~~0000895421ms:AOCIDebtValuationAdjustmentIncludingNoncontrollingInterestMember2020-01-012020-09-30~~0000895421srt:MaximumMemberms:MeasurementInputEquityCorrelationMemberus-gaap:ValuationTechniqueOptionPricingModelMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-09-30


~~Table of Contents~~

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2021~~2022

Commission File Number 1-11758

(Exact name of Registrant as specified in its charter)

Delaware

1585 Broadway

36-3145972

(212)

761-4000

(State or other jurisdiction of

incorporation or organization)

New York,

10036

(I.R.S. Employer Identification No.)

(Registrant’s telephone number, including area code)

(Address of principal executive offices, including zip code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, $0.01 par value	MS	New York Stock Exchange
Depositary Shares, each representing 1/1,000th interest in a share of Floating Rate	MS/PA	New York Stock Exchange
Non-Cumulative Preferred Stock, Series A, $0.01 par value
Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate	MS/PE	New York Stock Exchange
Non-Cumulative Preferred Stock, Series E, $0.01 par value
Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate	MS/PF	New York Stock Exchange
Non-Cumulative Preferred Stock, Series F, $0.01 par value
Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate	MS/PI	New York Stock Exchange
Non-Cumulative Preferred Stock, Series I, $0.01 par value
Depositary Shares, each representing 1/1,000th interest in a share of Fixed-to-Floating Rate	MS/PK	New York Stock Exchange
Non-Cumulative Preferred Stock, Series K, $0.01 par value
Depositary Shares, each representing 1/~~1000th~~1,000th interest in a share of 4.875%	MS/PL	New York Stock Exchange
Non-Cumulative Preferred Stock, Series L, $0.01 par value
Depositary Shares, each representing 1/~~1000th~~1,000th interest in a share of 4.250%	MS/PO	New York Stock Exchange
Non-Cumulative Preferred Stock, Series O, $0.01 par value
Depositary Shares, each representing 1/1,000th interest in a share of 6.500%	MS/PP	New York Stock Exchange
Non-Cumulative Preferred Stock, Series O,P, $0.01 par value
Global Medium-Term Notes, Series A, Fixed Rate Step-Up Senior Notes Due 2026	MS/26C	New York Stock Exchange
of Morgan Stanley Finance LLC (and Registrant’s guarantee with respect thereto)
Global Medium-Term Notes, Series A, Floating Rate Notes Due 2029	MS/29	New York Stock Exchange
of Morgan Stanley Finance LLC (and Registrant’s guarantee with respect thereto)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October ~~29, 2021,~~31, 2022, there were ~~1,794,411,954~~1,690,109,419 shares of the Registrant’s Common Stock, par value $0.01 per share, outstanding.


Table of Contents

QUARTERLY REPORT ON FORM 10-Q

For the quarter ended September 30, ~~2021~~2022


Table of Contents	Table of Contents		Part	Item	Page	Table of Contents		Part	Item	Page
Financial Information	Financial Information		I			Financial Information		I
Management’s Discussion and Analysis of Financial Condition and Results of Operations	Management’s Discussion and Analysis of Financial Condition and Results of Operations		I	2	1	Management’s Discussion and Analysis of Financial Condition and Results of Operations		I	2	1
Introduction	Introduction				1	Introduction				1
Executive Summary	Executive Summary				2	Executive Summary				2
Business Segments	Business Segments				8	Business Segments				8
Institutional Securities	Institutional Securities				9	Institutional Securities				9
Wealth Management	Wealth Management				12	Wealth Management				12
Investment Management	Investment Management				15	Investment Management				15
Supplemental Financial Information	Supplemental Financial Information				17	Supplemental Financial Information				17
Accounting Development Updates	Accounting Development Updates				17	Accounting Development Updates				17
Critical Accounting Policies	Critical Accounting Policies				17	Critical Accounting Policies				17
Liquidity and Capital Resources	Liquidity and Capital Resources				17	Liquidity and Capital Resources				18
Balance Sheet	Balance Sheet				17	Balance Sheet				18
Regulatory Requirements	Regulatory Requirements				21	Regulatory Requirements				21
Quantitative and Qualitative Disclosures about Risk	Quantitative and Qualitative Disclosures about Risk		I	3	27	Quantitative and Qualitative Disclosures about Risk		I	3	27
Market Risk	Market Risk				27	Market Risk				27
Credit Risk	Credit Risk				29	Credit Risk				29
Country and Other Risks	Country and Other Risks				33	Country and Other Risks				33
Report of Independent Registered Public Accounting Firm	Report of Independent Registered Public Accounting Firm				35	Report of Independent Registered Public Accounting Firm				35
Consolidated Financial Statements and Notes	Consolidated Financial Statements and Notes		I	1	36	Consolidated Financial Statements and Notes		I	1	36
Consolidated Income Statements (Unaudited)					36
Consolidated Comprehensive Income Statements (Unaudited)					36
Consolidated Balance Sheets (Unaudited at September 30, 2021)					37
Consolidated Statements of Changes in Total Equity (Unaudited)					38
Consolidated Cash Flow Statements (Unaudited)					39
Consolidated Income Statement (Unaudited)						Consolidated Income Statement (Unaudited)				36
Consolidated Comprehensive Income Statement (Unaudited)						Consolidated Comprehensive Income Statement (Unaudited)				36
Consolidated Balance Sheet (Unaudited at September 30, 2022)						Consolidated Balance Sheet (Unaudited at September 30, 2022)				37
Consolidated Statement of Changes in Total Equity (Unaudited)						Consolidated Statement of Changes in Total Equity (Unaudited)				38
Consolidated Cash Flow Statement (Unaudited)						Consolidated Cash Flow Statement (Unaudited)				39
Notes to Consolidated Financial Statements (Unaudited)	Notes to Consolidated Financial Statements (Unaudited)				40	Notes to Consolidated Financial Statements (Unaudited)				40
1.	1.	Introduction and Basis of Presentation			40	1.	Introduction and Basis of Presentation			40
2.	2.	Significant Accounting Policies			41	2.	Significant Accounting Policies			41
3.	3.	Acquisitions			41	3.	Cash and Cash Equivalents			41
4.	4.	Cash and Cash Equivalents			42	4.	Fair Values			41
5.	5.	Fair Values			42	5.	Fair Value Option			47
6.	6.	Fair Value Option			49	6.	Derivative Instruments and Hedging Activities			48
7.	7.	Derivative Instruments and Hedging Activities			50	7.	Investment Securities			51
8.	8.	Investment Securities			53	8.	Collateralized Transactions			53
9.	9.	Collateralized Transactions			55	9.	Loans, Lending Commitments and Related Allowance for Credit Losses			55
10.	10.	Loans, Lending Commitments and Related Allowance for Credit Losses			56	10.	Other Assets—Equity Method Investments			57
11.	11.	Other Assets—Equity Method Investments			58	11.	Deposits			57
12.	12.	Deposits			59	12.	Borrowings and Other Secured Financings			58
13.	13.	Borrowings and Other Secured Financings			59	13.	Commitments, Guarantees and Contingencies			58
14.	14.	Commitments, Guarantees and Contingencies			59	14.	Variable Interest Entities and Securitization Activities			60
15.	15.	Variable Interest Entities and Securitization Activities			62	15.	Regulatory Requirements			62
16.	16.	Regulatory Requirements			64	16.	Total Equity			64
17.	17.	Total Equity			66	17.	Interest Income and Interest Expense			67
18.	18.	Interest Income and Interest Expense			68	18.	Income Taxes			67
19.	19.	Income Taxes			68	19.	Segment, Geographic and Revenue Information			67
20.		Segment, Geographic and Revenue Information			68
Financial Data Supplement (Unaudited)	Financial Data Supplement (Unaudited)				71	Financial Data Supplement (Unaudited)				70
Glossary of Common Terms and Acronyms	Glossary of Common Terms and Acronyms				72	Glossary of Common Terms and Acronyms				71
Controls and Procedures	Controls and Procedures		I	4	73	Controls and Procedures		I	4	72
Other Information	Other Information		II			Other Information		II
Legal Proceedings	Legal Proceedings		II	1	73	Legal Proceedings		II	1	72
Risk Factors	Risk Factors		II	1A	73	Risk Factors		II	1A	72
Unregistered Sales of Equity Securities and Use of Proceeds	Unregistered Sales of Equity Securities and Use of Proceeds		II	2	73	Unregistered Sales of Equity Securities and Use of Proceeds		II	2	72
Other Information	Other Information		II	5	73	Other Information		II	5	72
Exhibits	Exhibits		II	6	73	Exhibits		II	6	73
Signatures	Signatures				74	Signatures				73


			i


Table of Contents

Available Information

We file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains a website, www.sec.gov, that contains annual, quarterly and current reports, proxy and information statements and other information that issuers file electronically with the SEC. Our electronic SEC filings are available to the public at the SEC’s website.

Our website is www.morganstanley.com. You can access our Investor Relations webpage at www.morganstanley.com/about-us-ir. We make available free of charge, on or through our Investor Relations webpage, our proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (“Exchange Act”), as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. We also make available, through our Investor Relations webpage, via a link to the SEC’s website, statements of beneficial ownership of our equity securities filed by our directors, officers, 10% or greater shareholders and others under Section 16 of the Exchange Act.

You can access information about our corporate governance at www.morganstanley.com/about-us-governance, our sustainability initiatives at www.morganstanley.com/about-us/sustainability-at-morgan-stanley and our commitment to diversity and inclusion at www.morganstanley.com/about-us/diversity. Our webpages include:

•Amended and Restated Certificate of Incorporation;

•Amended and Restated Bylaws;

•Charters for our Audit Committee, Compensation, Management Development and Succession Committee, ~~Nominating~~Governance and ~~Governance~~Sustainability Committee, Operations and Technology Committee, and Risk Committee;

•Corporate Governance Policies;

•Policy Regarding Corporate Political Activities;

•Policy Regarding Shareholder Rights Plan;

•Equity Ownership Commitment;

•Code of Ethics and Business Conduct;

•Code of Conduct;

•Integrity Hotline Information;

•Environmental and Social Policies;

•Sustainability Report;

•~~Task Force on Climate-related Financial Disclosures~~Climate Report; and

•Diversity and Inclusion Report.

Our Code of Ethics and Business Conduct applies to all directors, officers and employees, including our Chief Executive Officer, Chief Financial Officer and Deputy Chief Financial Officer. We will post any amendments to the Code of Ethics and Business Conduct and any waivers that are required to be disclosed by the rules of either the SEC or the New York Stock Exchange LLC (“NYSE”) on our website. You can request a copy of these documents, excluding exhibits, at no cost, by contacting Investor Relations, 1585 Broadway, New York, NY 10036 (212-761-4000). The information on our website is not incorporated by reference into this report.


			ii


Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

Morgan Stanley is a global financial services firm that maintains significant market positions in each of its business segments—Institutional Securities, Wealth Management and Investment Management. Morgan Stanley, through its subsidiaries and affiliates, provides a wide variety of products and services to a large and diversified group of clients and customers, including corporations, governments, financial institutions and individuals. Unless the context otherwise requires, the terms “Morgan Stanley,” “Firm,” “us,” “we” or “our” mean Morgan Stanley (the “Parent Company”) together with its consolidated subsidiaries. Disclosures reflect the effects of the ~~acquisitions~~acquisition of ~~E*TRADE Financial Corporation (“E*TRADE”) and~~ Eaton Vance Corp. (“Eaton Vance”) prospectively from the ~~acquisition dates, October 2, 2020 and~~ March 1, 2021 ~~respectively.~~acquisition date. See the “Glossary of Common Terms and Acronyms” for the definition of certain terms and acronyms used throughout this Form 10-Q.

A description of the clients and principal products and services of each of our business segments is as follows:

Institutional Securities provides a variety of products and services to corporations, governments, financial institutions and ultra-high net worth clients. Investment ~~banking~~Banking services consist of capital raising and financial advisory services, including ~~services relating to~~ the underwriting of debt, equity and other securities, as well as advice on mergers and acquisitions, restructurings and project finance. Our Equity and Fixed Income businesses include sales, financing, prime brokerage, market-making, Asia wealth management services and certain business-related investments. Lending activities include originating corporate loans and commercial real estate loans, providing secured lending facilities, and extending securities-based and other financing to customers. Other activities include research.

Wealth Management provides a comprehensive array of financial services and solutions to individual investors and small to medium-sized businesses and institutions covering: financial advisor-led brokerage and investment advisory services; self-directed brokerage services; financial and wealth planning services; workplace services, including stock plan administration; annuity and insurance products; securities-based lending, residential real estate loans and other lending products; banking; and retirement plan services.

Investment Management provides a broad range of investment strategies and products that span geographies, asset classes, and public and private markets to a diverse group of clients across institutional and intermediary channels. Strategies and products, which are offered through a variety of investment vehicles, include equity, fixed income, alternatives and solutions, and liquidity and overlay services. Institutional clients include defined benefit/defined contribution plans, foundations, endowments, government entities, sovereign wealth funds, insurance companies, third-party fund sponsors and corporations. Individual clients are generally served through intermediaries, including affiliated and non-affiliated distributors.

Management’s Discussion and Analysis includes certain metrics that 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. Such metrics, when used, are defined and may be different from or inconsistent with metrics used by other companies.

The results of operations in the past have been, and in the future may continue to be, materially affected by: competition; risk factors; legislative, legal and regulatory developments; and other factors. These factors also may have an adverse impact on our ability to achieve our strategic objectives. Additionally, the discussion of our results of operations herein may contain forward-looking statements. These statements, which reflect management’s beliefs and expectations, are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of the risks and uncertainties that may affect our future results, see “Forward-Looking Statements,” “Business—Competition,” “Business—Supervision and Regulation,” and “Risk Factors” in the ~~2020~~2021 Form ~~10-K, and “Liquidity and Capital Resources—Regulatory Requirements” herein.~~10-K.


September ~~2021~~2022 Form 10-Q			1


Table of Contents
Management’s Discussion and Analysis

Executive Summary

Overview of Financial Results

Consolidated Results—Three Months Ended September 30, ~~2021~~2022

•The Firm reported net revenues of ~~$14.8~~$13.0 billion, ~~and net income of $3.7 billion increased more than 25% from the prior year quarter, reflecting strong performance across all business segments and regions.~~against a volatile market backdrop.

•The Firm delivered ~~an annualized~~ ROTCE of ~~19.6%~~14.6%, or ~~20.2%~~15.2% excluding the impact of integration-related expenses (see “Selected Non-GAAP Financial Information” herein).

•The ~~Firm~~Firm’s expense efficiency ratio ~~was 67%~~of 74% in the current quarter, or ~~66%~~73% excluding the impact of integration-related expenses (see “Selected Non-GAAP Financial Information” herein), contributed to an expense efficiency ratio in the current year period of 72%, or 71% excluding the impact of integration-related expenses (see “Selected Non-GAAP Financial Information” herein).

•At September 30, ~~2021,~~2022 our ~~standardized~~Standardized Common Equity Tier 1 capital ratio was ~~16.0%~~14.8%.

•Institutional Securities ~~Net~~net revenues of ~~$7.5~~$5.8 billion reflect ~~record Investment Banking revenues, led by Advisory, continued~~ strong performance in ~~Equity,~~Fixed Income and solid results in ~~Fixed income.~~Equity, while the uncertain macroeconomic environment continued to drive limited activity in Investment Banking.

•Wealth Management delivered a pre-tax margin of ~~25.8%~~26.9%, or ~~27.7%~~28.4% excluding integration-related expenses (see “Selected Non-GAAP Financial Information” herein). Results reflect ~~record asset management revenues, continued growth in bank lending.~~higher net interest income driven by higher interest rates. The business added ~~record~~$65 billion in net new assets, ~~of $135 billion representing a~~bringing total net new assets year-to-date ~~10% annualized growth rate from beginning period assets.~~to $260 billion.

•Investment Management ~~results reflect an increase in fee-based asset management~~delivered net revenues of $1.2 billion on AUM of ~~$1.5 trillion.~~$1.3 trillion in a challenging market environment.

Net Revenues1

($ in millions)

1.~~Certain prior period amounts have been reclassified to conform to the current presentation. See “Business Segments” herein and Note 1 to the financial statements for more information.~~

Net Income Applicable to Morgan Stanley

($ in millions)

Earnings per Diluted Common Share1

1.Adjusted Diluted EPS was $1.53 for the current quarter and $2.04 for the prior year quarter. Adjusted Diluted EPS was $5.04 for the current year period ~~were $2.04~~ and $6.15 ~~respectively~~for the prior year period (see “Selected Non-GAAP Financial Information” ~~herein)~~herein for further information).

We reported net revenues of $13.0 billion in the quarter ended September 30, 2022 (“current quarter,” or “3Q 2022”) compared with $14.8 billion in the quarter ended September 30, 2021 (“~~current quarter,” or “3Q 2021”), compared with $11.7 billion in the quarter ended September 30, 2020 (“~~prior year quarter,” or “3Q ~~2020”~~2021”). For the current quarter, net income applicable to Morgan Stanley was ~~$3.7~~$2.6 billion, or ~~$1.98~~$1.47 per diluted common share, compared with ~~$2.7~~$3.7 billion or ~~$1.66~~$1.98 per diluted common share in the prior year quarter.

We reported net revenues of ~~$45.2~~$40.9 billion in the nine months ended September 30, ~~2021~~2022 (“current year period,” or “YTD ~~2021”~~2022”), compared with ~~$35.2~~$45.2 billion in the period ended September 30, ~~2020~~2021 (“prior year period,” or “YTD ~~2020”~~2021”). For the current year period, net income applicable to Morgan Stanley was ~~$11.3~~$8.8 billion, or ~~$6.02~~$4.88 per diluted common share, compared with ~~$7.6~~$11.3 billion or ~~$4.62~~$6.02 per diluted common share in the prior year period.


			2			September ~~2021~~2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

Non-interest Expenses1 2

($ in millions)

1.The percentages on the bars in the chart represent the contribution of compensation and benefits expenses and non-compensation expenses to the total.

2.~~Certain prior period amounts have been reclassified to conform to the current presentation. See “Business Segments” herein and Note 1 to the financial statements for more information.~~

•Compensation and benefits expenses of ~~$5,920~~$5,614 million in the current quarter ~~increased 16%~~decreased 5% from the prior year quarter, primarily asdue to lower discretionary incentive compensation and a ~~result of increases in~~decrease due to the formulaic payout to Wealth Management representatives ~~incremental compensation as a result of the E*TRADE and Eaton Vance acquisitions, higher discretionary incentive compensation~~ driven by lower compensable revenues, ~~and higher salaries on increased headcount,~~ partially offset by higher salary expenses driven in part by the impact of higher headcount. Compensation and benefits expenses of $17,438 million in the current year period decreased 9% from the prior year period, primarily due to lower expenses related to certain deferred compensation plans linked to investment ~~performance.~~performance and lower stock-based compensation expense driven by the Firm’s share price, and lower discretionary incentive compensation, partially offset by higher salary expenses driven in part by the impact of higher headcount.

~~Compensation and benefits~~•Non-compensation expenses of ~~$19,141~~$3,949 million in the current quarter were relatively unchanged from the prior year quarter. Non-compensation expenses of $11,993 million in the current year period increased ~~24%~~6% from the prior year period, primarily asdue to higher legal expenses, including $200 million related to a ~~result of an increase~~regulatory matter in the ~~formulaic payout to Wealth Management representatives, incremental compensation as a result~~second quarter of ~~the E*TRADE~~2022 and Eaton Vance acquisitions, higher discretionary incentive compensation driven by revenues, higher expenses related to certain deferred compensation plans linked to the Firm's share price, and higher salariesincreased spend on ~~increased headcount.~~technology.

•Non-compensation expenses of $3,935 million in the current quarter increased 30% from the prior year quarter, primarily due to incremental expenses as a result of the E*TRADE and Eaton Vance acquisitions, in addition to higher volume-related expenses and increased investments in technology.

Non-compensation expenses of $11,307 million in the current year period increased 25% from the prior year period, primarily driven by incremental expenses as a result of the E*TRADE and Eaton Vance acquisitions, higher volume-related expenses, increased investments in technology and higher professional services expenses, partially offset by lower litigation expenses.

Provision for Credit Losses

The Provision for credit losses on loans and lending commitments of $35 million in the current quarter was ~~$24 million,~~primarily driven by ~~growth~~deterioration in ~~corporate lending commitments.~~macroeconomic outlook. ~~The Pr~~ovision for credit losses on loans and lending commitments of $111 million in the prior year quarter was primarily driven by the risks related to vulnerable sectors and higher downgrade sensitivity, and changes in asset quality trends.

The Provision for credit losses on loans and lending commitments in the prior year quarter was $24 million, primarily driven by growth in corporate lending commitments.

The Provision for credit losses on loans and lending commitments of $193 million in the current year period was due to portfolio growth and deterioration in macroeconomic outlook. The Provision for credit losses on loans and lending commitments in the prior year period was flat,, primarily as a result of paydowns on corporate loans, including by lower-rated borrowers, offset by the provision for one secured lending facility in the second quarter of 2021. ~~The Provision for credit losses on loans and lending commitments of~~ ~~$757 million~~ in the prior year period was primarily driven by the risks related to vulnerable sectors and higher downgrade sensitivity, changes in asset quality trends, and deterioration in the expected macroeconomic environment at that time.

For further information on the Provision for credit losses, see “Credit Risk” herein.

Income Taxes

The ~~Firm’s~~ effective tax rate of ~~23.6% is higher~~21.4% for the current quarter and 21.1% for the current year period was lower than the prior ~~year quarter which included a net discrete~~respective periods, primarily driven by the realization of certain tax ~~benefit from the remeasurement of reserves and related interest as a result of new information pertaining to the resolution of tax examinations in certain jurisdictions.~~benefits.


September ~~2021~~2022 Form 10-Q			3


Table of Contents
Management’s Discussion and Analysis

Business Segment Results

Net Revenues by Segment1 2

($ in millions)

Net Income Applicable to Morgan Stanley by Segment1

($ in millions)

1.The percentages on the bars in the charts represent the contribution of each business segment to the total of the applicable financial category and may not sum to 100% due to intersegment eliminations. See Note 2019 to the financial statements for details of intersegment eliminations.

2.~~Certain prior period amounts have been reclassified to conform to the current presentation. See “Business Segments” herein and Note 1 to the financial statements for more information.~~

•Institutional Securities net revenues of ~~$7,495~~$5,817 million in the current quarter ~~increased~~decreased 22% from the prior year quarter, primarily reflecting ~~higher Advisory~~lower results from Investment banking and Equity, ~~business revenues.~~partially offset by higher Fixed income results. Net revenues of ~~$23,164~~$19,593 million in the current year period ~~increased 19%~~decreased 15% from the prior year period, primarily reflecting lower underwriting results, partially offset by higher ~~Investment Banking and Equity business revenues.~~results in Fixed income.

•Wealth Management net revenues of ~~$5,935~~$6,120 million in the current quarter increased ~~28%~~3% from the prior year quarter, primarily reflecting higher Net interest revenues, partially offset by lower Asset management revenues and ~~net~~Transactional revenues. Net revenues of ~~$17,989~~$17,791 million in the current year period ~~increased 34%~~were relatively unchanged from the prior year period, ~~both~~as lower Transactional revenues, primarily ~~due to~~driven by losses on investments associated with certain employee deferred compensation plans, were offset by higher Net interest revenues and Asset management ~~revenues and incremental revenues as a result of the E*TRADE acquisition.~~revenues.


			4			September ~~2021~~2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

•Investment Management net revenues of ~~$1,453~~$1,168 million in the current quarter ~~increased 38%~~decreased 20% from the prior year quarter, ~~primarily due to higher~~reflecting lower Asset management and related fees ~~including incremental~~and lower Performance-based income and other revenues. Net revenues ~~related to~~of $3,914 million in the ~~Eaton Vance acquisition, partially offset by~~current year period decreased 12% from the prior year period, primarily reflecting lower Performance-based income and other revenues.

Investment Management net revenues of $4,469 million in the current year period increased 70% from the prior year period, primarily due to higher Asset management and related fees, including incremental revenues related to the Eaton Vance acquisition.

Net Revenues by Region1, 2 3

($ in millions)

1.The percentages on the bars in the charts represent the contribution of each region to the total.

2.For a discussion of how the geographic breakdown of net revenues is determined, see Note 2023 to the financial statements in the ~~2020~~2021 Form 10-K.

3.~~Certain prior period amounts have been reclassified to conform to the current presentation. See “Business Segments” herein and Note 1 to the financial statements for more information.~~

Americas net revenues in the current quarter ~~increased 33%~~decreased 10% from the prior year quarter, primarily driven by ~~the Wealth Management business segment, the~~ Investment banking ~~business~~results within the Institutional Securities business segment ~~and the Investment Management business segment.~~. EMEA net revenues ~~increased 19%~~decreased 21% from the prior year quarter, primarily driven by ~~the Equity and~~ Investment banking ~~businesses~~results within the Institutional Securities business ~~segment.~~segment. Asia net revenues decreased 3%14% from the prior year quarter, primarily driven by ~~the Investment Management business segment, partially offset by an increase in the~~ Equity ~~business~~results within the Institutional Securities business segment.

Americas net revenues in the current year period ~~increased 32% from the prior year period, driven by increases across all business segments. EMEA net revenues increased 26%~~decreased 9% from the prior year period, primarily driven by ~~the Investment banking and Equity businesses within the Institutional Securities business segment. Asia net revenues increased 16% from the prior year period, primarily driven by the Equity business~~results within the Institutional Securities business segment, with lower Investment banking and Other net revenues, partially

offset by higher results from Fixed Income. EMEA net revenues decreased 10% from the prior year quarter, primarily driven by Investment banking results within the Institutional Securities business segment. Asia net revenues decreased 10% from the prior year quarter, primarily driven by results within the Institutional Securities business segment, with lower results in Investment banking and Equity, partially offset by ~~a decrease in the Investment Management business segment.~~higher results from Fixed Income.

~~Selected Financial Information and Other Statistical Data~~

Three Months Ended
September 30, Nine Months Ended
September 30,
$ in millions 2021 2020 2021 2020
Consolidated results
Net revenues1
$ 14,753 $ 11,721 $ 45,231 $ 35,160
Earnings applicable to Morgan Stanley common shareholders $ 3,584 $ 2,597 $ 10,974 $ 7,234
Earnings per diluted common share $ 1.98 $ 1.66 $ 6.02 $ 4.62
Consolidated financial measures
Expense efficiency ratio1, 2
67 % 69 % 67 % 69 %
Adjusted expense efficiency
ratio1, 2 ,4
66 % 69 % 67 % 69 %
ROE3
14.5 % 13.2 % 15.1 % 12.6 %
Adjusted ROE3, 4
15.0 % 13.2 % 15.4 % 12.6 %
ROTCE3, 4
19.6 % 15.0 % 19.7 % 14.3 %
Adjusted ROTCE3, 4
20.2 % 15.0 % 20.2 % 14.3 %
Pre-tax margin1, 5
33 % 30 % 33 % 28 %
Effective tax rate 23.6 % 21.1 % 22.9 % 22.2 %
Pre-tax margin by segment5
Institutional Securities1
40 % 33 % 38 % 31 %
Wealth Management1
26 % 24 % 26 % 25 %
Wealth Management, adjusted1, 4
28 % 24 % 28 % 25 %
Investment Management 25 % 30 % 26 % 26 %
Investment Management, adjusted4
28 % 30 % 28 % 26 %


September ~~2021~~2022 Form 10-Q			5


Table of Contents
Management’s Discussion and Analysis

in millions, except per share and employee data At
September 30,
2021 At
December 31,
2020
Liquidity resources6
$ 346,289 $ 338,623
Loans7
$ 188,274 $ 161,745
Total assets $ 1,190,476 $ 1,115,862
Deposits $ 329,041 $ 310,782
Borrowings $ 229,762 $ 217,079
Common shareholders' equity $ 98,153 $ 92,531
Tangible common shareholders’ equity4
$ 72,808 $ 75,916
Common shares outstanding 1,799 1,810
Book value per common share8
$ 54.56 $ 51.13
Tangible book value per common share4, 8
$ 40.47 $ 41.95
Worldwide employees9 (in thousands)
74 68
Capital Ratios10
Common Equity Tier 1 capital—Standardized 16.0 % 17.4 %
Tier 1 capital—Standardized 17.6 % 19.4 %
Common Equity Tier 1 capital—Advanced 17.2 % 17.7 %
Tier 1 capital—Advanced 18.9 % 19.8 %
Tier 1 leverage 7.3 % 8.4 %
SLR11
5.7 % 7.4 %
Selected Financial Information and Other Statistical Data


	Three Months Ended September 30,						Nine Months Ended September 30,
$ in millions	2022			2021			2022			2021
Consolidated results
Net revenues	$	12,986		$	14,753		$	40,919		$	45,231
Earnings applicable to Morgan Stanley common shareholders	$	2,494		$	3,584		$	8,427		$	10,974
Earnings per diluted common share	$	1.47		$	1.98		$	4.88		$	6.02
Consolidated financial measures
Expense efficiency ratio1	74		%	67		%	72		%	67		%
Adjusted expense efficiency ratio1, 2	73		%	66		%	71		%	67		%
ROE3	10.7		%	14.5		%	11.9		%	15.1		%
Adjusted ROE2, 3	11.1		%	15.0		%	12.2		%	15.4		%
ROTCE2, 3	14.6		%	19.6		%	16.1		%	19.7		%
Adjusted ROTCE2, 3	15.2		%	20.2		%	16.6		%	20.2		%
Pre-tax margin4	26		%	33		%	28		%	33		%
Effective tax rate	21.4		%	23.6		%	21.1		%	22.9		%
Average liquidity resources5	$	308,001		$	358,310		N/M			N/M
Pre-tax margin by segment4
Institutional Securities	28		%	40		%	30		%	38		%
Wealth Management	27		%	26		%	27		%	26		%
Wealth Management, adjusted2	28		%	28		%	28		%	28		%
Investment Management	10		%	25		%	15		%	26		%
Investment Management, adjusted2	13		%	28		%	17		%	28		%


in millions, except per share and employee data	At September 30, 2022			At December 31, 2021
Loans6	$	218,448		$	200,761
Total assets	$	1,160,029		$	1,188,140
Deposits	$	338,123		$	347,574
Borrowings	$	220,423		$	233,127
Common shareholders' equity	$	92,261		$	97,691
Tangible common shareholders’ equity2	$	67,648		$	72,499
Common shares outstanding	1,694			1,772
Book value per common share7	$	54.46		$	55.12
Tangible book value per common share2, 7	$	39.93		$	40.91
Worldwide employees (in thousands)	82			75
Client assets8 (in billions)	$	5,413		$	6,554
Capital Ratios9
Common Equity Tier 1 capital—Standardized	14.8		%	16.0		%
Tier 1 capital—Standardized	16.7		%	17.7		%
Common Equity Tier 1 capital—Advanced	15.2		%	17.4		%
Tier 1 capital—Advanced	17.1		%	19.1		%
Tier 1 leverage	6.6		%	7.1		%
SLR	5.4		%	5.6		%

1.~~Certain prior period amounts have been reclassified to conform to the current presentation. See “Business Segments” herein and Note 1 to the financial statements for more information.~~

2.The expense efficiency ratio represents total non-interest expenses as a percentage of net revenues.

2.Represents a non-GAAP financial measure. See “Selected Non-GAAP Financial Information” herein.

3.ROE and ROTCE represent annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity and average tangible common equity, respectively.

4.~~Represents a non-GAAP financial measure. See “Selected Non-GAAP Financial Information” herein.~~

5.Pre-tax margin represents income before provision for income taxes as a percentage of net revenues.

6.5.For a discussion of Liquidity resources, see “Liquidity and Capital Resources—Balance Sheet—Liquidity Risk Management Framework—Liquidity Resources” herein.

7.6.Includes loans at held for investment, net of ACL, loans held for sale and also includes loans at fair value, which are included in Trading assets in the balance ~~sheets. Prior period amounts have been revised to conform to the current presentation.~~sheet.

8.7.Book value per common share and tangible book value per common share equal common shareholders’ equity and tangible common shareholders’ equity, respectively, divided by common shares outstanding.

9.8.~~As of September 30, 2021,~~Client assets represents Wealth Management client assets and Investment Management AUM. Certain Wealth Management client assets are invested in Investment Management products and are also included in Investment Management’s AUM. The prior period has been revised to conform to the ~~number of employees includes Eaton Vance.~~current period presentation. See “Business Segments—Wealth Management” herein for additional information.

~~10.~~9.For a discussion of our capital ratios, see “Liquidity and Capital Resources—Regulatory Requirements” herein.

~~11.At December 31, 2020, our SLR reflects~~

Russia and Ukraine War

We continue to monitor the ~~impact of a Federal Reserve interim final rule that was~~war in ~~effect until March 31, 2021. For further information, see “Liquidity~~Ukraine and ~~Capital Resources—Regulatory Requirements—Regulatory Developments and Other Matters” herein.~~

~~Coronavirus Disease (“COVID-19”) Pandemic~~

~~Since~~ its ~~onset, the COVID-19 pandemic has had a significant~~ impact on ~~global economic conditions~~both the Ukrainian and Russian economies, as well as related impacts on other world economies and the ~~environment~~financial markets. Our direct exposure to both Russia and Ukraine remains limited. We are not entering any new business onshore in ~~which we operate~~Russia and our ~~businesses~~activities in Russia are limited to helping global clients address and it may continue to do so in the future. The Firm continues to be fully operational with an increasing number of employees now working from the office on a regular basis. We may adjust our return to office plans as deemed necessary, recognizing that local conditions vary for our offices around the world and that the trajectory of the virus continues to be uncertain.close out pre-existing obligations.

Refer to “Risk Factors” and “Forward-Looking Statements” in the ~~2020~~2021 Form 10-K for more information on the potential effects of ~~the ongoing COVID-19 pandemic on our future operating results.~~geopolitical events and acts of war or aggression.

Selected Non-GAAP Financial Information

We prepare our financial statements using U.S. GAAP. From time to time, we may disclose certain “non-GAAP financial measures” in this document or in the course of our earnings releases, earnings and other conference calls, financial presentations, definitive proxy statement and otherwise. A “non-GAAP financial measure” excludes, or includes, amounts from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. We consider the non-GAAP financial measures we disclose to be useful to us, investors, analysts and other stakeholders by providing further transparency about, or an alternate means of assessing or comparing our financial condition, operating results and capital adequacy.

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 U.S. GAAP financial measure and the non-GAAP financial measure.

The principal non-GAAP financial measures presented in this document are set forth in the following tables.

~~Reconciliations from U.S. GAAP to Non-GAAP Consolidated Financial Measures~~

Three Months Ended
September 30, Nine Months Ended
September 30,
$ in millions, except per share data 2021 2020 2021 2020
Earnings applicable to Morgan Stanley common shareholders $ 3,584 $ 2,597 $ 10,974 $ 7,234
Impact of adjustments:
Integration-related expenses 145 — 310 —
Related tax benefit (34) — (72) —
Adjusted earnings applicable to
Morgan Stanley common shareholders—non-GAAP1
$ 3,695 $ 2,597 $ 11,212 $ 7,234
Earnings per diluted common share $ 1.98 $ 1.66 $ 6.02 $ 4.62
Impact of adjustments 0.06 — 0.13 —
Adjusted earnings per diluted common share—non-GAAP1
$ 2.04 $ 1.66 $ 6.15 $ 4.62
Expense efficiency ratio2
67 % 69 % 67 % 69 %
Impact of adjustments (1) % — % — % — %
Adjusted expense efficiency ratio—non-GAAP1, 2
66 % 69 % 67 % 69 %
Wealth Management Pre-tax margin2
26 % 24 % 26 % 25 %
Impact of adjustments 2 % — % 2 % — %
Adjusted Wealth Management pre-tax margin—non-GAAP1, 2
28 % 24 % 28 % 25 %
Investment Management Pre-tax margin 25 % 30 % 26 % 26 %
Impact of adjustments 3 % — % 2 % — %
Adjusted Investment Management pre-tax margin—non-GAAP1
28 % 30 % 28 % 26 %


			6			September ~~2021~~2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

$ in millions At
September 30,
2021 At
December 31,
2020
Tangible equity
Common shareholders' equity $ 98,153 $ 92,531
Less: Goodwill and net intangible assets (25,345) (16,615)
Tangible common shareholders' equity—non-GAAP $ 72,808 $ 75,916
Reconciliations from U.S. GAAP to Non-GAAP Consolidated Financial Measures

Average Monthly Balance
Three Months Ended
September 30, Nine Months Ended
September 30,
$ in millions 2021 2020 2021 2020
Tangible equity
Common shareholders' equity $ 98,563 $ 78,690 $ 96,929 $ 76,858
Less: Goodwill and net intangible assets (25,433) (9,260) (22,836) (9,248)
Tangible common shareholders' equity—non-GAAP $ 73,130 $ 69,430 $ 74,093 $ 67,610


	Three Months Ended September 30,						Nine Months Ended September 30,
$ in millions, except per share data	2022			2021			2022			2021
Earnings applicable to Morgan Stanley common shareholders	$	2,494		$	3,584		$	8,427		$	10,974
Impact of adjustments:
Wealth Management—Compensation expenses	3			9			8			48
Wealth Management—Non-compensation expenses	89			104			255			189
Investment Management—Compensation expenses	7			10			23			29
Investment Management—Non-compensation expenses	24			22			64			44
Integration-related expenses	123			145			350			310
Related tax benefit	(29)			(34)			(82)			(72)
Adjusted earnings applicable to Morgan Stanley common shareholders—non-GAAP1	$	2,588		$	3,695		$	8,695		$	11,212
Earnings per diluted common share	$	1.47		$	1.98		$	4.88		$	6.02
Impact of adjustments	0.06			0.06			0.16			0.13
Adjusted earnings per diluted common share—non-GAAP1	$	1.53		$	2.04		$	5.04		$	6.15
Expense efficiency ratio	74		%	67		%	72		%	67		%
Impact of adjustments	(1)		%	(1)		%	(1)		%	—		%
Adjusted expense efficiency ratio—non-GAAP1	73		%	66		%	71		%	67		%
Wealth Management Pre-tax margin	27		%	26		%	27		%	26		%
Impact of adjustments	1		%	2		%	1		%	2		%
Adjusted Wealth Management pre-tax margin—non-GAAP1	28		%	28		%	28		%	28		%
Investment Management Pre-tax margin	10		%	25		%	15		%	26		%
Impact of adjustments	3		%	3		%	2		%	2		%
Adjusted Investment Management pre-tax margin—non-GAAP1	13		%	28		%	17		%	28		%

Three Months Ended
September 30, Nine Months Ended
September 30,
$ in billions 2021 2020 2021 2020
Average common equity
Unadjusted—GAAP $ 98.6 $ 78.7 $ 96.9 $ 76.9
Adjusted1—Non-GAAP
98.6 78.7 97.0 76.9
ROE3
Unadjusted—GAAP 14.5 % 13.2 % 15.1 % 12.6 %
Adjusted1—Non-GAAP
15.0 % 13.2 % 15.4 % 12.6 %
Average tangible common equity—Non-GAAP
Unadjusted $ 73.1 $ 69.4 $ 74.1 $ 67.6
Adjusted1
73.2 69.4 74.2 67.6
ROTCE3—Non-GAAP
Unadjusted 19.6 % 15.0 % 19.7 % 14.3 %
Adjusted1
20.2 % 15.0 % 20.2 % 14.3 %


$ in millions	At September 30, 2022		At December 31, 2021
Tangible equity
Common shareholders' equity	$	92,261	$	97,691
Less: Goodwill and net intangible assets	(24,613)		(25,192)
Tangible common shareholders' equity—non-GAAP	$	67,648	$	72,499


	Average Monthly Balance
	Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	2022		2021		2022		2021
Tangible equity
Common shareholders' equity	$	92,905	$	98,563	$	94,654	$	96,929
Less: Goodwill and net intangible assets	(24,715)		(25,433)		(24,921)		(22,836)
Tangible common shareholders' equity—non-GAAP	$	68,190	$	73,130	$	69,733	$	74,093


	Three Months Ended September 30,						Nine Months Ended September 30,
$ in billions	2022			2021			2022			2021
Average common equity
Unadjusted—GAAP	$	92.9		$	98.6		$	94.7		$	96.9
Adjusted1—Non-GAAP	92.9			98.6			94.8			97.0
ROE2
Unadjusted—GAAP	10.7		%	14.5		%	11.9		%	15.1		%
Adjusted1—Non-GAAP	11.1		%	15.0		%	12.2		%	15.4		%
Average tangible common equity—Non-GAAP
Unadjusted	$	68.2		$	73.1		$	69.7		$	74.1
Adjusted1	68.2			73.2			69.9			74.2
ROTCE2—Non-GAAP
Unadjusted	14.6		%	19.6		%	16.1		%	19.7		%
Adjusted1	15.2		%	20.2		%	16.6		%	20.2		%

Non-GAAP Financial Measures by Business Segment


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
$ in billions	$ in billions	2021			2020			2021			2020			$ in billions	2022			2021			2022			2021
Average common equity4
Average common equity3														Average common equity3
Institutional Securities	Institutional Securities	$	43.5		$	42.8		$	43.5		$	42.8		Institutional Securities	$	48.8		$	43.5		$	48.8		$	43.5
Wealth Management	Wealth Management	28.6			18.2			28.6			18.2			Wealth Management	31.0			28.6			31.0			28.6
Investment Management	Investment Management	10.7			2.6			8.2			2.6			Investment Management	10.6			10.7			10.6			8.2
ROE5
ROE4														ROE4
Institutional Securities	Institutional Securities	20		%	15		%	20		%	13		%	Institutional Securities	10		%	20		%	12		%	20		%
Wealth Management	Wealth Management	16		%	18		%	17		%	18		%	Wealth Management	16		%	16		%	16		%	17		%
Investment Management	Investment Management	12		%	34		%	15		%	23		%	Investment Management	4		%	12		%	6		%	15		%
Average tangible common equity4
Average tangible common equity3														Average tangible common equity3
Institutional Securities	Institutional Securities	$	42.9		$	42.3		$	42.9		$	42.3		Institutional Securities	$	48.3		$	42.9		$	48.3		$	42.9
Wealth Management	Wealth Management	13.4			10.4			13.4			10.4			Wealth Management	16.3			13.4			16.3			13.4
Investment Management	Investment Management	1.0			1.7			1.0			1.7			Investment Management	0.8			1.0			0.8			1.0
ROTCE5
ROTCE4														ROTCE4
Institutional Securities	Institutional Securities	20		%	15		%	20		%	14		%	Institutional Securities	10		%	20		%	12		%	20		%
Wealth Management	Wealth Management	34		%	31		%	35		%	32		%	Wealth Management	30		%	34		%	30		%	35		%
Investment Management	Investment Management	161		%	53		%	128		%	36		%	Investment Management	56		%	161		%	87		%	128		%

1.Adjusted amounts exclude the effect of costs related to the integrations of E*TRADE and Eaton Vance, net of tax as appropriate. The pre-tax adjustments in the current quarter were as follows: Wealth Management—Compensation expenses of $9 million and Non-compensation expenses of $104 million; Investment Management—Compensation expenses of $10 million and Non-compensation expenses of $22 million. The pre-tax adjustments in the current year period were as follows: Wealth Management—Compensation expenses of $48 million and Non-compensation expenses of $189 million; Investment Management— Compensation expenses of $29 million and Non-compensation expenses of $44 million.

2.~~Certain prior period amounts have been reclassified to conform to the current presentation. See “Business Segments” herein and Note 1 to the financial statements for more information.~~

3.ROE and ROTCE represent earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity and average tangible common equity, respectively. When excluding integration-related costs, both the numerator and average denominator are adjusted.

4.3.Average common equity and average tangible common equity for each business segment is determined using our Required Capital framework (see "Liquidity and Capital Resources—Regulatory Requirements—Attribution of Average Common Equity According to the Required Capital Framework” herein). The sums of the ~~segments'~~segments’ Average common equity and Average tangible common equity do not equal the Consolidated measures due to Parent equity.

5.4.The calculation of ROE and ROTCE by segment uses net income applicable to Morgan Stanley by segment less preferred dividends allocated to each segment as a percentage of average common equity and average tangible common equity, respectively, allocated to each segment.

Return on Tangible Common Equity ~~Target~~Goal

In January ~~2021,~~2022, we established ~~a 2-year~~an ROTCE ~~Target~~goal of ~~14% to 16%~~over 20%, excluding integration-related expenses.

Our ROTCE ~~Target~~goal is a forward-looking statement that was based on a normal market environment and may be materially affected by many factors, including, among other things: macroeconomic and market conditions, which may be impacted by the future course of COVID-19; legislative, accounting, tax and regulatory developments; industry trading and investment banking volumes; equity market levels; interest rate environment; outsized legal expenses or penalties; the ability to control expenses; capital levels; and mergers and acquisitions.

factors. See “Risk Factors” and “Forward-Looking Statements” in the ~~2020~~2021 Form 10-K for further information on market and economic conditions and their potential effects on our future operating results.

For further information on non-GAAP measures (ROTCE excluding integration-related expenses), see “Selected Non-GAAP Financial Information” herein.


September ~~2021~~2022 Form 10-Q			7


Table of Contents
Management’s Discussion and Analysis

~~For further information on non-GAAP measures (ROTCE excluding integration-related expenses), see “Selected Non-GAAP Financial Information” herein.~~

Business Segments

Substantially all of our operating revenues and operating expenses are directly attributable to our business segments. Certain revenues and expenses have been allocated to each business segment, generally in proportion to its respective net revenues, non-interest expenses or other relevant measures. See Note 2019 to the financial statements for segment net revenues by income statement line item and information on intersegment transactions.

The global economic and geopolitical environment continues to be characterized by persistent inflation, rising interest rates and volatility in global financial markets. This environment has impacted our businesses, as discussed further herein.

For an overview of the components of our business segments, net revenues, compensation expense and income taxes, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Segments” in the ~~2020~~2021 Form 10-K.

As part of our effort to continually improve the transparency and comparability of our external financial reporting, several updates to our financial presentation were implemented in the first quarter of 2021. Prior period amounts have been reclassified to conform to the current presentation.

~~Provision for credit losses~~

The Provision for credit losses for loans and lending commitments is presented as a separate line in the income statements. Previously, the provision for credit losses for loans was included in Other revenues and the provision for credit losses for lending commitments was included in Other expense.

~~Other revenues~~

Gains and losses on economic derivative hedges associated with certain held-for-sale and held-for-investment corporate loans, which were previously reported in Trading revenues, are reported within Other revenues in the income statements. This presentation better aligns with the recognition of mark-to-market gains and losses on held-for-sale loans which continue to be reported in Other revenues.


			8			September 2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

Institutional Securities

Equity—Financing, Equity—Execution services and Fixed income include certain Investments and Other revenues to the extent directly attributable to those businesses. The remaining Investments and Other revenues not included in those businesses’ results are reported in Other. Other also includes revenues previously reported as Other Sales and Trading.

~~Investment Management~~

~~We have renamed the previously disclosed revenue line Asset management to Asset management and related fees and have~~

~~combined the remaining revenue lines into a new category named Performance-based income and other.~~


			8			~~September 2021 Form 10-Q~~


~~Table of Contents~~
~~Management’s Discussion and Analysis~~

~~Institutional Securities~~

Income Statement Information


		Three Months Ended September 30,							Three Months Ended September 30,
$ in millions	$ in millions	2021		2020		% Change		$ in millions	2022		2021		% Change
Revenues	Revenues							Revenues
Advisory	Advisory	$	1,272	$	357	N/M		Advisory	$	693	$	1,272	(46)	%
Equity	Equity	1,010		874		16	%	Equity	218		1,010		(78)	%
Fixed income	Fixed income	567		476		19	%	Fixed income	366		567		(35)	%
Total Underwriting	Total Underwriting	1,577		1,350		17	%	Total Underwriting	584		1,577		(63)	%
Total Investment banking	Total Investment banking	2,849		1,707		67	%	Total Investment banking	1,277		2,849		(55)	%
Equity1		2,876		2,311		24	%
Fixed income1		1,640		1,954		(16)	%
Other1		130		157		(17)	%
Equity								Equity	2,459		2,876		(14)	%
Fixed income								Fixed income	2,181		1,640		33	%
Other								Other	(100)		130		(177)	%
Net revenues	Net revenues	$	7,495	$	6,129	22	%	Net revenues	$	5,817	$	7,495	(22)	%
Provision for credit losses1		24		113		(79)	%
Provision for credit losses								Provision for credit losses	24		24		—%
Compensation and benefits	Compensation and benefits	2,248		2,001		12	%	Compensation and benefits	1,948		2,248		(13)	%
Non-compensation expenses1		2,250		1,967		14	%
Total non-interest expenses1		4,498		3,968		13	%
Non-compensation expenses								Non-compensation expenses	2,219		2,250		(1)	%
Total non-interest expenses								Total non-interest expenses	4,167		4,498		(7)	%
Income before provision for income taxes	Income before provision for income taxes	2,973		2,048		45	%	Income before provision for income taxes	1,626		2,973		(45)	%
Provision for income taxes	Provision for income taxes	713		385		85	%	Provision for income taxes	305		713		(57)	%
Net income	Net income	2,260		1,663		36	%	Net income	1,321		2,260		(42)	%
Net income applicable to noncontrolling interests	Net income applicable to noncontrolling interests	31		16		94	%	Net income applicable to noncontrolling interests	47		31		52	%
Net income applicable to Morgan Stanley	Net income applicable to Morgan Stanley	$	2,229	$	1,647	35	%	Net income applicable to Morgan Stanley	$	1,274	$	2,229	(43)	%

Nine Months Ended
September 30,
$ in millions 2021 2020 % Change
Revenues
Advisory $ 2,416 $ 1,181 105 %
Equity 3,584 2,092 71 %
Fixed income 1,838 1,629 13 %
Total Underwriting 5,422 3,721 46 %
Total Investment banking 7,838 4,902 60 %
Equity1
8,578 7,387 16 %
Fixed income1
6,288 7,057 (11) %
Other1
460 160 188 %
Net revenues1
$ 23,164 $ 19,506 19 %
Provision for credit losses1
1 718 (100) %
Compensation and benefits 7,795 6,767 15 %
Non-compensation expenses1
6,526 6,030 8 %
Total non-interest expenses1
14,321 12,797 12 %
Income before provision for income taxes 8,842 5,991 48 %
Provision for income taxes 2,023 1,326 53 %
Net income 6,819 4,665 46 %
Net income applicable to noncontrolling interests 85 75 13 %
Net income applicable to Morgan Stanley $ 6,734 $ 4,590 47 %

1.~~Certain prior period amounts have been reclassified to conform to the current presentation. See “Business Segments” herein and Note 1 to the financial statements for additional information.~~


	Nine Months Ended September 30,
$ in millions	2022		2021		% Change
Revenues
Advisory	$	2,235	$	2,416	(7)	%
Equity	624		3,584		(83)	%
Fixed income	1,124		1,838		(39)	%
Total Underwriting	1,748		5,422		(68)	%
Total Investment banking	3,983		7,838		(49)	%
Equity	8,593		8,578		—%
Fixed income	7,604		6,288		21	%
Other	(587)		460		N/M
Net revenues	$	19,593	$	23,164	(15)	%
Provision for credit losses	150		1		N/M
Compensation and benefits	6,602		7,795		(15)	%
Non-compensation expenses	6,874		6,526		5	%
Total non-interest expenses	13,476		14,321		(6)	%
Income before provision for income taxes	5,967		8,842		(33)	%
Provision for income taxes	1,235		2,023		(39)	%
Net income	4,732		6,819		(31)	%
Net income applicable to noncontrolling interests	146		85		72	%
Net income applicable to Morgan Stanley	$	4,586	$	6,734	(32)	%

Investment Banking

Investment Banking Volumes


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in billions	$ in billions	2021		2020		2021		2020		$ in billions	2022		2021		2022		2021
Completed mergers and acquisitions1	Completed mergers and acquisitions1	$	352	$	110	$	732	$	662	Completed mergers and acquisitions1	$	138	$	365	$	629	$	744
Equity and equity-related offerings2, 3	Equity and equity-related offerings2, 3	22		26		92		75		Equity and equity-related offerings2, 3	5		23		16		93
Fixed income offerings2, 4	Fixed income offerings2, 4	73		93		284		308		Fixed income offerings2, 4	51		85		187		298

Source: Refinitiv data as of October 1, ~~2021.~~2022. Transaction volumes may not be indicative of net revenues in a given period. In addition, transaction volumes for prior periods may vary from amounts previously reported due to the subsequent withdrawal, change in value or change in timing of certain transactions.

1.Includes transactions of $100 million or more. Based on full credit to each of the advisors in a transaction.

2.Based on full credit for single book managers and equal credit for joint book managers.

3.Includes Rule 144A issuances and registered public offerings of common stock, convertible securities and rights offerings.

4.Includes Rule 144A and publicly registered issuances, non-convertible preferred stock, mortgage-backed and asset-backed securities, and taxable municipal debt. Excludes leveraged loans and self-led issuances.

~~Investment Banking Revenues~~Provision for Credit Losses

~~Revenues~~The Provision for credit losses on loans and lending commitments of ~~$2,849~~$35 million in the current quarter ~~increased 67% compared with~~was primarily driven by deterioration in macroeconomic outlook.The Provision for credit losses on loans and lending commitments in the prior year quarter ~~primarily reflecting increases in advisory and equity underwriting.~~

•~~Advisory revenues increased~~was $24 million, primarily driven by ~~higher completed transactions.~~growth in corporate lending commitments.

•~~Equity underwriting revenues increased, primarily in initial public offerings, secondary block share trades,~~The Provision for credit losses on loans and ~~private placement offerings, partially offset by lower revenues from other equity offerings.~~

•~~Fixed income underwriting revenues increased primarily due to higher non-investment grade loan issuances and securitized products revenues, partially offset by lower investment grade bond issuances.~~

~~Revenues~~lending commitments of ~~$7,838~~$193 million in the current year period ~~increased 60% compared with~~was due to portfolio growth and deterioration in macroeconomic outlook. The Provision for credit losses on loans and lending commitments in the prior year period was flat, primarily ~~reflecting increases in equity underwriting and advisory revenues.~~

•~~Advisory revenues increased primarily due to higher completed transactions.~~

•~~Equity underwriting revenues increased~~as a result of paydowns on ~~higher volumes, primarily in initial public offerings, secondary block share trades, and private placement offerings, partially~~corporate loans, including by lower-rated borrowers, offset by ~~lower revenues from convertible issuances.~~the provision for one secured lending facility in the second quarter of 2021.

For further information on the Provision for credit losses, see “Credit Risk” herein.

Income Taxes

•~~Fixed income underwriting revenues increased~~The effective tax rate of 21.4% for the current quarter and 21.1% for the current year period was lower than the prior respective periods, primarily ~~due to higher non-investment grade loan issuances and securitized products revenues, partially offset~~driven by ~~a decrease investment grade bond issuances.~~

~~See “Investment Banking Volumes” herein.~~the realization of certain tax benefits.


September ~~2021~~2022 Form 10-Q			93


Table of Contents
Management’s Discussion and Analysis

~~Equity, Fixed~~Business Segment Results

Net Revenues by Segment1

($ in millions)

Net Income ~~and Other Net Revenues~~Applicable to Morgan Stanley by Segment1

~~Equity and Fixed Income Net Revenues~~($ in millions)

Three Months Ended
September 30, 2021

Net Interest2
All Other3

$ in millions Trading
Fees1
Total
Financing $ 1,204 $ 123 $ 130 $ 1 $ 1,458
Execution services 832 612 (62) 36 1,418
Total Equity $ 2,036 $ 735 $ 68 $ 37 $ 2,876
Total Fixed Income $ 1,029 $ 75 $ 479 $ 57 $ 1,640

Three Months Ended
September 30, 20204

Net Interest2
All Other3

$ in millions Trading
Fees1
Total
Financing $ 929 $ 108 $ 116 $ — $ 1,153
Execution services 606 580 (77) 49 1,158
Total Equity $ 1,535 $ 688 $ 39 $ 49 $ 2,311
Total Fixed Income $ 1,420 $ 65 $ 442 $ 27 $ 1,954

Nine Months Ended
September 30, 2021

Net Interest2
All Other3

$ in millions Trading
Fees1
Total
Financing $ 2,987 $ 374 $ 429 $ 7 $ 3,797
Execution services 2,764 2,048 (169) 138 4,781
Total Equity $ 5,751 $ 2,422 $ 260 $ 145 $ 8,578
Total Fixed Income $ 4,490 $ 228 $ 1,335 $ 235 $ 6,288

Nine Months Ended
September 30, 20204

Net Interest2
All Other3

$ in millions Trading
Fees1
Total
Financing $ 2,847 $ 325 $ 172 $ 4 $ 3,348
Execution services 2,134 2,014 (189) 80 4,039
Total Equity $ 4,981 $ 2,339 $ (17) $ 84 $ 7,387
Total Fixed Income $ 5,661 $ 234 $ 1,274 $ (112) $ 7,057

1.~~Includes Commissions and fees and Asset management revenues.~~

2.~~Includes funding costs, which are allocated~~The percentages on the bars in the charts represent the contribution of each business segment to the ~~businesses based on funding usage.~~

3.~~Includes Investments~~total of the applicable financial category and ~~Other revenues.~~

4.~~Certain prior period amounts have been reclassified~~may not sum to ~~conform~~100% due to ~~the current period presentation.~~intersegment eliminations. See ~~“Business Segments” herein and~~ Note 119 to the financial statements for ~~additional information.~~details of intersegment eliminations.

~~Equity~~

income results. Net revenues of ~~$2,876~~$19,593 million in the current year period decreased 15% from the prior year period, primarily reflecting lower underwriting results, partially offset by higher results in Fixed income.

•Wealth Management net revenues of $6,120 million in the current quarter increased ~~24% compared with the prior year quarter, reflecting an increase in both our financing and execution services businesses, with particular strength in Asia.~~

•~~Financing revenues increased, primarily driven by higher average client balances and higher client activity.~~

•~~Execution services revenues increased, primarily due to higher client activity in derivatives and the impact of market conditions on inventory held to facilitate client activity in cash equities.~~

~~Fixed Income~~

~~Net revenues of $1,640 million in the current quarter decreased 16% compared with~~3% from the prior year quarter, primarily ~~driven~~reflecting higher Net interest revenues, partially offset by ~~global macro~~lower Asset management revenues and ~~credit products.~~

•~~Global macro products revenues decreased in rates and foreign exchange products, primarily due to the impact of market conditions on inventory held to facilitate client activity.~~

•Credit products revenues decreased primarily due to the impact of market conditions on inventory held to facilitate client activity in securitized products and corporate credit products, reflecting the impact of tightening credit spreads in the prior year quarter and the effect of tighter bid-offer spreads in the current quarter.

•~~Commodities products and other fixed income revenues increased, primarily driven by higher client activity in Commodities.~~

~~Other Net Revenues~~

Transactional revenues. Net revenues of ~~$130~~$17,791 million in the current ~~quarter decreased 17% compared with~~year period were relatively unchanged from the prior year ~~quarter~~period, as lower Transactional revenues, primarily ~~due to~~ driven by losses ~~from~~on investments associated with certain employee deferred compensation plans, ~~compared with gains in the prior year quarter, partially~~ were offset by ~~improved performance in economic hedges related to certain of the Firm’s Borrowings.~~

~~Net Interest~~

higher Net interest revenues ~~of $716 million in the current quarter are included within Equity, Fixed Income,~~ and Other, and increased 21% compared with the prior year quarter primarily driven by lower net costs associated with maintaining liquidity as well as increased revenues from higher balances in secured lending facilities.

~~Equity, Fixed Income and Other Net Revenues~~—~~Current Year Period~~

~~Equity~~

Net revenues of $8,578 million in the current year period increased 16% compared with the prior year period, reflecting an increase in both our execution services and financing businesses, with particular strength in Asia.

•~~Financing revenues increased, primarily driven by higher average client balances and higher client activity, partially offset by a credit loss related to a single client in the first quarter of 2021.~~

•Execution services revenues increased, primarily due to higher client activity and the impact of market conditions on inventory held to facilitate client activity in derivatives, partially offset by trading losses related to the aforementioned credit event.Asset management revenues.


			104			September ~~2021~~2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

~~Fixed Income~~

•Investment Management net revenues of $1,168 million in the current quarter decreased 20% from the prior year quarter, reflecting lower Asset management and related fees and lower Performance-based income and other revenues. Net revenues of ~~$6,288~~$3,914 million in the current year period decreased ~~11% compared with~~12% from the prior year period, primarily reflecting lower Performance-based income and other revenues.

Net Revenues by Region1, 2

($ in millions)

1.The percentages on the bars in the charts represent the contribution of each region to the total.

2.For a discussion of how the geographic breakdown of net revenues is determined, see Note 23 to the financial statements in the 2021 Form 10-K.

Americas net revenues in the current quarter decreased 10% from the prior year quarter, primarily driven by Investment banking results within the Institutional Securities business segment. EMEA net revenues decreased 21% from the prior year quarter, primarily driven by Investment banking results within the Institutional Securities business segment. Asia net revenues decreased 14% from the prior year quarter, primarily driven by Equity results within the Institutional Securities business segment.

Americas net revenues in the current year period decreased 9% from the prior year period, primarily driven by ~~global macro products,~~results within the Institutional Securities business segment, with lower Investment banking and Other net revenues, partially

•Global macro products revenues decreased in rates and foreign exchange products, primarily due to the effect of tighter bid-offer spreads and lower market volatility compared with the prior year period, partially offset by the impact of market conditions on inventory held to facilitate client activity.

•Credit products revenues increased, primarily due to the impact of market conditions on inventory held to facilitate client activity across all credit products, partially offset by the effect of tighter bid-offer spreads on corporate credit products.

•~~Commodities products and other fixed income revenues increased, primarily driven by~~ higher ~~counterparty credit risk management~~ results ~~partially offset by the impact of market conditions on inventory held to facilitate client activity in Commodities.~~from Fixed Income.

~~Other Net Revenues~~


September 2022 Form 10-Q			5


Table of Contents
Management’s Discussion and Analysis

Selected Financial Information and Other Statistical Data


	Three Months Ended September 30,						Nine Months Ended September 30,
$ in millions	2022			2021			2022			2021
Consolidated results
Net revenues	$	12,986		$	14,753		$	40,919		$	45,231
Earnings applicable to Morgan Stanley common shareholders	$	2,494		$	3,584		$	8,427		$	10,974
Earnings per diluted common share	$	1.47		$	1.98		$	4.88		$	6.02
Consolidated financial measures
Expense efficiency ratio1	74		%	67		%	72		%	67		%
Adjusted expense efficiency ratio1, 2	73		%	66		%	71		%	67		%
ROE3	10.7		%	14.5		%	11.9		%	15.1		%
Adjusted ROE2, 3	11.1		%	15.0		%	12.2		%	15.4		%
ROTCE2, 3	14.6		%	19.6		%	16.1		%	19.7		%
Adjusted ROTCE2, 3	15.2		%	20.2		%	16.6		%	20.2		%
Pre-tax margin4	26		%	33		%	28		%	33		%
Effective tax rate	21.4		%	23.6		%	21.1		%	22.9		%
Average liquidity resources5	$	308,001		$	358,310		N/M			N/M
Pre-tax margin by segment4
Institutional Securities	28		%	40		%	30		%	38		%
Wealth Management	27		%	26		%	27		%	26		%
Wealth Management, adjusted2	28		%	28		%	28		%	28		%
Investment Management	10		%	25		%	15		%	26		%
Investment Management, adjusted2	13		%	28		%	17		%	28		%


in millions, except per share and employee data	At September 30, 2022			At December 31, 2021
Loans6	$	218,448		$	200,761
Total assets	$	1,160,029		$	1,188,140
Deposits	$	338,123		$	347,574
Borrowings	$	220,423		$	233,127
Common shareholders' equity	$	92,261		$	97,691
Tangible common shareholders’ equity2	$	67,648		$	72,499
Common shares outstanding	1,694			1,772
Book value per common share7	$	54.46		$	55.12
Tangible book value per common share2, 7	$	39.93		$	40.91
Worldwide employees (in thousands)	82			75
Client assets8 (in billions)	$	5,413		$	6,554
Capital Ratios9
Common Equity Tier 1 capital—Standardized	14.8		%	16.0		%
Tier 1 capital—Standardized	16.7		%	17.7		%
Common Equity Tier 1 capital—Advanced	15.2		%	17.4		%
Tier 1 capital—Advanced	17.1		%	19.1		%
Tier 1 leverage	6.6		%	7.1		%
SLR	5.4		%	5.6		%

~~Net revenues~~1.The expense efficiency ratio represents total non-interest expenses as a percentage of ~~$460 million in the current year period increased 188~~net revenues.

2.~~% compared with~~ Represents a non-GAAP financial measure. See “Selected Non-GAAP Financial Information” herein.

3.~~the prior year period primarily due~~ROE and ROTCE represent annualized earnings applicable to ~~lower losses on corporate~~Morgan Stanley common shareholders as a percentage of average common equity and average tangible common equity, respectively.

4.Pre-tax margin represents income before provision for income taxes as a percentage of net revenues.

5.For a discussion of Liquidity resources, see “Liquidity and Capital Resources—Balance Sheet—Liquidity Risk Management Framework—Liquidity Resources” herein.

6.Includes loans held for investment, net of ACL, loans held for sale and also includes loans at fair value, which are included in Trading assets in the balance sheet.

7.Book value per common share and tangible book value per common share equal common shareholders’ equity and tangible common shareholders’ equity, respectively, divided by common shares outstanding.

8.Client assets represents Wealth Management client assets and Investment Management AUM. Certain Wealth Management client assets are invested in Investment Management products and are also included in Investment Management’s AUM. The prior period has been revised to conform to the current period presentation. See “Business Segments—Wealth Management” herein for additional information.

9.For a discussion of our capital ratios, see “Liquidity and Capital Resources—Regulatory Requirements” herein.

Russia and Ukraine War

We continue to monitor the war in Ukraine and its impact on both the Ukrainian and Russian economies, as well as related impacts on other world economies and the financial markets. Our direct exposure to both Russia and Ukraine remains limited. We are not entering any new business onshore in Russia and our activities in Russia are limited to helping global clients address and close out pre-existing obligations.

Refer to “Risk Factors” and “Forward-Looking Statements” in the 2021 Form 10-K for more information on the potential effects of geopolitical events and acts of war or aggression.

Selected Non-GAAP Financial Information

The principal non-GAAP financial measures presented in this document are set forth in the following tables.


