Morgan Stanley · NYSE:MS
Morgan Stanley — Under the Hood Conference (May 2005)
31 slides from Morgan Stanley's conference presentation, May 17, 2005
Slide 1: David H. Sidwell and Jerker Johansson, May 17, 2005
David H. Sidwell, Chief Financial Officer Jerker Johansson, Global Head of Equities May 17, 2005
Slide 2: Notice
Notice This presentation may contain forward-looking statements. These statements, which reflect management's beliefs and expectations, are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of the risks and uncertainties that may affect the Compa
Slide 3: Agenda
Agenda • Introduction • Global Equities Overview • Our Strategy • Q&A This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-pu
Slide 4: Introduction
Introduction David H. Sidwell Chief Financial Officer This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information
Slide 5: Strategy and Execution Agenda
Strategy and Execution Agenda • Pursue a Global Securities-Focused Strategy • Integrate Our Securities Businesses • Align Management Structure with our Integrated Securities Model • Pursue Credit Services Business – Discover – Spin-off • Regain a Premium Return on Equity This slide is part of a pres
Slide 6: A Premier Franchise
A Premier Franchise Institutional Securities Investment Banking Fixed Income Institutional Equities • #1 Announced Global M&A • #1 Overall in 2004 Global Investor • #1 Equity secondary trading FX Survey • #1 Global IPOs • #1 in Greenwich Trading • Best in class commodities business Quality Index • #
Slide 7: Management Aligned With Strategy
Management Aligned With Strategy Securities Business Credit Services Business Steve Crawford and Zoe Cruz David Nelms Co-Presidents Chairman and CEO Investment Institutional Investment Individual Fixed Income Banking Equity Management Investor Group Common Platform Finance Risk Management Operations
Slide 8: Where Are We Now?
Where Are We Now? • Governance Changes − Created Lead Director Position − Adding Two Additional Outside Directors − Accelerated De-staggering of Board − Removed Requirement of Supermajority Vote − Reaffirmed Director Retirement Age of 72 − Added to Compensation Committee Charter Management Developme
Slide 9: Global Equities Overview
Global Equities Overview Jerker Johansson Head of Global Equities This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public
Slide 10: The Evolution of the Total Market
The Evolution of the Total Market Total Market Value as a % of GDP % 160 140 120 100 80 60 40 20 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Total EU Japan US NJA Source: Datastream and Morgan Stanley Research This slide is part of a presentation by Morgan Stanley an
Slide 11: Market Value of Global Equity Market
Market Value of Global Equity Market $ Trillions % +13.2 R 31 CAG 32 28 29 27 23 24 20 18 15 13 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 YTD Source: Datastream and Morgan Stanley Research This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of tha
Slide 12: Market Value of U.S. Equity Market
Market Value of U.S. Equity Market $ Trillions % 13.8 CAGR +3.5 12.9 13.2 11.9 12.0 11.2 9.2 8.2 5.9 4.8 3.4 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 YTD Source: Datastream and Morgan Stanley Research This slide is part of a presentation by Morgan Stanley and is intended to be viewed a
Slide 13: Market Value of European Equity Market
Market Value of European Equity Market $ Trillions 1 % R +12. 10.0 9.2 CAG 8.6 8.3 7.4 7.1 6.0 5.5 4.3 3.3 2.6 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 YTD Source: Datastream and Morgan Stanley Research This slide is part of a presentation by Morgan Stanley and is intended to be viewed
Slide 14: Market Value of Asian Equity Market
Market Value of Asian Equity Market $ Trillions 6.4 +16.6% R CAG 5.7 4.8 4.4 4.4 4.2 4.5 3.4 3.6 3.2 3.2 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 YTD Source: Datastream and Morgan Stanley Research This slide is part of a presentation by Morgan Stanley and is intended to be viewed as pa
Slide 15: Little Growth In Overall Commission Pot
Little Growth In Overall Commission Pot Total Commissions Excluding New Issues $Bn GR +4.2% 16.4 16.2 CA 15.2 14.0 13.2 11.6 8.9 6.2 4.4 2.8 3.4 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Third Party Independent Research This slide is part of a presentation by Morgan Stanley and
Slide 16: Margin Erosion Is A Constant – Requiring Innovation And Leadership In Low Cost Execution
Margin Erosion Is A Constant – Requiring Innovation And Leadership In Low Cost Execution Total NYSE Share Volume vs. Average Commissions Per Share NYSE Share Average Commission Volume (Bn) Rate ($) 400 0.40 350 0.35 300 0.30 250 0.25 200 0.20 150 0.15 100 0.10 50 0.05 Trends in Morgan Stanley Commis
