Morgan Stanley · NYSE:MS
Morgan Stanley — Q2 2010 Earnings Presentation
16 slides from Morgan Stanley's earnings presentation, Sep 17, 2010
Slide 1: Morgan Stanley Second Quarter 2010 Overview
Free Writing Prospectus Dated September 17, 2010 Registration Statement No. 333-156423 Filed Pursuant to Rule 433 Morgan Stanley Second Quarter 2010 Overview September 2010
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 for the year ended December 31, 2009, 2010 Quarterly Reports on Form 10-Q and Current Re
Slide 3: Index
Index • Consolidated Financial Highlights • Business Strategy and Financial Results − Institutional Securities − Global Wealth Management Group − Asset Management • Capital • Liquidity • Funding Diversification − Secured Funding − Unsecured Funding • Summary 3 This slide is part of a presentation by
Slide 4: Consolidated Financial Highlights
Consolidated Financial Highlights (1) 2Q10 Net Revenues of $8.0 Bn Business Mix 2Q10 2Q 2010 Highlights - Asset • Second quarter revenues were $8.0 billion Management Equities • Difficult macro environment characterized by 5% uncertainties regarding global growth, Global Wealth 18% concerns on Europ
Slide 5: Executing Our Business Strategy
Executing Our Business Strategy Long Term Performance Goals Institutional Securities Strengthen Institutional Securities • Strong talent pool Leading position in many businesses, with upside • Increase footprint from more broadly leveraging our client franchise • Expand market share Wealth Managemen
Slide 6: Institutional Securities
Institutional Securities Net Revenue 5,344 314 ($mm) 4,502 2Q 2010 Highlights - 887 885 • Net Revenues of $4.5 billion 2,967 1,419 − Positive impact of approximately $750 127 1,415 million from DVA(3) 1,126 • For the first half of 2010, Investment 776 2,724 2,244 Banking was 938 − #1 In Global IPOs
Slide 7: Global Wealth Management Group
Global Wealth Management Group Net Revenue ($mm) 3,105 3,074 2Q 2010 Highlights - 191 288 348 256 249 • $207 million PBT and 7% PBT margin 273 1,923 682 − Quarterly integration costs of $106 160 692 304 million 231 412 • 18,087 Financial Advisors 1,628 1,572 816 • $1.5 trillion total client assets •
Slide 8: GWM / MSSB – Metrics that Matter
GWM / MSSB – Metrics that Matter Long-Term Metric 2009 Target Run-rate Cost Synergies (1) $550MM $1.1Bn target One-time Costs (1) $280MM $1.1Bn target Number of FAs 18,135 18,500-19,000 PBT Margin 8% (2) >20% Net New Money ($14Bn) (2) $50Bn Net FA Attrition to Competition, Top 2 <2% (2) <5% Quintile
Slide 9: Asset Management
Asset Management Net Revenue ($mm) 2Q 2010 Highlights - 653 51 • Total assets under management of $251 188 410 billion 358 • Approximately 70% of our equity and fixed 21 6 income strategies continued to outperform 396 414 383 their respective benchmarks on a three, five, and ten-year basis (32) (6)
Slide 10: MSIM – Key 2010 Execution Milestones (7-Step Plan)
MSIM – Key 2010 Execution Milestones (7-Step Plan) Action Item Status 1 Combined AIP and Graystone 2 Announced sale of Retail Asset Management Signed strategic outsourcing partnership with 3 State Street 4 Rebuild investment culture in long-only business In Progress 5 Restructure and renew Rea
Slide 11: Capital
Capital 2Q10 Key Capital Ratios (Basel I) Total Assets ($Bn) 943 820 809 770 771 Tier 1 Common Ratio 9.2% 677 677 626 Tier 1 Capital Ratio 16.5% 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2008 2008 2009 2009 2009 2009 2010 2010 August Mandatory Convertible Equity Conversion increased Tier 1 Common by $5.6 Billion Sour
Slide 12: Liquidity
Liquidity Sufficient liquidity is maintained to meet funding and contingent obligations based on the Company’s balance sheet, business mix and as modeled in its liquidity stress tests Average Balance 6/30/10 E 3/31/10 For Qtr End For Qtr End 6/30/10 3/31/10 6/30/10 3/31/10 Balance Sheet ($Bn) 809 82
Slide 13: Funding Diversification
Funding Diversification Composition of Funding Liabilities and Equity Shareholders’ Equity Shareholders’ Deposits Equity 5% 5% 10% Long-term Debt Long-term Debt 32% Deposits 35% 12% 1% 52% 6% 42% Commercial Paper Commercial Paper & other short term Secured & other short term borrowings Funding borro
Slide 14: Secured Funding Term Consistent with Asset Fundability
Secured Funding Term Consistent with Asset Fundability Focus on Liquidity Characteristics of Assets Illiquid • Assets Tiered by Fundability: Less Liquid − Highly Liquid – Governments, Agencies, Open Market Operations and Central Clearing Counterparty eligible collateral − Liquid - AAA or AA bonds, S
Slide 15: Estimated Senior Unsecured Funding Issuance
Estimated Senior Unsecured Funding Issuance As of 9/14/10 • Reduction in term funding ($Bn) planned for 2011 and 2012 40 38 given success in − Pre-funding 35 − Structured Notes 13 30 ~28 26 ~ 28 Issuance 25 ~3 − Term Secured Funding 22 8 ~ 20 20 3 16-18 11 • Assumes a constant balance 15 8-10 20 she
Slide 16: Well Positioned for Strong Execution Going Forward
Well Positioned for Strong Execution Going Forward Unique Opportunity to Increase Share Significant Market Share Opportunities • Clients receptive to Morgan Stanley Targeted Growth Strategy offerings • Expanding capability to deliver flow products and content / ideas across the firm • Leadership in