			6			September 2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

Reconciliations from U.S. GAAP to Non-GAAP Consolidated Financial Measures


	Three Months Ended September 30,						Nine Months Ended September 30,
$ in millions, except per share data	2022			2021			2022			2021
Earnings applicable to Morgan Stanley common shareholders	$	2,494		$	3,584		$	8,427		$	10,974
Impact of adjustments:
Wealth Management—Compensation expenses	3			9			8			48
Wealth Management—Non-compensation expenses	89			104			255			189
Investment Management—Compensation expenses	7			10			23			29
Investment Management—Non-compensation expenses	24			22			64			44
Integration-related expenses	123			145			350			310
Related tax benefit	(29)			(34)			(82)			(72)
Adjusted earnings applicable to Morgan Stanley common shareholders—non-GAAP1	$	2,588		$	3,695		$	8,695		$	11,212
Earnings per diluted common share	$	1.47		$	1.98		$	4.88		$	6.02
Impact of adjustments	0.06			0.06			0.16			0.13
Adjusted earnings per diluted common share—non-GAAP1	$	1.53		$	2.04		$	5.04		$	6.15
Expense efficiency ratio	74		%	67		%	72		%	67		%
Impact of adjustments	(1)		%	(1)		%	(1)		%	—		%
Adjusted expense efficiency ratio—non-GAAP1	73		%	66		%	71		%	67		%
Wealth Management Pre-tax margin	27		%	26		%	27		%	26		%
Impact of adjustments	1		%	2		%	1		%	2		%
Adjusted Wealth Management pre-tax margin—non-GAAP1	28		%	28		%	28		%	28		%
Investment Management Pre-tax margin	10		%	25		%	15		%	26		%
Impact of adjustments	3		%	3		%	2		%	2		%
Adjusted Investment Management pre-tax margin—non-GAAP1	13		%	28		%	17		%	28		%


$ in millions	At September 30, 2022		At December 31, 2021
Tangible equity
Common shareholders' equity	$	92,261	$	97,691
Less: Goodwill and net intangible assets	(24,613)		(25,192)
Tangible common shareholders' equity—non-GAAP	$	67,648	$	72,499


	Average Monthly Balance
	Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	2022		2021		2022		2021
Tangible equity
Common shareholders' equity	$	92,905	$	98,563	$	94,654	$	96,929
Less: Goodwill and net intangible assets	(24,715)		(25,433)		(24,921)		(22,836)
Tangible common shareholders' equity—non-GAAP	$	68,190	$	73,130	$	69,733	$	74,093


	Three Months Ended September 30,						Nine Months Ended September 30,
$ in billions	2022			2021			2022			2021
Average common equity
Unadjusted—GAAP	$	92.9		$	98.6		$	94.7		$	96.9
Adjusted1—Non-GAAP	92.9			98.6			94.8			97.0
ROE2
Unadjusted—GAAP	10.7		%	14.5		%	11.9		%	15.1		%
Adjusted1—Non-GAAP	11.1		%	15.0		%	12.2		%	15.4		%
Average tangible common equity—Non-GAAP
Unadjusted	$	68.2		$	73.1		$	69.7		$	74.1
Adjusted1	68.2			73.2			69.9			74.2
ROTCE2—Non-GAAP
Unadjusted	14.6		%	19.6		%	16.1		%	19.7		%
Adjusted1	15.2		%	20.2		%	16.6		%	20.2		%

Non-GAAP Financial Measures by Business Segment


	Three Months Ended September 30,						Nine Months Ended September 30,
$ in billions	2022			2021			2022			2021
Average common equity3
Institutional Securities	$	48.8		$	43.5		$	48.8		$	43.5
Wealth Management	31.0			28.6			31.0			28.6
Investment Management	10.6			10.7			10.6			8.2
ROE4
Institutional Securities	10		%	20		%	12		%	20		%
Wealth Management	16		%	16		%	16		%	17		%
Investment Management	4		%	12		%	6		%	15		%
Average tangible common equity3
Institutional Securities	$	48.3		$	42.9		$	48.3		$	42.9
Wealth Management	16.3			13.4			16.3			13.4
Investment Management	0.8			1.0			0.8			1.0
ROTCE4
Institutional Securities	10		%	20		%	12		%	20		%
Wealth Management	30		%	34		%	30		%	35		%
Investment Management	56		%	161		%	87		%	128		%

1.Adjusted amounts exclude the effect of costs related to the integrations of E*TRADE and Eaton Vance, net of ~~related economic hedges, higher gains from investments associated with certain employee deferred compensation plans~~tax as appropriate.

2.ROE and ~~improved performance in economic hedges related~~ROTCE represent earnings applicable to ~~certain~~Morgan Stanley common shareholders as a percentage of average common equity and average tangible common equity, respectively. When excluding integration-related costs, both the numerator and average denominator are adjusted.

3.Average common equity and average tangible common equity for each business segment is determined using our Required Capital framework (see "Liquidity and Capital Resources—Regulatory Requirements—Attribution of Average Common Equity According to the Required Capital Framework” herein). The sums of the ~~Firm’s Borrowings.~~segments’ Average common equity and Average tangible common equity do not equal the Consolidated measures due to Parent equity.

~~Net Interest~~4.The calculation of ROE and ROTCE by segment uses net income applicable to Morgan Stanley by segment less preferred dividends allocated to each segment as a percentage of average common equity and average tangible common equity, respectively, allocated to each segment.

~~Net interest revenues~~Return on Tangible Common Equity Goal

In January 2022, we established an ROTCE goal of ~~$1,964 million~~over 20%, excluding integration-related expenses. Our ROTCE goal is a forward-looking statement that was based on a normal market environment and may be materially affected by many factors. See “Risk Factors” and “Forward-Looking Statements” in the ~~current year period~~2021 Form 10-K for further information on market and economic conditions and their potential effects on our future operating results.

For further information on non-GAAP measures (ROTCE excluding integration-related expenses), see “Selected Non-GAAP Financial Information” herein.


September 2022 Form 10-Q			7


Table of Contents
Management’s Discussion and Analysis

Business Segments

Substantially all of our operating revenues and operating expenses are ~~included within Equity, Fixed~~ directly attributable to our business segments. Certain revenues and expenses have been allocated to each business segment, generally in proportion to its respective net revenues, non-interest expenses or other relevant measures. See Note 19 to the financial statements for segment net revenues by income statement line item and information on intersegment transactions.


			8			September 2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

Institutional Securities

Income Statement Information


	Three Months Ended September 30,
$ in millions	2022		2021		% Change
Revenues
Advisory	$	693	$	1,272	(46)	%
Equity	218		1,010		(78)	%
Fixed income	366		567		(35)	%
Total Underwriting	584		1,577		(63)	%
Total Investment banking	1,277		2,849		(55)	%
Equity	2,459		2,876		(14)	%
Fixed income	2,181		1,640		33	%
Other	(100)		130		(177)	%
Net revenues	$	5,817	$	7,495	(22)	%
Provision for credit losses	24		24		—%
Compensation and benefits	1,948		2,248		(13)	%
Non-compensation expenses	2,219		2,250		(1)	%
Total non-interest expenses	4,167		4,498		(7)	%
Income before provision for income taxes	1,626		2,973		(45)	%
Provision for income taxes	305		713		(57)	%
Net income	1,321		2,260		(42)	%
Net income applicable to noncontrolling interests	47		31		52	%
Net income applicable to Morgan Stanley	$	1,274	$	2,229	(43)	%


	Nine Months Ended September 30,
$ in millions	2022		2021		% Change
Revenues
Advisory	$	2,235	$	2,416	(7)	%
Equity	624		3,584		(83)	%
Fixed income	1,124		1,838		(39)	%
Total Underwriting	1,748		5,422		(68)	%
Total Investment banking	3,983		7,838		(49)	%
Equity	8,593		8,578		—%
Fixed income	7,604		6,288		21	%
Other	(587)		460		N/M
Net revenues	$	19,593	$	23,164	(15)	%
Provision for credit losses	150		1		N/M
Compensation and benefits	6,602		7,795		(15)	%
Non-compensation expenses	6,874		6,526		5	%
Total non-interest expenses	13,476		14,321		(6)	%
Income before provision for income taxes	5,967		8,842		(33)	%
Provision for income taxes	1,235		2,023		(39)	%
Net income	4,732		6,819		(31)	%
Net income applicable to noncontrolling interests	146		85		72	%
Net income applicable to Morgan Stanley	$	4,586	$	6,734	(32)	%

Investment Banking

Investment Banking Volumes


	Three Months Ended September 30,				Nine Months Ended September 30,
$ in billions	2022		2021		2022		2021
Completed mergers and acquisitions1	$	138	$	365	$	629	$	744
Equity and equity-related offerings2, 3	5		23		16		93
Fixed income offerings2, 4	51		85		187		298

Source: Refinitiv data as of October 1, 2022. Transaction volumes may not be indicative of net revenues in a given period. In addition, transaction volumes for prior periods may vary from amounts previously reported due to the subsequent withdrawal, change in value or change in timing of certain transactions.

1.Includes transactions of $100 million or more. Based on full credit to each of the advisors in a transaction.

2.Based on full credit for single book managers and ~~Other,~~equal credit for joint book managers.

3.Includes Rule 144A issuances and ~~increased 21% compared with the prior year period primarily driven by higher client balances in Equity Financing~~registered public offerings of common stock, convertible securities and ~~increased revenues from higher balances in secured lending facilities.~~rights offerings.

Provision for Credit Losses

The Provision for credit losses on loans and lending commitments of $35 million in the current quarter was primarily driven by deterioration in macroeconomic outlook.The Provision for credit losses on loans and lending commitments in the prior year quarter was $24 million, primarily driven by growth in corporate lending commitments.

For further information on the Provision for credit losses, see “Credit Risk” herein.

Income Taxes

The effective tax rate of 21.4% for the current quarter and 21.1% for the current year period was lower than the prior respective periods, primarily driven by the realization of certain tax benefits.


September 2022 Form 10-Q			3


Table of Contents
Management’s Discussion and Analysis

Business Segment Results

Net Revenues by Segment1

($ in millions)

Net Income Applicable to Morgan Stanley by Segment1

($ in millions)

1.The percentages on the bars in the charts represent the contribution of each business segment to the total of the applicable financial category and may not sum to 100% due to intersegment eliminations. See Note 19 to the financial statements for details of intersegment eliminations.

•Institutional Securities net revenues of $5,817 million in the current quarter decreased 22% from the prior year quarter, primarily reflecting lower results from Investment banking and Equity, partially offset by higher Fixed income results. Net revenues of $19,593 million in the current year period decreased 15% from the prior year period, primarily reflecting lower underwriting results, partially offset by higher results in Fixed income.

•Wealth Management net revenues of $6,120 million in the current quarter increased 3% from the prior year quarter, primarily reflecting higher Net interest revenues, partially offset by lower Asset management revenues and Transactional revenues. Net revenues of $17,791 million in the current year period were relatively unchanged from the prior year period, as lower Transactional revenues, primarily driven by losses on investments associated with certain employee deferred compensation plans, were offset by higher Net interest revenues and Asset management revenues.


			4			September 2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

•Investment Management net revenues of $1,168 million in the current quarter decreased 20% from the prior year quarter, reflecting lower Asset management and related fees and lower Performance-based income and other revenues. Net revenues of $3,914 million in the current year period decreased 12% from the prior year period, primarily reflecting lower Performance-based income and other revenues.

Net Revenues by Region1, 2

($ in millions)

1.The percentages on the bars in the charts represent the contribution of each region to the total.

2.For a discussion of how the geographic breakdown of net revenues is determined, see Note 23 to the financial statements in the 2021 Form 10-K.

Americas net revenues in the current year period decreased 9% from the prior year period, primarily driven by results within the Institutional Securities business segment, with lower Investment banking and Other net revenues, partially


September 2022 Form 10-Q			5


Table of Contents
Management’s Discussion and Analysis

Selected Financial Information and Other Statistical Data


	Three Months Ended September 30,						Nine Months Ended September 30,
$ in millions	2022			2021			2022			2021
Consolidated results
Net revenues	$	12,986		$	14,753		$	40,919		$	45,231
Earnings applicable to Morgan Stanley common shareholders	$	2,494		$	3,584		$	8,427		$	10,974
Earnings per diluted common share	$	1.47		$	1.98		$	4.88		$	6.02
Consolidated financial measures
Expense efficiency ratio1	74		%	67		%	72		%	67		%
Adjusted expense efficiency ratio1, 2	73		%	66		%	71		%	67		%
ROE3	10.7		%	14.5		%	11.9		%	15.1		%
Adjusted ROE2, 3	11.1		%	15.0		%	12.2		%	15.4		%
ROTCE2, 3	14.6		%	19.6		%	16.1		%	19.7		%
Adjusted ROTCE2, 3	15.2		%	20.2		%	16.6		%	20.2		%
Pre-tax margin4	26		%	33		%	28		%	33		%
Effective tax rate	21.4		%	23.6		%	21.1		%	22.9		%
Average liquidity resources5	$	308,001		$	358,310		N/M			N/M
Pre-tax margin by segment4
Institutional Securities	28		%	40		%	30		%	38		%
Wealth Management	27		%	26		%	27		%	26		%
Wealth Management, adjusted2	28		%	28		%	28		%	28		%
Investment Management	10		%	25		%	15		%	26		%
Investment Management, adjusted2	13		%	28		%	17		%	28		%


in millions, except per share and employee data	At September 30, 2022			At December 31, 2021
Loans6	$	218,448		$	200,761
Total assets	$	1,160,029		$	1,188,140
Deposits	$	338,123		$	347,574
Borrowings	$	220,423		$	233,127
Common shareholders' equity	$	92,261		$	97,691
Tangible common shareholders’ equity2	$	67,648		$	72,499
Common shares outstanding	1,694			1,772
Book value per common share7	$	54.46		$	55.12
Tangible book value per common share2, 7	$	39.93		$	40.91
Worldwide employees (in thousands)	82			75
Client assets8 (in billions)	$	5,413		$	6,554
Capital Ratios9
Common Equity Tier 1 capital—Standardized	14.8		%	16.0		%
Tier 1 capital—Standardized	16.7		%	17.7		%
Common Equity Tier 1 capital—Advanced	15.2		%	17.4		%
Tier 1 capital—Advanced	17.1		%	19.1		%
Tier 1 leverage	6.6		%	7.1		%
SLR	5.4		%	5.6		%

1.The expense efficiency ratio represents total non-interest expenses as a percentage of net revenues.

2.Represents a non-GAAP financial measure. See “Selected Non-GAAP Financial Information” herein.

3.ROE and ROTCE represent annualized earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity and average tangible common equity, respectively.

4.Pre-tax margin represents income before provision for income taxes as a percentage of net revenues.

5.For a discussion of Liquidity resources, see “Liquidity and Capital Resources—Balance Sheet—Liquidity Risk Management Framework—Liquidity Resources” herein.

6.Includes loans held for investment, net of ACL, loans held for sale and also includes loans at fair value, which are included in Trading assets in the balance sheet.

9.For a discussion of our capital ratios, see “Liquidity and Capital Resources—Regulatory Requirements” herein.

Russia and Ukraine War

Refer to “Risk Factors” and “Forward-Looking Statements” in the 2021 Form 10-K for more information on the potential effects of geopolitical events and acts of war or aggression.

Selected Non-GAAP Financial Information

The principal non-GAAP financial measures presented in this document are set forth in the following tables.


			6			September 2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

Reconciliations from U.S. GAAP to Non-GAAP Consolidated Financial Measures


	Three Months Ended September 30,						Nine Months Ended September 30,
$ in millions, except per share data	2022			2021			2022			2021
Earnings applicable to Morgan Stanley common shareholders	$	2,494		$	3,584		$	8,427		$	10,974
Impact of adjustments:
Wealth Management—Compensation expenses	3			9			8			48
Wealth Management—Non-compensation expenses	89			104			255			189
Investment Management—Compensation expenses	7			10			23			29
Investment Management—Non-compensation expenses	24			22			64			44
Integration-related expenses	123			145			350			310
Related tax benefit	(29)			(34)			(82)			(72)
Adjusted earnings applicable to Morgan Stanley common shareholders—non-GAAP1	$	2,588		$	3,695		$	8,695		$	11,212
Earnings per diluted common share	$	1.47		$	1.98		$	4.88		$	6.02
Impact of adjustments	0.06			0.06			0.16			0.13
Adjusted earnings per diluted common share—non-GAAP1	$	1.53		$	2.04		$	5.04		$	6.15
Expense efficiency ratio	74		%	67		%	72		%	67		%
Impact of adjustments	(1)		%	(1)		%	(1)		%	—		%
Adjusted expense efficiency ratio—non-GAAP1	73		%	66		%	71		%	67		%
Wealth Management Pre-tax margin	27		%	26		%	27		%	26		%
Impact of adjustments	1		%	2		%	1		%	2		%
Adjusted Wealth Management pre-tax margin—non-GAAP1	28		%	28		%	28		%	28		%
Investment Management Pre-tax margin	10		%	25		%	15		%	26		%
Impact of adjustments	3		%	3		%	2		%	2		%
Adjusted Investment Management pre-tax margin—non-GAAP1	13		%	28		%	17		%	28		%


$ in millions	At September 30, 2022		At December 31, 2021
Tangible equity
Common shareholders' equity	$	92,261	$	97,691
Less: Goodwill and net intangible assets	(24,613)		(25,192)
Tangible common shareholders' equity—non-GAAP	$	67,648	$	72,499


	Average Monthly Balance
	Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	2022		2021		2022		2021
Tangible equity
Common shareholders' equity	$	92,905	$	98,563	$	94,654	$	96,929
Less: Goodwill and net intangible assets	(24,715)		(25,433)		(24,921)		(22,836)
Tangible common shareholders' equity—non-GAAP	$	68,190	$	73,130	$	69,733	$	74,093


	Three Months Ended September 30,						Nine Months Ended September 30,
$ in billions	2022			2021			2022			2021
Average common equity
Unadjusted—GAAP	$	92.9		$	98.6		$	94.7		$	96.9
Adjusted1—Non-GAAP	92.9			98.6			94.8			97.0
ROE2
Unadjusted—GAAP	10.7		%	14.5		%	11.9		%	15.1		%
Adjusted1—Non-GAAP	11.1		%	15.0		%	12.2		%	15.4		%
Average tangible common equity—Non-GAAP
Unadjusted	$	68.2		$	73.1		$	69.7		$	74.1
Adjusted1	68.2			73.2			69.9			74.2
ROTCE2—Non-GAAP
Unadjusted	14.6		%	19.6		%	16.1		%	19.7		%
Adjusted1	15.2		%	20.2		%	16.6		%	20.2		%

Non-GAAP Financial Measures by Business Segment


	Three Months Ended September 30,						Nine Months Ended September 30,
$ in billions	2022			2021			2022			2021
Average common equity3
Institutional Securities	$	48.8		$	43.5		$	48.8		$	43.5
Wealth Management	31.0			28.6			31.0			28.6
Investment Management	10.6			10.7			10.6			8.2
ROE4
Institutional Securities	10		%	20		%	12		%	20		%
Wealth Management	16		%	16		%	16		%	17		%
Investment Management	4		%	12		%	6		%	15		%
Average tangible common equity3
Institutional Securities	$	48.3		$	42.9		$	48.3		$	42.9
Wealth Management	16.3			13.4			16.3			13.4
Investment Management	0.8			1.0			0.8			1.0
ROTCE4
Institutional Securities	10		%	20		%	12		%	20		%
Wealth Management	30		%	34		%	30		%	35		%
Investment Management	56		%	161		%	87		%	128		%

1.Adjusted amounts exclude the effect of costs related to the integrations of E*TRADE and Eaton Vance, net of tax as appropriate.

2.ROE and ROTCE represent earnings applicable to Morgan Stanley common shareholders as a percentage of average common equity and average tangible common equity, respectively. When excluding integration-related costs, both the numerator and average denominator are adjusted.

3.Average common equity and average tangible common equity for each business segment is determined using our Required Capital framework (see "Liquidity and Capital Resources—Regulatory Requirements—Attribution of Average Common Equity According to the Required Capital Framework” herein). The sums of the segments’ Average common equity and Average tangible common equity do not equal the Consolidated measures due to Parent equity.

4.The calculation of ROE and ROTCE by segment uses net income applicable to Morgan Stanley by segment less preferred dividends allocated to each segment as a percentage of average common equity and average tangible common equity, respectively, allocated to each segment.

Return on Tangible Common Equity Goal

In January 2022, we established an ROTCE goal of over 20%, excluding integration-related expenses. Our ROTCE goal is a forward-looking statement that was based on a normal market environment and may be materially affected by many factors. See “Risk Factors” and “Forward-Looking Statements” in the 2021 Form 10-K for further information on market and economic conditions and their potential effects on our future operating results.

For further information on non-GAAP measures (ROTCE excluding integration-related expenses), see “Selected Non-GAAP Financial Information” herein.


September 2022 Form 10-Q			7


Table of Contents
Management’s Discussion and Analysis

Business Segments

Substantially all of our operating revenues and operating expenses are directly attributable to our business segments. Certain revenues and expenses have been allocated to each business segment, generally in proportion to its respective net revenues, non-interest expenses or other relevant measures. See Note 19 to the financial statements for segment net revenues by income statement line item and information on intersegment transactions.


			8			September 2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

Institutional Securities

Income Statement Information


	Three Months Ended September 30,
$ in millions	2022		2021		% Change
Revenues
Advisory	$	693	$	1,272	(46)	%
Equity	218		1,010		(78)	%
Fixed income	366		567		(35)	%
Total Underwriting	584		1,577		(63)	%
Total Investment banking	1,277		2,849		(55)	%
Equity	2,459		2,876		(14)	%
Fixed income	2,181		1,640		33	%
Other	(100)		130		(177)	%
Net revenues	$	5,817	$	7,495	(22)	%
Provision for credit losses	24		24		—%
Compensation and benefits	1,948		2,248		(13)	%
Non-compensation expenses	2,219		2,250		(1)	%
Total non-interest expenses	4,167		4,498		(7)	%
Income before provision for income taxes	1,626		2,973		(45)	%
Provision for income taxes	305		713		(57)	%
Net income	1,321		2,260		(42)	%
Net income applicable to noncontrolling interests	47		31		52	%
Net income applicable to Morgan Stanley	$	1,274	$	2,229	(43)	%


	Nine Months Ended September 30,
$ in millions	2022		2021		% Change
Revenues
Advisory	$	2,235	$	2,416	(7)	%
Equity	624		3,584		(83)	%
Fixed income	1,124		1,838		(39)	%
Total Underwriting	1,748		5,422		(68)	%
Total Investment banking	3,983		7,838		(49)	%
Equity	8,593		8,578		—%
Fixed income	7,604		6,288		21	%
Other	(587)		460		N/M
Net revenues	$	19,593	$	23,164	(15)	%
Provision for credit losses	150		1		N/M
Compensation and benefits	6,602		7,795		(15)	%
Non-compensation expenses	6,874		6,526		5	%
Total non-interest expenses	13,476		14,321		(6)	%
Income before provision for income taxes	5,967		8,842		(33)	%
Provision for income taxes	1,235		2,023		(39)	%
Net income	4,732		6,819		(31)	%
Net income applicable to noncontrolling interests	146		85		72	%
Net income applicable to Morgan Stanley	$	4,586	$	6,734	(32)	%

Investment Banking

Investment Banking Volumes


	Three Months Ended September 30,				Nine Months Ended September 30,
$ in billions	2022		2021		2022		2021
Completed mergers and acquisitions1	$	138	$	365	$	629	$	744
Equity and equity-related offerings2, 3	5		23		16		93
Fixed income offerings2, 4	51		85		187		298

1.Includes transactions of $100 million or more. Based on full credit to each of the advisors in a transaction.

2.Based on full credit for single book managers and equal credit for joint book managers.

3.Includes Rule 144A issuances and registered public offerings of common stock, convertible securities and rights offerings.

Investment Banking Revenues

Revenues of $1,277 million in the current quarter decreased 55% compared with the prior year quarter, primarily reflecting a decrease in underwriting revenues in line with market levels and lower advisory revenues.

•Advisory revenues decreased primarily due to fewer completed M&A transactions.

•Equity underwriting revenues decreased on lower volumes, with lower revenues across all products.

•Fixed income underwriting revenues decreased primarily due to lower issuances.

Revenues of $3,983 million in the current year period decreased 49% compared with the prior year period, primarily reflecting a decrease in underwriting revenues in line with market levels.

•Advisory revenues decreased primarily due to fewer completed M&A transactions.

•Equity underwriting revenues decreased on lower volumes, with lower revenues across all products.

•Fixed income underwriting revenues decreased primarily due to lower issuances.

In the near term, lower levels of announced M&A transactions are expected to impact Advisory revenues.

See “Investment Banking Volumes” herein.


September 2022 Form 10-Q			9


Table of Contents
Management’s Discussion and Analysis

Equity, Fixed Income and Other Net Revenues

Equity and Fixed Income Net Revenues


	Three Months Ended September 30, 2022
					Net Interest2		All Other3
$ in millions	Trading		Fees1		Net Interest2		All Other3		Total
Financing	$	1,308	$	132	$	(74)	$	2	$	1,368
Execution services	578		573		21		(81)		1,091
Total Equity	$	1,886	$	705	$	(53)	$	(79)	$	2,459
Total Fixed Income	$	1,928	$	85	$	133	$	35	$	2,181


	Three Months Ended September 30, 2021
					Net Interest2		All Other3
$ in millions	Trading		Fees1		Net Interest2		All Other3		Total
Financing	$	1,204	$	123	$	130	$	1	$	1,458
Execution services	832		612		(62)		36		1,418
Total Equity	$	2,036	$	735	$	68	$	37	$	2,876
Total Fixed Income	$	1,029	$	75	$	479	$	57	$	1,640


	Nine Months Ended September 30, 2022
					Net Interest2		All Other3
$ in millions	Trading		Fees1		Net Interest2		All Other3		Total
Financing	$	3,914	$	404	$	46	$	7	$	4,371
Execution services	2,371		1,887		(22)		(14)		4,222
Total Equity	$	6,285	$	2,291	$	24	$	(7)	$	8,593
Total Fixed Income	$	6,263	$	264	$	1,046	$	31	$	7,604


	Nine Months Ended September 30, 2021
					Net Interest2		All Other3
$ in millions	Trading		Fees1		Net Interest2		All Other3		Total
Financing	$	2,987	$	374	$	429	$	7	$	3,797
Execution services	2,764		2,048		(169)		138		4,781
Total Equity	$	5,751	$	2,422	$	260	$	145	$	8,578
Total Fixed Income	$	4,490	$	228	$	1,335	$	235	$	6,288

1.Includes Commissions and fees and Asset management revenues.

2.Includes funding costs, which are allocated to the businesses based on funding usage.

3.Includes Investments and Other revenues.

Current Quarter

Equity

Net revenues of $2,459 million in the current quarter decreased 14% compared with elevated levels in the prior year quarter, primarily reflecting a decrease in execution services.

•Financing revenues decreased primarily due to lower average client balances and lower client activity.

•Execution services revenues decreased primarily due to a mark-to-market loss on a business-related investment and lower client activity in derivatives and cash equities.

Fixed Income

Net revenues of $2,181 million in the current quarter increased 33% compared with the prior year quarter, primarily reflecting an increase in global macro products.

•Global macro products benefited from client engagement and increased client flow activity in an environment characterized by inflationary pressures, central bank actions and fiscal activity driving higher volatility. Revenues increased primarily due to the impact of market conditions

on inventory held to facilitate client activity and increased client activity.

•Credit products revenues were relatively unchanged from the prior year quarter as an increase due to the impact of market conditions on inventory held to facilitate client activity in corporate credit products was offset by a decrease in client activity in corporate credit products.

•Commodities products and other fixed income revenues decreased primarily due to lower client activity in Commodities.

Other Net Revenues

Other Net revenues in the current quarter decreased compared with the prior year quarter, primarily due to higher mark-to-market losses on corporate loans held for sale, net of hedges compared with gains in the prior year quarter.

Current Year Period

Equity

Net revenues of $8,593 million in the current year period were relatively unchanged compared with the prior year period as an increase in financing was offset by a decrease in execution services.

•Absent the loss from a credit event for a single client in the prior year period, Financing revenues decreased as the impact of marginally lower average client balances was partially offset by the impact of a change in client balance mix.

•Execution services revenues decreased primarily due to lower client activity and the impact of market conditions on inventory held to facilitate client activity in cash equities, as well as a mark-to-market loss on a business-related investment, partially offset by the absence of trading losses related to the aforementioned credit event.

Fixed Income

Net revenues of $7,604 million in the current year period increased 21% compared with the prior year period, primarily reflecting an increase in global macro and commodities products, partially offset by a decrease in credit products.

•Credit products revenues decreased primarily due to the impact of market conditions on inventory held to facilitate client activity across products.

•Commodities products and other fixed income revenues increased primarily due to higher client activity and the impact of market conditions on inventory held to facilitate client activity in Commodities.


			10			September 2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

Other Net Revenues

Other Net revenues in the current year period decreased compared with the prior year period, primarily due to higher mark-to-market losses on corporate loans held for sale, net of hedges, as well as losses compared with gains in the prior year period on investments associated with certain employee deferred compensation plans and lower results from our Japanese joint venture, MUMSS.

Provision for Credit Losses

Provision for credit losses on loans and lending commitments of $24 million in the current quarter was primarily driven by deterioration in macroeconomic outlook. The Provision for credit losses on loans and lending commitments was $24 million in the prior year quarter, primarily driven by growth in corporate lending commitments. ~~The~~

Provision for credit losses on loans and lending commitments of ~~$113~~$150 million in the ~~prior~~current year ~~quarter~~period was ~~primarily~~ driven by ~~the risks related to vulnerable sectors~~portfolio growth and ~~higher downgrade sensitivity, and changes~~deterioration in ~~asset quality trends.~~

macroeconomic outlook. In the ~~current~~prior year period, the Provision for credit losses on loans and lending commitments was flat, primarily as a result of provision for one secured lending facility in the second quarter of 2021, offset by the impact of paydowns on corporate loans, including by lower-rated borrowers.~~The Provision for credit losses on loans and lending commitments~~

of $718 million in the prior year period was primarily driven by the risks related to vulnerable sectors and higher downgrade sensitivity, changes in asset quality trends, and deterioration in the expected macroeconomic environment at that time.

For further information on the Provision for credit losses, see “Credit Risk” herein.

Non-interest Expenses

Non-interest expenses of ~~$4,498~~$4,167 million in the current quarter ~~increased 13%~~decreased 7% compared with the prior year quarter, ~~as a result of both higher Non-compensation and~~primarily due to lower Compensation and ~~benefit~~benefits expenses.

•Compensation and benefits expenses ~~increased~~decreased in the current quarter, primarily due to ~~an increase in~~lower discretionary incentive compensation ~~driven~~on lower revenues.

•Non-compensation expenses were relatively unchanged in the current quarter.

Non-interest expenses of $13,476 million in the current year period decreased 6% compared with the prior year period, primarily due to lower Compensation and benefits expenses, partially offset by higher Non-compensation expenses.

•Compensation and benefits expenses decreased in the current year period, primarily due to lower discretionary incentive compensation on lower revenues, ~~higher salaries on increased headcount, and higher expenses related to certain deferred~~lower stock-based compensation ~~plans linked to~~expense driven by the Firm’s share price, ~~partially offset by~~and lower expenses related to certain deferred compensation plans linked to investment ~~performance.~~

•~~Non-compensation expenses increased in the current quarter, primarily due to increased volume-related expenses, investments in technology, and professional services.~~

In the current year period, non-interest expenses increased 12% compared with the prior year period to $14,321 million as a result of both higher Compensation and benefits and Non-compensation expenses.

•~~Compensation and benefits expenses increased in the current year period, primarily due to an increase in discretionary incentive compensation driven~~performance, partially offset by higher ~~revenue,~~salary expenses driven in part by the impact of higher ~~expenses related to certain deferred compensation plans linked to the Firm’s share price, as well as higher salaries on increased~~ headcount.

•Non-compensation expenses increased in the current year period, primarily due to an increase in legal expenses, including $200 million related to a regulatory matter in the second quarter of 2022 and increased ~~volume-related expenses, investments in technology, and professional services, partially offset by a decrease in litigation expenses.~~spend on technology.

Income ~~Tax Items~~Taxes

The effective tax rate of ~~24.0% is higher~~18.8% for the current quarter and 20.7% for the current year period was lower than the prior ~~year quarter which included a net discrete~~respective periods, primarily driven by the realization of certain tax ~~benefit from the remeasurement of reserves and related interest as a result of new information pertaining to the resolution of tax examinations in certain jurisdictions.~~benefits.


September ~~2021~~2022 Form 10-Q			11


Table of Contents
Management’s Discussion and Analysis

Wealth Management

Income Statement Information


		Three Months Ended September 30,							Three Months Ended September 30,
$ in millions	$ in millions	2021		2020		% Change		$ in millions	2022		2021		% Change
Revenues	Revenues							Revenues
Asset management	Asset management	$	3,628	$	2,793	30	%	Asset management	$	3,389	$	3,628	(7)	%
Transactional1	Transactional1	832		880		(5)	%	Transactional1	616		832		(26)	%
Net interest	Net interest	1,348		889		52	%	Net interest	2,004		1,348		49	%
Other1,2		127		92		38	%
Other1								Other1	111		127		(13)	%
Net revenues	Net revenues	5,935		4,654		28	%	Net revenues	6,120		5,935		3	%
Provision for credit losses2		—		(2)		100	%
Provision for credit losses								Provision for credit losses	11		—		N/M
Compensation and benefits	Compensation and benefits	3,159		2,684		18	%	Compensation and benefits	3,171		3,159		—	%
Non-compensation expenses	Non-compensation expenses	1,246		852		46	%	Non-compensation expenses	1,289		1,246		3	%
Total non-interest expenses	Total non-interest expenses	4,405		3,536		25	%	Total non-interest expenses	4,460		4,405		1	%
Income before provision for income taxes	Income before provision for income taxes	$	1,530	$	1,120	37	%	Income before provision for income taxes	$	1,649	$	1,530	8	%
Provision for income taxes	Provision for income taxes	373		278		34	%	Provision for income taxes	396		373		6	%
Net income applicable to Morgan Stanley	Net income applicable to Morgan Stanley	$	1,157	$	842	37	%	Net income applicable to Morgan Stanley	$	1,253	$	1,157	8	%


		Nine Months Ended September 30,							Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		% Change		$ in millions	2022		2021		% Change
Revenues	Revenues							Revenues
Asset management	Asset management	$	10,266	$	7,980	29	%	Asset management	$	10,525	$	10,266	3	%
Transactional1	Transactional1	3,232		2,354		37	%	Transactional1	1,542		3,232		(52)	%
Net interest	Net interest	3,988		2,815		42	%	Net interest	5,291		3,988		33	%
Other1,2		503		265		90	%
Other1								Other1	433		503		(14)	%
Net revenues	Net revenues	17,989		13,414		34	%	Net revenues	17,791		17,989		(1)	%
Provision for credit losses2		(2)		39		(105)	%
Provision for credit losses								Provision for credit losses	43		(2)		N/M
Compensation and benefits	Compensation and benefits	9,604		7,625		26	%	Compensation and benefits	9,191		9,604		(4)	%
Non-compensation expenses	Non-compensation expenses	3,621		2,433		49	%	Non-compensation expenses	3,814		3,621		5	%
Total non-interest expenses	Total non-interest expenses	13,225		10,058		31	%	Total non-interest expenses	13,005		13,225		(2)	%
Income before provision for income taxes	Income before provision for income taxes	$	4,766	$	3,317	44	%	Income before provision for income taxes	$	4,743	$	4,766	—	%
Provision for income taxes	Provision for income taxes	1,103		758		46	%	Provision for income taxes	1,028		1,103		(7)	%
Net income applicable to Morgan Stanley	Net income applicable to Morgan Stanley	$	3,663	$	2,559	43	%	Net income applicable to Morgan Stanley	$	3,715	$	3,663	1	%

1.Transactional includes Investment banking, Trading, and Commissions and fees revenues. Other includes Investments and Other revenues.

2.~~Certain prior period amounts have been reclassified to conform to the current presentation. See "Business Segments" herein and Note 1 to the financial statements for additional information.~~

~~Acquisition of E*TRADE~~

The comparisons of current year results to prior periods are impacted by the acquisition of E*TRADE in the fourth quarter of 2020. For additional information on the acquisition of E*TRADE, see Note 3 to the financial statements in the Form 2020 10-K.

Wealth Management Metrics


$ in billions	$ in billions	At September 30, 2021		At December 31, 2020		$ in billions	At September 30, 2022		At December 31, 2021
Total client assets		$	4,629	$	3,999
Total client assets1						Total client assets1	$	4,134	$	4,989
U.S. Bank Subsidiary loans	U.S. Bank Subsidiary loans	$	121	$	98	U.S. Bank Subsidiary loans	$	146	$	129
Margin and other lending1		$	29	$	23
Deposits2		$	327	$	306
Margin and other lending2						Margin and other lending2	$	24	$	31
Deposits3						Deposits3	$	332	$	346
Annualized weighted average cost of deposits	Annualized weighted average cost of deposits	0.13%		0.24%		Annualized weighted average cost of deposits	0.93%		0.10%

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Net new assets3
$ 134.5 $ 51.8 $ 310.6 $ 109.3


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net new assets4	$	64.8	$	134.5	$	259.7	$	310.6

1.The prior period amount has been revised. See “Self-directed Channel” herein for additional information.

2.Margin and other lending represents margin lending arrangements, which allow customers to borrow against the value of qualifying securities and other lending which includes non‐purpose securities-based lending on non‐bank entities.

2.3.Deposits are sourced from Wealth Management clients and other sources of funding on the U.S. Bank Subsidiaries. Deposits include sweep deposit programs, savings and other, and time deposits. Excludes approximately $9$8 billion and ~~$25~~$9 billion of off-balance sheet deposits as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

3.4.Net new assets represent client inflows, including dividends and interest, and asset acquisitions, less client outflows, and exclude activity from business combinations/divestitures and the impact of fees and commissions.

Advisor-led ~~channel~~Channel


$ in billions	$ in billions	At September 30, 2021		At December 31, 2020		$ in billions	At September 30, 2022		At December 31, 2021
Advisor-led client assets1	Advisor-led client assets1	$	3,647	$	3,167	Advisor-led client assets1	$	3,305	$	3,886
Fee-based client assets2	Fee-based client assets2	$	1,752	$	1,472	Fee-based client assets2	$	1,628	$	1,839
Fee-based client assets as a percentage of advisor-led client assets	Fee-based client assets as a percentage of advisor-led client assets	48%		46%		Fee-based client assets as a percentage of advisor-led client assets	49%		47%


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Fee-based asset flows3	Fee-based asset flows3	$	70.6	$	23.8	$	141.5	$	53.3	Fee-based asset flows3	$	16.7	$	70.6	$	142.4	$	141.5

1.Advisor-led client assets represent client assets in accounts that have a Wealth Management representative assigned.

2.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.

3.Fee-based asset flows include net new fee-based assets (including asset acquisitions), net account transfers, dividends, interest and client fees, and exclude institutional cash management related activity. For a description of the Inflows and Outflows included in Fee-based asset flows, see Fee-based client assets in the ~~2020~~2021 Form 10-K.

Self-directed ~~channel~~Channel


$ in billions	$ in billions	At September 30, 2021		At December 31, 2020		$ in billions	At September 30, 2022		At December 31, 2021
Self-directed assets1	Self-directed assets1	$	982	$	832	Self-directed assets1	$	829	$	1,103
Self-directed households (in millions)2	Self-directed households (in millions)2	7.4		6.7		Self-directed households (in millions)2	7.8		7.4

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Daily average revenue trades (“DARTs”) (in thousands)3
959 6 1,200 6


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Daily average revenue trades (“DARTs”) (in thousands)3	805	959	900	1,200

1.Self-directed assets represent active accounts which are not advisor led. Active accounts are defined as having at least $25 in assets. The prior period amount has been revised to include certain additional vested client employee stock options to align the timing of recognition with other existing Morgan Stanley client assets.

2.Self-directed households represent the total number of households that include at least one account with self-directed assets. Individual households or participants that are engaged in one or more of our Wealth Management channels ~~will be~~are included in each of the respective channel counts.

3.DARTs represent the total self-directed trades in a period divided by the number of trading days during that period.


			12			September ~~2021~~2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

Workplace ~~channel~~Channel1

$ in billions At September 30,
2021 At December 31,
2020
Workplace unvested assets2
$ 495 $ 435
Number of participants (in millions)3
5.3 4.9


$ in billions	At September 30, 2022		At December 31, 2021
Stock plan unvested assets2	$	312	$	509
Stock plan participants (in millions)3	6.2		5.6

1.The workplace channel includes equity compensation solutions for companies, their executives and employees.

2.~~Workplace~~Stock plan unvested assets represent the market value of public company securities at the end of the period.

3.~~Workplace~~Stock plan participants represent total accounts with vested and/or unvested stock plan assets in the workplace channel. Individuals with accounts in multiple plans are counted as participants in each plan.

Net Revenues

Asset Management

Asset management revenues of ~~$3,628~~$3,389 million in the current quarter decreased 7% compared with the prior year quarter, primarily due to lower fee-based asset levels in the current quarter as a result of lower market levels, partially offset by positive fee-based flows.

In the current year period, asset management increased 3% to $10,525 million compared with the prior year period, primarily due to higher fee-based asset levels in the current year period as a result of positive fee-based flows, partially offset by lower market levels.

See “Fee-Based Client Assets—Rollforwards” herein.

Transactional Revenues

Transactional revenues of $616 million in the current quarter decreased 26% compared with the prior year quarter, primarily due to lower client activity.

In the current year period, transactional revenues decreased 52% to $1,542 million compared with the prior year period, primarily due to losses on investments associated with certain employee deferred compensation plans and ~~$10,266~~lower client activity in equities.

Net Interest

Net interest revenues of $2,004 million in the current quarter and $5,291 million in the current year period increased ~~30%~~49% and ~~29% from~~33% compared with the prior year quarter and the prior year period, respectively, primarily due to net effect of higher ~~fee-based asset levels~~interest rates and growth in bank lending.

The level and pace of interest rate changes may impact the ~~current year periods as a result~~composition of ~~market appreciation~~deposits and ~~positive fee-based flows since the prior year~~customer behavior, which may impact net interest income in future periods.

~~See “Fee-Based Client Assets—Rollforwards” herein.~~Non-interest Expenses

~~Transactional Revenues~~

~~Transactional revenues~~Non-interest expenses of ~~$832~~$4,460 million in the current quarter decreased 5% compared with the prior year quarter, primarily due to losses related to investments associated with certain employee deferred compensation plans, partially offset by incremental revenues as a result of the E*TRADE acquisition.

~~In the current year period, Transactional revenues~~ increased 37% to $3,232 million compared with the prior year period, primarily due to incremental revenues as a result of the E*TRADE acquisition and higher revenues from structured product and closed-end fund issuances.

~~Net Interest~~

Net interest of $1,348 million in the current quarter increased 52% compared with the prior year quarter, primarily due to incremental net interest as a result of the E*TRADE acquisition and continued growth in bank lending.

In the current year period, Net interest increased 42% to $3,988 million compared with the prior year period, primarily due to incremental net interest as a result of the E*TRADE acquisition, a decrease in prepayment amortization related to mortgage-backed securities, and continued growth in bank lending. These increases in Net interest were partially offset by the net effect of lower interest rates.

~~Other~~

~~Other revenues of $127 million in the current quarter increased 38% from the prior year quarter primarily due to incremental revenues as a result of the E*TRADE acquisition.~~

In the current year period, Other revenues increased 90% to $503 million compared with the prior year period, primarily due to incremental revenues as a result of the E*TRADE acquisition and higher realized gains from the AFS securities portfolio.

~~Non-interest Expenses~~

~~Non-interest expenses of $4,405 million in the current quarter increased 25%~~ 1% compared with the prior year quarter, as a result of ~~both~~ higher ~~Compensation and benefits and~~ Non-compensation ~~expenses.~~expenses .

•Compensation and benefits expenses ~~increased primarily due to an increase~~were relatively unchanged in the current quarter as the impact of higher

headcount was offset by a decrease in the formulaic payout to Wealth Management representatives driven by lower compensable revenues.

•Non-compensation expenses increased in the current quarter primarily driven by spend on technology and higher ~~compensable revenues~~marketing and ~~incremental compensation~~business development costs.

In the current year period, Non-interest expenses decreased 2% to $13,005 million compared with the prior year period, primarily as a result of ~~the E*TRADE acquisition,~~lower Compensation and benefits expenses, partially offset by higher Non-compensation expenses.

•Compensation and benefits expenses decreased in the current year period primarily due to lower expenses related to certain deferred compensation plans linked to investment ~~performance.~~performance, partially offset by the impact of higher headcount.

•Non-compensation expenses increased ~~primarily due to incremental expenses as a result of the E*TRADE acquisition.~~

Inin the current year period ~~Non-interest expenses increased 31% to $13,225 million compared with the prior year period, as a result of both higher Compensation and benefits and Non-compensation expenses.~~

•~~Compensation and benefits expenses increased~~ primarily ~~due to an increase in the formulaic payout to Wealth Management representatives~~ driven by spend on technology and higher ~~compensable revenues,~~marketing and ~~incremental compensation as a result of the E*TRADE acquisition.~~

•business development costs~~Non-compensation expenses increased primarily due to incremental expenses as a result of the E*TRADE acquisition.~~.

Fee-Based Client Assets Rollforwards


$ in billions	$ in billions	At June 30, 2021		Inflows1		Outflows		Market Impact		At September 30, 2021		$ in billions	At June 30, 2022		Inflows		Outflows		Market Impact		At September 30, 2022
Separately managed2		$	407	$	51	$	(4)	$	14	$	468
Separately managed1												Separately managed1	$	556	$	14	$	(6)	$	(53)	$	511
Unified managed	Unified managed	436		27		(18)		(6)		439		Unified managed	396		18		(12)		(23)		379
Advisor	Advisor	201		11		(9)		(2)		201		Advisor	172		7		(9)		(7)		163
Portfolio manager	Portfolio manager	590		29		(16)		(7)		596		Portfolio manager	546		22		(18)		(24)		526
Subtotal	Subtotal	$	1,634	$	118	$	(47)	$	(1)	$	1,704	Subtotal	$	1,670	$	61	$	(45)	$	(107)	$	1,579
Cash management	Cash management	46		9		(7)		—		48		Cash management	47		10		(8)		—		49
Total fee-based client assets	Total fee-based client assets	$	1,680	$	127	$	(54)	$	(1)	$	1,752	Total fee-based client assets	$	1,717	$	71	$	(53)	$	(107)	$	1,628


$ in billions	$ in billions	At June 30, 2020		Inflows		Outflows		Market Impact		At September 30, 2020		$ in billions	At June 30, 2021		Inflows		Outflows		Market Impact		At September 30, 2021
Separately managed2		$	313	$	19	$	(4)	$	14	$	342
Separately managed1												Separately managed1	$	407	$	51	$	(4)	$	14	$	468
Unified managed	Unified managed	305		16		(12)		18		327		Unified managed	436		27		(18)		(6)		439
Advisor	Advisor	149		8		(8)		9		158		Advisor	201		11		(9)		(2)		201
Portfolio manager	Portfolio manager	431		21		(16)		23		459		Portfolio manager	590		29		(16)		(7)		596
Subtotal	Subtotal	$	1,198	$	64	$	(40)	$	64	$	1,286	Subtotal	$	1,634	$	118	$	(47)	$	(1)	$	1,704
Cash management	Cash management	38		12		(3)		—		47		Cash management	46		9		(7)		—		48
Total fee-based client assets	Total fee-based client assets	$	1,236	$	76	$	(43)	$	64	$	1,333	Total fee-based client assets	$	1,680	$	127	$	(54)	$	(1)	$	1,752


$ in billions	At December 31, 2021		Inflows2		Outflows		Market Impact		At September 30, 2022
Separately managed1	$	479	$	126	$	(19)	$	(75)	$	511
Unified managed	467		58		(37)		(109)		379
Advisor	211		22		(27)		(43)		163
Portfolio manager	636		71		(52)		(129)		526
Subtotal	$	1,793	$	277	$	(135)	$	(356)	$	1,579
Cash management	46		28		(25)		—		49
Total fee-based client assets	$	1,839	$	305	$	(160)	$	(356)	$	1,628


September ~~2021~~2022 Form 10-Q			13


Table of Contents
Management’s Discussion and Analysis

$ in billions At
December 31,
2020
Inflows1
Outflows
Market
Impact
At
September 30,
2021
Separately managed2
$ 359 $ 77 $ (15) $ 47 $ 468
Unified managed 379 75 (42) 27 439
Advisor 177 30 (23) 17 201
Portfolio manager 509 84 (44) 47 596
Subtotal $ 1,424 $ 266 $ (124) $ 138 $ 1,704
Cash management 48 22 (22) — 48
Total fee-based
client assets
$ 1,472 $ 288 $ (146) $ 138 $ 1,752

$ in billions At
December 31,
2019 Inflows Outflows
Market
Impact
At
September 30,
2020
Separately managed2
$ 322 $ 37 $ (14) $ (3) $ 342
Unified managed 313 43 (33) 4 327
Advisor 155 22 (21) 2 158
Portfolio manager 435 62 (43) 5 459
Subtotal $ 1,225 $ 164 $ (111) $ 8 $ 1,286
Cash management 42 21 (16) — 47
Total fee-based
client assets
$ 1,267 $ 185 $ (127) $ 8 $ 1,333


$ in billions	At December 31, 2020		Inflows		Outflows		Market Impact		At September 30, 2021
Separately managed1	$	359	$	77	$	(15)	$	47	$	468
Unified managed	379		75		(42)		27		439
Advisor	177		30		(23)		17		201
Portfolio manager	509		84		(44)		47		596
Subtotal	$	1,424	$	266	$	(124)	$	138	$	1,704
Cash management	48		22		(22)		—		48
Total fee-based client assets	$	1,472	$	288	$	(146)	$	138	$	1,752

1.Includes ~~$43~~non-custody account values reflecting prior quarter-end balances due to lag in the reporting of asset values by third-party custodians.

2.Includes $75 billion of fee-based assets acquired in an asset acquisition in the current ~~quarter~~year period reflected in Separately managed.

2.~~Includes non-custody account values reflecting prior quarter-end balances due to a lag in the reporting of asset values by third-party custodians.~~

Average Fee Rates1


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
Fee rate in bps	Fee rate in bps	2021	2020	2021	2020	Fee rate in bps	2022	2021	2022	2021
Separately managed	Separately managed	14	15	14	14	Separately managed	11	14	12	14
Unified managed	Unified managed	95	99	96	99	Unified managed	94	95	94	96
Advisor	Advisor	82	85	82	85	Advisor	80	82	81	82
Portfolio manager	Portfolio manager	93	94	93	94	Portfolio manager	91	93	92	93
Subtotal	Subtotal	71	73	72	72	Subtotal	65	71	66	72
Cash management	Cash management	5	5	5	5	Cash management	6	5	6	5
Total fee-based client assets	Total fee-based client assets	70	71	70	70	Total fee-based client assets	63	70	65	70

1.Based on Asset management revenues related to advisory services associated with fee-based assets.

For a description of fee-based client assets and rollforward items in the previous tables, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Segments—Wealth Management Fee-Based Client Assets” in the ~~2020~~2021 Form 10-K.


			14			September ~~2021~~2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

Investment Management

Income Statement Information


		Three Months Ended September 30,							Three Months Ended September 30,
$ in millions	$ in millions	2021		2020		% Change		$ in millions	2022		2021		% Change
Revenues	Revenues							Revenues
Asset management and related fees	Asset management and related fees	$	1,470	$	795	85	%	Asset management and related fees	$	1,269	$	1,470	(14)	%
Performance-based income and other1	Performance-based income and other1	(17)		261		(107)	%	Performance-based income and other1	(101)		(17)		N/M
Net revenues	Net revenues	1,453		1,056		38	%	Net revenues	1,168		1,453		(20)	%
Compensation and benefits	Compensation and benefits	513		401		28	%	Compensation and benefits	495		513		(4)	%
Non-compensation expenses	Non-compensation expenses	570		340		68	%	Non-compensation expenses	557		570		(2)	%
Total non-interest expenses	Total non-interest expenses	1,083		741		46	%	Total non-interest expenses	1,052		1,083		(3)	%
Income before provision for income taxes	Income before provision for income taxes	370		315		17	%	Income before provision for income taxes	116		370		(69)	%
Provision for income taxes	Provision for income taxes	64		72		(11)	%	Provision for income taxes	26		64		(59)	%
Net income	Net income	306		243		26	%	Net income	90		306		(71)	%
Net income (loss) applicable to noncontrolling interests	Net income (loss) applicable to noncontrolling interests	(14)		18		(178)	%	Net income (loss) applicable to noncontrolling interests	(17)		(14)		(21)	%
Net income applicable to Morgan Stanley	Net income applicable to Morgan Stanley	$	320	$	225	42	%	Net income applicable to Morgan Stanley	$	107	$	320	(67)	%


		Nine Months Ended September 30,							Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		% Change		$ in millions	2022		2021		% Change
Revenues	Revenues							Revenues
Asset management and related fees	Asset management and related fees	$	3,991	$	2,144	86	%	Asset management and related fees	$	3,961	$	3,991	(1)	%
Performance-based income and other1	Performance-based income and other1	478		490		(2)	%	Performance-based income and other1	(47)		478		(110)	%
Net revenues	Net revenues	4,469		2,634		70	%	Net revenues	3,914		4,469		(12)	%
Compensation and benefits	Compensation and benefits	1,742		1,012		72	%	Compensation and benefits	1,645		1,742		(6)	%
Non-compensation expenses	Non-compensation expenses	1,557		948		64	%	Non-compensation expenses	1,676		1,557		8	%
Total non-interest expenses	Total non-interest expenses	3,299		1,960		68	%	Total non-interest expenses	3,321		3,299		1	%
Income before provision for income taxes	Income before provision for income taxes	1,170		674		74	%	Income before provision for income taxes	593		1,170		(49)	%
Provision for income taxes	Provision for income taxes	253		136		86	%	Provision for income taxes	121		253		(52)	%
Net income	Net income	917		538		70	%	Net income	472		917		(49)	%
Net income (loss) applicable to noncontrolling interests	Net income (loss) applicable to noncontrolling interests	(19)		81		(123)	%	Net income (loss) applicable to noncontrolling interests	(26)		(19)		(37)	%
Net income applicable to Morgan Stanley	Net income applicable to Morgan Stanley	$	936	$	457	105	%	Net income applicable to Morgan Stanley	$	498	$	936	(47)	%

1.Includes Investments, Trading, Commissions and fees, Net interest, and Other revenues.

Acquisition of Eaton Vance

The ~~comparisons~~comparison of the current year period results to the prior ~~periods are~~year period is impacted by the acquisition of Eaton Vance ~~in the first quarter of~~on March 1, 2021. For additional information on the acquisition of Eaton Vance, see Note 3 to the financial ~~statements.~~statements in the 2021 Form 10-K.

Net Revenues

Asset Management and ~~related fees~~Related Fees

Asset management and related fees of ~~$1,470~~$1,269 million in the current quarter decreased 14% from the prior year quarter, primarily due to lower average AUM driven by the decline in equity markets, partially offset by the impact of lower fee waivers in certain money market funds.

Asset management and ~~$3,991~~related fees of $3,961 million in the current year period ~~increased 85% and 86%~~were relatively unchanged from the prior year ~~quarter and prior year~~ period, ~~respectively, primarily due to~~reflecting the impact of the decline in equity markets, offset by incremental revenues as a result of the Eaton Vance acquisition and ~~higher average~~the impact of lower fee waivers in certain money market funds.

Asset management revenues are influenced by the level and relative mix of AUM. The current market environment may impact AUM ~~driven by strong investment performance~~ and ~~positive~~ net flows ~~since the prior year periods.~~within asset classes and therefore our asset management revenues.

See “Assets ~~Under~~under Management or Supervision” herein.

Performance-based ~~income~~Income and ~~other~~Other

Performance-based income and other revenues were a loss of ~~$17~~$101 million in the current quarter, representing a ~~107%~~ decrease from the prior year quarter, primarily due to the reversal of accrued carried interest ~~as well as investment losses compared with gains~~ in ~~the prior year quarter, in Asia~~certain private equity and real estate funds.

Performance-based income and other revenues were a loss of ~~$478~~$47 million in the current year period, ~~decreased 2%~~representing a 110% decrease from the prior year period, primarily due to ~~the reversal of~~lower accrued carried interest ~~as well as investment~~in certain private equity funds, losses on investments associated with certain employee deferred compensation plans compared with gains in the prior year period, ~~in an Asia private equity fund, partially offset by higher accrued carried interest in other private credit~~ and ~~equity, real estate and infrastructure funds.~~mark-to-market losses on public investments.

Non-interest Expenses

Non-interest expenses of ~~$1,083~~$1,052 million in the current quarter ~~increased 46%~~decreased 3% from the prior year quarter as a result of ~~higher~~lower Compensation and ~~benefits and higher Non-compensation expenses.~~benefits.

•Compensation and benefits expenses ~~increased~~decreased in the current quarter primarily due to ~~incremental~~lower discretionary incentive compensation ~~as a result of the Eaton Vance acquisition,~~driven by lower asset management revenues, partially offset by ~~lower compensation associated with carried interest.~~higher salary costs.

•Non-compensation expenses ~~in the current quarter increased primarily due to incremental expenses as a result of the Eaton Vance acquisition.~~

were relatively unchanged.


September ~~2021~~2022 Form 10-Q			15


Table of Contents
Management’s Discussion and Analysis

Non-interest expenses of ~~$3,299~~$3,321 million in the current year period increased ~~68%~~1% from the prior year period as a result of higher Non-compensation expenses, partially offset with lower Compensation and ~~benefits and higher Non-compensation expenses.~~benefits.

•Compensation and benefits expenses ~~increased~~decreased in the current year period primarily due to lower discretionary incentive compensation driven by lower asset management revenues and lower expenses related to certain deferred compensation plans linked to investment performance, partially offset by higher salary costs, including the impact of incremental compensation as a result of the Eaton Vance ~~acquisition, an increase in discretionary incentive compensation driven by higher asset management revenues, and higher compensation associated with carried interest.~~acquisition.

•Non-compensation expenses increased in the current year period ~~increased~~ primarily due to incremental expenses as a result of the Eaton Vance ~~acquisition and higher fee sharing paid to intermediaries on higher average AUM.~~acquisition.

Assets ~~Under~~under Management or Supervision

Rollforwards

~~Rollforwards~~


$ in billions	Equity		Fixed Income		Alternatives and Solutions		Long-Term AUM Subtotal		Liquidity and Overlay Services		Total
June 30, 2022	$	265	$	181	$	415	$	861	$	490	$	1,351
Inflows	10		13		24		47		572		619
Outflows	(14)		(17)		(15)		(46)		(602)		(648)
Market Impact	(9)		(3)		(15)		(27)		(2)		(29)
Other	(3)		(3)		(4)		(10)		(4)		(14)
September 30, 2022	$	249	$	171	$	405	$	825	$	454	$	1,279


$ in billions	$ in billions	Equity		Fixed income		Alternatives and Solutions		Long-term AUM Subtotal		Liquidity and Overlay Services		Total		$ in billions	Equity		Fixed Income		Alternatives and Solutions		Long-Term AUM Subtotal		Liquidity and Overlay Services		Total
June 30, 2021	June 30, 2021	$	404	$	207	$	445	$	1,056	$	468	$	1,524	June 30, 2021	$	404	$	207	$	445	$	1,056	$	468	$	1,524
Inflows	Inflows	18		17		24		59		462		521		Inflows	18		17		24		59		462		521
Outflows	Outflows	(19)		(16)		(23)		(58)		(448)		(506)		Outflows	(19)		(16)		(23)		(58)		(448)		(506)
Market Impact	Market Impact	(12)		—		—		(12)		—		(12)		Market Impact	(12)		—		—		(12)		—		(12)
Other	Other	—		(2)		(3)		(5)		—		(5)		Other	—		(2)		(3)		(5)		—		(5)
September 30, 2021	September 30, 2021	$	391	$	206	$	443	$	1,040	$	482	$	1,522	September 30, 2021	$	391	$	206	$	443	$	1,040	$	482	$	1,522


$ in billions	$ in billions	Equity		Fixed income		Alternatives and Solutions		Long-term AUM Subtotal		Liquidity and Overlay Services		Total		$ in billions	Equity		Fixed Income		Alternatives and Solutions		Long-Term AUM Subtotal		Liquidity and Overlay Services		Total
June 30, 2020		$	168	$	84	$	145	$	397	$	268	$	665
December 31, 2021														December 31, 2021	$	395	$	207	$	466	$	1,068	$	497	$	1,565
Inflows	Inflows	24		8		6		38		319		357		Inflows	42		50		74		166		1,675		1,841
Outflows	Outflows	(14)		(5)		(7)		(26)		(317)		(343)		Outflows	(60)		(59)		(60)		(179)		(1,702)		(1,881)
Market Impact	Market Impact	23		1		4		28		—		28		Market Impact	(117)		(19)		(67)		(203)		(11)		(214)
Other	Other	1		4		2		7		1		8		Other	(11)		(8)		(8)		(27)		(5)		(32)
September 30, 2020		$	202	$	92	$	150	$	444	$	271	$	715
September 30, 2022														September 30, 2022	$	249	$	171	$	405	$	825	$	454	$	1,279


$ in billions	$ in billions	Equity		Fixed income		Alternatives and Solutions		Long-term AUM Subtotal		Liquidity and Overlay Services		Total		$ in billions	Equity		Fixed Income		Alternatives and Solutions		Long-Term AUM Subtotal		Liquidity and Overlay Services		Total
December 31, 2020	December 31, 2020	$	242	$	98	$	153	$	493	$	288	$	781	December 31, 2020	$	242	$	98	$	153	$	493	$	288	$	781
Inflows	Inflows	73		49		68		190		1,375		1,565		Inflows	73		49		68		190		1,375		1,565
Outflows	Outflows	(63)		(40)		(53)		(156)		(1,300)		(1,456)		Outflows	(63)		(40)		(53)		(156)		(1,300)		(1,456)
Market Impact	Market Impact	23		1		29		53		4		57		Market Impact	23		1		29		53		4		57
Acquired1	Acquired1	119		103		251		473		116		589		Acquired1	119		103		251		473		116		589
Other	Other	(3)		(5)		(5)		(13)		(1)		(14)		Other	(3)		(5)		(5)		(13)		(1)		(14)
September 30, 2021	September 30, 2021	$	391	$	206	$	443	$	1,040	$	482	$	1,522	September 30, 2021	$	391	$	206	$	443	$	1,040	$	482	$	1,522

1.Related to the Eaton Vance acquisition.

$ in billions Equity Fixed income Alternatives and Solutions Long-term AUM Subtotal Liquidity and Overlay Services Total
December 31, 2019 $ 138 $ 79 $ 139 $ 356 $ 196 $ 552
Inflows 56 29 21 106 1,174 1,280
Outflows (35) (20) (15) (70) (1,100) (1,170)
Market Impact 42 1 (1) 42 1 43
Other 1 3 6 10 — 10
September 30, 2020 $ 202 $ 92 $ 150 $ 444 $ 271 $ 715

Average AUM


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in billions	$ in billions	2021		2020		2021		2020		$ in billions	2022		2021		2022		2021
Equity	Equity	$	402	$	190	$	350	$	159	Equity	$	269	$	402	$	308	$	350
Fixed income	Fixed income	207		90		173		84		Fixed income	179		207		190		173
Alternatives and Solutions	Alternatives and Solutions	451		148		356		143		Alternatives and Solutions	420		451		436		356
Long-term AUM subtotal	Long-term AUM subtotal	1,060		428		879		386		Long-term AUM subtotal	868		1,060		934		879
Liquidity and Overlay Services	Liquidity and Overlay Services	476		267		413		244		Liquidity and Overlay Services	466		476		469		413
Total AUM	Total AUM	$	1,536	$	695	$	1,292	$	630	Total AUM	$	1,334	$	1,536	$	1,403	$	1,292

Average Fee Rates
Three Months Ended
September 30, Nine Months Ended
September 30,
Fee rate in bps 2021 2020 2021 2020
Equity 72 76 76 75
Fixed income 37 29 38 29
Alternatives and Solutions 32 58 37 59
Long-term AUM 48 60 53 59
Liquidity and Overlay Services 5 15 6 16
Total AUM 35 43 38 42
1


	Three Months Ended September 30,		Nine Months Ended September 30,
Fee rate in bps	2022	2021	2022	2021
Equity	71	72	70	76
Fixed income	34	37	36	38
Alternatives and Solutions	34	32	34	37
Long-term AUM	46	48	46	53
Liquidity and Overlay Services	13	5	11	6
Total AUM	34	35	35	38

~~While~~1.Based on Asset management revenues, net of waivers, excluding performance-based fees and ~~related~~other non-management fees. For certain non-U.S. funds, it includes the portion of advisory fees ~~arising from~~that the ~~acquisition are incremental to our revenues, certain Eaton Vance products may have higher or lower average fee rates than similar products prior~~advisor collects on behalf of third-party distributors. The payment of those fees to the ~~acquisition, with~~distributor is included in Non-compensation expenses in the ~~overall impact yielding a lower average fee rate.~~income statement.

For a description of the asset classes and rollforward items in the previous tables, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Segments—Investment Management—Assets Under Management or Supervision” in the ~~2020~~2021 Form ~~10-K, except for the following updates to the definitions, which reflect the inclusion of certain Eaton Vance products.~~

•~~Alternatives and Solutions—includes products in fund of funds, real estate, infrastructure, private equity and credit strategies, multi-asset portfolios as well as custom separate account portfolios.~~

•~~Liquidity and Overlay Services~~—includes liquidity fund products as well as overlay services, which represent investment strategies that use passive exposure instruments to obtain, offset or substitute specific portfolio exposures, beyond those provided by the underlying holdings of the fund.10-K.


			16			September ~~2021~~2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

Supplemental Financial Information

U.S. Bank Subsidiaries

Our U.S. bank subsidiaries, Morgan Stanley Bank N.A. (“MSBNA”), and Morgan Stanley Private Bank, National Association (“MSPBNA”)~~, E*TRADE Bank (“ETB”), and E*TRADE Savings Bank (“ETSB”)~~ (collectively, “U.S. Bank Subsidiaries”), accept deposits, provide loans to a variety of customers, including large corporate and institutional clients as well as high to ultra-high net worth individuals, and invest in securities. Lending activity ~~recorded~~ in the U.S. Bank Subsidiaries from the Institutional Securities business segment primarily includes Secured lending facilities and Commercial real estate loans. Lending activity ~~recorded~~ in the U.S. Bank Subsidiaries from the Wealth Management business segment primarily includes Securities-based lending, which allows clients to borrow money against the value of qualifying securities, and Residential real estate loans.

For a further discussion of our credit risks, see “Quantitative and Qualitative Disclosures about Risk—Credit Risk.” For a further discussion about loans and lending commitments, see Notes 109 and 1413 to the financial statements.

U.S. Bank Subsidiaries’ Supplemental Financial Information1


$ in billions	$ in billions	At September 30, 2021		At December 31, 2020		$ in billions	At September 30, 2022		At December 31, 2021
Investment securities portfolio:	Investment securities portfolio:					Investment securities portfolio:
Investment securities—AFS	Investment securities—AFS	$	81.1	$	90.3	Investment securities—AFS	$	65.6	$	81.6
Investment securities—HTM	Investment securities—HTM	63.0		52.6		Investment securities—HTM	57.4		61.7
Total investment securities	Total investment securities	$	144.1	$	142.9	Total investment securities	$	123.0	$	143.3
Wealth Management Loans2	Wealth Management Loans2					Wealth Management Loans2
Residential real estate	Residential real estate	$	41.4	$	35.2	Residential real estate	$	52.8	$	44.2
Securities-based lending and Other3	Securities-based lending and Other3	79.8		62.9		Securities-based lending and Other3	92.9		85.0
Total, net of ACL	Total, net of ACL	$	121.2	$	98.1	Total, net of ACL	$	145.7	$	129.2
Institutional Securities Loans2	Institutional Securities Loans2					Institutional Securities Loans2
Corporate	Corporate	$	8.1	$	7.9	Corporate	$	6.7	$	6.5
Secured lending facilities	Secured lending facilities	29.0		27.4		Secured lending facilities	36.9		33.1
Commercial and Residential real estate	Commercial and Residential real estate	10.1		10.1		Commercial and Residential real estate	10.2		10.4
Securities-based lending and Other	Securities-based lending and Other	6.2		5.4		Securities-based lending and Other	5.4		6.3
Total, net of ACL	Total, net of ACL	$	53.4	$	50.8	Total, net of ACL	$	59.2	$	56.3
Total Assets	Total Assets	$	367.1	$	346.5	Total Assets	$	371.2	$	386.1
Deposits4	Deposits4	$	326.9	$	309.7	Deposits4	$	331.9	$	346.2

1.Amounts exclude transactions between the bank subsidiaries, as well as deposits from the Parent Company and affiliates.

2.For a further discussion of loans in the Wealth Management and Institutional Securities business segments, see “Quantitative and Qualitative Disclosures about Risk—Credit Risk” herein.

3.Other loans primarily include tailored lending.

4.For further information on deposits, see “Liquidity and Capital Resources—Funding Management—Balance Sheet—Unsecured Financing” herein.

Accounting Development Updates

The Financial Accounting Standards Board has issued certain accounting updates ~~which we have~~that apply to us. Accounting updates not listed below were assessed and either determined ~~are~~to be not applicable or ~~are~~to not ~~expected to~~ have a ~~significant~~material impact on our financial ~~statements.~~

condition or results of operations upon adoption.

The following accounting updates are currently being evaluated, however, we do not expect a material impact on our financial condition or results of operations upon adoption:

•Financial Instruments—Credit Losses. This accounting update eliminates the accounting guidance for Troubled Debt Restructurings (“TDRs”) and requires new disclosures regarding certain modifications of financing receivables (i.e., principal forgiveness, interest rate reductions, other-than-insignificant payment delays and term extensions) to borrowers experiencing financial difficulty. The update also requires disclosure of current period gross charge-offs by year of origination for financing receivables measured at amortized cost. The ASU is effective January 1, 2023 with early adoption permitted.

