Morgan Stanley Second Quarter 2021 Earnings Results
Morgan Stanley Reports Net Revenues of $14.8 Billion, EPS of $1.85 and ROTCE of 18.6%
NEW YORK, July 15, 2021 – Morgan Stanley (NYSE: MS) today reported net revenues of $14.8 billion for thesecond quarter ended June 30, 2021 compared with $13.7 billion a year ago. Net income applicable to Morgan
Stanley was $3.5 billion, or $1.85 per diluted share,1 compared with net income of $3.2 billion, or $1.96 per diluted
share,1 for the same period a year ago. The comparisons of current year results to prior periods were impacted by theacquisitions of E*TRADE Financial Corporation (“E*TRADE”), reported in the Wealth Management segment, andEaton Vance Corp. (“Eaton Vance”), reported in the Investment Management segment.
James P. Gorman, Chairman and Chief Executive Officer, said, “The Firm delivered another very strong quarter, with
contributions from all of our businesses. Our Wealth and Investment Management businesses attracted $120 billion inflows and Institutional Securities generated over $7 billion in revenues. With our transformed business model
providing more stable and durable earnings, we have doubled our dividend and announced a $12 billion buyback as
we move to return our excess capital to shareholders. Our global franchise is very well positioned to drive further
growth.”Financial Summary2,3,4

Highlights

Firm ($ millions, except per share data)

2Q 2021

2Q 2020

Net revenues$14,759$13,660

Provision for credit losses

$73

$239

Compensation expense$6,423$6,035

Non-compensation expenses
Pre-tax income9$3,697$3,031$4,566$4,355

Net income app. to MS$3,511$3,196

69%

66%

Earnings per diluted share

$1.85

$1.96

• Common Equity Tier 1 capital standardized ratio was 16.7%.

Book value per share$54.04$49.57

Tangible book value per share$40.12$43.68Return on equity

13.8%

15.7%

18.6%

17.8%

• The Firm doubled its quarterly common stock dividend to$0.70 per share and increased its share repurchaseauthorization of outstanding common stock up to $12 billion,
over the next 12 months.

Net revenues$7,092$8,199Investment Banking$2,376$2,051Equity$2,827$2,627

Fixed Income$1,682$3,041

Net revenues$6,095$4,704Fee-based client assets ($ billions)10$1,680$1,236

Fee-based asset flows ($ billions)11

$33.7

$11.1

Net new assets ($ billions)

$71.2

$20.4

Loans ($ billions)$114.7$85.2

Expense efficiency ratio

7

Return on tangible equity

5

Institutional Securities

Wealth Management

12

Investment Management
Net revenues$1,702$886

13

AUM ($ billions)$1,524$665

Long-term net flows ($ billions)14

$13.5

$15.4

Media Relations: Wesley McDade 212-761-2430• Firm net revenues of $14.8 billion and net income of $3.5
billion reflect strong performance with contributions acrosseach of our business segments and geographies.
• The Firm delivered ROTCE of 18.6% or 19.0% excluding theimpact of integration-related expenses.5,6• The Firm expense efficiency ratio was 69% or 68% excluding
the impact of integration-related expenses.6,7• Institutional Securities net revenues of $7.1 billion reflect
strong results as clients remained active across Investment
Banking and Equity.

• Wealth Management delivered a pre-tax margin of 26.8% or
27.8% excluding integration-related expenses.6,8 Results
reflect higher asset management fees, growth in banklending, as well as net new assets and fee-based flows of$71 billion and $34 billion, respectively.

• Investment Management results reflect strong asset
management fees on AUM of $1.5 trillion which includes$13.5 billion of positive long-term net flows across all asset
classes.

Investor Relations: Leslie Bazos 212-761-5352

Institutional Securities
Institutional Securities reported net revenues for the current quarter of $7.1 billion compared with $8.2 billion a year
ago. Pre-tax income was $2.5 billion compared with $3.0 billion a year ago.9
Investment Banking revenues up 16% from a year ago:
• Advisory revenues increased from a year ago on higher M&A
completed transactions.
• Equity underwriting increased from a year ago driven byhigher volumes in traditional IPOs partially offset by lower
revenues from convertible issuance and follow-on offerings.
• Fixed income underwriting revenues decreased from a year
ago primarily due to lower investment grade and noninvestment grade bond issuances partially offset by strength
in non-investment grade loans.

