing operations applicable to Morgan Stanley was $898 million, or $0.37 per diluted
share, compared with income of $337 million, or $0.16 per diluted share, a year ago.3, 10 Earnings per diluted
share in the current quarter included the negative adjustment related to the Morgan Stanley Smith Barney Joint
Venture acquisition.9
Compensation expense of $4.1 billion increased from $3.6 billion a year ago on higher revenues. Noncompensation expenses of $2.6 billion increased from $2.4 billion in the prior year reflecting increased litigation
costs and higher volume driven expenses.
For the current quarter, net income applicable to Morgan Stanley, including discontinued operations, was $0.41
per diluted share, compared with income of $0.29 per diluted share in the second quarter of 2012.9

1

Summary of Firm Results(dollars in millions)Excluding DVA10As Reported
Net
Revenues

MS IncomeCont. Ops.

Net
Revenues

MS IncomeCont. Ops.

2Q 2013$8,503$1,009$8,328$898

1Q 2013$8,158$981$8,475$1,182

2Q 2012$6,942$562$6,592$337

Business Overview
Institutional Securities net revenues excluding DVA11 were $4.2 billion reflecting strength in Equity sales
and trading and Investment Banking, and improved results in Fixed Income & Commodities sales andtrading.



Wealth Management net revenues were $3.5 billion and pre-tax margin was 18.5%.7 Fee based asset flows
for the quarter were $10.0 billion and total client assets were $1.8 trillion at quarter end.



Investment Management6 reported net revenues of $673 million with assets under management or
supervision of $347 billion.

James P. Gorman, Chairman and Chief Executive Officer, said, “This quarter, we saw significant year-over-year
revenue growth in each of our five major business units and higher year-over-year profitability. Of particularnote, Equity sales and trading results were strong across all products and regions, while Investment Banking
delivered top-three rankings in announced and completed M&A, global equity offerings and global IPOs. In
addition, we look forward to the full benefits of the recently completed Wealth Management acquisition. We
continue to work as one firm to realize the advantages specific to our business model.”2

Summary of Institutional Securities Results(dollars in millions)
As Reported
Net
Pre-Tax
Revenues
IncomeExcluding DVA11Net
Pre-Tax
Revenues
Income2Q 2013$4,346$960$4,171$785

1Q 2013$4,089$798$4,406$1,115

2Q 2012$3,332$488$2,982$138

INSTITUTIONAL SECURITIESInstitutional Securities reported pre-tax income from continuing operations of $960 million compared with pretax income of $488 million in the second quarter of last year. Net revenues for the current quarter were $4.3
billion compared with $3.3 billion a year ago. DVA resulted in positive revenue of $175 million in the current
quarter compared with $350 million a year ago. Excluding DVA, net revenues for the current quarter were $4.2
billion compared with $3.0 billion a year ago.11 Income after the noncontrolling interest allocation and before
taxes was $870 million.12 The following discussion for sales and trading excludes DVA.


Advisory revenues were $333 million compared with $263 million a year ago reflecting higher levels ofcompleted activity. Equity underwriting revenues of $327 million increased from $283 million a year ago
reflecting higher market volume. Fixed income underwriting revenues were $418 million compared with$338 million a year ago reflecting a more favorable debt underwriting environment.



Fixed Income & Commodities sales and trading net revenues were $1.2 billion compared with $771 million ayear ago reflecting higher revenues in foreign exchange and commodities.13 The prior year quarter was also
negatively impacted by period specific charges representing credit valuation allowances and other related
adjustments.

Equity sales and trading net revenues of $1.8 billion increased from $1.3 billion in the prior year quarterreflecting strong performance across all products and regions.13



Other revenues were $140 million compared with $41 million in the second quarter of last year, principally
driven by strength in our Japanese securities joint venture, Mitsubishi UFJ Morgan Stanley Securities Co.,Ltd.



