Business Wire | Jan 19, 2022 07:30AM EST

Morgan Stanley Fourth Quarter and Full Year 2021 Earnings Results

Jan. 19, 2022

NEW YORK--(BUSINESS WIRE)--Jan. 19, 2022--Morgan Stanley (NYSE: MS) today reported net revenues of $14.5 billion for the fourth quarter ended December 31, 2021 compared with $13.6 billion a year ago. Net income applicable to Morgan Stanley was $3.7 billion, or $2.01 per diluted share,1compared with $3.4 billion, or $1.81 per diluted share,1 for the same period a year ago.

Full year net revenues were $59.8 billion compared with $48.8 billion a year ago. Net income applicable to Morgan Stanley for the current year was $15.0 billion, or $8.03 per diluted share,1 compared with $11.0 billion, or $6.46 per diluted share,1 a year ago. The comparisons of current year results to prior periods were impacted by the acquisitions of E*TRADE Financial Corporation ("E*TRADE") and Eaton Vance Corp. ("Eaton Vance").

James P. Gorman,Chairman and Chief Executive Officer, said, "2021 was an outstanding year for our Firm. We delivered record net revenues of $60 billion and a ROTCE of 20%, with stand-out results in each of our business segments. Wealth Management grew client assets by nearly $1 trillion to $4.9 trillion this year, with $438 billion in net new assets. Combined with Investment Management, we now have $6.5 trillion in client assets. Our integrated investment bank has continued to gain wallet share. We have a sustainable business model with scale, capital flexibility, momentum and growth."

Full Year HighlightsFinancialSummary^2,3,4

Firm ($MM,except per share 4Q 2021 4Q 2020 FY 2021 FY 2020 data)



Net revenues $14,524 $13,597 $59,755 $48,757

Provision for $5 $4 $4 $761credit losses * The Firm's full yearCompensation $5,487 $5,450 $24,628 $20,854 results reflect bothexpense record net revenues of $59.8 billion up 23%Non-compensation $4,148 $3,713 $15,455 $12,724 year over year and netexpenses income of $15.0 billion up 37%.Pre-tax income^9 $4,884 $4,430 $19,668 $14,418 Net income app. $3,696 $3,385 $15,034 $10,996to MS * The Firm delivered full year ROTCE of 19.8%.^5,6Expenseefficiency ratio 66% 67% 67% 69% ^7 * The full year FirmEarnings per $2.01 $1.81 $8.03 $6.46 expense efficiency ratiodiluted share was 67%.^6,7

Book value per $55.12 $51.13 $55.12 $51.13 share * Common Equity Tier 1Tangible book $40.91 $41.95 $40.91 $41.95 capital standardizedvalue per share ratio was 16.0%.

Return on equity 14.7% 14.7% 15.0% 13.1%

Return on * Institutional Securitiestangible equity^ 19.8% 17.7% 19.8% 15.2% reported record full5 year net revenues of $29.8 billion up 13%Institutional with strong revenuesSecurities across Advisory, Underwriting, andNet revenues $6,669 $6,970 $29,833 $26,476 Equity.

Investment $2,434 $2,302 $10,272 $7,204 Banking * Wealth ManagementEquity $2,857 $2,534 $11,435 $9,921 delivered a full year pre-tax margin of 25.5%Fixed Income $1,228 $1,790 $7,516 $8,847 or 26.9% excluding integration-relatedWealth expenses.^6,8 TheManagement business added net new assets of $438 billionNet revenues $6,254 $5,672 $24,243 $19,086 and total client assets under management wereFee-based client $1,839 $1,472 $1,839 $1,472 $4.9 trillion, up 23%assets ($Bn)^10 from a year ago.

Fee-based asset $37.8 $24.1 $179.3 $77.4 flows ($Bn)^11 * Investment ManagementNet new assets $127.1 $73.4 $437.7 $175.4 reported full year net($Bn)^12 revenues above $6 billion driven by strongLoans ($Bn) $129.2 $98.1 $129.2 $98.1 fee-based asset management revenues onInvestment record AUM of $1.6Management trillion.

