Morgan Stanley · NYSE:MS
Morgan Stanley — Q3 2008 Earnings Presentation
20 slides from Morgan Stanley's earnings presentation, Oct 16, 2008
Slide 1: Morgan Stanley Financial Overview Third Quarter 2008
Free Writing Prospectus Registration Statement No. 333-131266 Dated October 16, 2008 Filed pursuant to Rule 433 Morgan Stanley Financial Overview Third Quarter 2008
Slide 2: Notice
Notice The information provided herein may include certain non-GAAP financial measures. The reconciliation of such measures to the comparable GAAP figures are included in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, including any amendmen
Slide 3: Index
Index • Morgan Stanley as a Federal Financial Holding Company • Mitsubishi UFJ Investment • Temporary Liquidity Guarantee • Capital, Liquidity and Funding • Risk Management • Financial Results • Institutional Securities • Global Wealth Management • Asset Management This slide is part of a presentati
Slide 4: Morgan Stanley as a Federal Financial Holding Company
Morgan Stanley as a Federal Financial Holding Company Federal Financial Holding Company Benefits Regulation Capital • New business opportunities • Federal Reserve • “Well-Capitalized” institution • Access to expanded sources • Office of Comptroller of • One of the highest Tier 1 of funding and liqui
Slide 5: Mitsubishi UFJ Investment (MUFG)
Mitsubishi UFJ Investment (MUFG) Mitsubishi – Morgan Stanley Alliance Strategic Alliance Transaction Details Capital • Global strategic alliance with • 21% interest in Morgan • $9 billion investment further focus on global corporate and Stanley on a fully diluted bolsters strong capital and investme
Slide 6: Temporary Liquidity Guarantee Program
Temporary Liquidity Guarantee Program Systemic Risk Exception of the FDIC Improvement Act of 1991 Eligible Entities Type of Unsecured Debt Terms • FDIC-insured • Promissory Notes • Covered up to 125% of debt depository institutions outstanding as of September • Commercial Paper 30, 2008 (scheduled t
Slide 7: Total Capital
Total Capital Total and Adjusted Assets ($Bn) 1,185 1,091 1,045 1,031 987 900 689 566 637 579 544 3Q07 4Q07 1Q08 2Q08 3Q08 10/7/2008 Adjusted Assets Total Capital (1) 187.5 191.1 198.2 210.1 202.6 Total Capital as a % Total Assets 16% 18% 18% 20% 21% Source: Morgan Stanley SEC Filings (1) These amou
Slide 8: Active Capital Management
Active Capital Management Leverage Ratios(1) 32.3x 32.6x 27.4x 25.1x 23.4x 20.0x (3) 3Q07 4Q07 1Q08 2Q08 3Q08 10/7/2008 Adjusted Leverage Ratio(2) (3) 18.8x 17.6x 16.0x 14.1x 12.9x 10x Tangible Shareholders’ Equity ($Bn) 37 32 40 41 42 Source: Morgan Stanley SEC Filings (1) Leverage ratio equals tot
Slide 9: Capital Strength – 3Q08
Capital Strength – 3Q08 Basel II Regulatory Capital ($Bn) Tier 1 Ratio 12.4% 12.7% >15.5% 55.6 56.3 14.4 14.7 4.1 4.1 11.5 11.5 +9 33.4 34.7 (7.8) (8.6) 2Q08 3Q08 $9 Bn MUFG Tier 1 Common Equity Tier 2 Subordinated Debt Tier 1 Eligible Capital Qualifying Long-Term Debt Deductibles (1) Source: Morgan
Slide 10: Average Liquidity Reserves per Quarter
Average Liquidity Reserves per Quarter ($Bn) Post - 3Q08, liquidity reserves remain > 2007 average 175 135 120 122 94 93 61 51 56 64 68 44 18 30 74 81 64 71 46 49 38 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 Parent Bank and Non-Bank Subsidiaries Source: Morgan Stanley SEC Filings This slide is part of a pr
Slide 11: Evolution of Funding Diversification