Compensation expense for the current quarter of $1.8 billion compared with $1.5 billion in the prior year
quarter driven by higher revenues. Non-compensation expenses of $1.6 billion increased from $1.3 billion ayear ago reflecting increased litigation costs and higher volume driven expenses.

Morgan Stanley’s average trading Value-at-Risk (VaR) measured at the 95% confidence level was $61
million compared with $72 million in the first quarter of 2013 and $76 million in the second quarter of theprior year.14

3

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

Pre-Tax
Income2Q 2013$3,531$655

1Q 2013$3,470$597

2Q 2012$3,196$410

WEALTH MANAGEMENT
Wealth Management reported pre-tax income from continuing operations of $655 million compared with $410
million in the second quarter of last year. The quarter’s pre-tax margin was 18.5%.7 Net revenues for the current
quarter were $3.5 billion compared with $3.2 billion a year ago. Income after the noncontrolling interest
allocation to Citigroup Inc. (Citi) and before taxes was $555 million.8


Asset management fee revenues of $1.9 billion increased 4% from last year’s second quarter primarilyreflecting an increase in fee based assets.

Transactional revenues15 of $1.0 billion increased from $908 million a year ago reflecting increased
commissions and fees and higher trading and investment banking revenues.

Compensation expense for the current quarter was $2.0 billion compared with $1.9 billion a year ago on
higher revenues. Non-compensation expenses of $834 million decreased from $875 million a year ago driven
by the absence of platform integration costs.



Total client assets were $1.8 trillion at quarter end. Client assets in fee based accounts were $629 billion, or
35% of total client assets. Fee based asset flows for the quarter were $10.0 billion.



Wealth Management representatives of 16,321 declined from 16,478 as of June 30, 2012. Averageannualized revenue per representative of $866,000 and total client assets per representative of $109 million
increased 12% and 10%, respectively, compared with the prior year quarter.

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

Pre-Tax
Income2Q 2013

$673

$160

1Q 2013

$645

$187

2Q 2012$456$43

INVESTMENT MANAGEMENT
Investment Management reported pre-tax income from continuing operations of $160 million compared with pretax income of $43 million in last year’s second quarter.16 The quarter’s pre-tax margin was 24%.7 Income after
the noncontrolling interest allocation and before taxes was $139 million.

4

Net revenues of $673 million increased from $456 million in the prior year primarily reflecting gains on
investments in the Merchant Banking business compared with prior year losses, and higher results in the
Traditional Asset Management business.17

Compensation expense for the current quarter of $297 million increased from $214 million a year ago on
higher revenues. Non-compensation expenses of $216 million increased from $199 million a year ago
primarily on higher revenue related expenses.



Assets under management or supervision at June 30, 2013 of $347 billion increased from $311 billion a year
ago primarily reflecting positive flows and market appreciation. The business recorded positive net flows of$9.8 billion in the current quarter.

CAPITAL
Morgan Stanley’s Tier 1 capital ratio under Basel I was approximately 14.1% and Tier 1 common ratio wasapproximately 11.8% at June 30, 2013.18
At June 30, 2013, book value and tangible book value per common share were $31.48 and $26.27,19 respectively,
based on approximately 2.0 billion shares outstanding. Tangible book value per common share reflected a
reduction of approximately $1.49 related to the increased 35% ownership interest in the Morgan Stanley Smith
Barney Joint Venture.

OTHER MATTERS
The Firm has received no objection from the Federal Reserve Board to repurchase up to $500 million of the
Firm’s outstanding common stock under rules permitting annual capital distributions (12 CFR 225.8, Capital
Planning). Share repurchases will be made pursuant to the share repurchase program previously authorized by
the Firm’s Board of Directors and will be exercised from time to time through March 31, 2014, at prices the Firm
deems appropriate subject to various factors, including the Firm’s capital position and market conditions. The
share repurchases may be effected through open market purchases or privately negotiated transactions, including
through Rule 10b5-1 plans, and may be suspended at any time.
The effective tax rate from continuing operations for the current quarter was 31.3%.
The Firm declared a $0.05 quarterly dividend per common share, payable on August 15, 2013 to commonshareholders of record on July 31, 2013.

