~~0000895421us-gaap:NotDesignatedAsHedgingInstrumentTradingMemberus-gaap:ForeignExchangeContractMember2023-03-31~~

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 ~~March 31,~~September 30, 2023

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 1/1,000th 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 1/1,000th 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 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 ~~April 28,~~October 31, 2023, there were ~~1,670,113,691~~1,641,311,580 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 ~~March 31,~~September 30, 2023


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	4
Introduction	Introduction				1	Introduction				4
Executive Summary	Executive Summary				2	Executive Summary				5
Business Segments	Business Segments				6	Business Segments				10
Institutional Securities	Institutional Securities				7	Institutional Securities				11
Wealth Management	Wealth Management				9	Wealth Management				14
Investment Management	Investment Management				11	Investment Management				17
Supplemental Financial Information	Supplemental Financial Information				13	Supplemental Financial Information				19
Accounting Development Updates	Accounting Development Updates				13	Accounting Development Updates				19
Critical Accounting Estimates	Critical Accounting Estimates				13	Critical Accounting Estimates				19
Liquidity and Capital Resources	Liquidity and Capital Resources				13	Liquidity and Capital Resources				19
Balance Sheet	Balance Sheet				14	Balance Sheet				20
Regulatory Requirements	Regulatory Requirements				17	Regulatory Requirements				23
Quantitative and Qualitative Disclosures about Risk	Quantitative and Qualitative Disclosures about Risk		I	3	23	Quantitative and Qualitative Disclosures about Risk		I	3	30
Market Risk	Market Risk				23	Market Risk				30
Credit Risk	Credit Risk				25	Credit Risk				32
Country and Other Risks	Country and Other Risks				30	Country and Other Risks				37
Report of Independent Registered Public Accounting Firm	Report of Independent Registered Public Accounting Firm				32	Report of Independent Registered Public Accounting Firm				39
Consolidated Financial Statements and Notes	Consolidated Financial Statements and Notes		I	1	33	Consolidated Financial Statements and Notes		I	1	40
Consolidated Income Statement (Unaudited)	Consolidated Income Statement (Unaudited)				33	Consolidated Income Statement (Unaudited)				40
Consolidated Comprehensive Income Statement (Unaudited)	Consolidated Comprehensive Income Statement (Unaudited)				33	Consolidated Comprehensive Income Statement (Unaudited)				40
Consolidated Balance Sheet (Unaudited at March 31, 2023)					34
Consolidated Balance Sheet (Unaudited at September 30, 2023)						Consolidated Balance Sheet (Unaudited at September 30, 2023)				41
Consolidated Statement of Changes in Total Equity (Unaudited)	Consolidated Statement of Changes in Total Equity (Unaudited)				35	Consolidated Statement of Changes in Total Equity (Unaudited)				42
Consolidated Cash Flow Statement (Unaudited)	Consolidated Cash Flow Statement (Unaudited)				36	Consolidated Cash Flow Statement (Unaudited)				43
Notes to Consolidated Financial Statements (Unaudited)	Notes to Consolidated Financial Statements (Unaudited)				37	Notes to Consolidated Financial Statements (Unaudited)				44
1.	1.	Introduction and Basis of Presentation			37	1.	Introduction and Basis of Presentation			44
2.	2.	Significant Accounting Policies			37	2.	Significant Accounting Policies			44
3.	3.	Cash and Cash Equivalents			38	3.	Cash and Cash Equivalents			45
4.	4.	Fair Values			38	4.	Fair Values			45
5.	5.	Fair Value Option			44	5.	Fair Value Option			51
6.	6.	Derivative Instruments and Hedging Activities			45	6.	Derivative Instruments and Hedging Activities			52
7.	7.	Investment Securities			48	7.	Investment Securities			55
8.	8.	Collateralized Transactions			50	8.	Collateralized Transactions			57
9.	9.	Loans, Lending Commitments and Related Allowance for Credit Losses			52	9.	Loans, Lending Commitments and Related Allowance for Credit Losses			59
10.	10.	Other Assets—Equity Method Investments			54	10.	Other Assets—Equity Method Investments			62
11.	11.	Deposits			55	11.	Deposits			62
12.	12.	Borrowings and Other Secured Financings			55	12.	Borrowings and Other Secured Financings			63
13.	13.	Commitments, Guarantees and Contingencies			55	13.	Commitments, Guarantees and Contingencies			63
14.	14.	Variable Interest Entities and Securitization Activities			57	14.	Variable Interest Entities and Securitization Activities			66
15.	15.	Regulatory Requirements			60	15.	Regulatory Requirements			68
16.	16.	Total Equity			62	16.	Total Equity			70
17.	17.	Interest Income and Interest Expense			63	17.	Interest Income and Interest Expense			72
18.	18.	Income Taxes			63	18.	Income Taxes			72
19.	19.	Segment, Geographic and Revenue Information			64	19.	Segment, Geographic and Revenue Information			73
Financial Data Supplement (Unaudited)	Financial Data Supplement (Unaudited)				66	Financial Data Supplement (Unaudited)				76
Glossary of Common Terms and Acronyms	Glossary of Common Terms and Acronyms				67	Glossary of Common Terms and Acronyms				77
Controls and Procedures	Controls and Procedures		I	4	68	Controls and Procedures		I	4	78
Other Information	Other Information		II			Other Information		II
Legal Proceedings	Legal Proceedings		II	1	68	Legal Proceedings		II	1	78
Risk Factors	Risk Factors		II	1A	68	Risk Factors		II	1A	78
Unregistered Sales of Equity Securities and Use of Proceeds	Unregistered Sales of Equity Securities and Use of Proceeds		II	2	68	Unregistered Sales of Equity Securities and Use of Proceeds		II	2	79
Other Information	Other Information		II	5	69	Other Information		II	5	79
Exhibits	Exhibits		II	6	69	Exhibits		II	6	79
Signatures	Signatures				69	Signatures				79


			i2


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, Governance and 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;~~

•~~Climate Report;~~ and

•2022 ESG Report: Diversity & Inclusion, Climate, and ~~Inclusion Report.~~Sustainability.

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.


			ii3


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. 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 services consist of capital raising and financial advisory services, including the underwriting of debt, equity securities and other ~~securities,~~products, 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, custody, administrative and investment advisory services; self-directed brokerage services; financial and wealth planning services; workplace services, including stock plan administration; 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,” “Risk Factors” in the 2022 Form 10-K and “Liquidity and Capital Resources—Regulatory Requirements” herein.


~~March 2023 Form 10-Q~~			14


Table of Contents
Management’s Discussion and Analysis

Executive Summary

Overview of Financial Results

Consolidated Results—Three Months Ended ~~March 31,~~September 30, 2023

•The Firm reported net revenues of ~~$14.5~~$13.3 billion and net income of ~~$3.0 billion as our businesses navigated a volatile market environment.~~$2.4 billion.

•The Firm delivered ROE of 10.0% and ROTCE of ~~16.9%~~13.5% (see “Selected Non-GAAP Financial Information” herein).

•The Firm’s expense efficiency ratio ~~was 72%. Expenses~~ for the ~~quarter include integration-related expenses of $77 million.~~quarter-to-date and year-to-date periods was 75%.

•At ~~March 31,~~September 30, 2023, the Firm’s Standardized Common Equity Tier 1 capital ratio was ~~15.1%~~15.6%.

•Institutional Securities net revenues of ~~$6.8~~$5.7 billion reflect ~~strong performance~~solid results in Equity and Fixed Income ~~despite a less favorable market environment compared to a year ago~~ and ~~lower results~~muted completed activity in Investment Banking.

•Wealth Management ~~net revenues were $6.6 billion, positively impacted by mark-to-market gains on investments associated with certain employee deferred compensation plans compared to losses a year ago. The business~~ delivered a pre-tax margin of ~~26.1%~~26.7%. ~~Results reflect~~Net revenues were $6.4 billion, reflecting increased asset management revenues on higher ~~net interest income versus prior~~average asset levels compared to a year primarily driven by higher interest rates, even as clients continue to redeploy sweep deposits. These results were partially offset by an increase in expenses as well as higher provisions for credit losses.

•~~Wealth Management attracted significant net new assets~~ago. The quarter included continued positive fee-based flows of ~~$110 billion during the quarter.~~$22.5 billion.

•Investment Management ~~results reflect~~ net revenues of $1.3 billion increased compared to a year ago on higher asset management revenues and AUM of $1.4 ~~trillion amid declines in asset values from a year ago.~~trillion.

Net Revenues

($ in millions)

Net Income Applicable to Morgan Stanley

($ in millions)

Earnings per Diluted Common Share

We reported net revenues of ~~$14.5~~$13.3 billion in the quarter ended ~~March 31,~~September 30, 2023 (“current quarter,” or ~~“1Q~~“3Q 2023”) compared with ~~$14.8~~$13.0 billion in the quarter ended ~~March 31,~~September 30, 2022 (“prior year quarter,” or ~~“1Q~~“3Q 2022”). For the current quarter, net income applicable to Morgan Stanley was ~~$3.0~~$2.4 billion, or ~~$1.70~~$1.38 per diluted common share, compared with ~~$3.7~~$2.6 billion, or ~~$2.02~~$1.47 per diluted common share in the prior year quarter.