($ millions)

2Q 2021

2Q 2020

Net Revenues$7,092$8,199Investment Banking$2,376$2,051$664$462$1,072

$882

$640

$707

Equity$2,827$2,627

Fixed Income$1,682$3,041

Other

$207

$480

Provision for credit losses

$70

$217

Total Expenses$4,524$4,989Compensation$2,433$2,952

Non-compensation$2,091$2,037Advisory
Equity underwriting
Fixed income underwriting

Equity net revenues up 8% from a year ago:
• Equity net revenues increased from a year ago driven byhigh levels of client activity with particular strength in Asia.
Results reflect higher revenues in prime brokerage partially
offset by declines in cash equities and derivatives driven bylower volatility and volumes compared to a year ago.
Fixed Income net revenues down 45% from a year ago:
• Fixed Income net revenues declined versus the prior year
due to lower bid-offer spreads and volatility as well as tighter
credit spreads.
Other:• Other revenues decreased from a year ago primarilyreflecting lower mark-to-market gains associated withcorporate lending activity.
Provision for credit losses:• Provision for credit losses decreased from a year ago on loans held for investment as a result of an improved
macroeconomic environment.
Total Expenses:• Compensation expense decreased from a year ago on lower revenues.
• Non-compensation expenses were essentially unchanged from a year ago.

2

Wealth Management
Wealth Management reported net revenues for the current quarter of $6.1 billion compared with $4.7 billion from a year
ago. Pre-tax income of $1.6 billion9 in the current quarter resulted in a reported pre-tax margin of 26.8% or 27.8%
excluding the impact of integration-related expenses.6,8 The comparisons of current year results to prior periods were
impacted by the acquisition of E*TRADE.
Net revenues increased 30% from a year ago:($ millions)

2Q 2021

2Q 2020• Asset management revenues increased from a year ago
reflecting higher asset levels driven by market appreciationand positive fee-based flows.

Net Revenues$6,095$4,704

Asset management$3,447$2,507$1,172$1,075$1,255$1,030

$221

$92

$3

$22

Total Expenses$4,456$3,540Compensation$3,275$2,729Non-compensation$1,181$811• Transactional revenues15 increased 49% excluding theimpact of lower mark-to-market gains on investments
associated with certain employee deferred compensationplans. Results reflect incremental revenues as a result of
the E*TRADE acquisition and strong client activity.
• Net interest income (NII) increased from a year ago driven
by incremental NII as a result of the E*TRADE acquisitionand higher bank lending partially offset by the impact oflower rates and an increase in mortgage securities
prepayment amortization expense.

Transactional

15

Net interest income
Other
Provision for credit losses

Total Expenses:• Compensation expense increased from a year ago driven by higher compensable revenues and incremental
compensation as a result of the E*TRADE acquisition6 partially offset by decreases in the fair value of certain
deferred compensation plan referenced investments.
• Non-compensation expenses increased from a year ago primarily driven by incremental expenses as a result of the
E*TRADE acquisition.6

Investment Management
Investment Management reported net revenues of $1.7 billion compared with $886 million a year ago. Pre-tax income
was $430 million compared with $216 million a year ago.9 The comparisons of current year results to prior periods
were impacted by the acquisition of Eaton Vance.
Net revenues increased 92% from a year ago:($ millions)

2Q 2021

2Q 2020• Asset management and related fees increased from ayear ago driven by incremental revenues as a result of
the Eaton Vance acquisition and higher AUM on
continued strong performance and positive net flows.

Net Revenues$1,702$886

Asset management and related fees

$1,418$684

Performance-based income and other

$284

$202

Total Expenses$1,272$670

Compensation

$715

$354

Non-compensation

$557

$316

• Performance-based income and other revenues
increased from a year ago primarily on higher accrued
carried interest across our funds, particularly in private
equity and infrastructure.
Total Expenses:• Compensation expense increased from a year ago primarily driven by incremental compensation expenses as aresult of the Eaton Vance acquisition,6 carried interest and higher asset management revenues.
• Non-compensation expenses increased from a year ago primarily driven by incremental expenses as a result of theEaton Vance acquisition6 and higher brokerage and clearing costs.
3

Other Matters• The Common Equity Tier 1 capital standardized ratio was
16.7%, 350 basis points above the aggregate standardized
approach CET1 requirement.
• The Firm announced a repurchase authorization of up to $12
billion of outstanding common stock through June 30, 2022.
The Firm repurchased $2.9 billion of its outstanding common
stock during the quarter as part of its Share Repurchase
Program.

