MORGAN STANLEY - FORM 8-K - EX-99.2 - EXHIBIT 99.2

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EX-99.1 - EXHIBIT 99.1 - MORGAN STANLEY	a52250280_ex991.htm
8-K - MORGAN STANLEY 8-K - MORGAN STANLEY	a52250280.htm

Exhibit 99.2

Second Quarter 2020 Earnings Results


Quarterly Financial Supplement	Page

Consolidated Financial Summary	1
Consolidated Financial Metrics, Ratios and Statistical Data	2
Consolidated and U.S. Bank Supplemental Financial Information	3
Consolidated Average Common Equity and Regulatory Capital Information	4
Institutional Securities Income Statement Information, Financial Metrics and Ratios	5
Wealth Management Income Statement Information, Financial Metrics and Ratios	6
Wealth Management Financial Information and Statistical Data	7
Investment Management Income Statement Information, Financial Metrics and Ratios	8
Investment Management Financial Information and Statistical Data	9
Consolidated Loans and Lending Commitments	10
Consolidated Loans and Lending Commitments Allowance for Credit Losses	11
Definition of U.S. GAAP to Non-GAAP Measures	12
Definition of Performance Metrics and Terms	13 - 14
Supplemental Quantitative Details and Calculations	15 - 16
Legal Notice	17

Consolidated Financial Summary
(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020			Jun 30, 2019			Change
Net revenues
Institutional Securities	$	7,977		$	4,905		$	5,113			63	%		56	%	$	12,882		$	10,309			25	%
Wealth Management		4,680			4,037			4,408			16	%		6	%		8,717			8,797			(1	%)
Investment Management		886			692			839			28	%		6	%		1,578			1,643			(4	%)
Intersegment Eliminations		(129	)		(147	)		(116	)		12	%		(11	%)		(276	)		(219	)		(26	%)
Net revenues	$	13,414		$	9,487		$	10,244			41	%		31	%	$	22,901		$	20,530			12	%

Non-interest expenses
Institutional Securities	$	4,984		$	3,955		$	3,650			26	%		37	%	$	8,939		$	7,251			23	%
Wealth Management		3,538			2,982			3,165			19	%		12	%		6,520			6,366			2	%
Investment Management		670			549			640			22	%		5	%		1,219			1,270			(4	%)
Intersegment Eliminations		(133	)		(145	)		(114	)		8	%		(17	%)		(278	)		(215	)		(29	%)
Non-interest expenses ⁽¹⁾	$	9,059		$	7,341		$	7,341			23	%		23	%	$	16,400		$	14,672			12	%

Income (loss) before taxes
Institutional Securities	$	2,993		$	950		$	1,463			*			105	%	$	3,943		$	3,058			29	%
Wealth Management		1,142			1,055			1,243			8	%		(8	%)		2,197			2,431			(10	%)
Investment Management		216			143			199			51	%		9	%		359			373			(4	%)
Intersegment Eliminations		4			(2	)		(2	)		*			*			2			(4	)		*
Income (loss) before taxes	$	4,355		$	2,146		$	2,903			103	%		50	%	$	6,501		$	5,858			11	%

Net Income (loss) applicable to Morgan Stanley
Institutional Securities	$	2,186		$	757		$	1,121			189	%		95	%	$	2,943		$	2,492			18	%
Wealth Management		853			864			953			(1	%)		(10	%)		1,717			1,877			(9	%)
Investment Management		154			78			128			97	%		20	%		232			264			(12	%)
Intersegment Eliminations		3			(1	)		(1	)		*			*			2			(3	)		*
Net Income (loss) applicable to Morgan Stanley	$	3,196		$	1,698		$	2,201			88	%		45	%	$	4,894		$	4,630			6	%
Earnings (loss) applicable to Morgan Stanley common shareholders	$	3,047		$	1,590		$	2,031			92	%		50	%	$	4,637		$	4,367			6	%

The End Notes are an integral part of this presentation. See pages 12 - 17 for Definition of U.S. GAAP to Non-GAAP Measures, Definition of Performance Metrics and Terms, Supplemental Quantitative Details and Calculations, and Legal Notice.