Morgan Stanley is a leading global financial services firm providing a wide range of investment banking,securities, investment management and wealth management services. The Firm’s employees serve clientsworldwide including corporations, governments, institutions and individuals from more than 1,200 offices in 43
countries. For further information about Morgan Stanley, please visit www.morganstanley.com.
A financial summary follows. Financial, statistical and business-related information, as well as information
regarding business and segment trends, is included in the Financial Supplement. Both the earnings release andthe Financial Supplement are available online in the Investor Relations section at www.morganstanley.com.

5###(See Attached Schedules)
The information above contains forward-looking statements. Readers are cautioned not to place undue
reliance on forward-looking statements, which speak only as of the date on which they are made and whichreflect management's current estimates, projections, expectations or beliefs and which are subject to risks anduncertainties that may cause actual results to differ materially. For a discussion of additional risks anduncertainties that may affect the future results of the Company, please see “Forward-Looking Statements”
immediately preceding Part I, Item 1, “Competition” and “Supervision and Regulation” in Part I, Item 1,“Risk Factors” in Part I, Item 1A, “Legal Proceedings” in Part I, Item 3, “Management’s Discussion andAnalysis of Financial Condition and Results of Operations” in Part II, Item 7 and “Quantitative andQualitative Disclosures about Market Risk” in Part II, Item 7A, each of the Company's Annual Report on
Form 10-K for the year ended December 31, 2012 and other items throughout the Form 10-K, theCompany’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 Morgan Stanley’s long-term and short-term borrowings resulting fromfluctuations in its credit spreads and other credit factors (commonly referred to as “DVA”).

2

From time to time, Morgan Stanley may disclose certain “non-GAAP financial measures” in the course of its earnings
releases, earnings conference calls, financial presentations and otherwise. For these purposes, “GAAP” refers to generally
accepted accounting principles in the United States. The Securities and Exchange Commission (SEC) defines a “non-GAAP
financial measure” as a numerical measure of historical or future financial performance, financial positions, or cash flowsthat is subject to adjustments that effectively exclude, or include amounts from the most directly comparable measurecalculated and presented in accordance with GAAP. Non-GAAP financial measures disclosed by Morgan Stanley areprovided as additional information to investors in order to provide them with greater transparency about, or an alternative
method for assessing our financial condition and operating results. These measures are not in accordance with, or asubstitute for GAAP, and may be different from or inconsistent with non-GAAP financial measures used by other companies.
Whenever we refer to a non-GAAP financial measure, we will also generally present the most directly comparable financial
measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the nonGAAP financial measure we reference and such comparable GAAP financial measure.
3

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

2Q 2013
$0.37
$0.06
$0.43

2Q 2012
$0.16
$0.12
$0.28

1,951
0
1,951

1,912
0
1,912

4

The Firm completed the purchase of the remaining 35% interest in the Morgan Stanley Smith Barney Joint Venture from
Citigroup Inc. (Citi) on June 28, 2013 for the previously established price of $4.7 billion. The Firm recorded a negative
adjustment of approximately $152 million (net of tax) to reflect the difference between the purchase price for the 35%
redeemable noncontrolling interest in the joint venture and its carrying value.
5

Source: Thomson Reuters – for the period of January 1, 2013 to June 30, 2013 as of July 2, 2013.

