NEW YORK--(BUSINESS WIRE)--Morgan Stanley (NYSE: MS) today reported net revenues of $13.6 billion for the fourth quarter ended December 31, 2020 compared with $10.9 billion a year ago. Net income applicable to Morgan Stanley was $3.4 billion, or $1.81 per diluted share,1compared with $2.2 billion, or $1.30 per diluted share,1 for the same period a year ago. The comparisons of current year results to prior periods were impacted by the acquisition of E*TRADE Financial Corporation, completed on October 2, 2020, reported in the Wealth Management segment.

Full year net revenues were a record $48.2 billion compared with $41.4 billion a year ago. Net income applicable to Morgan Stanley for the current year was $11.0 billion, or $6.46 per diluted share,1 compared with $9.0 billion, or $5.19 per diluted share,1 a year ago.

James P. Gorman, Chairman and Chief Executive Officer, said, “The Firm produced a very strong quarter and record full-year results, with excellent performance across all three businesses and geographies. I am extremely proud of how our employees came together to support each other and our communities and deliver for our clients in an incredibly challenging year. Our unique business model continues to serve us well as we further execute on our long-term strategy with the acquisitions of E*TRADE and Eaton Vance. We enter 2021 with significant momentum, and I am very confident in our competitive position and our opportunities for continued growth.”

Financial Summary2,3	Highlights
Firm ($MM, except per share data)	4Q 2020	4Q 2019	FY 2020	FY 2019
The Firm’s full year results reflect both record net revenues of $48 billion up 16% year over year and net income of $11 billion up 22%. The Firm delivered full year ROTCE of 15.2% or 15.4% excluding the impact of integration-related expenses.4,5 The full year Firm expense efficiency ratio was 70% excluding the impact of integration-related expenses.5,6 Common Equity Tier 1 capital standardized ratio of 17.4%. Institutional Securities delivered record full year net revenues of $25.9 billion. Fourth quarter net revenues were up 39% driven by continued strong client engagement in a constructive market environment. Wealth Management delivered a full year pre-tax margin of 23.0% (24.2% excluding $231 million of integration-related expenses).7 Fourth quarter results reflect growth in client assets, increases in bank deposits and lending as well as strong transactional activity. Strong Investment Management results reflect record asset management fees in both the quarter and full year driven by record AUM of $781 billion and record long-term net flows of $41 billion.
Net revenues	$13,640	$10,857	$48,198	$41,419
Compensation expense	$5,450	$5,228	$20,854	$18,837
Non-compensation expenses	$3,760	$2,896	$12,926	$11,281
Pre-tax income8	$4,430	$2,733	$14,418	$11,301
Net income app. to MS	$3,385	$2,239	$10,996	$9,042
Expense efficiency ratio6	68%	75%	70%	73%
Earnings per diluted share	$1.81	$1.30	$6.46	$5.19
Book value per share	$51.13	$45.82	$51.13	$45.82
Tangible book value per share	$41.95	$40.01	$41.95	$40.01
Return on equity	14.7%	11.3%	13.1%	11.7%
Return on tangible equity4	17.7%	13.0%	15.2%	13.4%
Institutional Securities
Net revenues	$7,004	$5,054	$25,948	$20,386
Investment Banking	$2,302	$1,576	$7,204	$5,734
Sales & Trading	$4,220	$3,194	$18,792	$13,695
Wealth Management
Net revenues	$5,681	$4,582	$19,055	$17,737
Fee-based client assets ($Bn)9	$1,472	$1,267	$1,472	$1,267
Fee-based asset flows ($Bn)10	$24.1	$24.9	$77.4	$64.9
Net new assets ($Bn)11	$66.1	$27.1	$175.4	$97.8
Loans ($Bn)	$98.1	$80.1	$98.1	$80.1
Investment Management
Net revenues	$1,100	$1,356	$3,734	$3,763
AUM ($Bn)12	$781	$552	$781	$552
Long-term net flows ($Bn)13	$8.5	$6.7	$41.0	$15.4

Fourth Quarter ResultsInstitutional Securities

Institutional Securities reported net revenues for the current quarter of $7.0 billion compared with $5.1 billion a year ago. Pre-tax income was $3.2 billion compared with $1.1 billion a year ago.8