We reported net revenues of $41.2 billion in the nine months ended September 30, 2023 (“current year period,” or “YTD 2023”) compared with $40.9 billion in the nine months ended September 30, 2022 (“prior year period,” or “YTD 2022”). For the current year period, net income applicable to Morgan Stanley was $7.6 billion, or $4.33 per diluted common share, compared with $8.8 billion, or $4.88 per diluted common share in the prior year period.


			25			~~March 2023 Form 10-Q~~


Table of Contents
Management’s Discussion and Analysis

Non-interest Expenses1

($ 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.~~ 4398046950162

•Compensation and benefits expenses of ~~$6,410~~$5,935 million in the current quarter increased 2%6% from the prior year quarter, primarily due to higher discretionary incentive compensation and higher formulaic payout to Wealth Management representatives, driven by higher compensable revenues.

Compensation and benefits expenses of $18,607 million in the current year period increased 7% from the prior year period, primarily due to higher expenses related to certain deferred cash-based compensation plans linked to investment performance ~~higher stock-based compensation expense driven by the Firm’s share price,~~(“DCP”) and higher salary expenses, ~~driven in part by the impact of higher headcount,~~ partially offset by lower discretionary incentive ~~compensation on lower revenues and a decrease in the formulaic payout to Wealth Management representatives driven by lower compensable revenues.~~compensation.

•Non-compensation expenses of ~~$4,113~~$4,059 million in the current quarter increased 6%3% from the prior year quarter, primarily ~~due to higher~~driven by increased spend on technology and higher occupancy expenses.

Non-compensation expenses of $12,394 million in the current year period increased 3% from the prior year period, primarily driven by increased spend on technology, higher occupancy expenses and higher marketing and business development costs, ~~and higher~~partially offset by a decrease in legal expenses.

Provision for Credit Losses

The Provision for credit losses on loans and lending commitments of ~~$234~~$134 million in the current quarter ~~was~~ primarily ~~related to a deterioration~~reflects deteriorating conditions in ~~both~~ the ~~macroeconomic outlook and our expectations of~~ commercial real estate ~~borrowers.~~sector, including provisions for certain specific loans, mainly in the office portfolio. The Provision for credit losses on loans and lending commitments in the prior year quarter was ~~$57~~$35 million, primarily driven by deterioration in the macroeconomic outlook.

The Provision for credit losses on loans and lending commitments of $529 million in the current year period was primarily related to deteriorating conditions in the commercial real estate sector, including provisions for certain specific loans, mainly in the office portfolio, ~~growth.~~and modest growth in certain other loan portfolios. The Provision for credit losses on loans and lending commitments in the prior year period was $193 million, primarily due to portfolio growth and deterioration in the macroeconomic outlook.

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

~~Income Taxes~~

The effective tax rate of 19.3% for the current quarter was substantially similar to the prior year quarter, both periods reflecting a benefit associated with employee share-based awards, which primarily settled in the first quarter of each year.


			6


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

•Institutional Securities net revenues of $6,797 million in the current quarter decreased 11% from the elevated levels in the prior year quarter, primarily reflecting lower results from Equity, Investment Banking and Fixed income, partially offset by higher other net revenues.

•Wealth Management net revenues of $6,559 million in the current quarter increased 11% from the prior year quarter, primarily reflecting gains on investments associated with certain employee deferred cash-based compensation plans compared with losses in the prior year quarter and higher Net interest revenues, partially offset by lower Asset management revenues driven by lower fee-based asset levels in the current quarter resulting from lower market levels, partially offset by the impact of positive fee-based flows.

•~~Investment Management net revenues of $1,289~~$5,669 million in the current quarter decreased 3% from the prior year quarter, ~~reflecting lower AUM~~primarily due to ~~the decline in asset values~~lower results from Investment banking and ~~cumulative outflows over the prior year,~~Fixed income, partially offset by higher ~~Performance-based income~~Other net revenues. Institutional Securities net revenues of $18,120 million in the current year period decreased 8% from the prior year period, primarily reflecting lower results across businesses, partially offset by higher Other net revenues.

•Wealth Management net revenues of $6,404 million in the current quarter increased 5% from the prior year quarter, primarily reflecting higher Asset management revenues. Wealth Management net revenues of $19,623 million in the current year period increased 10% from the prior year period, primarily reflecting higher Net interest revenues and ~~other revenues.~~gains on investments associated with certain employee deferred cash-based compensation plans (“DCP investments”) compared with losses in the prior year period.

•Investment Management net revenues of $1,336 million in the current quarter increased 14% from the prior year quarter, primarily reflecting higher Asset management and related fees. Investment Management net revenues of $3,906 million in the current year period were relatively unchanged from the prior year period.


~~March 2023 Form 10-Q~~			37


Table of Contents
Management’s Discussion and Analysis

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 2022 Form 10-K.

•Americas net revenues in the current quarter increased 3%2% from the prior year quarter, primarily driven by results within the Wealth Management business segment ~~partially offset by Equity results~~and Other net revenues within the Institutional Securities business segment, partially offset by lower Investment banking and Fixed income results. Americas net revenues in the current year period increased 4% from the prior year period, primarily driven by results within the Wealth Management business segment and Other net revenues within the Institutional Securities business segment, partially offset by lower results across businesses within the Institutional Securities business segment.

•EMEA net revenues ~~decreased 25%~~in the current quarter increased 6% from the prior year quarter, primarily driven by higher results from Equity, partially offset by lower results from Fixed ~~income, Investment banking and Equity~~income. EMEA net revenues in the current year period decreased 12% from the prior year period, primarily driven by lower results across businesses within the Institutional Securities business segment.

•Asia net revenues in the current quarter ~~continued to reflect the strong levels in~~increased 2% from the prior year ~~quarter.~~quarter, primarily driven by results within the Investment Management business segment, partially offset by lower results from Fixed income. Asia net revenues in the current year period decreased 5% from the prior year period, primarily driven by lower results across businesses within the Institutional Securities business segment, partially offset by higher results within the Investment Management business segment and higher Other net revenues within the Institutional Securities business segment.


			8


Table of Contents
Management’s Discussion and Analysis

Selected Financial Information and Other Statistical Data


		Three Months Ended March 31,						Three Months Ended September 30,					Nine Months Ended September 30,
$ in millions	$ in millions		2023			2022			$ in millions	2023			2022			2023			2022
Consolidated results	Consolidated results								Consolidated results
Net revenues	Net revenues		$	14,517		$	14,801		Net revenues	$	13,273		$	12,986		$	41,247		$	40,919
Earnings applicable to Morgan Stanley common shareholders	Earnings applicable to Morgan Stanley common shareholders		$	2,836		$	3,542		Earnings applicable to Morgan Stanley common shareholders	$	2,262		$	2,494		$	7,147		$	8,427
Earnings per diluted common share	Earnings per diluted common share		$	1.70		$	2.02		Earnings per diluted common share	$	1.38		$	1.47		$	4.33		$	4.88
Consolidated financial measures	Consolidated financial measures		Consolidated financial measures
Expense efficiency ratio1	Expense efficiency ratio1		72		%	69		%	Expense efficiency ratio1	75		%	74		%	75		%	72		%

ROE2	ROE2		12.4		%	14.7		%	ROE2	10.0		%	10.7		%	10.5		%	11.9		%

ROTCE2, 3	ROTCE2, 3		16.9		%	19.8		%	ROTCE2, 3	13.5		%	14.6		%	14.2		%	16.1		%

Pre-tax margin4	Pre-tax margin4		26		%	31		%	Pre-tax margin4	24		%	26		%	24		%	28		%
Effective tax rate	Effective tax rate		19.3		%	19.0		%	Effective tax rate	22.6		%	21.4		%	20.9		%	21.1		%
Pre-tax margin by segment4	Pre-tax margin by segment4		Pre-tax margin by segment4
Institutional Securities	Institutional Securities		28		%	36		%	Institutional Securities	21		%	28		%	22		%	30		%
Wealth Management	Wealth Management		26		%	27		%	Wealth Management	27		%	27		%	26		%	27		%