Consolidated Financial Metrics, Ratios and Statistical Data
(unaudited)

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020			Jun 30, 2019			Change

Financial Metrics:

Earnings per basic share	$	1.98		$	1.02		$	1.24			94	%		60	%	$	3.00		$	2.65			13	%
Earnings per diluted share	$	1.96		$	1.01		$	1.23			94	%		59	%	$	2.96		$	2.62			13	%

Return on average common equity		15.7	%		8.5	%		11.2	%								12.2	%		12.1	%
Return on average tangible common equity		17.8	%		9.7	%		12.8	%								13.9	%		13.8	%

Book value per common share	$	49.57		$	49.09		$	44.13								$	49.57		$	44.13
Tangible book value per common share	$	43.68		$	43.28		$	38.44								$	43.68		$	38.44

Excluding intermittent net discrete tax provision / benefit ⁽¹⁾⁽²⁾
Adjusted earnings per diluted share	$	2.04		$	0.99		$	1.23			106	%		66	%	$	3.03		$	2.56			18	%
Adjusted return on average common equity		16.4	%		8.3	%		11.2	%								12.5	%		11.8	%
Adjusted return on average tangible common equity		18.6	%		9.5	%		12.8	%								14.2	%		13.5	%


Financial Ratios:

Pre-tax profit margin		32	%		23	%		28	%								28	%		29	%
Compensation and benefits as a % of net revenues		45	%		45	%		44	%								45	%		45	%
Non-compensation expenses as a % of net revenues		23	%		32	%		27	%								27	%		27	%
Firm expense efficiency ratio		68	%		77	%		72	%								72	%		71	%
Effective tax rate⁽¹⁾⁽²⁾		25.7	%		17.1	%		22.6	%								22.8	%		19.5	%


Statistical Data:

Period end common shares outstanding (millions)		1,576			1,576			1,659			--			(5	%)
Average common shares outstanding (millions)
Basic		1,541			1,555			1,634			(1	%)		(6	%)		1,548			1,646			(6	%)
Diluted		1,557			1,573			1,655			(1	%)		(6	%)		1,565			1,666			(6	%)

Worldwide employees		61,596			60,670			59,513			2	%		4	%

Consolidated and U.S. Bank Supplemental Financial Information
(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Six Months Ended				Percentage
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020		Jun 30, 2019		Change

Consolidated Balance sheet

Total assets	$	975,363		$	947,795		$	891,959			3	%		9	%
Loans ⁽¹⁾	$	150,723		$	158,759		$	131,957			(5	%)		14	%
Deposits	$	236,849		$	235,239		$	176,593			1	%		34	%
Liquidity Resources⁽²⁾	$	301,407		$	255,134		$	219,337			18	%		37	%
Long-term debt outstanding	$	202,238		$	192,645		$	196,072			5	%		3	%
Maturities of long-term debt outstanding (next 12 months)	$	20,076		$	17,153		$	26,621			17	%		(25	%)

Common equity	$	78,125		$	77,340		$	73,204			1	%		7	%
Less: Goodwill and intangible assets		(9,286	)		(9,146	)		(9,433	)		2	%		(2	%)
Tangible common equity	$	68,839		$	68,194		$	63,771			1	%		8	%

Preferred equity	$	8,520		$	8,520		$	8,520			--			--

U.S. Bank Supplemental Financial Information
Total Assets	$	263,934		$	265,383		$	205,897			(1	%)		28	%
Loans	$	136,613		$	141,712		$	119,754			(4	%)		14	%
Investment securities portfolio ⁽³⁾	$	92,270		$	77,747		$	70,712			19	%		30	%
Deposits	$	235,959		$	234,055		$	175,765			1	%		34	%

Regional revenues
Americas	$	9,765		$	6,646		$	7,526			47	%		30	%	$	16,411	$	14,847		11	%
EMEA (Europe, Middle East, Africa)		2,049			1,148			1,576			78	%		30	%		3,197		3,278		(2	%)
Asia		1,600			1,693			1,142			(5	%)		40	%		3,293		2,405		37	%
Consolidated net revenues	$	13,414		$	9,487		$	10,244			41	%		31	%	$	22,901	$	20,530		12	%

Consolidated Average Common Equity and Regulatory Capital Information
(unaudited, dollars in billions)

	Quarter Ended									Percentage Change From:						Six Months Ended				Percentage
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020		Jun 30, 2019		Change

Average Common Equity
Institutional Securities	$	42.8		$	42.8		$	40.4			--			6	%	$	42.8	$	40.4		6	%
Wealth Management		18.2			18.2			18.2			--			--			18.2		18.2		--
Investment Management		2.6			2.6			2.5			--			4	%		2.6		2.5		4	%
Parent		14.0			11.1			11.5			26	%		22	%		12.4		11.0		13	%
Firm	$	77.6		$	74.7		$	72.6			4	%		7	%	$	76.0	$	72.1		5	%


Regulatory Capital

Common Equity Tier 1 capital	$	68.7		$	65.2		$	64.0			5	%		7	%
Tier 1 capital	$	77.4		$	73.9		$	72.7			5	%		6	%