•Derivatives and Hedging. The accounting update allows entities to designate fair value hedging relationships to multiple layers in a closed portfolio of prepayable and non-prepayable financial assets. It also provides additional guidance on the accounting for and disclosure of hedge basis adjustments under the portfolio layer method. As of the adoption date, entities are permitted to reclassify HTM debt securities to AFS if the securities will be included in a closed portfolio that are designated in a portfolio layer method hedge. The ASU is effective January 1, 2023 with early adoption permitted.

•Fair Value Measurement. This accounting update clarifies, consistent with our current accounting policy, that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also requires additional disclosures including the fair value of equity securities subject to contractual sale restrictions, the nature and remaining duration of the restriction and circumstances that could cause the restriction to lapse. The ASU is effective January 1, 2024 with early adoption permitted.

Critical Accounting Policies

Our financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions (see Note 1 to the financial statements). We believe that of our significant accounting policies (see Note 2 to the financial statements in the ~~2020~~2021 Form 10-K and Note 2 to the financial statements), the fair value, goodwill and intangible assets, legal and regulatory contingencies and income taxes policies involve a higher degree of judgment and complexity. For a further discussion about our critical accounting policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in the ~~2020~~2021 Form 10-K. As discussed in Note 2 to the financial statements, our acquisition of Eaton Vance on March 1, 2021 included indefinite lived intangible assets. The initial valuation of an intangible asset, including indefinite lived intangible assets, as part of the acquisition method of accounting and the subsequent valuation of intangible assets as part of impairment assessments are subjective and based, in part, on inputs that are unobservable. These inputs include, but are not limited to, forecasted cash flows, revenue growth rates, attrition rates and discount rates.


September 2022 Form 10-Q			17


Table of Contents
Management’s Discussion and Analysis

Liquidity and Capital Resources

Our liquidity and capital policies are established and maintained by senior management, with oversight by the Asset/Liability Management Committee and the Board of Directors (“Board”). Through various risk and control committees, senior management reviews business performance relative to these policies, monitors the availability of alternative sources of financing, and oversees the liquidity, interest rate and currency sensitivity of our asset and liability position. Our Treasury department, Firm Risk Committee, Asset/Liability Management Committee, and other committees and control groups assist in evaluating, monitoring and ~~controlling~~managing the impact that our business activities have on our balance sheet, liquidity and capital structure. Liquidity and capital matters are reported regularly to the Board and the Risk Committee of the Board.

Balance Sheet

We monitor and evaluate the composition and size of our balance sheet on a regular basis. Our balance sheet management process includes quarterly planning, business-specific thresholds, monitoring of business-specific usage versus key performance metrics and new business impact assessments.

We establish balance sheet thresholds at the consolidated and business segment levels. We monitor balance sheet utilization and review variances resulting from business activity and market fluctuations. On a regular basis, we review current performance versus established thresholds and assess the need to re-allocate our balance sheet based on business segment needs. We also monitor key metrics, including asset and liability size and capital usage.


~~September 2021 Form 10-Q~~			17


~~Table of Contents~~
~~Management’s Discussion and Analysis~~

Total Assets by Business Segment


		At September 30, 2021									At September 30, 2022
$ in millions	$ in millions	IS		WM		IM		Total		$ in millions	IS		WM		IM		Total
Assets	Assets									Assets
Cash and cash equivalents	Cash and cash equivalents	$	98,346	$	24,880	$	637	$	123,863	Cash and cash equivalents	$	89,524	$	21,911	$	261	$	111,696
Trading assets at fair value	Trading assets at fair value	309,467		1,339		4,355		315,161		Trading assets at fair value	284,683		1,752		4,753		291,188
Investment securities	Investment securities	40,631		142,800		—		183,431		Investment securities	41,503		119,766		—		161,269
Securities purchased under agreements to resell	Securities purchased under agreements to resell	104,040		15,681		—		119,721		Securities purchased under agreements to resell	100,251		10,873		—		111,124
Securities borrowed	Securities borrowed	124,329		1,593		—		125,922		Securities borrowed	135,570		908		—		136,478
Customer and other receivables	Customer and other receivables	62,270		34,872		1,211		98,353		Customer and other receivables	55,202		31,517		1,216		87,935
Loans1	Loans1	52,117		121,237		5		173,359		Loans1	65,169		145,763		4		210,936
Other assets2	Other assets2	17,052		22,232		11,382		50,666		Other assets2	14,482		23,977		10,944		49,403
Total assets	Total assets	$	808,252	$	364,634	$	17,590	$	1,190,476	Total assets	$	786,384	$	356,467	$	17,178	$	1,160,029

At December 31, 2020
$ in millions IS WM IM Total
Assets
Cash and cash equivalents $ 74,281 $ 31,275 $ 98 $ 105,654
Trading assets at fair value 308,413 280 4,045 312,738
Investment securities 41,630 140,524 — 182,154
Securities purchased under agreements to resell 84,998 31,236 — 116,234
Securities borrowed 110,480 1,911 — 112,391
Customer and other receivables 67,085 29,781 871 97,737
Loans1
52,449 98,130 18 150,597
Other assets2
13,986 22,458 1,913 38,357
Total assets $ 753,322 $ 355,595 $ 6,945 $ 1,115,862


	At December 31, 2021
$ in millions	IS		WM		IM		Total
Assets
Cash and cash equivalents	$	91,251	$	36,003	$	471	$	127,725
Trading assets at fair value	288,405		1,921		4,543		294,869
Investment securities	41,407		141,591		—		182,998
Securities purchased under agreements to resell	112,267		7,732		—		119,999
Securities borrowed	128,154		1,559		—		129,713
Customer and other receivables	57,009		37,643		1,366		96,018
Loans1	58,822		129,307		5		188,134
Other assets2	14,820		22,682		11,182		48,684
Total assets	$	792,135	$	378,438	$	17,567	$	1,188,140

1.Amounts include loans held for investment, net of ACL, and loans held for sale but exclude loans at fair value, which are included in Trading assets in the balance ~~sheets~~sheet (see Note 109 to the financial statements).

2.Other assets primarily includes Goodwill and Intangible assets, premises, equipment and software, ROU assets related to leases, other investments, and deferred tax assets.

A substantial portion of total assets consists of cash and cash equivalents, liquid marketable securities and short-term receivables. In the Institutional Securities business segment, these arise from market-making, financing and prime brokerage activities, and in the Wealth Management business segment, these arise from banking activities, including management of the investment ~~portfolio, comprising Investment securities, Cash and cash equivalents and Securities purchased under agreements to resell.~~portfolio. Total assets ~~increased slightly to $1,190~~of $1,160 billion at September 30, ~~2021~~2022 were relatively unchanged from ~~$1,116~~$1,188 billion at December 31, ~~2020.~~2021.

Liquidity Risk Management Framework

The core components of our Liquidity Risk Management Framework are the Required Liquidity Framework, Liquidity Stress Tests and Liquidity Resources, which support our target liquidity profile. For a further discussion about the Firm’s Required Liquidity Framework and Liquidity Stress Tests, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Liquidity Risk Management Framework” in the ~~2020~~2021 Form 10-K.

At September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we maintained sufficient liquidity to meet current and contingent funding obligations as modeled in our Liquidity Stress Tests.

Liquidity Resources

We maintain sufficient liquidity resources, which consist of HQLA and cash deposits with banks (“Liquidity Resources”) to cover daily funding needs and to meet strategic liquidity targets sized by the Required Liquidity Framework and Liquidity Stress Tests. ~~The total~~We actively manage the amount of our 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.

The amount of Liquidity Resources we hold is based on our risk ~~tolerance~~appetite and is ~~subject~~calibrated to ~~change depending on market~~meet various internal and ~~Firm-specific events.~~


			18			September 2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

regulatory requirements and to fund prospective business activities. The Liquidity Resources are primarily held within the Parent Company and its major operating subsidiaries. The Total HQLA values in the tables immediately following are different from Eligible HQLA, which, in accordance with the LCR rule, also takes into account certain regulatory weightings and other operational considerations.

Liquidity Resources by Type of Investment


							Average Daily Balance Three Months Ended
$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	September 30, 2022		June 30, 2022
Cash deposits with central banks	Cash deposits with central banks	$	62,808	$	49,669	Cash deposits with central banks	$	61,447	$	65,144
Unencumbered HQLA Securities1:	Unencumbered HQLA Securities1:					Unencumbered HQLA Securities1:
U.S. government obligations	U.S. government obligations	138,588		136,555		U.S. government obligations	132,788		123,950
U.S. agency and agency mortgage-backed securities	U.S. agency and agency mortgage-backed securities	107,714		99,659		U.S. agency and agency mortgage-backed securities	89,279		92,825
Non-U.S. sovereign obligations2	Non-U.S. sovereign obligations2	28,315		39,745		Non-U.S. sovereign obligations2	15,812		15,661
Other investment grade securities	Other investment grade securities	632		2,053		Other investment grade securities	607		629
Total HQLA1	Total HQLA1	$	338,057	$	327,681	Total HQLA1	$	299,933	$	298,209
Cash deposits with banks (non-HQLA)	Cash deposits with banks (non-HQLA)	8,232		10,942		Cash deposits with banks (non-HQLA)	8,068		8,161
Total Liquidity Resources	Total Liquidity Resources	$	346,289	$	338,623	Total Liquidity Resources	$	308,001	$	306,370

1.HQLA is presented prior to applying weightings and includes all HQLA held in subsidiaries.

2.Primarily composed of unencumbered ~~Japanese,~~ U.K., Japanese, French, German ~~French~~ and ~~Italian~~Dutch government obligations.

Liquidity Resources by Bank and Non-Bank Legal Entities


		At September 30, 2021		At December 31, 2020		Average Daily Balance Three Months Ended			Average Daily Balance Three Months Ended
$ in millions	$ in millions					September 30, 2021		$ in millions	September 30, 2022		June 30, 2022
Bank legal entities	Bank legal entities							Bank legal entities
U.S.	U.S.	$	168,880	$	178,033	$	173,306	U.S.	$	133,306	$	142,290
Non-U.S.	Non-U.S.	12,172		7,670		11,451		Non-U.S.	7,607		8,712
Total Bank legal entities	Total Bank legal entities	181,052		185,703		184,757		Total Bank legal entities	140,913		151,002
Non-Bank legal entities	Non-Bank legal entities							Non-Bank legal entities
U.S.:	U.S.:							U.S.:
Parent Company	Parent Company	55,918		59,468		71,622		Parent Company	54,189		43,158
Non-Parent Company	Non-Parent Company	53,565		33,368		45,116		Non-Parent Company	55,098		55,342
Total U.S.	Total U.S.	109,483		92,836		116,738		Total U.S.	109,287		98,500
Non-U.S.	Non-U.S.	55,754		60,084		56,815		Non-U.S.	57,801		56,868
Total Non-Bank legal entities	Total Non-Bank legal entities	165,237		152,920		173,553		Total Non-Bank legal entities	167,088		155,368
Total Liquidity Resources	Total Liquidity Resources	$	346,289	$	338,623	$	358,310	Total Liquidity Resources	$	308,001	$	306,370


			18			~~September 2021 Form 10-Q~~


~~Table of Contents~~
~~Management’s Discussion and Analysis~~

Liquidity Resources may fluctuate from period to period based on the overall size and composition of our balance sheet, the maturity profile of our unsecured debt and estimates of funding needs in a stressed environment, among other factors.

Regulatory Liquidity Framework

Liquidity Coverage Ratio and Net Stable Funding Ratio

~~The Firm, MSBNA, MSPBNA~~We and ~~ETB~~our U.S. Bank Subsidiaries are required to maintain a minimum LCR and NSFR of 100%. The LCR ~~requirements are designed to ensure~~requires that large banking organizations have sufficient Eligible HQLA to cover net cash outflows arising from significant stress over 30 calendar days, thus promoting the short-term resilience of the liquidity risk profile of banking organizations. In determining Eligible HQLA for LCR purposes, weightings (or asset haircuts) are applied to HQLA, and certain HQLA held in

subsidiaries is excluded. The NSFR requires large banking organizations to maintain sufficiently stable sources of funding over a one-year time horizon.

As of September 30, ~~2021, the Firm, MSBNA, MSPBNA~~2022, we and ~~ETB~~our U.S. Bank Subsidiaries are compliant with the minimum ~~required~~ LCR and NSFR requirements of 100%.

Liquidity Coverage Ratio


		Average Daily Balance Three Months Ended							Average Daily Balance Three Months Ended
$ in millions	$ in millions	September 30, 2021			June 30, 2021			$ in millions	September 30, 2022			June 30, 2022
Eligible HQLA1	Eligible HQLA1							Eligible HQLA1
Cash deposits with central banks	Cash deposits with central banks	$	66,288		$	56,430		Cash deposits with central banks	$	57,133		$	59,887
Securities2	Securities2	174,068			171,729			Securities2	183,102			169,708
Total Eligible HQLA1	Total Eligible HQLA1	$	240,356		$	228,159		Total Eligible HQLA1	$	240,235		$	229,595
LCR	LCR	134		%	126		%	LCR	136		%	128		%

1.Under the LCR rule, Eligible HQLA is calculated using weightings and excluding certain HQLA held in subsidiaries.

2.Primarily includes U.S. Treasuries, U.S. agency mortgage-backed securities, sovereign bonds and investment grade corporate bonds.

~~Net Stable Funding Ratio~~

The Firm, MSBNA, MSPBNA, and ETB are required to maintain a minimum NSFR of 100%. The NSFR requires large banking organizations to maintain sufficiently stable sources of funding over a one-year time horizon.

~~As of September 30, 2021, the Firm, MSBNA, MSPBNA, and ETB are compliant with the 100% minimum NSFR requirement.~~

Funding Management

We manage our funding in a manner that reduces the risk of disruption to our operations. We pursue a strategy of diversification of secured and unsecured funding sources (by product, investor and region) and attempt to ensure that the tenor of our liabilities equals or exceeds the expected holding period of the assets being financed. Our goal is to achieve an optimal mix of durable secured and unsecured financing.

We fund our balance sheet on a global basis through diverse sources. These sources include our equity capital, borrowings, securities sold under agreements to repurchase, securities lending, deposits, letters of credit and lines of credit. We have

active financing programs for both standard and structured products targeting global investors and currencies.

Secured Financing

For a discussion of our secured financing activities, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Funding Management—Secured Financing” in the ~~2020~~2021 Form 10-K.


September 2022 Form 10-Q			19


Table of Contents
Management’s Discussion and Analysis

Collateralized Financing Transactions


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Securities purchased under agreements to resell and Securities borrowed	Securities purchased under agreements to resell and Securities borrowed	$	245,643	$	228,625	Securities purchased under agreements to resell and Securities borrowed	$	247,602	$	249,712
Securities sold under agreements to repurchase and Securities loaned	Securities sold under agreements to repurchase and Securities loaned	$	73,120	$	58,318	Securities sold under agreements to repurchase and Securities loaned	$	73,230	$	74,487
Securities received as collateral1	Securities received as collateral1	$	7,746	$	4,277	Securities received as collateral1	$	6,853	$	10,504


		Average Daily Balance Three Months Ended					Average Daily Balance Three Months Ended
$ in millions	$ in millions	September 30, 2021		December 31, 2020		$ in millions	September 30, 2022		December 31, 2021
Securities purchased under agreements to resell and Securities borrowed	Securities purchased under agreements to resell and Securities borrowed	$	225,388	$	195,376	Securities purchased under agreements to resell and Securities borrowed	$	261,256	$	236,327
Securities sold under agreements to repurchase and Securities loaned	Securities sold under agreements to repurchase and Securities loaned	$	69,974	$	54,528	Securities sold under agreements to repurchase and Securities loaned	$	73,487	$	69,565

1.Included within Trading assets in the balance ~~sheets.~~sheet.

See “Total Assets by Business Segment” herein for additional information on the assets shown in the previous table and Note 2 to the financial statements in the ~~2020~~2021 Form 10-K and Note 98 to the financial statements for additional information on collateralized financing transactions.

In addition to the collateralized financing transactions shown in the previous table, we engage in financing transactions collateralized by customer-owned securities, which are segregated in accordance with regulatory requirements. Receivables under these financing transactions, primarily margin loans, are included in Customer and other receivables in the balance ~~sheets,~~sheet, and payables under these financing transactions, primarily to prime brokerage customers, are included in Customer and other payables in the balance ~~sheets.~~sheet. Our risk exposure on these transactions is mitigated by collateral maintenance policies and the elements of our Liquidity Risk Management Framework.

Unsecured Financing

For a discussion of our unsecured financing activities, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Funding Management—Unsecured Financing” in the ~~2020~~2021 Form 10-K.


~~September 2021 Form 10-Q~~			19


~~Table of Contents~~
~~Management’s Discussion and Analysis~~

Deposits


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Savings and demand deposits:	Savings and demand deposits:					Savings and demand deposits:
Brokerage sweep deposits1	Brokerage sweep deposits1	$	273,137	$	232,071	Brokerage sweep deposits1	$	233,519	$	298,352
Savings and other	Savings and other	37,708		47,150		Savings and other	83,610		34,395
Total Savings and demand deposits	Total Savings and demand deposits	310,845		279,221		Total Savings and demand deposits	317,129		332,747
Time deposits	Time deposits	18,196		31,561		Time deposits	20,994		14,827
Total2	Total2	$	329,041	$	310,782	Total2	$	338,123	$	347,574

1.Amounts represent balances swept from client brokerage accounts.

2.Excludes approximately $9$8 billion and ~~$25~~$9 billion of off-balance sheet deposits at unaffiliated financial institutions as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. This client cash held by third parties is not reflected in our balance ~~sheets~~sheet and is not immediately available for liquidity purposes.

Deposits are primarily sourced from our Wealth Management clients and are considered to have stable, low-cost funding ~~characteristics. The increase in total~~

characteristics. Total deposits decreased in the current year period, ~~was~~ primarily driven by ~~increases~~a reduction in Brokerage sweep deposits, ~~and the onboarding in the first quarter of 2021 of approximately $20 billion of E*TRADE sweep deposits previously held off-balance sheet at unaffiliated financial institutions,~~ partially offset by ~~maturities of Time deposits and lower Savings and other~~higher savings deposits.

Borrowings by Remaining Maturity at September 30, ~~2021~~20221


$ in millions	$ in millions	Parent Company		Subsidiaries		Total		$ in millions	Parent Company		Subsidiaries		Total
Original maturities of one year or less	Original maturities of one year or less	$	—	$	4,825	$	4,825	Original maturities of one year or less	$	—	$	4,062	$	4,062
Original maturities greater than one year	Original maturities greater than one year							Original maturities greater than one year
2021		$	3,398	$	1,444	$	4,842
2022	2022	9,097		7,053		16,150		2022	$	3,151	$	1,198	$	4,349
2023	2023	17,272		5,623		22,895		2023	13,376		7,491		20,867
2024	2024	20,688		8,224		28,912		2024	19,224		8,798		28,022
2025	2025	16,754		6,579		23,333		2025	21,353		7,632		28,985
2026								2026	21,957		4,785		26,742
Thereafter	Thereafter	100,910		27,895		128,805		Thereafter	81,708		25,688		107,396
Total	Total	$	168,119	$	56,818	$	224,937	Total	$	160,769	$	55,592	$	216,361
Total Borrowings	Total Borrowings	$	168,119	$	61,643	$	229,762	Total Borrowings	$	160,769	$	59,654	$	220,423
Maturities over next 12 months2	Maturities over next 12 months2					$	13,899	Maturities over next 12 months2					$	18,755

1.Original maturity in the table is generally based on contractual final maturity. For borrowings with put options, remaining maturity represents the earliest put date.

2.Includes only borrowings with original maturities greater than one year.

Borrowings of ~~$230~~$220 billion as of September 30, ~~2021 increased slightly~~2022 were relatively unchanged when compared with ~~$217~~$233 billion at December 31, ~~2020.~~2021.

We believe that accessing debt investors through multiple distribution channels helps provide consistent access to the unsecured markets. In addition, the issuance of borrowings with original maturities greater than one year allows us to reduce reliance on short-term credit sensitive instruments. Borrowings with original maturities greater than one year are generally managed to achieve staggered maturities, thereby mitigating refinancing risk, and to maximize investor diversification through sales to global institutional and retail clients across regions, currencies and product types.

The availability and cost of financing to us can vary depending on market conditions, the volume of certain trading and lending activities, our credit ratings and the overall

availability of credit. We also engage in, and may continue to engage in, repurchases of our borrowings as part of our market-making activities.

For further information on Borrowings, see Note 1312 to the financial statements.

Credit Ratings

We rely on external sources to finance a significant portion of our daily operations. Our credit ratings are one of the factors in the cost and availability of financing and can have an impact on certain trading revenues, particularly in those businesses where longer-term counterparty performance is a key consideration, such as certain OTC derivative transactions. When determining credit ratings, rating agencies consider both company-specific and industry-wide factors. ~~These include regulatory or legislative changes, the macroeconomic environment and perceived levels of support, among other things.~~ See also “Risk Factors—Liquidity Risk” in the ~~2020~~2021 Form 10-K.


			20			September 2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

Parent Company ~~MSBNA~~ and ~~MSPBNA~~U.S. Bank Subsidiaries Issuer Ratings at October ~~29, 2021~~31, 2022


	Parent Company
	Short-Term Debt	Long-Term Debt	Rating Outlook
DBRS, Inc.	R-1 (middle)	A (high)	Stable
Fitch Ratings, Inc.	F1	A	~~Stable~~Positive
Moody’s Investors Service, Inc.	P-1	A1	Stable
Rating and Investment Information, Inc.	a-1	A	Stable
S&P Global Ratings	A-2	~~BBB+~~A-	~~Positive~~Stable


	MSBNA
	Short-Term Debt	Long-Term Debt	Rating Outlook
Fitch Ratings, Inc.	F1	A+	~~Stable~~Positive
Moody’s Investors Service, Inc.	P-1	Aa3	Stable
S&P Global Ratings	A-1	A+	Stable


	MSPBNA
	Short-Term Debt	Long-Term Debt	Rating Outlook
Moody’s Investors Service, Inc.	P-1	Aa3	Stable
S&P Global Ratings	A-1	A+	Stable

On May ~~24, 2021,~~17, 2022, S&P Global Ratings upgraded the issuer ratings of the Parent Company from BBB+ to A-, and revised the Parent Company outlook from ~~stable~~positive to ~~positive.~~stable.

Incremental Collateral or Terminating Payments

In connection with certain OTC derivatives and certain other agreements where we are a liquidity provider to certain financing vehicles associated with the Institutional Securities business segment, we may be required to provide additional collateral, immediately settle any outstanding liability balances with certain counterparties or pledge additional collateral to certain clearing organizations in the event of a future credit rating downgrade irrespective of whether we are in a net asset or net liability position. See Note 76 to the financial statements for additional information on OTC derivatives that contain such contingent features.


			20			~~September 2021 Form 10-Q~~


~~Table of Contents~~
~~Management’s Discussion and Analysis~~

While certain aspects of a credit rating downgrade are quantifiable pursuant to contractual provisions, the impact it would have on our business and results of operations in future periods is inherently uncertain and would depend on a number of interrelated factors, including, among other things, the magnitude of the downgrade, the rating relative to peers, the rating assigned by the relevant agency ~~pre-downgrade,~~before the downgrade, individual client behavior and future mitigating actions we might take. The liquidity impact of additional collateral requirements is included in our Liquidity Stress Tests.

Capital Management

We view capital as an important source of financial strength and actively manage our consolidated capital position based upon, among other things, business opportunities, risks, capital availability and rates of return together with internal capital policies, regulatory requirements and rating agency guidelines. In the future, we may expand or contract our capital base to address the changing needs of our businesses.

Common Stock Repurchases


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
in millions, except for per share data	in millions, except for per share data	2021		2020		2021		2020		in millions, except for per share data	2022		2021		2022		2021
Number of shares	Number of shares	36		—		98		29		Number of shares	30		36		93		98
Average price per share	Average price per share	$	99.44	$	—	$	88.60	$	46.01	Average price per share	$	85.79	$	99.44	$	87.50	$	88.60
Total	Total	$	3,557	$	—	$	8,631	$	1,347	Total	$	2,555	$	3,557	$	8,165	$	8,631

For additional information on our common stock repurchases, see “Liquidity and Capital Resources—Regulatory Requirements—Capital Plans, Stress Tests and the Stress Capital Buffer” herein and Note 1716 to the financial statements.

For a description of our capital plan, see “Liquidity and Capital Resources—Regulatory Requirements—Capital Plans, Stress Tests and the Stress Capital Buffer” herein.

Common Stock Dividend Announcement


Announcement date			October 14, ~~2021~~2022
Amount per share			$~~0.70~~0.775
Date to be paid			November 15, ~~2021~~2022
Shareholders of record as of			October ~~29, 2021~~31, 2022

For additional information on our common stock dividends, see “Liquidity and Capital Resources—Regulatory Requirements—Capital Plans, Stress Tests and the Stress Capital Buffer” herein.

For additional information on our common stock and information on our preferred stock, see Note 1716 to the financial statements.

~~Off-Balance Sheet Arrangements and Contractual Obligations~~

Off-Balance Sheet Arrangements

We enter into various off-balance sheet arrangements, including through unconsolidated SPEs and lending-related financial instruments (e.g., guarantees and commitments), primarily in connection with the Institutional Securities and Investment Management business segments.

We utilize SPEs primarily in connection with securitization activities. For information on our securitization activities, see Note 16 to the financial statements in the ~~2020~~2021 Form 10-K.

For information on our commitments, obligations under certain guarantee arrangements and indemnities, see Note 1413 to the financial statements. For a further discussion of our lending commitments, see “Quantitative and Qualitative Disclosures about Risk—Credit Risk—Loans and Lending Commitments” herein.

~~Contractual Obligations~~

For a discussion about our contractual obligations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Contractual Obligations” in the 2020 Form 10-K.

Regulatory Requirements

Regulatory Capital Framework

We are an FHC under the Bank Holding Company Act of 1956, as amended (“BHC Act”), and are subject to the regulation and oversight of the Federal Reserve. The Federal Reserve establishes capital requirements for us, including “well-capitalized” standards, and evaluates our compliance


September 2022 Form 10-Q			21


Table of Contents
Management’s Discussion and Analysis

with such capital requirements. ~~Regulatory~~The OCC establishes similar capital requirements ~~established by the Federal Reserve~~and standards for our U.S. Bank Subsidiaries. The regulatory capital requirements are largely based on the Basel III capital standards established by the Basel Committee and also implement certain provisions of the Dodd-Frank ~~Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). The OCC establishes similar capital requirements and standards for our U.S. Bank Subsidiaries.~~Act. For us to remain an FHC, we must remain well-capitalized in accordance with standards established by the Federal Reserve, and our U.S. Bank Subsidiaries must remain well-capitalized in accordance with standards established by the OCC. In addition, many of our regulated subsidiaries are subject to regulatory capital requirements, including regulated subsidiaries provisionally registered as swap dealers with the CFTC or conditionally registered as security-based swap dealers with the SEC or registered as broker-dealers or futures commission merchants. For additional information on regulatory capital requirements for our U.S. Bank Subsidiaries, as well as our subsidiaries that are Swap Entities, see Note 1615 to the financial statements.

Regulatory Capital Requirements

We are required to maintain minimum risk-based and leverage-based capital and TLAC ratios. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Regulatory Capital Requirements” in


~~September~~ the 2021 ~~Form 10-Q~~			21


~~Table of Contents~~
~~Management’s Discussion and Analysis~~

~~the 2020~~ Form 10-K. For additional information on TLAC, see “Total Loss-Absorbing Capacity, Long-Term Debt and Clean Holding Company Requirements” herein.

Risk-Based Regulatory Capital. ~~Minimum risk-based~~Risk-based capital ratio requirements apply to Common Equity Tier 1 capital, Tier 1 capital and Total capital (which includes Tier 2 capital)., each as a percentage of RWA, and consist of regulatory minimum required ratios plus our capital buffer requirement. Capital ~~standards~~requirements require certain adjustments to, and deductions from, capital for purposes of determining these ratios.

Risk-Based Regulatory Capital Ratio Requirements


				At September 30, 2021 and December 31, 2020		At September 30, 2022 and December 31, 2021
				Standardized	Advanced			Standardized	Advanced
Capital buffers	Capital buffers						Capital buffers
Capital conservation buffer	Capital conservation buffer			—	2.5%		Capital conservation buffer	—	2.5%
SCB1	SCB1			5.7%	N/A		SCB1	5.7%	N/A
G-SIB capital surcharge2	G-SIB capital surcharge2			3.0%			G-SIB capital surcharge2	3.0%
CCyB3	CCyB3			0%			CCyB3	0%
Capital buffer requirement4				8.7%	5.5%

				At September 30, 2021 and December 31, 2020
		Regulatory Minimum		Standardized	Advanced
Required ratios5
Common Equity Tier 1 capital ratio		4.5	%	13.2%	10.0%
Tier 1 capital ratio		6.0	%	14.7%	11.5%
Total capital ratio		8.0	%	16.7%	13.5%
Capital buffer requirement							Capital buffer requirement	8.7%	5.5%

1.For additional information on the SCB, see “Capital Plans, Stress Tests and the Stress Capital Buffer” herein and in the ~~2020~~2021 Form 10-K.

2.For a further discussion of the G-SIB capital surcharge, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Regulatory Requirements—G-SIB Capital Surcharge” in the ~~2020~~2021 Form 10-K.

3.The CCyB can be set up to 2.5%, but is currently set by the ~~U.S. banking agencies~~Federal Reserve at zero.

4.The capital buffer requirement represents the amount of Common Equity Tier 1 capital we must maintain above the minimum risk-based capital requirements in order to avoid restrictions on our ability to make capital distributions, including the payment of dividends and the repurchase of

stock, and to pay discretionary bonuses to executive officers. Our Standardized Approach capital buffer requirement is equal to the sum of our SCB, G-SIB capital surcharge and CCyB, and our Advanced Approach capital buffer requirement is equal to our 2.5% capital conservation buffer, G-SIB capital surcharge and CCyB.


	Regulatory Minimum		At September 30, 2022 and December 31, 2021
			Standardized	Advanced
Required ratios1
Common Equity Tier 1 capital ratio	4.5	%	13.2%	10.0%
Tier 1 capital ratio	6.0	%	14.7%	11.5%
Total capital ratio	8.0	%	16.7%	13.5%

5.1.Required ratios represent the regulatory minimum plus the capital buffer requirement.

Our risk-based capital ratios are computed under each of (i) the standardized approaches for calculating credit risk and market risk RWA (“Standardized Approach”) and (ii) the applicable advanced approaches for calculating credit risk, market risk and operational risk RWA (“Advanced Approach”). The credit risk RWA calculations between the two approaches differ in that the Standardized Approach requires calculation of RWA using prescribed risk weights and exposure methodologies, whereas the Advanced Approach utilizes models to calculate exposure amounts and risk w~~eights.~~weights. At September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the differences between the actual and required ratios were lower under the Standardized Approach.

Leverage-Based Regulatory Capital. ~~Minimum leverage-based~~Leverage-based capital requirements include a minimum Tier 1 leverage ratio ~~and an SLR. We are required to maintain an~~of 4%, a minimum SLR of ~~5%, inclusive of~~3% and an enhanced SLR capital buffer of at least 2%.

CECL Deferral. As of ~~September 30, 2021 and~~ December 31, ~~2020,~~2021, our risk-based and leverage-based capital amounts and ratios, as well as RWA, adjusted average assets and supplementary leverage exposure ~~are~~were calculated excluding the effect of the adoption of CECL based on our election to defer this effect over a five-year transition period ~~which~~that began on January 1, 2020. ~~For further information, see “Liquidity~~In 2022 the deferral impacts began to phase in at 25% per year and ~~Capital Resources—Regulatory Requirements—Regulatory Developments”~~will become fully phased-in beginning in ~~the2020 Form 10-K.~~2025.

Regulatory Capital Ratios


$ in millions	$ in millions	Required Ratio1		At September 30, 2021			At December 31, 2020			$ in millions	Required Ratio1		At September 30, 2022			At December 31, 2021
Risk-based capital— Standardized	Risk-based capital— Standardized									Risk-based capital— Standardized
Common Equity Tier 1 capital	Common Equity Tier 1 capital			$	75,785		$	78,650		Common Equity Tier 1 capital			$	67,933		$	75,742
Tier 1 capital	Tier 1 capital			83,435			88,079			Tier 1 capital			76,428			83,348
Total capital	Total capital			94,062			97,213			Total capital			86,139			93,166
Total RWA	Total RWA			473,020			453,106			Total RWA			457,911			471,921
Common Equity Tier 1 capital ratio	Common Equity Tier 1 capital ratio	13.2	%	16.0		%	17.4		%	Common Equity Tier 1 capital ratio	13.2	%	14.8		%	16.0		%
Tier 1 capital ratio	Tier 1 capital ratio	14.7	%	17.6		%	19.4		%	Tier 1 capital ratio	14.7	%	16.7		%	17.7		%
Total capital ratio	Total capital ratio	16.7	%	19.9		%	21.5		%	Total capital ratio	16.7	%	18.8		%	19.7		%

$ in millions
Required
Ratio1
At September 30,
2021 At December 31, 2020
Risk-based capital—
Advanced
Common Equity Tier 1 capital $ 75,785 $ 78,650
Tier 1 capital 83,435 88,079
Total capital 93,813 96,994
Total RWA 441,214 445,151
Common Equity Tier 1 capital ratio 10.0 % 17.2 % 17.7 %
Tier 1 capital ratio 11.5 % 18.9 % 19.8 %
Total capital ratio 13.5 % 21.3 % 21.8 %
$ in millions
Required
Ratio1
At September 30, 2021 At December 31, 2020
Leverage-based capital
Adjusted average assets2
$ 1,145,682 $ 1,053,510
Tier 1 leverage ratio 4.0 % 7.3 % 8.4 %
Supplementary leverage exposure3,4
$ 1,459,466 $ 1,192,506
SLR4
5.0 % 5.7 % 7.4 %


			22			September 2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis


$ in millions	Required Ratio1		At September 30, 2022			At December 31, 2021
Risk-based capital— Advanced
Common Equity Tier 1 capital			$	67,933		$	75,742
Tier 1 capital			76,428			83,348
Total capital			85,763			92,927
Total RWA			447,792			435,749
Common Equity Tier 1 capital ratio	10.0	%	15.2		%	17.4		%
Tier 1 capital ratio	11.5	%	17.1		%	19.1		%
Total capital ratio	13.5	%	19.2		%	21.3		%

$ in millions	Required Ratio1		At September 30, 2022			At December 31, 2021
Leverage-based capital
Adjusted average assets2			$	1,154,411		$	1,169,939
Tier 1 leverage ratio	4.0	%	6.6		%	7.1		%
Supplementary leverage exposure3			$	1,406,345		$	1,476,962
SLR	5.0	%	5.4		%	5.6		%

1.Required ratios are inclusive of any buffers applicable as of the date presented. Failure to maintain the buffers would result in restrictions on our ability to make capital distributions, including the payment of dividends and the repurchase of stock, and to pay discretionary bonuses to executive officers.

2.Adjusted average assets represents the denominator of the Tier 1 leverage ratio and is composed of the average daily balance of consolidated on-balance sheet assets for the quarters ending on the respective balance sheet dates, reduced by disallowed goodwill, intangible assets, investments in covered funds, defined benefit pension plan assets, after-tax gain on sale from assets sold into securitizations, investments in our own capital instruments, certain deferred tax assets and other capital deductions.

3.Supplementary leverage exposure is the sum of Adjusted average assets used in the Tier 1 leverage ratio and other adjustments, primarily: (i) for derivatives, potential future exposure and the effective notional principal amount of sold credit protection offset by qualifying purchased credit protection; (ii) the counterparty credit risk for repo-style transactions; and (iii) the credit equivalent amount for off-balance sheet exposures.

4.Our SLR and Supplementary leverage exposure as of December 31, 2020 reflect the exclusion of U.S. Treasury securities and deposits at Federal Reserve Banks based on a Federal Reserve interim final rule that was in effect until March 31, 2021. As of December 31, 2020, the impact of the interim final rule on our SLR was an increase of 80 bps. For further information, see “Liquidity and Capital Resources—Regulatory Requirements—Regulatory Developments and Other Matters” herein and “Liquidity and Capital Resources—Regulatory Requirements—Regulatory Developments" in the 2020 Form 10-K.


			22			~~September 2021 Form 10-Q~~


~~Table of Contents~~
~~Management’s Discussion and Analysis~~

Regulatory Capital


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		Change		$ in millions	At September 30, 2022		At December 31, 2021		Change
Common Equity Tier 1 capital	Common Equity Tier 1 capital							Common Equity Tier 1 capital
Common stock and surplus	Common stock and surplus	$	13,755	$	15,799	$	(2,044)	Common stock and surplus	$	3,964	$	11,361	$	(7,397)
Retained earnings	Retained earnings	87,356		78,978		8,378		Retained earnings	94,240		89,679		4,561
AOCI	AOCI	(2,701)		(1,962)		(739)		AOCI	(5,758)		(3,102)		(2,656)
Regulatory adjustments and deductions:	Regulatory adjustments and deductions:							Regulatory adjustments and deductions:
Net goodwill	Net goodwill	(16,678)		(11,527)		(5,151)		Net goodwill	(16,456)		(16,641)		185
Net intangible assets	Net intangible assets	(6,878)		(4,165)		(2,713)		Net intangible assets	(6,290)		(6,704)		414
Other adjustments and deductions1	Other adjustments and deductions1	931		1,527		(596)		Other adjustments and deductions1	(1,767)		1,149		(2,916)
Total Common Equity Tier 1 capital	Total Common Equity Tier 1 capital	$	75,785	$	78,650	$	(2,865)	Total Common Equity Tier 1 capital	$	67,933	$	75,742	$	(7,809)
Additional Tier 1 capital	Additional Tier 1 capital							Additional Tier 1 capital
Preferred stock	Preferred stock	$	7,750	$	9,250	$	(1,500)	Preferred stock	$	8,750	$	7,750	$	1,000
Noncontrolling interests	Noncontrolling interests	534		619		(85)		Noncontrolling interests	542		562		(20)
Additional Tier 1 capital	Additional Tier 1 capital	$	8,284	$	9,869	$	(1,585)	Additional Tier 1 capital	$	9,292	$	8,312	$	980
Deduction for investments in covered funds	Deduction for investments in covered funds	(634)		(440)		(194)		Deduction for investments in covered funds	(797)		(706)		(91)
Total Tier 1 capital	Total Tier 1 capital	$	83,435	$	88,079	$	(4,644)	Total Tier 1 capital	$	76,428	$	83,348	$	(6,920)
Standardized Tier 2 capital	Standardized Tier 2 capital							Standardized Tier 2 capital
Subordinated debt	Subordinated debt	$	9,522	$	7,737	$	1,785	Subordinated debt	$	8,161	$	8,609	$	(448)

Eligible ACL	Eligible ACL	1,182		1,265		(83)		Eligible ACL	1,505		1,155		350
Other adjustments and deductions	Other adjustments and deductions	(77)		132		(209)		Other adjustments and deductions	45		54		(9)
Total Standardized Tier 2 capital	Total Standardized Tier 2 capital	$	10,627	$	9,134	$	1,493	Total Standardized Tier 2 capital	$	9,711	$	9,818	$	(107)
Total Standardized capital	Total Standardized capital	$	94,062	$	97,213	$	(3,151)	Total Standardized capital	$	86,139	$	93,166	$	(7,027)
Advanced Tier 2 capital	Advanced Tier 2 capital							Advanced Tier 2 capital
Subordinated debt	Subordinated debt	$	9,522	$	7,737	$	1,785	Subordinated debt	$	8,161	$	8,609	$	(448)

Eligible credit reserves	Eligible credit reserves	933		1,046		(113)		Eligible credit reserves	1,129		916		213
Other adjustments and deductions	Other adjustments and deductions	(77)		132		(209)		Other adjustments and deductions	45		54		(9)
Total Advanced Tier 2 capital	Total Advanced Tier 2 capital	$	10,378	$	8,915	$	1,463	Total Advanced Tier 2 capital	$	9,335	$	9,579	$	(244)
Total Advanced capital	Total Advanced capital	$	93,813	$	96,994	$	(3,181)	Total Advanced capital	$	85,763	$	92,927	$	(7,164)

1.Other adjustments and deductions used in the calculation of Common Equity Tier 1 capital primarily includes net after-tax DVA, the credit spread premium over risk-free rate for derivative liabilities, defined benefit pension plan assets, after-tax gain on sale from assets sold into securitizations, investments in our own capital instruments and certain deferred tax assets.

~~RWA Rollforward~~
Nine Months Ended
September 30, 2021
$ in millions Standardized Advanced
Credit risk RWA
Balance at December 31, 2020 $ 387,066 $ 284,930
Change related to the following items:
Derivatives 10,529 (14,533)
Securities financing transactions 5,914 947
Investment securities (2,563) 357
Commitments, guarantees and loans 639 4,260
Equity investments 2,117 2,196
Other credit risk1
6,884 6,395
Total change in credit risk RWA $ 23,520 $ (378)
Balance at September 30, 2021 $ 410,586 $ 284,552
Market risk RWA
Balance at December 31, 2020 $ 66,040 $ 66,040
Change related to the following items:
Regulatory VaR (6,747) (6,747)
Regulatory stressed VaR (1,908) (1,908)
Incremental risk charge 3,032 3,032
Comprehensive risk measure (125) (125)
Specific risk 2,142 2,142
Total change in market risk RWA $ (3,606) $ (3,606)
Balance at September 30, 2021 $ 62,434 $ 62,434
Operational risk RWA
Balance at December 31, 2020 N/A $ 94,181
Change in operational risk RWA N/A 47
Balance at September 30, 2021 N/A $ 94,228
Total RWA $ 473,020 $ 441,214

~~Regulatory VaR—VaR for regulatory capital requirements~~

1.~~Amounts reflect assets not in a defined category, non-material portfolios of exposures and unsettled transactions.~~

Credit risk RWA in the current year period increased under the Standardized Approach, while it is relatively unchanged under the Advanced Approach. Under the Standardized Approach, the increase was primarily from Derivatives and Securities financing transactions driven by increased exposure. Under the Advanced Approach, decreased CVA in Derivatives due to lower credit spread volatility was offset by increased exposure in event lending within the Institutional Securities business segment and other increases.

Market risk RWA decreased in the current year period under both the Standardized and Advanced Approaches primarily due to a decrease in Regulatory VaR mainly as a result of reduced volatility as the peak COVID-19 market stress in 2020 is no longer included in VaR. This was partially offset by an increase in the Incremental risk charge and non-securitization charges due to increased exposure.

~~Total Loss-Absorbing Capacity, Long-Term Debt and Clean Holding Company Requirements~~

The Federal Reserve has established external TLAC, long-term debt (“LTD”) and clean holding company requirements for top-tier BHCs of U.S. G-SIBs (“covered BHCs”), including the Parent Company. These requirements are designed to ensure that covered BHCs will have enough loss-absorbing resources at the point of failure to be recapitalized through the conversion of eligible LTD to equity or otherwise


September ~~2021~~2022 Form 10-Q			23


Table of Contents
Management’s Discussion and Analysis

RWA Rollforward


	Nine Months Ended September 30, 2022
$ in millions	Standardized		Advanced
Credit risk RWA
Balance at December 31, 2021	$	416,502	$	285,247
Change related to the following items:
Derivatives	(6,624)		10,507
Securities financing transactions	(8,841)		1,838
Investment securities	(2,842)		(7,456)
Commitments, guarantees and loans	11,446		5,704
Equity investments	(4,054)		(4,256)
Other credit risk	2,817		4,125
Total change in credit risk RWA	$	(8,098)	$	10,462
Balance at September 30, 2022	$	408,404	$	295,709
Market risk RWA
Balance at December 31, 2021	$	55,419	$	55,419
Change related to the following items:
Regulatory VaR	3,434		3,434
Regulatory stressed VaR	242		242
Incremental risk charge	(5,119)		(5,119)
Comprehensive risk measure	(391)		(436)
Specific risk	(4,078)		(4,078)
Total change in market risk RWA	$	(5,912)	$	(5,957)
Balance at September 30, 2022	$	49,507	$	49,462
Operational risk RWA
Balance at December 31, 2021	N/A		$	95,083
Change in operational risk RWA	N/A		7,538
Balance at September 30, 2022	N/A		$	102,621
Total RWA	$	457,911	$	447,792

Regulatory VaR—VaR for regulatory capital requirements

In the current year period, Credit risk RWA decreased under the Standardized Approach, but increased under the Advanced Approach. Under the Standardized Approach, the decrease was primarily driven by lower equity and credit Derivatives as well as lower Securities financing transactions from margin lending, partially offset by lending growth. Under the Advanced Approach, the increase was primarily driven by higher commodities and foreign exchange Derivatives exposures as well as lending growth, partially offset by a decrease in Investment securities.

Market risk RWA decreased in the current year period under both the Standardized and Advanced Approaches primarily driven by lower Incremental Risk Charge driven by exposure reduction in the Fixed Income business and lower Specific risk standardized charges and securitizations, partially offset by higher Regulatory VaR.

The increase in Operational risk RWA in the current year period reflects higher legal expenses and execution-related losses.

Total Loss-Absorbing Capacity, Long-Term Debt and Clean Holding Company Requirements

designed to ensure that covered BHCs will have enough loss-absorbing resources at the point of failure to be recapitalized through the conversion of eligible LTD to equity or otherwise by imposing losses on eligible LTD or other forms of TLAC where an SPOE resolution strategy is used.

Required and Actual TLAC and Eligible LTD Ratios


						Actual Amount/Ratio									Actual Amount/Ratio
$ in millions	$ in millions	Regulatory Minimum		Required Ratio1		At September 30, 2021			At December 31, 2020			$ in millions	Regulatory Minimum		Required Ratio1		At September 30, 2022			At December 31, 2021
External TLAC2	External TLAC2					$	234,639		$	216,129		External TLAC2					$	235,864		$	235,681
External TLAC as a % of RWA	External TLAC as a % of RWA	18.0	%	21.5	%	49.6		%	47.7		%	External TLAC as a % of RWA	18.0	%	21.5	%	51.5		%	49.9		%
External TLAC as a % of leverage exposure	External TLAC as a % of leverage exposure	7.5	%	9.5	%	16.1		%	18.1		%	External TLAC as a % of leverage exposure	7.5	%	9.5	%	16.8		%	16.0		%
Eligible LTD3	Eligible LTD3					$	142,978		$	120,561		Eligible LTD3					$	149,694		$	144,659
Eligible LTD as a % of RWA	Eligible LTD as a % of RWA	9.0	%	9.0	%	30.2		%	26.6		%	Eligible LTD as a % of RWA	9.0	%	9.0	%	32.7		%	30.7		%
Eligible LTD as a % of leverage exposure	Eligible LTD as a % of leverage exposure	4.5	%	4.5	%	9.8		%	10.1		%	Eligible LTD as a % of leverage exposure	4.5	%	4.5	%	10.6		%	9.8		%

1.Required ratios are inclusive of applicable buffers. The final rule imposes TLAC buffer requirements on top of both the risk-based and leverage exposure-based external TLAC minimum requirements. The risk-based TLAC buffer is equal to the sum of 2.5%, our Method 1 G-SIB surcharge and the CCyB, if any, as a percentage of total RWA. The leverage exposure-based TLAC buffer is equal to 2% of our total leverage exposure. Failure to maintain the buffers would result in restrictions on our ability to make capital distributions, including the payment of dividends and the repurchase of stock, and to pay discretionary bonuses to executive officers.

2.External TLAC consists of Common Equity Tier 1 capital and Additional Tier 1 capital (each excluding any noncontrolling minority interests), as well as eligible LTD.

3.Consists of TLAC-eligible LTD reduced by 50% for amounts of unpaid principal due to be paid in more than one year but less than two years from each respective balance sheet date.

We are in compliance with all TLAC requirements as of September 30, ~~2021~~2022 and December 31, ~~2020.~~ 2021.

For a further discussion of TLAC and related requirements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Regulatory Requirements—~~Regulatory Capital Requirements—~~Total Loss-Absorbing Capacity, Long-Term Debt and Clean Holding Company Requirements” in the ~~2020~~2021 Form 10-K.

Capital Plans, Stress Tests and the Stress Capital Buffer

~~Pursuant to the Dodd-Frank Act, the~~The Federal Reserve has ~~adopted~~ capital planning and stress test requirements for large BHCs, which form part of the Federal Reserve’s annual CCAR framework.

We must submit, on at least an annual basis, a capital plan to the Federal Reserve, taking into account the results of separate annual stress tests designed by us and the Federal Reserve, so that the Federal Reserve may assess our systems and processes that incorporate forward-looking projections of revenues and losses to monitor and maintain our internal capital adequacy. As banks with less than $250 billion of total assets, our U.S. Bank Subsidiaries are not subject to company-run stress test regulatory requirements.

For the ~~2021~~2022 capital planning and stress test cycle, we submitted our capital plan and company-run stress test results to the Federal Reserve on April 5, ~~2021.~~2022. On June ~~24, 2021,~~23, 2022, the Federal Reserve published summary results of its supervisory stress tests of each large BHC, ~~and following~~in which the projected decline in our Common Equity Tier 1 ratio in the severely adverse scenario improved from the prior annual supervisory stress test, from 4.7% to 4.6%. Following the publication of the supervisory stress test results, weand as a


			24			September 2022 Form 10-Q


Table of Contents
Management’s Discussion and Analysis

result of the increase in our common stock dividend and the resulting dividend add-on, we announced that our SCB will ~~remain at 5.7%~~be 5.8% from October 1, ~~2021~~2022 through September 30, ~~2022.~~2023. Together with other features of the regulatory capital framework, this SCB results in an aggregate Standardized Approach Common Equity Tier 1 ~~required~~ ratio of ~~13.2%~~13.3%. Generally, our SCB is determined annually based on the results of the supervisory stress test.

Additionally, under the modified capital action restrictions announced previously by the Federal Reserve, in the first two quarters of 2021 large BHCs were permitted to pay common stock dividends, provided they did not increase the amount of common stock dividends to be larger than the level paid in the second quarter of 2020, and make share repurchases that, in the aggregate, did not exceed an amount equal to the average of the firm’s net income for the four preceding calendar quarters; make share repurchases that equal the amount of share issuances related to expensed employee compensation; and redeem and make scheduled payments on additional Tier 1 and Tier 2 capital instruments. The Federal Reserve subsequently announced that the restrictions described above would end on June 30, 2021 for all firms whose capital levels are above minimum risk-based requirements in the Federal Reserve’s annual supervisory stress test.

Based on the results of the 2021 supervisory stress tests, the temporary capital action supervisory restrictions previously applicable to us ended on June 30, 2021. Beginning July 1, 2021, the Firm is permitted, in its discretion, to adjust its capital distributions without seeking prior approval from the Federal Reserve, provided that it remains in compliance with all applicable regulatory capital requirements, including the SCB. We also disclosed a summary of the results of our company-run stress tests on our Investor Relations website and ~~announced that our Board of Directors authorized the increase of~~increased our quarterly common stock dividend to ~~$0.70~~$0.775 per share from ~~$0.35 per share~~$0.70, beginning with the common stock dividend announced on July ~~15, 2021, and authorized the~~14, 2022. Additionally, our Board of Directors approved a new multi-year repurchase authorization of up to ~~$12~~$20 billion of outstanding common stock, ~~from July 1, 2021 through June 30,~~without a set expiration date, beginning in the third quarter of 2022, which will be exercised from time to time as conditions ~~warrant, which supersedes the previous common stock repurchase authorization.~~warrant.

For additional information, ~~on our capital planning and stress tests, including the SCB,~~ see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Regulatory Requirements—Capital Plans, Stress Tests and the Stress Capital Buffer” ~~and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital Action Supervisory Restrictions”~~ in the ~~2020~~2021 Form 10-K.

Attribution of Average Common Equity According to the Required Capital Framework

Our required capital (“Required Capital”) estimation is based on the Required Capital framework, an internal capital adequacy measure. Common equity attribution to the business segments is based on capital usage calculated under the


			24			~~September 2021 Form 10-Q~~


~~Table of Contents~~
~~Management’s Discussion and Analysis~~

Required Capital framework, as well as each business segment’s relative contribution to our total Required Capital.

The Required Capital framework is a risk-based and leverage-based capital measure, which is compared with our regulatory capital to ensure that we maintain an amount of going concern capital after absorbing potential losses from stress events, where applicable, at a point in time. The amount of capital allocated to the business segments is generally set at the beginning of each year and remains fixed throughout the year until the next annual reset unless a significant business change occurs (e.g., acquisition or disposition). We define the difference between our total average common equity and the sum of the average common equity amounts allocated to our business segments as Parent common equity. We generally hold Parent common equity for prospective regulatory requirements, organic growth, potential future acquisitions and other capital needs.

Average Common Equity Attribution under the Required Capital Framework1


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in billions	$ in billions	2021		2020		2021		2020		$ in billions	2022		2021		2022		2021
Institutional Securities	Institutional Securities	$	43.5	$	42.8	$	43.5	$	42.8	Institutional Securities	$	48.8	$	43.5	$	48.8	$	43.5
Wealth Management2		28.6		18.2		28.6		18.2
Investment Management3		10.7		2.6		8.2		2.6
Wealth Management										Wealth Management	31.0		28.6		31.0		28.6
Investment Management2										Investment Management2	10.6		10.7		10.6		8.2
Parent	Parent	15.8		15.1		16.6		13.3		Parent	2.5		15.8		4.3		16.6
Total	Total	$	98.6	$	78.7	$	96.9	$	76.9	Total	$	92.9	$	98.6	$	94.7	$	96.9

1.The attribution of average common equity to the business segments is a non-GAAP financial measure. See “Selected Non-GAAP Financial Information” herein.

2.~~The total average common equity and the allocation to the Wealth Management business segment in 2021 reflect the E*TRADE acquisition on October 2, 2020.~~

3. The total average common equity and the allocation to the Investment Management business segment in 2021 reflect the Eaton Vance acquisition on March 1, 2021.

~~The Firm has made updates~~We continue to ~~its~~evaluate our Required Capital framework ~~for 2021 and continues~~with respect to ~~evaluate~~ the impact of evolving regulatory requirements, as appropriate.

Resolution and Recovery Planning

~~Pursuant to the Dodd-Frank Act, we~~We are required to ~~periodically~~ submit once every two years to the Federal Reserve and the FDIC a resolution plan that describes our strategy for a rapid and orderly resolution under the U.S. Bankruptcy Code in the event of our material financial distress or failure. We submitted our 2021 targeted resolution plan on June 30, 2021.On July 1, 2022, the Federal Reserve and the FDIC announced that they have extended the period for issuing feedback for the U.S. G-SIBs’ 2021 resolution plans to allow the agencies additional time to analyze them.

As described in our most recent resolution plan, our preferred resolution strategy is an SPOE strategy. In line with our SPOE strategy, the Parent Company has transferred, and has agreed to transfer on an ongoing basis, certain assets to its wholly owned, direct subsidiary Morgan Stanley Holdings LLC (the “Funding IHC”). In addition, the Parent Company has entered into an amended and restated support agreement with its material entities (including the Funding IHC) and certain other subsidiaries. In the event of a resolution scenario, the Parent Company would be obligated to contribute all of its Contributable Assets to our material entities and/or the Funding IHC. The Funding IHC would be

obligated to provide capital and liquidity, as applicable, to our material entities. The combined implication of the SPOE resolution strategy and the requirement to maintain certain levels of TLAC is that losses in resolution would be imposed on the holders of eligible long-term debt and other forms of eligible TLAC issued by the Parent Company before any losses are imposed on creditors of our material entities and without requiring taxpayer or government financial support.

For more information about resolution and recovery planning requirements and our activities in these areas, including the implications of such activities in a resolution scenario, see “Business—Supervision and Regulation—Financial Holding Company—Resolution and Recovery Planning,” “Risk Factors—Legal, Regulatory and Compliance Risk” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital ~~Resources—Regulatory Requirements—Resolution and Recovery Planning” in the 2020 Form 10-K.~~

~~Regulatory Developments and Other Matters~~

~~Planned Adoption of the Standardized Approach for Counterparty Credit Risk (“SA-CCR”)~~

The U.S. banking agencies’ final rule to implement SA-CCR requires compliance by January 1, 2022 for Advanced Approaches banking organizations, such as the Parent Company. We intend to early adopt SA-CCR under the final rule in the fourth quarter of 2021. SA-CCR replaces the current exposure method used to measure derivatives counterparty exposure on the Standardized Approach RWA and Supplementary leverage exposure calculations in the regulatory capital framework. In the absence of further mitigation, the adoption of SA-CCR could increase our RWA under the Standardized Approach by $35 billion to $45 billion and reduce our Standardized Common Equity Tier 1 capital ratio by approximately 120 basis points. This preliminary estimate of the initial impact of adopting SA-CCR is subject to risks and uncertainties, incl~~uding regarding portfolio composition and mitigation efforts as of the adoption date, that may cause the actual impact~~ ~~to differ materially and should not be taken as a projection of what our capital ratios and RWA will be in future periods.~~

~~Swap Dealer and Security-based Swap Dealer Regulations~~

CFTC rules establishing capital requirements for swap dealers not subject to regulation by a prudential regulator required compliance by October 6, 2021. A number of our U.S. and non-U.S. CFTC-regulated swap dealers have been required to comply with these rules since such date. Additionally, the compliance date for SEC rules requiring the registration of security-based swap dealers was November 1, 2021. Compliance by our security-based swap dealers with associated SEC requirements, including but not limited to those related to capital and business conduct standards, is now also required. Each entity subject to these rules was compliant with the applicable requirements as of the compliance dates.


September ~~2021~~2022 Form 10-Q			25


Table of Contents
Management’s Discussion and Analysis

~~Expiration of~~Resources—Regulatory Requirements—Resolution and Recovery Planning” in the ~~Supplementary Leverage Ratio Interim Final~~2021 Form 10-K.

Regulatory Developments and Other Matters

Covered Funds Restrictions under the Volcker Rule

~~On March 19, 2021,~~The Volcker Rule prohibits certain investments and relationships by banking entities with covered funds, as defined in the ~~Federal Reserve announced that~~Volcker Rule. We requested and received additional time until July 21, 2023 to conform investments in certain legacy illiquid funds. During the ~~temporary change~~current quarter, we have continued our efforts to conform these illiquid funds by July 21, 2023, including but not limited to assessing alternative conformance options permitted under the ~~SLR for bank holding companies, which allowed for the exclusion of U.S. Treasury securities and deposits at Federal Reserve Banks, would expire as scheduled on March 31, 2021.~~Volcker Rule. As a result, ~~this exclusion was eliminated beginning~~as of September 30, 2022, we continued to estimate the fair value of our investments in such covered funds using the net asset value per share (“NAV”), which approximated $300 million. For additional information on the Volcker Rule, see “Business—Supervision and Regulation—Financial Holding Company—Activities Restrictions Under the Volcker Rule” in the ~~second quarter of 2021.~~2021 Form 10-K. For ~~a summary of~~information on investments measured at NAV, see Note 4 to the ~~impact of this interim final rule, see “Regulatory Capital Requirements” herein.~~financial statements.

~~Planned~~ Replacement of London Interbank Offered Rate and Replacement or Reform of Other Interest ~~Rates~~Rate Benchmarks

Central banks around the world, including the Federal Reserve, have commissioned committees and working groups of market participants and official sector representatives to replace LIBOR and replace or reform other interest rate benchmarks (collectively, the “IBORs”). ~~On March 5, 2021, ICE Benchmark Administration, which administers LIBOR publication, announced that it~~A transition away from use of the IBORs to alternative rates and other potential interest rate benchmark reforms is underway and will ~~cease~~continue through the cessation dates.

The publication of most non-U.S. dollar LIBOR rates ceased as of the end of December ~~2021, except for~~2021. The publication of certain non-U.S. dollar LIBOR rates on the ~~publication~~basis of a “synthetic” methodology (known as “synthetic LIBOR”) will continue at least until ~~June 30, 2023~~the end of ~~the most widely used~~2022 and certain U.S. dollar LIBOR tenors ~~and the U.K. Financial Conduct Authority (“FCA”), which regulates LIBOR publication, announced that it would not compel panel banks~~are expected to ~~submit to LIBOR beyond those dates.~~

Subsequently, the International Swaps and Derivatives Association (“ISDA”) confirmed that the FCA’s announcement constituted an “Index Cessation Event” as defined in the IBOR Fallbacks Supplement, which amended ISDA’s interest rate definitions to include robust fallbacks for derivatives linked to LIBOR and certain other interest rate benchmarks, and the ISDA 2020 IBOR Fallbacks Protocol, which incorporates the fallbacks into legacy non-cleared derivatives entered into between Protocol adherents. The FCA’s announcement therefore triggered a fixing of the ISDA fallback spread adjustments for all LIBOR benchmarks,continue to be effective when the contractual fallbacks are implemented. The Alternative Reference Rates Committee (“ARRC”) also confirmed that the ICE Benchmark Administration and FCA announcements also constituted a “Benchmark Transition Event” with respect to all U.S. dollar LIBOR settings pursuant to the ARRC’s fallback recommendations for new issuances or originations of certain cash products.

~~Separately,~~published until June 30, 2023. On March 15, 2022 the U.S. ~~banking agencies and the FCA have been encouraging banks to cease entering into new contracts referencing LIBOR no later than December 31, 2021.~~

~~Further, New York State has~~ enacted federal legislation that is intended to minimize legal and economic uncertainty following U.S. dollar LIBOR’s cessation by replacing LIBOR references in certain contracts ~~governed by New York law~~under certain circumstances with a ~~benchmark based on the Secured Overnight Financing Rate, including any~~SOFR-based rate to be established in a Federal Reserve rule that incorporates a spread adjustment ~~recommended by~~specified in the statute. On July 19, 2022, the Federal Reserve issued a proposed rule to implement the federal legislation. While some states have already adopted LIBOR legislation, the federal legislation expressly preempts any provision of any state or local law, statute, rule, regulation or standard.

As of September 30, 2022, our LIBOR-referenced contracts were primarily concentrated in derivative contracts and to a lesser extent, loans, floating rate notes, preferred shares, securitizations and mortgages. A significant majority of our

~~Federal Reserve,~~derivative contracts, and a majority of our non-derivative contracts contain fallback provisions or otherwise have an expected path that will allow for the ~~Federal Reserve Bank~~transition to an alternative reference rate upon the cessation of ~~New York or~~ the ~~ARRC.~~applicable LIBOR rate.

WeWhile we have made substantial progress in the transition away from the IBORs, we nonetheless currently remain a party to a significant number of U.S. dollar LIBOR-linked ~~contracts, many of which extend beyond 2021 and, in~~contracts. For the ~~case~~limited number of U.S. dollar ~~LIBOR,~~LIBOR-linked contracts without a current market standard fallback, or for which the federal legislation does not apply, we are actively developing appropriate transition plans in light of the planned June 30, 2023 ~~composed of derivatives, securitizations, floating rate notes, loans and mortgages and we continue to execute against our Firm-wide IBOR transition plan to promote~~cessation date for the ~~transition to alternative reference rates in accordance with industry transition timelines.~~ remaining U.S. dollar LIBOR tenors.

Our IBOR transition plan is overseen by a global steering committee, with senior management ~~oversight. Firm entities engaged in derivative activities have adhered~~oversight, and we continue to ~~the ISDA 2020~~execute against our Firm-wide IBOR ~~Fallbacks Protocol. As noted above, the Protocol is designed~~transition plan to ~~facilitate the transition of covered derivatives contracts to alternative reference rates. The New York State legislation also provides safeguards that help facilitate~~complete the transition to alternative reference ~~rates for certain U.S. dollar LIBOR contracts, although additional regulatory clarity may be needed in some instances.~~rates.

See also ~~“Risk Factors—Risk Management” in the 2020 Form 10-K for a further discussion of risks related to the planned replacement of the IBORs and/or reform of interest rate benchmarks.~~

~~For a further discussion of regulatory developments and other matters, see~~ “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Regulatory Requirements—Regulatory ~~Developments”~~Developments and ~~“Management’s Discussion~~Other Matters” and ~~Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Regulatory Requirements—Other Matters,” respectively,~~“Risk Factors—Risk Management” in the ~~2020~~2021 Form ~~10-K.~~10-K for a further discussion of the replacement of the IBORs and/or reform of other interest rate benchmarks and related risks.


			26			September ~~2021~~2022 Form 10-Q


Table of Contents

Quantitative and Qualitative Disclosures about Risk

Management believes effective risk management is vital to the success of our business activities. For a discussion of our Enterprise Risk Management framework and risk management functions, see “Quantitative and Qualitative Disclosures about Risk—Risk Management” in the ~~2020~~2021 Form 10-K.

Market Risk

Market risk refers to the risk that a change in the level of one or more market prices, rates, spreads, indices, volatilities, correlations or other market factors, such as market liquidity, will result in losses for a position or portfolio. Generally, we incur market risk as a result of trading, investing and client facilitation activities, principally within the Institutional Securities business segment where the substantial majority of our VaR for market risk exposures is generated. In addition, we incur non-trading market risk, principally within the Wealth Management and Investment Management business segments. The Wealth Management business segment primarily incurs non-trading market risk (including interest rate risk) from lending and deposit-taking activities. The Investment Management business segment primarily incurs non-trading market risk from capital investments in its funds. For a further discussion of market risk, see “Quantitative and Qualitative Disclosures about Risk—Market Risk” in the ~~2020~~2021 Form 10-K.

Trading Risks

We ~~are exposed~~have exposures to a wide range of risks related to interest rates and credit spreads, equity prices, foreign exchange rates and commodity prices ~~and~~as well as the associated implied volatilities, correlations and spreads ~~related to~~of the global markets in which we conduct our trading activities.

The statistical technique known as VaR is one of the tools we use to measure, monitor and review the market risk exposures of our trading portfolios.

For information regarding our primary risk exposures and market risk management, VaR methodology, assumptions and limitations, see “Quantitative and Qualitative Disclosures about Risk—Market Risk—Trading Risks” in the ~~2020~~2021 Form 10-K.

95%/One-Day Management VaR for the Trading Portfolio


		Three Months Ended									Three Months Ended
		September 30, 2021									September 30, 2022
$ in millions	$ in millions	Period End		Average		High2		Low2		$ in millions	Period End		Average		High1		Low1
Interest rate and credit spread	Interest rate and credit spread	$	27	$	28	$	33	$	23	Interest rate and credit spread	$	36	$	34	$	38	$	30
Equity price	Equity price	28		24		32		20		Equity price	22		24		31		19
Foreign exchange rate	Foreign exchange rate	7		8		11		6		Foreign exchange rate	9		8		12		5
Commodity price	Commodity price	19		12		19		9		Commodity price	26		30		36		24
Less: Diversification benefit1		(34)		(29)		N/A
Less: Diversification benefit2										Less: Diversification benefit2	(37)		(39)		N/A
Primary Risk Categories	Primary Risk Categories	$	47	$	43	$	53	$	38	Primary Risk Categories	$	56	$	57	$	65	$	49
Credit Portfolio	Credit Portfolio	12		12		13		11		Credit Portfolio	16		16		18		15
Less: Diversification benefit1		(11)		(10)		N/A
Less: Diversification benefit2										Less: Diversification benefit2	(11)		(12)		N/A
Total Management VaR	Total Management VaR	$	48	$	45	$	56	$	41	Total Management VaR	$	61	$	61	$	74	$	50


		Three Months Ended									Three Months Ended
		June 30, 2021									June 30, 2022
$ in millions	$ in millions	Period End		Average		High2		Low2		$ in millions	Period End		Average		High1		Low1
Interest rate and credit spread	Interest rate and credit spread	$	29	$	31	$	39	$	28	Interest rate and credit spread	$	33	$	30	$	43	$	24
Equity price	Equity price	21		24		32		19		Equity price	24		24		28		19
Foreign exchange rate	Foreign exchange rate	8		8		15		5		Foreign exchange rate	6		7		15		4
Commodity price	Commodity price	10		11		16		8		Commodity price	24		31		40		24
Less: Diversification benefit1		(28)		(29)		N/A
Less: Diversification benefit2										Less: Diversification benefit2	(42)		(48)		N/A
Primary Risk Categories	Primary Risk Categories	$	40	$	45	$	58	$	37	Primary Risk Categories	$	45	$	44	$	57	$	36
Credit Portfolio	Credit Portfolio	12		13		17		11		Credit Portfolio	15		15		18		14
Less: Diversification benefit1		(9)		(10)		N/A
Less: Diversification benefit2										Less: Diversification benefit2	(10)		(13)		N/A
Total Management VaR	Total Management VaR	$	43	$	48	$	60	$	41	Total Management VaR	$	50	$	46	$	57	$	40

1.The high and low VaR values for the Total Management VaR and each of the component VaRs might have occurred on different days during the quarter, and, therefore, the diversification benefit is not an applicable measure.