Investment Management	Investment Management		13		%	17		%	Investment Management	18		%	10		%	15		%	15		%


in millions, except per share and employee data	in millions, except per share and employee data	At March 31, 2023			At December 31, 2022			in millions, except per share and employee data	At September 30, 2023			At December 31, 2022
Average liquidity resources for three months ended5	Average liquidity resources for three months ended5	$	321,195		$	312,250		Average liquidity resources for three months ended5	$	307,367		$	312,250
Loans6	Loans6	$	222,727		$	222,182		Loans6	$	224,957		$	222,182
Total assets	Total assets	$	1,199,904		$	1,180,231		Total assets	$	1,169,013		$	1,180,231
Deposits	Deposits	$	347,523		$	356,646		Deposits	$	345,458		$	356,646
Borrowings	Borrowings	$	250,182		$	238,058		Borrowings	$	247,193		$	238,058
Common shareholders' equity	Common shareholders' equity	$	92,076		$	91,391		Common shareholders' equity	$	90,461		$	91,391
Tangible common shareholders’ equity3	Tangible common shareholders’ equity3	$	67,951		$	67,123		Tangible common shareholders’ equity3	$	66,561		$	67,123
Common shares outstanding	Common shares outstanding	1,670			1,675			Common shares outstanding	1,642			1,675
Book value per common share7	Book value per common share7	$	55.13		$	54.55		Book value per common share7	$	55.08		$	54.55
Tangible book value per common share3, 7	Tangible book value per common share3, 7	$	40.68		$	40.06		Tangible book value per common share3, 7	$	40.53		$	40.06
Worldwide employees (in thousands)	Worldwide employees (in thousands)	82			82			Worldwide employees (in thousands)	81			82
Client assets8 (in billions)	Client assets8 (in billions)	$	5,920		$	5,492		Client assets8 (in billions)	$	6,186		$	5,492
Capital Ratios9	Capital Ratios9							Capital Ratios9
Common Equity Tier 1 capital—Standardized	Common Equity Tier 1 capital—Standardized	15.1		%	15.3		%	Common Equity Tier 1 capital—Standardized	15.6		%	15.3		%
Tier 1 capital—Standardized	Tier 1 capital—Standardized	17.0		%	17.2		%	Tier 1 capital—Standardized	17.6		%	17.2		%
Common Equity Tier 1 capital—Advanced	Common Equity Tier 1 capital—Advanced	15.6		%	15.6		%	Common Equity Tier 1 capital—Advanced	16.1		%	15.6		%
Tier 1 capital—Advanced	Tier 1 capital—Advanced	17.5		%	17.6		%	Tier 1 capital—Advanced	18.2		%	17.6		%
Tier 1 leverage	Tier 1 leverage	6.7		%	6.7		%	Tier 1 leverage	6.8		%	6.7		%
SLR	SLR	5.5		%	5.5		%	SLR	5.5		%	5.5		%

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

2.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.

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

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.

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


			4			~~March 2023 Form 10-Q~~


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

Economic and Market Conditions

The ~~global economic and geopolitical~~market environment ~~continues to be~~in aggregate remained mixed, characterized by ~~elevated inflation, rising~~inflationary pressures and uncertainty regarding the future path of interest rates, ~~and volatility in global financial markets and deterioration in the macroeconomic outlook.~~which have remained persistently high. This environment has impacted our businesses, as discussed further in “Business Segments” herein, and, to the extent that it continues to ~~deteriorate,~~remain uncertain, could adversely impact client confidence and related activity. ~~In addition to~~

We are monitoring the ~~aforementioned conditions, certain financial institutions have recently come under significant stress. While the full impact of these events~~war and increased tensions in the ~~U.S. or global banking sector remains uncertain, they have not significantly impacted our results or~~Middle East and its impact on the regional economy, as well as on other world economies and the financial ~~condition.~~ markets. Our direct exposure to Israel is limited. Morgan Stanley has a small number of employees in Israel and we continue to support them.

For more information on economic and market conditions, and ~~their~~the potential effects of geopolitical events and acts of war or aggression on our future results, refer to “Risk Factors” and “Forward-Looking Statements” in the 2022 Form 10-K.

Following the recent failure of several financial institutions and resulting losses to the FDIC’s Deposit Insurance Fund (“DIF”) it is likely that the FDIC will assess certain financial institutions, including the Firm, for additional amounts to be provided to the DIF. While such special assessments have not been determined, they may impact our future operating results.

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 statements and other public disclosures. 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.

In the fourth quarter of 2022, we introduced new non-GAAP financial measures and have presented comparable prior year quarter amounts for the first time in the following table. These measures exclude the impact of mark-to-market gains and losses on investments associated with certain employee deferred cash-based compensation plans from net revenues and compensation expenses. These employee deferred cash-

based compensation plans are primarily reflected in our Wealth Management business segment. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Summary” in the 2022 Form 10-K.

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
March 31,
$ in millions, except per share data 2023 2022
Net revenues $ 14,517 $ 14,801
Adjustment for mark-to-market losses (gains) on certain employee deferred cash-based compensation plans1
(153) 441
Adjusted Net revenues—non-GAAP $ 14,364 $ 15,242
Compensation expense $ 6,410 $ 6,274
Adjustment for mark-to-market gains (losses) on certain employee deferred cash-based compensation plans1
(193) 288
Adjusted Compensation expense—non-GAAP $ 6,217 $ 6,562
Wealth Management Net revenues $ 6,559 $ 5,935
Adjustment for mark-to-market losses (gains) on certain employee deferred cash-based compensation plans1
(101) 296
Adjusted Wealth Management Net revenues—non-GAAP $ 6,458 $ 6,231
Wealth Management Compensation expense $ 3,477 $ 3,125
Adjustment for mark-to-market gains (losses) on certain employee deferred cash-based compensation plans1
(119) 200
Adjusted Wealth Management Compensation expense—non-GAAP $ 3,358 $ 3,325

$ in millions At
March 31,
2023 At
December 31,
2022
Tangible equity
Common shareholders’ equity $ 92,076 $ 91,391
Less: Goodwill and net intangible assets (24,125) (24,268)
Tangible common shareholders’ equity—non-GAAP $ 67,951 $ 67,123

Average Monthly Balance
Three Months Ended
March 31,
$ in millions 2023 2022
Tangible equity
Common shareholders’ equity $ 91,382 $ 96,667
Less: Goodwill and net intangible assets (24,198) (25,120)
Tangible common shareholders’ equity—non-GAAP $ 67,184 $ 71,547

Three Months Ended
March 31,


~~March 2023 Form 10-Q~~			59


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	2023		2022		2023		2022
Net revenues	$	13,273	$	12,986	$	41,247	$	40,919
Adjustment for mark-to-market losses (gains) on DCP1	202		236		(65)		1,392
Adjusted Net revenues—non-GAAP	$	13,475	$	13,222	$	41,182	$	42,311
Compensation expense	$	5,935	$	5,614	$	18,607	$	17,438
Adjustment for mark-to-market gains (losses) on DCP1	57		119		(314)		905
Adjusted Compensation expense—non-GAAP	$	5,992	$	5,733	$	18,293	$	18,343
Wealth Management Net revenues	$	6,404	$	6,120	$	19,623	$	17,791
Adjustment for mark-to-market losses (gains) on DCP1	143		153		(40)		964
Adjusted Wealth Management Net revenues—non-GAAP	$	6,547	$	6,273	$	19,583	$	18,755
Wealth Management Compensation expense	$	3,352	$	3,171	$	10,332	$	9,191
Adjustment for mark-to-market gains (losses) on DCP1	48		86		(178)		645
Adjusted Wealth Management Compensation expense—non-GAAP	$	3,400	$	3,257	$	10,154	$	9,836


$ in millions	At September 30, 2023		At December 31, 2022
Tangible equity
Common shareholders’ equity	$	90,461	$	91,391
Less: Goodwill and net intangible assets	(23,900)		(24,268)
Tangible common shareholders’ equity—non-GAAP	$	66,561	$	67,123


	Average Monthly Balance
	Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	2023		2022		2023		2022
Tangible equity
Common shareholders’ equity	$	90,788	$	92,905	$	91,142	$	94,654
Less: Goodwill and net intangible assets	(23,965)		(24,715)		(24,074)		(24,921)
Tangible common shareholders’ equity—non-GAAP	$	66,823	$	68,190	$	67,068	$	69,733

Non-GAAP Financial Measures by Business Segment


		Three Months Ended March 31,						Three Months Ended September 30,					Nine Months Ended September 30,
$ in billions	$ in billions		2023			2022			$ in billions	2023			2022			2023			2022
Average common equity2	Average common equity2					Average common equity2
Institutional Securities	Institutional Securities		$	45.6		$	48.8		Institutional Securities	$	45.6		$	48.8		$	45.6		$	48.8
Wealth Management	Wealth Management		28.8			31.0			Wealth Management	28.8			31.0			28.8			31.0
Investment Management	Investment Management		10.4			10.6			Investment Management	10.4			10.6			10.4			10.6
ROE3	ROE3								ROE3
Institutional Securities	Institutional Securities		12		%	17		%	Institutional Securities	7		%	10		%	8		%	12		%
Wealth Management	Wealth Management		19		%	16		%	Wealth Management	18		%	16		%	18		%	16		%
Investment Management	Investment Management		5		%	8		%	Investment Management	7		%	4		%	6		%	6		%
Average tangible common equity2	Average tangible common equity2					Average tangible common equity2
Institutional Securities	Institutional Securities		$	45.2		$	48.3		Institutional Securities	$	45.2		$	48.3		$	45.2		$	48.3
Wealth Management	Wealth Management		14.8			16.3			Wealth Management	14.8			16.3			14.8			16.3
Investment Management	Investment Management		0.7			0.8			Investment Management	0.7			0.8			0.7			0.8
ROTCE3	ROTCE3								ROTCE3
Institutional Securities	Institutional Securities		12		%	17		%	Institutional Securities	7		%	10		%	8		%	12		%
Wealth Management	Wealth Management		36		%	30		%	Wealth Management	35		%	30		%	35		%	30		%
Investment Management	Investment Management		73		%	106		%	Investment Management	98		%	56		%	80		%	87		%

1.Net revenues and compensation expense are adjusted for ~~certain employee deferred cash-based compensation plans~~DCP for both Firm and Wealth Management business segment. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Other Matters” in the 2022 Form 10-K for more information.