Investment Banking revenues up 46% from a year ago:
	Advisory revenues increased from a year ago driven by higher M&A completed transactions.	($ millions)	4Q 2020	4Q 2019
Net Revenues	$7,004	$5,054
•	Equity underwriting revenues increased from a year ago driven by higher revenues on IPOs, blocks and follow-on offerings.	Investment Banking	$2,302	$1,576
Advisory	$827	$654
•	Fixed income underwriting revenues decreased from a year ago as lower volumes contributed to a decline in bond revenues, partially offset by higher event driven activity.	Equity underwriting	$1,000	$422
Fixed income underwriting	$475	$500
Sales and Trading net revenues up 32% from a year ago:
	Equity sales and trading net revenues increased from a year ago reflecting strong performance across products and geographies driven by increased client activity, with particular strength in derivatives.	Sales and Trading	$4,220	$3,194
Equity	$2,498	$1,920
•	Fixed Income sales and trading net revenues increased from a year ago reflecting strong performance across businesses, benefitting from strong client engagement and market volatility, with notable strength in foreign exchange and credit products.	Fixed Income	$1,664	$1,273
Other	$58	$1
•	Other sales and trading net revenues increased from a year ago reflecting gains on investments associated with certain employee deferred compensation plans.
Investments and Other	$482	$284
Investments and Other:		Investments	$68	$68
Other	$414	$216
•	Other revenues increased from a year ago primarily driven by a reduction in the provision for credit losses on loans held for investment, mark-to-market gains on loans held for sale related to corporate lending activity and gains on the sale of a commodities related intangible asset.
Total Expenses	$3,844	$3,929
Compensation	$1,575	$2,057
Non-compensation	$2,269	$1,872

Total Expenses:

• Compensation expense decreased from a year ago driven by lower discretionary compensation, partially offset by increases in the fair value of deferred compensation plan referenced investments.

• Non-compensation expenses increased from a year ago driven by higher volume related expenses, higher litigation expense, and an increase in the provision for credit losses on unfunded lending commitments.

Wealth Management

Wealth Management reported net revenues for the current quarter of $5.7 billion compared with $4.6 billion a year ago. Pre-tax income of $1.1 billion8 in the current quarter resulted in a pre-tax margin of 18.8%7 or 22.9% excluding the impact of integration-related expenses.5 The comparisons of current year results to prior periods were impacted by the acquisition of E*TRADE.

Net revenues up 24% from a year ago:
Asset management revenues increased from a year ago reflecting higher asset levels driven by market appreciation and strong fee-based flows.	($ millions)	4Q 2020	4Q 2019
Net Revenues	$5,681	$4,582
Asset management	$2,975	$2,655
Transactional revenues14 increased 37% excluding the impact of mark-to-market gains on investments associated with certain employee deferred compensation plans. Results reflect strong client activity in both the advisor-led and self-directed channels.	Transactional14	$1,340	$829
Net interest	$1,207	$1,033
Net interest income (NII) increased from a year ago driven by incremental NII as a result of the E*TRADE acquisition as well as higher deposits and bank lending, partially offset by the impact of lower average rates.	Other	$159	$65
Total Expenses:	Total Expenses	$4,611	$3,419
Compensation expense increased from a year ago driven by incremental compensation as a result of the E*TRADE acquisition and integration-related expenses,5 increases in the fair value of deferred compensation plan referenced investments,and higher compensable revenues.	Compensation	$3,345	$2,590
Non-compensation expense increased from a year ago primarily driven by incremental operating and other expenses as a result of the E*TRADE acquisition and integration-related expenses.5	Non-compensation	$1,266	$829

Investment ManagementInvestment Management reported net revenues of $1.1 billion compared with $1.4 billion a year ago. Pre-tax income was $196 million compared with $447 million a year ago.8

Net revenues down 19% from a year ago:	($ millions)	4Q 2020	4Q 2019
Net Revenues	$1,100	$1,356
Asset management revenues increased from a year ago driven by record AUM, reflecting strong investment performance and positive net flows.	Asset management	$869	$736
Investments revenues decreased from a year ago due to significant gains reflected in the prior year quarter related to an investment’s initial public offering within an Asia private equity fund.	Investments	$256	$670
Other	$(25)	$(50)
Total Expenses:	Total Expenses	$904	$909
Compensation expense decreased from a year ago principally due to lower carried interest in the quarter.	Compensation	$530	$581
Non-compensation expenses increased from a year ago driven by higher brokerage and clearing expense.	Non-compensation	$374	$328

Full Year ResultsInstitutional Securities

Institutional Securities reported net revenues of $25.9 billion compared with $20.4 billion a year ago. Pre-tax income was $9.2 billion compared with $5.5 billion in the prior year.8