2.Diversification benefit equals the difference between the total VaR and the sum of the component VaRs. This benefit arises because the simulated one-day losses for each of the components occur on different days; similar diversification benefits also are taken into account within each component.

2.The high and low VaR values for the total Management VaR and each of the component VaRs might have occurred on different days during the quarter, and therefore, the diversification benefit is not an applicable measure.

Average ~~total~~Total Management VaR and average Management VaR for the Primary Risk Categories ~~were relatively unchanged~~increased from the three months ended June 30, ~~2021.~~2022, primarily from an increase in interest rate and credit spread risk categories driven by market volatility and a reduction in diversification benefit.

Distribution of VaR Statistics and Net Revenues

We evaluate the reasonableness of our VaR model by comparing the potential declines in portfolio values generated by the model with corresponding actual trading results for the Firm, as well as individual business units. For days where losses exceed the VaR statistic, we examine the drivers of trading losses to evaluate the VaR model’s accuracy ~~relative to realized trading result~~s.. There were ~~two~~2 loss days in the current quarter, which did not exceed ~~the Firm’s~~95% Total Management VaR.


September ~~2021~~2022 Form 10-Q			27


Table of Contents
Risk Disclosures

Daily 95%/One-Day Total Management VaR for the Current Quarter

($ in millions)

Daily Net Trading Revenues for the Current Quarter

($ in millions)

The previous histogram shows the distribution of daily net trading revenues for the current quarter. Daily net trading revenues include profits and losses from Interest rate and credit spread, Equity price, Foreign exchange rate, Commodity price, and Credit Portfolio positions and intraday trading activities for our trading businesses. Certain items such as fees, commissions, net interest income and counterparty default risk are excluded from daily net trading revenues and the VaR model. Revenues required for Regulatory VaR backtesting further exclude intraday trading.

Non-Trading Risks

We believe that sensitivity analysis is an appropriate representation of our non-trading risks. The following sensitivity analyses cover substantially all of the non-trading risk in our portfolio.

Credit Spread Risk Sensitivity1


$ in millions	$ in millions	At September 30, 2021		At June 30, 2021		$ in millions	At September 30, 2022		At June 30, 2022
Derivatives	Derivatives	$	7	$	7	Derivatives	$	7	$	7
Borrowings carried at fair value	Borrowings carried at fair value	48		48		Borrowings carried at fair value	33		38

1.Amounts represent the potential gain for each 1 bps widening of our credit spread.

Credit spread risk sensitivity for borrowings carried at fair value at September 30, 2022 decreased from June 30, 2022 primarily due to widening credit spreads, partially offset by new debt issuance.

The Wealth Management business segment reflects a substantial portion of our non-trading interest rate risk. Historically, net interest income sensitivity for our U.S. Bank ~~Subsidiaries’~~Subsidiaries was representative of such sensitivity for the Wealth Management business segment and, accordingly, we presented net interest income sensitivity for our U.S. Bank Subsidiaries. However, over time the Wealth Management business segment has grown its assets that generate net interest income outside of the U.S. Bank Subsidiaries, such as margin and other lending on non-bank entities, and this growth has been further accelerated by the acquisition of E*TRADE. Net interest in the Wealth Management business segment primarily consists of interest income earned on non-trading assets, including loans and investment securities, as well as margin and other lending on non-bank entities and interest expense incurred on non-trading liabilities, primarily deposits.

Wealth Management Net Interest Income Sensitivity Analysis1


$ in millions	$ in millions	At September 30, 2021		At June 30, 2021		$ in millions	At September 30, 2022		At June 30, 2022
Basis point change	Basis point change					Basis point change
+100	+100	$	1,540	$	1,463	+100	$	398	$	93
-100	-100	(494)		(498)		-100	(568)		(360)

1.The prior period has been revised to conform to the current period presentation.

The previous table presents an analysis of selected instantaneous upward and downward parallel interest rate shocks (subject to a floor of zero percent in the downward scenario) on net interest income over the next 12 months for our ~~U.S. Bank Subsidiaries.~~Wealth Management business segment. These shocks are applied to our 12-month forecast for our ~~U.S. Bank Subsidiaries,~~Wealth Management business segment, which incorporates market expectations of interest rates and our forecasted business activity.

We do not manage to any single rate scenario but rather manage net interest income in our ~~U.S. Bank Subsidiaries~~Wealth Management business segment to optimize across a range of possible outcomes, including non-parallel rate change scenarios. The sensitivity analysis assumes that we take no action in response to these scenarios, assumes there are no changes in other macroeconomic variables normally correlated with changes in interest rates and includes subjective assumptions regarding customer and market re-pricing behavior and other factors. Net interest income sensitivity ~~was relatively unchanged~~to interest rates at September


			28			September 2022 Form 10-Q


Table of Contents
Risk Disclosures

30, 2022 increased from June 30, ~~2021.~~2022, primarily driven by the changes in deposit pricing, mix and expected customer behavior.

Investments Sensitivity, Including Related Carried Interest


		Loss from 10% Decline					Loss from 10% Decline
$ in millions	$ in millions	At September 30, 2021		At June 30, 2021		$ in millions	At September 30, 2022		At June 30, 2022
Investments related to Investment Management activities	Investments related to Investment Management activities	$	422	$	477	Investments related to Investment Management activities	$	423	$	423
Other investments:	Other investments:					Other investments:
MUMSS	MUMSS	174		172		MUMSS	131		139
Other Firm investments	Other Firm investments	261		232		Other Firm investments	348		348

We have exposure to public and private companies through direct investments, as well as through funds that invest in these assets. These investments are predominantly equity positions with long investment horizons, a portion of which is for business facilitation purposes. The market risk related to these investments is measured by estimating the potential reduction in net revenues associated with a reasonably possible 10% decline in investment values and related impact on performance-based income, as applicable.


			28			~~September 2021 Form 10-Q~~


~~Table of Contents~~
~~Risk Disclosures~~

Asset Management Revenue Sensitivity

Certain asset management revenues in the Wealth Management and Investment Management business segments are derived from management fees, which are based on fee-based client assets in Wealth Management or AUM in Investment Management (together, “client holdings”). The assets underlying client holdings are primarily composed of equity, fixed income and alternative investments and are sensitive to changes in related markets. ~~The overall level of these~~These revenues ~~depends~~depend on multiple factors ~~that include,~~including, but ~~are~~ not limited to, the level and duration of a market increase or decline, price volatility, the geographic and industry mix of client assets, and client behavior such as the rate and magnitude of client investments and redemptions. Therefore, overall revenues domay not correlate completely with changes in the related markets.

Credit Risk

Credit risk refers to the risk of loss arising when a borrower, counterparty or issuer does not meet its financial obligations to us. We are primarily exposed to credit risk from institutions and individuals through our Institutional Securities and Wealth Management business segments. For a further discussion of our credit risks, see “Quantitative and Qualitative Disclosures about Risk—Credit Risk” in the ~~2020~~2021 Form 10-K.

Loans and Lending Commitments


		At September 30, 2021									At September 30, 2022
$ in millions	$ in millions	HFI		HFS		FVO		Total		$ in millions	HFI		HFS		FVO		Total
Institutional Securities:	Institutional Securities:									Institutional Securities:
Corporate	Corporate	$	4,774	$	8,998	$	13	$	13,785	Corporate	$	6,858	$	7,640	$	—	$	14,498
Secured lending facilities	Secured lending facilities	27,345		3,650		350		31,345		Secured lending facilities	34,788		3,707		7		38,502
Commercial and Residential real estate	Commercial and Residential real estate	6,915		434		5,536		12,885		Commercial and Residential real estate	8,191		1,750		2,044		11,985
Securities-based lending and Other	Securities-based lending and Other	520		56		8,889		9,465		Securities-based lending and Other	2,728		109		5,013		7,850
Total Institutional Securities	Total Institutional Securities	39,554		13,138		14,788		67,480		Total Institutional Securities	52,565		13,206		7,064		72,835
Wealth Management:	Wealth Management:									Wealth Management:
Residential real estate	Residential real estate	41,428		8		—		41,436		Residential real estate	52,904		5		—		52,909
Securities-based lending and Other	Securities-based lending and Other	79,888		22		—		79,910		Securities-based lending and Other	92,859		142		—		93,001
Total Wealth Management	Total Wealth Management	121,316		30		—		121,346		Total Wealth Management	145,763		147		—		145,910
Total Investment Management1	Total Investment Management1	5		—		127		132		Total Investment Management1	4		—		448		452
Total loans2	Total loans2	160,875		13,168		14,915		188,958		Total loans2	198,332		13,353		7,512		219,197
ACL	ACL	(684)						(684)		ACL	(749)						(749)
Total loans, net of ACL	Total loans, net of ACL	$	160,191	$	13,168	$	14,915	$	188,274	Total loans, net of ACL	$	197,583	$	13,353	$	7,512	$	218,448
Lending commitments3	Lending commitments3							$	137,116	Lending commitments3							$	136,605
Total exposure	Total exposure							$	325,390	Total exposure							$	355,053

At December 31, 2020
$ in millions HFI HFS FVO Total
Institutional Securities:
Corporate $ 6,046 $ 8,580 $ 13 $ 14,639
Secured lending facilities 25,727 3,296 648 29,671
Commercial and Residential real estate 7,346 859 3,061 11,266
Securities-based lending and Other 1,279 55 7,001 8,335
Total Institutional Securities 40,398 12,790 10,723 63,911
Wealth Management:
Residential real estate 35,268 11 — 35,279
Securities-based lending and Other 62,947 — — 62,947
Total Wealth Management 98,215 11 — 98,226
Total Investment Management1
6 12 425 443
Total loans2
138,619 12,813 11,148 162,580
ACL (835) (835)
Total loans, net of ACL $ 137,784 $ 12,813 $ 11,148 $ 161,745
Lending commitments3
$ 127,855
Total exposure

$ 289,600

~~HFI—Held for investment; HFS—Held for sale; FVO—Fair value option~~


	At December 31, 2021
$ in millions	HFI		HFS		FVO		Total
Institutional Securities:
Corporate	$	5,567	$	8,107	$	8	$	13,682
Secured lending facilities	31,471		3,879		—		35,350
Commercial and Residential real estate	7,227		1,777		4,774		13,778
Securities-based lending and Other	1,292		45		7,710		9,047
Total Institutional Securities	45,557		13,808		12,492		71,857
Wealth Management:
Residential real estate	44,251		7		—		44,258
Securities-based lending and Other	85,143		17		—		85,160
Total Wealth Management	129,394		24		—		129,418
Total Investment Management1	5		—		135		140
Total loans2	174,956		13,832		12,627		201,415
ACL	(654)						(654)
Total loans, net of ACL	$	174,302	$	13,832	$	12,627	$	200,761
Lending commitments3							$	134,934
Total exposure							$	335,695

Total exposure—consists of Total loans, net of ACL, and Lending commitments

1.Investment Management business segment loans are related to certain of our activities as an investment advisor and manager. Loans held at fair value are the result of the consolidation of investment vehicles (including CLOs) managed by Investment Management, composed primarily of senior secured loans to corporations.

2.FVO also includes the fair value of certain unfunded lending commitments.

3.Lending commitments represent the notional amount of legally binding obligations to provide funding to clients for lending transactions. Since commitments associated with these business activities may expire unused or may not be utilized to full capacity, they do not necessarily reflect the actual future cash funding requirements.

We provide loans and lending commitments to a variety of customers, including large corporate and institutional clients, as well as high to ultra-high net worth individuals. In addition, we purchase loans in the secondary market. Loans and lending commitments are either held for investment, held for sale or carried at fair value. For more information on these loan classifications, see Note 2 to the financial statements in the ~~2020~~2021 Form 10-K.

Total loans and lending commitments increased by approximately $36 billion since December 31, 2020, primarily due to growth in Securities-based and Residential real estate loans within the Wealth Management business segment, as well as increases in Corporate lending commitments and Secured lending facilities within the Institutional Securities business segment.

~~See Notes 5, 6, 10 and 14 to the financial statements for further information.~~

Beginning late in the first quarter of 2020 and following in part from the U.S. government’s enactment of the CARES Act, we have granted requests from certain clients for modifications of their credit agreements with us, which in some cases include deferral of their loan payments. In addition to these principal and interest deferrals, we continue to work with certain clients regarding modifications of other terms under their original loan agreements that do not impact contractual loan payments. We do not believe these


September ~~2021~~2022 Form 10-Q			29


Table of Contents
Risk Disclosures

~~modifications have had a material impact on~~Total loans and lending commitments increased by approximately $19 billion since December 31, 2021, primarily due to growth in Residential real estate loans and Securities-based loans within the ~~risk profile of our loan portfolio.~~Wealth Management segment.

~~Requests for deferrals~~See Notes 4, 5, 9 and ~~other modifications could continue in future periods. See~~ ~~“Executive Summary—Coronavirus Disease (COVID-19) Pandemic” herein and “Risk Factors” and “Forward Looking Statements” in the 2020 Form 10-K.~~

For additional information on regulatory guidance which permits certain loan modifications for borrowers impacted by COVID-19 to not be accounted for and reported as TDRs as well as the Firm’s accounting policies for such modifications, see “Liquidity and Capital Resources—Regulatory Requirements—Regulatory Developments” and Note 213 to the financial statements ~~in the 2020 Form 10-K, respectively. For information on HFI loans on nonaccrual status and HFI loans modified and reported as TDRs, see “Status of Loans Held~~ for ~~Investment” herein and Note 10 to the financial statements, and for a discussion of the related accounting policies see Note 2 to the financial statements in the 2020 Form 10-K.~~further information.

Allowance for Credit Losses—Loans and Lending Commitments


$ in millions
ACL—Loans	$	~~835~~654
ACL—Lending Commitments	~~396~~444
Total at December 31, ~~2020~~2021	~~1,231~~1,098
Gross charge-offs	~~(107)~~(31)
Recoveries	7
Net (charge-offs) recoveries	(24)
Provision for credit losses	~~(1)~~193
Other	~~(10)~~(31)
Total at September 30, ~~2021~~2022	$	~~1,113~~1,236
ACL—Loans	$	~~684~~749
ACL—Lending commitments	~~429~~487

Provision for Credit Losses by Business Segment


		Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021							Three Months Ended September 30, 2022						Nine Months Ended September 30, 2022
$ in millions	$ in millions	IS		WM		Total		IS		WM		Total		$ in millions	IS		WM		Total		IS		WM		Total
Loans	Loans	$	3	$	2	$	5	$	(38)	$	1	$	(37)	Loans	$	(9)	$	15	$	6	$	88	$	49	$	137
Lending commitments	Lending commitments	21		(2)		19		39		(3)		36		Lending commitments	33		(4)		29		62		(6)		56
Total	Total	$	24	$	—	$	24	$	1	$	(2)	$	(1)	Total	$	24	$	11	$	35	$	150	$	43	$	193

Credit exposure arising from our loans and lending commitments is measured in accordance with our internal risk management standards. Risk factors considered in determining the ~~aggregate~~ allowance for ~~loan~~credit losses for loans and ~~commitment losses~~lending commitments include the borrower’s financial strength, industry, facility structure, LTV ratio, debt service ratio, collateral and covenants. Qualitative and environmental factors such as economic and business conditions, nature and volume of the portfolio and lending terms, and volume and severity of past due loans may also be considered.

The base scenario used in our ACL models as of September 30, ~~2021~~2022 was generated using a combination of

~~industry~~ consensus economic forecasts, forward rates, and internally developed and validated ~~models.~~models, and assumes slower economic growth over the forecast period. Given the nature of our lending portfolio, the most sensitive model input is U.S. gross domestic product. ~~The base scenario, among other things, assumes continued growth over the forecast period and a year-over-year~~

Forecasted U.S. Real GDP ~~effective growth rate of approximately 6%~~Growth Rates in ~~the fourth quarter of 2021, supported by fiscal stimulus and accommodative monetary policy.~~ Base Scenario


	4Q 2022		4Q 2023
Year-over-year growth rate	0.8	%	1.3	%

See ~~Notes 10 and 14~~Note 9 to the financial statements for further information. See Note 2 to the financial statements in the ~~2020~~2021 Form 10-K for a discussion of the Firm’s ACL methodology under CECL.

Status of Loans Held for Investment

At September 30, 2021 At December 31, 2020
IS WM IS WM
Accrual 98.6 % 99.8 % 99.2 % 99.7 %
Nonaccrual1
1.4 % 0.2 % 0.8 % 0.3 %


	At September 30, 2022				At December 31, 2021
	IS		WM		IS		WM
Accrual	99.4	%	99.9	%	98.7	%	99.8	%
Nonaccrual1	0.6	%	0.1	%	1.3	%	0.2	%

1.These loans are on nonaccrual status because the loans were past due for a period of 90 days or more or payment of principal or interest was in doubt.

Net Charge-off Ratios for Loans Held for Investment


$ in millions	Corporate			Secured Lending Facilities			CRE			Residential Real Estate			SBL and Other			Total
For the Nine Months Ended September 30, 2022
Net charge-off (recovery) ratio1	(0.09)		%	0.01		%	0.09		%	—		%	0.02		%	0.01		%
Average loans	$	6,441		$	32,367		$	8,196		$	48,675		$	92,681		$	188,360
For the Nine Months Ended September 30, 2021
Net charge-off ratio1	0.37		%	0.25		%	0.30		%	—		%	—		%	0.07		%
Average loans	$	5,182		$	27,151		$	7,066		$	37,897		$	72,484		$	149,780

1.Net charge-off ratio represents gross charge-offs net of recoveries divided by total average loans held for investment before ACL.

Institutional Securities Loans and Lending Commitments1


		At September 30, 2021											At September 30, 2022
		Contractual Years to Maturity											Contractual Years to Maturity
$ in millions	$ in millions	Less than 1		1-3		3-5		Over 5		Total		$ in millions	<1		1-5		5-15		>15		Total
Loans	Loans											Loans
AA	AA	$	—	$	36	$	—	$	—	$	36	AA	$	58	$	4	$	150	$	—	$	212
A	A	1,138		814		371		377		2,700		A	987		1,148		225		—		2,360
BBB	BBB	5,459		5,273		2,444		1,178		14,354		BBB	6,960		10,505		564		—		18,029
BB	BB	10,886		10,260		4,290		954		26,390		BB	9,865		19,845		1,322		124		31,156
Other NIG	Other NIG	4,328		7,286		3,937		3,305		18,856		Other NIG	5,028		10,573		1,886		133		17,620
Unrated2	Unrated2	178		334		511		3,546		4,569		Unrated2	71		616		699		1,470		2,856
Total loans, net of ACL	Total loans, net of ACL	21,989		24,003		11,553		9,360		66,905		Total loans, net of ACL	22,969		42,691		4,846		1,727		72,233
Lending commitments	Lending commitments											Lending commitments
AAA	AAA	—		50		—		—		50		AAA	—		50		—		—		50
AA	AA	2,938		1,120		2,449		—		6,507		AA	2,116		2,896		245		—		5,257
A	A	4,327		7,482		10,456		446		22,711		A	4,279		19,271		272		324		24,146
BBB	BBB	10,509		16,834		19,487		1,050		47,880		BBB	7,007		40,213		879		—		48,099
BB	BB	3,202		11,489		7,932		1,790		24,413		BB	3,820		18,084		948		52		22,904
Other NIG	Other NIG	1,142		6,742		7,574		5,104		20,562		Other NIG	882		13,767		4,498		—		19,147
Unrated2	Unrated2	1		—		17		15		33		Unrated2	—		38		—		2		40
Total lending commitments	Total lending commitments	22,119		43,717		47,915		8,405		122,156		Total lending commitments	18,104		94,319		6,842		378		119,643
Total exposure	Total exposure	$	44,108	$	67,720	$	59,468	$	17,765	$	189,061	Total exposure	$	41,073	$	137,010	$	11,688	$	2,105	$	191,876


			30			September ~~2021~~2022 Form 10-Q


Table of Contents
Risk Disclosures


		At December 31, 2020											At December 31, 2021
		Contractual Years to Maturity											Contractual Years to Maturity
$ in millions	$ in millions	Less than 1		1-3		3-5		Over 5		Total		$ in millions	<1		1-5		5-15		>15		Total
Loans	Loans											Loans
AA	AA	$	279	$	10	$	—	$	—	$	289	AA	$	—	$	35	$	38	$	—	$	73
A	A	759		798		36		391		1,984		A	890		1,089		675		—		2,654
BBB	BBB	5,043		5,726		2,746		469		13,984		BBB	5,335		8,944		563		—		14,842
BB	BB	10,963		7,749		5,324		503		24,539		BB	10,734		18,349		814		18		29,915
Other NIG	Other NIG	5,214		6,956		4,002		3,269		19,441		Other NIG	4,656		10,475		3,439		160		18,730
Unrated2	Unrated2	141		142		330		2,322		2,935		Unrated2	171		665		511		3,753		5,100
Total loans, net of ACL	Total loans, net of ACL	22,399		21,381		12,438		6,954		63,172		Total loans, net of ACL	21,786		39,557		6,040		3,931		71,314
Lending commitments	Lending commitments											Lending commitments
AAA	AAA	—		50		—		—		50		AAA	—		50		—		—		50
AA	AA	4,047		1,038		2,135		—		7,220		AA	3,283		2,690		—		—		5,973
A	A	6,025		8,359		9,808		425		24,617		A	5,255		17,646		407		303		23,611
BBB	BBB	6,783		17,782		15,500		460		40,525		BBB	6,703		36,096		766		—		43,565
BB	BB	4,357		8,958		7,958		3,103		24,376		BB	2,859		19,698		3,122		—		25,679
Other NIG	Other NIG	664		7,275		6,077		2,652		16,668		Other NIG	992		13,420		6,180		55		20,647
Unrated2	Unrated2	4		—		—		—		4		Unrated2	672		40		3		—		715
Total lending commitments	Total lending commitments	21,880		43,462		41,478		6,640		113,460		Total lending commitments	19,764		89,640		10,478		358		120,240
Total exposure	Total exposure	$	44,279	$	64,843	$	53,916	$	13,594	$	176,632	Total exposure	$	41,550	$	129,197	$	16,518	$	4,289	$	191,554

NIG–Non-investment grade

1.Counterparty credit ratings are internally determined by the CRM.

2.Unrated loans and lending commitments are primarily trading positions that are measured at fair value and risk-managed as a component of market risk. For a further discussion of our market risk, see ~~“Market~~“Quantitative and Qualitative Disclosures about Risk—Market Risk” herein.

Institutional Securities Loans and Lending Commitments by Industry


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Industry	Industry					Industry
Financials	Financials	$	50,404	$	44,358	Financials	$	52,630	$	52,066
Real estate	Real estate	30,411		25,484		Real estate	32,325		31,560
Communications services						Communications services	15,386		12,645
Industrials	Industrials	17,409		15,861		Industrials	14,555		17,446
Communications services		14,382		12,600
Information technology						Information technology	12,834		13,471
Healthcare	Healthcare	14,021		12,650		Healthcare	11,863		12,618
Consumer discretionary	Consumer discretionary	11,763		11,177		Consumer discretionary	11,352		11,628
Information technology		10,601		11,358
Utilities	Utilities	10,150		9,504		Utilities	10,301		10,310
Energy	Energy	8,456		10,064		Energy	9,170		8,544
Consumer staples	Consumer staples	8,170		9,088		Consumer staples	8,186		7,855
Materials	Materials	6,434		6,084		Materials	6,296		6,394
Insurance	Insurance	4,249		3,889		Insurance	5,300		4,954
Other	Other	2,611		4,515		Other	1,678		2,063
Total exposure	Total exposure	$	189,061	$	176,632	Total exposure	$	191,876	$	191,554

~~Sectors Currently in Focus due to COVID-19~~

The economic effects of COVID-19 have impacted borrowers in many sectors and industries, though certain sectors remain more sensitive to the current economic environment and are continuing to receive heightened focus. The sectors currently in focus are air travel, lodging and leisure, retail, upstream energy, and healthcare services and systems. As of September 30, 2021, exposures to these sectors are included across the Industrials, Financials, Real estate, Consumer discretionary, Energy and Healthcare industries in the previous table, and in aggregate represent approximately 10% of total Institutional Securities business segment lending exposure. Further, as of September 30, 2021, approximately 90% of these exposures

are either investment grade and/or secured by collateral. The future developments of COVID-19 and its effect on the economic environment remain uncertain; therefore, the sectors impacted may change over time. Refer to “Risk Factors” in the 2020 Form 10-K.

Institutional Securities Lending Activities

The Institutional Securities business segment lending activities include Corporate, Secured lending facilities, Commercial real estate and Securities-based lending and Other. As of September 30, ~~2021,~~2022, over 90% of our total lending exposure, which consists of loans and lending commitments, is investment grade and/or secured by collateral. For a description of Institutional Securities’ lending activities, see “Quantitative and Qualitative Disclosures about Risk—Credit Risk” in the ~~2020~~2021 Form 10-K.

Institutional Securities Event-Driven Loans and Lending Commitments

At September 30, 2021
Contractual Years to Maturity
$ in millions Less than 1 1-3 3-5 Over 5 Total
Loans, net of ACL $ 1,331 $ 609 $ 479 $ 3,148 $ 5,567
Lending commitments 5,861 5,078 2,877 6,442 20,258
Total exposure $ 7,192 $ 5,687 $ 3,356 $ 9,590 $ 25,825
At December 31, 2020
Contractual Years to Maturity
$ in millions Less than 1 1-3 3-5 Over 5 Total
Loans, net of ACL $ 1,241 $ 907 $ 873 $ 2,090 $ 5,111
Lending commitments 2,810 4,649 2,678 4,650 14,787
Total exposure $ 4,051 $ 5,556 $ 3,551 $ 6,740 $ 19,898


	At September 30, 2022
	Contractual Years to Maturity
$ in millions	<1		1-5		5-15		Total
Loans, net of ACL	$	1,605	$	1,564	$	1,282	$	4,451
Lending commitments	1,400		6,436		4,787		12,623
Total exposure	$	3,005	$	8,000	$	6,069	$	17,074


	At December 31, 2021
	Contractual Years to Maturity
$ in millions	<1		1-5		5-15		Total
Loans, net of ACL	$	951	$	2,088	$	1,803	$	4,842
Lending commitments	1,619		5,288		8,879		15,786
Total exposure	$	2,570	$	7,376	$	10,682	$	20,628

Event-driven loans and lending commitments are associated with a particular event or transaction, such as to support client merger, acquisition, recapitalization or project finance activities. Balances may fluctuate as such lending is related to transactions that vary in timing and size from period to period.

Institutional Securities Loans and Lending Commitments Held for Investment


		At September 30, 2021						At September 30, 2022
$ in millions	$ in millions	Loans		Lending Commitments		Total			$ in millions	Loans		Lending Commitments		Total
Corporate	Corporate	$	4,774	$	73,264	$	78,038		Corporate	$	6,858	$	75,801	$	82,659
Secured lending facilities	Secured lending facilities	27,345		9,434		36,779			Secured lending facilities	34,788		11,617		46,405
Commercial real estate	Commercial real estate	6,915		341		7,256			Commercial real estate	8,191		433		8,624
Other		520		645		1,165
Securities-based lending and Other									Securities-based lending and Other	2,728		992		3,720
Total, before ACL	Total, before ACL	$	39,554	$	83,684	$	123,238		Total, before ACL	$	52,565	$	88,843	$	141,408
ACL	ACL	$	(575)	$	(416)	$	(991)		ACL	$	(602)	$	(475)	$	(1,077)


		At December 31, 2020								At December 31, 2021
$ in millions	$ in millions		Loans		Lending Commitments		Total		$ in millions		Loans		Lending Commitments		Total
Corporate	Corporate		$	6,046	$	69,488	$	75,534	Corporate		$	5,567	$	73,585	$	79,152
Secured lending facilities	Secured lending facilities		25,727		8,312		34,039		Secured lending facilities		31,471		10,003		41,474
Commercial real estate	Commercial real estate		7,346		334		7,680		Commercial real estate		7,227		1,475		8,702
Other			1,279		1,135		2,414
Securities-based lending and Other									Securities-based lending and Other		1,292		887		2,179
Total, before ACL	Total, before ACL		$	40,398	$	79,269	$	119,667	Total, before ACL		$	45,557	$	85,950	$	131,507
ACL	ACL		$	(739)	$	(391)	$	(1,130)	ACL		$	(543)	$	(426)	$	(969)


September ~~2021~~2022 Form 10-Q			31


Table of Contents
Risk Disclosures

Institutional Securities Allowance for Credit Losses—Loans and Lending Commitments

$ in millions Corporate Secured lending facilities Commercial real estate Other Total
ACL—Loans $ 309 $ 198 $ 211 $ 21 $ 739
ACL—Lending commitments 323 38 11 19 391
Total at December 31, 2020 $ 632 $ 236 $ 222 $ 40 $ 1,130
Gross charge-offs (19) (67) (21) — (107)
Provision for credit losses (52) 49 4 — 1
Other1
(5) (2) (2) (24) (33)
Total at September 30, 2021 $ 556 $ 216 $ 203 $ 16 $ 991
ACL—Loans $ 197 $ 175 $ 193 $ 10 $ 575
ACL—Lending commitments 359 41 10 6 416

1.Other primarily reflects the allowance for credit losses associated with the Community Development Fund loans portfolio that was transferred to the Wealth Management business segment from the Institutional Securities business segment in the second quarter of 2021.


$ in millions	Corporate		Secured Lending Facilities		Commercial Real Estate		Other		Total
ACL—Loans	$	165	$	163	$	206	$	9	$	543
ACL—Lending commitments	356		41		20		9		426
Total at December 31, 2021	$	521	$	204	$	226	$	18	$	969
Gross charge-offs	—		(3)		(7)		(7)		(17)
Recoveries	6		—		—		—		6
Net (charge-offs) recoveries	6		(3)		(7)		(7)		(11)
Provision for credit losses	110		5		29		6		150
Other	(18)		(3)		(10)		—		(31)
Total at September 30, 2022	$	619	$	203	$	238	$	17	$	1,077
ACL—Loans	$	211	$	156	$	224	$	11	$	602
ACL—Lending commitments	408		47		14		6		475

Institutional Securities HFI Loans—Ratios of Allowance for Credit Losses to Balance Before Allowance


		At September 30, 2021		At December 31, 2020			At September 30, 2022		At December 31, 2021
Corporate	Corporate	4.1	%	5.1	%	Corporate	3.1	%	3.0	%
Secured lending facilities	Secured lending facilities	0.6	%	0.8	%	Secured lending facilities	0.4	%	0.5	%
Commercial real estate	Commercial real estate	2.8	%	2.9	%	Commercial real estate	2.7	%	2.9	%
Other		1.9	%	1.7	%
Securities-based lending and Other						Securities-based lending and Other	0.4	%	0.7	%
Total Institutional Securities loans	Total Institutional Securities loans	1.5	%	1.8	%	Total Institutional Securities loans	1.1	%	1.2	%

Wealth Management Loans and Lending Commitments


		At September 30, 2021											At September 30, 2022
		Contractual Years to Maturity											Contractual Years to Maturity
$ in millions	$ in millions	Less than 1		1-3		3-5		Over 5		Total		$ in millions	<1		1-5		5-15		>15		Total
Securities-based lending and Other		$	70,226	$	5,411	$	2,503	$	1,717	$	79,857
Residential real estate		6		—		7		41,367		41,380
Securities-based lending and Other loans												Securities-based lending and Other loans	$	81,996	$	9,204	$	1,610	$	131	$	92,941
Residential real estate loans												Residential real estate loans	2		24		1,359		51,437		52,822
Total loans, net of ACL	Total loans, net of ACL	$	70,232	$	5,411	$	2,510	$	43,084	$	121,237	Total loans, net of ACL	$	81,998	$	9,228	$	2,969	$	51,568	$	145,763
Lending commitments	Lending commitments	12,005		2,513		116		326		14,960		Lending commitments	12,367		4,252		48		295		16,962
Total exposure	Total exposure	$	82,237	$	7,924	$	2,626	$	43,410	$	136,197	Total exposure	$	94,365	$	13,480	$	3,017	$	51,863	$	162,725


		At December 31, 2020											At December 31, 2021
		Contractual Years to Maturity											Contractual Years to Maturity
$ in millions	$ in millions	Less than 1		1-3		3-5		Over 5		Total		$ in millions	<1		1-5		5-15		>15		Total
Securities-based lending and Other		$	54,483	$	4,587	$	2,167	$	1,672	$	62,909
Residential real estate		9		1		1		35,210		35,221
Securities-based lending and Other loans												Securities-based lending and Other loans	$	74,466	$	8,927	$	1,571	$	144	$	85,108
Residential real estate loans												Residential real estate loans	4		10		1,231		42,954		44,199
Total loans, net of ACL	Total loans, net of ACL	$	54,492	$	4,588	$	2,168	$	36,882	$	98,130	Total loans, net of ACL	$	74,470	$	8,937	$	2,802	$	43,098	$	129,307
Lending commitments	Lending commitments	11,666		2,356		120		253		14,395		Lending commitments	11,894		2,467		51		282		14,694
Total exposure	Total exposure	$	66,158	$	6,944	$	2,288	$	37,135	$	112,525	Total exposure	$	86,364	$	11,404	$	2,853	$	43,380	$	144,001

The principal Wealth Management business segment lending activities include Securities-based lending and Residential real estate loans.

Securities-based lending allows clients to borrow money against the value of qualifying securities, generally for any purpose other than purchasing, trading or carrying securities or refinancing margin debt. For more information about our Securities-based lending and Residential real estate loans, see “Quantitative and Qualitative Disclosures about Risk—Credit Risk” in the ~~2020~~2021 Form 10-K.

Wealth Management Allowance for Credit Losses—Loans and Lending Commitments


$ in millions
ACL—Loans	$	96111
ACL—Lending commitments	518
Total at December 31, ~~2020~~2021	~~101~~129
Gross charge-offs	(14)
Recoveries	1
Net (charge-offs) recoveries	(13)
Provision for credit losses	~~(2)~~43
~~Other~~1	23
Total at September 30, ~~2021~~2022	$	~~122~~159
ACL—Loans	$	~~109~~147
ACL—Lending commitments	1312

At September 30, ~~2021,~~2022, more than 75% of Wealth Management ~~Residential~~residential real estate loans were to borrowers with “Exceptional” or “Very Good” FICO scores (i.e., exceeding 740). Additionally, Wealth Management’s ~~Securities-based~~securities-based lending portfolio remains well-collateralized and subject to daily client margining, which includes requiring customers to deposit additional collateral or reduce debt positions, when necessary.

Customer and Other Receivables

Margin Loans and Other ~~lending~~Lending


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Institutional Securities	Institutional Securities	$	41,060	$	51,570	Institutional Securities	$	19,109	$	40,545
Wealth Management	Wealth Management	28,548		23,144		Wealth Management	24,306		30,987
Total	Total	$	69,608	$	74,714	Total	$	43,415	$	71,532

The Institutional Securities and Wealth Management business segments provide margin lending arrangements that allow customers to borrow against the value of qualifying securities, primarily for the purpose of purchasing additional securities, as well as to collateralize short positions. Institutional Securities primarily includes margin loans in the Equity Financing business. Wealth Management includes margin loans as well as non-purpose securities-based lending on non-bank entities.

~~Margin lending activities generally have lower credit risk due to the value of collateral held and their short-term nature.~~ Amounts may fluctuate from period to period as overall client balances change as a result of market levels, client positioning and leverage.

Credit exposures arising from margin lending activities are generally mitigated by their short-term nature, the value of collateral held and our right to call for additional margin when collateral values decline. However, we could incur losses in the event that the customer fails to meet margin calls and collateral values decline below the loan amount. This risk is elevated in loans backed by collateral pools with significant concentrations in individual issuers or securities with similar risk characteristics. For a further discussion, see “Risk Factors—Credit Risk” in the 2021 Form 10-K.

Employee Loans

For information on employee loans and related ACL, see Note 109 to the financial statements.


			32			September ~~2021~~2022 Form 10-Q


Table of Contents
Risk Disclosures

Derivatives

Fair Value of OTC Derivative Assets


		Counterparty Credit Rating1													Counterparty Credit Rating1
$ in millions	$ in millions	AAA		AA		A		BBB		NIG		Total		$ in millions	AAA		AA		A		BBB		NIG		Total
At September 30, 2021
At September 30, 2022														At September 30, 2022
Less than 1 year	Less than 1 year	$	1,503	$	13,004	$	36,932	$	23,620	$	14,141	$	89,200	Less than 1 year	$	3,523	$	35,580	$	63,540	$	49,825	$	16,985	$	169,453
1-3 years	1-3 years	790		4,478		15,274		15,286		7,802		43,630		1-3 years	1,846		9,595		24,041		25,556		10,411		71,449
3-5 years	3-5 years	457		4,766		7,382		8,247		3,790		24,642		3-5 years	889		7,259		10,868		10,975		4,959		34,950
Over 5 years	Over 5 years	4,260		26,468		64,816		44,303		6,184		146,031		Over 5 years	4,267		37,745		51,423		50,685		9,183		153,303
Total, gross	Total, gross	$	7,010	$	48,716	$	124,404	$	91,456	$	31,917	$	303,503	Total, gross	$	10,525	$	90,179	$	149,872	$	137,041	$	41,538	$	429,155
Counterparty netting	Counterparty netting	(2,867)		(37,546)		(96,338)		(65,345)		(14,619)		(216,715)		Counterparty netting	(4,820)		(70,458)		(103,445)		(104,828)		(24,463)		(308,014)
Cash and securities collateral	Cash and securities collateral	(3,244)		(8,123)		(22,438)		(18,083)		(7,453)		(59,341)		Cash and securities collateral	(3,115)		(16,036)		(38,904)		(20,461)		(7,467)		(85,983)
Total, net	Total, net	$	899	$	3,047	$	5,628	$	8,028	$	9,845	$	27,447	Total, net	$	2,590	$	3,685	$	7,523	$	11,752	$	9,608	$	35,158


		Counterparty Credit Rating1													Counterparty Credit Rating1
$ in millions	$ in millions	AAA		AA		A		BBB		NIG		Total		$ in millions	AAA		AA		A		BBB		NIG		Total
At December 31, 2020
At December 31, 2021														At December 31, 2021
Less than 1 year	Less than 1 year	$	1,179	$	16,166	$	52,164	$	26,088	$	12,175	$	107,772	Less than 1 year	$	1,561	$	11,088	$	32,069	$	25,680	$	11,924	$	82,322
1-3 years	1-3 years	572		5,225		17,560		13,750		8,134		45,241		1-3 years	780		4,577		16,821		15,294		6,300		43,772
3-5 years	3-5 years	359		4,326		11,328		8,363		4,488		28,864		3-5 years	593		4,807		6,805		8,030		3,317		23,552
Over 5 years	Over 5 years	4,545		32,049		84,845		63,084		13,680		198,203		Over 5 years	4,359		26,056		61,091		44,091		4,633		140,230
Total, gross	Total, gross	$	6,655	$	57,766	$	165,897	$	111,285	$	38,477	$	380,080	Total, gross	$	7,293	$	46,528	$	116,786	$	93,095	$	26,174	$	289,876
Counterparty netting	Counterparty netting	(3,269)		(44,306)		(134,310)		(84,171)		(22,227)		(288,283)		Counterparty netting	(3,093)		(36,957)		(91,490)		(68,365)		(11,642)		(211,547)
Cash and securities collateral	Cash and securities collateral	(3,124)		(10,973)		(26,712)		(20,708)		(8,979)		(70,496)		Cash and securities collateral	(3,539)		(7,608)		(20,500)		(17,755)		(5,762)		(55,164)
Total, net	Total, net	$	262	$	2,487	$	4,875	$	6,406	$	7,271	$	21,301	Total, net	$	661	$	1,963	$	4,796	$	6,975	$	8,770	$	23,165


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Industry	Industry					Industry
Financials	Financials	$	7,421	$	6,195	Financials	$	11,201	$	5,096
Utilities	Utilities	6,218		3,954		Utilities	7,436		5,918
Energy	Energy	4,097		965		Energy	5,574		2,587
Industrials						Industrials	2,444		985
Regional governments						Regional governments	2,163		963
Sovereign governments						Sovereign governments	1,316		386
Communications services						Communications services	1,235		348
Insurance						Insurance	625		174
Consumer Discretionary	Consumer Discretionary	2,230		1,866		Consumer Discretionary	611		3,069
Industrials		1,029		1,291
Consumer staples						Consumer staples	596		324
Information technology	Information technology	1,000		1,104		Information technology	526		1,060
Regional governments		980		806
Healthcare	Healthcare	798		1,494		Healthcare	478		682
Sovereign governments		684		650
Insurance		682		518
Not-for-profit organizations	Not-for-profit organizations	571		701		Not-for-profit organizations	220		531
Communications services		328		529
Materials	Materials	299		430		Materials	201		240
Consumer staples		288		339
Real estate	Real estate	198		378		Real estate	54		280
Other	Other	624		81		Other	478		522
Total	Total	$	27,447	$	21,301	Total	$	35,158	$	23,165

1.Counterparty credit ratings are determined internally by the CRM.

We are exposed to credit risk as a dealer in OTC derivatives. Credit risk with respect to derivative instruments arises from the possibility that a counterparty may fail to perform according to the terms of the contract. In 2022, our exposure to credit risk arising from OTC derivatives has increased, primarily as a function of the effect of market factors and volatility on the valuation of our positions. For more information on derivatives, see “Quantitative and Qualitative Disclosures about Risk—Credit Risk—Derivatives” in the ~~2020~~2021 Form 10-K and Note 76 to the financial statements.

Country Risk

Country risk exposure is the risk that events in, or that affect, a foreign country (any country other than the U.S.) might adversely affect us. We actively manage country risk exposure through a comprehensive risk management framework that combines credit and other market fundamentals and allows us to effectively identify, monitor and limit country risk. For a further discussion of our country risk exposure see “Quantitative and Qualitative Disclosures about Risk—Country and Other Risks” in the ~~2020~~2021 Form 10-K.

Top 10 Non-U.S. Country Exposures at September 30, ~~2021~~2022

$ in millions United Kingdom Japan France Germany Spain
Sovereign
Net inventory1
$ (794) $ 7,006 $ 1,361 $ (3,085) $ 355
Net counterparty exposure2
9 32 6 69 38
Lending commitments — — — 637 —
Exposure before hedges (785) 7,038 1,367 (2,379) 393
Hedges3
(307) (79) (6) (287) —
Net exposure $ (1,092) $ 6,959 $ 1,361 $ (2,666) $ 393
Non-sovereign
Net inventory1
$ 729 $ 873 $ (877) $ (455) $ 10
Net counterparty exposure2
13,517 4,297 2,757 2,519 794
Loans 3,461 380 579 1,694 3,168
Lending commitments 6,791 180 4,344 5,768 874
Exposure before hedges 24,498 5,730 6,803 9,526 4,846
Hedges3
(1,401) (155) (1,167) (1,033) (540)
Net exposure $ 23,097 $ 5,575 $ 5,636 $ 8,493 $ 4,306
Total net exposure $ 22,005 $ 12,534 $ 6,997 $ 5,827 $ 4,699


$ in millions	United Kingdom		Germany		Japan		France		Brazil
Sovereign
Net inventory1	$	(1,289)	$	1,931	$	4,714	$	2,925	$	3,045
Net counterparty exposure2	19		268		146		8		—


Exposure before hedges	(1,270)		2,199		4,860		2,933		3,045
Hedges3	(250)		(284)		(168)		(6)		(109)
Net exposure	$	(1,520)	$	1,915	$	4,692	$	2,927	$	2,936

Non-sovereign
Net inventory1	$	1,975	$	462	$	749	$	329	$	118
Net counterparty exposure2	15,075		4,126		3,695		3,888		497
Loans	5,056		1,101		357		438		254
Lending commitments	5,922		3,556		—		2,400		405
Exposure before hedges	28,028		9,245		4,801		7,055		1,274
Hedges3	(1,706)		(1,590)		(559)		(1,836)		(39)
Net exposure	$	26,322	$	7,655	$	4,242	$	5,219	$	1,235
Total net exposure	$	24,802	$	9,570	$	8,934	$	8,146	$	4,171


~~September 2021 Form 10-Q~~			33


~~Table of Contents~~
~~Risk Disclosures~~


$ in millions	$ in millions	China		Netherlands		India		Canada		Italy		$ in millions	Canada		China		Spain		Korea		Netherlands
Sovereign	Sovereign											Sovereign
Net inventory1	Net inventory1	$	(17)	$	256	$	972	$	(523)	$	845	Net inventory1	$	67	$	(271)	$	(152)	$	1,136	$	40
Net counterparty exposure2	Net counterparty exposure2	73		—		—		67		53		Net counterparty exposure2	53		574		41		679		—

Exposure before hedges	Exposure before hedges	56		256		972		(456)		898		Exposure before hedges	120		303		(111)		1,815		40
Hedges3	Hedges3	(81)		(32)		—		—		(25)		Hedges3	—		(65)		(8)		(37)		(17)
Net exposure	Net exposure	$	(25)	$	224	$	972	$	(456)	$	873	Net exposure	$	120	$	238	$	(119)	$	1,778	$	23

Non-sovereign	Non-sovereign											Non-sovereign
Net inventory1	Net inventory1	$	1,142	$	(359)	$	752	$	263	$	123	Net inventory1	$	739	$	1,207	$	426	$	229	$	123
Net counterparty exposure2	Net counterparty exposure2	908		1,064		978		1,473		1,042		Net counterparty exposure2	1,781		1,252		984		915		1,428
Loans	Loans	800		373		235		58		193		Loans	204		393		1,938		131		484
Lending commitments	Lending commitments	1,786		2,847		—		1,547		367		Lending commitments	1,358		680		816		25		1,429
Exposure before hedges	Exposure before hedges	4,636		3,925		1,965		3,341		1,725		Exposure before hedges	4,082		3,532		4,164		1,300		3,464
Hedges3	Hedges3	(200)		(271)		—		(86)		(94)		Hedges3	(161)		(99)		(923)		(12)		(589)
Net exposure	Net exposure	$	4,436	$	3,654	$	1,965	$	3,255	$	1,631	Net exposure	$	3,921	$	3,433	$	3,241	$	1,288	$	2,875
Total net exposure	Total net exposure	$	4,411	$	3,878	$	2,937	$	2,799	$	2,504	Total net exposure	$	4,041	$	3,671	$	3,122	$	3,066	$	2,898

1.Net inventory represents exposure to both long and short single-name and index positions (i.e., bonds and equities at fair value and CDS based on a notional amount assuming zero recovery adjusted for the fair value of any receivable or payable).

2.Net counterparty exposure (e.g., repurchase transactions, securities lending and OTC derivatives) is net of the benefit of collateral received and also is net by counterparty when legally enforceable master netting agreements are in place. For more information, see “Additional Information—Top 10 Non-U.S. Country Exposures” herein.

3.Amounts represent net CDS hedges (purchased and sold) on net counterparty exposure and lending executed by trading desks responsible for hedging counterparty and lending credit risk exposures. Amounts are based on the CDS notional amount assuming zero recovery adjusted for ~~any~~the fair value of any receivable or payable. For further description of the contractual terms for purchased credit protection and whether they may limit the effectiveness of our hedges, see “Quantitative and Qualitative Disclosures about Risk—Credit Risk—Derivatives” in the ~~2020~~2021 Form 10-K.


September 2022 Form 10-Q			33


Table of Contents
Risk Disclosures

Additional Information—Top 10 Non-U.S. Country Exposures

Collateral Held against Net Counterparty Exposure1


$ in millions		At September 30, ~~2021~~2022
Country of Risk	Collateral2
~~Germany~~	~~Croatia and France~~	$	~~11,815~~
United Kingdom	U.K., U.S. and ~~Spain~~France	~~8,703~~$	14,632
Japan	Japan and U.S.	9,008
Other	~~Japan, Italy~~Netherlands, France, and ~~France~~Germany	~~21,322~~28,854

1.The benefit of collateral received is reflected in the Top 10 Non-U.S. Country Exposures at September 30, ~~2021.~~2022.

2.Primarily consists of cash ~~as well as~~and government obligations of the countries listed.

Operational Risk

Operational risk refers to the risk of loss, or of damage to our reputation, resulting from inadequate or failed processes or systems, from human factors or from external events (e.g., cyber attacks or third-party vulnerabilities) that may manifest as, for example, loss of information, business disruption, theft and fraud, ~~theft,~~ legal and compliance risks, ~~cyber attacks~~ or damage to physical ~~assets).~~assets. We may incur operational risk across the full scope of our business activities, including revenue-generating activities and support and control groups (e.g., information technology and trade processing). For a further discussion about our operational risk, see “Quantitative and Qualitative Disclosures about Risk—Operational Risk” in the ~~2020~~2021 Form 10-K. ~~In addition, for further information on market and economic conditions and their effects on risk in general, see “Management’s~~

~~Discussion and Analysis of Financial Condition and Results of Operations—Executive Summary—Coronavirus Disease (COVID-19) Pandemic” herein and “Risk Factors” in the 2020 Form 10-K.~~

Model Risk

Model risk refers to the potential for adverse consequences from decisions based on incorrect or misused model outputs. Model risk can lead to financial loss, poor business and strategic decision making or damage to our reputation. The risk inherent in a model is a function of the materiality, complexity and uncertainty around inputs and assumptions. Model risk is generated from the use of models impacting financial statements, regulatory filings, capital adequacy assessments and the formulation of strategy. For a further discussion about our model risk, see “Quantitative and Qualitative Disclosures about Risk—Model Risk” in the ~~2020~~2021 Form 10-K.

Liquidity Risk

Liquidity risk refers to the risk that we will be unable to finance our operations due to a loss of access to the capital markets or difficulty in liquidating our assets. Liquidity risk also encompasses our ability (or perceived ability) to meet our financial obligations without experiencing significant business disruption or reputational damage that may threaten our viability as a going concern. For a further discussion about our liquidity risk, see “Quantitative and Qualitative Disclosures about Risk—Liquidity Risk” in the ~~2020~~2021 Form 10-K and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” herein. ~~In addition, for further information on market and economic conditions and their effects on risk in general, see “Risk Factors” in the 2020 Form 10-K.~~

Legal and Compliance Risk

Legal and compliance risk includes the risk of legal or regulatory sanctions, material financial loss, including fines, penalties, judgments, damages and/or settlements, limitations on our business, or loss to reputation that we may suffer as a result of failure to comply with laws, regulations, rules, related self-regulatory organization standards and codes of conduct applicable to our business activities. This risk also includes contractual and commercial risk, such as the risk that a counterparty’s performance obligations will be unenforceable. It also includes compliance with AML, terrorist financing, and anti-corruption rules and regulations. For a further discussion about our legal and compliance risk, see “Quantitative and Qualitative Disclosures about Risk—Legal and Compliance Risk” in the ~~2020~~2021 Form 10-K.


			34			September ~~2021~~2022 Form 10-Q


Table of Contents

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Morgan Stanley:

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated balance sheet of Morgan Stanley and subsidiaries (the “Firm”) as of September 30, ~~2021,~~2022, and the related condensed consolidated income statements, comprehensive income statements and statements of changes in total equity for the three-month and nine-month periods ended September 30, ~~2021~~2022 and ~~2020,~~2021, and the cash flow statements for the nine-month periods ended September 30, ~~2021~~2022 and ~~2020,~~2021, and the related notes (collectively referred to as the “interim financial information”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Firm as of December 31, ~~2020,~~2021, and the related consolidated income statement, comprehensive income statement, cash flow statement and statement of changes in total equity for the year then ended (not presented herein) included in the Firm’s Annual Report on Form 10-K; and in our report dated February ~~26, 2021,~~24, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, ~~2020~~2021 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of the Firm’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Firm in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.


/s/ Deloitte & Touche LLP
New York, New York
November 3, ~~2021~~2022


September ~~2021~~2022 Form 10-Q			35


Table of Contents
Consolidated Income ~~Statements~~Statement (Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
in millions, except per share data	in millions, except per share data	2021		2020		2021		2020		in millions, except per share data	2022		2021		2022		2021
Revenues	Revenues									Revenues
Investment banking	Investment banking	$	3,013	$	1,826	$	8,413	$	5,239	Investment banking	$	1,373	$	3,013	$	4,281	$	8,413
Trading	Trading	2,861		3,150		10,416		10,754		Trading	3,331		2,861		10,911		10,416
Investments	Investments	45		346		744		659		Investments	(168)		45		(70)		744
Commissions and fees	Commissions and fees	1,280		1,037		4,214		3,499		Commissions and fees	1,133		1,280		3,769		4,214
Asset management	Asset management	5,201		3,664		14,572		10,346		Asset management	4,744		5,201		14,775		14,572
Other	Other	290		212		916		221		Other	63		290		245		916
Total non-interest revenues	Total non-interest revenues	12,690		10,235		39,275		30,718		Total non-interest revenues	10,476		12,690		33,911		39,275
Interest income	Interest income	2,351		2,056		7,000		7,917		Interest income	6,101		2,351		12,363		7,000
Interest expense	Interest expense	288		570		1,044		3,475		Interest expense	3,591		288		5,355		1,044
Net interest	Net interest	2,063		1,486		5,956		4,442		Net interest	2,510		2,063		7,008		5,956
Net revenues	Net revenues	14,753		11,721		45,231		35,160		Net revenues	12,986		14,753		40,919		45,231
Provision for credit losses	Provision for credit losses	24		111		(1)		757		Provision for credit losses	35		24		193		(1)
Non-interest expenses	Non-interest expenses									Non-interest expenses
Compensation and benefits	Compensation and benefits	5,920		5,086		19,141		15,404		Compensation and benefits	5,614		5,920		17,438		19,141
Brokerage, clearing and exchange fees	Brokerage, clearing and exchange fees	825		697		2,530		2,153		Brokerage, clearing and exchange fees	847		825		2,607		2,530
Information processing and communications	Information processing and communications	788		616		2,286		1,768		Information processing and communications	874		788		2,560		2,286
Professional services	Professional services	734		542		2,104		1,526		Professional services	755		734		2,217		2,104
Occupancy and equipment	Occupancy and equipment	427		373		1,246		1,103		Occupancy and equipment	429		427		1,286		1,246
Marketing and business development	Marketing and business development	146		78		438		273		Marketing and business development	215		146		610		438
Other	Other	1,015		731		2,703		2,188		Other	829		1,015		2,713		2,703
Total non-interest expenses	Total non-interest expenses	9,855		8,123		30,448		24,415		Total non-interest expenses	9,563		9,855		29,431		30,448
Income before provision for income taxes	Income before provision for income taxes	4,874		3,487		14,784		9,988		Income before provision for income taxes	3,388		4,874		11,295		14,784
Provision for income taxes	Provision for income taxes	1,150		736		3,380		2,221		Provision for income taxes	726		1,150		2,382		3,380

Net income	Net income	$	3,724	$	2,751	$	11,404	$	7,767	Net income	$	2,662	$	3,724	$	8,913	$	11,404
Net income applicable to noncontrolling interests	Net income applicable to noncontrolling interests	17		34		66		156		Net income applicable to noncontrolling interests	30		17		120		66
Net income applicable to Morgan Stanley	Net income applicable to Morgan Stanley	$	3,707	$	2,717	$	11,338	$	7,611	Net income applicable to Morgan Stanley	$	2,632	$	3,707	$	8,793	$	11,338
Preferred stock dividends	Preferred stock dividends	123		120		364		377		Preferred stock dividends	138		123		366		364
Earnings applicable to Morgan Stanley common shareholders	Earnings applicable to Morgan Stanley common shareholders	$	3,584	$	2,597	$	10,974	$	7,234	Earnings applicable to Morgan Stanley common shareholders	$	2,494	$	3,584	$	8,427	$	10,974
Earnings per common share	Earnings per common share									Earnings per common share
Basic	Basic	$	2.01	$	1.68	$	6.11	$	4.68	Basic	$	1.49	$	2.01	$	4.95	$	6.11
Diluted	Diluted	$	1.98	$	1.66	$	6.02	$	4.62	Diluted	$	1.47	$	1.98	$	4.88	$	6.02
Average common shares outstanding	Average common shares outstanding									Average common shares outstanding
Basic	Basic	1,781		1,542		1,797		1,546		Basic	1,674		1,781		1,704		1,797
Diluted	Diluted	1,812		1,566		1,824		1,565		Diluted	1,697		1,812		1,725		1,824

Consolidated Comprehensive Income ~~Statements~~Statement

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2022		2021		2022		2021
Net income	Net income	$	3,724	$	2,751	$	11,404	$	7,767	Net income	$	2,662	$	3,724	$	8,913	$	11,404
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:									Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	Foreign currency translation adjustments	(78)		110		(256)		(1)		Foreign currency translation adjustments	(268)		(78)		(661)		(256)
Change in net unrealized gains (losses) on available-for-sale securities	Change in net unrealized gains (losses) on available-for-sale securities	(256)		(62)		(1,039)		1,558		Change in net unrealized gains (losses) on available-for-sale securities	(1,307)		(256)		(4,778)		(1,039)
Pension and other	Pension and other	5		5		22		29		Pension and other	5		5		13		22
Change in net debt valuation adjustment	Change in net debt valuation adjustment	147		(563)		470		744		Change in net debt valuation adjustment	816		147		2,628		470
Total other comprehensive income (loss)	Total other comprehensive income (loss)	$	(182)	$	(510)	$	(803)	$	2,330	Total other comprehensive income (loss)	$	(754)	$	(182)	$	(2,798)	$	(803)
Comprehensive income	Comprehensive income	$	3,542	$	2,241	$	10,601	$	10,097	Comprehensive income	$	1,908	$	3,542	$	6,115	$	10,601
Net income applicable to noncontrolling interests	Net income applicable to noncontrolling interests	17		34		66		156		Net income applicable to noncontrolling interests	30		17		120		66
Other comprehensive income (loss) applicable to noncontrolling interests	Other comprehensive income (loss) applicable to noncontrolling interests	(4)		28		(64)		79		Other comprehensive income (loss) applicable to noncontrolling interests	(17)		(4)		(142)		(64)
Comprehensive income applicable to Morgan Stanley	Comprehensive income applicable to Morgan Stanley	$	3,529	$	2,179	$	10,599	$	9,862	Comprehensive income applicable to Morgan Stanley	$	1,895	$	3,529	$	6,137	$	10,599


September ~~2021~~2022 Form 10-Q			36			See Notes to Consolidated Financial Statements


Table of Contents
Consolidated Balance ~~Sheets~~ Sheet


$ in millions, except share data	$ in millions, except share data	(Unaudited) At September 30, 2021		At December 31, 2020		$ in millions, except share data	(Unaudited) At September 30, 2022		At December 31, 2021
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	123,863	$	105,654	Cash and cash equivalents	$	111,696	$	127,725
Trading assets at fair value ($109,494 and $132,578 were pledged to various parties)		315,161		312,738
Investment securities (includes $101,594 and $110,383 at fair value)		183,431		182,154
Securities purchased under agreements to resell (includes $7 and $15 at fair value)		119,721		116,234
Trading assets at fair value ($100,709 and $104,186 were pledged to various parties)						Trading assets at fair value ($100,709 and $104,186 were pledged to various parties)	291,188		294,869
Investment securities (includes $83,633 and $102,830 at fair value)						Investment securities (includes $83,633 and $102,830 at fair value)	161,269		182,998
Securities purchased under agreements to resell (includes $— and $7 at fair value)						Securities purchased under agreements to resell (includes $— and $7 at fair value)	111,124		119,999
Securities borrowed	Securities borrowed	125,922		112,391		Securities borrowed	136,478		129,713
Customer and other receivables	Customer and other receivables	98,353		97,737		Customer and other receivables	87,935		96,018
Loans:	Loans:					Loans:
Held for investment (net of allowance for credit losses of $684 and $835)		160,191		137,784
Held for investment (net of allowance for credit losses of $749 and $654)						Held for investment (net of allowance for credit losses of $749 and $654)	197,583		174,302
Held for sale	Held for sale	13,168		12,813		Held for sale	13,353		13,832
Goodwill	Goodwill	16,832		11,635		Goodwill	16,721		16,833
Intangible assets (net of accumulated amortization of $3,671 and $3,265)		8,514		4,980
Intangible assets (net of accumulated amortization of $4,250 and $3,819)						Intangible assets (net of accumulated amortization of $4,250 and $3,819)	7,893		8,360
Other assets	Other assets	25,320		21,742		Other assets	24,789		23,491
Total assets	Total assets	$	1,190,476	$	1,115,862	Total assets	$	1,160,029	$	1,188,140
Liabilities	Liabilities					Liabilities
Deposits (includes $2,010 and $3,521 at fair value)		$	329,041	$	310,782
Deposits (includes $3,661 and $1,940 at fair value)						Deposits (includes $3,661 and $1,940 at fair value)	$	338,123	$	347,574
Trading liabilities at fair value	Trading liabilities at fair value	169,959		157,631		Trading liabilities at fair value	162,640		158,328
Securities sold under agreements to repurchase (includes $928 and $1,115 at fair value)		61,987		50,587
Securities sold under agreements to repurchase (includes $951 and $791 at fair value)						Securities sold under agreements to repurchase (includes $951 and $791 at fair value)	60,133		62,188
Securities loaned	Securities loaned	11,133		7,731		Securities loaned	13,097		12,299
Other secured financings (includes $5,614 and $11,701 at fair value)		10,272		15,863
Other secured financings (includes $4,594 and $5,133 at fair value)						Other secured financings (includes $4,594 and $5,133 at fair value)	7,701		10,041
Customer and other payables	Customer and other payables	240,319		227,437		Customer and other payables	229,463		228,685
Other liabilities and accrued expenses	Other liabilities and accrued expenses	30,884		25,603		Other liabilities and accrued expenses	26,360		29,300
Borrowings (includes $75,752 and $73,701 at fair value)		229,762		217,079
Borrowings (includes $68,788 and $76,340 at fair value)						Borrowings (includes $68,788 and $76,340 at fair value)	220,423		233,127
Total liabilities	Total liabilities	1,083,357		1,012,713		Total liabilities	1,057,940		1,081,542
Commitments and contingent liabilities (see Note 14)				0
0Equity
Commitments and contingent liabilities (see Note 13)						Commitments and contingent liabilities (see Note 13)
Equity						Equity
Morgan Stanley shareholders’ equity:	Morgan Stanley shareholders’ equity:					Morgan Stanley shareholders’ equity:
Preferred stock	Preferred stock	7,750		9,250		Preferred stock	8,750		7,750
Common stock, $0.01 par value:	Common stock, $0.01 par value:					Common stock, $0.01 par value:
Shares authorized: 3,500,000,000; Shares issued: 2,038,893,979; Shares outstanding: 1,798,908,848 and 1,809,624,144		20		20
Shares authorized: 3,500,000,000; Shares issued: 2,038,893,979; Shares outstanding: 1,694,051,265 and 1,772,226,530						Shares authorized: 3,500,000,000; Shares issued: 2,038,893,979; Shares outstanding: 1,694,051,265 and 1,772,226,530	20		20
Additional paid-in capital	Additional paid-in capital	28,504		25,546		Additional paid-in capital	28,893		28,841
Retained earnings	Retained earnings	87,099		78,694		Retained earnings	94,055		89,432
Employee stock trusts	Employee stock trusts	3,770		3,043		Employee stock trusts	4,860		3,955
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(2,701)		(1,962)		Accumulated other comprehensive income (loss)	(5,758)		(3,102)
Common stock held in treasury at cost, $0.01 par value (239,985,131 and 229,269,835 shares)		(14,769)		(9,767)
Common stock held in treasury at cost, $0.01 par value (344,842,714 and 266,667,449 shares)						Common stock held in treasury at cost, $0.01 par value (344,842,714 and 266,667,449 shares)	(24,949)		(17,500)
Common stock issued to employee stock trusts	Common stock issued to employee stock trusts	(3,770)		(3,043)		Common stock issued to employee stock trusts	(4,860)		(3,955)
Total Morgan Stanley shareholders’ equity	Total Morgan Stanley shareholders’ equity	105,903		101,781		Total Morgan Stanley shareholders’ equity	101,011		105,441
Noncontrolling interests	Noncontrolling interests	1,216		1,368		Noncontrolling interests	1,078		1,157
Total equity	Total equity	107,119		103,149		Total equity	102,089		106,598
Total liabilities and equity	Total liabilities and equity	$	1,190,476	$	1,115,862	Total liabilities and equity	$	1,160,029	$	1,188,140


See Notes to Consolidated Financial Statements			37			September ~~2021~~2022 Form 10-Q


Table of Contents
Consolidated ~~Statements~~Statement of Changes in Total Equity (Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2022		2021		2022		2021
Preferred Stock	Preferred Stock									Preferred Stock
Beginning balance	Beginning balance	$	7,750	$	8,520	$	9,250	$	8,520	Beginning balance	$	7,750	$	7,750	$	7,750	$	9,250
Redemption of Series J preferred stock		—		—		(1,500)		—
Issuance of preferred stock										Issuance of preferred stock	1,000		—		1,000		—
Redemption of preferred stock										Redemption of preferred stock	—		—		—		(1,500)
Ending balance	Ending balance	7,750		8,520		7,750		8,520		Ending balance	8,750		7,750		8,750		7,750
Common Stock	Common Stock									Common Stock
Beginning and ending balance	Beginning and ending balance	20		20		20		20		Beginning and ending balance	20		20		20		20
Additional Paid-in Capital	Additional Paid-in Capital									Additional Paid-in Capital
Beginning balance	Beginning balance	28,030		23,782		25,546		23,935		Beginning balance	28,394		28,030		28,841		25,546
Share-based award activity	Share-based award activity	473		232		765		79		Share-based award activity	505		473		57		765
Issuance of preferred stock										Issuance of preferred stock	(6)		—		(6)		—
Issuance of common stock for the acquisition of Eaton Vance	Issuance of common stock for the acquisition of Eaton Vance	—		—		2,185		—		Issuance of common stock for the acquisition of Eaton Vance	—		—		—		2,185

Other net increases (decreases)	Other net increases (decreases)	1		1		8		1		Other net increases (decreases)	—		1		1		8
Ending balance	Ending balance	28,504		24,015		28,504		24,015		Ending balance	28,893		28,504		28,893		28,504
Retained Earnings	Retained Earnings									Retained Earnings
Beginning balance	Beginning balance	84,791		74,015		78,694		70,589		Beginning balance	92,889		84,791		89,432		78,694
Cumulative adjustment related to the adoption of financial instruments-credit losses accounting update1		—		—		—		(100)
Net income applicable to Morgan Stanley	Net income applicable to Morgan Stanley	3,707		2,717		11,338		7,611		Net income applicable to Morgan Stanley	2,632		3,707		8,793		11,338
Preferred stock dividends2		(123)		(120)		(364)		(377)
Common stock dividends2		(1,276)		(551)		(2,562)		(1,662)

Preferred stock dividends1										Preferred stock dividends1	(138)		(123)		(366)		(364)
Common stock dividends1										Common stock dividends1	(1,329)		(1,276)		(3,802)		(2,562)
Other net increases (decreases)	Other net increases (decreases)	—		—		(7)		—		Other net increases (decreases)	1		—		(2)		(7)
Ending balance	Ending balance	87,099		76,061		87,099		76,061		Ending balance	94,055		87,099		94,055		87,099
Employee Stock Trusts	Employee Stock Trusts									Employee Stock Trusts
Beginning balance	Beginning balance	3,768		3,018		3,043		2,918		Beginning balance	4,900		3,768		3,955		3,043
Share-based award activity	Share-based award activity	2		(26)		727		74		Share-based award activity	(40)		2		905		727
Ending balance	Ending balance	3,770		2,992		3,770		2,992		Ending balance	4,860		3,770		4,860		3,770
Accumulated Other Comprehensive Income (Loss)	Accumulated Other Comprehensive Income (Loss)									Accumulated Other Comprehensive Income (Loss)
Beginning balance	Beginning balance	(2,523)		1		(1,962)		(2,788)		Beginning balance	(5,021)		(2,523)		(3,102)		(1,962)
Net change in Accumulated other comprehensive income (loss)	Net change in Accumulated other comprehensive income (loss)	(178)		(538)		(739)		2,251		Net change in Accumulated other comprehensive income (loss)	(737)		(178)		(2,656)		(739)
Ending balance	Ending balance	(2,701)		(537)		(2,701)		(537)		Ending balance	(5,758)		(2,701)		(5,758)		(2,701)
Common Stock Held in Treasury at Cost	Common Stock Held in Treasury at Cost									Common Stock Held in Treasury at Cost
Beginning balance	Beginning balance	(11,198)		(19,693)		(9,767)		(18,727)		Beginning balance	(22,436)		(11,198)		(17,500)		(9,767)
Share-based award activity	Share-based award activity	57		38		1,094		882		Share-based award activity	95		57		1,677		1,094
Repurchases of common stock and employee tax withholdings	Repurchases of common stock and employee tax withholdings	(3,628)		(30)		(9,228)		(1,840)		Repurchases of common stock and employee tax withholdings	(2,608)		(3,628)		(9,126)		(9,228)
Issuance of common stock for the acquisition of Eaton Vance	Issuance of common stock for the acquisition of Eaton Vance	—		—		3,132		—		Issuance of common stock for the acquisition of Eaton Vance	—		—		—		3,132
Ending balance	Ending balance	(14,769)		(19,685)		(14,769)		(19,685)		Ending balance	(24,949)		(14,769)		(24,949)		(14,769)
Common Stock Issued to Employee Stock Trusts	Common Stock Issued to Employee Stock Trusts									Common Stock Issued to Employee Stock Trusts
Beginning balance	Beginning balance	(3,768)		(3,018)		(3,043)		(2,918)		Beginning balance	(4,900)		(3,768)		(3,955)		(3,043)
Share-based award activity	Share-based award activity	(2)		26		(727)		(74)		Share-based award activity	40		(2)		(905)		(727)
Ending balance	Ending balance	(3,770)		(2,992)		(3,770)		(2,992)		Ending balance	(4,860)		(3,770)		(4,860)		(3,770)
Noncontrolling Interests	Noncontrolling Interests									Noncontrolling Interests
Beginning balance	Beginning balance	1,292		1,364		1,368		1,148		Beginning balance	1,066		1,292		1,157		1,368
Net income applicable to noncontrolling interests	Net income applicable to noncontrolling interests	17		34		66		156		Net income applicable to noncontrolling interests	30		17		120		66
Net change in Accumulated other comprehensive income (loss) applicable to noncontrolling interests	Net change in Accumulated other comprehensive income (loss) applicable to noncontrolling interests	(4)		28		(64)		79		Net change in Accumulated other comprehensive income (loss) applicable to noncontrolling interests	(17)		(4)		(142)		(64)
Other net increases (decreases)	Other net increases (decreases)	(89)		(2)		(154)		41		Other net increases (decreases)	(1)		(89)		(57)		(154)
Ending balance	Ending balance	1,216		1,424		1,216		1,424		Ending balance	1,078		1,216		1,078		1,216
Total Equity	Total Equity	$	107,119	$	89,818	$	107,119	$	89,818	Total Equity	$	102,089	$	107,119	$	102,089	$	107,119

1.See ~~Notes 2 and 18 in the 2020 Form 10-K for further information regarding cumulative adjustments for accounting changes.~~

2.~~See~~ Note 1716 for information regarding dividends per share for each class of stock.