Slide 17: Rise of Lower Margin Electronic Trading Is Key
Rise of Lower Margin Electronic Trading Is Key … Morgan Stanley is #1 in Agency business on NYSE Program Trading as a % of Total NYSE Trading Volume 54.72 41.04 18.97 Mar-99 Jan-00 Dec-00 Nov-01 Oct-02 Sep-03 Aug-04 Source: NYSE This slide is part of a presentation by Morgan Stanley and is intended
Slide 18: Changing Client Needs Require Innovation, Client Focus and Low Cost Execution
Changing Client Needs Require Innovation, Client Focus and Low Cost Execution Case Study: One Client’s Volume Traded By Broker Category in 2004 % 100 80 60 40 20 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Full Service Discount Direct Market Equity Swap Access Source: Case Study of One Morgan
Slide 19: Growth of Alternative Investments Provides Numerous New Opportunities
Growth of Alternative Investments Provides Numerous New Opportunities Hedge Fund AUM by Strategy Hedge Fund of Funds Growth 2000 – 2004 $Bn $Bn Total 1,000 ~$975 ~20% 900 800 Via Advisers 700 ~$525 or direct ~10% 600 500 ~$450 400 300 Via Fund ~$370 200 ~$450 of funds ~50% 100 ~$80 0 1990 1991 1992
Slide 20: Greater Transparency Reinforced By Regulatory Change
Greater Transparency Reinforced By Regulatory Change • Expect greater transparency on all practices, especially retail fee levels and soft commissions, and prompt restructuring of practices • Extensive review by the SEC, Spitzer, and the U.K. regulator FSA has acted as a catalyst for major review of
Slide 21: Helping Clients Across Their Entire Business
Helping Clients Across Their Entire Business Investment Process M (Themes & Solutions) Products Gives Rise to Revenue in Investment O Process Potentially Any Product Area R Capital Raising Cash G Alpha Generation and Convertibles Portfolio Strategies A Options Trading C N Futures Alternative L Many
Slide 22: Brokers Face Two Choices
Brokers Face Two Choices Global / Large or Specialist? Global/ Large Specialist • Diverse product set and cross • Clearly defined niche asset class ability – Region or industry • Technology – Differentiated product • Capital strength • Flexible business model • Willingness to take risk • Global scal
Slide 23: Our Strategy
Our Strategy This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is ac
Slide 24: Morgan Stanley – A Global Leader in Equities
Morgan Stanley – A Global Leader in Equities (1) Global Equity Sales & Trading Revenues (2Q04-1Q05) (Cumulative Total, $Bn) 6.0 4.8 4.2 3.2 3.2 2.7 2.3 2.0 1.4 1.1 GS UBS Morgan DB MER CSFB C LEH JPM BSC Stanley Equity / Total Firm Revenue (%) 28 16 17 11 14 6 3 16 3 16 Source: Morgan Stanley SEC fi
Slide 25: Momentum Across Global Equities Business
Momentum Across Global Equities Business Morgan Stanley Equity Sales & Trading Revenues ($MM) CAGR 2002-2004: 7.4% 4,067 3,528 CAGR 2002-2005: 9.8% 916 1,214 2000 2001 2002 2003 2004 2005 YTD Q1 Q2 Q3 Q4 Source: Morgan Stanley SEC filings This slide is part of a presentation by Morgan Stanley and is
Slide 26: Leadership Across Key Equity Segments
Leadership Across Key Equity Segments Cash − Global Equity House of the Year (IFR) − #1 Equity secondary trading (Euromoney) − #1 in Greenwich Trading Quality Index Prime Brokerage − Best in Class Prime Brokerage in Global Custodian Prime Brokerage Survey − #2 Euromoney Award for Best Technology for
Slide 27: Global Equities Strategy
Global Equities Strategy Profitability / Market Share / Wallet Share Product / Service • Differentiated Optimize Factory • Talent • Advisory • Cost • Solutions • Capital • “Best in Class” • Insights • Global Reach Client • Full Service • Segmentation This slide is part of a presentation by Morgan St
Slide 28: Focus Areas
Focus Areas • Talent Management • Trading / Risk Management • Equity Derivatives • Client Profitability / Growth • New Product Development • Retail Distribution This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based
Slide 29: Appendix
Appendix This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally available to the public and does not contain any material, non-public information. No representation is made that it is accura
Slide 30: Appendix: Notes to Accompany Slide 24
Appendix: Notes to Accompany Slide 24 Revenue Sources and Disclosure Note 1: Morgan Stanley results are as reported in quarterly financial supplements Note 2: Goldman Sachs equity revenue includes Total Equities and Securities Services Note 3: Lehman Brothers equity revenue reflects total revenues o
Slide 31: David H. Sidwell and Jerker Johansson, May 17, 2005
David H. Sidwell, Chief Financial Officer Jerker Johansson, Global Head of Equities May 17, 2005
Morgan Stanley — Under the Hood Conference (May 2005) on 6ix