Slide 1: Strategic Update: Driving Growth Through The Next Decade
Strategic Update: Driving Growth Through The Next Decade James P. Gorman, Chairman and Chief Executive Officer January 17, 2023
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 Morgan Stanley's (the ‘Company’) Annual Report on Form 10-K, De
Slide 3: Driving Growth Through The Next Decade
Driving Growth Through The Next Decade 1 Clarity and Consistency of Business Model 2 Tested in a Difficult Environment 3 Opportunities to Maximize Growth 4 Confidence in Our Opportunity and Goals 3
Slide 4: Clarity of What We Do and Who We Are
1 Clarity of What We Do and Who We Are Facilitating Capital for Clients to Reach Their Goals Leader Across Businesses (1) Governments #1 Wealth and Investment Management Individuals Corporates Top 3 Institutional Securities Institutions The End Notes are an integral part of this Presentation. See Sl
Slide 5: Consistent Strategic Actions Affirm Our Likes and Dislikes
1 Consistent Strategic Actions Affirm Our Likes and Dislikes What We Like to Own What We Don’t Like to Own Wealth Management, Retirement Unsecured Consumer Credit Broad-Based Investment Management Payments Businesses Advisory, Capital Markets, Sales & Trading Physical Businesses Scale Businesses Sub
Slide 6: Driving Growth and Business Mix Transformation
1 Driving Growth and Business Mix Transformation 2010 2022 2025+ Net Revenues (1) $32Bn $54Bn The Transformation Continues… ROTCE (2) 10% 16% 26% 52% Pre-Tax 2010 2022 Future Profit Mix (3) 74% 48% Institutional Securities Combined Wealth and Investment Management The End Notes are an integral part
Slide 7: Strength of Business Model Tested in a Challenging Year
2 Strength of Business Model Tested in a Challenging Year What Happened in 2022 How We Did in 2022 (1) • Highest Inflation in 40 Years • 16% ROTCE • Fastest Rate Increases in 40 Years • 15.3% CET1 Ratio • Tail End of Worst Pandemic in 100 Years • $54Bn in Net Revenues • War in Europe • ~3% Dividend
Slide 8: Destination of Choice Across Wealth Management Channels
3 Destination of Choice Across Wealth Management Channels with Increasing Durable Revenues Leader Across Channels (1) Stable and Consistent Revenues Wealth Management Daily Revenues (%) (2) 2014 2019 2022 # 1 Advisor-Led >$100MM 0% 0% 36% $80MM - 0% 5% 64% $100MM Top 2 Workplace $60MM - 33% 90% 0% $
Slide 9: Consistent Expansion of Wealth Management Profitability
3 Consistent Expansion of Wealth Management Profitability Expanding Pre-Tax Profit and Margin Toward 30% Goal WM Pre-Tax Profit ($Bn) 6.6 6.2 4.8 4.5 4.4 4.3 3.3 3.4 3.0 2.6 1.6 1.3 1.1 0.5 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 14% 25% 26% 28% Building Pairing Advice
Slide 10: NII Underpinned by Steady Loan Growth and Larger Deposit Base
3 NII Underpinned by Steady Loan Growth and Larger Deposit Base with Higher Intrinsic Value Larger Loan Portfolio Growth in Deposits More Efficient Pricing WM Loans ($Bn) (1) Deposit Mix ($Bn) (2) Effective Federal Funds Rate (%) (3) 146 351 4.33% 13% 30% 80 187 26% WM Clients: 9% 1.55% 87% 57% 1.59
Slide 11: Already Delivering ~$1 Trillion in Net New Assets
3 Already Delivering ~$1 Trillion in Net New Assets ~$1 Trillion of NNA Over Last Three Years Diversified Sources of NNA Net New Assets ($Bn) (1) ~3% ~4% ~6% New Retail Clients 981 Existing Retail Clients New Institutional Clients No Single Net Recruiting Source >25% (3) 278 Stock Plan Vested Assets
Slide 12: Multiple Channels Reaching New Relationships, Focused on Workplace
3 Multiple Channels Reaching New Relationships and Focused on Workplace for Long-term Growth Increasing Client Relationships Workplace: Strong Retention Core Client Relationships (MM) (1) 18 Retaining Stock Plan Vested Assets (3) 15 13 ✓ ~30% Rolling-Out Companion Accounts (4) ✓ 2.5 ~90% 2019 2020 2
Slide 13: Workplace Recognizing the Power of Advice
3 Workplace Recognizing the Power of Advice Workplace Client Strategy Over Last Three Years (1) 1 Attract New Relationships ~12MM Workplace Relationships 2 Grow Vested Flows ~$350Bn Vested Asset Inflows 3 Migrate Relationships ~$150Bn to Advice Advisor-Led Flows from Workplace Relationships, Includi
Slide 14: Investment Management Continues to Diversify and Deliver in Key Growth Areas
3 Investment Management Continues to Diversify and Deliver in Key Growth Areas Growth in Fee-Based Revenues More Diversified Asset Manager Alternatives (3) AM and Related Fees ($Bn) (1) AM and Related Fees (%) (1)(2) 5.3 ~$210Bn 2020 Investable Capital Customization (4) 2.0 2022 ~30% Net Flows % Sin