2Q 2021

2Q 2020

CET1 capital17

16.7%

16.5%

17

18.4%

18.6%

16

CapitalStandardized Approach

Tier 1 capital

Advanced Approach• The Board of Directors declared a $0.70 quarterly dividend
per share, payable on August 13, 2021 to commonshareholders of record on July 30, 2021, a 100 percent
increase from the current $0.35 per share dividend.

CET1 capital

17

17.7%

16.1%

Tier 1 capital

17

19.5%

18.1%

Tier 1 leverage18

7.4%

8.1%

SLR19

5.9%

7.3%

$2,939

N/A

34

N/A

Average Price$86.21

N/A

Period End Shares (millions)

1,834

1,576

Tax Rate

23.1%

25.7%

Leverage-based capital

Common Stock Repurchases
Repurchases ($ millions)
Number of Shares (millions)4Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities,
wealth management and investment management services. With offices in more than 41 countries, the Firm’s
employees serve clients worldwide including corporations, governments, institutions and individuals. For further
information about Morgan Stanley, please visit www.morganstanley.com.
A financial summary follows. Financial, statistical and business-related information, as well as information regarding
business and segment trends, is included in the financial supplement. Both the earnings release and the financial
supplement are available online in the Investor Relations section at www.morganstanley.com.
NOTICE:The information provided herein and in the financial supplement, including information provided on the Firm’s earnings
conference calls, may include certain non-GAAP financial measures. The definition of such measures or reconciliationof such measures to the comparable U.S. GAAP figures are included in this earnings release and the financial
supplement, both of which are available on www.morganstanley.com.
This earnings release may contain forward-looking statements, including the attainment of certain financial and othertargets, objectives and goals. Readers are cautioned not to place undue reliance on forward-looking statements, which
speak only as of the date on which they are made, which reflect management’s current estimates, projections,
expectations, assumptions, interpretations or beliefs and which are subject to risks and uncertainties that may cause
actual results to differ materially. For a discussion of risks and uncertainties that may affect the future results of theFirm, please see “Forward-Looking Statements” preceding Part I, Item 1, “Competition” and “Supervision andRegulation” in Part I, Item 1, “Risk Factors” in Part I, Item 1A, “Legal Proceedings” in Part I, Item 3, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and “Quantitative andQualitative Disclosures about Risk” in Part II, Item 7A in the Firm’s Annual Report on Form 10-K for the year ended
December 31, 2020 and other items throughout the Form 10-K, the Firm’s Quarterly Reports on Form 10-Q and the
Firm’s Current Reports on Form 8-K, including any amendments thereto.

5

1Includes preferred dividends related to the calculation of earnings per share of $103 million and $149 million for the second quarter of2021 and 2020, respectively.
2

The Firm prepares its Consolidated Financial Statements using accounting principles generally accepted in the United States (U.S.
GAAP). From time to time, Morgan Stanley may disclose certain “non-GAAP financial measures” in the course of its earnings releases,
earnings conference calls, financial presentations and otherwise. The Securities and Exchange Commission defines a “non-GAAP financial
measure” as a numerical measure of historical or future financial performance, financial position, or cash flows that is subject to adjustmentsthat effectively exclude, or include amounts from the most directly comparable measure calculated and presented in accordance with U.S.
GAAP. Non-GAAP financial measures disclosed by Morgan Stanley are provided as additional information to analysts, investors and otherstakeholders in order to provide them with greater transparency about, or an alternative method for assessing our financial condition,
operating results, or capital adequacy. These measures are not in accordance with, or a substitute for U.S. GAAP, and may be different
from or inconsistent with non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, wewill also generally define it or present the most directly comparable financial measure calculated and presented in accordance with U.S.
GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable U.S.
GAAP financial measure.

