Morgan Stanley · NYSE:MS
Morgan Stanley — Investor Presentation (January 2015)
17 slides from Morgan Stanley's investor presentation, Jan 20, 2015
Slide 1: Morgan Stanley Strategic Update
Morgan Stanley Strategic Update James P. Gorman, Chairman and Chief Executive Officer January 20, 2015
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 this presentation or in the Company’s most recent Annual Report on Form 10-K, Definitive Proxy Statement, Quarterly Reports on Fo
Slide 3: Morgan Stanley: Looking Forward
Morgan Stanley: Looking Forward • Multi-year transformation of business mix has led to earnings consistency and balance sheet strength • Beyond core businesses, Morgan Stanley benefitting from U.S. Bank(1) upside, lower funding costs and returning incremental capital Full Year 2006 Net Revenues(2) F
Slide 4: 2014 Checklist: Mark to Market
2014 Checklist: Mark to Market (1) 1 Continue to improve Wealth Management margins through cost discipline and revenue growth On Track 2 Improve Fixed Income and Commodities ROE: – Strategic solution for Commodities – “Centrally managed” Fixed Income – RWA reductions Resized, Reshaped and More Being
Slide 5: 2015 Roll-Forward: Realizing Benefit of Strategic Initiatives
2015 Roll-Forward: Realizing Benefit of Strategic Initiatives 1 Ongoing Wealth Management upside through additional margin improvement 2 Continued execution of U.S. Bank strategy in Wealth Management and Institutional Securities 3 Progress in Fixed Income and Commodities ROE 4 Tailwind from lower fu
Slide 6: Ongoing Wealth Management Upside Through Additional Margin Improvement
1 Ongoing Wealth Management Upside Through Additional Margin Improvement Wealth Management Pre-tax Margin (1),(2) 10% 14%(3) 18% 20% 22-25%(4) 2011 2012 2013 2014 4Q15 Pre-tax Margin Target Includes: • Revenue and operating leverage from deposit deployment • Continued investments in leading technolo
Slide 7: Additional Drivers of Wealth Management Returns
Additional Drivers of Wealth Management Returns • Benefitting from focus on high net worth and ultra-high net worth client segments • These segments have the broadest, most complex financial planning and investing requirements – consistent with Morgan Stanley’s strengths Meaningfully Increased Overa
Slide 8: NII Upside Driven by Ongoing Execution of U.S. Bank Strategy
2 NII Upside Driven by Ongoing Execution of U.S. Bank Strategy In Wealth Management & Institutional Securities • Sizable, underpenetrated and embedded client base supports balanced loan growth • Higher interest rates (eventually) will drive additional upside to net interest income Current Yield Futu
Slide 9: Institutional Securities Positive Outlook, Leading Advisory and Equity Franchises
Institutional Securities Positive Outlook, Benefitting From Leading Advisory and Equity Sales & Trading Franchises Industry Announced M&A Volumes(1) ($Tn) Industry Equity Underwriting Volumes(1) ($Tn) Morgan Stanley – #2 in Global Announced M&A in 2014 Morgan Stanley – #2 in Global Equity & Equity L
Slide 10: Drive ROE > 10% in Fixed Income & Commodities
3 Drive ROE > 10% in Fixed Income & Commodities Fixed Income Implemented centralized management of resources across Fixed Income – Reduced balance sheet – Reduced risk-weighted assets – Reduced non-compensation expenses Maintained normalized(1) ROEs of >10% in our areas of strength in 2014 – Securit
Slide 11: Reduction and Optimization of Risk-Weighted Assets in Fixed Income and Commodities
3 Reduction and Optimization of Risk-Weighted Assets in Fixed Income and Commodities • On track to achieve year end 2015 target of <$180Bn • Optimize ~$25Bn of RWAs beyond $180Bn target, primarily passive roll-down • RWAs to be redeployed to maximize returns, either within Fixed Income or across the
Slide 12: Tailwind from Lower Funding Costs
4 Tailwind from Lower Funding Costs • Meaningful reduction in funding costs due to spread tightening and roll-off of older more expensive debt Issuance and New Issue Levels Weighted Average Cost of Unsecured Funding ($Bn) (Spread to UST, bps) 2010 2011 2012 2013 2014 Peak Cost of Funding Projected ~
Slide 13: Ongoing Focus on Expense Management, Resulting in Greater Efficiency
5 Ongoing Focus on Expense Management, Resulting in Greater Efficiency Compensation Expenses Recent change to compensation structure: • Reflects the stability of the franchise • Reduces the overhang of prior year deferrals • Thus, provides operating leverage in an improved revenue environment and a
Slide 14: Returning Capital – Our Philosophy
6 Returning Capital – Our Philosophy • We intend to continue to increase our capital return to shareholders over time, subject to regulatory approval Morgan Stanley’s Capital Returns(1) & Total Payout Ratios(2) In 2012 and 2013, the Firm acquired the remaining 14% and 35% interest of the Wealth Mana
Slide 15: Systematic Progress to Achieving Return on Equity of 10% and Higher
Systematic Progress to Achieving Return on Equity of 10% and Higher Targeted Return on Average Common Equity (ROE) excl. DVA (1) (%) Assumptions •No change in industry trading or investment banking volumes •No change in equity market levels •Normalized legal expenses Actions •Execution of U.S. Bank
Slide 16: End Notes
End Notes These notes refer to the financial metrics presented on Slide 15. (1) The attainment of these results may be impacted by external factors that cannot be predicted at this time, including macroeconomic and market conditions and future regulations. (2) Improved interest rate environment refe
Slide 17: Morgan Stanley Strategic Update
Morgan Stanley Strategic Update James P. Gorman, Chairman and Chief Executive Officer January 20, 2015