6

The Global Wealth Management Group and Asset Management business segments have been re-titled the WealthManagement and Investment Management business segments.
7

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.
8

On June 28, 2013, the Firm completed the purchase of the remaining 35% interest in the Morgan Stanley Smith Barney
Joint Venture from Citi, increasing the Firm’s interest from 65% to 100%. During the quarter ended September 30, 2012,
Morgan Stanley completed the purchase of an additional 14% stake in the Morgan Stanley Smith Barney Joint Venture from
Citi, increasing the Firm’s interest from 51% to 65%. Prior to September 17, 2012, Citi’s results related to its 49% interest

7were reported in net income (loss) applicable to nonredeemable noncontrolling interests on page 8 of Morgan Stanley’s
Financial Supplement accompanying this release. Due to the terms of the revised agreement with Citi, subsequent to thepurchase of the additional 14% stake, Citi’s results related to the 35% interest are reported in net income (loss) applicable toredeemable noncontrolling interests on page 8 of Morgan Stanley’s Financial Supplement accompanying this release.
9

Includes preferred dividends and other adjustments related to the calculation of earnings per share for the second quarter of2013 and 2012 of approximately $178 million and $27 million, respectively. The current quarter includes a negative
adjustment of approximately $152 million related to the purchase of the remaining 35% interest in the Morgan Stanley Smith
Barney Joint Venture. Refer to page 3 of Morgan Stanley’s Financial Supplement accompanying this release for the
calculation of earnings per share.
10

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

2Q 2013$8,328$175$8,503

1Q 2013$8,475$(317)$8,158

2Q 2012$6,592$350$6,942$898$111$1,009$1,182$(201)
$981

$337
$225
$562

11

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) – GAAP

2Q 2013$4,171$175$4,346

1Q 2013$4,406$(317)$4,0892Q 2012$2,982$350$3,332

$785
$175
$960

$1,115$(317)
$798

$138
$350
$488

12

Noncontrolling interests reported in the Institutional Securities business segment primarily represents allocation to Morgan
Stanley MUFG Securities Co., Ltd.

13

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 and8trading net revenues from a non-GAAP to GAAP basis is as follows (amounts are presented in millions):
2Q 2013$2,902$175$3,077

2Q 2012$2,011$350$2,361FIC Sales & Trading – Non-GAAP
DVA impact
FIC Sales & Trading – GAAP

$1,153$61$1,214$771$276$1,047

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

$1,806$114$1,920$1,252$74$1,326

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

14

VaR represents the loss amount that one would not expect to exceed, on average, more than five times every one hundred
trading days in the Firm’s trading positions if the portfolio were held constant for a one-day period. Further discussion of thecalculation of VaR and the limitations of the Firm’s VaR methodology is disclosed in Part II, Item 7A “Quantitative andQualitative Disclosures about Market Risk” included in Morgan Stanley’s Annual Report on Form 10-K for the year ended
December 31, 2012. Refer to page 7 of Morgan Stanley’s Financial Supplement accompanying this release for the VaR
disclosure.
15

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

16

Results for the second quarter of 2013 and 2012 included pre-tax income of $20 million and $22 million, respectively,
related to investments held by certain consolidated real estate funds. The limited partnership interests in these funds arereported in net income (loss) applicable to noncontrolling interests on page 10 of Morgan Stanley’s Financial Supplement
accompanying this release.

17

Results for the current quarter included gains of $21 million compared with gains of $24 million in the prior year quarter
related to investments held by certain consolidated real estate funds.

18

The Firm calculates its Tier 1 capital ratio and risk-weighted assets (“RWAs”) in accordance with the capital adequacy
standards for financial holding companies adopted by the Federal Reserve Board. These standards are based upon aframework described in the International Convergence of Capital Measurement and Capital Standards, July 1988, as
amended, also referred to as Basel I. On January 1, 2013, the U.S. banking regulators’ rules to implement the BaselCommittee’s market risk capital framework, commonly referred to as “Basel 2.5”, became effective, which increases capitalrequirements for securitizations and correlation trading within the Firm’s trading book, as well as incorporating add-ons forstressed VaR and incremental risk requirement. The Firm’s Tier 1 capital ratio and RWAs for the quarters ended June 30,
2013 and March 31, 2013 were calculated under this revised framework. The Firm’s Tier 1 capital and RWAs for priorquarters have not been recalculated under this revised framework. In accordance with the Federal Reserve Board’s
definition, Tier 1 common capital is defined as Tier 1 capital less non-common elements in Tier 1 capital, including perpetual
preferred stock and related surplus, minority interest in subsidiaries, trust preferred securities and mandatory convertible
preferred securities. These computations are preliminary estimates as of July 18, 2013 (the date of this release) and could be
subject to revision in Morgan Stanley’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.

