Morgan Stanley · NYSE:MS
Morgan Stanley — Debt Investor Presentation (March 2017)
24 slides from Morgan Stanley's debt investor presentation, Mar 7, 2017
Slide 1: Morgan Stanley 4Q16 Fixed Income Investor Update
Morgan Stanley 4Q16 Fixed Income Investor Update March 7, 2017
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 Report on Form 10-K, Definitive Proxy Statement, Quarterly Reports on Form 10-Q and the Company’s Current Re
Slide 3: Agenda
Agenda Business Update Section 1 Liability Management Section 2 Capital Management Section 3 Liquidity Management Section 4 MORGAN STANLEY 4Q16 FIXED INCOME INVESTOR UPDATE | MARCH 7, 2017 3
Slide 4: Mark to Market: 2017 Strategic Objectives
1 Mark to Market: 2017 Strategic Objectives(1) Objective 2016 Status On Track for $1Bn in Expense Reduction by 1 Streamline: $1Bn Expense Reduction 2017 Retained Revenue Footprint, with 25% Complete Fixed Income Restructuring and 2 Maintain Revenue Footprint Headcount Reduction and Reduced Resources
Slide 5: Opportunities for Future Operational Improvements
Opportunities for Future Operational Improvements A Maintain Expense Discipline and Fully Realize Streamline Savings B Press Advantages in Businesses of Traditional Strength C Deepen Relationships to Grow Wealth Management D Drive Consistent Profit Growth in Investment Management E Continue to Retur
Slide 6: Maintain Expense Discipline and Fully Realize Streamline Savings
A Maintain Expense Discipline and Fully Realize Streamline Savings Focused on Operating Leverage Firm Revenues, ex-DVA ($Bn)(1) 34.5 34.6 Grew PBT(2) by Pre-Tax Profit 12% on Flat 7.9 Revenues 8.8 2017 & Beyond Expect Continued Maintained Compensation Operating 16.0 Compensation Expense 15.9 Leverag
Slide 7: Leading Investment Banking Franchise
B Leading Investment Banking Franchise Continued Strength in Advisory Upside from Normalization of Underwriting Industry Completed M&A Volumes ($Tn)(1) Industry Equity Underwriting Volumes ($Tn)(2) 32.9% Morgan Stanley Retaining Market Share 3.1 8.8% 8.3% 3.1 19.4% 0.8 2.4 0.8 0.8 2.0 2.1 0.6 0.5 20
Slide 8: Sales & Trading Positioned for Market Opportunities
B Sales & Trading Positioned for Market Opportunities Monetizing Strength Across Equities Fixed Income Restructuring in Progress #1 Globally 3 Years Running Fixed Income Sales & Trading Revenues, ex-DVA ($Bn)(2) 1.5 1.5 Gained Share in 2014, 2015 and 2016 Restructuring 1.3 Opportunity to Deplo
Slide 9: Wealth Management Net Interest Income Upside Driven by Rates and U.S. Bank Strategy
C Wealth Management Net Interest Income Upside Driven by Rates and Ongoing Execution of U.S. Bank Strategy Combined U.S. Bank Assets ($Bn)(1) 200 Average Assets $177 $177 – $182 1% $160 5% – 10% 160 2% 15% 17% 35% – 40% 120 36% 35% 80 48% 50% – 55% 40 46% 0 (2) 2015 2016 2017 Objective Lending Inves
Slide 10: Summary Margin Expansion and Growth Opportunities
C Summary Margin Expansion and Growth Opportunities Consistent Margin Improvement Since the Acquisition of Smith Barney Pre-Tax Margin (%)(1)(2) ? ? 23 - 25% 22% 22% 20% 18% 14% 10% 9% (3) 2010 2011 2012 2013 2014 2015 2016 Target: 2017 2018 2019 Key Drivers Additional Drivers Merger Synergies Retai
Slide 11: Investment Management Enters Period of Stability and Growth
D Investment Management Enters Period of Stability and Growth Balanced Business Mix Strategic Focus Organizational Realignment Rationalized Cost Base 28% Legacy Third Party Fund LP Positions 33% AUM Growth Opportunities $417Bn Enhance Distribution Capabilities • U.S. Intermediary and Asia 39%
Slide 12: Continue To Return Capital To Shareholders
E Continue To Return Capital To Shareholders Capital Sufficiency… ...Supporting Growth in Capital Return Average Common Equity, ex-DVA ($Bn)(1) Total Capital Return ($Bn) 69 4.8 66 60 3.2 42 1.6 0.8 0.4 2010 2012 2014 2016 2012 2013 2014 2015 2016 Common Dividends Buybacks 1. Represents the Firm’s a
