Morgan Stanley · NYSE:MS
Morgan Stanley — Investor Presentation (January 2019)
24 slides from Morgan Stanley's investor presentation, Jan 17, 2019
Slide 1: Strategic Update
Strategic Update James P. Gorman, Chairman and Chief Executive Officer January 17, 2019
Slide 2: Notice
Notice The information provided herein includes certain non-GAAP financial measures. The definition of such measures and/or the reconciliation of such measures to the comparable U.S. GAAP figures are included in this presentation, or in the Company’s Annual Report on Form 10-K, Definitive Proxy Stat
Slide 3: Record Performance in 2018: Selected Highlights
Record Performance in 2018: Selected Highlights Revenue Firm ISG WM Record $40.1Bn Pre-Tax Profit(1) Net Income(2) $11.2Bn $8.7Bn Equity Revenues $6.1Bn Investment Banking Revenues $9.0Bn Revenues Pre-Tax Profit(1) Pre-Tax Margin(4) $17.2Bn $4.5Bn 26.2% #1 Globally(3) Record Record Record Record Rec
Slide 4: Mark to Market: 2018 – 2019 Strategic Objectives
Mark to Market: 2018 – 2019 Strategic Objectives(1) 1 Deliver Wealth Mgmt. Pre-Tax Margin(2) of 26-28% 2 Expand Institutional Securities Penetration and Leadership 3 Position Investment Management for Growth 4 Realize Firm Expense Efficiency Ratio(5) of ≤73% ROE(7): 10%-13% ROTCE(8): 11.5%-14.5% 201
Slide 5: Franchise Supported By Greater Contribution of Relatively Stable Revenue Sources
Franchise Supported By Greater Contribution of Relatively Stable Revenue Sources(1)(2)(3) 2013 Firm ROE(4) 4.3% 11.5% 2018 5 Firm Revenue Growth of $7Bn... ...and Drove Higher Returns Relatively Stable(1) Relatively Volatile(2) 55% 45% ...Driven by $10Bn of Growth from Relatively Stable Sources… Rev
Slide 6: Strong Returns and Sufficient Capital Support Investment
Strong Returns and Sufficient Capital Support Investment Improving Returns(%) Ability to Invest(End of Period – $Bn) ROE(2) ROTCE(2) Tangible CommonEquity(3) Common Equity Capital Sufficient Dividend Per Common Share(1)(Per Quarter – $) (13%) Common Shares Outstanding(Beginning of Period – MM) +100%
Slide 7: Initiatives Focused on Dual Mission of Driving Growth and Enhancing Stability
Initiatives Focused on Dual Mission of Driving Growth and Enhancing Stability Expand Leadership in Investment BankingContinue Targeted Growth in Lending to Institutional Securities Group (“ISG”) Clients Drives Growth & Enhances Stability Objective ISG Attract Client Assets Held Away Increase Lendi
Slide 8: Institutional Securities Businesses Gaining Wallet Share
Institutional Securities Businesses Gaining Wallet Share(1)(2)(3) Wallet Share, ex DVA (%) Wallet Share (%) Wallet Share, ex DVA (%) 1 Investment Banking Equity Sales & Trading(5) Fixed Income Sales & Trading(4) 8 (6) (6) (6)
Slide 9: Asia Pacific – Opportunities to Deepen Presence in High Growth Region
Asia Pacific – Opportunities to Deepen Presence in High Growth Region Longer Term Current Revenue Footprint Provides Opportunity for Growth2018 ISG Net Revenues(2) ($Bn) 2018$21Bn AsiaPac Expected to Show StrongGrowth vs. Advanced Economies 2019 AsiaPac GDP Growth Projections(1) Growth Initiatives B
Slide 10: Joint Venture and Partnership Drive Prominent Position in Japan
Joint Venture and Partnership Drive Prominent Position in Japan 1 JFY2002 - 2009 Industry Wallet (Pre-JV)(1)(2) JFY2017 Industry Wallet(1)(3) 10 MS MS / MUFG JV M&A M&A(Cross-Border) 10 7 1 1 Jumbo Equity(6) Improvement in League Table Performance 7 3 1 5 7 1 2 Wallet Share Rank JFY2018/YTD(5) Rank
Slide 11: Wealth Management Continues to Demonstrate Stability
2013 Average Daily Revenues $56MM Pre-Tax Profit(2) $2.6Bn Net Income $1.5Bn ROE(3) 10% $69MM $4.5Bn $3.5Bn +22% +74% +136% 2018 20% Wealth Management Continues to Demonstrate Stability 2 +100% Solid Revenue Growth Scale Matters Tax Act Additive Increased Returns ...Coupled with Benefits of Scale Pr
Slide 12: Shift Towards Advisory Assets Helps Grow Relatively Stable Revenue Base