2.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 Company equity.

3.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

We have an ROTCE goal of over 20%. Our ROTCE goal is a forward-looking statement that is based on a normal market environment and may be materially affected by many factors. See “Risk Factors” and “Forward-Looking Statements” in the 2022 Form 10-K for further information on market and economic conditions and their potential effects on our future operating results. ROTCE represents a non-GAAP financial measure. For further information on non-GAAP measures, 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 19 to the financial statements for segment net revenues by income statement line item and information on intersegment transactions.

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 2022 Form 10-K.


			610			~~March 2023 Form 10-Q~~


Table of Contents
Management’s Discussion and Analysis

Institutional Securities

Income Statement Information



	Three Months Ended September 30,				% Change
$ in millions	2023		2022
Revenues
Advisory	$	449	$	693	(35)	%
Equity	237		218		9	%
Fixed income	252		366		(31)	%
Total Underwriting	489		584		(16)	%
Total Investment banking	938		1,277		(27)	%
Equity	2,507		2,459		2	%
Fixed income	1,947		2,181		(11)	%
Other	277		(100)		N/M
Net revenues	$	5,669	$	5,817	(3)	%
Provision for credit losses	93		24		N/M
Compensation and benefits	2,057		1,948		6	%
Non-compensation expenses	2,320		2,219		5	%
Total non-interest expenses	4,377		4,167		5	%
Income before provision for income taxes	1,199		1,626		(26)	%
Provision for income taxes	263		305		(14)	%
Net income	936		1,321		(29)	%
Net income applicable to noncontrolling interests	24		47		(49)	%
Net income applicable to Morgan Stanley	$	912	$	1,274	(28)	%


		Three Months Ended March 31,				% Change			Nine Months Ended September 30,				% Change
$ in millions	$ in millions	2023		2022				$ in millions	2023		2022
Revenues	Revenues							Revenues
Advisory	Advisory	$	638	$	944	(32)	%	Advisory	$	1,542	$	2,235	(31)	%
Equity	Equity	202		258		(22)	%	Equity	664		624		6	%
Fixed income	Fixed income	407		432		(6)	%	Fixed income	1,054		1,124		(6)	%
Total Underwriting	Total Underwriting	609		690		(12)	%	Total Underwriting	1,718		1,748		(2)	%
Total Investment banking	Total Investment banking	1,247		1,634		(24)	%	Total Investment banking	3,260		3,983		(18)	%
Equity	Equity	2,729		3,174		(14)	%	Equity	7,784		8,593		(9)	%
Fixed income	Fixed income	2,576		2,923		(12)	%	Fixed income	6,239		7,604		(18)	%
Other	Other	245		(74)		N/M		Other	837		(587)		N/M
Net revenues	Net revenues	$	6,797	$	7,657	(11)	%	Net revenues	$	18,120	$	19,593	(8)	%
Provision for credit losses	Provision for credit losses	189		44		N/M		Provision for credit losses	379		150		153	%
Compensation and benefits	Compensation and benefits	2,365		2,604		(9)	%	Compensation and benefits	6,637		6,602		1	%
Non-compensation expenses	Non-compensation expenses	2,351		2,222		6	%	Non-compensation expenses	7,036		6,874		2	%
Total non-interest expenses	Total non-interest expenses	4,716		4,826		(2)	%	Total non-interest expenses	13,673		13,476		1	%
Income before provision for income taxes	Income before provision for income taxes	1,892		2,787		(32)	%	Income before provision for income taxes	4,068		5,967		(32)	%
Provision for income taxes	Provision for income taxes	363		535		(32)	%	Provision for income taxes	802		1,235		(35)	%
Net income	Net income	1,529		2,252		(32)	%	Net income	3,266		4,732		(31)	%
Net income applicable to noncontrolling interests	Net income applicable to noncontrolling interests	51		61		(16)	%	Net income applicable to noncontrolling interests	117		146		(20)	%
Net income applicable to Morgan Stanley	Net income applicable to Morgan Stanley	$	1,478	$	2,191	(33)	%	Net income applicable to Morgan Stanley	$	3,149	$	4,586	(31)	%

Investment Banking

Investment Banking Volumes


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in billions	$ in billions		2023		2022			$ in billions	2023		2022		2023		2022
Completed mergers and acquisitions1	Completed mergers and acquisitions1		$	129	$	331		Completed mergers and acquisitions1	$	157	$	149	$	367	$	631
Equity and equity-related offerings2, 3	Equity and equity-related offerings2, 3		10		8			Equity and equity-related offerings2, 3	6		5		26		16
Fixed income offerings2, 4	Fixed income offerings2, 4		63		81			Fixed income offerings2, 4	47		53		184		187

Source: Refinitiv data as of ~~April 3,~~October 2, 2023. 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

Revenues of ~~$1,247~~$938 million in the current quarter decreased ~~24%~~27% from the prior year quarter, primarily reflecting lower advisory and fixed income underwriting revenues.

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

•Equity underwriting revenues increased on higher volumes, primarily in secondary offerings, partially offset by lower revenues from initial public offerings.

•Fixed income underwriting revenues decreased primarily due to lower event-driven non-investment grade loan issuances.

Revenues of $3,260 million in the current year period decreased 18% compared with the prior year ~~quarter,~~period, primarily reflecting lower advisory revenues.

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

•Equity underwriting revenues ~~decreased~~increased on higher volumes, primarily ~~due to~~in secondary offerings and convertible issuances, partially offset by lower revenues from initial public offerings.

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

Investment Banking continues to operate in a ~~global economic and geopolitical~~market environment characterized by ~~significantly~~ reduced completed M&A activity and underwriting activity amid ~~elevated inflation, rising~~inflationary pressures and uncertainty regarding the future path of interest rates, ~~and volatility in global financial markets~~ ~~and deterioration in the macroeconomic outlook and client confidence~~which have remained persistently high. T~~o the extent that the environment continues to deteriorate, it could adversely impact~~ ~~global announced M&A transactions and underwriting volumes, and as a result, continue to adversely impact our Investment Banking revenues.~~

See “Investment Banking Volumes” herein.


			11


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, 2023
					Net Interest2		All Other3
$ in millions	Trading		Fees1		Net Interest2		All Other3		Total
Financing	$	1,861	$	130	$	(857)	$	26	$	1,160
Execution services	803		534		(71)		81		1,347
Total Equity	$	2,664	$	664	$	(928)	$	107	$	2,507
Total Fixed Income	$	2,013	$	90	$	(258)	$	102	$	1,947



	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 March 31, 2023											Nine Months Ended September 30, 2023
						Net Interest2		All Other3									Net Interest2		All Other3
$ in millions	$ in millions	Trading		Fees1		Net Interest2		All Other3		Total		$ in millions	Trading		Fees1		Net Interest2		All Other3		Total
Financing	Financing	$	1,696	$	134	$	(541)	$	32	$	1,321	Financing	$	5,426	$	394	$	(2,016)	$	64	$	3,868
Execution services	Execution services	848		619		(59)		—		1,408		Execution services	2,308		1,695		(175)		88		3,916
Total Equity	Total Equity	$	2,544	$	753	$	(600)	$	32	$	2,729	Total Equity	$	7,734	$	2,089	$	(2,191)	$	152	$	7,784
Total Fixed Income	Total Fixed Income	$	2,478	$	109	$	(89)	$	78	$	2,576	Total Fixed Income	$	6,428	$	283	$	(821)	$	349	$	6,239


		Three Months Ended March 31, 2022											Nine Months Ended September 30, 2022
						Net Interest2		All Other3									Net Interest2		All Other3
$ in millions	$ in millions	Trading		Fees1		Net Interest2		All Other3		Total		$ in millions	Trading		Fees1		Net Interest2		All Other3		Total
Financing	Financing	$	1,251	$	132	$	87	$	4	$	1,474	Financing	$	3,914	$	404	$	46	$	7	$	4,371
Execution services	Execution services	924		693		(34)		117		1,700		Execution services	2,371		1,887		(22)		(14)		4,222
Total Equity	Total Equity	$	2,175	$	825	$	53	$	121	$	3,174	Total Equity	$	6,285	$	2,291	$	24	$	(7)	$	8,593
Total Fixed Income	Total Fixed Income	$	2,258	$	97	$	508	$	60	$	2,923	Total Fixed Income	$	6,263	$	264	$	1,046	$	31	$	7,604

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.