Slide 13: Liability Management: Executed Shift in Funding Mix to More Durable Sources
2 Liability Management: Executed Shift in Funding Mix to More Durable Sources PRIMARY SOURCES OF FUNDING PERCENTAGE POINT % OF FUNDING MIX FUNDING MIX(1) CHANGE SINCE YE 2013(1) Weighted average maturity of ~6 years; 34% Long-Term Debt Morgan Stanley issues predominantly 5% from the holding company
Slide 14: Unsecured Borrowings: Key Source of Funding
Unsecured Borrowings: Key Source of Funding Unsecured Debt Issuance(1) ($Bn) 42 2016 Highlights 38 34 • Issued $42Bn in 2016(2) 34 30 • Net positive issuance 28 Continue to issue majority of unsecured debt from the Parent while optimizing issuance on other entities Diversified across tenors, cur
Slide 15: Deposit Profile Provides Durable Funding Source and Supports Asset Sensitivity
Deposit Profile Provides Durable Funding Source and Supports Asset Sensitivity Bank Deposit Program Evolution Attractive Deposit Characteristics Bank Deposit Program Balances ($Bn) 2 Bank Deposit Program Balance / Total Client Assets (%)(1) 8 8 8 7 149 153 7 7 7 7 1 128 104 72 '09 '10 '11 '12 '13 '1
Slide 16: Four Pillars of Secured Funding Ensure Durability and Stability
Four Pillars of Secured Funding Ensure Durability and Stability Underlying Principles of the Four Pillars of Secured Funding 1 2 SIGNIFICANT WEIGHTED AVERAGE MATURITY (“WAM”) MATURITY LIMIT STRUCTURE • Criteria-based model sources appropriate term funding • Reduces roll-over risk consistent with liq
Slide 17: Strict Governance Framework Ensures Appropriate Term Consistent with Asset Fundability
Strict Governance Framework Ensures Appropriate Term Consistent with Asset Fundability Rules-based Criteria Determine Asset Fundability Fundability Criteria Fundability Definition • Eligible for financing through Open Market Operations (“OMO”) and/or OMO ELIGIBLE GOVT. SEC / AND / OR GOVT. FULL SECU
Slide 18: Well Positioned For Upcoming TLAC Requirements
3 Well Positioned For Upcoming TLAC Requirements Based on Final U.S. TLAC Rule Released on December 15, 2016(1)(2)(3) 4Q16 Outstanding Debt & Capital Instruments (%) External TLAC & Long-Term Debt ($Bn) Subsidiary Debt Parent Structured Debt 203 6% Common 6% Equity Tier 1 (18) 185 25% (74) ~88% 111
Slide 19: Strong Risk-Based and Strengthening Leverage Ratios
Strong Risk-Based and Strengthening Leverage Ratios 4Q16 Pro Forma Fully Phased-In Common Equity Tier 1 Ratio vs. Pro Forma Fully Phased-In U.S. Peers (%)(1) Supplementary Leverage Ratio (%)(1) 15.9% 13.8% 6.2% 12.7% 12.6% 12.4% 12.2% 11.9% 5.8% 11.6% 10.8% 4.7% MS UBS GS C BARC JPM DB CS BAC 4Q14 4
Slide 20: Significant Global Liquidity Position
4 Significant Global Liquidity Position Period End Global Liquidity Reserve (“GLR”) ($Bn) 4Q16 GLR Composition 202 203 202 Other investment Deposits 193 182 182 grade securities with banks Deposits with Non-U.S. central banks 79 sovereign 4% 4% 89 94 obligations 63 71 88 15% 15% 23% 119 111 113 124
Slide 21: Appendix
Morgan Stanley Appendix
Slide 22: Maturity Profile of Unsecured Borrowings
Maturity Profile of Unsecured Borrowings Total Short-Term and Long-Term Maturities(1)(2) ($Bn) $30 $23 $22 4Q16 Weighted Average $20 Maturity(3): 5.9 years $20 $19 $16 $17 $12 $10 $9 $8 $9 $8 $5 $6 $4 $2 $0 1. As of December 30, 2016. 2. Total short-term and long-term maturities include Plain Vanill
Slide 23: High Quality Liquid Assets (HQLA)
High Quality Liquid Assets (“HQLA”) Pro Forma High Quality Liquidity Assets ($Bn)(1) 186 186 5 27 73 153 112 4Q16 Bank Level 2B Assets Non-bank Level 2A Assets Level 1 Assets 1. Pro forma High Quality Liquid Assets is based on the current interpretation of the final Federal Reserve Bank LCR rule pub
Slide 24: Morgan Stanley 4Q16 Fixed Income Investor Update
Morgan Stanley 4Q16 Fixed Income Investor Update March 7, 2017
Morgan Stanley — Debt Investor Presentation (March 2017) on 6ix