Shift Towards Advisory Assets Helps Grow Relatively Stable Revenue Base Percentage of Fee-Based Assets(1) Continues to Grow... ...Leading to a Decreasing Reliance on Transactional Revenues(2) 2 12 3-5 Years 2013$14Bn 2018$17Bn Transactional Non-Transactional Fee-Based Assets Are Well Diversified(3)
Slide 13: Wealth Management's Focus on Capturing Assets to Drive Growth
Legacy Systems / SB Integration Wealth Management’s Focus on Capturing Assets to Drive Growth Drive Client and Advisor Adoption Invest in Productivity Enhancing Tools 2009-2014 2015-2018 Address legacy infrastructure and systems Create unified advisor platform for Morgan Stanley and Smith Barney adv
Slide 14: Lending – Source of High Quality Organic Growth
WM – Measured, Consistent Growth($Bn) ISG – Targeted Growth Based on Client and Market Opportunities($Bn) U.S. Bank(1) Lending – Source of High Quality Organic Growth Secured Lending Corporate Lending Tailored Securities-Based Loans Residential Mortgages Mid-SingleDigit Growth Key Drivers Key Driver
Slide 15: IM: Opportunities for Organic Growth and Acquisitions
IM: Opportunities for Organic Growth and Acquisitions 4 Equity Fixed Income Organic Growth / New Strategies Hire Talent / Liftouts Acquisitions = potential = unlikely Alternatives & Solutions 6% organic growth driven by highly ranked product line(1) Named new head of Fixe
Slide 16: Strong Operating Leverage – Aided by Expense Discipline
5 Strong Operating Leverage – Aided by Expense Discipline, While Still Investing For Growth Firm Expense Efficiency Ratio(1), ex DVA (%) Pre-Tax Profit(2), ex DVA ($Bn) 114% 12% Reduction 16 (2)
Slide 17: Strategic Objectives
Strategic Objectives(1) 17 Opportunities “Fill-In” Acquisitions for Wealth and Investment Management Businesses 100% Payout Ratio, Absent Acquisitions and Subject to Regulatory Approval(4) Leverage Capital Base to Support Organic Business Initiatives 2 3 1 1 Deliver Wealth Mgmt. Pre-Tax Margin(2) of
Slide 18: End Notes
End Notes These notes refer to the financial metrics presented on Slide 3.Pre-Tax Profit is defined as income from continuing operations before income taxes.Represents net income applicable to Morgan Stanley.Estimated by combining the actual results for peers that have reported full-year 2018 result
Slide 19: End Notes
End Notes These notes refer to the financial metrics presented on Slide 5.Relatively stable revenue sources represent revenues associated with fee-based pricing arrangements, financing and lending that are generally less susceptible to significant fluctuation as a result of market volatility when co
Slide 20: End Notes
End Notes These notes refer to the financial metrics presented on Slide 7.U.S. Bank represents the Firm’s U.S. Bank operating subsidiaries, Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association. We provide loans to a variety of clients and customers primarily through our U.
Slide 21: End Notes
End Notes These notes refer to the financial metrics presented on Slide 10.JFY denotes Japanese Fiscal Year, which starts on April 1.JFY 2002 – 2009 Industry Wallet represents the average reported revenues from JFY 2002 to JFY 2009 (where available) from the Japanese securities divisions of the foll
Slide 22: End Notes
End Notes These notes refer to the financial metrics presented on Slide 12.Wealth Management fee‐based client account assets represent the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets.Transactional revenues include investment banking
Slide 23: End Notes
End Notes These notes refer to the financial metrics presented on Slide 17.The attainment of these objectives may be impacted by external factors that cannot be predicted at this time, including macroeconomic and market conditions and future regulations. Pre-Tax Margin represents income (loss) from
Slide 24: Strategic Update
Strategic Update James P. Gorman, Chairman and Chief Executive Officer January 17, 2019