Net revenues $1,751 $1,100 $6,220 $3,734

AUM ($Bn)^13 $1,565 $781 $1,565 $781

Long-term net $(1.1) $8.5 $26.4 $41.0flows ($Bn)^14

Fourth Quarter Results

Institutional Securities

Institutional Securities reported net revenues for the current quarter of $6.7 billion compared with $7.0 billion a year ago. Pre-tax income was $3.0 billion compared with $3.2 billion a year ago.9

4Q 4Q ($ millions) 2021 2020

Net Revenues $6,669 $6,970Investment Banking revenues up 6% from a yearago:

* Advisory revenues increased from a year ago Investment driven by higher completed M&A transactions. Banking $2,434 $2,302 * Equity underwriting revenues decreased from a year ago due to declines in follow-on offerings and blocks, partially offset by Advisory $1,071 $827 higher revenues from private placements. * Fixed income underwriting revenues increased from a year ago driven by higher securitized Equity products and non-investment grade issuances. underwriting $853 $1,000

Equity net revenues up 13% from a year ago: Fixed income underwriting $510 $475

* Equity net revenues increased from a year ago driven by higher prime brokerage revenues as a result of higher client balances, and also included a significant mark-to-market gain of $225 million on a Equity $2,857 $2,534 strategic investment, partially offset by declines in cash equities and derivatives. Fixed Income $1,228 $1,790Fixed Income net revenues down 31% from a yearago: Other $150 $344

* Fixed Income net revenues decreased from a year ago driven by a challenging trading environment in rates and lower volumes and tighter bid-offer spreads in credit. Provision for credit losses $(8) $13Other:



* Other revenues decreased from a year ago due to lower gains on investments associated Total Expenses $3,705 $3,797 with certain employee deferred compensation plans and lower mark-to-market gains on corporate loans held for sale, net of Compensation $1,370 $1,575 related hedges.

Non-compensation $2,335 $2,222



Total Expenses:

* Compensation expense decreased from a year ago reflecting lower expenses related to certain deferred compensation plans linked to investment performance. * Non-compensation expenses increased from a year ago primarily driven by higher volume related expenses.

Wealth Management

Wealth Management reported net revenues for the current quarter of $6.3 billion compared with $5.7 billion a year ago. Pre-tax income of $1.4 billion9 in the current quarter resulted in a pre-tax margin of 22.6% or 24.4% excluding the impact of integration-related expenses.6,8

4Q 4QNet revenues up 10% from a year ago: ($ millions) 2021 2020

Net Revenues $6,254 $5,672 * Asset management revenues increased from a year ago reflecting higher asset levels driven by market appreciation and strong Asset management $3,700 $2,975 positive fee-based flows. * Transactional revenues^15 were essentially unchanged excluding the impact of Transactional^15 $1,027 $1,340 mark-to-market gains on investments associated with certain employee deferred compensation plans. Net interest $1,405 $1,207 * Net interest income increased from a year ago primarily driven by strong growth in bank lending and higher brokerage sweep Other $122 $150 deposits.

Total Expenses: Provision for credit losses $13 $(9)

* Compensation expense increased from a year Total Expenses $4,826 $4,611 ago driven by higher compensable revenues and higher benefits cost, partially offset by lower expenses related to certain Compensation $3,486 $3,345 deferred compensation plans linked to investment performance. * Non-compensation expenses increased from a Non-compensation $1,340 $1,266 year ago driven by higher professional services and integration-related expenses. ^ 6

Investment Management

Investment Management reported net revenues of $1.8 billion compared with $1.1 billion a year ago. Pre-tax income was $508 million compared with $196 million a year ago.9 The comparisons of current year results to prior periods were impacted by the acquisition of Eaton Vance completed on March 1, 2021.