Equity

Net revenues of ~~$2,729~~$2,507 million in the current quarter ~~decreased 14%~~increased 2% compared with the prior year quarter, primarily reflecting an increase in execution services, partially offset by a decrease in ~~execution services and~~ financing.

•Financing revenues decreased primarily due to lower ~~average~~spreads driven by changes in the client ~~balances reflective~~balance mix and higher funding costs.

•Execution services revenues increased primarily due to mark-to-market gains on business-related investments compared with losses in the prior year quarter and higher gains on inventory held to facilitate client activity in derivatives.

Net revenues of ~~market declines.~~$7,784 million in the current year period decreased 9% compared with the prior year period, primarily reflecting decreases in financing and execution services.

•Financing revenues decreased primarily due to lower spreads driven by changes in the client balance mix and higher funding costs.

•Execution services revenues decreased primarily due to lower gains ~~from the impact of market conditions~~ on inventory held to facilitate client activity and lower client activity ~~across products~~in derivatives and cash equities, partially offset by mark-to-market gains on business-related investments compared towith losses in the prior year ~~quarter.~~period.

Fixed Income

Net revenues of ~~$2,576~~$1,947 million in the current quarter decreased ~~12%~~11% from the prior year quarter reflecting a decrease in rates and foreign exchange products, partially offset by increases in commodities and securitized products.

•Global macro products revenues decreased primarily due to a decline in rates and foreign exchange products.

•Credit products revenues increased primarily due to an increase in agency and non-agency trading within securitized products, partially offset by municipal securities products.

•Commodities products and other fixed income revenues increased primarily due to higher gains on inventory held to facilitate client activity.

Net revenues of $6,239 million in the current year period decreased 18% compared with the prior year ~~quarter, primarily~~period, reflecting a decrease in foreign exchange products and ~~commodities, partially offset by increases in rates and credit products.~~commodities.

•Global macro products revenues decreased primarily due to a decline in foreign exchange products.

•Credit products ~~partially offset by an increase~~revenues were relatively unchanged from ~~market conditions~~the prior year period.

•Commodities products and other fixed income revenues decreased compared to elevated results in the prior year period, primarily due to lower gains on inventory ~~held~~and lower client activity.

Other Net Revenues

Other net revenues were $277 million in the current quarter, compared with losses of $100 million in the prior year quarter, primarily due to lower mark-to-market losses, inclusive of hedges and higher net interest income and fees on corporate loans.


~~March 2023 Form 10-Q~~			712


Table of Contents
Management’s Discussion and Analysis

~~facilitate client activity in rates products reflective of interest rate volatility across regions.~~

•Credit products revenues increased, supported by client engagement, reflecting the impact of market conditions on inventory held to facilitate client activity in corporate credit products and municipal securities.

•Commodities products and other fixed income revenues decreased compared to elevated results in the prior year quarter, primarily due to lower gains from the impact of market conditions on inventory held to facilitate client activity and lower client activity in Commodities.

~~Other Net Revenues~~

Other net revenues ~~reflected a gain of $245~~were $837 million in the current ~~quarter~~year period, compared with ~~a loss~~losses of ~~$74~~$587 million in the prior year ~~quarter,~~period, primarily due to lower mark-to-market losses, inclusive of hedges and higher net interest income on corporate loans as well as mark-to-market gains compared with losses in the prior year ~~quarter~~period on investments associated with certain employee deferred cash-based compensation plans, higher net interest income on corporate loans, and lower mark-to-market losses on corporate loans inclusive of hedges.DCP investments.

Provision for Credit Losses

The Provision for credit losses on loans and lending commitments of ~~$189~~$93 million in the current quarter was primarily ~~related to a deterioration~~driven by deteriorating conditions in ~~both~~ the ~~macroeconomic outlook and our expectations of~~ commercial real estate ~~borrowers.~~sector, including provisions for certain specific loans, mainly in the office portfolio. The Provision for credit losses on loans and lending commitments was ~~$44~~$24 million in the prior year quarter, primarily driven by deterioration in the macroeconomic outlook.

The Provision for credit losses on loans and lending commitments of $379 million in the current year period was primarily related to deteriorating conditions in the commercial real estate sector, including provisions for certain specific loans, mainly in the office portfolio, ~~growth.~~and modest growth in certain other loan portfolios. The Provision for credit losses on loans and lending commitments was $150 million in the prior year period driven by portfolio growth and deterioration in the macroeconomic outlook.

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

Non-interest Expenses

Non-interest expenses of ~~$4,716~~$4,377 million in the current quarter ~~decreased 2%~~increased 5% compared with the prior year quarter ~~primarily~~ due to ~~lower~~ higher Compensation and benefits and Non-compensation expenses.

•Compensation and benefits expenses increased primarily due to higher discretionary incentive compensation, partially offset by lower expenses related to outstanding deferred compensation.

•Non-compensation expenses increased primarily due to increased spend on technology, higher execution-related expenses and higher professional services expenses.

Non-interest expenses of $13,673 million in the current year period increased 1% compared with the prior year period, primarily due to higher Non-compensation expenses.

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

•Non-compensation expenses increased ~~in the current quarter,~~ primarily due to ~~an increase in legal~~higher execution-related expenses, ~~and higher~~increased spend on technology, marketing and business development ~~costs.~~and professional services, partially offset by a decrease in legal expenses.


			813			~~March 2023 Form 10-Q~~


Table of Contents
Management’s Discussion and Analysis

Wealth Management

Income Statement Information


		Three Months Ended March 31,				% Change			Three Months Ended September 30,				% Change
$ in millions	$ in millions	2023		2022				$ in millions	2023		2022
Revenues	Revenues							Revenues
Asset management	Asset management	$	3,382	$	3,626	(7)	%	Asset management	$	3,629	$	3,389	7	%
Transactional1	Transactional1	921		635		45	%	Transactional1	678		616		10	%
Net interest	Net interest	2,158		1,540		40	%	Net interest	1,952		2,004		(3)	%
Other1	Other1	98		134		(27)	%	Other1	145		111		31	%
Net revenues	Net revenues	6,559		5,935		11	%	Net revenues	6,404		6,120		5	%
Provision for credit losses	Provision for credit losses	45		13		N/M		Provision for credit losses	41		11		N/M
Compensation and benefits	Compensation and benefits	3,477		3,125		11	%	Compensation and benefits	3,352		3,171		6	%
Non-compensation expenses	Non-compensation expenses	1,325		1,224		8	%	Non-compensation expenses	1,302		1,289		1	%
Total non-interest expenses	Total non-interest expenses	4,802		4,349		10	%	Total non-interest expenses	4,654		4,460		4	%
Income before provision for income taxes	Income before provision for income taxes	$	1,712	$	1,573	9	%	Income before provision for income taxes	$	1,709	$	1,649	4	%
Provision for income taxes	Provision for income taxes	336		301		12	%	Provision for income taxes	389		396		(2)	%
Net income applicable to Morgan Stanley	Net income applicable to Morgan Stanley	$	1,376	$	1,272	8	%	Net income applicable to Morgan Stanley	$	1,320	$	1,253	5	%



	Nine Months Ended September 30,				% Change
$ in millions	2023		2022
Revenues
Asset management	$	10,463	$	10,525	(1)	%
Transactional1	2,468		1,542		60	%
Net interest	6,266		5,291		18	%
Other1	426		433		(2)	%
Net revenues	19,623		17,791		10	%
Provision for credit losses	150		43		N/M
Compensation and benefits	10,332		9,191		12	%
Non-compensation expenses	4,039		3,814		6	%
Total non-interest expenses	14,371		13,005		11	%
Income before provision for income taxes	$	5,102	$	4,743	8	%
Provision for income taxes	1,098		1,028		7	%
Net income applicable to Morgan Stanley	$	4,004	$	3,715	8	%

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

Wealth Management Metrics


$ in billions	$ in billions	At March 31, 2023		At December 31, 2022		$ in billions	At September 30, 2023		At December 31, 2022
Total client assets1	Total client assets1	$	4,558	$	4,187	Total client assets1	$	4,798	$	4,187
U.S. Bank Subsidiary loans	U.S. Bank Subsidiary loans	$	144	$	146	U.S. Bank Subsidiary loans	$	146	$	146
Margin and other lending2	Margin and other lending2	$	21	$	22	Margin and other lending2	$	23	$	22
Deposits3	Deposits3	$	341	$	351	Deposits3	$	340	$	351
Annualized weighted average cost of deposits4	Annualized weighted average cost of deposits4					Annualized weighted average cost of deposits4
Period end	Period end	2.05%		1.59%		Period end	2.86%		1.59%
Period average for three months ended	Period average for three months ended	1.86%		1.32%		Period average for three months ended	2.69%		1.32%

Three Months Ended
March 31,
2023 2022
Net new assets5
$ 109.6 $ 142.0


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net new assets5	$	35.7	$	64.8	$	234.8	$	259.7

1.Client assets represent those for which Wealth Management is providing services including financial advisor-led brokerage, custody, administrative and investment advisory services; self-directed brokerage and investment advisory services; financial and wealth planning services; workplace services, including stock plan administration, and retirement plan services. See “Advisor-led Channel” and “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.