3

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

4

The provision for credit losses for loans and lending commitments is now presented as a separate line in the consolidated income
statements.
5

Return on average tangible common equity and return on average tangible common equity excluding integration-related expenses are
non-GAAP financial measures that the Firm considers useful for analysts, investors and other stakeholders to allow comparability of periodto-period operating performance and capital adequacy. The calculation of return on average tangible common equity represents full year or
annualized net income applicable to Morgan Stanley less preferred dividends as a percentage of average tangible common equity.
Tangible common equity, also a non-GAAP financial measure, represents common equity less goodwill and intangible assets net ofallowable mortgage servicing rights deduction. The calculation of return on average tangible common equity excluding integration-related
expenses is adjusted in both the numerator and the denominator to exclude the integration-related expenses associated with theacquisitions of E*TRADE and Eaton Vance.
6

The Firm’s second quarter results include $90 million of integration-related expenses on a pre-tax basis ($69 million after-tax) as a resultof the E*TRADE and Eaton Vance acquisitions. The integration-related expenses include $25 million in compensation expense and $65
million in non-compensation expense. Wealth Management and Investment Management integration-related expenses include $9 million
and $16 million in compensation expense, respectively, and $51 million and $14 million in non-compensation expense, respectively.
7

The Firm expense efficiency ratio of 68.6% represents total non-interest expenses as a percentage of net revenues. The Firm expense
efficiency ratio excluding integration-related expenses of 68.0% represents total non-interest expenses adjusted for integration-related
expenses as a percentage of net revenues. The Firm expense efficiency ratio excluding integration-related expenses is a non-GAAP
financial measure that the Firm considers useful for analysts, investors and other stakeholders to allow comparability of period-to-period
operating performance.

8

Pre-tax margin represents income before taxes divided by net revenues. Wealth Management pre-tax margin excluding the integrationrelated expenses represents income before taxes less those expenses divided by net revenues. Wealth Management pre-tax margin
excluding integration-related expenses is a non-GAAP financial measure that the Firm considers useful for analysts, investors and otherstakeholders to allow comparability of period-to-period operating performance.
9

Pre-tax income represents income before taxes.

10

Wealth Management fee-based client assets represent the amount of assets in client accounts where the basis of payment for services isa fee calculated on those assets.
11

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

12

Wealth Management net new assets represent client inflows, including dividend and interest, less client outflows, and exclude activity
from business combinations/divestitures and the impact of fees and commissions.

6

13

AUM is defined as assets under management.

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

15
Transactional revenues include investment banking, trading, and commissions and fee revenues. Transactional revenues excluding theimpact of mark-to-market gains on investments associated with employee deferred cash-based compensation plans is a non-GAAP
financial measure that the Firm considers useful for analysts, investors and other stakeholders to allow better comparability of period-toperiod operating performance and capital adequacy.
16

Capital ratios are estimates as of the press release date, July 15, 2021.

17

CET1 capital is defined as Common Equity Tier 1 capital. The Firm’s risk-based capital ratios are computed under each of the (i)standardized approaches for calculating credit risk and market risk risk-weighted assets (RWAs) (the “Standardized Approach”) and (ii)applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (the “Advanced Approach”). For
information on the calculation of regulatory capital and ratios, and associated regulatory requirements, please refer to "Management’s
Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Regulatory Requirements" inthe Firm’s Annual Report on Form 10-K for the year ended December 31, 2020 (2020 Form 10-K).
18

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

19

The Firm’s supplementary leverage ratio (SLR) utilizes a Tier 1 capital numerator of approximately $84.6 billion and $77.4 billion, andsupplementary leverage exposure denominator of approximately $1.44 trillion and $1.06 trillion, for the second quarter of 2021 and 2020,
respectively. Based on a Federal Reserve interim final rule that was in effect until March 31, 2021, our SLR and supplementary leverage
exposure as of June 30, 2020 reflects the exclusion of U.S. Treasury securities and deposits at Federal Reserve Banks. The exclusion ofthese assets had the effect of increasing our SLR by 0.9% as of June 30, 2020.

7

Morgan Stanley
Consolidated Income Statement Information(unaudited, dollars in millions)

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

Jun 30, 2021

Quarter Ended
Mar 31, 2021 Jun 30, 2020$$

Interest income
Interest expense
Net interest
Net revenues

2,560
3,330
381
1,308
4,973
342
12,894

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

Percentage Change From:Mar 31, 2021 Jun 30, 2020

2,142
4,803
275
1,102
3,265
473
12,060

(10%)
(21%)
20%
(20%)
13%
20%
(6%)

20%
(31%)
39%
19%
52%
(28%)
7%

Six Months Ended
Jun 30, 2021 Jun 30, 2020
$

5,400
7,555
699
2,934
9,371
626
26,585$Percentage
Change

3,413
7,604
313
2,462
6,682
9
20,483

58%
(1%)
123%
19%
40%
*
30%

2,212
347
1,865
14,759

2,437
409
2,028
15,719

2,358
758
1,600
13,660

(9%)
(15%)
(8%)
(6%)

