Morgan Stanley · NYSE:MS
Morgan Stanley — Corporate Update (January 2014)
17 slides from Morgan Stanley's corporate update, Jan 17, 2014
Slide 1: Strategic Update
Strategic Update James P. Gorman, Chairman and Chief Executive Officer January 17, 2014
Slide 2: Forward-looking statements disclaimer
2 This presentation may contain forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management’s current plans, estimates, projections, expectations or beliefs and which are sub
Slide 3: Progress against strategic plan goals
1 Acquire 100% of Wealth Management joint venture 2 Achieve Wealth Management margin goals through expense management; exceed through revenue growth 3 Significantly reduce RWAs in Fixed Income and Commodities Exceeded Targets 4 Drive expenses lower in 2013, 2014, and beyond On Track 5 Grow earnings
Slide 4: Strategic Plan Roll-Forward: Focus on Driving Higher Returns
Strategic Plan Roll-Forward: Focus on Driving Higher Returns 1 Continue to improve Wealth Management margins through cost discipline and revenue growth 2 Improve Fixed Income and Commodities ROE: − Strategic solutions for Commodities − “Centrally managed” Fixed Income − Continue RWA reductions 3 Add
Slide 5: Increasing Wealth Management Pre-Tax Margin Target for 4Q15
1 Increasing Wealth Management Pre-Tax Margin Target for 4Q15 Wealth Management Pre-tax Margin (%) (1),(2) 7% 9% 10% 14%(3) 18% 22-25% (4) 0% 5% 10% 15% 20% 25% 30% 2009 2010 2011 2012 2013 4Q15 Pro-forma year-end 2015 margin assumes deployment of deposits, but no change in interest rates or market
Slide 6: Drive ROE > 10% in Fixed Income & Commodities
2 Drive ROE > 10% in Fixed Income & Commodities 1 Challenge Area: Commodities Selling Global Oil Merchanting business 2 Ongoing Progress With “Centrally Managed” Fixed Income (Excluding Commodities) In 2013, achieved normalized (1) ROEs of at least 10% in almost all products: Credit, Securitized Pro
Slide 7: Driving ROE > 10% in Fixed Income & Commodities: Commodities
2 Driving ROE > 10% in Fixed Income & Commodities: Commodities Reducing exposure to physical commodities Recently Announced: Sale of Global Oil Merchanting Business to Rosneft; Expected Close 2H14 Includes the assets, liabilities, and contracts of physical oil and oil-distillate trading activities,
Slide 8: Accelerating RWA Reduction Plan Revised
2 Driving ROE > 10% in Fixed Income & Commodities: Accelerating RWA Reduction Plan Revised RWA guidance pulls timeline forward to 2015 from 2016 Provides capacity to support client growth and invest in our strong franchises Fixed Income and Commodities Basel III Risk-Weighted Assets (1), (2) ($Bn) G
Slide 9: Continued Expense Discipline: On Track for 2014 and Beyond
3 Continued Expense Discipline: On Track for 2014 and Beyond From Morgan Stanley January 2013 Strategic Update Assuming a flat revenue environment, expenses would decline by $1.6Bn between 2012 and 2014 On higher revenues, our activity-related expenses would grow, but our overall expense ratios woul
Slide 10: Continued Expense Discipline: How We Did in 2013
3 Continued Expense Discipline: How We Did in 2013 Expenses grew 9% in 2013 vs. 2012, driven by investments/write-offs, increased legal expenses and activity-related increases Adjusting for investments/write-offs & increased legal expenses, our 2013 expense ratio would be 79% (1) Adjusting for all t
Slide 11: Bank Supports Significant Growth Opportunity in Net Interest Income
4 Bank Supports Significant Growth Opportunity in Net Interest Income Contractual growth in deposits (1)+ optimization of assets + higher rates (eventually) drive significant NII growth in Wealth Management and Institutional Securities Significantly higher incremental profit before tax Combined Bank
Slide 12: Lending Growth Driven by Embedded Client Base
4 Lending Growth Driven by Embedded Client Base in Wealth Management & Institutional Securities Wealth Management Underpenetrated With Our Clients Relative To Peers Securities Based Lending (e.g. PLA) Credit lines to clients secured by brokerage account assets More flexible product than margin lendi
Slide 13: Returning Capital – Our Philosophy
5 Returning Capital – Our Philosophy We intend to prudently increase our capital return to shareholders over time, subject to regulatory approval Two-Pronged Approach Share Repurchases Steady increase in buyback program in the coming years Dividends Begin increasing dividend reflecting stable earnin
Slide 14: Business Model Supports Path to 5% Leverage Ratio in 2015
Business Model Supports Path to 5% Leverage Ratio in 2015 (1) Our business model supports reaching and exceeding the 5% SLR requirement in 2015, while increasing capital returns to shareholders Items Within Morgan Stanley’s Control Potential Sources of Increase Impact Exposure compression, RWA reduc
Slide 15: What Does This Add Up To?
6 What Does This Add Up To? 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 litigation expenses Actions Strategic solution for Commodities “Centrally managed” Fixed Income Exe
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: Strategic Update
Strategic Update James P. Gorman, Chairman and Chief Executive Officer January 17, 2014