3.Deposits reflect liabilities 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 ~~$2 billion and~~ $6 billion of off-balance sheet deposits as of ~~March 31, 2023 and~~ December 31, 2022 ~~respectively.~~and none as of September 30, 2023.

4.Annualized weighted average represents the total annualized weighted average cost of the various deposit products, excluding the effect of related hedging derivatives. The period end cost of deposits is based upon balances and rates as of ~~March 31,~~September 30, 2023 and December 31, 2022. The period average is based on daily balances and rates for the period.

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

Advisor-led Channel


$ in billions	$ in billions	At March 31, 2023		At December 31, 2022		$ in billions	At September 30, 2023		At December 31, 2022
Advisor-led client assets1	Advisor-led client assets1	$	3,582	$	3,392	Advisor-led client assets1	$	3,755	$	3,392
Fee-based client assets2	Fee-based client assets2	$	1,769	$	1,678	Fee-based client assets2	$	1,857	$	1,678
Fee-based client assets as a percentage of advisor-led client assets	Fee-based client assets as a percentage of advisor-led client assets	49%		49%		Fee-based client assets as a percentage of advisor-led client assets	49%		49%

Three Months Ended
March 31,
2023 2022
Fee-based asset flows3
$ 22.4 $ 97.2


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Fee-based asset flows3	$	22.5	$	16.7	$	67.6	$	142.4

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 2022 Form 10-K.


			14


Table of Contents
Management’s Discussion and Analysis

Self-directed Channel


$ in billions	$ in billions	At March 31, 2023		At December 31, 2022		$ in billions	At September 30, 2023		At December 31, 2022
Self-directed assets1		$	976	$	795
Self-directed client assets1						Self-directed client assets1	$	1,043	$	795
Self-directed households (in millions)2	Self-directed households (in millions)2	8.1		8.0		Self-directed households (in millions)2	8.1		8.0

Three Months Ended
March 31,
2023 2022
Daily average revenue trades (“DARTs”) (in thousands)3
831 1,016


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Daily average revenue trades (“DARTs”) (in thousands)3	735	805	777	900

1.Self-directed client assets represent active accounts which are not advisor led. Active accounts are defined as having at least $25 in assets.

2.Self-directed households represent the total number of households that include at least one active account with self-directed assets. Individual households or participants that are engaged in one or more of our Wealth Management channels 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.

Workplace Channel1


$ in billions	$ in billions	At March 31, 2023		At December 31, 2022		$ in billions	At September 30, 2023		At December 31, 2022
Stock plan unvested assets2	Stock plan unvested assets2	$	358	$	302	Stock plan unvested assets2	$	377	$	302
Stock plan participants (in millions)3	Stock plan participants (in millions)3	6.5		6.3		Stock plan participants (in millions)3	6.6		6.3

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

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

3.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 ~~$3,382~~$3,629 million in the current quarter ~~decreased~~increased 7% when compared with the prior year quarter, primarily ~~due to lower~~reflecting higher average fee-based asset levels in the current quarter ~~resulting from~~due to higher market levels and the cumulative impact of positive fee-based flows.

Asset management revenues of $10,463 million in the current year period decreased 1% when compared with the prior year period, primarily reflecting lower ~~market~~average fee-based asset levels due to declines in the markets, partially offset by the cumulative impact of positive fee-based flows.

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

Transactional Revenues

Transactional revenues of ~~$921~~$678 million in the current quarter increased ~~45% compared with~~by $62 million from the prior year quarter,


~~March 2023 Form 10-Q~~			9


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

primarily due to increased client activity in alternative products.

In the current year period, transactional revenues of $2,468 million increased by $926 million from the prior year period, primarily driven by gains on DCP investments ~~associated with certain employee deferred cash-based compensation plans~~ compared with losses in the prior year ~~quarter,~~period, partially offset by ~~fewer new issuances and reduced~~lower client activity.

For further information on the impact of ~~investments associated with certain employee deferred cash-based compensation plans,~~DCP, see “Selected Non-GAAP Financial Information” herein.

Net Interest

Net interest revenues of ~~$2,158~~$1,952 million in the current quarter ~~increased 40%~~decreased 3% when compared with the prior year quarter, primarily due to the net effect of lower brokerage sweep deposits as client preferences continue to evolve, partially offset by the impact of higher interest rates.

Net interest revenues of $6,266 million in the current year period increased 18% when compared with the prior year period, primarily due to the net effect of higher interest rates, partially offset by the impact of ~~a reduction in~~lower brokerage sweep ~~deposits in excess of our expectations.~~deposits.

The level and pace of interest rate changes and other macroeconomic factors ~~continue~~continued to impact ~~client demand for loans,~~ client preferences for cash allocation to ~~other~~higher-yielding products and the pace of reallocation of client balances, resulting in changes in the deposit mix and associated interest ~~expense.~~expense, as well as client demand for loans. If these trends persist, net interest income may continue to be impacted in future periods.

Provision for Credit Losses

The Provision for credit losses on loans and lending commitments of ~~$45~~$41 million in the current quarter ~~was~~ primarily ~~driven by deterioration~~reflects deteriorating conditions in the ~~macroeconomic outlook.~~commercial real estate sector, including provisions for certain specific loans, mainly in the office portfolio. The Provision for credit losses on loans and lending commitments was ~~$13~~$11 million in the prior year quarter, primarily driven by the commercial real estate portfolio.

In the current year period, the Provision for credit losses on loans and lending commitments of $150 million was primarily related to deteriorating conditions in the commercial real estate sector, including provisions for certain specific loans, mainly in the office portfolio. The Provision for credit losses on loans and lending commitments was $43 million in the prior year period, primarily driven by deterioration in the macroeconomic outlook and portfolio ~~growth.~~growth in Residential real estate loans.

Non-interest Expenses

Non-interest expenses of ~~$4,802~~$4,654 million in the current quarter increased ~~10%~~4% compared with the prior year quarter, as a result of higher Compensation and benefits expenses.

•Compensation and benefits expenses increased in the current quarter primarily due to higher expenses in the formulaic payout to Wealth Management representatives driven by higher compensable revenues, higher salaries and higher expenses related to DCP.

•Non-compensation expenses were relatively unchanged compared with the prior year quarter.


			15


Table of Contents
Management’s Discussion and Analysis

In the current year period, Non-interest expenses increased 11% to $14,371 million compared with the prior year period, as a result of higher Compensation and benefits expenses and higher Non-compensation expenses.

•Compensation and benefits expenses increased in the current ~~quarter~~year period primarily due to higher expenses related to ~~certain deferred cash-based compensation plans linked to investment performance~~DCP, higher salaries and severance costs associated with the ~~impact of higher headcount, partially offset by a decrease~~employee action in the ~~formulaic payout to Wealth Management representatives~~second quarter.

•Non-compensation expenses increased in the current year period primarily driven by ~~lower compensable revenues.~~increased spend on technology, professional services and occupancy.

For further information on the impact of expenses related to ~~certain employee deferred cash-based compensation plans linked to investment performance,~~DCP, see “Selected Non-GAAP Financial Information” herein.