September ~~2021~~2022 Form 10-Q			38			See Notes to Consolidated Financial Statements


Table of Contents
Consolidated Cash Flow ~~Statements~~Statement (Unaudited)


		Nine Months Ended September 30,					Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		$ in millions	2022		2021
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net income	Net income	$	11,404	$	7,767	Net income	$	8,913	$	11,404
Adjustments to reconcile net income to net cash provided by (used for) operating activities:	Adjustments to reconcile net income to net cash provided by (used for) operating activities:					Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Stock-based compensation expense	Stock-based compensation expense	1,636		802		Stock-based compensation expense	1,377		1,636
Depreciation and amortization	Depreciation and amortization	2,979		2,363		Depreciation and amortization	2,791		2,979
Provision for credit losses	Provision for credit losses	(1)		757		Provision for credit losses	193		(1)
Other operating adjustments	Other operating adjustments	(149)		663		Other operating adjustments	508		(149)
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Trading assets, net of Trading liabilities	Trading assets, net of Trading liabilities	2,832		18,442		Trading assets, net of Trading liabilities	(23,285)		2,832
Securities borrowed	Securities borrowed	(13,531)		5,746		Securities borrowed	(6,765)		(13,531)
Securities loaned	Securities loaned	3,402		(582)		Securities loaned	798		3,402
Customer and other receivables and other assets	Customer and other receivables and other assets	(2,692)		(17,098)		Customer and other receivables and other assets	7,966		(2,692)
Customer and other payables and other liabilities	Customer and other payables and other liabilities	19,829		(5,818)		Customer and other payables and other liabilities	8,283		19,829
Securities purchased under agreements to resell	Securities purchased under agreements to resell	(3,487)		(59)		Securities purchased under agreements to resell	8,875		(3,487)
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	11,400		(12,824)		Securities sold under agreements to repurchase	(2,055)		11,400
Net cash provided by (used for) operating activities	Net cash provided by (used for) operating activities	33,622		159		Net cash provided by (used for) operating activities	7,599		33,622
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Proceeds from (payments for):	Proceeds from (payments for):					Proceeds from (payments for):
Other assets—Premises, equipment and software, net	Other assets—Premises, equipment and software, net	(1,658)		(905)		Other assets—Premises, equipment and software, net	(2,308)		(1,658)
Changes in loans, net	Changes in loans, net	(23,197)		(13,592)		Changes in loans, net	(23,280)		(23,197)
Investment securities:
AFS securities1:						AFS securities1:
Purchases	Purchases	(57,334)		(41,147)		Purchases	(22,636)		(32,483)
Proceeds from sales	Proceeds from sales	18,325		7,220		Proceeds from sales	21,922		18,325
Proceeds from paydowns and maturities						Proceeds from paydowns and maturities	11,682		21,508
HTM securities1:						HTM securities1:
Purchases						Purchases	(5,231)		(24,851)
Proceeds from paydowns and maturities	Proceeds from paydowns and maturities	32,368		11,240		Proceeds from paydowns and maturities	7,837		10,860
Cash paid as part of the Eaton Vance acquisition, net of cash acquired	Cash paid as part of the Eaton Vance acquisition, net of cash acquired	(2,648)		—		Cash paid as part of the Eaton Vance acquisition, net of cash acquired	—		(2,648)
Other investing activities	Other investing activities	(447)		(254)		Other investing activities	(516)		(447)
Net cash provided by (used for) investing activities	Net cash provided by (used for) investing activities	(34,591)		(37,438)		Net cash provided by (used for) investing activities	(12,530)		(34,591)
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Net proceeds from (payments for):	Net proceeds from (payments for):					Net proceeds from (payments for):
Other secured financings	Other secured financings	(1,125)		229		Other secured financings	(1,352)		(1,125)
Deposits	Deposits	18,347		48,734		Deposits	(16,816)		18,347
Issuance of preferred stock, net of issuance costs						Issuance of preferred stock, net of issuance costs	994		—
Proceeds from issuance of Borrowings	Proceeds from issuance of Borrowings	73,591		42,169		Proceeds from issuance of Borrowings	54,283		73,591
Payments for:	Payments for:					Payments for:
Borrowings	Borrowings	(56,699)		(38,151)		Borrowings	(27,019)		(56,699)
Repurchases of common stock and employee tax withholdings	Repurchases of common stock and employee tax withholdings	(9,228)		(1,840)		Repurchases of common stock and employee tax withholdings	(9,126)		(9,228)
Cash dividends	Cash dividends	(2,857)		(2,008)		Cash dividends	(4,023)		(2,857)
Other financing activities	Other financing activities	(197)		(208)		Other financing activities	(202)		(197)
Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	21,832		48,925		Net cash provided by (used for) financing activities	(3,261)		21,832
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(2,654)		955		Effect of exchange rate changes on cash and cash equivalents	(7,837)		(2,654)
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	18,209		12,601		Net increase (decrease) in cash and cash equivalents	(16,029)		18,209
Cash and cash equivalents, at beginning of period	Cash and cash equivalents, at beginning of period	105,654		82,171		Cash and cash equivalents, at beginning of period	127,725		105,654
Cash and cash equivalents, at end of period	Cash and cash equivalents, at end of period	$	123,863	$	94,772	Cash and cash equivalents, at end of period	$	111,696	$	123,863
Supplemental Disclosure of Cash Flow Information	Supplemental Disclosure of Cash Flow Information					Supplemental Disclosure of Cash Flow Information
Cash payments for:	Cash payments for:					Cash payments for:
Interest	Interest	$	1,236	$	3,747	Interest	$	4,339	$	1,236
Income taxes, net of refunds	Income taxes, net of refunds	3,303		1,675		Income taxes, net of refunds	2,805		3,303

1.The prior period amounts have been revised to present Purchases, Proceeds from sales and Proceeds from paydowns and maturities separately between AFS securities and HTM securities.


See Notes to Consolidated Financial Statements			39			September ~~2021~~2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

1. Introduction and Basis of Presentation

The Firm

Morgan Stanley is a global financial services firm that maintains significant market positions in each of its business segments—Institutional Securities, Wealth Management and Investment Management. Morgan Stanley, through its subsidiaries and affiliates, provides a wide variety of products and services to a large and diversified group of clients and customers, including corporations, governments, financial institutions and individuals. Unless the context otherwise requires, the terms “Morgan Stanley” or the “Firm” mean Morgan Stanley (the “Parent Company”) together with its consolidated subsidiaries. Disclosures reflect the effects of the acquisition of Eaton Vance Corp. (“Eaton Vance”) prospectively from the March 1, 2021 acquisition date. See Note 3 to the financial statements in the 2021 Form 10-K for further information. See the “Glossary of Common Terms and Acronyms” for the definition of certain terms and acronyms used throughout this Form 10-Q.

A description of the clients and principal products and services of each of the Firm’s business segments is as follows:

income, alternatives and solutions, and liquidity and overlay services. Institutional clients include defined benefit/defined contribution plans, foundations,

endowments, government entities, sovereign wealth funds, insurance companies, third-party fund sponsors and corporations. Individual clients are generally served through intermediaries, including affiliated and non-affiliated distributors.

Basis of Financial Information

The financial statements are prepared in accordance with U.S. GAAP, which requires the Firm to make estimates and assumptions regarding the valuations of certain financial instruments, the valuations of goodwill and intangible assets, the outcome of legal and tax matters, deferred tax assets, ACL, and other matters that affect its financial statements and related disclosures. The Firm believes that the estimates utilized in the preparation of its financial statements are prudent and reasonable. Actual results could differ materially from these estimates.

The financial statements reflect the effects of the following reclassifications to prior period amounts. The Provision for credit losses for loans and lending commitments is presented as a separate line in the income statements. Previously, the provision for credit losses for loans was included in Other revenues, and the provision for credit losses for lending commitments was included in Other expenses. In addition, economic hedges of certain held-for-sale and held-for-investment loans, which were previously reported in Trading revenues, are reported in Other revenues.

The ~~Notes~~notes are an integral part of the Firm’s financial statements. The Firm has evaluated subsequent events for adjustment to or disclosure in these financial statements through the date of this report and has not identified any recordable or disclosable events not otherwise reported in these financial statements or the notes thereto.

The accompanying financial statements should be read in conjunction with the Firm’s financial statements and notes thereto included in the ~~2020~~2021 Form 10-K. Certain footnote disclosures included in the ~~2020~~2021 Form 10-K have been condensed or omitted from these financial statements as they are not required for interim reporting under U.S. GAAP. The financial statements reflect all adjustments of a normal, recurring nature that are, in the opinion of management, necessary for the fair presentation of the results for the interim period. The results of operations for interim periods are not necessarily indicative of results for the entire year.

Consolidation

The financial statements include the accounts of the Firm, its wholly owned subsidiaries and other entities in which the Firm has a controlling financial interest, including certain VIEs (see Note ~~15)~~14). Intercompany balances and transactions have been eliminated. For consolidated subsidiaries that are not wholly owned, the third-party holdings of equity interests are referred to as Noncontrolling interests. The net income attributable to Noncontrolling interests for such subsidiaries is presented as Net income applicable to noncontrolling interests in the income statement. The portion of shareholders’ equity that is attributable to noncontrolling interests for such subsidiaries is presented as Noncontrolling interests, a component of Total equity, in the balance sheet.

For a discussion of the Firm’s significant regulated U.S. and international subsidiaries and its involvement with VIEs, see Note 1 to the financial statements in the 2021 Form 10-K.


September ~~2021~~2022 Form 10-Q			40


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

presented as Net income applicable to noncontrolling interests in the income statements. The portion of shareholders’ equity that is attributable to noncontrolling interests for such subsidiaries is presented as noncontrolling interests, a component of Total equity, in the balance sheets.

~~For a discussion of the Firm’s significant regulated U.S. and international subsidiaries and its involvement with VIEs, see Note 1 to the financial statements in the 2020 Form 10-K.~~

2. Significant Accounting Policies

For a detailed discussion about the Firm’s significant accounting policies and for further information on accounting updates adopted, ~~in the prior year,~~ see Note 2 to the financial statements in the ~~2020~~2021 Form 10-K.

During the nine months ended September 30, ~~2021~~2022 (“current year period”), there were no significant updates to the Firm’s significant accounting ~~policies, other than as described below~~policies.

3. Cash and inCash Equivalents


$ in millions	At September 30, 2022		At December 31, 2021
Cash and due from banks	$	6,836	$	8,394
Interest bearing deposits with banks	104,860		119,331
Total Cash and cash equivalents	$	111,696	$	127,725
Restricted cash	$	40,413	$	40,887

For additional information on cash and cash equivalents, including restricted cash, see Note 12 to the financial ~~statements.~~

~~The Firm’s acquisition of Eaton Vance Corp. (“Eaton Vance”) on March 1,~~statements in the 2021 added indefinite lived intangible assets to the Firm’s balance sheet. Indefinite lived intangible assets are not amortized but are tested for impairment on an annual basis and on an interim basis when certain events or circumstances exist. For both the annual and interim tests, the Firm has the option to either (i) perform a quantitative impairment test or (ii) first perform a qualitative assessment to determine whether it is more likely than not that the asset is impaired, in which case the quantitative test would be performed.

~~Goodwill~~

The Firm completed its annual goodwill impairment testing as of July 1, 2021. The Firm’s impairment testing did not indicate any goodwill impairment, as each of the Firm’s reporting units with goodwill had a fair value that was in excess of its carrying value.Form 10-K.

~~3. Acquisitions~~4. Fair Values

~~Acquisition of Eaton Vance~~Recurring Fair Value Measurements

~~On March 1, 2021, the Firm completed the acquisition of 100% of Eaton Vance in~~Assets and Liabilities Measured at Fair Value on a stock and cash transaction, which increases the scale and breadth of the Investment Management business segment. Total consideration for the transaction was approximately $8.7 billion, which consists of the $5.3 billion fair value of 69 million common shares issued from Common stock held in treasury and cash of approximately $3.4 billion.Recurring Basis

Upon acquisition, the assets and liabilities of Eaton Vance were adjusted to their respective fair values as of the closing date of the transaction, including the identifiable intangible assets acquired. In addition, the excess of the purchase price


	At September 30, 2022
$ in millions	Level 1		Level 2		Level 3		Netting1		Total
Assets at fair value
Trading assets:
U.S. Treasury and agency securities	$	37,694	$	29,822	$	1	$	—	$	67,517
Other sovereign government obligations	27,618		5,411		137		—		33,166
State and municipal securities	—		2,259		52		—		2,311
MABS	—		2,090		344		—		2,434
Loans and lending commitments2	—		4,929		2,583		—		7,512
Corporate and other debt	—		24,936		1,898		—		26,834
Corporate equities3	74,566		1,043		145		—		75,754
Derivative and other contracts:
Interest rate	18,630		173,134		768		—		192,532
Credit	—		10,294		474		—		10,768
Foreign exchange	56		167,919		269		—		168,244
Equity	1,736		59,409		531		—		61,676
Commodity and other	11,660		31,216		4,134		—		47,010
Netting1	(15,435)		(328,762)		(1,363)		(68,420)		(413,980)
Total derivative and other contracts	16,647		113,210		4,813		(68,420)		66,250
Investments4	588		716		873		—		2,177
Physical commodities	—		1,924		—		—		1,924
Total trading assets4	157,113		186,340		10,846		(68,420)		285,879
Investment securities—AFS	53,618		29,979		36		—		83,633

Total assets at fair value	$	210,731	$	216,319	$	10,882	$	(68,420)	$	369,512

over the fair value of the net assets acquired has been recorded as goodwill. The fair value estimates used in valuing certain acquired assets and liabilities are based, in part, on inputs that are unobservable. For intangible assets, these include, but are not limited to, forecasted future cash flows, revenue growth rates, attrition rates and discount rates.


	At September 30, 2022
$ in millions	Level 1		Level 2		Level 3		Netting1		Total
Liabilities at fair value
Deposits	$	—	$	3,654	$	7	$	—	$	3,661
Trading liabilities:
U.S. Treasury and agency securities	15,842		8		1		—		15,851
Other sovereign government obligations	19,215		2,398		12		—		21,625
Corporate and other debt	—		9,993		23		—		10,016
Corporate equities3	66,268		564		54		—		66,886
Derivative and other contracts:
Interest rate	16,043		166,207		945		—		183,195
Credit	—		10,079		352		—		10,431
Foreign exchange	57		159,478		94		—		159,629
Equity	1,868		66,950		987		—		69,805
Commodity and other	12,669		24,561		2,333		—		39,563
Netting1	(15,435)		(328,762)		(1,363)		(68,801)		(414,361)
Total derivative and other contracts	15,202		98,513		3,348		(68,801)		48,262
Total trading liabilities	116,527		111,476		3,438		(68,801)		162,640
Securities sold under agreements to repurchase	—		443		508		—		951
Other secured financings	—		4,481		113		—		4,594
Borrowings	—		66,851		1,937		—		68,788
Total liabilities at fair value	$	116,527	$	186,905	$	6,003	$	(68,801)	$	240,634

~~Eaton Vance Purchase Price Allocation~~


~~$ in millions~~	At March 1, 2021
~~Assets~~
~~Cash and cash equivalents~~	$	~~691~~
~~Trading assets at fair value:~~
~~Loans and lending commitments~~	~~445~~
~~Investments~~	~~299~~
~~Corporate and other debt~~	52
~~Customer and other receivables~~	~~331~~
~~Goodwill~~	~~5,270~~
~~Intangible assets~~	~~3,956~~
~~Other assets~~	~~836~~
~~Total assets~~	$	~~11,880~~
~~Liabilities~~
~~Other secured financings~~	$	~~399~~
~~Other liabilities and accrued expenses~~	~~2,147~~
~~Borrowings~~	~~678~~
~~Total liabilities~~	$	~~3,224~~

~~Acquired Intangible Assets~~

$ in millions Weighted
average life
(years) At
March 1,
2021
Non-amortizable
Management contracts indefinite $ 2,120
Amortizable
Customer relationships 16 1,455
Tradenames 23 221
Management contracts 16 160
Total acquired Intangible assets $ 3,956

~~Eaton Vance Results Included in the Firm’s Consolidated Results~~

$ in millions Three Months Ended
September 30, 2021
Nine Months Ended
September 30, 20211
Net revenues $ 549 $ 1,258
Net income 137 287

1.~~Reflects Eaton Vance results from March 1, 2021 through September 30, 2021.~~

~~Morgan Stanley and Eaton Vance Proforma Combined Financial Information~~

Three Months Ended
September 30, Nine Months Ended
September 30,
$ in millions
20211
2020 2021 2020
Net revenues $ 14,753 $ 12,072 $ 45,527 $ 36,313
Net income 3,724 2,729 11,504 7,420

1.~~Amounts are the same as those presented in the Consolidated Income Statement for the current quarter.~~

The proforma financial information presented in the previous table was computed by combining the historical financial information of the Firm and Eaton Vance along with the effects of the acquisition method of accounting for business


	At December 31, 2021
$ in millions	Level 1		Level 2		Level 3		Netting1		Total
Assets at fair value
Trading assets:
U.S. Treasury and agency securities	$	45,970	$	29,749	$	2	$	—	$	75,721
Other sovereign government obligations	28,041		4,533		211		—		32,785
State and municipal securities	—		1,905		13		—		1,918
MABS	—		1,237		344		—		1,581
Loans and lending commitments2	—		8,821		3,806		—		12,627
Corporate and other debt	—		27,309		1,973		—		29,282
Corporate equities3	91,630		832		115		—		92,577
Derivative and other contracts:
Interest rate	1,364		153,048		1,153		—		155,565
Credit	—		8,441		509		—		8,950
Foreign exchange	28		74,571		132		—		74,731
Equity	1,562		68,519		251		—		70,332
Commodity and other	4,462		20,194		3,057		—		27,713
Netting1	(5,696)		(241,814)		(794)		(50,833)		(299,137)
Total derivative and other contracts	1,720		82,959		4,308		(50,833)		38,154
Investments4	735		846		1,125		—		2,706
Physical commodities	—		2,771		—		—		2,771
Total trading assets4	168,096		160,962		11,897		(50,833)		290,122
Investment securities—AFS	59,021		43,809		—		—		102,830
Securities purchased under agreements to resell	—		7		—		—		7
Total assets at fair value	$	227,117	$	204,778	$	11,897	$	(50,833)	$	392,959


			41			September ~~2021~~2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

~~combinations as though the companies were combined on January 1, 2020.~~

The proforma information does not reflect the potential benefits of cost and funding synergies, opportunities to earn additional revenues, or other factors, and therefore does not represent what the actual Net revenues and Net income would have been had the companies actually been combined as of this date.

~~4. Cash and Cash Equivalents~~

Cash and cash equivalents consist of Cash and due from banks and Interest bearing deposits with banks. Cash equivalents are highly liquid investments with remaining maturities of three months or less from the acquisition date that are readily convertible to cash and are not held for trading purposes.

$ in millions At
September 30,
2021 At
December 31,
2020
Cash and due from banks $ 10,216 $ 9,792
Interest bearing deposits with banks 113,647 95,862
Total Cash and cash equivalents $ 123,863 $ 105,654
Restricted cash $ 43,829 $ 38,202

Cash and cash equivalents also include Restricted cash such as cash segregated in compliance with federal or other regulations, including minimum reserve requirements set by the Federal Reserve Bank and other central banks, and the Firm’s initial margin deposited with clearing organizations.

~~5. Fair Values~~

~~Recurring Fair Value Measurements~~

~~Assets and Liabilities Measured at Fair Value on a Recurring Basis~~

At September 30, 2021
$ in millions Level 1 Level 2 Level 3
Netting1
Total
Assets at fair value
Trading assets:
U.S. Treasury and agency securities $ 44,238 $ 26,312 $ 4 $ — $ 70,554
Other sovereign government obligations 32,668 5,246 127 — 38,041
State and municipal securities — 1,960 — — 1,960
MABS — 1,249 366 — 1,615
Loans and lending commitments2
— 10,611 4,304 — 14,915
Corporate and other debt — 31,242 1,563 — 32,805
Corporate equities3
100,903 1,126 214 — 102,243
Derivative and other contracts:
Interest rate 3,382 158,164 1,311 — 162,857
Credit — 9,063 510 — 9,573
Foreign exchange 32 73,464 147 — 73,643
Equity 1,211 69,495 464 — 71,170
Commodity and other 12,547 27,294 2,882 — 42,723
Netting1
(15,382) (248,815) (869) (51,501) (316,567)
Total derivative and other contracts 1,790 88,665 4,445 (51,501) 43,399
Investments4
795 648 781 — 2,224
Physical commodities — 3,049 — — 3,049
Total trading assets4
180,394 170,108 11,804 (51,501) 310,805
Investment securities—AFS 55,839 45,755 — — 101,594
Securities purchased under agreements to resell — 7 — — 7
Total assets at fair value $ 236,233 $ 215,870 $ 11,804 $ (51,501) $ 412,406

At September 30, 2021
$ in millions Level 1 Level 2 Level 3
Netting1
Total
Liabilities at fair value
Deposits $ — $ 1,948 $ 62 $ — $ 2,010
Trading liabilities:
U.S. Treasury and agency securities 19,623 1,142 — — 20,765
Other sovereign government obligations 23,194 1,814 3 — 25,011
Corporate and other debt — 10,565 5 — 10,570
Corporate equities3
74,549 314 34 — 74,897
Derivative and other contracts:
Interest rate 3,251 148,188 515 — 151,954
Credit — 9,671 544 — 10,215
Foreign exchange 35 69,491 50 — 69,576
Equity 1,477 80,045 1,464 — 82,986
Commodity and other 12,445 23,170 1,573 — 37,188
Netting1
(15,382) (248,815) (869) (48,137) (313,203)
Total derivative and other contracts 1,826 81,750 3,277 (48,137) 38,716
Total trading liabilities 119,192 95,585 3,319 (48,137) 169,959
Securities sold under agreements to repurchase — 480 448 — 928
Other secured financings — 5,219 395 — 5,614
Borrowings — 73,696 2,056 — 75,752
Total liabilities at fair value $ 119,192 $ 176,928 $ 6,280 $ (48,137) $ 254,263


~~September 2021 Form 10-Q~~			42


~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)

At December 31, 2020
$ in millions Level 1 Level 2 Level 3
Netting1
Total
Assets at fair value
Trading assets:
U.S. Treasury and agency securities $ 43,084 $ 31,524 $ 9 $ — $ 74,617
Other sovereign government obligations 26,174 5,048 268 — 31,490
State and municipal securities — 1,135 — — 1,135
MABS — 1,070 322 — 1,392
Loans and lending commitments2
— 5,389 5,759 — 11,148
Corporate and other debt — 30,093 3,435 — 33,528
Corporate equities3
111,575 1,142 86 — 112,803
Derivative and other contracts:
Interest rate 4,458 227,818 1,210 — 233,486
Credit — 6,840 701 — 7,541
Foreign exchange 29 93,770 260 — 94,059
Equity 1,132 65,943 1,369 — 68,444
Commodity and other 1,818 10,108 2,723 — 14,649
Netting1
(5,488) (310,534) (1,351) (62,956) (380,329)
Total derivative and other contracts 1,949 93,945 4,912 (62,956) 37,850
Investments4
624 234 828 — 1,686
Physical commodities — 3,260 — — 3,260
Total trading assets4
183,406 172,840 15,619 (62,956) 308,909
Investment securities—AFS 46,354 61,225 2,804 — 110,383
Securities purchased under agreements to resell — 12 3 — 15
Total assets at fair value $ 229,760 $ 234,077 $ 18,426 $ (62,956) $ 419,307


		At December 31, 2020											At December 31, 2021
$ in millions	$ in millions	Level 1		Level 2		Level 3		Netting1		Total		$ in millions	Level 1		Level 2		Level 3		Netting1		Total
Liabilities at fair value	Liabilities at fair value											Liabilities at fair value
Deposits	Deposits	$	—	$	3,395	$	126	$	—	$	3,521	Deposits	$	—	$	1,873	$	67	$	—	$	1,940
Trading liabilities:	Trading liabilities:											Trading liabilities:
U.S. Treasury and agency securities	U.S. Treasury and agency securities	10,204		1		—		—		10,205		U.S. Treasury and agency securities	16,433		319		—		—		16,752
Other sovereign government obligations	Other sovereign government obligations	24,209		1,738		16		—		25,963		Other sovereign government obligations	20,771		2,062		—		—		22,833
Corporate and other debt	Corporate and other debt	—		8,468		—		—		8,468		Corporate and other debt	—		8,707		16		—		8,723
Corporate equities3	Corporate equities3	67,822		172		63		—		68,057		Corporate equities3	75,181		226		45		—		75,452
Derivative and other contracts:	Derivative and other contracts:											Derivative and other contracts:
Interest rate	Interest rate	4,789		213,321		528		—		218,638		Interest rate	1,087		145,670		445		—		147,202
Credit	Credit	—		7,500		652		—		8,152		Credit	—		9,090		411		—		9,501
Foreign exchange	Foreign exchange	11		94,698		199		—		94,908		Foreign exchange	19		73,096		80		—		73,195
Equity	Equity	1,245		81,683		3,600		—		86,528		Equity	2,119		77,363		1,196		—		80,678
Commodity and other	Commodity and other	1,758		9,418		1,014		—		12,190		Commodity and other	4,563		16,837		1,528		—		22,928
Netting1	Netting1	(5,488)		(310,534)		(1,351)		(58,105)		(375,478)		Netting1	(5,696)		(241,814)		(794)		(50,632)		(298,936)
Total derivative and other contracts	Total derivative and other contracts	2,315		96,086		4,642		(58,105)		44,938		Total derivative and other contracts	2,092		80,242		2,866		(50,632)		34,568
Total trading liabilities	Total trading liabilities	104,550		106,465		4,721		(58,105)		157,631		Total trading liabilities	114,477		91,556		2,927		(50,632)		158,328
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	—		671		444		—		1,115		Securities sold under agreements to repurchase	—		140		651		—		791
Other secured financings	Other secured financings	—		11,185		516		—		11,701		Other secured financings	—		4,730		403		—		5,133
Borrowings	Borrowings	—		69,327		4,374		—		73,701		Borrowings	—		74,183		2,157		—		76,340
Total liabilities at fair value	Total liabilities at fair value	$	104,550	$	191,043	$	10,181	$	(58,105)	$	247,669	Total liabilities at fair value	$	114,477	$	172,482	$	6,205	$	(50,632)	$	242,532

MABS—Mortgage- and asset-backed securities

1.For positions with the same counterparty that cross over the levels of the fair value hierarchy, both counterparty netting and cash collateral netting are included in the column titled “Netting.” Positions classified within the same level that are with the same counterparty are netted within that level. For further information on derivative instruments and hedging activities, see Note 7.6.

2.For a further breakdown by type, see the following Detail of Loans and Lending Commitments at Fair Value table.

3.For trading purposes, the Firm holds or sells short equity securities issued by entities in diverse industries and of varying sizes.

4.Amounts exclude certain investments that are measured based on NAV per share, which are not classified in the fair value hierarchy. For additional disclosure about such investments, see “Net Asset Value Measurements” herein.

Detail of Loans and Lending Commitments at Fair Value


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Corporate	Corporate	$	13	$	13	Corporate	$	—	$	8
Secured lending facilities	Secured lending facilities	350		648		Secured lending facilities	7		—
Commercial Real Estate	Commercial Real Estate	2,418		916		Commercial Real Estate	476		863
Residential Real Estate	Residential Real Estate	3,118		2,145		Residential Real Estate	1,568		3,911
Securities-based lending and Other loans	Securities-based lending and Other loans	9,016		7,426		Securities-based lending and Other loans	5,461		7,845
Total	Total	$	14,915	$	11,148	Total	$	7,512	$	12,627

Unsettled Fair Value of Futures Contracts1


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Customer and other receivables (payables), net	Customer and other receivables (payables), net	$	(26)	$	434	Customer and other receivables (payables), net	$	693	$	948

1.These contracts are primarily Level 1, actively traded, valued based on quoted prices from the exchange and are excluded from the previous recurring fair value tables.

For a description of the valuation techniques applied to the Firm’s major categories of assets and liabilities measured at fair value on a recurring basis, see Note 5 to the financial statements in the ~~2020~~2021 Form 10-K. During the current quarter, there were no significant revisions made to the Firm’s valuation techniques.

Rollforward of Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis


	Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	2022		2021		2022		2021
U.S. Treasury and agency securities
Beginning balance	$	9	$	25	$	2	$	9
Realized and unrealized gains (losses)	—		(1)		(1)		—
Purchases	1		4		2		28
Sales	(4)		(24)		(7)		(33)

Net transfers	(5)		—		5		—
Ending balance	$	1	$	4	$	1	$	4
Unrealized gains (losses)	$	—	$	(1)	$	(1)	$	—
Other sovereign government obligations
Beginning balance	$	161	$	78	$	211	$	268
Realized and unrealized gains (losses)	23		(3)		(24)		(1)
Purchases	43		59		69		129
Sales	(57)		(4)		(60)		(269)

Net transfers	(33)		(3)		(59)		—
Ending balance	$	137	$	127	$	137	$	127
Unrealized gains (losses)	$	23	$	(3)	$	(22)	$	—
State and municipal securities
Beginning balance	$	29	$	4	$	13	$	—
Realized and unrealized gains (losses)	(1)		—		(2)		—
Purchases	4		—		54		4
Sales	—		(4)		—		(4)

Net transfers	20		—		(13)		—
Ending balance	$	52	$	—	$	52	$	—
Unrealized gains (losses)	$	(3)	$	—	$	(2)	$	—
MABS
Beginning balance	$	339	$	357	$	344	$	322
Realized and unrealized gains (losses)	8		11		(366)		67
Purchases	3		96		448		263
Sales	(33)		(23)		(116)		(216)

Net transfers	27		(75)		34		(70)
Ending balance	$	344	$	366	$	344	$	366
Unrealized gains (losses)	$	9	$	11	$	(12)	$	8
Loans and lending commitments
Beginning balance	$	2,507	$	4,896	$	3,806	$	5,759
Realized and unrealized gains (losses)	(26)		47		8		33
Purchases and originations	541		1,373		800		2,467
Sales	(353)		(768)		(801)		(2,314)
Settlements	(144)		(414)		(618)		(1,082)
Net transfers1	58		(830)		(612)		(559)
Ending balance	$	2,583	$	4,304	$	2,583	$	4,304
Unrealized gains (losses)	$	(27)	$	21	$	—	$	(5)


September 2022 Form 10-Q			42


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	2022		2021		2022		2021
Corporate and other debt
Beginning balance	$	2,113	$	1,801	$	1,973	$	3,435
Realized and unrealized gains (losses)	(43)		173		446		(151)
Purchases and originations	132		639		752		1,505
Sales	(528)		(594)		(1,400)		(1,698)
Settlements	(30)		—		(26)		—
Net transfers2	254		(456)		153		(1,528)
Ending balance	$	1,898	$	1,563	$	1,898	$	1,563
Unrealized gains (losses)	$	(42)	$	173	$	454	$	10
Corporate equities
Beginning balance	$	246	$	150	$	115	$	86
Realized and unrealized gains (losses)	(60)		4		(71)		(15)
Purchases	15		83		79		367
Sales	(37)		(7)		(67)		(193)

Net transfers	(19)		(16)		89		(31)
Ending balance	$	145	$	214	$	145	$	214
Unrealized gains (losses)	$	(60)	$	4	$	(65)	$	(5)
Investments
Beginning balance	$	1,027	$	978	$	1,125	$	828
Realized and unrealized gains (losses)	(140)		18		(275)		58
Purchases	6		59		52		150
Sales	(18)		(23)		(33)		(46)

Net transfers	(2)		(251)		4		(209)
Ending balance	$	873	$	781	$	873	$	781
Unrealized gains (losses)	$	(136)	$	13	$	(267)	$	39
Investment securities —AFS
Beginning balance	$	38	$	—	$	—	$	2,804
Realized and unrealized gains (losses)	(2)		—		(2)		(4)

Sales	—		—		—		(203)

Net transfers3	—		—		38		(2,597)
Ending balance	$	36	$	—	$	36	$	—
Unrealized gains (losses)	$	(2)	$	—	$	(2)	$	—









Net derivatives: Interest rate
Beginning balance	$	(102)	$	668	$	708	$	682
Realized and unrealized gains (losses)	(200)		70		(482)		(223)
Purchases	—		22		—		48
Issuances	—		(9)		—		(41)
Settlements	122		18		(38)		101
Net transfers	3		27		(365)		229
Ending balance	$	(177)	$	796	$	(177)	$	796
Unrealized gains (losses)	$	(120)	$	165	$	(201)	$	(168)


	Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	2022		2021		2022		2021
Net derivatives: Credit
Beginning balance	$	190	$	(203)	$	98	$	49
Realized and unrealized gains (losses)	3		59		91		(2)
Purchases	—		12		3		23
Issuances	—		(19)		(1)		(44)
Settlements	(78)		102		(59)		16
Net transfers	7		15		(10)		(76)
Ending balance	$	122	$	(34)	$	122	$	(34)
Unrealized gains (losses)	$	7	$	(26)	$	83	$	—
Net derivatives: Foreign exchange
Beginning balance	$	(331)	$	33	$	52	$	61
Realized and unrealized gains (losses)	38		32		(18)		41
Purchases	—		12		—		19
Issuances	—		(15)		—		(21)
Settlements	73		46		47		(45)
Net transfers	395		(11)		94		42
Ending balance	$	175	$	97	$	175	$	97
Unrealized gains (losses)	$	44	$	29	$	18	$	73
Net derivatives: Equity
Beginning balance	$	(530)	$	(837)	$	(945)	$	(2,231)
Realized and unrealized gains (losses)	1		(45)		275		366
Purchases	48		24		167		69
Issuances	(92)		(122)		(253)		(362)
Settlements	68		(3)		379		(196)
Net transfers2	49		(17)		(79)		1,354
Ending balance	$	(456)	$	(1,000)	$	(456)	$	(1,000)
Unrealized gains (losses)	$	(3)	$	(96)	$	399	$	(57)
Net derivatives: Commodity and other
Beginning balance	$	1,344	$	1,430	$	1,529	$	1,709
Realized and unrealized gains (losses)	238		(167)		546		43
Purchases	2		44		107		324
Issuances	(7)		(31)		(97)		(137)
Settlements	69		(97)		(247)		(371)
Net transfers	155		130		(37)		(259)
Ending balance	$	1,801	$	1,309	$	1,801	$	1,309
Unrealized gains (losses)	$	72	$	(96)	$	25	$	(243)
Deposits
Beginning balance	$	19	$	86	$	67	$	126
Realized and unrealized losses (gains)	—		(1)		—		1

Issuances	2		—		2		—
Settlements	(1)		(4)		(3)		(12)
Net transfers	(13)		(19)		(59)		(53)
Ending balance	$	7	$	62	$	7	$	62
Unrealized losses (gains)	$	—	$	(1)	$	—	$	1
Nonderivative trading liabilities
Beginning balance	$	104	$	59	$	61	$	79
Realized and unrealized losses (gains)	(8)		(11)		(41)		(20)
Purchases	(20)		(16)		(39)		(88)
Sales	16		11		88		83

Net transfers	(2)		(1)		21		(12)
Ending balance	$	90	$	42	$	90	$	42
Unrealized losses (gains)	$	(8)	$	(11)	$	(41)	$	1


			43			September ~~2021~~2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

~~there were no significant revisions made to the Firm’s valuation techniques.~~

~~Rollforward of Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis~~

Three Months Ended
September 30, Nine Months Ended
September 30,
$ in millions 2021 2020 2021 2020
U.S. Treasury and agency securities
Beginning balance $ 25 $ 97 $ 9 $ 22
Realized and unrealized gains (losses) (1) (1) — —
Purchases 4 109 28 133
Sales (24) (36) (33) (42)
Net transfers — (47) — 9
Ending balance $ 4 $ 122 $ 4 $ 122
Unrealized gains (losses) $ (1) $ (1) $ — $ —
Other sovereign government obligations
Beginning balance $ 78 $ 11 $ 268 $ 5
Realized and unrealized gains (losses) (3) (1) (1) —
Purchases 59 1 129 8
Sales (4) (1) (269) (3)
Net transfers (3) — — —
Ending balance $ 127 $ 10 $ 127 $ 10
Unrealized gains (losses) $ (3) $ — $ — $ —
State and municipal securities
Beginning balance $ 4 $ — $ — $ 1
Purchases — — 4 —
Sales (4) — (4) —
Net transfers — — — (1)
Ending balance $ — $ — $ — $ —
Unrealized gains (losses) $ — $ — $ — $ —
MABS
Beginning balance $ 357 $ 379 $ 322 $ 438
Realized and unrealized gains (losses) 11 13 67 (60)
Purchases 96 13 263 172
Sales (23) (54) (216) (162)
Net transfers (75) 92 (70) 55
Ending balance $ 366 $ 443 $ 366 $ 443
Unrealized gains (losses) $ 11 $ 8 $ 8 $ (35)
Loans and lending commitments
Beginning balance $ 4,896 $ 4,068 $ 5,759 $ 5,073
Realized and unrealized gains (losses) 47 20 33 (161)
Purchases and originations 1,373 846 2,467 1,926
Sales (768) (725) (2,314) (1,139)
Settlements (414) (285) (1,082) (1,907)
Net transfers1
(830) 427 (559) 559
Ending balance $ 4,304 $ 4,351 $ 4,304 $ 4,351
Unrealized gains (losses) $ 21 $ 27 $ (5) $ (137)
Corporate and other debt
Beginning balance $ 1,801 $ 2,686 $ 3,435 $ 1,396
Realized and unrealized gains (losses) 173 (107) (151) (184)
Purchases and originations 639 451 1,505 2,217
Sales (594) (325) (1,698) (425)
Settlements — — — (311)
Net transfers2
(456) 22 (1,528) 34
Ending balance $ 1,563 $ 2,727 $ 1,563 $ 2,727
Unrealized gains (losses) $ 173 $ (96) $ 10 $ (186)

Three Months Ended
September 30, Nine Months Ended
September 30,
$ in millions 2021 2020 2021 2020
Corporate equities
Beginning balance $ 150 $ 83 $ 86 $ 97
Realized and unrealized gains (losses) 4 32 (15) —
Purchases 83 32 367 42
Sales (7) (27) (193) (27)
Net transfers (16) 15 (31) 23
Ending balance $ 214 $ 135 $ 214 $ 135
Unrealized gains (losses) $ 4 $ 39 $ (5) $ 14
Investments
Beginning balance $ 978 $ 759 $ 828 $ 858
Realized and unrealized gains (losses) 18 55 58 (6)
Purchases 59 7 150 37
Sales (23) (16) (46) (37)
Net transfers (251) 16 (209) (31)
Ending balance $ 781 $ 821 $ 781 $ 821
Unrealized gains (losses) $ 13 $ 44 $ 39 $ (19)
Investment securities —AFS
Beginning balance $ — $ — $ 2,804 $ —
Realized and unrealized gains (losses) — — (4) —
Sales — — (203) —
Net transfers3
— — (2,597) —
Ending balance $ — $ — $ — $ —
Unrealized gains (losses) $ — $ — $ — $ —
Securities purchased under agreements to resell
Beginning balance $ — $ — $ 3 $ —
Net transfers — — (3) —
Ending balance $ — $ — $ — $ —
Unrealized gains (losses) $ — $ — $ — $ —
Net derivatives: Interest rate
Beginning balance $ 668 $ 760 $ 682 $ 777
Realized and unrealized gains (losses) 70 (147) (223) (95)
Purchases 22 36 48 153
Issuances (9) (15) (41) (41)
Settlements 18 (31) 101 36
Net transfers 27 33 229 (194)
Ending balance $ 796 $ 636 $ 796 $ 636
Unrealized gains (losses) $ 165 $ (139) $ (168) $ (37)
Net derivatives: Credit
Beginning balance $ (203) $ 131 $ 49 $ 124
Realized and unrealized gains (losses) 59 (16) (2) 11
Purchases 12 17 23 66
Issuances (19) (51) (44) (101)
Settlements 102 10 16 61
Net transfers 15 25 (76) (45)
Ending balance $ (34) $ 116 $ (34) $ 116
Unrealized gains (losses) $ (26) $ (16) $ — $ 2


~~September 2021 Form 10-Q~~			44


~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
$ in millions 2021 2020 2021 2020
Net derivatives: Foreign exchange
Beginning balance $ 33 $ 17 $ 61 $ (31)
Realized and unrealized gains (losses) 32 86 41 202
Purchases 12 — 19 3
Issuances (15) (4) (21) (5)
Settlements 46 (9) (45) (27)
Net transfers (11) 9 42 (43)
Ending balance $ 97 $ 99 $ 97 $ 99
Unrealized gains (losses) $ 29 $ 75 $ 73 $ 136
Net derivatives: Equity
Beginning balance $ (837) $ (1,884) $ (2,231) $ (1,684)
Realized and unrealized gains (losses) (45) 3 366 75
Purchases 24 19 69 192
Issuances (122) (181) (362) (706)
Settlements (3) (151) (196) (167)
Net transfers2
(17) 49 1,354 145
Ending balance $ (1,000) $ (2,145) $ (1,000) $ (2,145)
Unrealized gains (losses) $ (96) $ 32 $ (57) $ (143)
Net derivatives: Commodity and other
Beginning balance $ 1,430 $ 2,087 $ 1,709 $ 1,612
Realized and unrealized gains (losses) (167) (29) 43 373
Purchases 44 1 324 26
Issuances (31) (40) (137) (65)
Settlements (97) (181) (371) (101)
Net transfers 130 (34) (259) (41)
Ending balance $ 1,309 $ 1,804 $ 1,309 $ 1,804
Unrealized gains (losses) $ (96) $ (251) $ (243) $ (6)
Deposits
Beginning balance $ 86 $ 90 $ 126 $ 179
Realized and unrealized losses (gains) (1) 4 1 8
Settlements (4) (2) (12) (13)
Net transfers (19) 13 (53) (69)
Ending balance $ 62 $ 105 $ 62 $ 105
Unrealized losses (gains) $ (1) $ 4 $ 1 $ 8
Nonderivative trading liabilities
Beginning balance $ 59 $ 74 $ 79 $ 37
Realized and unrealized losses (gains) (11) (6) (20) (21)
Purchases (16) (7) (88) (23)
Sales 11 5 83 23
Settlements — — — 3
Net transfers (1) (6) (12) 41
Ending balance $ 42 $ 60 $ 42 $ 60
Unrealized losses (gains) $ (11) $ (4) $ 1 $ (21)
Securities sold under agreements to repurchase
Beginning balance $ 449 $ 440 $ 444 $ —
Realized and unrealized losses (gains) (1) 8 5 (22)
Issuances — — — 470
Net transfers — — (1) —
Ending balance $ 448 $ 448 $ 448 $ 448
Unrealized losses (gains) $ (1) $ 8 $ 5 $ (22)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2022		2021		2022		2021
Securities sold under agreements to repurchase										Securities sold under agreements to repurchase
Beginning balance										Beginning balance	$	514	$	449	$	651	$	444
Realized and unrealized losses (gains)										Realized and unrealized losses (gains)	5		(1)		(3)		5

Issuances										Issuances	—		—		9		—
Settlements										Settlements	(11)		—		(22)		—
Net transfers										Net transfers	—		—		(127)		(1)
Ending balance										Ending balance	$	508	$	448	$	508	$	448
Unrealized losses (gains)										Unrealized losses (gains)	$	5	$	(1)	$	—	$	5
Other secured financings	Other secured financings									Other secured financings
Beginning balance	Beginning balance	$	401	$	300	$	516	$	109	Beginning balance	$	112	$	401	$	403	$	516
Realized and unrealized losses (gains)	Realized and unrealized losses (gains)	(17)		11		(14)		(1)		Realized and unrealized losses (gains)	(5)		(17)		(11)		(14)

Issuances	Issuances	14		3		421		10		Issuances	13		14		44		421
Settlements	Settlements	(3)		(5)		(500)		(208)		Settlements	(7)		(3)		(320)		(500)
Net transfers	Net transfers	—		—		(28)		399		Net transfers	—		—		(3)		(28)
Ending balance	Ending balance	$	395	$	309	$	395	$	309	Ending balance	$	113	$	395	$	113	$	395
Unrealized losses (gains)	Unrealized losses (gains)	$	(17)	$	11	$	(13)	$	(1)	Unrealized losses (gains)	$	(5)	$	(17)	$	(11)	$	(13)
Borrowings	Borrowings									Borrowings
Beginning balance	Beginning balance	$	1,975	$	4,135	$	4,374	$	4,088	Beginning balance	$	2,325	$	1,975	$	2,157	$	4,374
Realized and unrealized losses (gains)	Realized and unrealized losses (gains)	(87)		(32)		(37)		(284)		Realized and unrealized losses (gains)	(185)		(87)		(625)		(37)

Issuances	Issuances	197		194		411		992		Issuances	65		197		230		411
Settlements	Settlements	(67)		(70)		(347)		(346)		Settlements	(65)		(67)		(263)		(347)
Net transfers2	Net transfers2	38		(146)		(2,345)		(369)		Net transfers2	(203)		38		438		(2,345)
Ending balance	Ending balance	$	2,056	$	4,081	$	2,056	$	4,081	Ending balance	$	1,937	$	2,056	$	1,937	$	2,056
Unrealized losses (gains)	Unrealized losses (gains)	$	(86)	$	(33)	$	(8)	$	(282)	Unrealized losses (gains)	$	(185)	$	(86)	$	(629)	$	(8)
Portion of Unrealized losses (gains) recorded in OCI—Change in net DVA	Portion of Unrealized losses (gains) recorded in OCI—Change in net DVA	(4)		22		(18)		(124)		Portion of Unrealized losses (gains) recorded in OCI—Change in net DVA	(36)		(4)		(126)		(18)

1.Net transfers in the ~~current~~prior year quarter reflect the transfer of $895 million of equity margin loans from Level 3 to Level 2 as a result of the reduced significance of the margin loan rate input.Net transfers in the prior year periods reflect the largely offsetting impacts of equity margin loan transfers of $857 million into Level 3 in the first quarter of the prior year and $707 million out of Level 3 in the second quarter of the prior year, both driven by changes in the significance level of the margin loan rate input based on changes in liquidity conditions.

2.Net transfers in the ~~current~~prior year period reflect the transfer in the second quarter of the prior year of $2.0 billion of Corporate and Other Debt, $1.0 billion of net Equity derivatives, and $2.2 billion of Borrowings from Level 3 to Level 2 as the unobservable inputs were not significant to the overall fair value measurements.

3.Net transfers in the ~~current~~prior year period reflect the transfer in the first quarter of the prior year of $2.5 billion of AFS securities from Level 3 to Level 2 due to increased trading activity and observability of pricing inputs.

Level 3 instruments may be hedged with instruments classified in Level 1 and Level 2. The realized and unrealized gains or losses for assets and liabilities within the Level 3 category presented in the previous tables do not reflect the related realized and unrealized gains or losses on hedging instruments that have been classified by the Firm within the Level 1 and/or Level 2 categories.

The unrealized gains (losses) during the period for assets and liabilities within the Level 3 category may include changes in fair value during the period that were attributable to both observable and unobservable inputs. Total realized and unrealized gains (losses) are primarily included in Trading revenues in the income ~~statements.~~statement.

Additionally, in the previous tables, consolidations of VIEs are included in Purchases, and deconsolidations of VIEs are included in Settlements.


			45			~~September 2021 Form 10-Q~~


~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)

Significant Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements

Valuation Techniques and Unobservable Inputs

Balance / Range (Average1)
$ in millions, except inputs At September 30, 2021 At December 31, 2020
Assets at Fair Value on a Recurring Basis
Other sovereign government obligations $ 127 $ 268
Comparable pricing:
Bond price 96 to 152 points (125 points) 106 points
MABS $ 366 $ 322
Comparable pricing:
Bond price 0 to 86 points (53 points) 0 to 80 points (50 points)
Loans and lending
commitments $ 4,304 $ 5,759
Margin loan model:
Margin loan rate 1% to 4% (3%) 1% to 5% (3%)
Comparable pricing:
Loan price 91 to 102 points (99 points) 75 to 102 points (93 points)
Corporate and
other debt $ 1,563 $ 3,435
Comparable pricing:
Bond price 90 to 110 points (99 points) 10 to 133 points (101 points)
Discounted cash flow:
Recovery rate 40% to 62% (46% / 40%) 40% to 62% (46% / 40%)
Option model:
Equity volatility 22% to 134% (70%) 18% to 21% (19%)
Corporate equities $ 214 $ 86
Comparable pricing:
Equity price 100% 100%
Investments $ 781 $ 828
Discounted cash flow:
WACC 10% to 16% (15%) 8% to 18% (15%)
Exit multiple 8 to 17 times (12 times) 7 to 17 times (12 times)
Market approach:
EBITDA multiple 8 to 29 times (10 times) 8 to 32 times (11 times)
Comparable pricing:
Equity price 43% to 100% (99%) 45% to 100% (99%)
Investment securities —AFS $ — $ 2,804
Comparable pricing:
Bond price N/A 97 to 107 points (101 points)
Net derivative and other contracts:
Interest rate $ 796 $ 682
Option model:
IR volatility skew 33% to 99% (60% / 59%) 0% to 349% (62% / 59%)
IR curve correlation 65% to 98% (83% / 83%) 54% to 99% (87% / 89%)
Bond volatility 5% to 14% (7% / 6%) 6% to 24% (13% / 13%)
Inflation volatility 25% to 65% (45% / 43%) 25% to 66% (45% / 43%)
IR curve 2% 1%

Balance / Range (Average1)
$ in millions, except inputs At September 30, 2021 At December 31, 2020
Credit $ (34) $ 49
Credit default swap model:
Cash-synthetic basis 7 points 7 points
Bond price 0 to 83 points (46 points) 0 to 85 points (47 points)
Credit spread 14 to 463 bps (74 bps) 20 to 435 bps (74 bps)
Funding spread 18 to 95 bps (60 bps) 65 to 118 bps (86 bps)
Correlation model:
Credit correlation 23% to 39% (26%) 27% to 44% (32%)
Foreign exchange2
$ 97 $ 61
Option model:
IR - FX correlation 53% to 57% (55% 55%) 55% to 59% (56% / 56%)
IR volatility skew 33% to 99% (60% / 59%) 0% to 349% (62% / 59%)
IR curve 7% 6% to 8% (7% / 8%)
Foreign exchange volatility skew -4% to -2% (-3% / -3%) -22% to 28% (3% / 1%)
Contingency probability 95% 50% to 95% (83% / 93%)
Equity2
$ (1,000) $ (2,231)
Option model:
Equity volatility 5% to 92% (23%) 16% to 97% (43%)
Equity volatility skew -4% to 0% (-1%) -3% to 0% (-1%)
Equity correlation 5% to 99% (74%) 24% to 96% (74%)
FX correlation -85% to 50% (-33%) -79% to 60% (-16%)
IR correlation -13% to 35% (15%) -13% to 47% (21% / 20%)
Commodity and other $ 1,309 $ 1,709
Option model:
Forward power price $1 to $248 ($39) per MWh $-1 to $157 ($28) per MWh
Commodity volatility 8% to 212% (24%) 8% to 183% (19%)
Cross-commodity correlation 43% to 100% (94%) 43% to 99% (92%)
Liabilities Measured at Fair Value on a Recurring Basis
Deposits $ 62 $ 126
Option model:
Equity volatility 7% 7% to 22% (8%)
Nonderivative trading liabilities
—Corporate equities $ 34 $ 63
Comparable pricing:
Equity price 100% 100%
Securities sold under agreements to repurchase $ 448 $ 444
Discounted cash flow:
Funding spread 116 to 122 bps (119 bps) 107 to 127 bps (115 bps)
Other secured financings $ 395 $ 516
Discounted cash flow:
Funding spread N/A 111 bps (111 bps)
Comparable pricing:
Loan price 30 to 100 points (83 points) 30 to 101 points (56 points)


	Balance / Range (Average1)
$ in millions, except inputs	At September 30, 2022		At December 31, 2021
Assets at Fair Value on a Recurring Basis



Other sovereign government obligations	$	137	$	211
Comparable pricing:
Bond price	76 to 127 points (92 points)		100 to 140 points (120 points)
State and municipal securities	$	52	$	13
Comparable pricing:
Bond price	78 to 100 points (95 points)		N/M
MABS	$	344	$	344
Comparable pricing:
Bond price	0 to 95 points (68 points)		0 to 86 points (59 points)
Loans and lending commitments	$	2,583	$	3,806
Margin loan model:



Margin loan rate	2% to 4% (3%)		1% to 4% (3%)
Comparable pricing:
Loan price	84 to 101 points (97 points)		89 to 101 points (97 points)
Corporate and other debt	$	1,898	$	1,973
Comparable pricing:
Bond price	52 to 139 points (90 points)		50 to 163 points (99 points)
Discounted cash flow:
Loss given default	54% to 84% (62% / 54%)		54% to 84% (62% / 54%)



Corporate equities	$	145	$	115
Comparable pricing:
Equity price	100%		100%
Investments	$	873	$	1,125
Discounted cash flow:
WACC	15% to 18% (17%)		10% to 16% (15%)
Exit multiple	7 to 17 times (13 times)		8 to 17 times (12 times)
Market approach:
EBITDA multiple	7 to 20 times (9 times)		8 to 25 times (10 times)
Comparable pricing:
Equity price	48% to 100% (85%)		43% to 100% (99%)


September ~~2021~~2022 Form 10-Q			4644


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

Balance / Range (Average1)

$ in millions, except inputs

At September 30, 2021

At December 31, 2020

$ in millions, except inputs

At September 30, 2022

At December 31, 2021

Borrowings

2,056

4,374

Net derivative and other contracts:

Interest rate

(177)

708

Option model:

IR volatility skew

106% to 126% (113% / 111%)

39% to 79% (64% / 63%)

IR curve correlation

58% to 99% (80% / 80%)

62% to 98% (83% / 84%)

Bond volatility

N/M

5% to 32% (12% / 9%)

Inflation volatility

24% to 62% (44% / 40%)

24% to 65% (44% / 40%)

IR curve

4% to 5% (4% / 4%)

Credit

122

Credit default swap model:

Cash-synthetic basis

7 points

Bond price

0 to 83 points (43 points)

0 to 83 points (46 points)

Credit spread

10 to 530 bps (129 bps)

14 to 477 bps (68 bps)

Funding spread

18 to 590 bps (86 bps)

15 to 433 bps (55 bps)

Foreign exchange2

175

Option model:

IR - FX correlation

N/M

53% to 56% (55% / 54%)

IR volatility skew

N/M

39% to 79% (64% / 63%)

IR curve

-4% to 71% (21% / 17%)

-1% to 7% (2% / 0%)

Foreign exchange volatility skew

11% to 15% (13% / 13%)

-4% to -2% (-3% / -3%)

Contingency probability

95%

90% to 95% (94% / 95%)

Equity2

(456)

(945)

Option model:

Equity volatility

7% to 51% (19%)

6% to 66% (23%)

Equity volatility

5% to 97% (27%)

5% to 99% (24%)

Equity volatility skew

-1% to 0% (0%)

-2% to 0% (0%)

Equity volatility skew

-3% to 0% (-1%)

-4% to 0% (-1%)

Equity correlation

39% to 98% (91%)

37% to 95% (78%)

Equity correlation

10% to 96% (76%)

5% to 99% (73%)

Equity - FX correlation

-60% to 10% (-16%)

-72% to 13% (-24%)

FX correlation

-85% to 65% (-27%)

-85% to 37% (-42%)

IR correlation

10% to 30% (12%)

13% to 30% (15%)

Commodity and other

1,801

1,529

Option model:

Forward power price

$2 to $288 ($59) per MWh

$4 to $263 ($39) per MWh

Commodity volatility

8% to 137% (36%)

8% to 385% (22%)

Cross-commodity correlation

70% to 100% (93%)

43% to 100% (94%)

Liabilities Measured at Fair Value on a Recurring Basis

Deposits

Option model:

Equity volatility

N/M

IR FX Correlation

-27% to 7% (-5% / -5%)

-28% to 6% (-6% / -6%)

Nonderivative trading liabilities
—Corporate equities

Comparable pricing:

Equity price

100%

Securities sold under agreements to repurchase

508

651

Discounted cash flow:

Recovery rate

40% to 62% (46% / 40%)

N/M

Nonrecurring Fair Value Measurement

Loans

1,603

3,134

Corporate loan model:

Credit spread

95 to 562 bps (298 bps)

36 to 636 bps (336 bps)

Funding spread

62 to 147 bps (114 bps)

112 to 127 bps (120 bps)

Other secured financings

113

403

Comparable pricing:

Loan price

48 to 80 points (63 points)

N/M

Loan price

23 to 101 points (77 points)

30 to 100 points (83 points)

Warehouse model:

Credit spread

197 to 450 bps (374 bps)

200 to 413 bps (368 bps)

Comparable pricing:

Bond Price

N/A

88 to 99 bps (94 bps)


	Balance / Range (Average1)
$ in millions, except inputs	At September 30, 2022		At December 31, 2021
Borrowings	$	1,937	$	2,157
Option model:
Equity volatility	6% to 96% (23%)		7% to 85% (20%)
Equity volatility skew	-1% to 0% (-1%)		-1% to 0% (0%)
Equity correlation	39% to 95% (86%)		41% to 95% (81%)
Equity - FX correlation	-55% to 25% (-17%)		-55% to 25% (-30%)
IR FX Correlation	-17% to 5% (-5% / -5%)		-26% to 8% (-5% / -5%)
IR curve correlation	58% to 85% (75% / 73%)		N/M
IR volatility skew	57% to 93% (69% / 56%)		N/M
Discounted cash flow:
Loss given default	54% to 84% (62% / 54%)		54% to 84% (62% / 54%)
Nonrecurring Fair Value Measurement
Loans	$	3,476	$	1,576
Corporate loan model:
Credit spread	113 to 819 bps (438 bps)		108 to 565 bps (284 bps)
Comparable pricing:
Loan price	36 to 80 points (66 points)		40 to 80 points (61 points)
Warehouse model:
Credit spread	146 to 260 bps (235 bps)		182 to 446 bps (376 bps)

Points—Percentage of par

IR—Interest rate

FX—Foreign exchange

1.A single amount is disclosed for range and average when there is no significant difference between the minimum, maximum and average. Amounts represent weighted averages except where simple averages and the median of the inputs are more relevant.

2.Includes derivative contracts with multiple risks (i.e., hybrid products).

The previous ~~tables provide~~table provides information on the valuation techniques, significant unobservable inputs, and the ranges and averages for each major category of assets and liabilities measured at fair value on a recurring and nonrecurring basis with a significant Level 3 balance. The level of aggregation and breadth of products cause the range of inputs to be wide and not evenly distributed across the inventory of financial instruments. Further, the range of unobservable inputs may differ across firms in the financial services industry because of diversity in the types of products included in each firm’s inventory. Generally, there are no predictable relationships between multiple significant unobservable inputs attributable to a given valuation technique.

For a description of the Firm’s significant unobservable inputs and qualitative information about the effect of hypothetical changes in the values of those inputs, see Note 5 to the financial statements in the ~~2020~~2021 Form 10-K. During the current quarter, there were no significant revisions made to the descriptions of the Firm’s significant unobservable inputs.


			45			September 2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

Net Asset Value Measurements

Fund Interests


		At September 30, 2021				At December 31, 2020					At September 30, 2022				At December 31, 2021
$ in millions	$ in millions	Carrying Value		Commitment		Carrying Value		Commitment		$ in millions	Carrying Value		Commitment		Carrying Value		Commitment
Private equity	Private equity	$	2,430	$	640	$	2,367	$	644	Private equity	$	2,795	$	538	$	2,492	$	615
Real estate	Real estate	1,747		255		1,403		136		Real estate	2,316		242		2,064		248
Hedge1	Hedge1	179		3		59		—		Hedge1	198		2		191		2
Total	Total	$	4,356	$	898	$	3,829	$	780	Total	$	5,309	$	782	$	4,747	$	865

1.Investments in hedge funds may be subject to initial period lock-up or gate provisions, which restrict an investor from withdrawing from the fund during a certain initial period or restrict the redemption amount on any redemption date, respectively.

Amounts in the previous table represent the Firm’s carrying value of general and limited partnership interests in fund investments, as well as any related performance-based income in the form of carried interest. The carrying amounts are measured based on the NAV of the fund taking into account the distribution terms applicable to the interest held. This same measurement applies whether the fund investments are accounted for under the equity method or fair value.

For a description of the Firm’s investments in private equity funds, real estate funds and hedge funds, which are measured based on NAV, see Note 5 to the financial statements in the ~~2020~~2021 Form 10-K.

See Note 1413 for information regarding general partner guarantees, which include potential obligations to return performance fee distributions previously received. See Note 2019 for information regarding unrealized carried interest at risk of reversal.

Nonredeemable Funds by Contractual Maturity


		Carrying Value at September 30, 2021					Carrying Value at September 30, 2022
$ in millions	$ in millions	Private Equity		Real Estate		$ in millions	Private Equity		Real Estate
Less than 5 years	Less than 5 years	$	1,094	$	408	Less than 5 years	$	1,035	$	902
5-10 years	5-10 years	1,094		678		5-10 years	1,196		1,380
Over 10 years	Over 10 years	242		661		Over 10 years	564		34
Total	Total	$	2,430	$	1,747	Total	$	2,795	$	2,316

Nonrecurring Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis


		At September 30, 2021							At September 30, 2022
		Fair Value							Fair Value
$ in millions	$ in millions	Level 2		Level 31		Total		$ in millions	Level 2		Level 31		Total
Assets	Assets							Assets
Loans	Loans	$	3,310	$	1,603	$	4,913	Loans	$	4,855	$	3,476	$	8,331

Other assets—Other investments	Other assets—Other investments	—		76		76		Other assets—Other investments	—		5		5

Other assets—ROU assets								Other assets—ROU assets	5		—		5
Total	Total	$	3,310	$	1,679	$	4,989	Total	$	4,860	$	3,481	$	8,341
Liabilities	Liabilities							Liabilities
Other liabilities and accrued expenses—Lending commitments	Other liabilities and accrued expenses—Lending commitments	$	156	$	67	$	223	Other liabilities and accrued expenses—Lending commitments	$	375	$	144	$	519
Total	Total	$	156	$	67	$	223	Total	$	375	$	144	$	519


			47			~~September 2021 Form 10-Q~~


~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)


		At December 31, 2020							At December 31, 2021
		Fair Value							Fair Value
$ in millions	$ in millions	Level 2		Level 31		Total		$ in millions	Level 2		Level 31		Total
Assets	Assets							Assets
Loans	Loans	$	2,566	$	3,134	$	5,700	Loans	$	4,035	$	1,576	$	5,611
Other assets—Other investments	Other assets—Other investments	—		16		16		Other assets—Other investments	—		8		8
Other assets—ROU assets	Other assets—ROU assets	21		—		21		Other assets—ROU assets	16		—		16
Total	Total	$	2,587	$	3,150	$	5,737	Total	$	4,051	$	1,584	$	5,635
Liabilities	Liabilities							Liabilities
Other liabilities and accrued expenses—Lending commitments	Other liabilities and accrued expenses—Lending commitments	$	193	$	72	$	265	Other liabilities and accrued expenses—Lending commitments	$	173	$	70	$	243
Total	Total	$	193	$	72	$	265	Total	$	173	$	70	$	243

1.For significant Level 3 balances, refer to “Significant Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements” section herein for details of the significant unobservable inputs used for nonrecurring fair value measurement.

Gains (Losses) from Nonrecurring Fair Value Remeasurements1


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2022		2021		2022		2021
Assets	Assets									Assets
Loans2	Loans2	$	(22)	$	(43)	$	(75)	$	(467)	Loans2	$	(118)	$	(22)	$	(365)	$	(75)
Goodwill	Goodwill	—		—		(8)		—		Goodwill	—		—		—		(8)
Intangibles	Intangibles	—		(1)		(3)		(1)		Intangibles	—		—		—		(3)
Other assets— Other investments3		(2)		(2)		(55)		(54)
Other assets—Premises, equipment and software4		(10)		(29)		(14)		(35)
Other assets—Other investments3										Other assets—Other investments3	(2)		(2)		(8)		(55)
Other assets—Premises, equipment and software										Other assets—Premises, equipment and software	(1)		(10)		(3)		(14)
Other assets—ROU assets										Other assets—ROU assets	(1)		—		(7)		—
Total	Total	$	(34)	$	(75)	$	(155)	$	(557)	Total	$	(122)	$	(34)	$	(383)	$	(155)
Liabilities	Liabilities									Liabilities
Other liabilities and accrued expenses—Lending commitments2	Other liabilities and accrued expenses—Lending commitments2	$	(2)	$	25	$	34	$	(54)	Other liabilities and accrued expenses—Lending commitments2	$	(13)	$	(2)	$	(172)	$	34
Total	Total	$	(2)	$	25	$	34	$	(54)	Total	$	(13)	$	(2)	$	(172)	$	34

1.Gains and losses for Loans and Other assets—Other investments are classified in Other revenues. For other items, gains and losses are recorded in Other revenues if the item is held for sale; otherwise, they are recorded in Other expenses.

2.Nonrecurring changes in the fair value of loans and lending commitments, ~~were~~which exclude the impact of related economic hedges, are calculated as follows: for the held-for-investment category, based on the value of the underlying collateral; and for the held-for-sale category, based on recently executed transactions, market price quotations, valuation models that incorporate market observable inputs where possible, such as comparable loan or debt prices and CDS spread levels adjusted for any basis difference between cash and derivative instruments, or default recovery analysis where such transactions and quotations are unobservable.

