Morgan Stanley · NYSE:MS
Morgan Stanley — Debt Investor Presentation (May 2014)
26 slides from Morgan Stanley's debt investor presentation, May 14, 2014
Slide 1: Morgan Stanley 1Q14 Fixed Income Investor Update
Morgan Stanley 1Q14 Fixed Income Investor Update May 14, 2014
Slide 2: Notice
Notice The information provided herein may include certain non-GAAP financial measures. The reconciliation of such measures to the comparable GAAP figures are included in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and the Company’s Current Reports on Form 8-K, as applic
Slide 3: Agenda
Agenda A Business Update B Capital Management C Prudent Liability Management D Liquidity Management E Regulatory Topics 3
Slide 4: Strategic Moves Enhance Business Outlook and Funding Profile
A Strategic Moves Enhance Business Outlook and Funding Profile (1) (2) Key Drivers Revenue Split Funding Stack Wealth Management 2% Revenue and earnings consistency 13% Well positioned for growth, benefitting from higher deposits 32% 13% At the end of 4Q13, increased WM margin target to 22-2
Slide 5: Bank Supports Significant Growth Opportunity in Net Interest Income
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 Indicative
Slide 6: Pro-forma Top US-Based Depository Institution With Remaining Deposits
Pro-forma Top 10 US-Based Depository Institution With Remaining Deposits Top US-Based Depositories as of 4Q13 (1),(2) ($Bn) 1. JPMorgan Chase & Co. 1,288 2. Bank of America Corporation 1,119 3. Wells Fargo & Company 1,079 4. Citigroup Inc. 968 5. U.S. Bancorp 262 6. Bank of New York Mellon Corporati
Slide 7: The “Why” Behind Our Capital, Liability Stack, and Liquidity
The “Why” Behind Our Capital, Liability Stack, and Liquidity Keys to Robust, Vibrant Financial Institutions in All Environments Strengthen Business as Usual Ensure ample flexibility in all scenarios Morgan Stanley’s Framework to Ensure a Robust, Vibrant Firm Capital management Higher, better
Slide 8: Capital Management: Strong Capital Under Basel I and Basel III Regimes
B Capital Management: Strong Capital Under Basel I and Basel III Regimes Tier 1 Common Ratio & Common Equity Tier 1 Ratio (Common Less Tier 1 Deductions) / RWA (%) Beginning in the first quarter of 2014, the Firm calculates its Common Equity Tier 1 capital, 14.6% 14.1% Tier 1 capital, and Tier 1 l
Slide 9: Capital Management: Significant Improvement in Quality of Total Capital
Capital Management: Significant Improvement in Quality of Total Capital Morgan Stanley Total Capital (1) (2) 2007 1Q14 <1% 7% 3% 6% Does not reflect the 4% $1.8Bn of preferred issuances in April 2014 Qualifying Long Term Debt 25% 79% Other 8% 9% Subordinated Debt 2% NCI Trust Preferred Securities 56
Slide 10: Prudent Liability Management: Centralized Structure and Strict Governance
C Prudent Liability Management: Centralized Structure and Strict Governance Prudent Liability Management & Funding Durability – Setting the Stage A prudent liability management framework supported by centralized, strong governance ensuring funding durability, providing critical stability in all en
Slide 11: Prudent Liability Management: Illustrative Asset-Liability Funding Model
Prudent Liability Management: Illustrative Asset-Liability (1) Funding Model Funding governance requires alignment of more liquid assets with shorter-term liabilities and less liquid assets with longer-term liabilities and equity Liabilities & Assets Equity Bank Deposits Assets(2) Deposits Equity
Slide 12: Prudent Liability Management: Significant Reduction In Debt Outstanding
Prudent Liability Management: Significant Reduction In Debt Outstanding Reduced long-term debt outstanding by ~$30 billion since year-end 2011, due to a more liquid balance sheet, higher capital, and increasing deposit optimization Appropriately sized, balanced maturity profile; diversified acro
Slide 13: Significant Increase in Deposits With 100% Ownership of Wealth Management Business
Significant Increase in Deposits With 100% Ownership of Wealth Management Business Firmwide Pro-forma Deposit Growth (1) ($Bn) $5 ~$140 $5 $5 $5 $5 $117 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Total (1) Firmwide pro-forma deposit growth reflects the contractual transfer of deposits from Citi to Morgan Stanley