(6%)
(54%)
17%
8%

4,649
756
3,893
30,478

5,861
2,905
2,956
23,439

(21%)
(74%)
32%
30%

73

(98)

239

*

(69%)

(25)

646

*

Non‐interest expenses:
Compensation and benefits

6,423

6,798

6,035

(6%)

6%

13,221

10,31828%

Non‐compensation expenses:
Brokerage, clearing and exchange fees
Information processing and communications
Professional services
Occupancy and equipment
Marketing and business development
Other
Total non‐compensation expenses

795
765
746
414
146
831
3,697

910
733
624
405
146
857
3,675

716
589
535
365
63
763
3,031

(13%)
4%
20%
2%
‐‐
(3%)
1%

11%
30%
39%
13%
132%
9%
22%

1,705
1,498
1,370
819
292
1,688
7,372

1,456
1,152
984
730
195
1,457
5,974

17%
30%
39%
12%
50%
16%
23%

10,12010,473

9,066

(3%)

12%

20,593

16,292

26%

4,566
1,054
3,512
1
3,511
103
3,408

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

4,355
1,119
3,236
40
3,196
149
3,047

(15%)
(10%)
(16%)
(98%)
(15%)
(25%)
(14%)

5%
(6%)
9%
(98%)
10%
(31%)
12%

9,910
2,230
7,680
49
7,631
241
7,390

6,501
1,485
5,016
122
4,894
257
4,637

52%
50%
53%
(60%)
56%
(6%)
59%

Provision for credit losses

Total non‐interest expenses
Income before provision for income taxes
Provision for income taxes
Net income
Net income applicable to nonredeemable noncontrolling interests
Net income applicable to Morgan Stanley
Preferred stock dividend
Earnings applicable to Morgan Stanley common shareholders

$

$

$

$

$

$

$

$

$

$

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

8

Morgan Stanley
Consolidated Financial Metrics, Ratios and Statistical Data
(unaudited)Jun 30, 2021

Quarter Ended
Mar 31, 2021

Jun 30, 2020

$
$

$
$

$
$

Percentage Change From:Mar 31, 2021
Jun 30, 2020

Six Months Ended
Jun 30, 2021 Jun 30, 2020

Percentage
ChangeFinancial Metrics:
Earnings per basic share
Earnings per diluted share
Return on average common equity
Return on average tangible common equity
Book value per common share
Tangible book value per common share
Excluding integration‐related expenses
Adjusted earnings per diluted share
Adjusted return on average common equity
Adjusted return on average tangible common equity

1.88
1.85
13.8%
18.6%

2.22
2.19
16.9%
21.1%

1.98
1.96

(15%)
(16%)

(5%)
(6%)

$
$

15.7%
17.8%

$
$

54.04
40.12

$
$

52.71
38.97

$
$

49.57
43.68

$

1.89
14.1%
19.0%

$

2.22
17.1%
21.4%

$

1.96
15.7%
17.8%

4.10
4.04

$
$

15.3%
19.8%

(15%)

(4%)

3.00
2.96

37%
36%

12.2%
13.9%

$
$

54.04
40.12

$
$

49.57
43.68

$

4.11
15.6%
20.1%

$

2.96
12.2%
13.9%

39%

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

31%
44%
25%
69%
68%
23.1%

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

32%
44%
22%
66%
66%
25.7%

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

1,834

1,869

1,576

(2%)

16%

1,814
1,841

1,795
1,818

1,541
1,557

1%
1%

18%
18%

Worldwide employees

71,82670,97561,596

1%

17%

33%
43%
24%
68%
67%
22.5%

28%
44%
25%
70%
70%
22.8%

1,804
1,829

1,548
1,565

Statistical Data:

17%
17%

Notes:‐ For the quarters ended June 30, 2021 and March 31, 2021, Firm results include pre‐tax integration‐related expenses of $90 million and $75 million ($69 million and $58 million after‐tax) respectively, reported in the WealthManagement and Investment Management business segments. The six months ended June 30, 2021 results include pre‐tax integration‐related expenses of $165 million ($127 million after‐tax).
‐ The End Notes are an integral part of this presentation. Refer to the Financial Supplement on pages 12 ‐ 17 for Definition of U.S. GAAP to Non‐GAAP Measures, Definitions of Performance Metrics and Terms, Supplemental
Quantitative Details and Calculations, and Legal Notice for additional information.

9