3.Losses related to Other assets—Other investments were determined using techniques that included discounted cash flow models, methodologies that incorporate multiples of certain comparable companies and recently executed transactions.

4.~~Losses related to Other assets—Premises, equipment and software generally include impairments as well as write-offs related to the disposal of certain assets.~~


September 2022 Form 10-Q			46


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

Financial Instruments Not Measured at Fair Value


		At September 30, 2021											At September 30, 2022
		Carrying Value		Fair Value									Carrying Value		Fair Value
$ in millions	$ in millions			Level 1		Level 2		Level 3		Total		$ in millions			Level 1		Level 2		Level 3		Total
Financial assets	Financial assets											Financial assets
Cash and cash equivalents	Cash and cash equivalents	$	123,863	$	123,863	$	—	$	—	$	123,863	Cash and cash equivalents	$	111,696	$	111,696	$	—	$	—	$	111,696
Investment securities—HTM	Investment securities—HTM	81,837		30,726		50,380		982		82,088		Investment securities—HTM	77,636		27,657		37,721		1,015		66,393
Securities purchased under agreements to resell	Securities purchased under agreements to resell	119,714		—		117,863		1,868		119,731		Securities purchased under agreements to resell	111,124		—		108,312		2,680		110,992
Securities borrowed	Securities borrowed	125,922		—		125,923		—		125,923		Securities borrowed	136,478		—		136,471		—		136,471
Customer and other receivables	Customer and other receivables	95,022		—		91,571		3,349		94,920		Customer and other receivables	83,417		—		79,493		3,558		83,051
Loans1	Loans1	173,359		—		23,242		151,341		174,583		Loans1	210,936		—		25,100		178,571		203,671
Other assets	Other assets	528		—		528		—		528		Other assets	704		—		704		—		704
Financial liabilities	Financial liabilities											Financial liabilities
Deposits	Deposits	$	327,031	$	—	$	327,384	$	—	$	327,384	Deposits	$	334,462	$	—	$	334,378	$	—	$	334,378
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	61,059		—		61,100		—		61,100		Securities sold under agreements to repurchase	59,182		—		59,070		—		59,070
Securities loaned	Securities loaned	11,133		—		11,131		—		11,131		Securities loaned	13,097		—		13,096		—		13,096
Other secured financings	Other secured financings	4,658		—		4,659		—		4,659		Other secured financings	3,107		—		3,107		—		3,107
Customer and other payables	Customer and other payables	240,293		—		240,293		—		240,293		Customer and other payables	229,272		—		229,272		—		229,272
Borrowings	Borrowings	154,010		—		160,131		4		160,135		Borrowings	151,635		—		148,105		4		148,109
		Commitment Amount											Commitment Amount
Lending commitments2	Lending commitments2	$	136,040	$	—	$	682	$	423	$	1,105	Lending commitments2	$	135,899	$	—	$	2,065	$	880	$	2,945


		At December 31, 2020											At December 31, 2021
		Carrying Value		Fair Value									Carrying Value		Fair Value
$ in millions	$ in millions			Level 1		Level 2		Level 3		Total		$ in millions			Level 1		Level 2		Level 3		Total
Financial assets	Financial assets											Financial assets
Cash and cash equivalents	Cash and cash equivalents	$	105,654	$	105,654	$	—	$	—	$	105,654	Cash and cash equivalents	$	127,725	$	127,725	$	—	$	—	$	127,725
Investment securities—HTM	Investment securities—HTM	71,771		31,239		42,281		900		74,420		Investment securities—HTM	80,168		29,454		49,352		1,076		79,882
Securities purchased under agreements to resell	Securities purchased under agreements to resell	116,219		—		114,046		2,173		116,219		Securities purchased under agreements to resell	119,992		—		117,922		2,075		119,997
Securities borrowed	Securities borrowed	112,391		—		112,392		—		112,392		Securities borrowed	129,713		—		129,713		—		129,713
Customer and other receivables	Customer and other receivables	92,907		—		89,832		3,041		92,873		Customer and other receivables	91,664		—		88,091		3,442		91,533
Loans1	Loans1	150,597		—		16,635		135,277		151,912		Loans1	188,134		—		25,706		163,784		189,490
Other assets	Other assets	485		—		485		—		485		Other assets	528		—		528		—		528
Financial liabilities	Financial liabilities											Financial liabilities
Deposits	Deposits	$	307,261	$	—	$	307,807	$	—	$	307,807	Deposits	$	345,634	$	—	$	345,911	$	—	$	345,911
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	49,472		—		49,315		195		49,510		Securities sold under agreements to repurchase	61,397		—		61,419		—		61,419
Securities loaned	Securities loaned	7,731		—		7,731		—		7,731		Securities loaned	12,299		—		12,296		—		12,296
Other secured financings	Other secured financings	4,162		—		4,162		—		4,162		Other secured financings	4,908		—		4,910		—		4,910
Customer and other payables	Customer and other payables	224,951		—		224,951		—		224,951		Customer and other payables	228,631		—		228,631		—		228,631
Borrowings	Borrowings	143,378		—		150,824		5		150,829		Borrowings	156,787		—		162,154		4		162,158
		Commitment Amount											Commitment Amount
Lending commitments2	Lending commitments2	$	125,498	$	—	$	709	$	395	$	1,104	Lending commitments2	$	133,519	$	—	$	890	$	470	$	1,360

1.Amounts include loans measured at fair value on a nonrecurring basis.

2.Represents Lending commitments accounted for as Held for Investment and Held for Sale. For a further discussion on lending commitments, see Note ~~14.~~13.


~~September 2021 Form 10-Q~~			48


~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)

The previous tables exclude all non-financial assets and liabilities, such as ~~the value of the long-term relationships with the Firm’s deposit customers,~~Goodwill and Intangible assets, and certain financial instruments, such as equity method investments and certain receivables.

6.5. Fair Value Option

The Firm has elected the fair value option for certain eligible instruments that are risk managed on a fair value basis to mitigate income statement volatility caused by measurement basis differences between the elected instruments and their associated risk management transactions or to eliminate complexities of applying certain accounting models.

Borrowings Measured at Fair Value on a Recurring Basis


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Business Unit Responsible for Risk Management	Business Unit Responsible for Risk Management					Business Unit Responsible for Risk Management
Equity	Equity	$	35,708	$	33,952	Equity	$	34,226	$	37,046
Interest rates	Interest rates	29,213		31,222		Interest rates	22,896		28,638
Commodities	Commodities	7,968		5,078		Commodities	9,147		7,837
Credit	Credit	1,274		1,344		Credit	1,220		1,347
Foreign exchange	Foreign exchange	1,589		2,105		Foreign exchange	1,299		1,472
Total	Total	$	75,752	$	73,701	Total	$	68,788	$	76,340

Net Revenues from Borrowings under the Fair Value Option


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2022		2021		2022		2021
Trading revenues	Trading revenues	$	1,383	$	(1,455)	$	937	$	(1,447)	Trading revenues	$	4,034	$	1,383	$	16,361	$	937
Interest expense	Interest expense	77		77		234		241		Interest expense	67		77		203		234
Net revenues1	Net revenues1	$	1,306	$	(1,532)	$	703	$	(1,688)	Net revenues1	$	3,967	$	1,306	$	16,158	$	703

1.Amounts do not reflect any gains or losses from related economic hedges.

Gains (losses) from changes in fair value are recorded in Trading revenues and are mainly attributable to movements in the reference price or index, interest rates or foreign exchange rates.

Gains (Losses) Due to Changes in Instrument-Specific Credit Risk


		Three Months Ended September 30,									Three Months Ended September 30,
		2021				2020					2022				2021
$ in millions	$ in millions	Trading Revenues		OCI		Trading Revenues		OCI		$ in millions	Trading Revenues		OCI		Trading Revenues		OCI
Loans and other debt1		$	58	$	—	$	56	$	—
Loans and other receivables1										Loans and other receivables1	$	(68)	$	—	$	58	$	—
Lending commitments	Lending commitments	(3)		—		(3)		—		Lending commitments	(2)		—		(3)		—
Deposits	Deposits	—		6		—		(19)		Deposits	—		(9)		—		6
Borrowings	Borrowings	(9)		190		(8)		(720)		Borrowings	—		1,091		(9)		190


	Nine Months Ended September 30,
	2022				2021
$ in millions	Trading Revenues		OCI		Trading Revenues		OCI
Loans and other receivables1	$	(59)	$	—	$	311	$	—
Lending commitments	(3)		—		(2)		—
Deposits	—		5		—		15
Borrowings	1		3,468		(36)		612


			47			September 2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

Nine Months Ended September 30,
2021 2020
$ in millions Trading
Revenues OCI Trading
Revenues OCI
Loans and other debt1
$ 311 $ — $ (183) $ —
Lending commitments (2) — (2) —
Deposits — 15 — (10)
Borrowings (36) 612 (14) 991


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Cumulative pre-tax DVA gain (loss) recognized in AOCI	Cumulative pre-tax DVA gain (loss) recognized in AOCI	$	(2,730)	$	(3,357)	Cumulative pre-tax DVA gain (loss) recognized in AOCI	$	1,034	$	(2,439)

1.Loans and other ~~debt instrument-specific~~receivables-specific credit gains (losses) were determined by excluding the non-credit components of gains and losses.

Difference Between Contractual Principal and Fair Value1


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Loans and other debt2		$	13,053	$	14,042
Loans and other receivables2						Loans and other receivables2	$	10,908	$	12,633
Nonaccrual loans2	Nonaccrual loans2	10,732		11,551		Nonaccrual loans2	8,192		9,999
Borrowings3	Borrowings3	(2,382)		(3,773)		Borrowings3	5,558		(2,106)

1.Amounts indicate contractual principal greater than or (less than) fair value.

2.The majority of the difference between principal and fair value amounts for loans and other ~~debt~~receivables relates to distressed debt positions purchased at amounts well below par.

3.Excludes borrowings where the repayment of the initial principal amount fluctuates based on changes in a reference price or index.

The previous tables exclude non-recourse debt from consolidated VIEs, liabilities related to transfers of financial assets treated as collateralized financings, pledged commodities and other liabilities that have specified assets attributable to them.

Fair Value Loans on Nonaccrual Status


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Nonaccrual loans	Nonaccrual loans	$	943	$	1,407	Nonaccrual loans	$	440	$	989
Nonaccrual loans 90 or more days past due	Nonaccrual loans 90 or more days past due	321		239		Nonaccrual loans 90 or more days past due	41		363

6. Derivative Instruments and Hedging Activities

Fair Values of Derivative Contracts


	Assets at September 30, 2022
$ in millions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total
Designated as accounting hedges
Interest rate	$	53	$	1	$	—	$	54
Foreign exchange	332		137		—		469
Total	385		138		—		523
Not designated as accounting hedges
Economic hedges of loans
Credit	2		112		—		114
Other derivatives
Interest rate	158,740		31,664		2,074		192,478
Credit	7,627		3,027		—		10,654
Foreign exchange	163,229		4,476		70		167,775
Equity	25,922		—		35,754		61,676
Commodity and other	33,833		—		13,177		47,010
Total	389,353		39,279		51,075		479,707
Total gross derivatives	$	389,738	$	39,417	$	51,075	$	480,230
Amounts offset
Counterparty netting	(270,565)		(37,449)		(48,859)		(356,873)
Cash collateral netting	(55,266)		(1,841)		—		(57,107)
Total in Trading assets	$	63,907	$	127	$	2,216	$	66,250
Amounts not offset1
Financial instruments collateral	(28,876)		—		—		(28,876)
Net amounts	$	35,031	$	127	$	2,216	$	37,374
Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable							$	8,565


	Liabilities at September 30, 2022
$ in millions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total
Designated as accounting hedges
Interest rate	$	427	$	1	$	—	$	428
Foreign exchange	56		3		—		59
Total	483		4		—		487
Not designated as accounting hedges
Economic hedges of loans
Credit	8		231		—		239
Other derivatives
Interest rate	147,347		34,480		940		182,767
Credit	7,057		3,135		—		10,192
Foreign exchange	155,524		3,971		75		159,570
Equity	31,341		—		38,464		69,805
Commodity and other	25,455		—		14,108		39,563
Total	366,732		41,817		53,587		462,136
Total gross derivatives	$	367,215	$	41,821	$	53,587	$	462,623
Amounts offset
Counterparty netting	(270,565)		(37,449)		(48,859)		(356,873)
Cash collateral netting	(56,300)		(1,188)		—		(57,488)
Total in Trading liabilities	$	40,350	$	3,184	$	4,728	$	48,262
Amounts not offset1
Financial instruments collateral	(2,927)		—		(2,899)		(5,826)
Net amounts	$	37,423	$	3,184	$	1,829	$	42,436
Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable							8,279


			4948			September ~~2021~~2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

~~7. Derivative Instruments and Hedging Activities~~


	Assets at December 31, 2021
$ in millions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total
Designated as accounting hedges
Interest rate	$	594	$	1	$	—	$	595
Foreign exchange	191		6		—		197
Total	785		7		—		792
Not designated as accounting hedges
Economic hedges of loans
Credit	—		15		—		15
Other derivatives
Interest rate	147,585		7,002		383		154,970
Credit	5,749		3,186		—		8,935
Foreign exchange	73,276		1,219		39		74,534
Equity	28,877		—		41,455		70,332
Commodity and other	22,175		—		5,538		27,713
Total	277,662		11,422		47,415		336,499
Total gross derivatives	$	278,447	$	11,429	$	47,415	$	337,291
Amounts offset
Counterparty netting	(201,729)		(9,818)		(42,883)		(254,430)
Cash collateral netting	(43,495)		(1,212)		—		(44,707)
Total in Trading assets	$	33,223	$	399	$	4,532	$	38,154
Amounts not offset1
Financial instruments collateral	(10,457)		—		—		(10,457)
Net amounts	$	22,766	$	399	$	4,532	$	27,697
Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable							$	6,725

~~Fair Values of Derivative Contracts~~

Assets at September 30, 2021
$ in millions
Bilateral
OTC
Cleared
OTC
Exchange-
Traded
Total
Designated as accounting hedges
Interest rate $ 578 $ 9 $ — $ 587
Foreign exchange 145 15 — 160
Total 723 24 — 747
Not designated as accounting hedges
Economic loan hedges
Credit 1 16 — 17
Other derivatives
Interest rate 154,421 7,628 221 162,270
Credit 5,624 3,932 — 9,556
Foreign exchange 72,129 1,301 53 73,483
Equity 29,159 — 42,011 71,170
Commodity and other 28,545 — 14,178 42,723
Total 289,879 12,877 56,463 359,219
Total gross derivatives $ 290,602 $ 12,901 $ 56,463 $ 359,966
Amounts offset
Counterparty netting (205,701) (11,014) (52,930) (269,645)
Cash collateral netting (45,163) (1,759) — (46,922)
Total in Trading assets $ 39,738 $ 128 $ 3,533 $ 43,399
Amounts not offset1
Financial instruments collateral (12,419) — — (12,419)
Net amounts $ 27,319 $ 128 $ 3,533 $ 30,980
Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable $ 4,385

Liabilities at September 30, 2021
$ in millions
Bilateral
OTC
Cleared
OTC
Exchange-
Traded
Total
Designated as accounting hedges
Interest rate $ — $ — $ — $ —
Foreign exchange 7 20 — 27
Total 7 20 — 27
Not designated as accounting hedges
Economic loan hedges
Credit 15 229 — 244
Other derivatives
Interest rate 144,921 6,683 350 151,954
Credit 5,508 4,463 — 9,971
Foreign exchange 68,163 1,334 52 69,549
Equity 39,690 — 43,296 82,986
Commodity and other 22,708 — 14,480 37,188
Total 281,005 12,709 58,178 351,892
Total gross derivatives $ 281,012 $ 12,729 $ 58,178 $ 351,919
Amounts offset
Counterparty netting (205,701) (11,014) (52,930) (269,645)
Cash collateral netting (42,471) (1,087) — (43,558)
Total in Trading liabilities $ 32,840 $ 628 $ 5,248 $ 38,716
Amounts not offset1
Financial instruments collateral (6,226) — (1,007) (7,233)
Net amounts $ 26,614 $ 628 $ 4,241 $ 31,483
Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable 7,103

Assets at December 31, 2020
$ in millions
Bilateral
OTC
Cleared
OTC
Exchange-
Traded
Total
Designated as accounting hedges
Interest rate $ 946 $ 2 $ — $ 948
Foreign exchange 5 2 — 7
Total 951 4 — 955
Not designated as accounting hedges
Economic loan hedges
Credit2
2 51 — 53
Other derivatives
Interest rate 221,895 10,343 300 232,538
Credit2
5,341 2,147 — 7,488
Foreign exchange 92,334 1,639 79 94,052
Equity 34,278 — 34,166 68,444
Commodity and other 11,095 — 3,554 14,649
Total 364,945 14,180 38,099 417,224
Total gross derivatives $ 365,896 $ 14,184 $ 38,099 $ 418,179
Amounts offset
Counterparty netting (276,682) (11,601) (35,260) (323,543)
Cash collateral netting (54,921) (1,865) — (56,786)
Total in Trading assets $ 34,293 $ 718 $ 2,839 $ 37,850
Amounts not offset1
Financial instruments collateral (13,319) — — (13,319)
Other cash collateral (391) — — (391)
Net amounts $ 20,583 $ 718 $ 2,839 $ 24,140
Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable $ 3,743


		Liabilities at December 31, 2020									Liabilities at December 31, 2021
$ in millions	$ in millions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total		$ in millions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total
Designated as accounting hedges	Designated as accounting hedges									Designated as accounting hedges
Interest rate	Interest rate	$	—	$	19	$	—	$	19	Interest rate	$	86	$	1	$	—	$	87
Foreign exchange	Foreign exchange	291		99		—		390		Foreign exchange	57		50		—		107
Total	Total	291		118		—		409		Total	143		51		—		194
Not designated as accounting hedges	Not designated as accounting hedges									Not designated as accounting hedges
Economic loan hedges
Credit2		18		177		—		195
Economic hedges of loans										Economic hedges of loans
Credit										Credit	17		412		—		429
Other derivatives	Other derivatives									Other derivatives
Interest rate	Interest rate	210,015		7,965		639		218,619		Interest rate	140,770		6,112		233		147,115
Credit2		5,275		2,682		—		7,957
Credit										Credit	5,609		3,463		—		9,072
Foreign exchange	Foreign exchange	92,975		1,500		43		94,518		Foreign exchange	71,851		1,196		41		73,088
Equity	Equity	49,943		—		36,585		86,528		Equity	39,597		—		41,081		80,678
Commodity and other	Commodity and other	8,831		—		3,359		12,190		Commodity and other	17,188		—		5,740		22,928
Total	Total	367,057		12,324		40,626		420,007		Total	275,032		11,183		47,095		333,310
Total gross derivatives	Total gross derivatives	$	367,348	$	12,442	$	40,626	$	420,416	Total gross derivatives	$	275,175	$	11,234	$	47,095	$	333,504
Amounts offset	Amounts offset									Amounts offset
Counterparty netting	Counterparty netting	(276,682)		(11,601)		(35,260)		(323,543)		Counterparty netting	(201,729)		(9,818)		(42,883)		(254,430)
Cash collateral netting	Cash collateral netting	(51,112)		(823)		—		(51,935)		Cash collateral netting	(43,305)		(1,201)		—		(44,506)
Total in Trading liabilities	Total in Trading liabilities	$	39,554	$	18	$	5,366	$	44,938	Total in Trading liabilities	$	30,141	$	215	$	4,212	$	34,568
Amounts not offset1	Amounts not offset1									Amounts not offset1
Financial instruments collateral	Financial instruments collateral	(10,598)		—		(1,520)		(12,118)		Financial instruments collateral	(5,866)		(8)		(39)		(5,913)
Other cash collateral		(62)		(3)		—		(65)
Net amounts	Net amounts	$	28,894	$	15	$	3,846	$	32,755	Net amounts	$	24,275	$	207	$	4,173	$	28,655
Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable	Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable							$	6,746	Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable							$	6,194

1.Amounts relate to master netting agreements and collateral agreements that have been determined by the Firm to be legally enforceable in the event of default but where certain other criteria are not met in accordance with applicable offsetting accounting guidance.

2.~~Certain prior period amounts have been reclassified to conform~~See Note 4 for information related to the ~~current presentation.~~unsettled fair value of futures contracts not designated as accounting hedges, which are excluded from the previous tables.

Notionals of Derivative Contracts


	Assets at September 30, 2022
$ in billions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total
Designated as accounting hedges
Interest rate	$	2	$	49	$	—	$	51
Foreign exchange	9		3		—		12
Total	11		52		—		63
Not designated as accounting hedges
Economic hedges of loans
Credit	—		5		—		5
Other derivatives
Interest rate	3,320		7,486		616		11,422
Credit	207		129		—		336
Foreign exchange	3,600		147		9		3,756
Equity	504		—		423		927
Commodity and other	155		—		73		228
Total	7,786		7,767		1,121		16,674
Total gross derivatives	$	7,797	$	7,819	$	1,121	$	16,737


	Liabilities at September 30, 2022
$ in billions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total
Designated as accounting hedges
Interest rate	$	3	$	186	$	—	$	189
Foreign exchange	3		—		—		3
Total	6		186		—		192
Not designated as accounting hedges
Economic hedges of loans
Credit	—		11		—		11
Other derivatives
Interest rate	3,430		7,979		532		11,941
Credit	194		131		—		325
Foreign exchange	3,513		141		29		3,683
Equity	503		—		603		1,106
Commodity and other	113		—		93		206
Total	7,753		8,262		1,257		17,272
Total gross derivatives	$	7,759	$	8,448	$	1,257	$	17,464


	Assets at December 31, 2021
$ in billions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total
Designated as accounting hedges
Interest rate	$	4	$	104	$	—	$	108
Foreign exchange	8		1		—		9
Total	12		105		—		117
Not designated as accounting hedges
Economic hedges of loans
Credit	—		—		—		—
Other derivatives
Interest rate	3,488		7,082		570		11,140
Credit	216		105		—		321
Foreign exchange	3,386		95		10		3,491
Equity	495		—		407		902
Commodity and other	139		—		73		212
Total	7,724		7,282		1,060		16,066
Total gross derivatives	$	7,736	$	7,387	$	1,060	$	16,183

September ~~2021~~2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

~~See Note 5 for information related to the unsettled fair value of futures contracts not designated as accounting hedges, which are excluded from the previous tables.~~

~~Notionals of Derivative Contracts~~

Assets at September 30, 2021
$ in billions
Bilateral
OTC
Cleared
OTC
Exchange-
Traded
Total
Designated as accounting hedges
Interest rate $ 4 $ 103 $ — $ 107
Foreign exchange 12 1 — 13
Total 16 104 — 120
Not designated as accounting hedges
Economic loan hedges
Credit — — — —
Other derivatives
Interest rate 3,836 7,950 558 12,344
Credit 213 130 — 343
Foreign exchange 3,363 89 9 3,461
Equity 522 — 459 981
Commodity and other 142 — 83 225
Total 8,076 8,169 1,109 17,354
Total gross derivatives $ 8,092 $ 8,273 $ 1,109 $ 17,474

Liabilities at September 30, 2021
$ in billions
Bilateral
OTC
Cleared
OTC
Exchange-
Traded
Total
Designated as accounting hedges
Interest rate $ — $ 99 $ — $ 99
Foreign exchange 3 2 — 5
Total 3 101 — 104
Not designated as accounting hedges
Economic loan hedges
Credit — 7 — 7
Other derivatives
Interest rate 3,924 7,979 505 12,408
Credit 204 140 — 344
Foreign exchange 3,230 87 20 3,337
Equity 538 — 766 1,304
Commodity and other 119 — 87 206
Total 8,015 8,213 1,378 17,606
Total gross derivatives $ 8,018 $ 8,314 $ 1,378 $ 17,710

Assets at December 31, 2020
$ in billions
Bilateral
OTC
Cleared
OTC
Exchange-
Traded
Total
Designated as accounting hedges
Interest rate $ 6 $ 123 $ — $ 129
Foreign exchange 2 — — 2
Total 8 123 — 131
Not designated as accounting hedges
Economic loan hedges
Credit1
— 1 — 1
Other derivatives
Interest rate 3,847 6,946 409 11,202
Credit1
140 87 — 227
Foreign exchange 3,046 103 10 3,159
Equity 444 — 367 811
Commodity and other 107 — 68 175
Total 7,584 7,137 854 15,575
Total gross derivatives $ 7,592 $ 7,260 $ 854 $ 15,706

Liabilities at December 31, 2020
$ in billions
Bilateral
OTC
Cleared
OTC
Exchange-
Traded
Total
Designated as accounting hedges
Interest rate $ — $ 80 $ — $ 80
Foreign exchange 11 3 — 14
Total 11 83 — 94
Not designated as accounting hedges
Economic loan hedges
Credit1
1 5 — 6
Other derivatives
Interest rate 4,000 6,915 511 11,426
Credit1
142 93 — 235
Foreign exchange 3,180 102 11 3,293
Equity 474 — 591 1,065
Commodity and other 93 — 68 161
Total 7,890 7,115 1,181 16,186
Total gross derivatives $ 7,901 $ 7,198 $ 1,181 $ 16,280

1.~~Certain prior period amounts have been reclassified to conform to the current presentation.~~


	Liabilities at December 31, 2021
$ in billions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total
Designated as accounting hedges
Interest rate	$	—	$	99	$	—	$	99
Foreign exchange	5		3		—		8
Total	5		102		—		107
Not designated as accounting hedges
Economic hedges of loans
Credit	1		12		—		13
Other derivatives
Interest rate	3,827		6,965		445		11,237
Credit	225		106		—		331
Foreign exchange	3,360		88		12		3,460
Equity	552		—		735		1,287
Commodity and other	110		—		81		191
Total	8,075		7,171		1,273		16,519
Total gross derivatives	$	8,080	$	7,273	$	1,273	$	16,626

The notional amounts of derivative contracts generally overstate the Firm’s exposure. In most circumstances, notional amounts are used only as a reference point from which to calculate amounts owed between the parties to the contract. Furthermore, notional amounts do not reflect the benefit of legally enforceable netting arrangements or risk mitigating transactions.

For a discussion of the Firm’s derivative instruments and hedging activities, see Note 7 to the financial statements in the ~~2020~~2021 Form 10-K.

Gains (Losses) on Accounting Hedges


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30,									September 30,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2022		2021		2022		2021
Fair value hedges—Recognized in Interest income	Fair value hedges—Recognized in Interest income									Fair value hedges—Recognized in Interest income
Interest rate contracts	Interest rate contracts	$	107	$	12	$	607	$	(68)	Interest rate contracts	$	846	$	107	$	2,037	$	607
Investment Securities—AFS	Investment Securities—AFS	(82)		(11)		(509)		78		Investment Securities—AFS	(836)		(82)		(1,960)		(509)
Fair value hedges—Recognized in Interest expense	Fair value hedges—Recognized in Interest expense									Fair value hedges—Recognized in Interest expense
Interest rate contracts	Interest rate contracts	$	(763)	$	(1,004)	$	(3,633)	$	5,908	Interest rate contracts	$	(5,379)	$	(763)	$	(15,629)	$	(3,633)
Deposits	Deposits	15		62		73		(153)		Deposits	25		15		143		73
Borrowings	Borrowings	796		915		3,547		(5,844)		Borrowings	5,372		796		15,499		3,547
Net investment hedges—Foreign exchange contracts	Net investment hedges—Foreign exchange contracts									Net investment hedges—Foreign exchange contracts
Recognized in OCI	Recognized in OCI	$	225	$	(260)	$	524	$	54	Recognized in OCI	$	662	$	225	$	1,436	$	524
Forward points excluded from hedge effectiveness testing—Recognized in Interest income	Forward points excluded from hedge effectiveness testing—Recognized in Interest income	(19)		(6)		(32)		19		Forward points excluded from hedge effectiveness testing—Recognized in Interest income	18		(19)		(59)		(32)


			51			~~September 2021 Form 10-Q~~


~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)

Fair Value Hedges—Hedged Items


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Investment Securities—AFS	Investment Securities—AFS					Investment Securities—AFS
Amortized cost basis currently or previously hedged	Amortized cost basis currently or previously hedged	$	17,823	$	16,288	Amortized cost basis currently or previously hedged	$	26,017	$	17,902
Basis adjustments included in amortized cost1	Basis adjustments included in amortized cost1	$	(459)	$	(39)	Basis adjustments included in amortized cost1	$	(1,847)	$	(591)
Deposits	Deposits					Deposits
Carrying amount currently or previously hedged	Carrying amount currently or previously hedged	$	4,672	$	15,059	Carrying amount currently or previously hedged	$	4,319	$	6,279
Basis adjustments included in carrying amount1	Basis adjustments included in carrying amount1	$	20	$	93	Basis adjustments included in carrying amount1	$	(138)	$	5
Borrowings	Borrowings					Borrowings
Carrying amount currently or previously hedged	Carrying amount currently or previously hedged	$	120,111	$	114,349	Carrying amount currently or previously hedged	$	135,864	$	122,919
Basis adjustments included in carrying amount—Outstanding hedges	Basis adjustments included in carrying amount—Outstanding hedges	$	2,996	$	6,575	Basis adjustments included in carrying amount—Outstanding hedges	$	(13,052)	$	2,324
Basis adjustments included in carrying amount—Terminated hedges	Basis adjustments included in carrying amount—Terminated hedges	$	(750)	$	(756)	Basis adjustments included in carrying amount—Terminated hedges	$	(722)	$	(743)

1.Hedge accounting basis adjustments are primarily related to outstanding hedges.

Gains (Losses) on Economic ~~Loan~~ Hedges of Loans


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30,									September 30,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2022		2021		2022		2021
Recognized in Other revenues	Recognized in Other revenues									Recognized in Other revenues
Credit contracts1	Credit contracts1	$	(21)	$	(58)	$	(170)	$	77	Credit contracts1	$	(44)	$	(21)	$	160	$	(170)

1.Amounts related to hedges of certain held-for-investment and held-for-sale loans.

Net Derivative Liabilities and Collateral Posted


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Net derivative liabilities with credit risk-related contingent features	Net derivative liabilities with credit risk-related contingent features	$	22,199	$	30,421	Net derivative liabilities with credit risk-related contingent features	$	23,750	$	20,548
Collateral posted	Collateral posted	15,433		23,842		Collateral posted	14,427		14,789

The previous table presents the aggregate fair value of certain derivative contracts that contain credit risk-related contingent features that are in a net liability position for which the Firm has posted collateral in the normal course of business.

Incremental Collateral and Termination Payments upon Potential Future Ratings Downgrade


$ in millions	At September 30, ~~2021~~2022
One-notch downgrade	$	~~264~~779
Two-notch downgrade	~~434~~491
Bilateral downgrade agreements included in the amounts above1	$	~~587~~1,215

1.Amount represents arrangements between the Firm and other parties where upon the downgrade of one party, the downgraded party must deliver collateral to the other party. These bilateral downgrade arrangements are used by the Firm to manage the risk of counterparty downgrades.

The additional collateral or termination payments that may be called in the event of a future credit rating downgrade vary by contract and can be based on ratings by either or both of Moody’s Investors Service, Inc. and S&P Global Ratings. The previous table shows the future potential collateral amounts and termination payments that could be called or required by counterparties or exchange and clearing organizations in the


September 2022 Form 10-Q			50


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

event of one-notch or two-notch downgrade scenarios based on the relevant contractual downgrade triggers.

Maximum Potential Payout/Notional of Credit Protection Sold1


		Years to Maturity at September 30, 2021											Years to Maturity at September 30, 2022
$ in billions	$ in billions	< 1		1-3		3-5		Over 5		Total		$ in billions	< 1		1-3		3-5		Over 5		Total
Single-name CDS	Single-name CDS											Single-name CDS
Investment grade	Investment grade	$	9	$	22	$	30	$	14	$	75	Investment grade	$	11	$	28	$	27	$	13	$	79
Non-investment grade	Non-investment grade	5		12		16		5		38		Non-investment grade	5		12		16		5		38
Total	Total	$	14	$	34	$	46	$	19	$	113	Total	$	16	$	40	$	43	$	18	$	117
Index and basket CDS	Index and basket CDS											Index and basket CDS
Investment grade	Investment grade	$	2	$	8	$	84	$	37	$	131	Investment grade	$	2	$	11	$	70	$	44	$	127
Non-investment grade	Non-investment grade	7		14		37		25		83		Non-investment grade	8		17		39		20		84
Total	Total	$	9	$	22	$	121	$	62	$	214	Total	$	10	$	28	$	109	$	64	$	211
Total CDS sold	Total CDS sold	$	23	$	56	$	167	$	81	$	327	Total CDS sold	$	26	$	68	$	152	$	82	$	328
Other credit contracts	Other credit contracts	—		—		—		—		—		Other credit contracts	—		—		—		—		—
Total credit protection sold	Total credit protection sold	$	23	$	56	$	167	$	81	$	327	Total credit protection sold	$	26	$	68	$	152	$	82	$	328
CDS protection sold with identical protection purchased	CDS protection sold with identical protection purchased									$	283	CDS protection sold with identical protection purchased									$	273


		Years to Maturity at December 31, 2020											Years to Maturity at December 31, 2021
$ in billions	$ in billions	< 1		1-3		3-5		Over 5		Total		$ in billions	< 1		1-3		3-5		Over 5		Total
Single-name CDS	Single-name CDS											Single-name CDS
Investment grade	Investment grade	$	9	$	19	$	32	$	9	$	69	Investment grade	$	10	$	26	$	29	$	9	$	74
Non-investment grade	Non-investment grade	7		10		17		2		36		Non-investment grade	5		13		17		2		37
Total	Total	$	16	$	29	$	49	$	11	$	105	Total	$	15	$	39	$	46	$	11	$	111
Index and basket CDS	Index and basket CDS											Index and basket CDS
Investment grade	Investment grade	$	2	$	5	$	39	$	14	$	60	Investment grade	$	2	$	11	$	106	$	15	$	134
Non-investment grade	Non-investment grade	6		9		29		14		58		Non-investment grade	9		14		37		12		72
Total	Total	$	8	$	14	$	68	$	28	$	118	Total	$	11	$	25	$	143	$	27	$	206
Total CDS sold	Total CDS sold	$	24	$	43	$	117	$	39	$	223	Total CDS sold	$	26	$	64	$	189	$	38	$	317
Other credit contracts	Other credit contracts	—		—		—		—		—		Other credit contracts	—		—		—		—		—
Total credit protection sold	Total credit protection sold	$	24	$	43	$	117	$	39	$	223	Total credit protection sold	$	26	$	64	$	189	$	38	$	317
CDS protection sold with identical protection purchased	CDS protection sold with identical protection purchased									$	196	CDS protection sold with identical protection purchased									$	278

Fair Value Asset (Liability) of Credit Protection Sold1


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Single-name CDS	Single-name CDS					Single-name CDS
Investment grade	Investment grade	$	1,532	$	1,230	Investment grade	$	145	$	1,428
Non-investment grade	Non-investment grade	(18)		(22)		Non-investment grade	(1,886)		(370)
Total	Total	$	1,514	$	1,208	Total	$	(1,741)	$	1,058
Index and basket CDS	Index and basket CDS					Index and basket CDS
Investment grade	Investment grade	$	1,590	$	843	Investment grade	$	(194)	$	1,393
Non-investment grade	Non-investment grade	(82)		(824)		Non-investment grade	(4,125)		(650)
Total	Total	$	1,508	$	19	Total	$	(4,319)	$	743
Total CDS sold	Total CDS sold	$	3,022	$	1,227	Total CDS sold	$	(6,060)	$	1,801
Other credit contracts	Other credit contracts	(3)		(4)		Other credit contracts	(2)		(3)
Total credit protection sold	Total credit protection sold	$	3,019	$	1,223	Total credit protection sold	$	(6,062)	$	1,798

1.Investment grade/non-investment grade determination is based on the internal credit rating of the reference obligation. Internal credit ratings serve as the CRM’s assessment of credit risk and the basis for a comprehensive credit limits framework used to control credit risk. The Firm uses quantitative models and judgment to estimate the various risk parameters related to each obligor.


~~September 2021 Form 10-Q~~			52


~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)

Protection Purchased with CDS


		Notional					Notional
$ in billions	$ in billions	At September 30, 2021		At December 31, 2020		$ in billions	At September 30, 2022		At December 31, 2021
Single name	Single name	$	123	$	116	Single name	$	139	$	126
Index and basket	Index and basket	228		116		Index and basket	184		204
Tranched index and basket	Tranched index and basket	16		14		Tranched index and basket	26		18
Total	Total	$	367	$	246	Total	$	349	$	348


		Fair Value Asset (Liability)					Fair Value Asset (Liability)
$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Single name	Single name	$	(1,811)	$	(1,452)	Single name	$	1,970	$	(1,338)
Index and basket	Index and basket	(1,535)		(57)		Index and basket	3,986		(563)
Tranched index and basket	Tranched index and basket	(318)		(329)		Tranched index and basket	441		(451)
Total	Total	$	(3,664)	$	(1,838)	Total	$	6,397	$	(2,352)

The Firm enters into credit derivatives, principally CDS, under which it receives or provides protection against the risk of default on a set of debt obligations issued by a specified reference entity or entities. A majority of the Firm’s counterparties for these derivatives are banks, broker-dealers, and insurance and other financial institutions.

The fair value amounts as shown in the previous tables are prior to cash collateral or counterparty netting. For further information on credit derivatives and other credit contracts, see Note 7 to the financial statements in the ~~2020~~2021 Form 10-K.

8.7. Investment Securities

AFS and HTM Securities


		At September 30, 2021									At September 30, 2022
$ in millions	$ in millions	Amortized Cost1		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		$ in millions	Amortized Cost1		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
AFS securities	AFS securities									AFS securities
U.S. Treasury securities	U.S. Treasury securities	$	55,344	$	555	$	83	$	55,816	U.S. Treasury securities	$	56,113	$	9	$	2,504	$	53,618
U.S. agency securities2	U.S. agency securities2	28,383		386		188		28,581		U.S. agency securities2	23,918		1		2,879		21,040
Agency CMBS	Agency CMBS	14,881		342		65		15,158		Agency CMBS	6,144		3		449		5,698

State and municipal securities	State and municipal securities	285		26		6		305		State and municipal securities	2,170		14		90		2,094
FFELP student loan ABS3	FFELP student loan ABS3	1,728		15		9		1,734		FFELP student loan ABS3	1,213		—		30		1,183

Total AFS securities	Total AFS securities	100,621		1,324		351		101,594		Total AFS securities	89,558		27		5,952		83,633
HTM securities	HTM securities									HTM securities
U.S. Treasury securities	U.S. Treasury securities	29,684		1,103		61		30,726		U.S. Treasury securities	29,589		—		1,932		27,657
U.S. agency securities2	U.S. agency securities2	48,871		267		1,055		48,083		U.S. agency securities2	44,945		—		9,006		35,939
Agency CMBS	Agency CMBS	2,331		—		34		2,297		Agency CMBS	1,954		—		172		1,782
Non-agency CMBS	Non-agency CMBS	951		34		3		982		Non-agency CMBS	1,148		—		133		1,015
Total HTM securities	Total HTM securities	81,837		1,404		1,153		82,088		Total HTM securities	77,636		—		11,243		66,393
Total investment securities	Total investment securities	$	182,458	$	2,728	$	1,504	$	183,682	Total investment securities	$	167,194	$	27	$	17,195	$	150,026


			51			September 2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)


		At December 31, 2020									At December 31, 2021
$ in millions	$ in millions	Amortized Cost1		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		$ in millions	Amortized Cost1		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
AFS securities	AFS securities									AFS securities
U.S. Treasury securities	U.S. Treasury securities	$	45,345	$	1,010	$	—	$	46,355	U.S. Treasury securities	$	58,974	$	343	$	296	$	59,021
U.S. agency securities2	U.S. agency securities2	37,389		762		25		38,126		U.S. agency securities2	26,780		274		241		26,813
Agency CMBS	Agency CMBS	19,982		465		9		20,438		Agency CMBS	14,476		289		89		14,676

Corporate bonds		1,694		42		—		1,736

State and municipal securities	State and municipal securities	1,461		103		1		1,563		State and municipal securities	613		37		2		648
FFELP student loan ABS3	FFELP student loan ABS3	1,735		7		26		1,716		FFELP student loan ABS3	1,672		11		11		1,672
Other ABS		449		—		—		449

Total AFS securities	Total AFS securities	108,055		2,389		61		110,383		Total AFS securities	102,515		954		639		102,830
HTM securities	HTM securities									HTM securities
U.S. Treasury securities	U.S. Treasury securities	29,346		1,893		—		31,239		U.S. Treasury securities	28,653		882		81		29,454
U.S. agency securities2	U.S. agency securities2	38,951		704		8		39,647		U.S. agency securities2	48,195		169		1,228		47,136
Agency CMBS	Agency CMBS	2,632		4		2		2,634		Agency CMBS	2,267		—		51		2,216
Non-agency CMBS	Non-agency CMBS	842		58		—		900		Non-agency CMBS	1,053		28		5		1,076
Total HTM securities	Total HTM securities	71,771		2,659		10		74,420		Total HTM securities	80,168		1,079		1,365		79,882
Total investment securities	Total investment securities	$	179,826	$	5,048	$	71	$	184,803	Total investment securities	$	182,683	$	2,033	$	2,004	$	182,712

1.Amounts are net of any ACL.

2.U.S. agency securities consist mainly of agency mortgage pass-through pool securities, CMOs and agency-issued debt.

3.Underlying loans are backed by a guarantee, ultimately from the U.S. Department of Education, of at least 95% of the principal balance and interest outstanding.

~~Investment~~AFS Securities in an Unrealized Loss Position


		At September 30, 2021				At December 31, 2020					At September 30, 2022				At December 31, 2021
$ in millions	$ in millions	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		$ in millions	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. Treasury securities	U.S. Treasury securities									U.S. Treasury securities
Less than 12 months	Less than 12 months	$	23,587	$	83	$	151	$	—	Less than 12 months	$	46,061	$	1,923	$	31,459	$	296

12 months or longer										12 months or longer	6,673		581		—		—
Total	Total	23,587		83		151		—		Total	52,734		2,504		31,459		296
U.S. agency securities	U.S. agency securities									U.S. agency securities
Less than 12 months	Less than 12 months	11,116		170		5,808		22		Less than 12 months	15,301		1,602		12,283		219
12 months or longer	12 months or longer	839		18		1,168		3		12 months or longer	5,708		1,277		1,167		22
Total	Total	11,955		188		6,976		25		Total	21,009		2,879		13,450		241
Agency CMBS	Agency CMBS									Agency CMBS
Less than 12 months	Less than 12 months	2,738		65		2,779		9		Less than 12 months	5,373		437		2,872		89
12 months or longer	12 months or longer	22		—		46		—		12 months or longer	104		12		10		—
Total	Total	2,760		65		2,825		9		Total	5,477		449		2,882		89

Corporate bonds

12 months or longer		—		—		31		—
Total		—		—		31		—

State and municipal securities	State and municipal securities									State and municipal securities
Less than 12 months	Less than 12 months	102		6		86		—		Less than 12 months	1,536		88		21		2
12 months or longer	12 months or longer	—		—		36		1		12 months or longer	46		2		7		—
Total	Total	102		6		122		1		Total	1,582		90		28		2
FFELP student loan ABS	FFELP student loan ABS									FFELP student loan ABS
Less than 12 months	Less than 12 months	39		—		—		—		Less than 12 months	807		19		320		1
12 months or longer	12 months or longer	759		9		1,077		26		12 months or longer	348		11		591		10
Total	Total	798		9		1,077		26		Total	1,155		30		911		11

Total AFS securities in an unrealized loss position	Total AFS securities in an unrealized loss position									Total AFS securities in an unrealized loss position
Less than 12 months	Less than 12 months	37,582		324		8,824		31		Less than 12 months	69,078		4,069		46,955		607
12 months or longer	12 months or longer	1,620		27		2,358		30		12 months or longer	12,879		1,883		1,775		32
Total	Total	$	39,202	$	351	$	11,182	$	61	Total	$	81,957	$	5,952	$	48,730	$	639

For AFS securities, the Firm believes there are no securities in an unrealized loss position that have credit losses after


			53			~~September 2021 Form 10-Q~~


~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)

performing the analysis described in Note 2 in the ~~2020~~2021 Form 10-K and the Firm expects to recover the amortized cost basis of these securities. Additionally, the Firm does not intend to sell these securities and is not likely to be required to sell these securities prior to recovery of the amortized cost basis.

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the securities in an unrealized loss position are predominantly investment grade.

The HTM securities net carrying amounts at September 30, ~~2021~~2022 and December 31, ~~2020~~2021 reflect an ACL of ~~$35~~$30 million and ~~$26~~$33 million, respectively, related to Non-agency CMBS. See Note 2 in the ~~2020~~2021 Form 10-K for a description of the ACL methodology used for HTM Securities. As of September 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, Non-Agency CMBS HTM securities were predominantly on accrual status and investment grade.

See Note 1514 for additional information on securities issued by VIEs, including U.S. agency mortgage-backed securities, non-agency CMBS, and FFELP student loan ~~ABS and other~~ ABS.

Investment Securities by Contractual Maturity

At September 30, 2021
$ in millions
Amortized
Cost1
Fair
Value Annualized
Average
Yield
AFS securities
U.S. Treasury securities:
Due within 1 year $ 11,941 $ 12,031 1.4 %
After 1 year through 5 years 34,704 35,070 1.1 %
After 5 years through 10 years 8,699 8,715 1.2 %
Total 55,344 55,816
U.S. agency securities:
Due within 1 year 3 3 1.2 %
After 1 year through 5 years 132 134 1.3 %
After 5 years through 10 years 1,402 1,438 1.8 %
After 10 years 26,846 27,006 1.5 %
Total 28,383 28,581
Agency CMBS:
Due within 1 year 193 194 1.7 %
After 1 year through 5 years 1,926 1,964 1.7 %
After 5 years through 10 years 9,974 10,257 1.6 %
After 10 years 2,788 2,743 1.4 %
Total 14,881 15,158
State and municipal securities:
Due within 1 year 4 4 1.9 %
After 1 year through 5 years 22 22 1.8 %
After 5 years through 10 years 49 58 2.1 %
After 10 Years 210 221 2.0 %
Total 285 305
FFELP student loan ABS:
Due within 1 year 31 31 0.8 %
After 1 year through 5 years 183 180 0.9 %
After 5 years through 10 years 148 144 0.7 %
After 10 years 1,366 1,379 1.2 %
Total 1,728 1,734
Total AFS securities 100,621 101,594 1.3 %

At September 30, 2021
$ in millions
Amortized
Cost1
Fair
Value Annualized
Average
Yield
HTM securities
U.S. Treasury securities:
Due within 1 year 4,022 4,058 1.9 %
After 1 year through 5 years 18,673 19,217 1.7 %
After 5 years through 10 years 5,426 5,811 2.4 %
After 10 years 1,563 1,640 2.3 %
Total 29,684 30,726
U.S. agency securities:
After 5 years through 10 years 497 512 2.0 %
After 10 years 48,374 47,571 1.6 %
Total 48,871 48,083
Agency CMBS:
Due within 1 year 46 46 1.1 %
After 1 year through 5 years 1,193 1,181 1.3 %
After 5 years through 10 years 939 922 1.4 %
After 10 years 153 148 1.5 %
Total 2,331 2,297
Non-agency CMBS:
Due within 1 year 151 151 4.5 %
After 1 year through 5 years 61 62 2.6 %
After 5 years through 10 years 703 730 3.6 %
After 10 years 36 39 4.4 %
Total 951 982
Total HTM securities 81,837 82,088 1.7 %
Total investment securities $ 182,458 $ 183,682 1.5 %

1.~~Amounts are net of any ACL.~~

~~Gross Realized Gains (Losses) on Sales of AFS Securities~~

Three Months Ended
September 30, Nine Months Ended
September 30,
$ in millions 2021 2020 2021 2020
Gross realized gains $ 17 $ 55 $ 236 $ 120
Gross realized (losses) — — (27) (14)
Total1
$ 17 $ 55 $ 209 $ 106

1.~~Realized gains and losses are recognized in Other revenues in the income statements.~~


	At September 30, 2022
$ in millions	Amortized Cost1		Fair Value		Annualized Average Yield2
AFS securities
U.S. Treasury securities:
Due within 1 year	$	12,692	$	12,438	1.1	%
After 1 year through 5 years	40,430		38,199		1.2	%
After 5 years through 10 years	2,991		2,981		1.1	%

Total	56,113		53,618
U.S. agency securities:
Due within 1 year	4		5		0.9	%
After 1 year through 5 years	415		382		1.4	%
After 5 years through 10 years	919		831		1.8	%
After 10 years	22,580		19,822		1.7	%
Total	23,918		21,040
Agency CMBS:
Due within 1 year	119		118		1.8	%
After 1 year through 5 years	854		783		2.1	%
After 5 years through 10 years	3,856		3,680		1.8	%
After 10 years	1,315		1,117		1.2	%
Total	6,144		5,698












State and municipal securities:
Due within 1 year	33		34		2.5	%
After 1 year through 5 years	28		29		2.6	%
After 5 years through 10 years	65		62		2.6	%
After 10 Years	2,044		1,969		3.2	%
Total	2,170		2,094
FFELP student loan ABS:

After 1 year through 5 years	122		118		0.9	%
After 5 years through 10 years	129		124		0.7	%
After 10 years	962		941		1.6	%
Total	1,213		1,183






Total AFS securities	89,558		83,633		1.4	%


September ~~2021~~2022 Form 10-Q			5452


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)


	At September 30, 2022
$ in millions	Amortized Cost1	Fair Value	Annualized Average Yield2
HTM securities
U.S. Treasury securities:
Due within 1 year	3,429	3,397	1.9	%
After 1 year through 5 years	20,732	19,573	1.8	%
After 5 years through 10 years	3,867	3,515	2.4	%
After 10 years	1,561	1,172	2.3	%
Total	29,589	27,657
U.S. agency securities:


After 5 years through 10 years	399	362	2.1	%
After 10 years	44,546	35,577	1.8	%
Total	44,945	35,939
Agency CMBS:
Due within 1 year	60	59	1.0	%
After 1 year through 5 years	1,528	1,418	1.3	%
After 5 years through 10 years	226	192	1.5	%
After 10 years	140	113	1.5	%
Total	1,954	1,782
Non-agency CMBS:
Due within 1 year	173	172	4.0	%
After 1 year through 5 years	206	191	3.9	%
After 5 years through 10 years	718	607	3.7	%
After 10 years	51	45	3.7	%
Total	1,148	1,015
Total HTM securities	77,636	66,393	1.9	%
Total investment securities	167,194	150,026	1.6	%

1.Amounts are net of any ACL.

2.Annualized average yield is computed using the effective yield, weighted based on the amortized cost of each security. The effective yield is shown pre-tax and considers the contractual coupon, amortization of premiums and accretion of discounts, and the effect of related hedging derivatives.

Gross Realized Gains (Losses) on Sales of AFS Securities


	Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	2022		2021		2022		2021
Gross realized gains	$	13	$	17	$	163	$	236
Gross realized (losses)	(4)		—		(92)		(27)
Total1	$	9	$	17	$	71	$	209

1.Realized gains and losses are recognized in Other revenues in the income statement.

8. Collateralized Transactions

Offsetting of Certain Collateralized Transactions


		At September 30, 2021											At September 30, 2022
$ in millions	$ in millions	Gross Amounts		Amounts Offset		Balance Sheet Net Amounts		Amounts Not Offset1		Net Amounts		$ in millions	Gross Amounts		Amounts Offset		Balance Sheet Net Amounts		Amounts Not Offset1		Net Amounts
Assets	Assets											Assets
Securities purchased under agreements to resell	Securities purchased under agreements to resell	$	215,672	$	(95,951)	$	119,721	$	(116,787)	$	2,934	Securities purchased under agreements to resell	$	207,180	$	(96,056)	$	111,124	$	(106,215)	$	4,909
Securities borrowed	Securities borrowed	136,731		(10,809)		125,922		(119,047)		6,875		Securities borrowed	148,654		(12,176)		136,478		(130,579)		5,899
Liabilities	Liabilities											Liabilities
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	$	157,938	$	(95,951)	$	61,987	$	(54,226)	$	7,761	Securities sold under agreements to repurchase	$	156,189	$	(96,056)	$	60,133	$	(55,748)	$	4,385
Securities loaned	Securities loaned	21,942		(10,809)		11,133		(10,822)		311		Securities loaned	25,273		(12,176)		13,097		(12,664)		433
Net amounts for which master netting agreements are not in place or may not be legally enforceable	Net amounts for which master netting agreements are not in place or may not be legally enforceable											Net amounts for which master netting agreements are not in place or may not be legally enforceable
Securities purchased under agreements to resell	Securities purchased under agreements to resell									$	2,417	Securities purchased under agreements to resell									$	2,773
Securities borrowed	Securities borrowed									2,006		Securities borrowed									820
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase									7,167		Securities sold under agreements to repurchase									3,162
Securities loaned	Securities loaned									173		Securities loaned									262


		At December 31, 2020											At December 31, 2021
$ in millions	$ in millions	Gross Amounts		Amounts Offset		Balance Sheet Net Amounts		Amounts Not Offset1		Net Amounts		$ in millions	Gross Amounts		Amounts Offset		Balance Sheet Net Amounts		Amounts Not Offset1		Net Amounts
Assets	Assets											Assets
Securities purchased under agreements to resell	Securities purchased under agreements to resell	$	264,140	$	(147,906)	$	116,234	$	(114,108)	$	2,126	Securities purchased under agreements to resell	$	197,486	$	(77,487)	$	119,999	$	(106,896)	$	13,103
Securities borrowed	Securities borrowed	124,921		(12,530)		112,391		(107,434)		4,957		Securities borrowed	139,395		(9,682)		129,713		(124,028)		5,685
Liabilities	Liabilities											Liabilities
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	$	198,493	$	(147,906)	$	50,587	$	(43,960)	$	6,627	Securities sold under agreements to repurchase	$	139,675	$	(77,487)	$	62,188	$	(53,692)	$	8,496
Securities loaned	Securities loaned	20,261		(12,530)		7,731		(7,430)		301		Securities loaned	21,981		(9,682)		12,299		(12,019)		280
Net amounts for which master netting agreements are not in place or may not be legally enforceable	Net amounts for which master netting agreements are not in place or may not be legally enforceable											Net amounts for which master netting agreements are not in place or may not be legally enforceable
Securities purchased under agreements to resell	Securities purchased under agreements to resell									$	1,870	Securities purchased under agreements to resell									$	12,514
Securities borrowed	Securities borrowed									596		Securities borrowed									1,041
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase									6,282		Securities sold under agreements to repurchase									8,295
Securities loaned	Securities loaned									128		Securities loaned									139

1.Amounts relate to master netting agreements that have been determined by the Firm to be legally enforceable in the event of default but where certain other criteria are not met in accordance with applicable offsetting accounting guidance.

For further discussion of the Firm’s collateralized transactions, see Note 2 and Note 9 to the financial statements in the ~~2020~~2021 Form 10-K. For information related to offsetting of derivatives, see Note 7.6.

Gross Secured Financing Balances by Remaining Contractual Maturity


		At September 30, 2021											At September 30, 2022
$ in millions	$ in millions	Overnight and Open		Less than 30 Days		30-90 Days		Over 90 Days		Total		$ in millions	Overnight and Open		Less than 30 Days		30-90 Days		Over 90 Days		Total
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	$	48,461	$	53,458	$	12,529	$	43,490	$	157,938	Securities sold under agreements to repurchase	$	53,042	$	50,868	$	12,508	$	39,771	$	156,189
Securities loaned	Securities loaned	12,675		—		150		9,117		21,942		Securities loaned	15,249		—		1,398		8,626		25,273
Total included in the offsetting disclosure	Total included in the offsetting disclosure	$	61,136	$	53,458	$	12,679	$	52,607	$	179,880	Total included in the offsetting disclosure	$	68,291	$	50,868	$	13,906	$	48,397	$	181,462
Trading liabilities— Obligation to return securities received as collateral	Trading liabilities— Obligation to return securities received as collateral	22,528		—		—		—		22,528		Trading liabilities— Obligation to return securities received as collateral	22,373		—		—		—		22,373
Total	Total	$	83,664	$	53,458	$	12,679	$	52,607	$	202,408	Total	$	90,664	$	50,868	$	13,906	$	48,397	$	203,835


			53			September 2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)


		At December 31, 2020											At December 31, 2021
$ in millions	$ in millions	Overnight and Open		Less than 30 Days		30-90 Days		Over 90 Days		Total		$ in millions	Overnight and Open		Less than 30 Days		30-90 Days		Over 90 Days		Total
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	$	84,349	$	60,853	$	26,221	$	27,070	$	198,493	Securities sold under agreements to repurchase	$	29,271	$	53,987	$	17,099	$	39,318	$	139,675
Securities loaned	Securities loaned	15,267		247		—		4,747		20,261		Securities loaned	11,480		364		650		9,487		21,981
Total included in the offsetting disclosure	Total included in the offsetting disclosure	$	99,616	$	61,100	$	26,221	$	31,817	$	218,754	Total included in the offsetting disclosure	$	40,751	$	54,351	$	17,749	$	48,805	$	161,656
Trading liabilities— Obligation to return securities received as collateral	Trading liabilities— Obligation to return securities received as collateral	16,389		—		—		—		16,389		Trading liabilities— Obligation to return securities received as collateral	30,104		—		—		—		30,104
Total	Total	$	116,005	$	61,100	$	26,221	$	31,817	$	235,143	Total	$	70,855	$	54,351	$	17,749	$	48,805	$	191,760

Gross Secured Financing Balances by Class of Collateral Pledged


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase					Securities sold under agreements to repurchase
U.S. Treasury and agency securities	U.S. Treasury and agency securities	$	40,104	$	94,662	U.S. Treasury and agency securities	$	51,436	$	30,790
Other sovereign government obligations	Other sovereign government obligations	83,996		71,140		Other sovereign government obligations	74,401		73,063
Corporate equities	Corporate equities	24,508		24,692		Corporate equities	19,128		25,881
Other	Other	9,330		7,999		Other	11,224		9,941
Total	Total	$	157,938	$	198,493	Total	$	156,189	$	139,675
Securities loaned	Securities loaned					Securities loaned
Other sovereign government obligations	Other sovereign government obligations	$	1,359	$	3,430	Other sovereign government obligations	$	1,045	$	748
Corporate equities	Corporate equities	20,195		16,536		Corporate equities	23,688		20,656
Other	Other	388		295		Other	540		577
Total	Total	$	21,942	$	20,261	Total	$	25,273	$	21,981
Total included in the offsetting disclosure	Total included in the offsetting disclosure	$	179,880	$	218,754	Total included in the offsetting disclosure	$	181,462	$	161,656
Trading liabilities—Obligation to return securities received as collateral	Trading liabilities—Obligation to return securities received as collateral					Trading liabilities—Obligation to return securities received as collateral
Corporate equities	Corporate equities	$	22,487	$	16,365	Corporate equities	$	22,355	$	30,048
Other	Other	41		24		Other	18		56
Total	Total	$	22,528	$	16,389	Total	$	22,373	$	30,104
Total	Total	$	202,408	$	235,143	Total	$	203,835	$	191,760

Carrying Value of Assets Loaned or Pledged without Counterparty Right to Sell or Repledge


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Trading assets	Trading assets	$	33,926	$	30,954	Trading assets	$	32,461	$	32,458

The Firm pledges certain of its trading assets to collateralize securities sold under agreements to repurchase, securities loaned, other secured financings and derivatives and to cover customer short sales. Counterparties may or may not have the right to sell or repledge the collateral.

Pledged financial instruments that can be sold or repledged by the secured party are identified as Trading assets (pledged to various parties) in the balance ~~sheets.~~sheet.

Fair Value of Collateral Received with Right to Sell or Repledge


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Collateral received with right to sell or repledge	Collateral received with right to sell or repledge	$	706,446	$	724,818	Collateral received with right to sell or repledge	$	630,129	$	672,104
Collateral that was sold or repledged1	Collateral that was sold or repledged1	535,697		523,648		Collateral that was sold or repledged1	489,010		510,000

1.Does not include securities used to meet federal regulations for the Firm’s U.S. broker-dealers.


			55			~~September 2021 Form 10-Q~~


~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)

The Firm receives collateral in the form of securities in connection with securities purchased under agreements to resell, securities borrowed, securities-for-securities transactions, derivative transactions, customer margin loans and securities-based lending. In many cases, the Firm is permitted to sell or repledge this collateral to secure securities sold under agreements to repurchase, to enter into securities lending and derivative transactions or ~~for delivery~~to deliver to counterparties to cover short positions.

Securities Segregated for Regulatory Purposes


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Segregated securities1	Segregated securities1	$	20,552	$	34,106	Segregated securities1	$	36,579	$	20,092

1.Securities segregated under federal regulations for the Firm’s U.S. broker-dealers are sourced from Securities purchased under agreements to resell and Trading assets in the balance ~~sheets.~~sheet.

Customer Margin and Other Lending


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Margin and other lending	Margin and other lending	$	69,608	$	74,714	Margin and other lending	$	43,415	$	71,532

The Firm provides margin lending arrangements that allow customers to borrow against the value of qualifying securities. Receivables from these arrangements are included within Customer and other receivables in the balance ~~sheets.~~sheet. Under these arrangements, the Firm receives collateral, which includes U.S. government and agency securities, other sovereign government obligations, corporate and other debt, and corporate equities. Margin loans are collateralized by customer-owned securities held by the Firm. The Firm monitors required margin levels and established credit terms daily and, pursuant to such guidelines, requires customers to deposit additional collateral, or reduce positions, when necessary.

For a further discussion of the Firm’s margin lending activities, see Note 9 to the financial statements in the ~~2020~~2021 Form 10-K.

Also included in the amounts in the previous table is non-purpose securities-based lending on non-bank entities in the Wealth Management business segment.

Other Secured Financings

The Firm has additional secured liabilities. For a further discussion of other secured financings, see Note ~~13.~~12.


September 2022 Form 10-Q			54


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

~~10.~~9. Loans, Lending Commitments and Related Allowance for Credit Losses

Loans by Type


		At September 30, 2021							At September 30, 2022
$ in millions	$ in millions	Loans Held for Investment		Loans Held for Sale		Total Loans		$ in millions	HFI Loans		HFS Loans		Total Loans
Corporate	Corporate	$	4,774	$	8,998	$	13,772	Corporate	$	6,858	$	7,640	$	14,498
Secured lending facilities	Secured lending facilities	27,345		3,650		30,995		Secured lending facilities	34,788		3,707		38,495
Commercial real estate	Commercial real estate	6,915		434		7,349		Commercial real estate	8,191		1,750		9,941
Residential real estate	Residential real estate	41,428		8		41,436		Residential real estate	52,904		5		52,909
Securities-based lending and Other loans	Securities-based lending and Other loans	80,413		78		80,491		Securities-based lending and Other loans	95,591		251		95,842
Total loans	Total loans	160,875		13,168		174,043		Total loans	198,332		13,353		211,685
ACL	ACL	(684)				(684)		ACL	(749)				(749)
Total loans, net	Total loans, net	$	160,191	$	13,168	$	173,359	Total loans, net	$	197,583	$	13,353	$	210,936
Fixed rate loans, net						$	40,590
Floating or adjustable rate loans, net						132,769
Loans to non-U.S. borrowers, net	Loans to non-U.S. borrowers, net					21,260		Loans to non-U.S. borrowers, net					$	24,624


		At December 31, 2020							At December 31, 2021
$ in millions	$ in millions	Loans Held for Investment		Loans Held for Sale		Total Loans		$ in millions	HFI Loans		HFS Loans		Total Loans
Corporate	Corporate	$	6,046	$	8,580	$	14,626	Corporate	$	5,567	$	8,107	$	13,674
Secured lending facilities	Secured lending facilities	25,727		3,296		29,023		Secured lending facilities	31,471		3,879		35,350
Commercial real estate	Commercial real estate	7,346		822		8,168		Commercial real estate	7,227		1,777		9,004
Residential real estate	Residential real estate	35,268		48		35,316		Residential real estate	44,251		7		44,258
Securities-based lending and Other loans	Securities-based lending and Other loans	64,232		67		64,299		Securities-based lending and Other loans	86,440		62		86,502
Total loans	Total loans	138,619		12,813		151,432		Total loans	174,956		13,832		188,788
ACL	ACL	(835)				(835)		ACL	(654)				(654)
Total loans, net	Total loans, net	$	137,784	$	12,813	$	150,597	Total loans, net	$	174,302	$	13,832	$	188,134
Fixed rate loans, net						$	32,796
Floating or adjustable rate loans, net						117,801
Loans to non-U.S. borrowers, net	Loans to non-U.S. borrowers, net					21,081		Loans to non-U.S. borrowers, net					$	24,322

For additional information on the Firm’s held-for-investment and held-for-sale loan portfolios, see Note 10 to the financial statements in the ~~2020~~2021 Form 10-K.

Loans by Interest Rate Type


	At September 30, 2022				At December 31, 2021
$ in millions	Fixed Rate		Floating or Adjustable Rate		Fixed Rate		Floating or Adjustable Rate
Corporate	$	—	$	14,498	$	—	$	13,674
Secured lending facilities	—		38,495		—		35,350
Commercial real estate	205		9,735		343		8,661
Residential real estate	24,105		28,805		18,966		25,292
Securities-based lending and Other loans	24,141		71,701		22,832		63,670
Total loans, before ACL	$	48,451	$	163,234	$	42,141	$	146,647

See Note 54 for further information regarding Loans and lending commitments held at fair value. See Note 1413 for details of current commitments to lend in the future.

Loans Held for Investment before Allowance by Origination Year


	At September 30, 2022						At December 31, 2021
	Corporate
$ in millions	IG		NIG		Total		IG		NIG		Total
Revolving	$	3,111	$	3,119	$	6,230	$	2,356	$	2,328	$	4,684
2022	—		80		80
2021	—		92		92		—		85		85
2020	16		25		41		111		26		137
2019	—		153		153		—		176		176
2018	146		—		146		196		—		196
Prior	115		1		116		229		60		289
Total	$	3,388	$	3,470	$	6,858	$	2,892	$	2,675	$	5,567


	At September 30, 2022						At December 31, 2021
	Secured Lending Facilities
$ in millions	IG		NIG		Total		IG		NIG		Total
Revolving	$	9,413	$	21,231	$	30,644	$	7,603	$	20,172	$	27,775
2022	590		995		1,585
2021	234		196		430		32		467		499
2020	—		107		107		35		160		195
2019	60		556		616		43		819		862
2018	—		284		284		297		703		1,000
Prior	217		905		1,122		144		996		1,140
Total	$	10,514	$	24,274	$	34,788	$	8,154	$	23,317	$	31,471


	At September 30, 2022						At December 31, 2021
	Commercial Real Estate
$ in millions	IG		NIG		Total		IG		NIG		Total
Revolving	$	4	$	154	$	158	$	3	$	149	$	152
2022	503		1,806		2,309
2021	283		1,492		1,775		423		1,292		1,715
2020	92		639		731		91		819		910
2019	923		862		1,785		976		1,266		2,242
2018	475		299		774		527		416		943
Prior	86		573		659		189		1,076		1,265
Total	$	2,366	$	5,825	$	8,191	$	2,209	$	5,018	$	7,227


	At September 30, 2022
	Residential Real Estate
	by FICO Scores						by LTV Ratio				Total
$ in millions	≥ 740		680-739		≤ 679		≤ 80%		> 80%
Revolving	$	75	$	27	$	4	$	106	$	—	$	106
2022	9,741		2,109		342		11,257		935		12,192
2021	11,749		2,529		260		13,555		983		14,538
2020	7,396		1,523		116		8,573		462		9,035
2019	4,268		956		138		5,031		331		5,362
2018	1,663		457		51		2,001		170		2,171
Prior	7,045		2,143		312		8,737		763		9,500
Total	$	41,937	$	9,744	$	1,223	$	49,260	$	3,644	$	52,904


	At December 31, 2021
	Residential Real Estate
	by FICO Scores						by LTV Ratio				Total
$ in millions	≥ 740		680-739		≤ 679		≤ 80%		> 80%
Revolving	$	65	$	27	$	4	$	96	$	—	$	96
2021	12,230		2,638		257		14,116		1,009		15,125
2020	7,941		1,648		131		9,210		510		9,720
2019	4,690		1,072		140		5,536		366		5,902
2018	1,865		497		55		2,231		186		2,417
2017	2,157		558		65		2,588		192		2,780
Prior	5,973		1,919		319		7,485		726		8,211
Total	$	34,921	$	8,359	$	971	$	41,262	$	2,989	$	44,251


			55			September 2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)


	At September 30, 2022
	Securities-based Lending1		Other2
$ in millions			IG		NIG		Total
Revolving	$	78,639	$	5,695	$	1,375	$	85,709
2022	1,409		1,379		108		2,896
2021	714		541		144		1,399
2020	—		529		548		1,077
2019	18		912		625		1,555
2018	202		301		243		746
Prior	16		1,562		631		2,209
Total	$	80,998	$	10,919	$	3,674	$	95,591


	December 31, 2021
	Securities-based Lending1		Other2
$ in millions			IG		NIG		Total
Revolving	$	71,485	$	6,170	$	858	$	78,513
2021	807		708		103		1,618
2020	—		651		626		1,277
2019	19		1,079		633		1,731
2018	232		273		375		880
2017	—		531		217		748
Prior	16		1,294		363		1,673
Total	$	72,559	$	10,706	$	3,175	$	86,440

IG—Investment Grade

NIG—Non-investment Grade

1. Securities-based loans are subject to collateral maintenance provisions, and at September 30, 2022 and December 31, 2021, these loans are predominantly over-collateralized. For more information on the ACL methodology related to securities-based loans, see Note 2 to the financial statements in the 2021 Form 10-K.