4Q 4QNet revenues up 59% from a year ago: ($ millions) 2021 2020

Net Revenues $1,751 $1,100 * Asset management and related fees increased from a year ago driven by the Eaton Vance acquisition, higher performance fees, and Asset management higher average AUM. and related fees $1,585 $869 * Performance-based income and other revenues decreased from a year ago reflecting losses on investments associated with certain Performance-based employee deferred compensation plans. income and other $166 $231

Total Expenses: Total Expenses $1,243 $904

* Compensation expense increased from a year Compensation $631 $530 ago primarily driven by the Eaton Vance acquisition,^6 partially offset by lower expenses related to certain deferred Non-compensation $612 $374 compensation plans linked to investment performance.

* Non-compensation expenses increased from a year ago primarily driven by the Eaton Vance acquisition. 6

Full Year Results

Institutional Securities

Institutional Securities reported record net revenues of $29.8 billion compared with $26.5 billion a year ago. Pre-tax income was $11.8 billion compared with $9.2 billion in the prior year.9

($ millions) FY 2021 FY 2020

Investment Banking revenues up 43% from a year Net Revenues $29,833 $26,476ago:



* Record Advisory revenues increased from a year ago driven by higher completed M&A Investment transactions. Banking $10,272 $7,204 * Record Equity underwriting revenues increased from a year ago primarily on higher volumes in IPOs, private placements Advisory $3,487 $2,008 and blocks. * Record Fixed income underwriting revenues increased from a year ago on higher Equity non-investment grade loan and bond underwriting $4,437 $3,092 issuances driven by increased event driven financing. Fixed incomeEquity net revenues up 15% from a year ago: underwriting $2,348 $2,104

* Record Equity net revenues increased from a year ago reflecting strong performance across products and geographies, with Equity $11,435 $9,921 notable strength in Asia, driven by higher client engagement. Fixed Income $7,516 $8,847Fixed Income net revenues down 15% from a yearago: Other $610 $504

* Fixed Income net revenues decreased versus a strong prior year with declines across businesses driven by tighter bid-offer spreads in macro and credit corporates, Provision for partially offset by securitized products. credit losses $(7) $731

Other:

* Other revenues increased from a year ago Total Expenses $18,026 $16,594 driven by higher contributions from our Mitsubishi UFJ securities joint venture and mark-to-market gains on corporate Compensation $9,165 $8,342 loans held for sale, net of related hedges. Non-compensation $8,861 $8,252



Provision for credit losses:

* Provision for credit losses decreased from a year ago as a result of an improved macroeconomic environment versus the prior year.

Total Expenses:

* Compensation expense increased from a year ago driven by higher discretionary compensation on higher revenues as well as increases in salaries and benefits. * Non-compensation expenses increased from a year ago primarily driven by higher volume related expenses.

Wealth Management

Wealth Management reported net revenues of $24.2 billion compared with $19.1 billion a year ago. Pre-tax income of $6.2 billion9 in the current year resulted in a reported pre-tax margin of 25.5% or 26.9% 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 in the fourth quarter of 2020.

($ millions) FY 2021 FY 2020

Net Revenues $24,243 $19,086

Net revenues up 27% from a year ago: Asset management $13,966 $10,955

* Asset management revenues increased from a Transactional^15 $4,259 $3,694 year ago on higher asset levels driven by market appreciation and record fee-based flows. Net interest $5,393 $4,022 * Transactional revenues^15 increased 29% excluding the impact of mark-to-market gains on investments associated with Other $625 $415 certain employee deferred compensations plans. Results reflect incremental revenues due to the E*TRADE acquisition Provision for and strong client activity. credit losses $11 $30 * Net interest income increased from a year ago primarily driven by the E*TRADE acquisition, strong growth in bank Total Expenses $18,051 $14,669 lending, improved mortgage securities prepayment impact, and higher brokerage sweep deposits, partially offset by the Compensation $13,090 $10,970 impact of lower average rates.