Standardized Approach
Risk-weighted assets	$	416.0		$	415.0		$	391.5			--			6	%
Common Equity Tier 1 capital ratio		16.5	%		15.7	%		16.3	%
Tier 1 capital ratio		18.6	%		17.8	%		18.6	%

Advanced Approach
Risk-weighted assets	$	426.7		$	427.8		$	384.0			--			11	%
Common Equity Tier 1 capital ratio		16.1	%		15.2	%		16.7	%
Tier 1 capital ratio		18.1	%		17.3	%		18.9	%

Leverage-based capital
Tier 1 leverage ratio		8.1	%		8.1	%		8.4	%
Supplementary Leverage Ratio⁽¹⁾		7.3	%		6.2	%		6.5	%

Institutional Securities
Income Statement Information, Financial Metrics and Ratios
(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020			Jun 30, 2019			Change
Revenues:

Advisory	$	462		$	362		$	506			28	%		(9	%)	$	824		$	912			(10	%)
Equity		882			336			546			163	%		62	%		1,218			885			38	%
Fixed income		707			446			420			59	%		68	%		1,153			826			40	%
Underwriting		1,589			782			966			103	%		64	%		2,371			1,711			39	%
Investment Banking		2,051			1,144			1,472			79	%		39	%		3,195			2,623			22	%

Equity		2,619			2,422			2,130			8	%		23	%		5,041			4,145			22	%
Fixed Income		3,033			2,203			1,133			38	%		168	%		5,236			2,843			84	%
Other		(99	)		240			41			*			*			141			58			143	%
Sales and Trading		5,553			4,865			3,304			14	%		68	%		10,418			7,046			48	%

Investments		36			(25	)		194			*			(81	%)		11			275			(96	%)
Other		337			(1,079	)		143			*			136	%		(742	)		365			*

Net revenues		7,977			4,905			5,113			63	%		56	%		12,882			10,309			25	%

Compensation and benefits		2,952			1,814			1,789			63	%		65	%		4,766			3,608			32	%
Non-compensation expenses		2,032			2,141			1,861			(5	%)		9	%		4,173			3,643			15	%
Total non-interest expenses		4,984			3,955			3,650			26	%		37	%		8,939			7,251			23	%


Income (loss) before taxes		2,993			950			1,463			*			105	%		3,943			3,058			29	%
Net income (loss) applicable to Morgan Stanley ⁽¹⁾	$	2,186		$	757		$	1,121			189	%		95	%	$	2,943		$	2,492			18	%


Pre-tax profit margin		38	%		19	%		29	%								31	%		30	%
Compensation and benefits as a % of net revenues		37	%		37	%		35	%								37	%		35	%
Non-compensation expenses as a % of net revenues		25	%		44	%		36	%								32	%		35	%

Return on Average Common Equity		19	%		6	%		10	%								13	%		11	%
Return on Average Tangible Common Equity ⁽²⁾		20	%		6	%		10	%								13	%		11	%

Trading VaR (Average Daily 95% / One-Day VaR)	$	60		$	40		$	46

Wealth Management
Income Statement Information, Financial Metrics and Ratios
(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020			Jun 30, 2019			Change
Revenues:
Asset management		2,507			2,680			2,544			(6	%)		(1	%)		5,187			4,905			6	%
Transactional		1,075			399			728			169	%		48	%		1,474			1,545			(5	%)
Net interest income		1,030			896			1,016			15	%		1	%		1,926			2,146			(10	%)
Other		68			62			120			10	%		(43	%)		130			201			(35	%)
Net revenues		4,680			4,037			4,408			16	%		6	%		8,717			8,797			(1	%)

Compensation and benefits		2,729			2,212			2,382			23	%		15	%		4,941			4,844			2	%
Non-compensation expenses		809			770			783			5	%		3	%		1,579			1,522			4	%
Total non-interest expenses		3,538			2,982			3,165			19	%		12	%		6,520			6,366			2	%

Income (loss) before taxes		1,142			1,055			1,243			8	%		(8	%)		2,197			2,431			(10	%)
Net income (loss) applicable to Morgan Stanley	$	853		$	864		$	953			(1	%)		(10	%)	$	1,717		$	1,877			(9	%)

Pre-tax profit margin		24	%		26	%		28	%								25	%		28	%
Compensation and benefits as a % of net revenues		58	%		55	%		54	%								57	%		55	%
Non-compensation expenses as a % of net revenues		17	%		19	%		18	%								18	%		17	%