2. Other loans primarily include certain loans originated in the tailored lending business within the Wealth Management business segment.

Past Due Loans Held for Investment before Allowance1

At September 30, 2021 At December 31, 2020
Corporate
$ in millions IG NIG Total IG NIG Total
Revolving $ 1,529 $ 2,302 $ 3,831 $ 1,138 $ 3,231 $ 4,369
2021 — 71 71
2020 179 26 205 585 80 665
2019 — 181 181 204 202 406
2018 195 — 195 195 — 195
2017 — 60 60 — 64 64
Prior 231 — 231 247 100 347
Total $ 2,134 $ 2,640 $ 4,774 $ 2,369 $ 3,677 $ 6,046


$ in millions	At September 30, 2022		At December 31, 2021
Corporate	$	44	$	—


Residential real estate	141		209

Total	$	185	$	209

1.The majority of the amounts are past due for a period of less than 90 days.

Nonaccrual Loans Held for Investment before Allowance


$ in millions	At September 30, 2022		At December 31, 2021
Corporate	$	60	$	34
Secured lending facilities	99		375
Commercial real estate	130		195
Residential real estate	120		138
Securities-based lending and Other loans	4		151
Total1	$	413	$	893
Nonaccrual loans without an ACL	$	108	$	356

1.Includes all loans held for investment that are 90 days or more past due as of September 30, 2022 and December 31, 2021.

See Note 2 to the financial statements in the 2021 Form 10-K for a description of the ACL calculated under the CECL methodology, including credit quality indicators, used for HFI loans.

Troubled Debt Restructurings


$ in millions	At September 30, 2022		At December 31, 2021
Loans, before ACL	$	27	$	49

Allowance for credit losses	—		8

Troubled debt restructurings typically include modifications of interest rates, collateral requirements, other loan covenants and payment extensions. See Note 2 to the financial statements in the 2021 Form 10-K for further information on TDR guidance issued by Congress in the CARES Act as well as by the U.S. banking agencies.

Allowance for Credit Losses Rollforward and Allocation—Loans


$ in millions	Corporate			Secured Lending Facilities			CRE			Residential Real Estate			SBL and Other			Total
December 31, 2021	$	165		$	163		$	206		$	60		$	60		$	654
Gross charge-offs	—			(3)			(7)			—			(21)			(31)
Recoveries	6			—			—			1			—			7
Net (charge-offs) recoveries	6			(3)			(7)			1			(21)			(24)
Provision (release)	46			(2)			35			26			32			137
Other	(6)			(2)			(10)			—			—			(18)
September 30, 2022	$	211		$	156		$	224		$	87		$	71		$	749
Percent of loans to total loans1	3		%	18		%	4		%	27		%	48		%	100		%


$ in millions	Corporate			Secured Lending Facilities			CRE			Residential Real Estate			SBL and Other			Total
December 31, 2020	$	309		$	198		$	211		$	59		$	58		$	835
Gross charge-offs	(19)			(67)			(21)			—			—			(107)


Provision (release)	(91)			47			4			(2)			5			(37)
Other	(2)			(3)			(1)			1			(2)			(7)
September 30, 2021	$	197		$	175		$	193		$	58		$	61		$	684
Percent of loans to total loans1	3		%	17		%	4		%	26		%	50		%	100		%

CRE—Commercial real estate

SBL—Securities-based lending

1.Percent of loans to total loans represents loans held for investment by loan type to total loans held for investment.

Allowance for Credit Losses Rollforward—Lending Commitments


$ in millions	Corporate		Secured Lending Facilities		CRE		Residential Real Estate		SBL and Other		Total
December 31, 2021	$	356	$	41	$	20	$	1	$	26	$	444
Provision (release)	64		7		(6)		1		(10)		56
Other	(12)		(1)		—		—		—		(13)
September 30, 2022	$	408	$	47	$	14	$	2	$	16	$	487


$ in millions	Corporate		Secured Lending Facilities		CRE		Residential Real Estate		SBL and Other		Total
December 31, 2020	$	323	$	38	$	11	$	1	$	23	$	396
Provision (release)	39		2		—		—		(5)		36
Other	(3)		1		(1)		—		—		(3)
September 30, 2021	$	359	$	41	$	10	$	1	$	18	$	429


September ~~2021~~2022 Form 10-Q			56


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

At September 30, 2021 At December 31, 2020
Secured lending facilities
$ in millions IG NIG Total IG NIG Total
Revolving $ 7,000 $ 16,034 $ 23,034 $ 4,711 $ 14,510 $ 19,221
2021 33 354 387
2020 84 175 259 162 253 415
2019 173 1,065 1,238 260 1,904 2,164
2018 310 786 1,096 614 1,432 2,046
2017 144 306 450 245 581 826
Prior — 881 881 — 1,055 1,055
Total $ 7,744 $ 19,601 $ 27,345 $ 5,992 $ 19,735 $ 25,727
Provision for Credit Losses

At September 30, 2021 At December 31, 2020
Commercial real estate
$ in millions IG NIG Total IG NIG Total
2021 260 537 797
2020 160 813 973 95 943 1,038
2019 1,148 1,400 2,548 1,074 1,848 2,922
2018 533 415 948 746 774 1,520
2017 334 339 673 412 387 799
Prior 100 876 976 100 967 1,067
Total $ 2,535 $ 4,380 $ 6,915 $ 2,427 $ 4,919 $ 7,346

At September 30, 2021
Residential real estate
by FICO Scores by LTV Ratio Total
$ in millions ≥ 740 680-739 ≤ 679 ≤ 80% > 80%
Revolving $ 66 $ 26 $ 4 $ 96 $ — $ 96
2021 8,749 1,863 164 10,099 677 10,776
2020 8,245 1,711 133 9,557 532 10,089
2019 4,941 1,130 149 5,836 384 6,220
2018 1,977 519 65 2,369 192 2,561
2017 2,282 584 76 2,736 206 2,942
Prior 6,350 2,060 334 7,967 777 8,744
Total $ 32,610 $ 7,893 $ 925 $ 38,660 $ 2,768 $ 41,428

At December 31, 2020
Residential real estate
by FICO Scores by LTV Ratio Total
$ in millions ≥ 740 680-739 ≤ 679 ≤ 80% > 80%
Revolving $ 85 $ 32 $ 5 $ 122 $ — $ 122
2020 8,948 1,824 149 10,338 583 10,921
2019 5,592 1,265 168 6,584 441 7,025
2018 2,320 604 75 2,756 243 2,999
2017 2,721 690 89 3,251 249 3,500
2016 3,324 884 118 4,035 291 4,326
Prior 4,465 1,626 284 5,684 691 6,375
Total $ 27,455 $ 6,925 $ 888 $ 32,770 $ 2,498 $ 35,268

At September 30, 2021
Securities-based lending1
Other2
$ in millions Investment Grade Non-Investment Grade Total
Revolving $ 67,009 $ 5,783 $ 670 $ 73,462
2021 31 346 64 441
2020 — 729 590 1,319
2019 19 1,105 627 1,751
2018 232 288 384 904
2017 — 521 262 783
Prior 16 1,395 342 1,753
Total $ 67,307 $ 10,167 $ 2,939 $ 80,413

December 31, 2020
Securities-based lending1
Other2
$ in millions Investment Grade Non-Investment Grade Total
Revolving $ 51,667 $ 4,816 $ 555 $ 57,038
2020 — 1,073 590 1,663
2019 18 1,156 623 1,797
2018 232 407 403 1,042
2017 — 654 122 776
2016 — 566 111 677
Prior 16 1,066 157 1,239
Total $ 51,933 $ 9,738 $ 2,561 $ 64,232

1. Securities-based loans are subject to collateral maintenance provisions, and at September 30, 2021 and December 31, 2020, these loans are predominantly over-collateralized. For more information on the ACL methodology related to securities-based loans, see Note 2 to the financial statements in the 2020 Form 10-K.

~~2. Other loans primarily include certain loans originated in the tailored lending business within the Wealth Management business segment.~~

~~Past Due Loans Held for Investment before Allowance~~1

$ in millions At September 30, 2021 At December 31, 2020
Corporate $ 4 $ —
Residential real estate 235 332
Securities-based lending and Other loans — 31
Total $ 239 $ 363

1.The majority of the amounts are past due for a period of greater than 90 days as of September 30, 2021, and the majority of the amounts are past due for a period of less than 90 days as of December 31, 2020.

~~Nonaccrual Loans Held for Investment before Allowance~~

$ in millions At September 30, 2021 At December 31, 2020
Corporate $ 82 $ 164
Secured lending facilities 388 —
Commercial real estate 68 152
Residential real estate 127 97
Securities-based lending and Other loans 161 178
Total1
$ 826 $ 591
Nonaccrual loans without an ACL $ 125 $ 90

1.~~Includes all HFI loans that are 90 days or more past due as of September 30, 2021 and December 31, 2020.~~

~~See Note 2 to the financial statements in the 2020 Form 10-K for a description of the ACL calculated under the CECL methodology, including credit quality indicators, used for HFI loans.~~

~~Troubled Debt Restructurings~~

$ in millions At September 30, 2021 At December 31, 2020
Loans, before ACL $ 65 $ 167
Lending commitments — 27
ACL on Loans and Lending commitments 9 36

Troubled debt restructurings typically include modifications of interest rates, collateral requirements, other loan covenants and payment extensions. See Note 2 to the financial statements in the 2020 Form 10-K for further information on TDR guidance issued by Congress in the CARES Act as well as by the U.S. banking agencies.


	Three Months Ended September 30,
$ in millions	2022		2021
Loans	$	6	$	5
Lending commitments	29		19


			57			~~September 2021 Form 10-Q~~



~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)

~~Allowance for Credit Losses Rollforward—Loans~~

$ in millions Corporate Secured lending facilities CRE Residential real estate SBL and Other Total
December 31, 2020 $ 309 $ 198 $ 211 $ 59 $ 58 $ 835
Gross charge-offs (19) (67) (21) — — (107)
Provision for credit losses (91) 47 4 (2) 5 (37)
Other (2) (3) (1) 1 (2) (7)
September 30, 2021 $ 197 $ 175 $ 193 $ 58 $ 61 $ 684

$ in millions Corporate Secured lending facilities CRE Residential real estate SBL and Other Total
December 31, 2019 $ 115 $ 101 $ 75 $ 25 $ 33 $ 349
Effect of CECL adoption (2) (42) 34 21 (2) 9
Gross charge-offs (33) — (26) — — (59)
Recoveries 3 — — — 2 5
Net recoveries (charge-offs) (30) — (26) — 2 (54)
Provision for credit losses 281 131 173 12 4 601
Other 3 1 (34) — 38 8
September 30, 2020 $ 367 $ 191 $ 222 $ 58 $ 75 $ 913

~~Allowance for Credit Losses Rollforward—Lending Commitments~~

$ in millions Corporate Secured lending facilities CRE Residential real estate SBL and Other Total
December 31, 2020 $ 323 $ 38 $ 11 $ 1 $ 23 $ 396
Provision for credit losses 39 2 — — (5) 36
Other (3) 1 (1) — — (3)
September 30, 2021 $ 359 $ 41 $ 10 $ 1 $ 18 $ 429

$ in millions Corporate Secured lending facilities CRE Residential real estate SBL and Other Total
December 31, 2019 $ 201 $ 27 $ 7 $ — $ 6 $ 241
Effect of CECL adoption (41) (11) 1 2 (1) (50)
Provision for credit losses 119 24 7 (1) 7 156
Other — — (4) — 4 —
September 30, 2020 $ 279 $ 40 $ 11 $ 1 $ 16 $ 347

~~CRE—Commercial real estate~~

~~SBL—Securities-based lending~~

~~Provision for Credit Losses~~

Three Months Ended
September 30,
$ in millions 2021 2020
Loans $ 5 $ 63
Lending commitments 19 48

The aggregate allowance for credit losses for loans and lending commitments ~~decreased~~increased in the current year period, ~~primarily~~ reflecting ~~charge-offs, as well as an allowance release as a result of paydowns on Corporate loans, including by lower-rated borrowers, offset by~~ the ~~provision~~Provision for ~~one Secured lending facility.The~~credit losses due to portfolio growth and deterioration in macroeconomic outlook. The base scenario used in our ACL models as of September 30, ~~2021~~2022 was generated using a combination of ~~industry~~ consensus economic forecasts, forward rates, and internally developed and validated ~~models.~~models, and assumes slower economic growth over the forecast period. Given the nature of our lending portfolio, the most sensitive model input is

U.S. gross domestic product. The base scenario, among other things, assumes continued growth over the forecast period and a year-over-year U.S. GDP effective growth rate of approximately 6% in the fourth quarter of 2021, supported by fiscal stimulus and accommodative monetary policy. For a further discussion of the Firm’s loans as well as the Firm’s allowance methodology, refer to Notes 2 and 10 to the financial statements in the ~~2020~~2021 Form 10-K.

Selected Credit Ratios


	At September 30, 2022		At December 31, 2021
ACL to total loans1	0.4	%	0.4	%
Nonaccrual loans to total loans2	0.2	%	0.5	%
ACL to nonaccrual loans3	181.4	%	73.2	%

1.Allowance for credit losses for loans to total loans held for investment.

2.Nonaccrual loans held for investment, which are loans that are 90 days or more past due, to total loans held for investment.

3.Allowance for credit losses for loans to nonaccrual loans held for investment.

Employee Loans


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Currently employed by the Firm1	Currently employed by the Firm1	$	3,486	$	3,100	Currently employed by the Firm1	$	3,967	$	3,613
No longer employed by the Firm2	No longer employed by the Firm2	128		$	140	No longer employed by the Firm2	98		113
Employee loans	Employee loans	$	3,614	$	3,240	Employee loans	$	4,065	$	3,726
ACL	ACL	(163)		(165)		ACL	(141)		(153)
Employee loans, net of ACL	Employee loans, net of ACL	$	3,451	$	3,075	Employee loans, net of ACL	$	3,924	$	3,573
Remaining repayment term, weighted average in years	Remaining repayment term, weighted average in years	5.6		5.3		Remaining repayment term, weighted average in years	5.8		5.7

1.These loans ~~were~~are predominantly current as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

2.These loans ~~were~~are predominantly past due for a period of 90 days or more as of September 30, ~~2021~~2022 and December 31, ~~2020.~~

2021.

Employee loans are granted in conjunction with a program established primarily to recruit certain Wealth Management representatives, are full recourse and generally require periodic repayments, and are due in full upon termination of employment with the Firm. These loans are recorded in Customer and other receivables in the balance sheets. The ACL as of September 30, 2021 and December 31, 2020 was calculated under the CECL methodology. The related provision is recorded in Compensation and benefits expense in the income statements.sheet. See Note 2 to the financial statements in the ~~2020~~2021 Form 10-K for a description of the CECL allowance methodology, including credit quality indicators, for employee loans.

~~11.~~10. Other Assets—Equity Method Investments

Equity Method Investments


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Investments	Investments	$	2,298	$	2,410	Investments	$	1,881	$	2,214


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2022		2021		2022		2021
Income (loss)	Income (loss)	$	24	$	10	$	51	$	(24)	Income (loss)	$	21	$	24	$	44	$	51

Equity method investments, other than investments in certain fund interests, are summarized above and are included in Other assets in the balance ~~sheets~~sheet with related income or loss included in Other revenues in the income ~~statements.~~statement. See “Net Asset Value Measurements—Fund Interests” in Note 54 for the carrying value of certain of the Firm’s fund interests, which are ~~comprised~~composed of general and limited partnership interests, as well as any related carried interest.

Japanese Securities Joint Venture


	Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	2022		2021		2022		2021
Income (loss) from investment in MUMSS	$	17	$	29	$	35	$	113

For more information on MUMSS and other relationships with MUFG, see Note 12 to the financial statements in the 2021 Form 10-K.

11. Deposits

Deposits


$ in millions	At September 30, 2022		At December 31, 2021
Savings and demand deposits	$	317,129	$	332,747
Time deposits	20,994		14,827
Total	$	338,123	$	347,574
Deposits subject to FDIC insurance	$	239,194	$	230,894
Deposits not subject to FDIC insurance	$	98,929	$	116,680

Time Deposit Maturities


$ in millions	At September 30, 2022
2022	$	1,948
2023	9,279
2024	5,640
2025	2,093
2026	623
Thereafter	1,411
Total	$	20,994

September ~~2021~~2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

~~Japanese Securities Joint Venture~~

Three Months Ended
September 30, Nine Months Ended
September 30,
$ in millions 2021 2020 2021 2020
Income (loss) from investment in MUMSS $ 29 $ 15 $ 113 $ 46

~~For more information on Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (“MUMSS”) and other relationships with Mitsubishi UFJ Financial Group, Inc., see Note~~ 12 ~~to the financial statements in the 2020 Form 10-K.~~

~~12. Deposits~~

~~Deposits~~

$ in millions At
September 30,
2021 At
December 31,
2020
Savings and demand deposits $ 310,845 $ 279,221
Time deposits 18,196 31,561
Total $ 329,041 $ 310,782
Deposits subject to FDIC insurance $ 226,605 $ 234,211
Time deposits that equal or exceed the FDIC insurance limit $ — $ 16

~~Time Deposit Maturities~~

$ in millions At
September 30,
2021
2021 $ 3,544
2022 6,124
2023 4,243
2024 2,813
2025 793
Thereafter 679
Total $ 18,196

13. Borrowings and Other Secured Financings

Borrowings


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Original maturities of one year or less	Original maturities of one year or less	$	4,825	$	3,691	Original maturities of one year or less	$	4,062	$	5,764
Original maturities greater than one year	Original maturities greater than one year					Original maturities greater than one year
Senior	Senior	$	211,226	$	202,305	Senior	$	202,251	$	213,776
Subordinated	Subordinated	13,711		11,083		Subordinated	14,110		13,587
Total	Total	$	224,937	$	213,388	Total	$	216,361	$	227,363
Total borrowings	Total borrowings	$	229,762	$	217,079	Total borrowings	$	220,423	$	233,127
Weighted average stated maturity, in years1	Weighted average stated maturity, in years1	7.7		7.3		Weighted average stated maturity, in years1	6.7		7.7

1.Only includes borrowings with original maturities greater than one year.

Other Secured Financings


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Original maturities:	Original maturities:					Original maturities:
One year or less	One year or less	$	4,947	$	10,453	One year or less	$	295	$	4,573
Greater than one year	Greater than one year	5,325		5,410		Greater than one year	7,406		5,468
Total	Total	$	10,272	$	15,863	Total	$	7,701	$	10,041
Transfers of assets accounted for as secured financings	Transfers of assets accounted for as secured financings	$	1,255	$	1,529	Transfers of assets accounted for as secured financings	$	931	$	1,556

~~Other~~Other secured financings include the liabilities related to ~~certain ELNs,~~collateralized notes, transfers of financial assets that are accounted for as financings rather than sales ~~pledged commodities,~~and consolidated VIEs where the Firm is deemed to be the primary ~~beneficiary and other secured borrowings.~~beneficiary. These liabilities are generally payable from the cash flows of the related assets accounted for as Trading assets. See Note 1514 for further information on other secured financings related to VIEs and securitization activities.

For transfers of assets that fail to meet accounting criteria for a sale, the Firm continues to record the assets and recognizes the associated liabilities in the balance ~~sheets.~~sheet.

~~14.~~

13. Commitments, Guarantees and Contingencies

Commitments


		Years to Maturity at September 30, 2021											Years to Maturity at September 30, 2022
$ in millions	$ in millions	Less than 1		1-3		3-5		Over 5		Total		$ in millions	Less than 1		1-3		3-5		Over 5		Total
Lending:	Lending:											Lending:
Corporate	Corporate	$	16,994	$	36,794	$	45,711	$	7,396	$	106,895	Corporate	$	11,654	$	29,955	$	54,877	$	6,105	$	102,591
Secured lending facilities	Secured lending facilities	4,799		6,061		1,717		630		13,207		Secured lending facilities	6,297		6,007		1,814		775		14,893
Commercial and Residential real estate	Commercial and Residential real estate	303		242		133		270		948		Commercial and Residential real estate	103		339		18		296		756
Securities-based lending and Other	Securities-based lending and Other	12,028		3,132		470		436		16,066		Securities-based lending and Other	12,415		5,012		548		390		18,365
Forward-starting secured financing receivables	Forward-starting secured financing receivables	64,603		—		—		—		64,603		Forward-starting secured financing receivables	62,091		—		—		—		62,091
Central counterparty	Central counterparty	300		—		—		11,807		12,107		Central counterparty	300		—		—		4,909		5,209
Underwriting	Underwriting	428		14		—		—		442		Underwriting	2,350		—		—		—		2,350
Investment activities	Investment activities	1,119		240		60		409		1,828		Investment activities	1,479		169		65		351		2,064
Letters of credit and other financial guarantees	Letters of credit and other financial guarantees	26		—		—		3		29		Letters of credit and other financial guarantees	168		—		—		2		170
Total	Total	$	100,600	$	46,483	$	48,091	$	20,951	$	216,125	Total	$	96,857	$	41,482	$	57,322	$	12,828	$	208,489
Lending commitments participated to third parties	Lending commitments participated to third parties									$	8,380	Lending commitments participated to third parties									$	7,877
Forward-starting secured financing receivables settled within three business days	Forward-starting secured financing receivables settled within three business days									$	55,387	Forward-starting secured financing receivables settled within three business days									$	45,666

Since commitments associated with these instruments may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements.

For a further description of these commitments, refer to Note 15 to the financial statements in the ~~2020~~2021 Form 10-K.

Guarantees


	At September 30, 2022
	Maximum Potential Payout/Notional of Obligations by Years to Maturity								Carrying Amount Asset (Liability)
$ in millions	Less than 1		1-3		3-5		Over 5
Non-credit derivatives1	$	1,168,376	$	917,531	$	351,872	$	759,598	$	(107,603)
Standby letters of credit and other financial guarantees issued2	1,641		826		1,310		2,672		6
Market value guarantees	5		2		—		—		—
Liquidity facilities	3,712		—		—		—		(6)
Whole loan sales guarantees	—		9		78		23,079		—
Securitization representations and warranties3	—		—		—		80,236		(3)
General partner guarantees	361		10		32		157		(88)
Client clearing guarantees	159		—		—		—		—

1.The carrying amounts of derivative contracts that meet the accounting definition of a guarantee are shown on a gross basis. For further information on derivatives contracts, see Note 6.

2.These amounts include certain issued standby letters of credit participated to third parties, totaling $0.7 billion of notional and collateral/recourse, due to the nature of the Firm’s obligations under these arrangements. As of September 30, 2022, the carrying amount of standby letters of credit and other financial guarantees issued includes an allowance for credit losses of $74 million.

3.Related to commercial and residential mortgage securitizations.

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Notes to Consolidated Financial Statements (Unaudited)

~~Guarantees~~

At September 30, 2021
Maximum Potential Payout/Notional of Obligations by Years to Maturity Carrying Amount Asset (Liability)
$ in millions Less than 1 1-3 3-5 Over 5
Non-credit derivatives1
$ 1,231,656 $ 1,036,489 $ 396,233 $ 933,946 $ (48,593)
Standby letters of credit and other financial guarantees issued2
1,466 1,053 770 3,573 88
Market value guarantees 75 20 — — —
Liquidity facilities 4,022 — — — 5
Whole loan sales guarantees — — 69 23,112 —
Securitization representations and warranties3
— — — 74,446 (42)
General partner guarantees 327 12 32 114 (65)
Client clearing guarantees 54 — — — —

1.~~The carrying amounts of derivative contracts that meet the accounting definition of a guarantee are shown on a gross basis. For further information on derivatives contracts, see Note 7.~~

2.These amounts include certain issued standby letters of credit participated to third parties, totaling $0.6 billion of notional and collateral/recourse, due to the nature of the Firm’s obligations under these arrangements. As of September 30, 2021, the carrying amount of standby letters of credit and other financial guarantees issued includes an allowance for credit losses of $85 million.

3.~~Primarily related to residential mortgage securitizations.~~

The Firm has obligations under certain guarantee arrangements, including contracts and indemnification agreements, that contingently require the Firm to make payments to the guaranteed party based on changes in an underlying measure (such as an interest or foreign exchange rate, security or commodity price, an index, or the occurrence or non-occurrence of a specified event) related to an asset, liability or equity security of a guaranteed party. Also included as guarantees are contracts that contingently require the Firm to make payments to the guaranteed party based on another entity’s failure to perform under an agreement, as well as indirect guarantees of the indebtedness of others.

For more information on the nature of the obligations and related business activities for our guarantees, see Note 15 to the financial statements in the ~~2020~~2021 Form 10-K.

Other Guarantees and Indemnities

In the normal course of business, the Firm provides guarantees and indemnifications in a variety of transactions. These provisions generally are standard contractual terms. Certain of these guarantees and indemnifications related to indemnities, exchange and clearinghouse member guarantees and merger and acquisition guarantees are described in Note 15 to the financial statements in the ~~2020~~2021 Form 10-K.

In addition, in the ordinary course of business, the Firm guarantees the debt and/or certain trading obligations (including obligations associated with derivatives, foreign exchange contracts and the settlement of physical commodities) of certain subsidiaries. These guarantees generally are entity or product specific and are required by investors or trading counterparties. The activities of the

Firm’s subsidiaries covered by these guarantees (including any related debt or trading obligations) are included in the financial statements.

Finance Subsidiary

The Parent Company fully and unconditionally guarantees the securities issued by Morgan Stanley Finance LLC, a wholly owned finance subsidiary. No other subsidiary of the Parent Company guarantees these securities.

Contingencies

Legal

In addition to the ~~matters~~matter described ~~in the following paragraphs,~~below, in the normal course of business, the Firm has been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, as well as being subject to regulatory investigations arising in connection with its activities as a global diversified financial services institution. Certain of the actual or threatened legal actions or regulatory investigations include claims for substantial penalties, compensatory and/or punitive damages or claims for indeterminate amounts of penalties or damages. In some cases, the entities that would otherwise be the primary defendants in such ~~cases~~legal actions are bankrupt or are in financial distress. These actions and investigations have

included, but are not limited to, antitrust, false claims act, residential mortgage and credit crisis-related matters.

While the Firm has identified below any individual proceedings where the Firm believes a material loss to be reasonably possible and reasonably estimable, there can be no assurance that material losses will not be incurred from claims that have not yet been asserted or those where potential losses have not yet been determined to be probable or possible and reasonably estimable.


	Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	2022		2021		2022		2021
Legal expenses	$	41	$	50	$	387	$	99

The ~~Firm contests liability and/or~~Firm’s legal expenses can, and may in the ~~amount of damages as appropriate in each pending matter. Where available information indicates that it is probable a liability had been incurred at~~future, fluctuate from period to period, given the ~~date of~~current environment regarding government investigations and private litigation affecting global financial services firms, including the ~~financial statements and the Firm can reasonably estimate the amount of that loss, the Firm accrues the estimated loss by a charge to income.~~Firm.

In many proceedings and investigations, however, it is inherently difficult to determine whether any loss is probable or even possible or to estimate the amount of any loss. In addition, even where a loss is possible or an exposure to loss exists in excess of the liability already accrued with respect to a previously recognized loss contingency, it is not always possible to reasonably estimate the size of the possible loss or range of loss, particularly for proceedings and investigations where the factual record is being developed or contested or where plaintiffs or government entities seek substantial or indeterminate damages, restitution, disgorgement or penalties. Numerous issues may need to be resolved before a loss or additional loss, or range of loss or additional range of loss, can be reasonably estimated for a proceeding or investigation, including through potentially lengthy discovery and


~~September 2021 Form 10-Q~~			60


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Notes to Consolidated Financial Statements (Unaudited)

determination of important factual matters, determination of issues related to class certification and the calculation of damages or other relief, and ~~by addressing~~consideration of novel or unsettled legal questions relevant to the proceedings or investigations in question.

For certain other legal proceedings and investigations, the Firm can estimate reasonably possible losses, additional losses, ranges of loss or ranges of additional loss in excess of amounts accrued but does not believe, based on current knowledge and after consultation with counsel, that such losses could have a material adverse effect on the Firm’s financial statements as a whole, other than the ~~matters~~matter referred to in the following ~~paragraphs.~~

~~On September 23, 2014, Financial Guaranty Insurance Company (“FGIC”) filed a complaint against the Firm in the Supreme Court of the State of New York County (“Supreme Court of NY”) styled~~ ~~Financial Guaranty Insurance Company v. Morgan Stanley ABS Capital I Inc. et al~~. relating to the Morgan Stanley ABS Capital I Inc. Trust 2007-NC4. The complaint asserts claims for breach of contract and fraudulent inducement and alleges, among other things, that the loans in the trust breached various representations and warranties and defendants made untrue statements and material omissions to induce FGIC to issue a financial guaranty policy on certain classes of certificates that had an original balance of approximately $876 million. The complaint seeks, among other relief, specific performance of the loan breach remedy procedures in the transaction documents, compensatory, consequential and punitive damages, attorneys’ fees, interest and costs. On January 23, 2017, the court denied the Firm’s motion to dismiss the complaint. On September 13, 2018, the Appellate Division, First Department (“First Department”) affirmed in part and reversed in part the lower court’s order denying the Firm’s motion to dismiss the complaint. On December 20, 2018, the First Department denied plaintiff’s motion for leave to appeal to the New York Court of Appeals (“Court of Appeals”) or, in the alternative, for re-argument. On July 30, 2021, the Firm filed a motion for summary judgment. Based on currently available information, the Firm believes that it could incur a loss in this action of up to approximately $277 million, the total original unpaid balance of the mortgage loans for which the Firm received repurchase demands from a certificate holder and FGIC that the Firm did not repurchase, plus pre- and post- judgment interest, fees and costs, as well as claim payments that FGIC has made and will make in the future. In addition, plaintiff is seeking to expand the number of loans at issue and the possible range of loss could increase.

~~On January 23, 2015, Deutsche Bank National Trust Company, in its capacity as trustee, filed a complaint against the Firm styled~~ Deutsche Bank National Trust Company solely in its capacity as Trustee of the Morgan Stanley ABS Capital I Inc. Trust 2007-NC4 v. Morgan Stanley Mortgage Capital Holdings LLC as Successor-by-Merger to Morgan Stanley Mortgage Capital Inc., and Morgan Stanley ABS

~~Capital I Inc.~~, pending in the Supreme Court of NY. The complaint asserts claims for breach of contract and alleges, among other things, that the loans in the trust, which had an original principal balance of approximately $1.05 billion, breached various representations and warranties. The complaint seeks, among other relief, specific performance of the loan breach remedy procedures in the transaction documents, compensatory, consequential, rescissory, equitable and punitive damages, attorneys’ fees, costs and other related expenses, and interest. On December 11, 2015, the court granted in part and denied in part the Firm’s motion to dismiss the complaint. On October 19, 2018, the court granted the Firm’s motion for leave to amend its answer and to stay the case pending resolution of Deutsche Bank National Trust Company’s appeal to the Court of Appeals in another case, styled ~~Deutsche Bank National Trust Company v. Barclays Bank PLC~~, regarding the applicable statute of limitations. On January 17, 2019, the First Department reversed the trial court’s order to the extent that it had granted in part the Firm’s motion to dismiss the complaint. On June 4, 2019, the First Department granted the Firm’s motion for leave to appeal its January 17, 2019 decision to the Court of Appeals. On March 19, 2020, the Firm filed a motion for partial summary judgment. On December 22, 2020, the Court of Appeals reversed the First Department and reinstated the trial court's order to the extent it had granted in part the Firm's motion to dismiss the complaint. Based on currently available information, the Firm believes that it could incur a loss in this action of up to approximately $277 million, the total original unpaid balance of the mortgage loans for which the Firm received repurchase demands from a certificate holder and a monoline insurer that the Firm did not repurchase, plus pre- and post-judgment interest, fees and costs, but plaintiff is seeking to expand the number of loans at issue and the possible range of loss could increase.paragraph.

Tax

In matters styled Case number 15/3637 and Case number 15/4353, the Dutch Tax Authority (“Dutch Authority”) is challenging in the Dutch courts the prior set-off by the Firm of approximately €124 million (approximately ~~$144~~$122 million) plus accrued interest of withholding tax credits against the Firm’s corporation tax liabilities for the tax years 2007 to 2012. The Dutch Authority alleges that the Firm was not


			59			September 2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

entitled to receive the withholding tax credits on the basis, inter alia, that a Firm subsidiary did not hold legal title to certain securities subject to withholding tax on the relevant dates. The Dutch Authority has also alleged that the Firm failed to provide certain information to the Dutch Authority and to keep adequate books and records. On April 26, 2018, the District Court in Amsterdam issued a decision dismissing the Dutch Authority’s claims with respect to certain of the tax years in dispute. On May 12, 2020, the Court of Appeal in Amsterdam granted the Dutch Authority’s appeal in matters re-styled Case number 18/00318 and Case number 18/00319. On June 22, 2020, the Firm filed an appeal against the decision of the Court of Appeal in Amsterdam before the


			61			~~September 2021 Form 10-Q~~


~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)

Dutch High Court. On January 29, 2021, the Advocate General of the Dutch High Court issued an advisory opinion on the Firm’s appeal, which rejected the Firm’s principal grounds of appeal. On February 11, 2021, the Firm and the Dutch Authority each responded to this opinion. On June 22, 2021, Dutch criminal authorities sought various documents in connection with an investigation of the Firm related to the civil claims asserted by the Dutch Authority concerning the accuracy of the Firm subsidiary’s tax returns and the maintenance of its books and records for 2007 to 2012.

~~15.~~14. Variable Interest Entities and Securitization Activities

Consolidated VIE Assets and Liabilities by Type of Activity1


		At September 30, 2021				At December 31, 2020					At September 30, 2022				At December 31, 2021
$ in millions	$ in millions	VIE Assets		VIE Liabilities		VIE Assets		VIE Liabilities		$ in millions	VIE Assets		VIE Liabilities		VIE Assets		VIE Liabilities
MABS2		$	774	$	234	$	590	$	17
Investment vehicles3		696		216		776		355
MABS1										MABS1	$	1,006	$	471	$	1,177	$	409
Investment vehicles2										Investment vehicles2	885		508		717		294
Operating entities	Operating entities	497		38		504		39		Operating entities	502		33		508		39
Other	Other	452		220		248		3		Other	844		584		510		286
Total	Total	$	2,419	$	708	$	2,118	$	414	Total	$	3,237	$	1,596	$	2,912	$	1,028

1.~~Certain prior period amounts have been reclassified to conform to the current presentation.~~

2.Amounts include transactions backed by residential mortgage loans, commercial mortgage loans and other types of assets, including consumer or commercial assets and may be in loan or security form. The value of assets is determined based on the fair value of the liabilities and the interests owned by the Firm in such VIEs as the fair values for the liabilities and interests owned are more observable.

3.2.Amounts include investment funds and CLOs.

Consolidated VIE Assets and Liabilities by Balance Sheet Caption


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	270	$	269	Cash and cash equivalents	$	368	$	341

Trading assets at fair value	Trading assets at fair value	1,550		1,445		Trading assets at fair value	2,074		1,965
Investment securities	Investment securities	33		—		Investment securities	244		37
Securities purchased under agreements to resell	Securities purchased under agreements to resell	200		—		Securities purchased under agreements to resell	200		200
Customer and other receivables	Customer and other receivables	18		23		Customer and other receivables	30		31

Intangible assets	Intangible assets	89		98		Intangible assets	76		85
Other assets	Other assets	259		283		Other assets	245		253
Total	Total	$	2,419	$	2,118	Total	$	3,237	$	2,912
Liabilities	Liabilities					Liabilities
Other secured financings	Other secured financings	$	505	$	366	Other secured financings	$	1,420	$	767
Other liabilities and accrued expenses	Other liabilities and accrued expenses	203		48		Other liabilities and accrued expenses	176		261
Total	Total	$	708	$	414	Total	$	1,596	$	1,028
Noncontrolling interests	Noncontrolling interests	$	130	$	196	Noncontrolling interests	$	103	$	115

Consolidated VIE assets and liabilities are presented in the previous tables after intercompany eliminations. Generally, most assets owned by consolidated VIEs cannot be removed unilaterally by the Firm and are not available to the Firm while the related liabilities issued by consolidated VIEs are non-recourse to the Firm. However, in certain consolidated VIEs, the Firm either has the unilateral right to remove assets

or provides additional recourse through derivatives such as total return swaps, guarantees or other forms of involvement.

In general, the Firm’s exposure to loss in consolidated VIEs is limited to losses that would be absorbed on the VIE net assets recognized in its financial statements, net of amounts absorbed by third-party variable interest holders.

Non-consolidated VIEs


		At September 30, 2021											At September 30, 2022
$ in millions	$ in millions	MABS1		CDO		MTOB		OSF		Other2		$ in millions	MABS1		CDO		MTOB		OSF		Other2
VIE assets (UPB)	VIE assets (UPB)	$	157,608	$	1,968	$	6,048	$	2,014	$	53,835	VIE assets (UPB)	$	125,670	$	170	$	5,448	$	2,302	$	49,714
Maximum exposure to loss3	Maximum exposure to loss3											Maximum exposure to loss3
Debt and equity interests	Debt and equity interests	$	19,539	$	169	$	—	$	1,239	$	10,497	Debt and equity interests	$	12,946	$	100	$	—	$	1,592	$	11,423
Derivative and other contracts	Derivative and other contracts	—		—		4,022		—		6,345		Derivative and other contracts	—		—		3,712		—		4,637
Commitments, guarantees and other	Commitments, guarantees and other	530		—		—		—		1,119		Commitments, guarantees and other	499		—		—		—		754
Total	Total	$	20,069	$	169	$	4,022	$	1,239	$	17,961	Total	$	13,445	$	100	$	3,712	$	1,592	$	16,814
Carrying value of variable interests—Assets	Carrying value of variable interests—Assets											Carrying value of variable interests—Assets
Debt and equity interests	Debt and equity interests	$	19,539	$	169	$	—	$	1,239	$	10,497	Debt and equity interests	$	12,946	$	100	$	—	$	1,592	$	11,423
Derivative and other contracts	Derivative and other contracts	—		—		6		—		2,307		Derivative and other contracts	—		—		5		—		1,794
Total	Total	$	19,539	$	169	$	6	$	1,239	$	12,804	Total	$	12,946	$	100	$	5	$	1,592	$	13,217
Additional VIE assets owned4	Additional VIE assets owned4									$	15,975	Additional VIE assets owned4									$	13,500
Carrying value of variable interests—Liabilities	Carrying value of variable interests—Liabilities											Carrying value of variable interests—Liabilities

Derivative and other contracts	Derivative and other contracts	$	—	$	—	$	—	$	—	$	224	Derivative and other contracts	$	—	$	—	$	11	$	—	$	448

At December 31, 2020
$ in millions
MABS1
CDO MTOB OSF
Other2
VIE assets (UPB) $ 184,153 $ 3,527 $ 6,524 $ 2,161 $ 48,241
Maximum exposure to loss3
Debt and equity interests $ 26,247 $ 257 $ — $ 1,187 $ 11,008
Derivative and other contracts — — 4,425 — 5,639
Commitments, guarantees and other 929 — — — 749
Total $ 27,176 $ 257 $ 4,425 $ 1,187 $ 17,396
Carrying value of variable interests–Assets
Debt and equity interests $ 26,247 $ 257 $ — $ 1,187 $ 11,008
Derivative and other contracts — — 5 — 851
Total $ 26,247 $ 257 $ 5 $ 1,187 $ 11,859
Additional VIE assets owned4
$ 20,019
Carrying value of variable interests—Liabilities
Derivative and other contracts $ — $ — $ — $ — $ 222


September 2022 Form 10-Q			60


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Notes to Consolidated Financial Statements (Unaudited)


	At December 31, 2021
$ in millions	MABS1		CDO		MTOB		OSF		Other2
VIE assets (UPB)	$	146,071	$	667	$	6,089	$	2,086	$	52,111
Maximum exposure to loss3
Debt and equity interests	$	18,062	$	129	$	—	$	1,459	$	10,339
Derivative and other contracts	—		—		4,100		—		5,599
Commitments, guarantees and other	771		—		—		—		1,005
Total	$	18,833	$	129	$	4,100	$	1,459	$	16,943
Carrying value of variable interests–Assets
Debt and equity interests	$	18,062	$	129	$	—	$	1,459	$	10,339
Derivative and other contracts	—		—		5		—		2,006
Total	$	18,062	$	129	$	5	$	1,459	$	12,345
Additional VIE assets owned4									$	15,392
Carrying value of variable interests—Liabilities
Derivative and other contracts	$	—	$	—	$	—	$	—	$	362

MTOB—Municipal tender option bonds

1.Amounts include transactions backed by residential mortgage loans, commercial mortgage loans and other types of assets, including consumer or commercial assets, and may be in loan or security form.

2.Other primarily includes exposures to commercial real estate property and investment funds.

3.Where notional amounts are utilized in quantifying the maximum exposure related to derivatives, such amounts do not reflect changes in fair value recorded by the Firm.

4.Additional VIE assets owned represents the carrying value of total exposure to non-consolidated VIEs for which the maximum exposure to loss is less than specific thresholds, primarily interests issued by securitization SPEs. The Firm’s maximum exposure to loss generally equals the fair value of the assets owned. These assets are primarily included in Trading assets and Investment securities and are measured at fair value (see Note 5)4). The Firm does not provide additional support in these transactions through contractual facilities, guarantees or similar derivatives.

The majority of the VIEs included in the previous tables are sponsored by unrelated parties; examples of the Firm’s involvement with these VIEs include its secondary market-making activities and the securities held in its Investment securities portfolio (see Note 8)7).


~~September 2021 Form 10-Q~~			62


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Notes to Consolidated Financial Statements (Unaudited)

The Firm’s maximum exposure to loss is dependent on the nature of the Firm’s variable interest in the VIE and is limited to the notional amounts of certain liquidity facilities and other credit support, total return swaps and written put options, as well as the fair value of certain other derivatives and investments the Firm has made in the VIE.

The Firm’s maximum exposure to loss in the previous tables does not include the offsetting benefit of hedges or any reductions associated with the amount of collateral held as part of a transaction with the VIE or any party to the VIE directly against a specific exposure to loss.

Liabilities issued by VIEs generally are non-recourse to the Firm.

Detail of Mortgage- and Asset-Backed Securitization Assets


		At September 30, 2021				At December 31, 2020					At September 30, 2022				At December 31, 2021
$ in millions	$ in millions	UPB		Debt and Equity Interests		UPB		Debt and Equity Interests		$ in millions	UPB		Debt and Equity Interests		UPB		Debt and Equity Interests
Residential mortgages	Residential mortgages	$	23,049	$	2,536	$	17,775	$	3,175	Residential mortgages	$	11,853	$	2,002	$	15,216	$	2,182
Commercial mortgages	Commercial mortgages	67,858		3,741		62,093		4,131		Commercial mortgages	78,298		4,572		68,503		4,092
U.S. agency collateralized mortgage obligations	U.S. agency collateralized mortgage obligations	62,470		10,881		99,182		17,224		U.S. agency collateralized mortgage obligations	32,493		4,865		57,972		9,835
Other consumer or commercial loans	Other consumer or commercial loans	4,231		2,381		5,103		1,717		Other consumer or commercial loans	3,026		1,507		4,380		1,953
Total	Total	$	157,608	$	19,539	$	184,153	$	26,247	Total	$	125,670	$	12,946	$	146,071	$	18,062

Transferred Assets with Continuing Involvement


		At September 30, 2021									At September 30, 2022
$ in millions	$ in millions	RML		CML		U.S. Agency CMO		CLN and Other1		$ in millions	RML		CML		U.S. Agency CMO		CLN and Other1
SPE assets (UPB)2	SPE assets (UPB)2	$	7,528	$	92,588	$	38,788	$	13,481	SPE assets (UPB)2	$	9,395	$	92,284	$	17,854	$	10,775
Retained interests	Retained interests									Retained interests
Investment grade	Investment grade	$	93	$	938	$	629	$	—	Investment grade	$	111	$	930	$	279	$	—
Non-investment grade	Non-investment grade	21		287		—		74		Non-investment grade	24		504		11		45
Total	Total	$	114	$	1,225	$	629	$	74	Total	$	135	$	1,434	$	290	$	45
Interests purchased in the secondary market	Interests purchased in the secondary market									Interests purchased in the secondary market
Investment grade	Investment grade	$	7	$	83	$	41	$	—	Investment grade	$	33	$	181	$	45	$	—
Non-investment grade	Non-investment grade	34		77		—		—		Non-investment grade	43		46		—		—
Total	Total	$	41	$	160	$	41	$	—	Total	$	76	$	227	$	45	$	—
Derivative assets	Derivative assets	$	—	$	—	$	—	$	586	Derivative assets	$	—	$	—	$	—	$	1,259
Derivative liabilities	Derivative liabilities	—		—		—		178		Derivative liabilities	—		—		—		282


		At December 31, 2020									At December 31, 2021
$ in millions	$ in millions	RML		CML		U.S. Agency CMO		CLN and Other1		$ in millions	RML		CML		U.S. Agency CMO		CLN and Other1
SPE assets (UPB)2	SPE assets (UPB)2	$	7,515	$	84,674	$	21,061	$	12,978	SPE assets (UPB)2	$	6,802	$	94,276	$	28,697	$	13,121
Retained interests	Retained interests									Retained interests
Investment grade	Investment grade	$	49	$	822	$	615	$	—	Investment grade	$	72	$	638	$	465	$	—
Non-investment grade	Non-investment grade	16		195		—		114		Non-investment grade	19		586		—		69
Total	Total	$	65	$	1,017	$	615	$	114	Total	$	91	$	1,224	$	465	$	69
Interests purchased in the secondary market	Interests purchased in the secondary market									Interests purchased in the secondary market
Investment grade	Investment grade	$	—	$	96	$	116	$	—	Investment grade	$	18	$	118	$	33	$	—
Non-investment grade	Non-investment grade	43		80		—		21		Non-investment grade	38		53		—		4
Total	Total	$	43	$	176	$	116	$	21	Total	$	56	$	171	$	33	$	4
Derivative assets	Derivative assets	$	—	$	—	$	—	$	400	Derivative assets	$	—	$	—	$	—	$	891
Derivative liabilities	Derivative liabilities	—		—		—		436		Derivative liabilities	—		—		—		284


	Fair Value At September 30, 2022
$ in millions	Level 2		Level 3		Total
Retained interests
Investment grade	$	557	$	—	$	557
Non-investment grade	24		36		60
Total	$	581	$	36	$	617
Interests purchased in the secondary market
Investment grade	$	257	$	2	$	259
Non-investment grade	71		18		89
Total	$	328	$	20	$	348
Derivative assets	$	1,259	$	—	$	1,259
Derivative liabilities	239		43		282


			61			September 2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

Fair Value At September 30, 2021
$ in millions Level 2 Level 3 Total
Retained interests
Investment grade $ 725 $ — $ 725
Non-investment grade 38 52 90
Total $ 763 $ 52 $ 815
Interests purchased in the secondary market
Investment grade $ 124 $ 7 $ 131
Non-investment grade 74 37 111
Total $ 198 $ 44 $ 242
Derivative assets $ 585 $ 1 $ 586
Derivative liabilities 149 29 178


		Fair Value at December 31, 2020							Fair Value at December 31, 2021
$ in millions	$ in millions	Level 2		Level 3		Total		$ in millions	Level 2		Level 3		Total
Retained interests	Retained interests							Retained interests
Investment grade	Investment grade	$	663	$	—	$	663	Investment grade	$	536	$	2	$	538
Non-investment grade	Non-investment grade	6		63		69		Non-investment grade	40		40		80
Total	Total	$	669	$	63	$	732	Total	$	576	$	42	$	618
Interests purchased in the secondary market	Interests purchased in the secondary market							Interests purchased in the secondary market
Investment grade	Investment grade	$	196	$	16	$	212	Investment grade	$	168	$	1	$	169
Non-investment grade	Non-investment grade	62		82		144		Non-investment grade	70		25		95
Total	Total	$	258	$	98	$	356	Total	$	238	$	26	$	264
Derivative assets	Derivative assets	$	388	$	12	$	400	Derivative assets	$	891	$	—	$	891
Derivative liabilities	Derivative liabilities	435		1		436		Derivative liabilities	194		90		284

RML—Residential mortgage loans

CML—Commercial mortgage loans

1.Amounts include CLO transactions managed by unrelated third parties.

2.Amounts include assets transferred by unrelated transferors.

The previous tables include transactions with SPEs in which the Firm, acting as principal, transferred financial assets with continuing involvement and received sales treatment. The transferred assets are carried at fair value prior to securitization, and any changes in fair value are recognized in the income ~~statements.~~statement. The Firm may act as underwriter of the beneficial interests issued by these securitization vehicles, for which Investment banking revenues are recognized. The Firm may retain interests in the securitized financial assets as one or more tranches of the securitization. These retained interests are generally carried at fair value in the balance ~~sheets~~sheet with changes in fair value recognized in the income ~~statements.~~statement. Fair value for these interests is measured using techniques that are consistent with the valuation techniques applied to the Firm’s major categories of assets and liabilities as described in Note 2 in the ~~2020~~2021 Form 10-K and Note 54 herein. Further, as permitted by applicable guidance, certain transfers of assets where the Firm’s only continuing involvement is a derivative are only reported in the following Assets Sold with Retained Exposure table.

Proceeds from New Securitization Transactions and Sales of Loans


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2022		2021		2022		2021
New transactions1	New transactions1	$	12,103	$	12,969	$	43,303	$	30,629	New transactions1	$	5,332	$	12,103	$	19,809	$	43,303
Retained interests	Retained interests	2,396		1,991		7,960		7,215		Retained interests	500		2,396		3,553		7,960
Sales of corporate loans to CLO SPEs1, 2	Sales of corporate loans to CLO SPEs1, 2	144		234		217		373		Sales of corporate loans to CLO SPEs1, 2	37		144		53		217

1.Net gains on new transactions and sales of corporate loans to CLO entities at the time of the sale were not material for all periods presented.

2.Sponsored by non-affiliates.


			63			~~September 2021 Form 10-Q~~


~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)

The Firm has provided, or otherwise agreed to be responsible for, representations and warranties regarding certain assets transferred in securitization transactions sponsored by the Firm (see Note ~~14)~~13).

Assets Sold with Retained Exposure


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Gross cash proceeds from sale of assets1	Gross cash proceeds from sale of assets1	$	64,054	$	45,051	Gross cash proceeds from sale of assets1	$	50,718	$	67,930
Fair value	Fair value					Fair value
Assets sold	Assets sold	$	64,185	$	46,609	Assets sold	$	48,474	$	68,992
Derivative assets recognized in the balance sheets		901		1,592
Derivative liabilities recognized in the balance sheets		771		64
Derivative assets recognized in the balance sheet						Derivative assets recognized in the balance sheet	160		1,195
Derivative liabilities recognized in the balance sheet						Derivative liabilities recognized in the balance sheet	2,405		132

1.The carrying value of assets derecognized at the time of sale approximates gross cash proceeds.

The Firm enters into transactions in which it sells securities, primarily equities, and contemporaneously enters into bilateral OTC derivatives with the purchasers of the securities, through which it retains exposure to the sold securities.

For a discussion of the Firm’s VIEs, the determination and structure of VIEs and securitization activities, see Note 16 to the financial statements in the ~~2020~~2021 Form 10-K.

~~16.~~15. Regulatory Requirements

Regulatory Capital Framework and Requirements

For a discussion of the Firm’s regulatory capital framework, see Note 17 to the financial statements in the ~~2020~~2021 Form 10-K.

The Firm is required to maintain minimum risk-based and leverage-based capital ratios under regulatory capital requirements. A summary of the calculations of regulatory capital and RWA follows.

~~Minimum risk-based~~Risk-Based Regulatory Capital. Risk-based capital ratio requirements apply to Common Equity Tier 1 capital, Tier 1 capital and Total capital (which includes Tier 2 capital)., each as a percentage of RWA, and consist of regulatory minimum required ratios plus the Firm’s capital buffer requirement. Capital ~~standards~~requirements require certain adjustments to, and deductions from, capital for purposes of determining these ratios. At September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the differences between the actual and required ratios were lower under the Standardized Approach.

In 2020, the U.S. banking agencies adopted a final rule, consistent with an interim final rule that was effective March 31, 2020, altering, for purposes of the regulatory capital rules, the required adoption time period for CECL. CECL Deferral. As of ~~September 30, 2021 and~~ December 31, ~~2020,~~2021, the risk-based and leverage-based capital amounts and ratios, as well as RWA, adjusted average assets and supplementary leverage exposure ~~are~~were calculated excluding the effect of the adoption of CECL based on the Firm’s election to defer this effect over a ~~five-~~

~~year~~five-year transition period ~~which~~that began on January 1, ~~2020~~2020. In 2022 the deferral impacts began to phase in ~~accordance with the final rule.~~at 25% per year and will become fully phased-in beginning in 2025.

~~Risk-Based Regulatory~~


September 2022 Form 10-Q			62


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

Capital ~~Ratio~~Buffer Requirements


				At September 30, 2021 and December 31, 2020		At September 30, 2022 and December 31, 2021
				Standardized	Advanced			Standardized	Advanced
Capital buffers	Capital buffers						Capital buffers
Capital conservation buffer	Capital conservation buffer			—	2.5%		Capital conservation buffer	—	2.5%
SCB	SCB			5.7%	N/A		SCB	5.7%	N/A
G-SIB capital surcharge	G-SIB capital surcharge			3.0%			G-SIB capital surcharge	3.0%
CCyB1	CCyB1			0%			CCyB1	0%
Capital buffer requirement2				8.7%	5.5%

				At September 30, 2021 and December 31, 2020
		Regulatory Minimum		Standardized	Advanced
Required ratios3
Common Equity Tier 1 capital ratio		4.5	%	13.2%	10.0%
Tier 1 capital ratio		6.0	%	14.7%	11.5%
Total capital ratio		8.0	%	16.7%	13.5%
Capital buffer requirement							Capital buffer requirement	8.7%	5.5%

1.The CCyB can be set up to 2.5%, but is currently set by the ~~U.S. banking agencies~~Federal Reserve at zero.

2.The capital buffer requirement represents the amount of Common Equity Tier 1 capital the Firm must maintain above the minimum risk-based capital requirements in order to avoid restrictions on the ~~Firm's~~Firm’s ability to make capital distributions, including the payment of dividends and the repurchase of stock, and to pay discretionary bonuses to executive officers. The ~~Firm's~~Firm’s Standardized Approach capital buffer requirement is equal to the sum of the SCB, G-SIB capital surcharge and CCyB, and the Advanced Approach capital buffer requirement is equal to the 2.5% capital conservation buffer, G-SIB capital surcharge and CCyB.

Risk-Based Regulatory Capital Ratio Requirements


	Regulatory Minimum		At September 30, 2022 and December 31, 2021
			Standardized	Advanced
Required ratios1
Common Equity Tier 1 capital ratio	4.5	%	13.2%	10.0%
Tier 1 capital ratio	6.0	%	14.7%	11.5%
Total capital ratio	8.0	%	16.7%	13.5%

3.1.Required ratios represent the regulatory minimum plus the capital buffer requirement.


~~September 2021 Form 10-Q~~			64


~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)

The Firm’s Regulatory Capital and Capital Ratios


$ in millions	$ in millions	Required Ratio1		At September 30, 2021			At December 31, 2020			$ in millions	Required Ratio1		At September 30, 2022			At December 31, 2021
Risk-based capital	Risk-based capital									Risk-based capital
Common Equity Tier 1 capital	Common Equity Tier 1 capital			$	75,785		$	78,650		Common Equity Tier 1 capital			$	67,933		$	75,742
Tier 1 capital	Tier 1 capital			83,435			88,079			Tier 1 capital			76,428			83,348
Total capital	Total capital			94,062			97,213			Total capital			86,139			93,166
Total RWA	Total RWA			473,020			453,106			Total RWA			457,911			471,921
Common Equity Tier 1 capital ratio	Common Equity Tier 1 capital ratio	13.2	%	16.0		%	17.4		%	Common Equity Tier 1 capital ratio	13.2	%	14.8		%	16.0		%
Tier 1 capital ratio	Tier 1 capital ratio	14.7	%	17.6		%	19.4		%	Tier 1 capital ratio	14.7	%	16.7		%	17.7		%
Total capital ratio	Total capital ratio	16.7	%	19.9		%	21.5		%	Total capital ratio	16.7	%	18.8		%	19.7		%

$ in millions	$ in millions	Required Ratio1		At September 30, 2021			At December 31, 2020			$ in millions	Required Ratio1		At September 30, 2022			At December 31, 2021
Leverage-based capital	Leverage-based capital									Leverage-based capital
Adjusted average assets2	Adjusted average assets2			$	1,145,682		$	1,053,510		Adjusted average assets2			$	1,154,411		$	1,169,939
Tier 1 leverage ratio	Tier 1 leverage ratio	4.0	%	7.3		%	8.4		%	Tier 1 leverage ratio	4.0	%	6.6		%	7.1		%
Supplementary leverage exposure3,4				$	1,459,466		$	1,192,506
SLR4		5.0	%	5.7		%	7.4		%
Supplementary leverage exposure3										Supplementary leverage exposure3			$	1,406,345		$	1,476,962
SLR										SLR	5.0	%	5.4		%	5.6		%

1.Required ratios are inclusive of any buffers applicable as of the date presented. Failure to maintain the buffers would result in restrictions on the Firm’s ability to make capital distributions, including the payment of dividends and the repurchase of stock, and to pay discretionary bonuses to executive officers.

2.Adjusted average assets represents the denominator of the Tier 1 leverage ratio and is composed of the average daily balance of consolidated on-balance sheet assets for the quarters ending on the respective balance sheet dates, reduced by disallowed goodwill, intangible assets, investments in covered funds, defined benefit pension plan assets, after-tax gain on sale from assets sold into securitizations, investments in the Firm’s own capital instruments, certain defined tax assets and other capital deductions.

3.Supplementary leverage exposure is the sum of Adjusted average assets used in the Tier 1 leverage ratio and other adjustments, primarily: (i) for derivatives, potential future exposure and the effective notional principal amount of sold credit protection, offset by qualifying purchased credit protection; (ii) the counterparty credit risk for repo-style transactions; and (iii) the credit equivalent amount for off-balance sheet exposures.

4.The Firm’s SLR and Supplementary leverage exposure as of December 31, 2020 reflect the exclusion of U.S. Treasury securities and deposits at Federal Reserve Banks based on a Federal Reserve interim final rule that was in effect until March 31, 2021.

~~Certain~~ U.S. Bank Subsidiaries’ Regulatory Capital and Capital Ratios

The OCC establishes capital requirements for the Firm’s U.S. bank subsidiaries, which ~~as of September 30, 2021 and December 31, 2020 include, among others,~~includes Morgan Stanley Bank, N.A. (“MSBNA”) and Morgan Stanley Private Bank, National Association (“MSPBNA”) (collectively, “U.S. Bank Subsidiaries”), and evaluates their compliance with such capital requirements. Regulatory capital requirements for ~~MSBNA and MSPBNA~~the U.S. Bank Subsidiaries are calculated in a similar manner to the Firm’s regulatory capital requirements, although G-SIB capital surcharge and SCB requirements do not apply to the U.S. ~~bank subsidiaries.~~Bank Subsidiaries.

The OCC’s regulatory capital framework includes Prompt Corrective Action (“PCA”) standards, including “well-capitalized” PCA standards that are based on specified regulatory capital ratio minimums. For the Firm to remain an FHC, its U.S. ~~bank subsidiaries~~Bank Subsidiaries must remain well-capitalized in accordance with the OCC’s PCA standards. In addition, failure by the U.S. ~~bank subsidiaries~~Bank Subsidiaries to meet minimum capital requirements may result in certain mandatory and discretionary actions by regulators that, if undertaken, could have a direct material effect on the U.S. ~~bank subsidiaries’~~Bank Subsidiaries’ and the Firm’s financial statements.

At September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, MSBNA and MSPBNA risk-based capital ratios are based on the Standardized Approach rules. ~~At September 30, 2021 and~~As of December 31, ~~2020,~~2021, the risk-based and leverage-based capital amounts and ratios ~~are~~were calculated excluding the effect of the adoption of CECL based


			63			September 2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

on MSBNA’s and MSPBNA’s election to defer this effect over a five-year transition period ~~which~~that began on January 1, 2020. In 2022 the deferral impacts began to phase in at 25% per year and will become fully phased-in beginning in 2025.

MSBNA’s Regulatory Capital


						At September 30, 2021				At December 31, 2020					Well-Capitalized Requirement		Required Ratio1		At September 30, 2022				At December 31, 2021
$ in millions	$ in millions	Well-Capitalized Requirement		Required Ratio1		Amount		Ratio		Amount		Ratio		$ in millions					Amount		Ratio		Amount		Ratio
Risk-based capital	Risk-based capital													Risk-based capital
Common Equity Tier 1 capital	Common Equity Tier 1 capital	6.5	%	7.0	%	$	18,562	20.8	%	$	17,238	18.7	%	Common Equity Tier 1 capital	6.5	%	7.0	%	$	18,758	19.5	%	$	18,960	20.5	%
Tier 1 capital	Tier 1 capital	8.0	%	8.5	%	18,562		20.8	%	17,238		18.7	%	Tier 1 capital	8.0	%	8.5	%	18,758		19.5	%	18,960		20.5	%
Total capital	Total capital	10.0	%	10.5	%	19,149		21.4	%	17,882		19.4	%	Total capital	10.0	%	10.5	%	19,335		20.1	%	19,544		21.1	%
Leverage-based capital	Leverage-based capital													Leverage-based capital
Tier 1 leverage	Tier 1 leverage	5.0	%	4.0	%	$	18,562	10.2	%	$	17,238	10.1	%	Tier 1 leverage	5.0	%	4.0	%	$	18,758	9.6	%	$	18,960	10.2	%
SLR	SLR	6.0	%	3.0	%	18,562		8.1	%	17,238		8.0	%	SLR	6.0	%	3.0	%	18,758		7.6	%	18,960		8.1	%

MSPBNA’s Regulatory Capital


						At September 30, 2021				At December 31, 2020					Well-Capitalized Requirement		Required Ratio1		At September 30, 20222				At December 31, 2021
$ in millions	$ in millions	Well-Capitalized Requirement		Required Ratio1		Amount		Ratio		Amount		Ratio		$ in millions					Amount		Ratio		Amount		Ratio
Risk-based capital	Risk-based capital													Risk-based capital
Common Equity Tier 1 capital	Common Equity Tier 1 capital	6.5	%	7.0	%	$	9,972	24.9	%	$	8,213	21.3	%	Common Equity Tier 1 capital	6.5	%	7.0	%	$	16,134	29.0	%	$	10,293	24.3	%
Tier 1 capital	Tier 1 capital	8.0	%	8.5	%	9,972		24.9	%	8,213		21.3	%	Tier 1 capital	8.0	%	8.5	%	16,134		29.0	%	10,293		24.3	%
Total capital	Total capital	10.0	%	10.5	%	10,045		25.1	%	8,287		21.5	%	Total capital	10.0	%	10.5	%	16,261		29.2	%	10,368		24.5	%

Leverage-based capital	Leverage-based capital													Leverage-based capital
Tier 1 leverage	Tier 1 leverage	5.0	%	4.0	%	$	9,972	7.1	%	$	8,213	7.2	%	Tier 1 leverage	5.0	%	4.0	%	$	16,134	8.1	%	$	10,293	6.9	%
SLR	SLR	6.0	%	3.0	%	9,972		6.9	%	8,213		6.9	%	SLR	6.0	%	3.0	%	16,134		7.9	%	10,293		6.7	%

1.Required ratios are inclusive of any buffers applicable as of the date presented. Failure to maintain the buffers would result in restrictions on the ability to make capital distributions, including the payment of dividends.

~~U.S. Broker-Dealer~~2.Regulatory capital amounts and ratios as of September 30, 2022 include the amounts from E*TRADE Bank (“ETB”) and E*TRADE Savings Bank (“ETSB”) as a result of the merger described herein.

Additionally, MSBNA is conditionally registered with the SEC as a security-based swap dealer and is provisionally registered with the CFTC as a swap dealer. However, as MSBNA is prudentially regulated as a bank, its capital requirements continue to be determined by the OCC.

Other Regulatory Capital Requirements

MS&Co. Regulatory Capital


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Net capital	Net capital	$	15,922	$	12,869	Net capital	$	14,886	$	18,383
Excess net capital	Excess net capital	12,043		9,034		Excess net capital	10,405		14,208

MS&Co. is a registered ~~U.S.~~as a broker-dealer and ~~registered~~a futures commission merchant ~~and, accordingly, is subject to the minimum net capital requirements of~~with the SEC and the ~~CFTC. MS&Co. has consistently operated~~CFTC, respectively, and provisionally registered as a swap dealer with ~~capital in excess of its regulatory capital requirements.~~the CFTC.

As an Alternative Net Capital broker-dealer, and in accordance with Securities Exchange Act of 1934 (“Exchange Act”) Rule 15c3-1, Appendix E, MS&Co. is subject to minimum net capital and tentative net capital requirements and operates with capital in excess of its regulatory capital requirements. As a futures commission merchant and provisionally-registered swap dealer, MS&Co. is subject to CFTC capital requirements. In addition, MS&Co. must notify

the SEC if its tentative net capital falls below certain levels. At September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, MS&Co. exceeded its net capital


			65			~~September 2021 Form 10-Q~~


~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)

requirement and had tentative net capital in excess of the minimum and notification requirements.

Other Regulated Subsidiaries

~~MSSB, a registered U.S. broker-dealer and introducing broker for the futures business, is~~The following subsidiaries are also subject to ~~the minimum net~~various regulatory capital requirements ~~of the SEC. MSIP, a London-based broker-dealer subsidiary, is subject to the capital requirements of the PRA,~~ and the Morgan Stanley Europe Holdings SE Group (“MSEHSE Group”) is subject to the capital requirements of the European Central Bank, BaFin and the German Central Bank. MSSB, MSIP and the MSEHSE Group, including MSESE, a Germany-based broker-dealer, have consistently operated with capital in excess of their respective regulatory capital ~~requirements. Additionally,~~ requirements as of September 30, 2022 and December 31, 2021, as applicable:

•MSSB,

•MSIP,

•Morgan Stanley Europe Holdings SE Group, including MSESE,

•MSMS,

•MSCS,

•MSCG, and

•E*TRADE ~~Bank~~Securities LLC.

ETB and ~~E*TRADE Savings Bank are~~ETSB were each previously subject to the capital requirements of the OCC until January 1, 2022, when ETSB merged with and ~~E*TRADE Securities LLC is subject~~into ETB, and subsequently ETB merged with and into MSPBNA, with MSPBNA as the surviving bank.

See Note 17 to the ~~minimum net capital requirements of~~financial statements in the ~~SEC; each of these entities has consistently operated with capital in excess of their respective regulatory capital requirements.~~

Certain other U.S. and non-U.S. subsidiaries of the Firm are subject to various securities, commodities and banking regulations, and capital adequacy requirements promulgated by the regulatory and exchange authorities of the countries in which they operate. These subsidiaries have also consistently operated with capital in excess of their local capital adequacy requirements.2021 Form 10-K for further information.