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

Fee-Based Client Assets Rollforwards



$ in billions	At June 30, 2023		Inflows		Outflows		Market Impact		At September 30, 2023
Separately managed1	$	556	$	15	$	(7)	$	14	$	578
Unified managed	456		29		(19)		(17)		449
Advisor	182		7		(9)		(5)		175
Portfolio manager	607		27		(21)		(16)		597
Subtotal	$	1,801	$	78	$	(56)	$	(24)	$	1,799
Cash management	55		16		(13)		—		58
Total fee-based client assets	$	1,856	$	94	$	(69)	$	(24)	$	1,857



$ in billions	At June 30, 2022		Inflows		Outflows		Market Impact		At September 30, 2022
Separately managed1	$	556	$	14	$	(6)	$	(53)	$	511
Unified managed	396		18		(12)		(23)		379
Advisor	172		7		(9)		(7)		163
Portfolio manager	546		22		(18)		(24)		526
Subtotal	$	1,670	$	61	$	(45)	$	(107)	$	1,579
Cash management	47		10		(8)		—		49
Total fee-based client assets	$	1,717	$	71	$	(53)	$	(107)	$	1,628


$ in billions	$ in billions	At December 31, 2022		Inflows		Outflows		Market Impact		At March 31, 2023		$ in billions	At December 31, 2022		Inflows		Outflows		Market Impact		At September 30, 2023
Separately managed1	Separately managed1	$	501	$	16	$	(7)	$	18	$	528	Separately managed1	$	501	$	40	$	(18)	$	55	$	578
Unified managed	Unified managed	408		21		(14)		17		432		Unified managed	408		70		(43)		14		449
Advisor	Advisor	167		9		(9)		9		176		Advisor	167		22		(25)		11		175
Portfolio manager	Portfolio manager	552		26		(20)		20		578		Portfolio manager	552		74		(53)		24		597
Subtotal	Subtotal	$	1,628	$	72	$	(50)	$	64	$	1,714	Subtotal	$	1,628	$	206	$	(139)	$	104	$	1,799
Cash management	Cash management	50		20		(15)		—		55		Cash management	50		48		(40)		—		58
Total fee-based client assets	Total fee-based client assets	$	1,678	$	92	$	(65)	$	64	$	1,769	Total fee-based client assets	$	1,678	$	254	$	(179)	$	104	$	1,857


$ in billions	$ in billions	At December 31, 2021		Inflows2		Outflows		Market Impact		At March 31, 2022		$ in billions	At December 31, 2021		Inflows2		Outflows		Market Impact		At September 30, 2022
Separately managed1	Separately managed1	$	479	$	87	$	(8)	$	7	$	565	Separately managed1	$	479	$	126	$	(19)	$	(75)	$	511
Unified managed	Unified managed	467		25		(14)		(31)		447		Unified managed	467		58		(37)		(109)		379
Advisor	Advisor	211		9		(11)		(10)		199		Advisor	211		22		(27)		(43)		163
Portfolio manager	Portfolio manager	636		30		(21)		(30)		615		Portfolio manager	636		71		(52)		(129)		526
Subtotal	Subtotal	$	1,793	$	151	$	(54)	$	(64)	$	1,826	Subtotal	$	1,793	$	277	$	(135)	$	(356)	$	1,579
Cash management	Cash management	46		9		(8)		—		47		Cash management	46		28		(25)		—		49
Total fee-based client assets	Total fee-based client assets	$	1,839	$	160	$	(62)	$	(64)	$	1,873	Total fee-based client assets	$	1,839	$	305	$	(160)	$	(356)	$	1,628

1.Includes non-custody account values ~~reflecting prior quarter-end balances due to~~based on asset values reported on a quarter 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 first quarter of 2022, reflected in Separately managed.

Average Fee Rates1


		Three Months Ended March 31,			Three Months Ended September 30,			Nine Months Ended September 30,
Fee rate in bps	Fee rate in bps		2023	2022		Fee rate in bps	2023	2022	2023	2022
Separately managed	Separately managed		13	13		Separately managed	12	11	13	12
Unified managed	Unified managed		93	94		Unified managed	92	94	92	94
Advisor	Advisor		80	81		Advisor	79	80	80	81
Portfolio manager	Portfolio manager		91	92		Portfolio manager	90	91	91	92
Subtotal	Subtotal		66	68		Subtotal	65	65	66	66
Cash management	Cash management		6	6		Cash management	6	6	6	6
Total fee-based client assets	Total fee-based client assets		65	67		Total fee-based client assets	64	63	64	65

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 2022 Form 10-K.


			1016			~~March 2023 Form 10-Q~~


Table of Contents
Management’s Discussion and Analysis

Investment Management

Income Statement Information



	Three Months Ended September 30,				% Change
$ in millions	2023		2022
Revenues
Asset management and related fees	$	1,312	$	1,269	3	%
Performance-based income and other1	24		(101)		124	%
Net revenues	1,336		1,168		14	%
Compensation and benefits	526		495		6	%
Non-compensation expenses	569		557		2	%
Total non-interest expenses	1,095		1,052		4	%
Income before provision for income taxes	241		116		108	%
Provision for income taxes	59		26		127	%
Net income	182		90		102	%
Net income (loss) applicable to noncontrolling interests	3		(17)		118	%
Net income applicable to Morgan Stanley	$	179	$	107	67	%


		Three Months Ended March 31,				% Change			Nine Months Ended September 30,				% Change
$ in millions	$ in millions	2023		2022				$ in millions	2023		2022
Revenues	Revenues							Revenues
Asset management and related fees	Asset management and related fees	$	1,248	$	1,388	(10)	%	Asset management and related fees	$	3,828	$	3,961	(3)	%
Performance-based income and other1	Performance-based income and other1	41		(53)		177	%	Performance-based income and other1	78		(47)		N/M
Net revenues	Net revenues	1,289		1,335		(3)	%	Net revenues	3,906		3,914		—	%
Compensation and benefits	Compensation and benefits	568		545		4	%	Compensation and benefits	1,638		1,645		—	%
Non-compensation expenses	Non-compensation expenses	555		562		(1)	%	Non-compensation expenses	1,691		1,676		1	%
Total non-interest expenses	Total non-interest expenses	1,123		1,107		1	%	Total non-interest expenses	3,329		3,321		—	%
Income before provision for income taxes	Income before provision for income taxes	166		228		(27)	%	Income before provision for income taxes	577		593		(3)	%
Provision for income taxes	Provision for income taxes	30		37		(19)	%	Provision for income taxes	135		121		12	%
Net income	Net income	136		191		(29)	%	Net income	442		472		(6)	%
Net income (loss) applicable to noncontrolling interests	Net income (loss) applicable to noncontrolling interests	2		(12)		117	%	Net income (loss) applicable to noncontrolling interests	2		(26)		108	%
Net income applicable to Morgan Stanley	Net income applicable to Morgan Stanley	$	134	$	203	(34)	%	Net income applicable to Morgan Stanley	$	440	$	498	(12)	%

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

Net Revenues

Asset Management and Related Fees

Asset management and related fees of ~~$1,248~~$1,312 million in the current quarter ~~decreased 10%~~increased 3% from the prior year quarter, primarily driven by higher average AUM due to the increase in asset values from the prior year quarter.

Asset management and related fees of $3,828 million in the current year period decreased 3% from the prior year period primarily due to lower average AUM driven by the decline in asset values and the cumulative effect of net outflows in Long-Term AUM.

Asset management revenues are influenced by the level, ~~and~~ relative mix of AUM and related fee rates. The market environment in recent quarters has led to a decline in asset prices, which in turn, negatively impacted our average Long-Term AUM level across asset classes. To the extent the market condition deteriorates further, or we continue to see net outflows of Long-Term AUM, we would expect our Asset management revenue to continue to be negatively impacted.

See “Assets under Management or Supervision” herein.

Performance-based Income and Other

Performance-based income and other revenues were ~~a gain of $41~~$24 million in the current quarter, ~~representing an increase from~~compared with losses of $101 million in the prior year quarter, primarily due to higher accrued carried interest and investment gains onin certain private equity funds.

Performance-based income and other revenues of $78 million in the current year period increased, primarily due to DCP investments ~~associated with certain employee deferred cash-based compensation plans~~ and ~~mark-to-market gains on~~ public investments, ~~compared with losses in the prior year quarter,~~ partially offset by ~~lower accrued~~reduced carried ~~interest.~~interest in infrastructure funds.

Non-interest Expenses

Non-interest expenses of ~~$1,123~~$1,095 million in the current quarter increased 1%4% from the prior year quarter, primarily due to higher Compensation and ~~benefits.~~benefits expenses.

•Compensation and benefits expenses increased in the current quarter primarily due to higher expenses related to ~~certain deferred cash-based compensation plans linked to investment performance, partially offset by lower~~ compensation associated with carried interest.

•Non-compensation expenses increased primarily as a result of higher fee sharing paid to intermediaries on higher average AUM.

Non-interest expenses of $3,329 million in the current year period, remained relatively unchanged from the prior year period.

•Compensation and benefits expenses were relatively ~~unchanged.~~unchanged for the current year period as a result of lower expenses related to compensation associated with carried interest, offset by higher expenses related to DCP.

~~Assets under Management or Supervision Rollforwards~~•Non-compensation expenses were relatively unchanged for the current year period.

