Morgan Stanley Third Quarter 2021 Earnings Results
Morgan Stanley Reports Net Revenues of $14.8 Billion, EPS of $1.98 and ROTCE of 19.6%
NEW YORK, October 14, 2021 – Morgan Stanley (NYSE: MS) today reported net revenues of $14.8 billion for thethird quarter ended September 30, 2021 compared with $11.7 billion a year ago. Net income applicable to Morgan
Stanley was $3.7 billion, or $1.98 per diluted share,1 compared with net income of $2.7 billion, or $1.66 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, withrobust revenues and improved efficiency producing an ROTCE of 20%. We had standout performance of ourintegrated Investment Bank and record net new assets of $135 billion in Wealth Management. Year-to-date, oursuccessful integrations of E*TRADE and Eaton Vance have supported growth of $400 billion in net new client assets
across Wealth and Investment Management, bringing our total combined client assets to $6.2 trillion.”

Financial Summary2,3,4

Highlights

Firm ($ millions, except per share data)

3Q 2021

3Q 2020

Net revenues$14,753$11,721

Provision for credit losses

$24

$111

Compensation expense$5,920$5,086

Non-compensation expenses
Pre-tax income10$3,935$3,037$4,874$3,487

Net income app. to MS$3,707$2,717

Expense efficiency ratio

7

67%

69%

Earnings per diluted share

$1.98

$1.66

Book value per share$54.56$50.67

Tangible book value per share$40.47$44.81Return on equity

14.5%

13.2%

Return on tangible equity5

19.6%

15.0%

Net revenues$7,495$6,129Investment Banking$2,849$1,707

Equity$2,876$2,311

Fixed Income$1,640$1,954

Institutional Securities

Wealth Management
Net revenues$5,935$4,654Fee-based client assets ($ billions)11$1,752$1,333

$70.6

$23.8

$134.5$51.8$121.2$91.3

12

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

9

Loans ($ billions)
Investment Management
Net revenues$1,453$1,056

AUM ($ billions)13$1,522$715$(2.3)$10.4

14

Long-term net flows ($ billions)Media Relations: Wesley McDade 212-761-2430• Firm net revenues of $14.8 billion and net income of $3.7
billion increased more than 25% year over year reflecting
strong performance across all business segments andregions.
• The Firm delivered ROTCE of 19.6% or 20.2% excluding theimpact of integration-related expenses.5,6• The Firm expense efficiency ratio improved to 67% or 66%
excluding the impact of integration-related expenses.6,7• Common Equity Tier 1 capital standardized ratio was 16.0%.

• Institutional Securities net revenues of $7.5 billion reflect
record Investment Banking revenues, led by advisory,
continued strong performance in Equity, and solid results in
Fixed Income.

• Wealth Management delivered a pre-tax margin of 25.8% or
27.7% excluding integration-related expenses.6,8 Results
reflect record asset management revenues and continued
growth in bank lending. The business added record net new
assets of $135 billion9 representing a year-to-date 10%
annualized growth rate from beginning period assets.
• Investment Management results reflect an increase in feebased asset management revenues on AUM of $1.5 trillion.

Investor Relations: Leslie Bazos 212-761-5352

Institutional Securities
Institutional Securities reported net revenues for the current quarter of $7.5 billion compared with $6.1 billion a year
ago. Pre-tax income was $3.0 billion compared with $2.0 billion a year ago.10
Investment Banking revenues up 67% from a year ago:
• Record advisory revenues driven by higher completed M&Atransactions.
• Equity underwriting revenues increased from a year ago
primarily from IPOs and blocks driven by more issuances
and activity in a constructive market.
• Fixed income underwriting revenues increased from a year
ago driven by higher non-investment grade loan issuanceson the back of increased event financing, partially offset bylower investment grade bond volumes.

($ millions)

3Q 2021

3Q 2020

Net Revenues$7,495$6,129Investment Banking$2,849$1,707Advisory$1,272$357

Equity underwriting$1,010

$874

$567

$476

Equity$2,876$2,311

Fixed Income$1,640$1,954

Other

$130

$157

Provision for credit losses

$24

$113

Total Expenses$4,498$3,968Compensation$2,248$2,001

Non-compensation$2,250$1,967

Fixed income underwriting

Equity net revenues up 24% from a year ago:
• Equity net revenues increased from a year ago reflecting
higher results across products driven by strong client
engagement in a favorable market environment, withparticular strength in Asia.
Fixed Income net revenues down 16% from a year ago:
• Fixed Income net revenues declined versus a strong prioryear quarter. Results reflect a decrease in our macrobusinesses in a less volatile environment and lower results in
our micro businesses driven by tighter bid-offer and credit
spreads. The decrease was partially offset by higher
revenues in commodities driven by an increase in client
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 increased from a year ago on higher revenues.
• Non-compensation expenses increased from a year ago primarily driven by higher volume related expenses.