Return on Average Common Equity		18	%		18	%		20	%								18	%		20	%
Return on Average Tangible Common Equity ⁽¹⁾		32	%		32	%		36	%								32	%		36	%

Wealth Management
Financial Information and Statistical Data
(unaudited)

	Quarter Ended									Percentage Change From:
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019


Wealth Management Metrics

Wealth Management representatives		15,399			15,432			15,633			--			(1	%)

Annualized revenue per representative (000's)	$	1,214		$	1,045		$	1,125			16	%		8	%

Client assets (billions)	$	2,661		$	2,397		$	2,570			11	%		4	%
Client assets per representative (millions)	$	173		$	155		$	164			12	%		5	%
Client liabilities (billions)	$	94		$	92		$	84			2	%		12	%

Fee-based client assets (billions)	$	1,236		$	1,134		$	1,159			9	%		7	%
Fee-based asset flows (billions)	$	11.1		$	18.4		$	9.8			(40	%)		13	%
Fee-based assets as a % of client assets		46	%		47	%		45	%

Retail locations		584			591			589			(1	%)		(1	%)

Investment Management
Income Statement Information, Financial Metrics and Ratios
(unaudited, dollars in millions)

	Quarter Ended									Percentage Change From:						Six Months Ended						Percentage
	Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020			Jun 30, 2019			Change
Revenues:
Asset management	$	684		$	665		$	612			3	%		12	%	$	1,349		$	1,229			10	%
Investments⁽¹⁾		231			63			247			*			(6	%)		294			438			(33	%)
Other		(29	)		(36	)		(20	)		19	%		(45	%)		(65	)		(24	)		(171	%)
Net revenues		886			692			839			28	%		6	%		1,578			1,643			(4	%)

Compensation and benefits		354			257			360			38	%		(2	%)		611			730			(16	%)
Non-compensation expenses		316			292			280			8	%		13	%		608			540			13	%
Total non-interest expenses		670			549			640			22	%		5	%		1,219			1,270			(4	%)

Income (loss) before taxes		216			143			199			51	%		9	%		359			373			(4	%)
Net income (loss) applicable to Morgan Stanley	$	154		$	78		$	128			97	%		20	%	$	232		$	264			(12	%)

Pre-tax profit margin		24	%		21	%		24	%								23	%		23	%
Compensation and benefits as a % of net revenues		40	%		37	%		43	%								39	%		44	%
Non-compensation expenses as a % of net revenues		36	%		42	%		33	%								39	%		33	%

Return on Average Common Equity		23	%		12	%		20	%								18	%		21	%
Return on Average Tangible Common Equity ⁽²⁾		36	%		18	%		33	%								27	%		34	%

Investment Management
Financial Information and Statistical Data
(unaudited, dollars in billions)

	Quarter Ended						Percentage Change From:						Six Months Ended					Percentage
	Jun 30, 2020		Mar 31, 2020		Jun 30, 2019		Mar 31, 2020			Jun 30, 2019			Jun 30, 2020		Jun 30, 2019			Change

Assets under management or supervision (AUM)

Net flows by asset class ⁽¹⁾
Equity	$	9.0	$	1.6	$	1.4		*			*		$	10.6	$	2.8			*
Fixed Income		4.4		1.3		1.3		*			*			5.7		0.1			*
Alternative / Other		2.0		3.8		2.2		(47	%)		(9	%)		5.8		1.6			*
Long-Term Net Flows		15.4		6.7		4.9		130	%		*			22.1		4.5			*

Liquidity		20.7		50.6		3.0		(59	%)		*			71.3		(2.8	)		*

Total net flows	$	36.1	$	57.3	$	7.9		(37	%)		*		$	93.4	$	1.7			*


Assets under management or supervision by asset class⁽²⁾⁽³⁾
Equity	$	168	$	121	$	128		39	%		31	%
Fixed Income		84		75		71		12	%		18	%
Alternative / Other		145		141		135		3	%		7	%
Long‐Term Assets Under Management or Supervision		397		337		334		18	%		19	%

Liquidity		268		247		163		9	%		64	%

Total Assets Under Management or Supervision	$	665	$	584	$	497		14	%		34	%

Consolidated Loans and Lending Commitments
(unaudited, dollars in billions)

	Quarter Ended						Percentage Change From:
	Jun 30, 2020		Mar 31, 2020		Jun 30, 2019		Mar 31, 2020			Jun 30, 2019

Institutional Securities

Loans:
Corporate	$	19.0	$	26.8	$	13.3		(29	%)		43	%
Secured lending facilities		28.9		30.4		24.9		(5	%)		16	%
Commercial and residential real estate		10.2		11.4		11.7		(11	%)		(13	%)
Securities-based lending and other		6.9		7.1		8.0		(3	%)		(14	%)