Non-compensation $4,961 $3,699



Total Expenses:

* Compensation expense increased from a year ago primarily driven by higher compensable revenues and higher compensation driven by the E*TRADE acquisition.6 * Non-compensation expenses increased from a year ago primarily driven by the E*TRADE acquisition.6

Investment Management

Investment Management reported net revenues of $6.2 billion compared with $3.7 billion a year ago. Pre-tax income was $1.7 billion compared with $870 million in the prior year.9 The comparisons of current year results to prior periods were impacted by the acquisition of Eaton Vance completed on March 1, 2021.

($ millions) FY FYNet revenues up 67% from a year ago: 2021 2020

Net Revenues $6,220 $3,734

* Asset management and related fees increased Asset management $5,576 $3,013 due to the Eaton Vance acquisition, record and related fees AUM on strong performance and positive flows across all asset classes. Performance-based $644 $721 * Performance-based income and other revenues income and other decreased from a year ago reflecting lower results in our Asia private equity business, primarily driven by an underlying public investment and lower gains on Total Expenses $4,542 $2,864 investments associated with certain employee deferred compensation plans. The Compensation $2,373 $1,542 decrease was partially offset by higher accrued carried interest across our private Non-compensation $2,169 $1,322 funds.

Total Expenses:

* Compensation expense increased from a year ago driven by the Eaton Vance acquisition6 and higher compensation associated with carried interest, partially offset by lower expenses related to certain deferred compensation plans linked to investment performance. * Non-compensation expenses increased from a year ago primarily driven by the Eaton Vance acquisition.6

Other Matters

4Q 4Q FY 2021 FY 2021 2020 2020

Common Stock Repurchases

Repurchases $2,833 NA $11,464 $1,347 ($MM)

Number of 28 NA 126 29 * The Firm repurchased $2.8 Shares (MM) billion of its outstanding common stock during the quarter Average Price $99.80 NA $91.13 $46.01 as part of its Share Repurchase Program. Period End 1,772 1,810 1,772 1,810 Shares (MM) * The Board of Directors declared a $0.70 quarterly dividend per Tax Rate 23.9% 23.0% 23.1% 22.5% share, payable on February 15, 2022 to common shareholders of Capital^16 record on January 31, 2022. Standardized * The Firm early adopted the Approach Standardized Approach for Counterparty Credit Risk CET1 capital^ 16.0% 17.4% (SA-CCR) under Basel III on 17,20 December 1, 2021. As a result of the adoption, as of December Tier 1 capital^ 17.6% 19.4% 31, 2021 our risk-weighted 17 assets under the Standardized Approach increased by $23 Advanced billion and our Standardized Approach CET1 capital ratio decreased by 82 basis points.^20 CET1 capital^17 17.5% 17.7%

Tier 1 capital^ 19.3% 19.8% 17

Leveraged-based capital

Tier 1 leverage 7.1% 8.4% ^18

SLR^19 5.6% 7.4%



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 reconciliation of 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 other 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 and uncertainties 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" 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 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.

1 Includes preferred dividends related to the calculation of earnings per share for the fourth quarter of 2021 and 2020 of approximately $104 million and $119 million, respectively. Includes preferred dividends related to the calculation of earnings per share for the years ended 2021 and 2020 of approximately $468 million and $496 million, 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 adjustments that 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 other stakeholders 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, 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 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 is a non-GAAP financial measures that the Firm considers useful for analysts, investors and other stakeholders to allow comparability of period-to-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 of allowable mortgage servicing rights deduction.

6 The Firm's and business segment's fourth quarter and full year results for 2021 and 2020 include integration-related expenses as a result of the E*TRADE and Eaton Vance acquisitions reported in the Wealth Management segment and Investment Management segment, respectively. The amounts are presented as follows (in millions):

4Q 2021 4Q 2020 FY 2021 FY 2020

Firm

Compensation $ 25 $ 151 $ 102 $ 151

Non-compensation 121 80 354 80

Total non-interest expenses $ 146 $ 231 $ 456 $ 231

Total non-interest expenses $ 114 $ 189 $ 352 $ 189 (after-tax)