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.

9

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

June 30, 2013
Net revenues
Institutional Securities
Wealth Management
Investment Management
Intersegment Eliminations
Consolidated net revenues

4,346
3,531
673
(47)
8,503

$

960
655
160
0
1,775

$

$

$
$

582
326
101
0
1,009
802

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

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

Income (loss) from continuing operations before tax
Institutional Securities
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
Earnings (loss) applicable to Morgan Stanley common shareholders$

Quarter Ended
Mar 31, 2013

$

$

$

$

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

June 30, 2012

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

$

798
597
187
0
1,582

$

$

$
$

641
256
84
0
981
936

0.44
(0.02)
0.42

$
$
$

0.43
(0.02)
0.41

$
$
$

$

$

Percentage Change From:Mar 31, 2013
June 30, 2012

Six Months Ended
June 30, 2013
June 30, 2012

3,332
3,196
456
(42)
6,942

6%
2%
4%
(2%)
4%

30%
10%
48%
(12%)
22%

$

488
410
43
(4)
937

20%
10%
(14%)
-12%

97%
60%
*
*
89%

$

(9%)
27%
20%
-3%
(14%)

56%
83%
*
*
80%
42%

$

$
$

374
178
14
(4)
562
564

0.50
(0.01)
0.49

$
$
$

0.28
0.02
0.30

(12%)
(100%)(14%)

0.49(0.01)
0.48

$
$
$

0.28
0.01
0.29

(12%)
(100%)
(15%)

$

$

8,435
7,001
1,318
(93)
16,661

$

1,758
1,252
347
0
3,357

$

$

$
$

1,223
582
185
0
1,990
1,738

57%
*
40%

$
$
$

54%
*
41%

$
$
$

$

$

6,467
6,487
989
(77)
13,866

30%
8%
33%
(21%)
20%

159
813
171
(4)
1,139

*
54%
103%
*
195%

$
$

72
376
39
(4)
483
446

*
55%
*
*
*
*

0.94
(0.03)
0.91

$
$
$

0.23
0.01
0.24

*
*
*

0.92
(0.03)
0.89

$
$
$

0.23
0.23

*
*
*

$

$

5.4%
5.2%

6.3%
6.2%

3.5%
3.7%

5.8%
5.7%

1.4%
1.5%

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

4.6%
4.4%

7.5%
7.4%

2.1%
2.3%

6.0%
5.9%

5.6%
5.6%

Tier 1 common capital ratio
Tier 1 capital ratio

11.8%
14.1%

11.5%
13.9%

13.6%
17.2%

Book value per common share
Tangible book value per common share

$
$

31.48
26.27

$
$

31.21
27.38

$
$

Percentage
Change

31.02
27.70

Notes: - The Global Wealth Management Group and Asset Management business segments have been re-titled the Wealth Management and Investment Management business segments.
- Effective January 1, 2013, in accordance with U.S. banking regulators’ rules, the Firm implemented the Basel Committee’s market risk capital framework, commonly referred to as “Basel 2.5”.
- Results for the quarters ended June 30, 2013, March 31, 2013 and June 30, 2012, include positive (negative) revenue of $175 million, $(317) million and $350 million, respectively, related to the movement in Morgan Stanley's credit
spreads and other credit factors on certain long-term and short-term debt (Debt Valuation Adjustment, DVA).
- The return on average common equity 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.
- Tier 1 common capital ratio equals Tier 1 common equity divided by risk-weighted assets (RWAs).
- Tier 1 capital ratio equals Tier 1 capital divided by RWAs.
- Book value per common share equals common equity divided by period end common shares outstanding.
- Tangible book value per common share equals tangible common equity divided by period end common shares outstanding.
- See page 4 of the financial supplement for additional information related to the calculation of the financial metrics.
10