Total Loans		65.0		75.7		57.9		(14	%)		12	%

Lending Commitments		98.5		92.9		114.0		6	%		(14	%)

Institutional Securities Loans and Lending Commitments	$	163.5	$	168.6	$	171.9		(3	%)		(5	%)


Wealth Management

Loans:
Securities-based lending and other	$	53.1	$	51.4	$	45.5		3	%		17	%
Residential real estate		32.1		31.1		28.6		3	%		12	%

Total Loans		85.2		82.5		74.1		3	%		15	%

Lending Commitments		14.4		13.4		12.3		7	%		17	%

Wealth Management Loans and Lending Commitments	$	99.6	$	95.9	$	86.4		4	%		15	%

Consolidated Loans and Lending Commitments ⁽¹⁾	$	263.1	$	264.5	$	258.3		(1	%)		2	%

Consolidated Loans and Lending Commitments
Allowance for Credit Losses (ACL) as of June 30, 2020
(unaudited, dollars in millions)

	Loans and Lending Commitments		ACL⁽¹⁾		ACL %			Q2 Provision ⁽²⁾
	(Gross)
Loans:
Held For Investment (HFI)

Corporate	$	9,974	$	379		3.8	%	$	121
Secured lending facilities		24,733		122		0.5	%		34
Commercial and residential real estate		7,207		226		3.1	%		89
Other		1,012		29		2.9	%		(21	)
Institutional Securities - HFI	$	42,926	$	756		1.8	%		223

Wealth Management - HFI		85,358		110		0.1	%		23

Held For Investment	$	128,284	$	866		0.7	%		246

Held For Sale		14,543

Fair Value		8,240

Total Loans		151,067		866					246

Lending Commitments		112,841		297		0.3	%		(7	)

Consolidated Loans and Lending Commitments ⁽³⁾	$	263,908	$	1,163				$	239

Definition of U.S. GAAP to Non-GAAP Measures

(a)	The Firm prepares its Consolidated Financial Statements using accounting principles generally accepted in the United States (U.S. GAAP). From time to time, Morgan Stanley may disclose certain “non-GAAP financial measures” in the course of its earnings releases, earnings conference calls, financial presentations and otherwise. The Securities and Exchange Commission defines a “non-GAAP financial measure” as a numerical measure of historical or future financial performance, financial positions, or cash flows that is subject to adjustments that effectively exclude, or include amounts from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. Non-GAAP financial measures disclosed by Morgan Stanley are provided as additional information to analysts, investors and other stakeholders in order to provide them with greater transparency about, or an alternative method for assessing, our financial condition, operating results, or prospective regulatory capital requirements. These measures are not in accordance with, or a substitute for U.S. GAAP, and may be different from or inconsistent with non-GAAP financial measures used by other companies. Whenever we refer to a non-GAAP financial measure, we will also generally define it or present the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable U.S. GAAP financial measure. In addition to the following notes, please also refer to the Firm's Annual Report on Form 10-K for the year ended December 31, 2019.
(b)	The following are considered non-GAAP financial measures that the Firm considers useful for analysts, investors and other stakeholders to allow better comparability of operating performance and capital adequacy. These measures are calculated as follows:
	-	Earnings per diluted share, excluding intermittent net discrete tax provision / benefit represents net income (loss) applicable to Morgan Stanley, adjusted for the impact of the intermittent net discrete tax provision / benefit, less preferred dividends divided by the average number of diluted shares outstanding.
	-	The return on average tangible common equity represents annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average tangible common equity.
	-	The return on average common equity and the return on average tangible common equity excluding intermittent net discrete tax provision / benefit are adjusted in both the numerator and the denominator to exclude the intermittent net discrete tax provision / benefit.
	-	Segment return on average common equity and return on average tangible common equity represents full year net income or annualized net income for the quarter applicable to Morgan Stanley for each segment, less preferred dividend segment allocation, divided by average common equity and average tangible common equity for each respective segment. The segment adjustments to common equity to derive segment average tangible common equity are generally set at the beginning of the year, and will remain fixed throughout the year until the next annual reset unless a significant business change occurs (e.g., acquisition or disposition).
	-	Tangible common equity represents common equity less goodwill and intangible assets net of certain mortgage servicing rights deduction.
	-	Tangible book value per common share represents tangible common equity divided by period end common shares outstanding.