2

Wealth Management
Wealth Management reported net revenues for the current quarter of $5.9 billion compared with $4.7 billion from a year
ago. Pre-tax income of $1.5 billion10 in the current quarter resulted in a reported pre-tax margin of 25.8% or 27.7%
excluding the impact of integration-related expenses.6,8 The comparisons of current year results to prior periods were
impacted by the acquisition of E*TRADE.
Net revenues increased 28% from a year ago:($ millions)

3Q 2021

3Q 2020• Asset management revenues increased from a year ago
reflecting higher asset levels driven by market appreciationand strong positive fee-based flows in the advisor-led
channel.

Net Revenues$5,935$4,654

Asset management$3,628$2,793$832$880• Transactional revenues15 increased 38% 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$1,348

$889

$127

$92

$0

$(2)

• Net interest income increased from a year ago as a resultof the E*TRADE acquisition and strong bank lending
growth.

Total Expenses$4,405$3,536Compensation$3,159$2,684Non-compensation$1,246$852

Transactional15

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 $1.5 billion compared with $1.1 billion a year ago. Pre-tax income
was $370 million compared with $315 million a year ago.10 The comparisons of current year results to prior periods
were impacted by the acquisition of Eaton Vance.
Net revenues increased 38% from a year ago:($ millions)

3Q 2021

3Q 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.

Net Revenues$1,453$1,056

Asset management and related fees

$1,470$795• Performance-based income and other revenues
decreased from a year ago due to overall lower
accrued carried interest in the Asia private equity
business, primarily driven by an underlying public
investment in one of the funds.

Performance-based income and other

$(17)

$261

Total Expenses$1,083$741

Compensation

$513

$401

Non-compensation

$570

$340

Total Expenses:• Compensation expense increased from a year ago primarily driven by incremental compensation expenses as aresult of the Eaton Vance acquisition,6 partially offset by lower compensation associated with carried interest.
• Non-compensation expenses increased from a year ago primarily driven by incremental expenses as a result of theEaton Vance acquisition.63

Other Matters• The Firm repurchased $3.6 billion of its outstanding common
stock during the quarter as part of its Share Repurchase
Program.
• The Board of Directors declared a $0.70 quarterly dividend
per share, payable on November 15, 2021 to commonshareholders of record on October 29, 2021.
• The Firm intends to early adopt the standardized approachfor counterparty credit risk (SA-CCR) under Basel III in the
fourth quarter. In the absence of further mitigation, our riskweighted assets (RWAs) under the Standardized Approach
could increase by $35 - $45 billion and decrease ourStandardized CET1 capital ratio by approximately 120 basis
points.20

3Q 2021

3Q 2020

CET1 capital17,20

16.0%

17.4%

Tier 1 capital17

17.6%

19.5%

CET1 capital17

17.1%

16.9%

Tier 1 capital17

18.9%

19.0%

Tier 1 leverage18

7.3%

8.3%

SLR19

5.7%

7.4%

$3,557

N/A

36

N/A

Average Price$99.44

N/A

Period End Shares (millions)

1,799

1,576

Tax Rate

23.6%

21.1%

16

CapitalStandardized Approach

Advanced Approach

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 $123 million and $120 million for the third quarter of 2021
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 third quarter results include $145 million of integration-related expenses on a pre-tax basis ($111 million after-tax) as a result of
the E*TRADE and Eaton Vance acquisitions. The integration-related expenses include $19 million in compensation expense and $126
million in non-compensation expense. Wealth Management and Investment Management integration-related expenses include $9 million
and $10 million in compensation expense, respectively, and $104 million and $22 million in non-compensation expense, respectively.
7

The Firm expense efficiency ratio of 66.8% represents total non-interest expenses as a percentage of net revenues. The Firm expense
efficiency ratio excluding integration-related expenses of 65.8% 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

Wealth Management net new assets represent client inflows, including dividends and interest, and asset acquisitions, less client outflows,
and exclude activity from business combinations/divestitures and the impact of fees and commissions. The current quarter ended
September 30, 2021 includes $43 billion of fee-based assets acquired in an asset acquisition.

10

Pre-tax income represents income before taxes.

11

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.

6

12

Wealth Management fee-based asset flows include net new fee-based assets (including asset acquisitions), net account transfers,
dividends, interest, and client fees, and exclude institutional cash management related activity. The current quarter ended September 30,
2021 includes $43 billion of fee-based assets acquired in an asset acquisition.

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, October 14, 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 $83.5 billion and $79.9 billion, andsupplementary leverage exposure denominator of approximately $1.46 trillion and $1.08 trillion, for the third 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 September 30, 2020 reflects the exclusion of U.S. Treasury securities and deposits at Federal Reserve Banks. The
exclusion of these assets had the effect of increasing our SLR by 0.9% as of September 30, 2020.