Evolution of Funding Diversification Investment Bank Federal Reserve Lending Financial Holding Company Fed Discount Window(4) Term Auction Facility Primary Dealer Credit Facility Expansion (3) Primary Dealer Credit Facility(2) Term Securities Lending Facility(1) Deposits Secured Financing Long-Term
Slide 12: Sources of Funding
Sources of Funding CP Outstanding Expansion of Bank Deposit Program ($Bn) ($Bn) 36 24 23 26 17 12 13 8 2 3Q07 4Q07 1Q08 2Q08 3Q08 4Q05 4Q06 4Q07 3Q08 Source: Morgan Stanley SEC Filings Source: Morgan Stanley SEC Filings Long-Term Debt Secured Financing Books • 2008 YTD Issuance $38 billion • Secured
Slide 13: Government Liquidity Facilities
Government Liquidity Facilities Eligible Collateral Term Securities Primary Dealer Federal Reserve Lending Facility Credit Facility Discount Window U.S. Government and Agency Securities U.S. Treasuries Agencies Agency MBS / GNMA Agency CMO Corporate and Other Debt Commercial Paper / Money Markets In
Slide 14: Risk Management
Risk Management Net Exposure (1) ($Bn) 19.6 17.5 10.9 9.3 7.7 6.5 3.6 2.7 1.8 0.0 ABS CDO / CMBS Other Monoline (2) Leveraged Acquisition Subprime Mortgage-Related Finance Pipeline 4Q 2007 3Q 2008 Source: Morgan Stanley SEC Filings (1) Net Exposure is defined as potential loss to the Firm in an even
Slide 15: Level 3 Assets
Level 3 Assets Total Assets ($Bn) • Level 3 – Inputs that are unobservable and 1,091 significant to the overall fair value 1,031 measurement 987 • Level 2 to Level 3: ↑ $3.9 billion of certain Corporate & other debt • Level 3 to Level 2: 78 69 78 ↓ $1 billion of certain Corporate & other 1Q08 2Q08 3
Slide 16: Consolidated Financial Highlights
Consolidated Financial Highlights 3Q08 Highlights Net Revenue Composition - Nine Months 2008 Net Revenues ($Bn) 8.0 Asset PBT ($Bn) 1.9 Management Tier 1 Capital (%) 12.7 7% 1.32 Global 36% Diluted EPS ($) Wealth 24% Equity Management Pre-Tax Margin (%) 24 ROE – Annualized Cont. Ops. (%) 16.5 7% Oth
Slide 17: Regional Net Revenue Growth
Regional Net Revenue Growth Americas ($Bn) 13.4 12.0 2004 Global Revenues $20.3Bn YTD 2008 Global Revenues $22.9Bn FY2004 9Mos 2008 Europe, Middle East and Africa EMEA ($Bn) 25% EMEA 5.0 7.9 35% 52% 66% 9% FY2004 9Mos 2008 Asia Americas 13% Asia Americas ($Bn) 3.0 Asia 1.9 FY2004 9Mos 2008 Source: M
Slide 18: Institutional Securities
Institutional Securities Net Revenue ($MM) 7,162 7,429 687 6,213 580 5,911 1,032 99 1,704 4,983 (3,425) 980 715 463 3,625 1,032 2,318 815 2,374 1,439 1,363 3,467 752 875 2,671 1,880 3,232 2,664 2,468 1,667 2,103 1,201 1,493 (105) (8,071) 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 (2) Fixed Income (1) Equity
Slide 19: Global Wealth Management
Global Wealth Management Net Revenue ($MM) 2,436 236 207 1,789 1,642 1,683 1,606 220 1,511 159 195 1,555 211 953 136 199 262 153 148 127 181 173 204 199 134 204 143 140 357 353 408 315 363 346 326 729 769 788 781 716 694 693 (2) 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 Fees Commissions Other (1) Principal
Slide 20: Asset Management
Asset Management Net Revenue ($MM) 1,509 1,368 77 1,364 68 100 1,252 79 588 338 532 187 543 488 647 78 26 91 926 986 768 844 845 779 742 (186) (380) (317) 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 (1) Asset Management Fees Principal Transactions Other Source: Morgan Stanley SEC Filings (1) “Other” includes