Definition of Performance Metrics and Terms

Our earnings releases, earnings conference calls, financial presentations and other communications may also include certain metrics which we believe to be useful to us, investors, analysts and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results.

Page 1:
(a)	Net income (loss) applicable to Morgan Stanley represents net income, less net income applicable to nonredeemable noncontrolling interests.
(b)	Earnings (loss) applicable to Morgan Stanley common shareholders represents net income (loss) applicable to Morgan Stanley, less preferred dividends.

Page 2:
(a)	The return on average common equity represents annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity.
(b)	Book value per common share represents common equity divided by period end common shares outstanding.
(c)	Tangible book value per common share represents tangible common equity divided by period end common shares outstanding.
(d)	Pre-tax profit margin percentages represent income before income taxes as percentages of net revenues.
(e)	The Firm expense efficiency ratio represents total non‐interest expenses as a percentage of net revenues.

Page 3:
(a)	Liquidity Resources, which are held within the bank and non-bank operating subsidiaries, are comprised of high quality liquid assets (HQLA) and cash deposits with banks ("Liquidity Resources"). The total amount of Liquidity Resources is actively managed by us considering the following components: unsecured debt maturity profile; balance sheet size and composition; funding needs in a stressed environment, inclusive of contingent cash outflows; legal entity, regional and segment liquidity requirements; regulatory requirements; and collateral requirements.
(b)	The Firm's goodwill and intangible balances utilized in the calculation of tangible common equity are net of certain mortgage servicing rights deduction.
(c)	U.S. Bank refers to the Firm's U.S. Bank operating subsidiaries Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association and excludes balances between Bank subsidiaries, as well as deposits from the Parent and affiliates.
(d)	Firmwide regional revenues reflect the Firm's consolidated net revenues on a managed basis. Further discussion regarding the geographic methodology for net revenues is disclosed in Note 21 to the consolidated financial statements included in the Firm's Annual Report on Form 10-K for the year ended December 31, 2019 (2019 Form 10-K).

Page 4:
(a)	The Firm's attribution of average common equity to the business segments is based on the Required Capital framework, an internal capital adequacy measure. This framework is a risk-based and leverage use-of-capital measure, which is compared with the Firm's regulatory capital to ensure that the Firm maintains an amount of going concern capital after absorbing potential losses from stress events, where applicable, at a point in time. The Required Capital framework is based on the Firm's regulatory capital requirements. The Firm defines the difference between its total average common equity and the sum of the average common equity amounts allocated to its business segments as Parent common equity. The amount of capital allocated to the business segments is generally set at the beginning of the year, and will remain fixed throughout the year until the next annual reset unless a significant business change occurs (e.g., acquisition or disposition). The Required Capital framework is expected to evolve over time in response to changes in the business and regulatory environment, for example, to incorporate changes in stress testing or enhancements to modeling techniques. For further discussion of the framework, refer to "Quantitative and Qualitative Disclosures about Risk" in the Firm's Annual Report on Form 10-K for the year ended December 31, 2019.
(b)	The Firm's risk-based capital ratios for purposes of determining regulatory compliance are the lower of the capital ratios computed under the (i) standardized approaches for calculating credit risk and market risk risk-weighted assets (RWAs) (the “Standardized Approach”); and (ii) applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (the “Advanced Approach”). At June 30, 2020 and March 31, 2020, the Firm's ratios are based on the Advanced Approach, while at June 30, 2019 were based on the Standardized Approach. For information on the calculation of regulatory capital and ratios for prior periods, please refer to "Quantitative and Qualitative Disclosures about Risk" in the Firm's 2019 Form 10-K.
(c)	Supplementary leverage ratio represents Tier 1 capital divided by the total supplementary leverage exposure.

Page 5:
(a)	Institutional Securities Sales & Trading net revenues includes trading, net interest income (interest income less interest expense), asset management and commissions and fees revenues.
(b)	Pre-tax profit margin percentages represent income before income taxes as percentages of net revenues.
(c)	VaR represents the loss amount that one would not expect to exceed, on average, more than five times every one hundred trading days in the Firm's trading positions if the portfolio were held constant for a one-day period. Further discussion of the calculation of VaR and the limitations of the Firm's VaR methodology, is disclosed in "Quantitative and Qualitative Disclosures about Risk" included in the Firm's 2019 Form 10-K.

Definition of Performance Metrics and Terms

Our earnings releases, earnings conference calls, financial presentations and other communications may also include certain metrics which we believe to be useful to us, investors, analysts and other stakeholders by providing further transparency about, or an additional means of assessing, our financial condition and operating results.