Slide 14: Four Pillars of Secured Funding Ensures Durability and Stability
Four Pillars of Secured Funding Ensures Durability and Stability: Not All Wholesale Funding Created Equal 1 Significant Weighted Average Maturity Enhances durability 2 Maturity Limit Structure Reduces roll-over risk 3 Investor Limit Structure Minimizes concentration with any single investor, i
Slide 15: Strict Governance Framework Ensures Appropriate Term Consistent with Asset Fundability
Strict Governance Framework Ensures Appropriate Term Consistent with Asset Fundability Rules-Based Criteria Determine Asset Fundability… Highly Liquid (Governments, Fundability Criteria Agencies, Open Market Operations and Central Eligible for financing through Open Market Operations (OMO) and/or
Slide 16: Secured Funding Pillar 1: Longer WAM Provides Appropriate Flexibility
Secured Funding Pillar 1: Longer WAM Provides Appropriate Flexibility (1) …Fundability Category Determines Required Weighted Average Maturity: >120 Days Established criteria-based model to obtain appropriate term funding consistent with liquidity profile of underlying assets Assets tiered by fun
Slide 17: Secured Funding Pillar 2: Monthly Maturity Target; Pillar 3: Investor Concentration Target
Secured Funding Pillar 2: Monthly Maturity Target Secured Funding Pillar 3: Investor Concentration Target Monthly Maturity Target: Target less than 15% of non-Super Green liabilities maturing in any given month Investor Concentration Target: Maximum total exposure per investor of 15% of non-Supe
Slide 18: Secured Funding Pillar 4: Spare Capacity as Additional Risk Mitigant
Secured Funding Pillar 4: Spare Capacity as Additional Risk Mitigant Spare Capacity is equivalent to total non-Super Green liabilities in excess of non-Super Green inventory Spare Capacity has created excess contractual term-funding, which serves as an additional risk mitigant to accommodate var
Slide 19: More Durable Liquidity: Significant Global Liquidity Position
D More Durable Liquidity: Significant Global Liquidity Position Highly Liquid and Unencumbered - Bank liquidity levels should remain elevated in the medium term due to onboarding of deposits Period End Liquidity ($Bn) $198 $202 $203 Composition of the Liquidity Reserve $ 200 at 1Q14 $182 $186 $182 $
Slide 20: More Durable Liquidity: Build and Stress Test Liquidity on a Legal Entity Basis
More Durable Liquidity: Build and Stress Test Liquidity on a Legal Entity Basis • Stress testing sizes contingency outflow requirements at a legal entity level (1) (2) Liquidity (% of Total) Contingent cash outflows are (1),(2) measured independently from the Parent 28% inflows resulting from mitig
Slide 21: Estimated LCR Reflects Benefits of Funding Governance & Liquidity Risk Management
E Estimated LCR Reflects Benefits of Funding Governance & Liquidity Risk Management Basel III Liquidity Coverage Ratio (LCR) (1) • Morgan Stanley’s Position: Current pro-forma LCR estimate based on Basel Committee proposal remains in excess of 100% The Firm’s stress test scenarios incorporate and
Slide 22: Appendix
Appendix Morgan Stanley
Slide 23: Securities Available for Sale
Securities Available for Sale At March 31, 2014 ($MM) Gross Gross Other-than- Amortized Unrealized Unrealized Temporary Cost Gains Losses Impairment Fair Value Debt Securities Available for Sale Total U.S. Government and Agency Securities $44,823 $78 $304 – $44,597 Corporate and Other Debt Commercia
Slide 24: Orderly Liquidation Authority
Orderly Liquidation Authority Well positioned for “minimum bail-in capacity” rules Long-term debt issued at Parent was approximately 17% of total consolidated assets and 36% of consolidated Basel 2.5 risk-weighted assets as of March 31, 2014 Long-Term Borrowings (% of Total) (1) Senior debt 91%
Slide 25: Loans and Lending Commitments
Loans and Lending Commitments Quarter Ended Percentage Change From: Mar 31, 2014 Dec 31, 2013 Mar 31, 2013 Dec 31, 2013 Mar 31, 2013 Institutional Securities Corporate Funded Loans Loans held for investment, net of allowance $ 8.4 $ 7.8 $ 7.1 8% 18% Loans held for sale 4.7 6.2 4.1 (24%) 15% Loans he
Slide 26: Morgan Stanley 1Q14 Fixed Income Investor Update
Morgan Stanley 1Q14 Fixed Income Investor Update May 14, 2014
Morgan Stanley — Debt Investor Presentation (May 2014) on 6ix