Wealth Management

Compensation $ 10 $ 151 $ 58 $ 151

Non-compensation 99 80 288 80

Total non-interest expenses $ 109 $ 231 $ 346 $ 231

Total non-interest expenses $ 85 $ 189 $ 267 $ 189 (after-tax)



Investment Management

Compensation $ 15 - $ 44 -

Non-compensation 22 - 66 -

Total non-interest expenses $ 37 - $ 110 -

Total non-interest expenses $ 29 - $ 85 - (after-tax)

7 The Firm expense efficiency ratio of 67.1% represents total non-interest expenses as a percentage of net revenues. The Firm expense efficiency ratio excluding integration-related expenses of 66.3% 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 integration-related 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 other stakeholders 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 is a fee calculated on those assets.

11 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.

12 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.

13 AUM is defined as assets under management or supervision.

14 Long-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 the impact 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-to-period operating performance and capital adequacy.

16 Capital ratios are estimates as of the press release date, January 19, 2022.

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" in the 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 $83.4 billion and $88.1 billion, and supplementary leverage exposure denominator of approximately $1.48 trillion and $1.19 trillion, for the fourth 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 December 31, 2020 reflect 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 0.8% as of December 31, 2020.

20 The Firm early adopted the standardized approach for counterparty credit risk (SA-CCR) under Basel III on December 1, 2021. SA-CCR replaced the current exposure method used to measure derivatives counterparty exposure within the Standardized Approach risk-weighted assets (RWAs) and Supplementary Leverage Ratio exposure calculations in the regulatory capital framework. As a result of the adoption, as of December 31, 2021 our risk-weighted assets under the Standardized Approach increased by $23 billion and our Standardized CET1 capital ratio decreased by 82 basis points.

ConsolidatedIncome StatementInformation(unaudited,dollars inmillions)

Quarter Ended Percentage Twelve Months Ended Percentage Change From:

Dec 31, Sep 30, Dec 31, Sep Dec Dec 31, Dec 31, 2021 2021 2020 30, 31, 2021 2020 Change 2021 2020

Revenues:Investment $ 2,581 $ 3,013 $ 2,435 (14 %) 6 % $ 10,994 $ 7,674 43 %bankingTrading 2,394 2,861 3,229 (16 %) (26 %) 12,810 13,983 (8 %)

Investments 632 45 327 * 93 % 1,376 986 40 %

Commissions and 1,307 1,280 1,352 2 % (3 %) 5,521 4,851 14 %feesAsset management 5,395 5,201 3,926 4 % 37 % 19,967 14,272 40 %

Other 126 290 457 (57 %) (72 %) 1,042 678 54 %

Total 12,435 12,690 11,726 (2 %) 6 % 51,710 42,444 22 %non-interestrevenues Interest income 2,411 2,351 2,245 3 % 7 % 9,411 10,162 (7 %)

Interest expense 322 288 374 12 % (14 %) 1,366 3,849 (65 %)

Net interest 2,089 2,063 1,871 1 % 12 % 8,045 6,313 27 %

Net revenues 14,524 14,753 13,597 (2 %) 7 % 59,755 48,757 23 %

Provision for 5 24 4 (79 %) 25 % 4 761 (99 %)credit losses Non-interestexpenses:Compensation and 5,487 5,920 5,450 (7 %) 1 % 24,628 20,854 18 %benefits Non-compensationexpenses:Brokerage, 811 825 776 (2 %) 5 % 3,341 2,929 14 %clearing andexchange feesInformation 833 788 697 6 % 20 % 3,119 2,465 27 %processing andcommunicationsProfessional 829 734 679 13 % 22 % 2,933 2,205 33 %servicesOccupancy and 479 427 456 12 % 5 % 1,725 1,559 11 %equipmentMarketing and 205 146 161 40 % 27 % 643 434 48 %businessdevelopmentOther 991 1,015 944 (2 %) 5 % 3,694 3,132 18 %