Page 6:
(a)	Transactional revenues for the Wealth Management segment includes investment banking, trading, and commissions and fee revenues.
(b)	Net interest income represents interest income less interest expense.
(c)	Other revenues for the Wealth Management segment includes investments and other revenues.
(d)	Pre-tax profit margin percentages represent income before income taxes as percentages of net revenues.

Page 7:
(a)	The average annualized revenue per representative metric represents annualized net revenues divided by average representative headcount.
(b)	Client assets per representative represents total client assets divided by period end representative headcount.
(c)	Client liabilities reflect U.S. Bank lending and broker dealer margin activity.
(d)	Fee-based client assets represent the amount of assets in client accounts where the basis of payment for services is a fee calculated on those assets.
(e)	Fee-based asset flows include net new fee-based assets, net account transfers, dividends, interest, and client fees and exclude institutional cash management related activity.

Page 8:
(a)	Other revenues for the Investment Management segment includes investment banking, trading, net interest and other revenues.
(b)	Pre-tax profit margin percentages represent income before income taxes as percentages of net revenues.

Page 9:
(a)	Investment Management Alternative/Other asset class includes products in Fund of Funds, Real Estate, Private Equity and Credit strategies, as well as Multi-Asset portfolios.
(b)	Investment Management net flows include new commitments, investments or reinvestments, net of client redemptions, returns of capital post-fund investment period and dividends not reinvested and excludes the impact of the transition of funds from their commitment period to the invested capital period.
(c)	Total assets under management or supervision excludes shares of minority stake assets which represent the Investment Management business segment’s proportional share of assets managed by third-party asset managers in which we hold investments accounted for under the equity method.

Page 10 and 11:
(a)	Corporate loans include relationship and event-driven loans and typically consist of revolving lines of credit, term loans and bridge loans.
(b)	Secured lending facilities include loans provided to clients, which are primarily secured by loans, which are, in turn, collateralized by various assets including residential real estate, commercial real estate, corporate and financial assets.
(c)	Securities-based lending and Other includes financing extended to sales and trading customers and corporate loans purchased in the secondary market.
(d)	Institutional Securities Lending Commitments principally include Corporate lending activity.

Supplemental Quantitative Details and Calculations

Page 1:
(1)	The Firm non-interest expenses by category are as follows:

		2Q20		1Q20		2Q19	2Q20 YTD		2Q19 YTD
Compensation and benefits	$	6,035	$	4,283	$	4,531	$	10,318	$	9,182

Non-compensation expenses:
Brokerage, clearing and exchange fees		716		740		630		1,456		1,223
Information processing and communications		589		563		538		1,152		1,070
Professional services		535		449		537		984		1,051
Occupancy and equipment		365		365		353		730		700
Marketing and business development		63		132		162		195		303
Other		756		809		590		1,565		1,143
Total non-compensation expenses		3,024		3,058		2,810		6,082		5,490

Total non-interest expenses	$	9,059	$	7,341	$	7,341	$	16,400	$	14,672

Page 2:
(1)	The second quarter ended June 30, 2020 included intermittent net discrete tax expenses of $134 million principally associated with the remeasurement of reserves related to a foreign tax matter. The first quarter ended March 31, 2020 included intermittent net discrete tax benefits of $31 million associated with the remeasurement of prior years' tax liability.

	The following sets forth the impact of the intermittent net discrete tax items to earnings per diluted share, return on average common equity and return on average tangible common equity (which are excluded):

		2Q20			1Q20		2Q20 YTD			2Q19 YTD
Earnings per diluted share impact	$	(0.08	)	$	0.02		$	(0.07	)	$	0.06
Return on average common equity impact		(0.7	)%		0.2	%		(0.3	)%		0.3	%
Return on average tangible common equity impact		(0.8	)%		0.2	%		(0.3	)%		0.3	%

(2)

The income tax consequences related to employee share-based payments, which are recurring-type tax items, are recognized in Provision for income taxes in the consolidated income statement, and may be either a benefit or a provision. Conversion of employee share-based awards to Firm shares will primarily occur in the first quarter of each year. The impacts of recognizing excess tax benefits / (cost) upon conversion of awards, are as follows: 2Q20 $(5) million; 1Q20: $99 million, 2Q19: $20 million, 2Q20 YTD: $94 million and 2Q19 YTD $127 million. The impact of intermittent net discrete tax provisions and benefits reflected above do not include the recurring-type discrete tax benefits related to employee share‐based payments as we anticipate conversion activity each year.