MORGAN STANLEY
Quarterly Consolidated Income Statement Information(unaudited, dollars in millions)

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

June 30, 2013

Quarter Ended
Mar 31, 2013

June 30, 2012

$

$

$

Interest income
Interest expense
Net interest
Net revenues
Non-interest expenses:
Compensation and benefits

1,303
2,894
188
1,217
2,404
293
8,299

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

Percentage Change From:Mar 31, 2013
June 30, 2012

1,104
2,469
63
1,040
2,268
158
7,102

6%
7%
(44%)
4%
2%
44%
4%

18%
17%
198%
17%
6%
85%
17%

Six Months Ended
June 30, 2013
June 30, 2012
$

2,527
5,588
526
2,385
4,750
496
16,272$

Percentage
Change

2,167
4,871
148
2,217
4,420
262
14,085

17%
15%
*
8%
7%
89%
16%

1,422
1,218
204
8,503

1,398
1,213
185
8,158

1,323
1,483
(160)
6,942

2%
-10%
4%

7%
(18%)
*
22%

2,820
2,431
389
16,661

2,865
3,084
(219)
13,866

(2%)
(21%)
*
20%

4,105

4,216

3,631

(3%)

13%

8,321

8,061

3%

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

377
456
470
163
458
699
2,623

379
428
448
134
440
531
2,360

378
405
487
155
477
472
2,374

(1%)
7%
5%
22%
4%
32%
11%

-13%
(3%)
5%
(4%)
48%
10%

756
884
918
297
898
1,230
4,983

766
808
946
301
889
956
4,666

(1%)
9%
(3%)
(1%)
1%
29%
7%

Total non-interest expenses

6,728

6,576

6,005

2%

12%

13,304

12,727

5%

$

1,775
555
1,220
(29)
1,191
100
111
980
178
802

$

1,582
332
1,250
(19)
1,231
122
147
962
26
936

$

937
224
713
37
750
0
159
591
27
564

12%
67%
(2%)
(53%)
(3%)
(18%)
(24%)
2%
*
(14%)

89%
148%
71%
*
59%
*
(30%)
66%
*
42%

$

3,357
887
2,470
(48)
2,422
222
258
1,942
204
1,738

$

1,139
278
861
23
884
0
387
497
51
446

195%
*
187%
*
174%
*
(33%)
*
*
*

$

1,009
(29)
980

$

981
(19)
962

$

562
29
591

3%
(53%)
2%

80%
*
66%

$

1,990
(48)
1,942

$

483
14
497

*
*
*

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

$

21%
48%
31%
31.3%

$

19%
52%
29%
21.0%

$

14%
52%
34%
23.9%

$

20%
50%
30%
26.4%

$

8%
58%
34%
24.4%

Notes: - Pre-tax profit margin is a non-GAAP financial measure that the Firm considers to be a useful measure to assess operating performance.
- For the quarter ended March 31, 2013, the income tax provision from continuing operations included a net tax benefit of approximately $142 million consisting of a benefit resulting from a
retroactive change in U.S. tax law (reported in the Institutional Securities business segment) and a discrete net tax benefit from the remeasurement of reserves and related interest.
- For the quarter ended June 30, 2012, discontinued operations included operating results related to Saxon (reported in Institutional Securities segment) and a pre-tax gain of $108 million ($73 million
after-tax) and other operating income related to the sale of Quilter & Co. Ltd. (Quilter) (reported in the Wealth Management business segment).
- During the quarter ended June 30, 2013, Morgan Stanley completed the purchase of the remaining 35% stake in Morgan Stanley Smith Barney Holdings LLC (MSSB) from Citigroup Inc. (Citi).
Upon completion of the purchase, Morgan Stanley has 100 percent ownership of the business which operates under the name Morgan Stanley Wealth Management (MSWM).
- Preferred stock dividend / other includes allocation of earnings to Participating Restricted Stock Units (RSUs). The Firm recorded a negative adjustment of approximately $152 million related to thepreviously announced purchase of the remaining interest in MSSB. This adjustment negatively impacted the calculation of basic and fully diluted earnings per share for the quarter and six months ended
June 30, 2013.
11