Investment Banking revenues up 26% from a year ago:	($ millions)	FY 2020	FY 2019
Advisory revenues decreased from a year ago due to fewer large completed M&A transactions.	Net Revenues	$25,948	$20,386
Equity underwriting revenues increased 81% from a year ago driven by growth in blocks, IPOs and follow-on offerings as clients continued to access capital markets.
Fixed income underwriting revenues increased from a year ago on higher investment and non-investment grade bond issuances driven by elevated volumes as clients accessed capital markets, partially offset by lower investment grade loan issuances.	Investment Banking	$7,204	$5,734
Advisory	$2,008	$2,116
Fixed income underwriting revenues increased from a year ago on higher investment and non-investment grade bond issuances driven by elevated volumes as clients accessed capital markets, partially offset by lower investment grade loan issuances.	Equity underwriting	$3,092	$1,708
Fixed income underwriting	$2,104	$1,910
Sales and Trading net revenues up 37% from a year ago:	Sales and Trading	$18,792	$13,695
Equity sales and trading net revenues increased 22% from a year ago reflecting strong performance across products and geographies driven by increased client activity.	Equity	$9,801	$8,056
Fixed Income sales and trading net revenues increased 59% from a year ago reflecting strong performance across businesses benefitting from strong client engagement and market volatility, with notable strength in foreign exchange and credit products.	Fixed Income	$8,824	$5,546
Other	$167	$93
Other sales and trading net revenues increased from a year ago primarily driven by gains on economic hedges associated with corporate lending activity, partially offset by lower rates on liquidity investments.
Investments and Other	$(48)	$957
Investments and Other:	Investments	$166	$325
Revenues decreased from a year ago reflecting lower mark-to-market gains on investments.	Other	$(214)	$632
Other revenues decreased from a year ago due to mark-to-market losses on corporate loans held for sale and an increase in the provision for credit losses on loans held for investment.
Total Expenses:	Total Expenses	$16,797	$14,896
Compensation expense increased from a year ago driven by higher discretionary compensation expense as a result of higher revenues.	Compensation	$8,342	$7,433
Non-compensation expenses increased from a year ago driven by higher volume related expenses and an increase in the provision for credit losses on unfunded lending commitments.	Non-compensation	$8,455	$7,463

Wealth ManagementWealth Management reported net revenues of $19.1 billion compared with $17.7 billion a year ago. Pre-tax income of $4.4 billion resulted in a pre-tax margin of 23.0%7,8 or 24.2% excluding the impact of integration-related expenses.5

Net revenues up 7% from a year ago:	($ millions)	FY 2020	FY 2019
Asset management revenues increased from a year ago on higher asset levels driven by market appreciation and record fee-based flows.	Net Revenues	$19,055	$17,737
Transactional revenues14 increased from a year ago primarily driven by an increase in commissions on higher client activity, gains on investments associated with certain employee deferred compensation plans, and incremental revenues in the fourth quarter as a result of the E*TRADE acquisition.	Asset management Transactional14	$10,955 $3,694	$10,199 $2,969
Net interest income decreased from a year ago primarily driven by the impact of lower interest rates, partially offset by increases due to higher deposits and bank lending as well as incremental NII as a result of the E*TRADE acquisition.	Net interest	$4,022	$4,222
Other	$384	$347
Total Expenses:	Total Expenses	$14,668	$12,905
Compensation expense increased from a year ago primarily driven by higher compensable revenues, incremental compensation as a result of the E*TRADE acquisition and integration-related expenses,5 as well as increases in the fair value of deferred compensation plan referenced investments.	Compensation	$10,970	$9,774
Non-compensation expenses increased from a year ago primarily driven by incremental operating and other expenses as a result of the E*TRADE acquisition, integration-related expenses,5 and a regulatory charge, partially offset by lower marketing and business development expenses.	Non-compensation	$3,698	$3,131

Investment ManagementInvestment Management net revenues were essentially unchanged from a year ago. Pre-tax income was $870 million compared with $985 million in the prior year.8

Net revenues:	($ millions)	FY 2020	FY 2019
Asset management revenues increased from a year ago driven by record AUM, reflecting strong investment performance and positive net flows.	Net Revenues	$3,734	$3,763
Asset management	$3,013	$2,629
Investments revenues decreased from a year ago driven by lower accrued carried interest.	Investments	$808	$1,213
Other	$(87)	$(79)
Total Expenses:	Total Expenses	$2,864	$2,778
Compensation expense decreased from a year ago principally due to a decrease in carried interest.	Compensation	$1,542	$1,630
Non-compensation expenses increased from a year ago driven by higher brokerage and clearing costs.	Non-compensation	$1,322	$1,148

Other Matters

4Q 2020	4Q 2019	FY 2020	FY 2019
The Firm’s Board of Directors authorized the repurchase of outstanding common stock of up to $10 billion in 2021.	Common Stock Repurchases
The Board of Directors declared a $0.35 quarterly dividend per share, payable on February 12, 2021 to common shareholders of record on January 29, 2021.	Repurchases ($MM)	NA	$1,500	$1,347	$5,360
Number of Shares (MM)	NA	31	29	121
The Firm’s provision for credit losses on loans and lending commitments was $5 million for the fourth quarter of 2020, compared with $57 million for the fourth quarter of 2019 and $111 million for the third quarter of 2020. The allowance for credit losses on loans and lending commitments was $1.2 billion as of December 31, 2020, a decrease of approximately $29 million from September 30, 2020 and an increase of approximately $641 million from December 31, 2019.	Average Price	NA	$48.49	$46.01	$44.23
Period End Shares (MM)	1,810	1,594	1,810	1,594
Tax Rate	23.0%	15.7%	22.5%	18.3%
Capital15
Standardized Approach
CET1 capital16	17.4%	16.4%
Tier 1 capital16	19.4%	18.6%
Advanced Approach
CET1 capital16	17.7%	16.9%
Tier 1 capital16	19.8%	19.2%
Leverage-based capital
Tier 1 leverage17	8.4%	8.3%
SLR18	7.4%	6.4%

Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in more than 41 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit www.morganstanley.com.