20

The Firm intends to early adopt the standardized approach for counterparty credit risk (SA-CCR) under Basel III in the fourth quarter. SACCR replaces the current exposure method used to measure derivatives counterparty exposure on the Standardized Approach riskweighted assets (RWAs) and Supplementary Leverage Ratio exposure calculations in the regulatory capital framework. In the absence offurther mitigation, our RWAs under the Standardized Approach could increase by $35 - $45 billion and decrease our Standardized CET1
capital ratio by approximately 120 basis points. This preliminary impact is subject to risks and uncertainties as well as the portfolio
composition as of the adoption date that may cause the actual impact to differ materially and should not be taken as a projection of what ourcapital ratios and RWAs will be in future periods.

7

Consolidated Income Statement Information(unaudited, dollars in millions)

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

Sep 30, 2021

Quarter Ended
Jun 30, 2021 Sep 30, 2020$$

Interest income
Interest expense
Net interest
Net revenues
Provision for credit losses
Non-interest expenses:
Compensation and benefits
Non-compensation expenses:
Brokerage, clearing and exchange fees
Information processing and communications
Professional services
Occupancy and equipment
Marketing and business development
Other
Total non-compensation expenses
Total non-interest expenses
Income before provision for income taxes
Provision for income taxes
Net income
Net income applicable to nonredeemable noncontrolling interests
Net income applicable to Morgan Stanley
Preferred stock dividend
Earnings applicable to Morgan Stanley common shareholders

$

$

3,013
2,861
45
1,280
5,201
290
12,690

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

Percentage Change From:Jun 30, 2021 Sep 30, 2020

1,826
3,150
346
1,037
3,664
212
10,235

18%
(14%)
(88%)
(2%)
5%
(15%)
(2%)

65%
(9%)
(87%)
23%
42%
37%
24%

Nine Months Ended
Sep 30, 2021 Sep 30, 2020$

8,413
10,416744
4,214
14,572916
39,275$Percentage
Change5,239
10,754659
3,499
10,346221
30,718

61%
(3%)
13%
20%
41%
*
28%

2,351
288
2,063
14,753

2,212
347
1,865
14,759

2,056
570
1,486
11,721

6%
(17%)
11%
--

14%
(49%)
39%
26%

7,000
1,044
5,956
45,231

7,917
3,475
4,442
35,160

(12%)
(70%)
34%
29%

24

73

111

(67%)

(78%)

(1)

757

*

5,920

6,423

5,086

(8%)

16%

19,141

15,404

24%

825
788
734
427
146
1,015
3,935

795
765
746
414
146
831
3,697

697
616
542
373
78
731
3,037

4%
3%
(2%)
3%
-22%
6%

18%
28%
35%
14%
87%
39%
30%

2,530
2,286
2,104
1,246
438
2,703
11,307

2,153
1,768
1,526
1,103
273
2,188
9,011

18%
29%
38%
13%
60%
24%
25%

9,855

10,120

8,123

(3%)

21%

30,44824,415

25%

4,874
1,150
3,724
17
3,707
123
3,584

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

3,487
736
2,751
34
2,717
120
2,597

7%
9%
6%
*
6%
19%
5%

40%
56%
35%
(50%)
36%
3%
38%

14,784
3,380
11,40466
11,338364
10,974

9,988
2,221
7,767
156
7,611
377
7,234

48%
52%
47%
(58%)
49%
(3%)
52%

$

$

$

$

$

$

$

$

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

Consolidated Financial Metrics, Ratios and Statistical Data
(unaudited)
Sep 30, 2021

Quarter Ended
Jun 30, 2021

Sep 30, 2020

$
$

$
$

$
$

Percentage Change From:Jun 30, 2021
Sep 30, 2020

Nine Months Ended
Sep 30, 2021 Sep 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

2.01
1.98
14.5%
19.6%

1.88
1.85
13.8%
18.6%

1.68
1.66

7%
7%

20%
19%

$
$

13.2%
15.0%

$
$

54.56
40.47

$
$

54.04
40.12

$
$

50.67
44.81

$

2.04
15.0%
20.2%

$

1.89
14.1%
19.0%

$

1.66
13.2%
15.0%

6.11
6.02

$
$

15.1%
19.7%

8%

23%

4.68
4.62

31%
30%

12.6%
14.3%

$
$

54.56
40.47

$
$

50.67
44.81

$

6.15
15.4%
20.2%

$

4.62
12.6%
14.3%

33%

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

33%
40%
27%
67%
66%
23.6%

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

30%
43%
26%
69%
69%
21.1%

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

1,799

1,834

1,576

(2%)

14%

1,781
1,812

1,814
1,841

1,542
1,566

(2%)
(2%)

15%
16%

Worldwide employees

73,62071,826

63,051

2%

17%

33%
42%
25%
67%
67%
22.9%

28%
44%
26%
69%
69%
22.2%

1,797
1,824

1,546
1,565

Statistical Data:

16%
17%

Notes:- For the quarters ended September 30, 2021 and June 30, 2021, Firm results include pre-tax integration-related expenses of $145 million and $90 million ($111 million and $69 million after-tax) respectively, reported in the WealthManagement and Investment Management business segments. The nine months ended September 30, 2021 results include pre-tax integration-related expenses of $310 million ($238 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