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

Quarter Ended
Mar 31, 2013

June 30, 2013

Income (loss) from continuing operations
Net income applicable to redeemable noncontrolling interests
Net income applicable to nonredeemable noncontrolling interests
Net income (loss) from continuing operations applicable to noncontrolling interests
Income (loss) from continuing operations applicable to Morgan Stanley
Less: Preferred Dividends
Less: Morgan Stanley Smith Barney Joint Venture Redemption Adjustment
Income from continuing operations applicable to Morgan Stanley, prior to allocation of income toParticipating Restricted Stock Units
Basic EPS Adjustments:
Less: Allocation of earnings to Participating Restricted Stock Units
Earnings (loss) from continuing operations applicable to Morgan Stanley common shareholders

$

1,220
100
111
211
1,009
24
152
833

2
831

$

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

$

$

802

$

957

$

(29)
0
(29)
0
(29)

Average basic common shares outstanding (millions)

1,250
122
147
269
981
24
-

June 30, 2012

2
955

$

936

(2%)
(18%)
(24%)
(22%)
3%
-*

71%
*
(27%)
40%
80%
-*

(13%)

55%

3
535

-(13%)

(33%)
55%

37
8
29
0
29

(53%)
-(53%)-(53%)

*
*
*
-*

538

$

(19)
0
(19)
0
(19)

1,908

713
0
151
151
562
24
-

$

1,901

Percentage Change From:Mar 31, 2013
June 30, 2012

564

(14%)

42%

1,885

--

1%

Six Months Ended
June 30, 2013
June 30, 2012

$

2,470
222
258
480
1,990
48
152

$

1,790

$

4
1,786

435

$

(48)
0
(48)
0
(48)
$

1,738

861
0
378
378
483
48
-

$

1,904

Percentage
Change

187%
*
(32%)
27%
*
-*
*

3
432

33%
*

23
9
14
0
14

*
*
*
-*

446

*

1,881

1%

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

$
$
$

0.44
(0.02)
0.42

$
$
$

0.50
(0.01)
0.49

$
$
$

0.28
0.02
0.30

(12%)
(100%)
(14%)

57%
*
40%

$
$
$

0.94
(0.03)
0.91

$
$
$

0.23
0.01
0.24

*
*
*

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

$

831

$

955

$

535

(13%)

55%

$

1,786

$

432

*

29

(53%)

*

14

*

$

802

$

936

$

564

(14%)

42%

$

1,738

$

446

*

1,912

1%

2%

1,907

2%

0.28
0.01
0.29

(12%)
(100%)
(15%)

54%
*
41%

0.23
0.23

*
*
*

Earnings (loss) from discontinued operations applicable to Morgan Stanley common shareholders
Earnings (loss) applicable to Morgan Stanley common shareholders(29)

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

(19)

1,951

$
$
$

0.43
(0.02)
0.41

1,940

$
$
$

0.49
(0.01)
0.48

$
$
$

(48)

1,946

$
$
$

Notes: - The Firm calculates earnings per share using the two-class method as described under the accounting guidance for earnings per share. For further discussion of the Firm's earnings per share calculations, see page 14 of thefinancial supplement and Note 15 to the consolidated financial statements in the Firm's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.

12

0.92
(0.03)
0.89$$$