Slide 15: Institutional Securities Delivering Strength in Various Market Environments
3 Institutional Securities Delivering Strength in Various Market Environments Strength Across the Integrated Investment Bank (1) ISG Net Revenues ($Bn) (2) 28 Top 3 Share Position Across ISG 24 20 Leading Equities House Premier Advisory & Underwriting Franchise Restored Fixed Income Footprint Avg Pr
Slide 16: Leading Institutional Securities Positions with Prudent Capital Management
3 Leading Institutional Securities Positions with Prudent Capital Management Strong Leadership Positions Firm RWAs Flat G-SIB Surcharge 2022E Wallet Share (%) (1) ($Bn) (2) (%) 472 ~20% Equities 3.0% 3.0% 3.0% Investment ~15% Banking 449 Fixed ~10% Income 2021 2022 2021 2022 2023 The End Notes are a
Slide 17: Intentional Capital Strategy Drives Results and Provides Capacity for Investment
3 Intentional Capital Strategy Drives Results and Provides Capacity for Investment Decline in Peak-to-Trough Reflecting Durability # 1 Risk-Based Capital Position Relative to Peers SCB, ex-Dividend Add-On (%) (1) CET1 Ratio (%) (2) 15.3% 5.1% ~200 bps 4.7% Over Regulatory 4.6% Requirement of 13.3% 2
Slide 18: ~9% Return from Dividends and Buyback
3 While Maintaining a Capital Buffer of ~200bps, Generated a ~9% Return from Dividends and Buyback Increasing Dividends Aligned with Durable Earnings While Reducing Shares 4Q Dividend Per Share ($) (1) Shares Outstanding (Bn) (2) 2.0 +302MM 0.775 1.8 1.7 0.35 ~9% 0.10 Return in 2022 (5) 2014 2020 20
Slide 19: $10Tn Client Assets Will Drive Wealth and Investment Management PBT
4 $10Tn Client Assets Will Drive Wealth and Investment Management’s PBT to be Larger Than the Firm’s Today Path to $10 Trillion Driving PBT Growth and Mix Transformation Client Assets ($Tn) (1) Pre-Tax Profit ($Bn) (2) $10Tn Client Assets $10Tn x 50bps Revenue Over Assets Market x 30% Pre-Tax Margin
Slide 20: Affirming Confidence in Long-Term Value Proposition
4 Affirming Confidence in Long-Term Value Proposition Goals (1) ROTCE 20%+ Efficiency Ratio <70% WM Pre-Tax Margin 30%+ WM Net New Assets $1 Trillion Every ~3 Years Longer-Term Goal (1) Client Assets $10 Trillion The End Notes are an integral part of this Presentation. See Slides 21-26 at the back o
Slide 21: End Notes
End Notes The Firm’s financial presentations, earnings releases, earnings conference calls, and other communications may include certain metrics, including non-GAAP financial measures, which we believe to be useful to us, investors, analysts and other stakeholders by providing further transparency a
Slide 22: End Notes
End Notes These notes refer to the financial metrics and/or defined term presented on Slide 4 1. Rankings are based on internal analysis of net revenues for Morgan Stanley and peers. For Wealth and Investment Management, net revenues represent the combination of Wealth Management and Investment Mana
Slide 23: End Notes
End Notes These notes refer to the financial metrics and/or defined term presented on Slide 8 1. Position in Advisor-Led derived from internal analysis based on client assets for Bank of America Merrill Lynch Global Wealth Management, UBS Wealth Management Americas and Wells Fargo Wealth and Investm
Slide 24: End Notes
End Notes These notes refer to the financial metrics and/or defined term presented on Slide 12 1. Core Client Relationships represent Advisor-Led Households, Self-Directed Households, Stock Plan Participants and Retirement and Financial Wellness Participants excluding overlap as of 4Q 2022. Advisor-
Slide 25: End Notes
End Notes These notes refer to the financial metrics and/or defined term presented on Slide 15 1. Top 3 Share Position across ISG is a ranking based on internal analysis of net revenues for Morgan Stanley and peers as described in end note 1 for Slide 4. 2. ISG net revenues have been averaged across
Slide 26: End Notes
End Notes These notes refer to the financial metrics and/or defined term presented on Slide 20 1. The attainment of these objectives assumes a normal market environment and may be impacted by external factors that cannot be predicted at this time, including geopolitical, macroeconomic and market con
Slide 27: Strategic Update: Driving Growth Through The Next Decade
Strategic Update: Driving Growth Through The Next Decade James P. Gorman, Chairman and Chief Executive Officer January 17, 2023