Total 4,148 3,935 3,713 5 % 12 % 15,455 12,724 21 %non-compensationexpenses Total 9,635 9,855 9,163 (2 %) 5 % 40,083 33,578 19 %non-interestexpenses Income before 4,884 4,874 4,430 -- 10 % 19,668 14,418 36 %provision forincome taxesProvision for 1,168 1,150 1,018 2 % 15 % 4,548 3,239 40 %income taxesNet income $ 3,716 $ 3,724 $ 3,412 -- 9 % $ 15,120 $ 11,179 35 %

Net incomeapplicable to 20 17 27 18 % (26 %) 86 183 (53 %)nonredeemablenoncontrollinginterestsNet income 3,696 3,707 3,385 -- 9 % 15,034 10,996 37 %applicable toMorgan StanleyPreferred stock 104 123 119 (15 %) (13 %) 468 496 (6 %)dividendEarningsapplicable to $ 3,592 $ 3,584 $ 3,266 -- 10 % $ 14,566 $ 10,500 39 %Morgan Stanleycommonshareholders The End Notes are an integral part of this presentation. Refer to the FinancialSupplement on pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures,Definitions of Performance Metrics and Terms, Supplemental Quantitative Detailsand Calculations, and Legal Notice for additional information.

Consolidated Financial Metrics, Ratios and Statistical Data

(unaudited)

Quarter Ended

Percentage Change From:

Twelve Months Ended

Percentage

Dec 31, 2021

Sep 30, 2021

Dec 31, 2020

Sep 30, 2021

Dec 31, 2020

Dec 31, 2021

Dec 31, 2020

Change

Financial Metrics:Earnings per basic share$

2.05

$

2.01

$

1.84

2

%

11

%

$

8.16

$

6.55

25

%

Earnings per diluted share$

2.01

$

1.98

$

1.81

2

%

11

%

$

8.03

$

6.46

24

%

Return on average common equity14.7

%

14.5

%

14.7

%

15.0

%

13.1

%

Return on average tangible common equity19.8

%

19.6

%

17.7

%

19.8

%

15.2

%

Book value per common share$

55.12

$

54.56

$

51.13

$

55.12

$

51.13

Tangible book value per common share$

40.91

$

40.47

$

41.95

$

40.91

$

41.95

Excluding integration-related expensesAdjusted earnings per diluted share$

2.08

$

2.04

$

1.92

2

%

8

%

$

8.22

$

6.58

25

%

Adjusted return on average common equity15.2

%

15.0

%

15.6

%

15.3

%

13.3

%

Adjusted return on average tangible common equity20.4

%

20.2

%

18.7

%

20.2

%

15.4

%

Financial Ratios:Pre-tax profit margin34

%

33

%

33

%

33

%

30

%

Compensation and benefits as a % of net revenues38

%

40

%

40

%

41

%

43

%

Non-compensation expenses as a % of net revenues29

%

27

%

27

%

26

%

26

%

Firm expense efficiency ratio66

%

67

%

67

%

67

%

69

%

Firm expense efficiency ratio excluding integration-related expenses65

%

66

%

66

%

66

%

68

%

Effective tax rate23.9

%

23.6

%

23.0

%

23.1

%

22.5

%

Statistical Data:Period end common shares outstanding (millions)1,772

1,799

1,810

(2

%)

(2

%)

Average common shares outstanding (millions)Basic1,751

1,781

1,774

(2

%)

(1

%)

1,785

1,603

11

%

Diluted1,785

1,812

1,802

(1

%)

(1

%)

1,814

1,624

12

%

Worldwide employees74,814

73,620

68,097

2

%

10

%

Notes:- For the quarters ended December 31, 2021 and September 30, 2021 and the full year ended December 31, 2021, Firm results include pre-tax integration-related expenses of $146 million, $145 million and $456 million ($114 million, $111 million and $352 million after-tax) respectively, reported in the Wealth Management and Investment Management business segments. For the quarter and full year ended December 31, 2020, Firm results include pre-tax integration-related expenses of $231 million ($189 million after-tax) reported in the Wealth Management segment.- 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20220116005037/en/

CONTACT: Morgan Stanley