~~17.~~16. Total Equity

Preferred Stock


		Shares Outstanding			Carrying Value					Shares Outstanding			Carrying Value
$ in millions, except per share data	$ in millions, except per share data	At September 30, 2021	Liquidation Preference per Share		At September 30, 2021		At December 31, 2020		$ in millions, except per share data	At September 30, 2022	Liquidation Preference per Share		At September 30, 2022		At December 31, 2021
Series	Series								Series
A	A	44,000	$	25,000	$	1,100	$	1,100	A	44,000	$	25,000	$	1,100	$	1,100
C1	C1	519,882	1,000		408		408		C1	519,882	1,000		408		408
E	E	34,500	25,000		862		862		E	34,500	25,000		862		862
F	F	34,000	25,000		850		850		F	34,000	25,000		850		850
H		52,000	25,000		1,300		1,300
I	I	40,000	25,000		1,000		1,000		I	40,000	25,000		1,000		1,000
J2		—	—		—		1,500
K	K	40,000	25,000		1,000		1,000		K	40,000	25,000		1,000		1,000
L	L	20,000	25,000		500		500		L	20,000	25,000		500		500
M	M	400,000	1,000		430		430		M	400,000	1,000		430		430
N	N	3,000	100,000		300		300		N	3,000	100,000		300		300
O									O	52,000	25,000		1,300		1,300
P									P	40,000	25,000		1,000		—
Total	Total				$	7,750	$	9,250	Total				$	8,750	$	7,750
Shares authorized	Shares authorized						30,000,000		Shares authorized						30,000,000

1.Series C preferred stock is held by MUFG.

2.On March 15, 2021, the Firm announced the redemption in whole of its outstanding Series J preferred stock. On notice of redemption, the amount due to holders of Series J Preferred Stock was reclassified to Borrowings, and on April 15, 2021 the redemption settled at the carrying value of $1.5 billion.

For a description of Series A through Series NO preferred stock, ~~issuances,~~ see Note 18 to the financial statements in the ~~2020~~2021 Form 10-K. The Firm’s preferred stock has a preference over its common stock upon liquidation. The Firm’s preferred

stock qualifies as and is included in Tier 1 capital in


September 2022 Form 10-Q			64


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

accordance with regulatory capital requirements (see Note ~~16)~~15).

On ~~October 25, 2021,~~August 2, 2022, the Firm issued 5240 million ~~Depositary Shares~~depositary shares of Series OP Preferred Stock, for an aggregate price of ~~$1.3~~$1.0 billion. Each ~~Depositary Share~~depositary share represents a 1/1000th interest in a share of ~~4.250%~~6.500% Non-Cumulative Preferred Stock, Series O,P, $0.01 par value (“Series OP Preferred Stock”). The Series OP Preferred Stock is redeemable at the Firm’s option, (i) in whole or in part, from time to time, on any dividend payment date on or after ~~January~~October 15, 2027 or (ii) in whole but not in part at any time within 90 days following a regulatory capital treatment event (as described in the terms of ~~that~~this series), in each case at a redemption price of $25,000 per share (equivalent to $25 per ~~Depositary Share)~~depositary share). The Series OP Preferred Stock also has a preference over the Firm’s common stock upon ~~liquidation.~~liquidation and qualifies as Tier 1 capital.

Share Repurchases


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2022		2021		2022		2021
Repurchases of common stock under the Firm’s Share Repurchase Program		$	3,557	$	—	$	8,631	$	1,347
Repurchases of common stock under the Firm’s Share Repurchase Authorization										Repurchases of common stock under the Firm’s Share Repurchase Authorization	$	2,555	$	3,557	$	8,165	$	8,631

~~Beginning late in the first quarter of 2020,~~On June 27, 2022, the Firm ~~suspended its share repurchase program, however the Federal Reserve permitted the resumption of share repurchases for the current year period. On June 28, 2021, the Firm~~ announced that its Board of Directors ~~authorized the~~approved a new multi-year repurchase authorization of up to ~~$12~~$20 billion of outstanding common stock, ~~from July 1, 2021 through June 30,~~without a set expiration date, beginning in the third quarter of 2022, which will be exercised from time to time as conditions ~~warrant, which supersedes the previous common stock repurchase authorization.~~warrant. For ~~more~~more information on share repurchases, see Note 18 to the financial statements in the ~~2020~~2021 Form 10-K.

Common Shares Outstanding for Basic and Diluted EPS


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
in millions	in millions	2021	2020	2021	2020	in millions	2022	2021	2022	2021
Weighted average common shares outstanding, basic	Weighted average common shares outstanding, basic	1,781	1,542	1,797	1,546	Weighted average common shares outstanding, basic	1,674	1,781	1,704	1,797
Effect of dilutive Stock options, RSUs and PSUs		31	24	27	19
Effect of dilutive RSUs and PSUs						Effect of dilutive RSUs and PSUs	23	31	21	27
Weighted average common shares outstanding and common stock equivalents, diluted	Weighted average common shares outstanding and common stock equivalents, diluted	1,812	1,566	1,824	1,565	Weighted average common shares outstanding and common stock equivalents, diluted	1,697	1,812	1,725	1,824
Weighted average antidilutive common stock equivalents (excluded from the computation of diluted EPS)	Weighted average antidilutive common stock equivalents (excluded from the computation of diluted EPS)	—	—	—	7	Weighted average antidilutive common stock equivalents (excluded from the computation of diluted EPS)	1	—	5	—


~~September 2021 Form 10-Q~~			66


~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)

Dividends


$ in millions, except per share data	$ in millions, except per share data	Three Months Ended September 30, 2021				Three Months Ended September 30, 2020				$ in millions, except per share data	Three Months Ended September 30, 2022				Three Months Ended September 30, 2021
		Per Share1		Total		Per Share1		Total			Per Share1		Total		Per Share1		Total
Preferred stock series	Preferred stock series									Preferred stock series
A	A	$	256	$	11	$	256	$	11	A	$	261	$	11	$	256	$	11
C	C	25		13		25		13		C	25		13		25		13
E	E	445		15		445		15		E	445		15		445		15
F	F	430		15		430		15		F	430		15		430		15
H		239		12		248		13
H2										H2	—		—		239		12
I	I	398		16		398		16		I	398		16		398		16
J2		—		—		261		16

K	K	366		15		366		15		K	366		15		366		15
L	L	305		6		305		6		L	305		6		305		6
M3		29		12		—		—
N4		2,650		8		—		—
M4										M4	29		12		29		12
N5										N5	2,650		8		2,650		8
O6										O6	266		14		—		—
P										P	330		13		—		—
Total Preferred stock	Total Preferred stock			$	123			$	120	Total Preferred stock			$	138			$	123
Common stock	Common stock	0.70		$	1,276	$	0.35	$	551	Common stock	$	0.775	$	1,329	$	0.700	$	1,276


$ in millions, except per share data	$ in millions, except per share data	Nine Months Ended September 30, 2021				Nine Months Ended September 30, 2020				$ in millions, except per share data	Nine Months Ended September 30, 2022				Nine Months Ended September 30, 2021
		Per Share1		Total		Per Share1		Total			Per Share1		Total		Per Share1		Total
Preferred stock series	Preferred stock series									Preferred stock series
A	A	$	758	$	33	$	761	$	33	A	$	756	$	33	$	758	$	33
C	C	75		39		75		39		C	75		39		75		39
E	E	1,336		45		1,336		45		E	1,336		45		1,336		45
F	F	1,289		44		1,289		44		F	1,289		44		1,289		44
H		719		37		897		47
H2										H2	—		—		719		37
I	I	1,195		48		1,195		48		I	1,195		48		1,195		48
J2		253		15		955		58
J3										J3	—		—		253		15
K	K	1,097		45		1,097		45		K	1,097		45		1,097		45
L	L	914		18		914		18		L	914		18		914		18
M3		59		24		—		—
N4		5,300		16		—		—
M4										M4	59		24		59		24
N5										N5	5,300		16		5,300		16
O6										O6	797		41		—		—
P										P	330		13		—		—
Total Preferred stock	Total Preferred stock			$	364			$	377	Total Preferred stock			$	366			$	364
Common stock	Common stock	$	1.40	$	2,562	$	1.05	$	1,662	Common stock	$	2.175	$	3,802	$	1.400	$	2,562

1.Common and Preferred Stock dividends are payable quarterly unless otherwise noted.

2.A notice of redemption was issued for Series H preferred stock on November 19, 2021.

3.Series J was payable semiannually until July 15, 2020, after which it was payable quarterly until its redemption.

3.4.Series M is payable semiannually until September 15, 2026 and thereafter will be payable quarterly.

4.5.Series N is payable semiannually until March 15, 2023 and thereafter will be payable quarterly.

~~Accumulated Other Comprehensive Income (Loss)~~6.1

$ in millions CTA
AFS
Securities
Pension and Other DVA Total
June 30, 2021 $ (895) $ 1,004 $ (481) $ (2,151) $ (2,523)
OCI during the period (65) (256) 5 138 (178)
September 30, 2021 $ (960) $ 748 $ (476) $ (2,013) $ (2,701)
June 30, 2020 $ (1,017) $ 1,827 $ (620) $ (189) $ 1
OCI during the period 81 (62) 5 (562) (538)
September 30, 2020 $ (936) $ 1,765 $ (615) $ (751) $ (537)
December 31, 2020 $ (795) $ 1,787 $ (498) $ (2,456) $ (1,962)
OCI during the period (165) (1,039) 22 443 (739)
September 30, 2021 $ (960) $ 748 $ (476) $ (2,013) $ (2,701)
December 31, 2019 $ (897) $ 207 $ (644) $ (1,454) $ (2,788)
OCI during the period (39) 1,558 29 703 2,251
September 30, 2020 $ (936) $ 1,765 $ (615) $ (751) $ (537)

~~CTA—Cumulative foreign currency translation adjustments~~

1.~~Amounts are net of tax~~Series O is payable semiannually until January 15, 2027 and ~~noncontrolling interests.~~thereafter will be payable quarterly.

~~Components of Period Changes in OCI~~

Three Months Ended September 30, 2021
$ in millions Pre-tax
Gain
(Loss) Income
Tax Benefit
(Provision) After-tax
Gain
(Loss) Non-
controlling
Interests Net
CTA
OCI activity $ (14) $ (64) $ (78) $ (13) $ (65)
Reclassified to earnings — — — — —
Net OCI $ (14) $ (64) $ (78) $ (13) $ (65)
Change in net unrealized gains (losses) on AFS securities
OCI activity $ (317) $ 74 $ (243) $ — $ (243)
Reclassified to earnings (17) 4 (13) — (13)
Net OCI $ (334) $ 78 $ (256) $ — $ (256)
Pension and other
OCI activity $ — $ — $ — $ — $ —
Reclassified to earnings 7 (2) 5 — 5
Net OCI $ 7 $ (2) $ 5 $ — $ 5
Change in net DVA
OCI activity $ 187 $ (46) $ 141 $ 9 $ 132
Reclassified to earnings 9 (3) 6 — 6
Net OCI $ 196 $ (49) $ 147 $ 9 $ 138

Three Months Ended September 30, 2020
$ in millions Pre-tax
Gain
(Loss) Income
Tax Benefit
(Provision) After-tax
Gain
(Loss) Non-
controlling
Interests Net
CTA
OCI activity $ 34 $ 76 $ 110 $ 29 $ 81
Reclassified to earnings — — — — —
Net OCI $ 34 $ 76 $ 110 $ 29 $ 81
Change in net unrealized gains (losses) on AFS securities
OCI activity $ (26) $ 6 $ (20) $ — $ (20)
Reclassified to earnings (55) 13 (42) — (42)
Net OCI $ (81) $ 19 $ (62) $ — $ (62)
Pension and other
OCI activity $ (1) $ 1 $ — $ — $ —
Reclassified to earnings 6 (1) 5 — 5
Net OCI $ 5 $ — $ 5 $ — $ 5
Change in net DVA
OCI activity $ (747) $ 178 $ (569) $ (1) $ (568)
Reclassified to earnings 8 (2) 6 — 6
Net OCI $ (739) $ 176 $ (563) $ (1) $ (562)

Nine Months Ended September 30, 2021
$ in millions Pre-tax
Gain
(Loss) Income
Tax Benefit
(Provision) After-tax
Gain
(Loss) Non-
controlling
Interests Net
CTA
OCI activity $ (106) $ (150) $ (256) $ (91) $ (165)
Reclassified to earnings — — — — —
Net OCI $ (106) $ (150) $ (256) $ (91) $ (165)
Change in net unrealized gains (losses) on AFS securities
OCI activity $ (1,146) $ 267 $ (879) $ — $ (879)
Reclassified to earnings (209) 49 (160) — (160)
Net OCI $ (1,355) $ 316 $ (1,039) $ — $ (1,039)
Pension and other
OCI activity $ 8 $ — $ 8 $ — $ 8
Reclassified to earnings 21 (7) 14 — 14
Net OCI $ 29 $ (7) $ 22 $ — $ 22
Change in net DVA
OCI activity $ 591 $ (148) $ 443 $ 27 $ 416
Reclassified to earnings 36 (9) 27 — 27
Net OCI $ 627 $ (157) $ 470 $ 27 $ 443


			6765			September ~~2021~~2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

Nine Months Ended September 30, 2020
$ in millions Pre-tax
Gain
(Loss) Income
Tax Benefit
(Provision) After-tax
Gain
(Loss) Non-
controlling
Interests Net
CTA
OCI activity $ 19 $ (17) $ 2 $ 38 $ (36)
Reclassified to earnings (3) — (3) — (3)
Net OCI $ 16 $ (17) $ (1) $ 38 $ (39)
Change in net unrealized gains (losses) on AFS securities
OCI activity $ 2,142 $ (503) $ 1,639 $ — $ 1,639
Reclassified to earnings (106) 25 (81) — (81)
Net OCI $ 2,036 $ (478) $ 1,558 $ — $ 1,558
Pension and other
OCI activity $ 20 $ (4) $ 16 $ — $ 16
Reclassified to earnings 16 (3) 13 — 13
Net OCI $ 36 $ (7) $ 29 $ — $ 29
Change in net DVA
OCI activity $ 967 $ (233) $ 734 $ 41 $ 693
Reclassified to earnings 14 (4) 10 — 10
Net OCI $ 981 $ (237) $ 744 $ 41 $ 703
Accumulated Other Comprehensive Income (Loss)1


$ in millions	CTA		AFS Securities		Pension and Other		DVA		Total
June 30, 2022	$	(1,226)	$	(3,226)	$	(543)	$	(26)	$	(5,021)
OCI during the period	(207)		(1,307)		5		772		(737)
September 30, 2022	$	(1,433)	$	(4,533)	$	(538)	$	746	$	(5,758)
June 30, 2021	$	(895)	$	1,004	$	(481)	$	(2,151)	$	(2,523)
OCI during the period	(65)		(256)		5		138		(178)
September 30, 2021	$	(960)	$	748	$	(476)	$	(2,013)	$	(2,701)
December 31, 2021	$	(1,002)	$	245	$	(551)	$	(1,794)	$	(3,102)
OCI during the period	(431)		(4,778)		13		2,540		(2,656)
September 30, 2022	$	(1,433)	$	(4,533)	$	(538)	$	746	$	(5,758)
December 31, 2020	$	(795)	$	1,787	$	(498)	$	(2,456)	$	(1,962)
OCI during the period	(165)		(1,039)		22		443		(739)
September 30, 2021	$	(960)	$	748	$	(476)	$	(2,013)	$	(2,701)

1.Amounts are net of tax and noncontrolling interests.

Components of Period Changes in OCI



	Three Months Ended September 30, 2022
$ in millions	Pre-tax Gain (Loss)		Income Tax Benefit (Provision)		After-tax Gain (Loss)		Non- controlling Interests		Net
CTA
OCI activity	$	(85)	$	(183)	$	(268)	$	(61)	$	(207)
Reclassified to earnings	—		—		—		—		—
Net OCI	$	(85)	$	(183)	$	(268)	$	(61)	$	(207)
Change in net unrealized gains (losses) on AFS securities
OCI activity	$	(1,698)	$	398	$	(1,300)	$	—	$	(1,300)
Reclassified to earnings	(9)		2		(7)		—		(7)
Net OCI	$	(1,707)	$	400	$	(1,307)	$	—	$	(1,307)
Pension and other
OCI activity	$	1	$	—	$	1	$	—	$	1
Reclassified to earnings	6		(2)		4		—		4
Net OCI	$	7	$	(2)	$	5	$	—	$	5
Change in net DVA
OCI activity	$	1,082	$	(266)	$	816	$	44	$	772
Reclassified to earnings	—		—		—		—		—
Net OCI	$	1,082	$	(266)	$	816	$	44	$	772


	Three Months Ended September 30, 2021
$ in millions	Pre-tax Gain (Loss)		Income Tax Benefit (Provision)		After-tax Gain (Loss)		Non- controlling Interests		Net
CTA
OCI activity	$	(14)	$	(64)	$	(78)	$	(13)	$	(65)
Reclassified to earnings	—		—		—		—		—
Net OCI	$	(14)	$	(64)	$	(78)	$	(13)	$	(65)
Change in net unrealized gains (losses) on AFS securities
OCI activity	$	(317)	$	74	$	(243)	$	—	$	(243)
Reclassified to earnings	(17)		4		(13)		—		(13)
Net OCI	$	(334)	$	78	$	(256)	$	—	$	(256)
Pension and other
OCI activity	$	—	$	—	$	—	$	—	$	—
Reclassified to earnings	7		(2)		5		—		5
Net OCI	$	7	$	(2)	$	5	$	—	$	5
Change in net DVA
OCI activity	$	187	$	(46)	$	141	$	9	$	132
Reclassified to earnings	9		(3)		6		—		6
Net OCI	$	196	$	(49)	$	147	$	9	$	138

~~18.~~


	Nine Months Ended September 30, 2022
$ in millions	Pre-tax Gain (Loss)		Income Tax Benefit (Provision)		After-tax Gain (Loss)		Non- controlling Interests		Net
CTA
OCI activity	$	(279)	$	(441)	$	(720)	$	(230)	$	(490)
Reclassified to earnings	—		59		59		—		59
Net OCI	$	(279)	$	(382)	$	(661)	$	(230)	$	(431)
Change in net unrealized gains (losses) on AFS securities
OCI activity	$	(6,169)	$	1,445	$	(4,724)	$	—	$	(4,724)
Reclassified to earnings	(71)		17		(54)		—		(54)
Net OCI	$	(6,240)	$	1,462	$	(4,778)	$	—	$	(4,778)
Pension and other
OCI activity	$	(1)	$	—	$	(1)	$	—	$	(1)
Reclassified to earnings	17		(3)		14		—		14
Net OCI	$	16	$	(3)	$	13	$	—	$	13
Change in net DVA
OCI activity	$	3,474	$	(845)	$	2,629	$	88	$	2,541
Reclassified to earnings	(1)		—		(1)		—		(1)
Net OCI	$	3,473	$	(845)	$	2,628	$	88	$	2,540


	Nine Months Ended September 30, 2021
$ in millions	Pre-tax Gain (Loss)		Income Tax Benefit (Provision)		After-tax Gain (Loss)		Non- controlling Interests		Net
CTA
OCI activity	$	(106)	$	(150)	$	(256)	$	(91)	$	(165)
Reclassified to earnings	—		—		—		—		—
Net OCI	$	(106)	$	(150)	$	(256)	$	(91)	$	(165)
Change in net unrealized gains (losses) on AFS securities
OCI activity	$	(1,146)	$	267	$	(879)	$	—	$	(879)
Reclassified to earnings	(209)		49		(160)		—		(160)
Net OCI	$	(1,355)	$	316	$	(1,039)	$	—	$	(1,039)
Pension and other
OCI activity	$	8	$	—	$	8	$	—	$	8
Reclassified to earnings	21		(7)		14		—		14
Net OCI	$	29	$	(7)	$	22	$	—	$	22
Change in net DVA
OCI activity	$	591	$	(148)	$	443	$	27	$	416
Reclassified to earnings	36		(9)		27		—		27
Net OCI	$	627	$	(157)	$	470	$	27	$	443


September 2022 Form 10-Q			66


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

17. Interest Income and Interest Expense


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2022		2021		2022		2021
Interest income	Interest income									Interest income
Investment securities	Investment securities	$	643	$	529	$	2,100	$	1,603	Investment securities	$	743	$	643	$	2,261	$	2,100
Loans	Loans	1,063		967		3,091		3,171		Loans	1,910		1,063		4,469		3,091
Securities purchased under agreements to resell and Securities borrowed1		(282)		(187)		(899)		70
Securities purchased under agreements to resell1,2										Securities purchased under agreements to resell1,2	664		(36)		870		(147)
Securities borrowed1,3										Securities borrowed1,3	385		(246)		97		(752)
Trading assets, net of Trading liabilities	Trading assets, net of Trading liabilities	525		537		1,521		1,902		Trading assets, net of Trading liabilities	635		525		1,722		1,521
Customer receivables and Other2		402		210		1,187		1,171
Customer receivables and Other4										Customer receivables and Other4	1,764		402		2,944		1,187
Total interest income	Total interest income	$	2,351	$	2,056	$	7,000	$	7,917	Total interest income	$	6,101	$	2,351	$	12,363	$	7,000

Interest expense	Interest expense									Interest expense
Deposits	Deposits	$	102	$	178	$	330	$	804	Deposits	$	476	$	102	$	684	$	330
Borrowings	Borrowings	597		714		2,030		2,534		Borrowings	1,370		597		2,990		2,030
Securities sold under agreements to repurchase and Securities loaned3		131		165		361		883
Customer payables and Other4		(542)		(487)		(1,677)		(746)
Securities sold under agreements to repurchase1,5										Securities sold under agreements to repurchase1,5	501		19		725		82
Securities loaned1,6										Securities loaned1,6	135		112		340		279
Customer payables and Other7										Customer payables and Other7	1,109		(542)		616		(1,677)
Total interest expense	Total interest expense	$	288	$	570	$	1,044	$	3,475	Total interest expense	$	3,591	$	288	$	5,355	$	1,044
Net interest	Net interest	$	2,063	$	1,486	$	5,956	$	4,442	Net interest	$	2,510	$	2,063	$	7,008	$	5,956

1.Certain prior period amounts have been reclassified to conform to the current presentation.

2.Includes interest paid on Securities purchased under agreements to resell.

3.Includes fees paid on Securities borrowed.

2.4.Includes interest from Cash and cash equivalents.

3.5.Includes interest received on Securities sold under agreements to repurchase.

6.Includes fees received on Securities loaned.

4.7.Includes fees received from Equity Financing customers ~~for stock loan~~related to their short transactions, ~~entered into to cover customers’ short positions.~~which can be under either margin or securities lending arrangements.

Interest income and Interest expense are classified in the income ~~statements~~statement based on the nature of the instrument and related market conventions. When included as a component of the instrument’s fair value, interest is included within Trading revenues or Investments revenues. Otherwise, it is included within Interest income or Interest expense.

Accrued Interest


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Customer and other receivables	Customer and other receivables	$	2,229	$	1,652	Customer and other receivables	$	3,242	$	1,800
Customer and other payables	Customer and other payables	2,374		2,119		Customer and other payables	3,401		2,164

~~19.~~18. Income Taxes

The Firm is routinely under ~~continuous~~ examination by the IRS and other tax authorities in certain countries, such as Japan and the U.K., and in states and localities in which it has significant business operations, such as New York.

The Firm believes that the resolution of these tax examinations will not have a material effect on the annual financial statements, although a resolution could have a material impact in the income statement and on the effective tax rate for any period in which such resolutions occur.

It is reasonably possible that significant changes in the balance of unrecognized tax benefits may occur within the next 12 months. At this time, however, it is not possible to reasonably estimate the expected change to the total amount

of unrecognized tax benefits and the impact on the Firm’s effective tax rate over the next 12 months.

~~20.~~19. Segment, Geographic and Revenue Information

Selected Financial Information by Business Segment


	Three Months Ended September 30, 2022
$ in millions	IS		WM		IM		I/E		Total
Investment banking	$	1,277	$	114	$	—	$	(18)	$	1,373
Trading	3,330		(41)		32		10		3,331
Investments	(73)		18		(113)		—		(168)
Commissions and fees1	648		543		—		(58)		1,133
Asset management1,2	140		3,389		1,269		(54)		4,744
Other	(25)		93		(1)		(4)		63
Total non-interest revenues	5,297		4,116		1,187		(124)		10,476
Interest income	3,889		2,626		18		(432)		6,101
Interest expense	3,369		622		37		(437)		3,591
Net interest	520		2,004		(19)		5		2,510
Net revenues	$	5,817	$	6,120	$	1,168	$	(119)	$	12,986
Provision for credit losses	$	24	$	11	$	—	$	—	$	35
Compensation and benefits	1,948		3,171		495		—		5,614
Non-compensation expenses	2,219		1,289		557		(116)		3,949
Total non-interest expenses	$	4,167	$	4,460	$	1,052	$	(116)	$	9,563
Income before provision for income taxes	$	1,626	$	1,649	$	116	$	(3)	$	3,388
Provision for income taxes	305		396		26		(1)		726


Net income	1,321		1,253		90		(2)		2,662
Net income applicable to noncontrolling interests	47		—		(17)		—		30
Net income applicable to Morgan Stanley	$	1,274	$	1,253	$	107	$	(2)	$	2,632


	Three Months Ended September 30, 2021
$ in millions	IS		WM		IM		I/E		Total
Investment banking	$	2,849	$	186	$	—	$	(22)	$	3,013
Trading	2,897		(58)		1		21		2,861
Investments	52		8		(15)		—		45
Commissions and fees1	664		704		—		(88)		1,280
Asset management1,2	145		3,628		1,470		(42)		5,201
Other	172		119		—		(1)		290
Total non-interest revenues	6,779		4,587		1,456		(132)		12,690
Interest income	948		1,464		8		(69)		2,351
Interest expense	232		116		11		(71)		288
Net interest	716		1,348		(3)		2		2,063
Net revenues	$	7,495	$	5,935	$	1,453	$	(130)	$	14,753
Provision for credit losses	$	24	$	—	$	—	$	—	$	24
Compensation and benefits	2,248		3,159		513		—		5,920
Non-compensation expenses	2,250		1,246		570		(131)		3,935
Total non-interest expenses	$	4,498	$	4,405	$	1,083	$	(131)	$	9,855
Income before provision for income taxes	$	2,973	$	1,530	$	370	$	1	$	4,874
Provision for income taxes	713		373		64		—		1,150


Net income	2,260		1,157		306		1		3,724
Net income applicable to noncontrolling interests	31		—		(14)		—		17
Net income applicable to Morgan Stanley	$	2,229	$	1,157	$	320	$	1	$	3,707

September ~~2021~~2022 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)


		Three Months Ended September 30, 2020											Nine Months Ended September 30, 2022
$ in millions	$ in millions	IS		WM		IM		I/E		Total		$ in millions	IS		WM		IM		I/E		Total
Investment banking	Investment banking	$	1,707	$	135	$	—	$	(16)	$	1,826	Investment banking	$	3,983	$	354	$	—	$	(56)	$	4,281
Trading3		2,865		268		2		15		3,150
Trading												Trading	11,511		(681)		38		43		10,911
Investments	Investments	87		1		258		—		346		Investments	(69)		45		(46)		—		(70)
Commissions and fees1	Commissions and fees1	639		477		1		(80)		1,037		Commissions and fees1	2,110		1,869		—		(210)		3,769
Asset management1,2	Asset management1,2	114		2,793		795		(38)		3,664		Asset management1,2	442		10,525		3,961		(153)		14,775
Other3		123		91		1		(3)		212
Other												Other	(131)		388		(2)		(10)		245
Total non-interest revenues	Total non-interest revenues	5,535		3,765		1,057		(122)		10,235		Total non-interest revenues	17,846		12,500		3,951		(386)		33,911
Interest income	Interest income	1,086		1,065		7		(102)		2,056		Interest income	6,797		6,208		34		(676)		12,363
Interest expense	Interest expense	492		176		8		(106)		570		Interest expense	5,050		917		71		(683)		5,355
Net interest	Net interest	594		889		(1)		4		1,486		Net interest	1,747		5,291		(37)		7		7,008
Net revenues3		$	6,129	$	4,654	$	1,056	$	(118)	$	11,721
Provision for credit losses3		$	113	$	(2)	$	—	$	—	$	111
Net revenues												Net revenues	$	19,593	$	17,791	$	3,914	$	(379)	$	40,919
Provision for credit losses												Provision for credit losses	$	150	$	43	$	—	$	—	$	193
Compensation and benefits	Compensation and benefits	2,001		2,684		401		—		5,086		Compensation and benefits	6,602		9,191		1,645		—		17,438
Non-compensation expenses3		1,967		852		340		(122)		3,037
Total non-interest expenses3		$	3,968	$	3,536	$	741	$	(122)	$	8,123
Non-compensation expenses												Non-compensation expenses	6,874		3,814		1,676		(371)		11,993
Total non-interest expenses												Total non-interest expenses	$	13,476	$	13,005	$	3,321	$	(371)	$	29,431
Income before provision for income taxes	Income before provision for income taxes	$	2,048	$	1,120	$	315	$	4	$	3,487	Income before provision for income taxes	$	5,967	$	4,743	$	593	$	(8)	$	11,295
Provision for income taxes	Provision for income taxes	385		278		72		1		736		Provision for income taxes	1,235		1,028		121		(2)		2,382

Net income	Net income	1,663		842		243		3		2,751		Net income	4,732		3,715		472		(6)		8,913
Net income applicable to noncontrolling interests	Net income applicable to noncontrolling interests	16		—		18		—		34		Net income applicable to noncontrolling interests	146		—		(26)		—		120
Net income applicable to Morgan Stanley	Net income applicable to Morgan Stanley	$	1,647	$	842	$	225	$	3	$	2,717	Net income applicable to Morgan Stanley	$	4,586	$	3,715	$	498	$	(6)	$	8,793


	Nine Months Ended September 30, 2021
$ in millions	IS		WM		IM		I/E		Total
Investment banking	$	7,838	$	640	$	—	$	(65)	$	8,413
Trading	10,048		323		(18)		63		10,416
Investments	199		24		521		—		744
Commissions and fees1	2,216		2,269		1		(272)		4,214
Asset management1,2	432		10,266		3,991		(117)		14,572
Other	467		479		(23)		(7)		916
Total non-interest revenues	21,200		14,001		4,472		(398)		39,275
Interest income	2,791		4,316		26		(133)		7,000
Interest expense	827		328		29		(140)		1,044
Net interest	1,964		3,988		(3)		7		5,956
Net revenues	$	23,164	$	17,989	$	4,469	$	(391)	$	45,231
Provision for credit losses	$	1	$	(2)	$	—	$	—	$	(1)
Compensation and benefits	7,795		9,604		1,742		—		19,141
Non-compensation expenses	6,526		3,621		1,557		(397)		11,307
Total non-interest expenses	$	14,321	$	13,225	$	3,299	$	(397)	$	30,448
Income before provision for income taxes	$	8,842	$	4,766	$	1,170	$	6	$	14,784
Provision for income taxes	2,023		1,103		253		1		3,380


Net income	6,819		3,663		917		5		11,404
Net income applicable to noncontrolling interests	85		—		(19)		—		66
Net income applicable to Morgan Stanley	$	6,734	$	3,663	$	936	$	5	$	11,338

Nine Months Ended September 30, 2020
$ in millions IS WM IM I/E Total
Investment banking $ 4,902 $ 403 $ — $ (66) $ 5,239
Trading3
10,298 413 (13) 56 10,754
Investments 98 9 552 — 659
Commissions and fees1
2,230 1,538 1 (270) 3,499
Asset management1,2
342 7,980 2,144 (120) 10,346
Other3
11 256 (39) (7) 221
Total non-interest revenues 17,881 10,599 2,645 (407) 30,718
Interest income 4,809 3,468 22 (382) 7,917
Interest expense 3,184 653 33 (395) 3,475
Net interest 1,625 2,815 (11) 13 4,442
Net revenues3
$ 19,506 $ 13,414 $ 2,634 $ (394) $ 35,160
Provision for credit losses3
$ 718 $ 39 $ — $ — $ 757
Compensation and benefits 6,767 7,625 1,012 — 15,404
Non-compensation expenses3
6,030 2,433 948 (400) 9,011
Total non-interest expenses3
$ 12,797 $ 10,058 $ 1,960 $ (400) $ 24,415
Income before provision for income taxes $ 5,991 $ 3,317 $ 674 $ 6 $ 9,988
Provision for income taxes 1,326 758 136 1 2,221
Net income 4,665 2,559 538 5 7,767
Net income applicable to noncontrolling interests 75 — 81 — 156
Net income applicable to Morgan Stanley $ 4,590 $ 2,559 $ 457 $ 5 $ 7,611

~~I/E–Intersegment Eliminations~~

1.Substantially all revenues are from contracts with customers.

2.Includes certain fees ~~which~~that may relate to services performed in prior periods.

3.~~Certain prior period amounts have been reclassified to conform to the current presentation. See Note 1 for additional information.~~

For a discussion about the Firm’s business segments, see Note 23 to the financial statements in the ~~2020~~2021 Form 10-K.

Detail of Investment Banking Revenues


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
$ in millions	$ in millions	2021			2020			2021			2020			$ in millions	2022			2021			2022			2021
Institutional Securities Advisory	Institutional Securities Advisory	$	1,272		$	357		$	2,416		$	1,181		Institutional Securities Advisory	$	693		$	1,272		$	2,235		$	2,416
Institutional Securities Underwriting	Institutional Securities Underwriting	1,577			1,350			5,422			3,721			Institutional Securities Underwriting	584			1,577			1,748			5,422
Firm Investment banking revenues from contracts with customers	Firm Investment banking revenues from contracts with customers	91		%	95		%	91		%	92		%	Firm Investment banking revenues from contracts with customers	89		%	91		%	89		%	91		%

Trading Revenues by Product Type1


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2022		2021		2022		2021
Interest rate	Interest rate	$	(32)	$	511	$	844	$	2,593	Interest rate	$	1,070	$	(32)	$	1,930	$	844
Foreign exchange	Foreign exchange	253		138		841		603		Foreign exchange	31		253		1,154		841
Equity security and index2		1,903		1,478		5,631		4,494
Equity1										Equity1	1,872		1,903		5,869		5,631
Commodity and other	Commodity and other	538		553		2,079		1,286		Commodity and other	279		538		1,288		2,079
Credit	Credit	199		470		1,021		1,778		Credit	79		199		670		1,021
Total	Total	$	2,861	$	3,150	$	10,416	$	10,754	Total	$	3,331	$	2,861	$	10,911	$	10,416

1.~~Certain prior period amounts have been reclassified to conform to the current presentation. See Note 1 for additional information.~~

2.Dividend income is included within equity ~~security and index~~ contracts.

The previous table summarizes realized and unrealized gains and losses, from derivative and non-derivative financial


			69			~~September 2021 Form 10-Q~~


~~Table of Contents~~
Notes to Consolidated Financial Statements (Unaudited)

instruments, included in Trading revenues in the income ~~statements.~~statement. The Firm generally utilizes financial instruments across a variety of product types in connection with its market-making and related risk management strategies. The trading revenues presented in the table are not representative of the manner in which the Firm manages its business activities and are prepared in a manner similar to the presentation of trading revenues for regulatory reporting purposes.

Investment Management Investments Revenues—Net Cumulative Unrealized Carried Interest


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Net cumulative unrealized performance-based income at risk of reversing		$	774	$	735
Net cumulative unrealized performance-based fees at risk of reversing						Net cumulative unrealized performance-based fees at risk of reversing	$	837	$	802

The Firm’s portion of net cumulative performance-based ~~income~~fees in the form of unrealized carried interest, for which the Firm is not obligated to pay compensation, is at risk of reversing when the return in certain funds fall below specified performance targets. See Note 1413 for information regarding general partner guarantees, which include potential obligations to return performance fee distributions previously received.

Investment Management Asset Management Revenues—Reduction of Fees Due to Fee Waivers


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2022		2021		2022		2021
Fee waivers	Fee waivers	$	139	$	37	$	364	$	70	Fee waivers	$	28	$	139	$	193	$	364


September 2022 Form 10-Q			68


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

The Firm waives a portion of its fees in the Investment Management business segment from certain registered money market funds that comply with the requirements of Rule 2a-7 of the Investment Company Act of 1940.

Certain Other Fee Waivers

Separately, the Firm’s employees, including its senior officers, may participate on the same terms and conditions as other investors in certain funds that the Firm sponsors primarily for client investment, and the Firm may waive or lower applicable fees and charges for its employees.

Other Expenses—Transaction Taxes


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2022		2021		2022		2021
Transaction taxes	Transaction taxes	$	262	$	194	$	717	$	524	Transaction taxes	$	215	$	262	$	701	$	717

Transaction taxes are composed of securities transaction taxes and stamp duties, which are levied on the sale or purchase of securities listed on recognized stock exchanges in certain markets. These taxes are imposed mainly on trades of equity securities in Asia and EMEA. Similar transaction taxes are

levied on trades of listed derivative instruments in certain countries.

Net Revenues by Region1

Three Months Ended
September 30, Nine Months Ended
September 30,
$ in millions 2021 2020 2021 2020
Americas $ 11,255 $ 8,455 $ 33,331 $ 25,293
EMEA 1,752 1,472 6,004 4,778
Asia 1,746 1,794 5,896 5,089
Total $ 14,753 $ 11,721 $ 45,231 $ 35,160

1.~~Certain prior period amounts have been reclassified to conform to the current presentation. See Note 1 for additional information.~~


	Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	2022		2021		2022		2021
Americas	$	10,094	$	11,255	$	30,220	$	33,331
EMEA	1,392		1,752		5,381		6,004
Asia	1,500		1,746		5,318		5,896
Total	$	12,986	$	14,753	$	40,919	$	45,231

For a discussion about the Firm’s geographic net revenues, see Note 23 to the financial statements in the ~~2020~~2021 Form 10-K.

Revenues Recognized from Prior Services


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions	2021		2020		2021		2020		$ in millions	2022		2021		2022		2021
Non-interest revenues	Non-interest revenues	$	1,308	$	556	$	1,862	$	1,616	Non-interest revenues	$	788	$	1,308	$	2,036	$	1,862

The previous table includes revenues from contracts with customers recognized where some or all services were performed in prior periods. ~~For the three and nine months ended September 30, 2021 these~~These revenues primarily include investment banking advisory ~~fees, and for the three and nine months ended September 30, 2020, these revenues primarily include investment banking advisory fees and distribution~~ fees.

Receivables from Contracts with Customers


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Customer and other receivables	Customer and other receivables	$	3,592	$	3,200	Customer and other receivables	$	2,483	$	3,591

Receivables from contracts with customers, which are included within Customer and other receivables in the balance ~~sheets,~~sheet, arise when the Firm has both recorded revenues and the right per the contract to bill the customer.

Assets by Business Segment


$ in millions	$ in millions	At September 30, 2021		At December 31, 2020		$ in millions	At September 30, 2022		At December 31, 2021
Institutional Securities	Institutional Securities	$	808,252	$	753,322	Institutional Securities	$	786,384	$	792,135
Wealth Management	Wealth Management	364,634		355,595		Wealth Management	356,467		378,438
Investment Management	Investment Management	17,590		6,945		Investment Management	17,178		17,567
Total1	Total1	$	1,190,476	$	1,115,862	Total1	$	1,160,029	$	1,188,140

1. Parent assets have been fully allocated to the business segments.

September ~~2021~~2022 Form 10-Q


Table of Contents
Financial Data Supplement (Unaudited)

Average Balances and Interest Rates and Net Interest Income


		Three Months Ended September 30,													Three Months Ended September 30,
		2021						2020							2022						2021
$ in millions	$ in millions	Average Daily Balance		Interest		Annualized Average Rate		Average Daily Balance		Interest		Annualized Average Rate		$ in millions	Average Daily Balance		Interest		Annualized Average Rate		Average Daily Balance		Interest		Annualized Average Rate
Interest earning assets
Investment securities1	Investment securities1	$	179,626	$	643	1.4	%	$	133,726	$	529	1.6	%	Investment securities1	$	164,889	$	743	1.8	%	$	179,626	$	643	1.4	%
Loans1	Loans1	170,656		1,063		2.5	%	144,985		967		2.7	%	Loans1	209,551		1,910		3.6	%	170,656		1,063		2.5	%
Securities purchased under agreements to resell and Securities borrowed2:
Securities purchased under agreements to resell2,3:														Securities purchased under agreements to resell2,3:
U.S.	U.S.	154,122		(177)		(0.5)	%	123,614		(99)		(0.3)	%	U.S.	56,111		513		3.6	%	50,479		19		0.1	%
Non-U.S.	Non-U.S.	71,266		(105)		(0.6)	%	58,567		(88)		(0.6)	%	Non-U.S.	61,118		151		1.0	%	51,850		(55)		(0.4)	%
Trading assets, net of Trading liabilities3:
Securities borrowed2,4:														Securities borrowed2,4:
U.S.	U.S.	77,576		411		2.1	%	78,417		443		2.2	%	U.S.	126,061		373		1.2	%	103,643		(196)		(0.8)	%
Non-U.S.	Non-U.S.	22,880		114		2.0	%	21,092		94		1.8	%	Non-U.S.	17,966		12		0.3	%	19,416		(50)		(1.0)	%
Customer receivables and Other4:
Trading assets, net of Trading liabilities5:														Trading assets, net of Trading liabilities5:
U.S.														U.S.	74,651		535		2.8	%	77,576		411		2.1	%
Non-U.S.														Non-U.S.	12,976		100		3.1	%	22,880		114		2.0	%
Customer receivables and Other6:														Customer receivables and Other6:
U.S.	U.S.	137,525		358		1.0	%	81,908		171		0.8	%	U.S.	105,345		1,378		5.2	%	137,525		358		1.0	%
Non-U.S.	Non-U.S.	73,130		44		0.2	%	63,657		39		0.2	%	Non-U.S.	76,056		386		2.0	%	73,130		44		0.2	%
Total	Total	$	886,781	$	2,351	1.1	%	$	705,966	$	2,056	1.2	%	Total	$	904,724	$	6,101	2.7	%	$	886,781	$	2,351	1.1	%
Interest bearing liabilities	Interest bearing liabilities													Interest bearing liabilities
Deposits1	Deposits1	$	325,520	$	102	0.1	%	$	236,119	$	178	0.3	%	Deposits1	$	337,288	$	476	0.6	%	$	325,520	$	102	0.1	%
Borrowings1, 5		227,880		597		1.0	%	205,166		714		1.4	%
Securities sold under agreements to repurchase and Securities loaned6:
Borrowings1,7														Borrowings1,7	229,821		1,370		2.4	%	227,880		597		1.0	%
Securities sold under agreements to repurchase2,8,10:														Securities sold under agreements to repurchase2,8,10:
U.S.	U.S.	34,755		52		0.6	%	30,154		81		1.1	%	U.S.	19,344		324		6.6	%	29,956		38		0.5	%
Non-U.S.	Non-U.S.	35,219		79		0.9	%	28,320		84		1.2	%	Non-U.S.	40,110		177		1.8	%	29,027		(19)		(0.3)	%
Customer payables and Other7:
Securities loaned2,9,10:														Securities loaned2,9,10:
U.S.														U.S.	7,103		20		1.1	%	4,799		14		1.2	%
Non-U.S.														Non-U.S.	6,930		115		6.6	%	6,192		98		6.3	%
Customer payables and Other11:														Customer payables and Other11:
U.S.	U.S.	129,298		(431)		(1.3)	%	119,846		(399)		(1.3)	%	U.S.	145,061		738		2.0	%	129,298		(431)		(1.3)	%
Non-U.S.	Non-U.S.	76,248		(111)		(0.6)	%	64,524		(88)		(0.5)	%	Non-U.S.	72,328		371		2.0	%	76,248		(111)		(0.6)	%
Total	Total	$	828,920	$	288	0.1	%	$	684,129	$	570	0.3	%	Total	$	857,985	$	3,591	1.7	%	$	828,920	$	288	0.1	%
Net interest income and net interest rate spread	Net interest income and net interest rate spread			$	2,063	1.0	%			$	1,486	0.9	%	Net interest income and net interest rate spread			$	2,510	1.0	%			$	2,063	1.0	%


		Nine Months Ended September 30,													Nine Months Ended September 30,
		2021						2020							2022						2021
$ in millions	$ in millions	Average Daily Balance		Interest		Annualized Average Rate		Average Daily Balance		Interest		Annualized Average Rate		$ in millions	Average Daily Balance		Interest		Annualized Average Rate		Average Daily Balance		Interest		Annualized Average Rate
Interest earning assets	Interest earning assets													Interest earning assets
Investment securities1	Investment securities1	$	182,804	$	2,100	1.5	%	$	122,613	$	1,603	1.7	%	Investment securities1	$	169,926	$	2,261	1.8	%	$	182,804	$	2,100	1.5	%
Loans1	Loans1	161,422		3,091		2.6	%	142,261		3,171		3.0	%	Loans1	201,655		4,469		3.0	%	161,422		3,091		2.6	%
Securities purchased under agreements to resell and Securities borrowed2:
Securities purchased under agreements to resell2,3:														Securities purchased under agreements to resell2,3:
U.S.	U.S.	150,985		(546)		(0.5)	%	127,868		194		0.2	%	U.S.	56,451		719		1.7	%	55,248		64		0.2	%
Non-U.S.	Non-U.S.	71,060		(353)		(0.7)	%	59,831		(124)		(0.3)	%	Non-U.S.	62,273		151		0.3	%	53,813		(211)		(0.5)	%
Trading assets, net of Trading liabilities3:
Securities borrowed2,4:														Securities borrowed2,4:
U.S.	U.S.	76,456		1,230		2.2	%	76,418		1,558		2.7	%	U.S.	124,628		167		0.2	%	95,737		(610)		(0.9)	%
Non-U.S.	Non-U.S.	19,103		291		2.0	%	22,570		344		2.0	%	Non-U.S.	19,819		(70)		(0.5)	%	17,247		(142)		(1.1)	%
Customer receivables and Other4:
Trading assets, net of Trading liabilities5:														Trading assets, net of Trading liabilities5:
U.S.														U.S.	74,993		1,418		2.5	%	76,456		1,230		2.2	%
Non-U.S.														Non-U.S.	14,668		304		2.8	%	19,103		291		2.0	%
Customer receivables and Other6:														Customer receivables and Other6:
U.S.	U.S.	135,596		1,035		1.0	%	78,705		892		1.5	%	U.S.	116,515		2,396		2.7	%	135,596		1,035		1.0	%
Non-U.S.	Non-U.S.	74,527		152		0.3	%	61,699		279		0.6	%	Non-U.S.	76,649		548		1.0	%	74,527		152		0.3	%
Total	Total	$	871,953	$	7,000	1.1	%	$	691,965	$	7,917	1.5	%	Total	$	917,577	$	12,363	1.8	%	$	871,953	$	7,000	1.1	%
Interest bearing liabilities	Interest bearing liabilities													Interest bearing liabilities
Deposits1	Deposits1	$	322,304	$	330	0.1	%	$	223,733	$	804	0.5	%	Deposits1	$	340,166	$	684	0.3	%	$	322,304	$	330	0.1	%
Borrowings1, 5		221,875		2,030		1.2	%	199,855		2,534		1.7	%
Securities sold under agreements to repurchase and Securities loaned6:
Borrowings1,7														Borrowings1,7	228,589		2,990		1.7	%	221,875		2,030		1.2	%
Securities sold under agreements to repurchase2,8,10:														Securities sold under agreements to repurchase2,8,10:
U.S.	U.S.	35,335		129		0.5	%	30,315		501		2.2	%	U.S.	20,957		487		3.1	%	30,559		122		0.5	%
Non-U.S.	Non-U.S.	30,917		232		1.0	%	29,315		382		1.7	%	Non-U.S.	39,694		238		0.8	%	25,722		(40)		(0.2)	%
Customer payables and Other7:
Securities loaned2,9,10:														Securities loaned2,9,10:
U.S.														U.S.	6,354		21		0.4	%	4,776		7		0.2	%
Non-U.S.														Non-U.S.	7,308		319		5.8	%	5,195		272		7.0	%
Customer payables and Other11:														Customer payables and Other11:
U.S.	U.S.	129,883		(1,349)		(1.4)	%	123,662		(693)		(0.7)	%	U.S.	144,691		311		0.3	%	129,883		(1,349)		(1.4)	%
Non-U.S.	Non-U.S.	73,415		(328)		(0.6)	%	64,608		(53)		(0.1)	%	Non-U.S.	75,510		305		0.5	%	73,415		(328)		(0.6)	%
Total	Total	$	813,729	$	1,044	0.2	%	$	671,488	$	3,475	0.7	%	Total	$	863,269	$	5,355	0.8	%	$	813,729	$	1,044	0.2	%
Net interest income and net interest rate spread	Net interest income and net interest rate spread			$	5,956	0.9	%			$	4,442	0.8	%	Net interest income and net interest rate spread			$	7,008	1.0	%			$	5,956	0.9	%

1.Amounts include primarily U.S. balances.

2.Certain prior period amounts have been reclassified to conform to the current presentation.

3.Includes interest paid on Securities purchased under agreements to resell.

4.Includes fees paid on Securities borrowed.

3.5.Excludes non-interest earning assets and non-interest bearing liabilities, such as equity securities.

4.6.Includes Cash and cash equivalents.

5.7.~~Includes~~Average daily balance includes borrowings carried at fair value, ~~whose~~but for certain borrowings, interest expense is considered part of fair value and ~~therefore~~ is recorded ~~within~~in Trading revenues.

6.8.Includes interest received on Securities sold under agreements to repurchase.

9.Includes fees received on Securities loaned.

10.The annualized average rate was calculated using (a) interest expense incurred on all securities sold under agreements to repurchase and securities loaned transactions, whether or not such transactions were reported in the balance ~~sheets~~sheet and (b) net average on-balance sheet balances, which exclude certain securities-for-securities transactions.

7.11.Includes fees received from Equity Financing customers ~~for~~related to their short transactions, which can be under either margin or securities lending ~~transactions entered into to cover customers’ short positions.~~arrangements.

September ~~2021~~2022 Form 10-Q


Table of Contents
Glossary of Common Terms and Acronyms


~~2020~~2021 Form 10-K			Annual report on Form 10-K for year ended December 31, ~~2020~~2021 filed with the SEC
ABS			Asset-backed securities
ACL			Allowance for credit losses
AFS			Available-for-sale
AML			Anti-money laundering
AOCI			Accumulated other comprehensive income (loss)
AUM			Assets under management or supervision
Balance ~~sheets~~sheet			Consolidated balance ~~sheets~~sheet
BHC			Bank holding company
bps			Basis points; one basis point equals 1/100th of 1%
Cash flow ~~statements~~statement			Consolidated cash flow ~~statements~~statement
CCAR			Comprehensive Capital Analysis and Review
CCyB			Countercyclical capital buffer
CDO			Collateralized debt obligation(s), including Collateralized loan obligation(s)
CDS			Credit default swaps
CECL			Current Expected Credit Losses, as calculated under the Financial Instruments—Credit Losses accounting update
CFTC			U.S. Commodity Futures Trading Commission
CLN			Credit-linked note(s)
CLO			Collateralized loan obligation(s)
CMBS			Commercial mortgage-backed securities
CMO			Collateralized mortgage obligation(s)
CRM			Credit Risk Management Department
~~CVA~~CTA			~~Credit valuation adjustment~~Cumulative foreign currency translation adjustments

DVA			Debt valuation adjustment
EBITDA			Earnings before interest, taxes, depreciation and amortization
~~ELN~~			~~Equity-linked note(s)~~
EMEA			Europe, Middle East and Africa
EPS			Earnings per common share

FDIC			Federal Deposit Insurance Corporation
FFELP			Federal Family Education Loan Program

FHC			Financial ~~Holding Company~~holding company

FICO			Fair Isaac Corporation
Financial statements			Consolidated financial statements

FVO			Fair value option
G-SIB			Global systemically important banks

HFI			Held-for-investment
HFS			Held-for-sale
HQLA			High-quality liquid assets
HTM			Held-to-maturity
I/E			Intersegment eliminations
IHC			Intermediate holding company
IM			Investment Management
Income ~~statements~~statement			Consolidated income ~~statements~~statement
IRS			Internal Revenue Service


~~IRS~~			~~Internal Revenue Service~~
IS			Institutional Securities
LCR			Liquidity coverage ratio, as adopted by the U.S. banking agencies
LIBOR			London Interbank Offered Rate
LTV			Loan-to-value
M&A			Merger, acquisition and restructuring transaction
MSBNA			Morgan Stanley Bank, N.A.
MS&Co.			Morgan Stanley & Co. LLC
MSCG			Morgan Stanley Capital Group Inc.
MSCS			Morgan Stanley Capital Services LLC
MSESE			Morgan Stanley Europe SE
MSIP			Morgan Stanley & Co. International plc
MSMS			Morgan Stanley MUFG Securities Co., Ltd.
MSPBNA			Morgan Stanley Private Bank, National Association
MSSB			Morgan Stanley Smith Barney LLC
MUFG			Mitsubishi UFJ Financial Group, Inc.
MUMSS			Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
MWh			Megawatt hour
N/A			Not Applicable
N/M			Not Meaningful
NAV			Net asset value
Non-GAAP			Non-generally accepted accounting principles
NSFR			Net stable funding ratio, as adopted by the U.S. banking agencies
OCC			Office of the Comptroller of the Currency
OCI			Other comprehensive income (loss)

OTC			Over-the-counter
~~PRA~~			~~Prudential Regulation Authority~~
PSU			Performance-based stock unit

ROE			Return on average common equity
ROTCE			Return on average tangible common equity
ROU			Right-of-use
RSU			Restricted stock unit
RWA			Risk-weighted assets
SCB			Stress capital buffer
SEC			U.S. Securities and Exchange Commission
SLR			Supplementary leverage ratio
SOFR			Secured Overnight Financing Rate
S&P			Standard & Poor’s
SPE			Special purpose entity
SPOE			Single point of entry
TDR			Troubled debt restructuring
TLAC			Total loss-absorbing capacity
U.K.			United Kingdom
UPB			Unpaid principal balance
U.S.			United States of America
U.S. GAAP			Accounting principles generally accepted in the United States of America
VaR			Value-at-Risk
VIE			Variable interest entity
WACC			Implied weighted average cost of capital
WM			Wealth Management

September ~~2021~~2022 Form 10-Q


Table of Contents

Controls and Procedures

Under the supervision and with the participation of the Firm’s management, including the Chief Executive Officer and Chief Financial Officer, the Firm conducted an evaluation of the effectiveness of the Firm’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Firm’s disclosure controls and procedures were effective as of the end of the period covered by this report.

No change in the Firm’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) occurred during the period covered by this report that materially affected, or is reasonably likely to materially affect, the Firm’s internal control over financial reporting.

Legal Proceedings

The following developments have occurred since previously reporting certain matters in the Firm’s ~~2020~~2021 Form 10-K and the Firm’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, ~~2021~~2022 (the “First Quarter Form 10-Q”) and the quarterly period ended June 30, ~~2021~~2022 (the “Second Quarter Form 10-Q”). See also the disclosures set forth under “Legal Proceedings” in the ~~2020~~2021 Form 10-K, the First Quarter Form 10-Q, and the Second Quarter Form 10-Q.

Residential Mortgage and Credit Crisis Matters

On ~~July 30, 2021,~~October 4, 2022, the ~~Firm filed a motion for summary judgment~~parties in ~~Financial Guaranty Insurance~~Deutsche Bank National Trust Company, as Trustee for the Morgan Stanley ABS Capital I Inc. Trust, Series 2007-NC1 v. Morgan Stanley ABS Capital I, Inc. ~~et al.~~ reached an agreement in principle to settle the litigation.

On ~~August 13, 2021,~~October 4, 2022, the parties in ~~U.S.~~Deutsche Bank National ~~Association,~~Trust Company, solely in its capacity as Trustee ~~of the~~for Morgan Stanley ~~Mortgage Loan~~ABS Capital I Inc. Trust, ~~2007-2AX (MSM 2007-2AX)~~Series 2007-NC3 v. Morgan Stanley Mortgage Capital Holdings LLC, as Successor-by-Merger to Morgan Stanley Mortgage Capital Inc. reached an agreement in principle to settle the litigation.

Record Keeping Matter

On September 27, 2022, the Firm’s settlements with the SEC and ~~GreenPoint Mortgage Funding, Inc., filed a stipulation~~the CFTC to resolve record-keeping related investigations by those agencies relating to business communications on unapproved messaging platforms became effective.

European Matter

The Firm is engaging with the UK Competition and Markets Authority in connection with its investigation of ~~voluntary discontinuance with prejudice.~~suspected anti-competitive arrangements in the financial services sector, specifically regarding the Firm's activities concerning certain liquid fixed income products between 2009 and 2012.

Risk Factors

For a discussion of the risk factors affecting the Firm, see “Risk Factors” in Part I, Item 1A of the ~~2020~~2021 Form 10-K.

Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities


$ in millions, except per share data	$ in millions, except per share data	Total Number of Shares Purchased1	Average Price Paid per Share		Total Shares Purchased as Part of Share Repurchase Program2,3	Dollar Value of Remaining Authorized Repurchase		$ in millions, except per share data	Total Number of Shares Purchased1	Average Price Paid per Share		Total Shares Purchased as Part of Share Repurchase Authorization2,3	Dollar Value of Remaining Authorized Repurchase
July	July	10,456,550	$	93.94	10,284,648	$	11,033	July	7,024,977	$	81.08	6,966,721	$	19,435
August	August	14,721,794	$	100.55	14,152,826	$	9,608	August	14,511,783	$	87.32	13,954,929	$	18,215
September	September	11,343,989	$	102.79	11,328,590	$	8,443	September	8,881,353	$	86.91	8,860,100	$	17,445
Three Months Ended September 30, 2021		36,522,333	$	99.35	35,766,064
Three Months Ended September 30, 2022								Three Months Ended September 30, 2022	30,418,113	$	85.76	29,781,750

1.Includes ~~756,269~~636,363 shares acquired by the Firm in satisfaction of the tax withholding obligations on stock-based awards granted under the Firm’s stock-based compensation plans during the three months ended September 30, ~~2021.~~2022.

2.Share purchases under publicly announced ~~programs~~authorizations are made pursuant to open-market purchases, Rule 10b5-1 plans or privately negotiated transactions (including with employee benefit plans) as market conditions warrant and at prices the Firm deems appropriate and may be suspended at any time.

3.The Firm’s Board of Directors has ~~authorized~~approved the repurchase of the Firm’s outstanding common stock under a share repurchase ~~program~~authorization (the “Share Repurchase ~~Program”~~Authorization”) from time to time as conditions warrant and subject to limitations on distributions from the Federal Reserve. The Share Repurchase ~~Program~~Authorization is ~~a program~~ for capital management purposes ~~that~~and considers, among other things, business segment capital needs, as well as equity-based compensation and benefit plan requirements. The Share Repurchase ~~Program~~Authorization has no set expiration or termination date.

On June ~~28, 2021,~~27, 2022, the Firm announced that its Board of Directors ~~authorized the~~approved a new multi-year repurchase authorization of up to ~~$12~~$20 billion of outstanding common stock, ~~from July 1, 2021 through June 30,~~without a set expiration date, beginning in the third quarter of 2022, which will be exercised from time to time as conditions ~~warrant, which supersedes the previous common stock repurchase authorization. F~~orwarrant. For further information, see “Liquidity and Capital Resources—Regulatory Requirements—Capital Plans, Stress Tests and the Stress Capital Buffer.”

Other Information

None.


September 2022 Form 10-Q			72


Table of Contents

Exhibits


Exhibit No.			Description
~~3.1~~			~~Amended and Restated Certificate of Incorporation of Morgan Stanley, as amended to date.~~
15			Letter of awareness from Deloitte & Touche LLP, dated ~~November~~ November 3,, ~~202~~1 , 2022, concerning unaudited interim financial information.
31.1			Rule 13a-14(a) Certification of Chief Executive Officer.
31.2			Rule 13a-14(a) Certification of Chief Financial Officer.
32.1			Section 1350 Certification of Chief Executive Officer.
32.2			Section 1350 Certification of Chief Financial Officer.
101			Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline eXtensible Business Reporting Language (“Inline XBRL”).
104			Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).


			73			~~September 2021 Form 10-Q~~


~~Table of Contents~~

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


MORGAN STANLEY (Registrant)

By:			/s/ SHARON YESHAYA
			Sharon Yeshaya Executive Vice President and Chief Financial Officer

By:			/s/ RAJA J. AKRAM
			Raja J. Akram Deputy Chief Financial Officer, Chief Accounting Officer and Controller

Date: November 3, ~~2021~~2022

September ~~2021~~2022 Form 10-Q


	Three Months Ended September 30, 20204
					Net Interest2		All Other3
$ in millions	Trading		Fees1		Net Interest2		All Other3		Total
Financing	$	929	$	108	$	116	$	—	$	1,153
Execution services	606		580		(77)		49		1,158
Total Equity	$	1,535	$	688	$	39	$	49	$	2,311
Total Fixed Income	$	1,420	$	65	$	442	$	27	$	1,954


	Nine Months Ended September 30, 20204
					Net Interest2		All Other3
$ in millions	Trading		Fees1		Net Interest2		All Other3		Total
Financing	$	2,847	$	325	$	172	$	4	$	3,348
Execution services	2,134		2,014		(189)		80		4,039
Total Equity	$	4,981	$	2,339	$	(17)	$	84	$	7,387
Total Fixed Income	$	5,661	$	234	$	1,274	$	(112)	$	7,057


$ in billions	At December 31, 2019		Inflows		Outflows		Market Impact		At September 30, 2020
Separately managed2	$	322	$	37	$	(14)	$	(3)	$	342
Unified managed	313		43		(33)		4		327
Advisor	155		22		(21)		2		158
Portfolio manager	435		62		(43)		5		459
Subtotal	$	1,225	$	164	$	(111)	$	8	$	1,286
Cash management	42		21		(16)		—		47
Total fee-based client assets	$	1,267	$	185	$	(127)	$	8	$	1,333


$ in millions	Weighted average life (years)	At March 1, 2021
Non-amortizable
Management contracts	indefinite	$	2,120
Amortizable
Customer relationships	16	1,455
Tradenames	23	221
Management contracts	16	160
Total acquired Intangible assets		$	3,956


$ in millions	Three Months Ended September 30, 2021		Nine Months Ended September 30, 20211
Net revenues	$	549	$	1,258
Net income	137		287


	Assets at September 30, 2021
$ in millions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total
Designated as accounting hedges
Interest rate	$	578	$	9	$	—	$	587
Foreign exchange	145		15		—		160
Total	723		24		—		747
Not designated as accounting hedges
Economic loan hedges
Credit	1		16		—		17
Other derivatives
Interest rate	154,421		7,628		221		162,270
Credit	5,624		3,932		—		9,556
Foreign exchange	72,129		1,301		53		73,483
Equity	29,159		—		42,011		71,170
Commodity and other	28,545		—		14,178		42,723
Total	289,879		12,877		56,463		359,219
Total gross derivatives	$	290,602	$	12,901	$	56,463	$	359,966
Amounts offset
Counterparty netting	(205,701)		(11,014)		(52,930)		(269,645)
Cash collateral netting	(45,163)		(1,759)		—		(46,922)
Total in Trading assets	$	39,738	$	128	$	3,533	$	43,399
Amounts not offset1
Financial instruments collateral	(12,419)		—		—		(12,419)

Net amounts	$	27,319	$	128	$	3,533	$	30,980
Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable							$	4,385


	Liabilities at September 30, 2021
$ in millions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total
Designated as accounting hedges
Interest rate	$	—	$	—	$	—	$	—
Foreign exchange	7		20		—		27
Total	7		20		—		27
Not designated as accounting hedges
Economic loan hedges
Credit	15		229		—		244
Other derivatives
Interest rate	144,921		6,683		350		151,954
Credit	5,508		4,463		—		9,971
Foreign exchange	68,163		1,334		52		69,549
Equity	39,690		—		43,296		82,986
Commodity and other	22,708		—		14,480		37,188
Total	281,005		12,709		58,178		351,892
Total gross derivatives	$	281,012	$	12,729	$	58,178	$	351,919
Amounts offset
Counterparty netting	(205,701)		(11,014)		(52,930)		(269,645)
Cash collateral netting	(42,471)		(1,087)		—		(43,558)
Total in Trading liabilities	$	32,840	$	628	$	5,248	$	38,716
Amounts not offset1
Financial instruments collateral	(6,226)		—		(1,007)		(7,233)

Net amounts	$	26,614	$	628	$	4,241	$	31,483
Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable							7,103


	Assets at December 31, 2020
$ in millions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total
Designated as accounting hedges
Interest rate	$	946	$	2	$	—	$	948
Foreign exchange	5		2		—		7
Total	951		4		—		955
Not designated as accounting hedges
Economic loan hedges
Credit2	2		51		—		53
Other derivatives
Interest rate	221,895		10,343		300		232,538
Credit2	5,341		2,147		—		7,488
Foreign exchange	92,334		1,639		79		94,052
Equity	34,278		—		34,166		68,444
Commodity and other	11,095		—		3,554		14,649
Total	364,945		14,180		38,099		417,224
Total gross derivatives	$	365,896	$	14,184	$	38,099	$	418,179
Amounts offset
Counterparty netting	(276,682)		(11,601)		(35,260)		(323,543)
Cash collateral netting	(54,921)		(1,865)		—		(56,786)
Total in Trading assets	$	34,293	$	718	$	2,839	$	37,850
Amounts not offset1
Financial instruments collateral	(13,319)		—		—		(13,319)
Other cash collateral	(391)		—		—		(391)
Net amounts	$	20,583	$	718	$	2,839	$	24,140
Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable							$	3,743


	Fair Value At September 30, 2021
$ in millions	Level 2		Level 3		Total
Retained interests
Investment grade	$	725	$	—	$	725
Non-investment grade	38		52		90
Total	$	763	$	52	$	815
Interests purchased in the secondary market
Investment grade	$	124	$	7	$	131
Non-investment grade	74		37		111
Total	$	198	$	44	$	242
Derivative assets	$	585	$	1	$	586
Derivative liabilities	149		29		178


$ in millions	CTA		AFS Securities		Pension and Other		DVA		Total
June 30, 2021	$	(895)	$	1,004	$	(481)	$	(2,151)	$	(2,523)
OCI during the period	(65)		(256)		5		138		(178)
September 30, 2021	$	(960)	$	748	$	(476)	$	(2,013)	$	(2,701)
June 30, 2020	$	(1,017)	$	1,827	$	(620)	$	(189)	$	1
OCI during the period	81		(62)		5		(562)		(538)
September 30, 2020	$	(936)	$	1,765	$	(615)	$	(751)	$	(537)
December 31, 2020	$	(795)	$	1,787	$	(498)	$	(2,456)	$	(1,962)
OCI during the period	(165)		(1,039)		22		443		(739)
September 30, 2021	$	(960)	$	748	$	(476)	$	(2,013)	$	(2,701)
December 31, 2019	$	(897)	$	207	$	(644)	$	(1,454)	$	(2,788)
OCI during the period	(39)		1,558		29		703		2,251
September 30, 2020	$	(936)	$	1,765	$	(615)	$	(751)	$	(537)


	Nine Months Ended September 30, 2020
$ in millions	Pre-tax Gain (Loss)		Income Tax Benefit (Provision)		After-tax Gain (Loss)		Non- controlling Interests		Net
CTA
OCI activity	$	19	$	(17)	$	2	$	38	$	(36)
Reclassified to earnings	(3)		—		(3)		—		(3)
Net OCI	$	16	$	(17)	$	(1)	$	38	$	(39)
Change in net unrealized gains (losses) on AFS securities
OCI activity	$	2,142	$	(503)	$	1,639	$	—	$	1,639
Reclassified to earnings	(106)		25		(81)		—		(81)
Net OCI	$	2,036	$	(478)	$	1,558	$	—	$	1,558
Pension and other
OCI activity	$	20	$	(4)	$	16	$	—	$	16
Reclassified to earnings	16		(3)		13		—		13
Net OCI	$	36	$	(7)	$	29	$	—	$	29
Change in net DVA
OCI activity	$	967	$	(233)	$	734	$	41	$	693
Reclassified to earnings	14		(4)		10		—		10
Net OCI	$	981	$	(237)	$	744	$	41	$	703