Page 3:
(1)	Includes loans held for investment (net of allowance), loans held for sale and also includes loans at fair value which are included in Trading assets on the balance sheet.
(2)	Beginning in the quarter ended March 31, 2020, the internal measure of liquidity was changed from Global Liquidity Reserve to Liquidity Resources to be more aligned with the current regulatory definition HQLA. June 30, 2019 has been recast. Refer to page 13 for additional information on the change in methodology.
(3)	For the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019, the U.S. Bank investment securities portfolio included held to maturity investment securities of $28.5 billion, $28.8 billion and $27.2 billion, respectively.

Page 4:
(1)	Based on a Federal Reserve interim final rule in effect until March 31, 2021, our Supplementary leverage ratio and Supplementary leverage exposure as of June 30, 2020 reflect the exclusion of U.S. Treasury securities and deposits at Federal Reserve Banks. The exclusion of these assets had the effect of improving our SLR ratio by 0.9% as of June 30, 2020.

Page 5:
(1)	For the second quarter ended June 30, 2020, the Institutional Securities segment net income applicable to Morgan Stanley included intermittent net discrete tax expenses of $125 million principally associated with the remeasurement of reserves related to a foreign tax matter. The first quarter ended March 31, 2020 included intermittent net discrete tax benefits of $27 million associated with the remeasurement of prior years' tax liability.
(2)	Institutional Securities average tangible common equity represents average common equity adjusted to exclude goodwill and intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 2Q20: $484mm; 1Q20: $484mm; 2Q19: $536mm; 2Q20 YTD: $484mm, 2Q19 YTD: $536mm

Page 6:
(1)	Wealth Management average tangible common equity represents average common equity adjusted to exclude goodwill and intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 2Q20: $7,802mm; 1Q20: $7,802mm; 2Q19: $8,088mm, 2Q20 YTD: $7,802mm; 2Q19 YTD: $8,088mm

Supplemental Quantitative Details and Calculations

Page 8:
(1)	Includes investment gains or losses for certain funds included in the Firm's consolidated financial statements for which the limited partnership interests in these gains or losses were reported in net income (loss) applicable to nonredeemable noncontrolling interests.
(2)	Investment Management average tangible common equity represents average common equity adjusted to exclude goodwill and intangible assets net of allowable mortgage servicing rights deduction. The adjustments are as follows: 2Q20: $932mm; 1Q20: $932mm; 2Q19: $940mm; 2Q20 YTD: $932mm; 2Q19 YTD: $940mm

Page 9:
(1)	Net Flows by region for the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019 were:
	North America: $17.7 billion, $57.9 billion and $4.3 billion
	International: $18.4 billion, $(0.6) billion and $3.6 billion
(2)	Assets under management or supervision by region for the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019 were:
	North America: $268 billion, $359 billion and $277 billion
	International: $397 billion, $225 billion and $220 billion
(3)	For the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019, the shares of minority stake assets were $5 billion, $6 billion and $6 billion, respectively.

Page 10:
(1)	For the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019, Investment Management reflected loan balances of $521 million, $499 million and $27 million, respectively. No material lending commitments were recorded by Investment Management for the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019.

Page 11:
(1)	For the quarter ended June 30, 2020 the Allowance Rollforward for Loans and Lending Commitments is as follows:

	Institutional Securities			Wealth Management			Total
Loans

Allowance for Credit Losses (ACL)
Beginning Balance - March 31, 2020	$	530		$	87		$	617
Net Charge Offs		2			0			2
Provision		223			23			246
Other		1			(0	)		1
Ending Balance - June 30, 2020	$	756		$	110		$	866


Lending Commitments

Allowance for Credit Losses (ACL)
Beginning Balance - March 31, 2020	$	298		$	6		$	304
Net Charge Offs		0			0			0
Provision		(5	)		(2	)		(7	)
Other		(0	)		0			0
Ending Balance - June 30, 2020	$	293		$	4		$	297


Loans and Lending Commitments

Allowance for Credit Losses (ACL)
Beginning Balance - March 31, 2020	$	828		$	93		$	921
Net Charge Offs		2			0			2
Provision		218			21			239
Other		1			(0	)		1
Ending Balance - June 30, 2020	$	1,049		$	114		$	1,163

(2)	The provision for credit losses associated with loans held for investment are reported in other revenues while the provision for credit losses related to lending commitments are reported in other expenses.
(3)	For the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019, Investment Management reflected loan balances of $521 million, $499 million and $27 million, respectively. No material lending commitments were recorded by Investment Management for the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019.

Legal Notice

This Financial Supplement contains financial, statistical and business-related information, as well as business and segment trends.

The information should be read in conjunction with the Firm's second quarter earnings press release issued July 16, 2020.

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