Table of Contents

Management’s Discussion and Analysis

$ in billions Equity Fixed Income Alternatives and Solutions Long-Term AUM Subtotal Liquidity and Overlay Services Total
December 31, 2022 $ 259 $ 173 $ 431 $ 863 $ 442 $ 1,305
Inflows 10 16 18 44 585 629
Outflows (12) (17) (16) (45) (568) (613)
Market Impact 21 4 15 40 6 46
Other (1) (1) — (2) (3) (5)
March 31, 2023 $ 277 $ 175 $ 448 $ 900 $ 462 $ 1,362
$ in billions Equity Fixed Income Alternatives and Solutions Long-Term AUM Subtotal Liquidity and Overlay Services Total
December 31, 2021 $ 395 $ 207 $ 466 $ 1,068 $ 497 $ 1,565
Inflows 19 19 27 65 494 559
Outflows (26) (22) (29) (77) (523) (600)
Market Impact (48) (7) (14) (69) (2) (71)
Other (3) (2) (1) (6) — (6)
March 31, 2022 $ 337 $ 195 $ 449 $ 981 $ 466 $ 1,447

Assets under Management or Supervision Rollforwards



$ in billions	Equity		Fixed Income		Alternatives and Solutions		Long-Term AUM Subtotal		Liquidity and Overlay Services		Total
June 30, 2023	$	289	$	165	$	482	$	936	$	476	$	1,412
Inflows	9		14		31		54		553		607
Outflows	(15)		(15)		(29)		(59)		(543)		(602)
Market Impact	(11)		(1)		(10)		(22)		—		(22)
Other	—		—		(2)		(2)		(5)		(7)
September 30, 2023	$	272	$	163	$	472	$	907	$	481	$	1,388



$ 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	Equity		Fixed Income1		Alternatives and Solutions1		Long-Term AUM Subtotal		Liquidity and Overlay Services		Total
December 31, 2022	$	259	$	173	$	431	$	863	$	442	$	1,305
Inflows	29		42		79		150		1,713		1,863
Outflows	(42)		(48)		(63)		(153)		(1,673)		(1,826)
Market Impact	30		4		22		56		10		66
Other1	(4)		(8)		3		(9)		(11)		(20)
September 30, 2023	$	272	$	163	$	472	$	907	$	481	$	1,388


$ in billions	Equity		Fixed Income		Alternatives and Solutions		Long-Term AUM Subtotal		Liquidity and Overlay Services		Total
December 31, 2021	$	395	$	207	$	466	$	1,068	$	497	$	1,565
Inflows	42		50		74		166		1,675		1,841
Outflows	(60)		(59)		(60)		(179)		(1,702)		(1,881)
Market Impact	(117)		(19)		(67)		(203)		(11)		(214)
Other	(11)		(8)		(8)		(27)		(5)		(32)
September 30, 2022	$	249	$	171	$	405	$	825	$	454	$	1,279

1.In the second quarter of the current year, our Retail Municipal and Corporate Fixed Income business (“FIMS”) was combined with our Parametric retail customized solutions business. The impact of the change was a $6 billion movement in AUM from Fixed Income to the Alternatives and Solutions asset class included in Other.

Average AUM


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in billions	$ in billions		2023		2022			$ in billions	2023		2022		2023		2022
Equity	Equity		$	271	$	355		Equity	$	287	$	269	$	278	$	308
Fixed income	Fixed income		175		201			Fixed income	166		179		171		190
Alternatives and Solutions	Alternatives and Solutions		441		454			Alternatives and Solutions	482		420		460		436
Long-term AUM subtotal	Long-term AUM subtotal		887		1010			Long-term AUM subtotal	935		868		909		934
Liquidity and Overlay Services	Liquidity and Overlay Services		442		476			Liquidity and Overlay Services	478		466		461		469
Total AUM	Total AUM		$	1,329	$	1,486		Total AUM	$	1,413	$	1,334	$	1,370	$	1,403

Average Fee Rates1


		Three Months Ended March 31,		Three Months Ended September 30,			Nine Months Ended September 30,
Fee rate in bps	Fee rate in bps	2023	2022		Fee rate in bps	2023	2022	2023	2022
Equity	Equity	72	70		Equity	72	71	72	70
Fixed income	Fixed income	35	36		Fixed income	36	34	35	36
Alternatives and Solutions	Alternatives and Solutions	33	35		Alternatives and Solutions	30	34	32	34
Long-term AUM	Long-term AUM	45	48		Long-term AUM	44	46	45	46
Liquidity and Overlay Services	Liquidity and Overlay Services	13	7		Liquidity and Overlay Services	12	13	13	11
Total AUM	Total AUM	35	35		Total AUM	33	34	34	35

1.Based on Asset management revenues, net of waivers, excluding performance-based fees and other non-management fees. For certain non-U.S. funds, it includes the portion of advisory fees that the advisor collects on behalf of third-party distributors. The payment of those fees to the distributor is included in Non-compensation expenses in the income statement.

For a description of the asset classes and rollforward items in the previous tables, see “Management’s Discussion and


~~March 2023 Form 10-Q~~			11


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

Analysis of Financial Condition and Results of Operations—Business Segments—Investment Management—Assets Under Management or Supervision” in the 2022 Form 10-K.


			1218			~~March 2023 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”) (together, “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 in the U.S. Bank Subsidiaries from the Institutional Securities business segment primarily includes Secured lending facilities, ~~and~~ Commercial real estate and Corporate loans. Lending activity 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.”~~Risk” herein. For a further discussion about loans and lending commitments, see Notes 9 and 13 to the financial statements.

U.S. Bank Subsidiaries’ Supplemental Financial Information1


$ in billions	$ in billions	At March 31, 2023		At December 31, 2022		$ in billions	At September 30, 2023		At December 31, 2022
Investment securities portfolio:	Investment securities portfolio:					Investment securities portfolio:
Investment securities—AFS	Investment securities—AFS	$	67.6	$	66.9	Investment securities—AFS	$	60.8	$	66.9
Investment securities—HTM	Investment securities—HTM	55.7		56.4		Investment securities—HTM	54.0		56.4
Total investment securities	Total investment securities	$	123.3	$	123.3	Total investment securities	$	114.8	$	123.3
Wealth Management Loans2	Wealth Management Loans2					Wealth Management Loans2
Residential real estate	Residential real estate	$	55.3	$	54.4	Residential real estate	$	58.9	$	54.4
Securities-based lending and Other3	Securities-based lending and Other3	88.4		91.7		Securities-based lending and Other3	86.9		91.7
Total, net of ACL	Total, net of ACL	$	143.7	$	146.1	Total, net of ACL	$	145.8	$	146.1
Institutional Securities Loans2	Institutional Securities Loans2					Institutional Securities Loans2
Corporate	Corporate	$	8.3	$	6.9	Corporate	$	8.8	$	6.9
Secured lending facilities	Secured lending facilities	38.3		37.1		Secured lending facilities	39.6		37.1
Commercial and Residential real estate	Commercial and Residential real estate	10.5		10.2		Commercial and Residential real estate	10.8		10.2
Securities-based lending and Other	Securities-based lending and Other	6.0		6.0		Securities-based lending and Other	4.1		6.0
Total, net of ACL	Total, net of ACL	$	63.1	$	60.2	Total, net of ACL	$	63.3	$	60.2
Total Assets	Total Assets	$	384.8	$	391.0	Total Assets	$	388.1	$	391.0
Deposits4	Deposits4	$	340.9	$	350.6	Deposits4	$	339.9	$	350.6

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.~~lending, which typically consist of bespoke lending arrangements provided to ultra-high net worth clients. These facilities are generally secured by eligible collateral.

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 that apply to us. Accounting updates not listed below were assessed and determined to be either not applicable or to not have a material impact on our financial condition or results of operations upon adoption.

We are currently evaluating the following accounting ~~update; However,~~update, however, we do not expect a material impact on our financial condition or results of operations upon adoption:

•Investments—Tax Credit Structures. This accounting update permits an election to account for tax equity investments using the proportional amortization method if certain conditions are met. The update requires a separate accounting policy election to be made for each tax credit program. Under the proportional amortization method, the initial cost of the investment is amortized in proportion to the income tax credits and other income tax benefits received. The ~~net~~ amortization of the investment and the income tax credits and other income tax benefits are recognized net in the income statement as a component of provision for income taxes. The update also requires disclosures of certain information that enable investors and other users of our financial statements to understand the nature of (i) the tax equity investments in projects that generate income tax credits and other income tax benefits from a program for which the proportional amortization method has been elected and (ii) the impact of the tax equity investments and related income tax credits on the financial condition and results of operations. The ~~ASU~~accounting update will be effective January 1, 2024, with early adoption permitted.

Critical Accounting Estimates

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 2022 Form 10-K and Note 2 to the financial statements), the fair value of financial instruments, goodwill and intangible assets, legal and regulatory contingencies (see Note 15 to the financial statements in the 2022 Form 10-K and Note 13 to the financial statements) 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 Estimates” in the 2022 Form 10-K.

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 Corporate Treasury department (“Treasury”), Firm Risk Committee, Asset/Liability Management Committee, and other committees and control groups assist in evaluating, monitoring and 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.~~


~~March 2023 Form 10-Q~~			1319


Table of Contents
Management’s Discussion and Analysis

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.

Total Assets by Business Segment


		At March 31, 2023									At September 30, 2023
$ 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	$	84,356	$	26,747	$	155	$	111,258	Cash and cash equivalents	$	75,646	$	32,573	$	182	$	108,401
Trading assets at fair value	Trading assets at fair value	310,842		4,560		4,899		320,301		Trading assets at fair value	335,146		6,691		4,848		346,685
Investment securities	Investment securities	37,386		120,558		—		157,944		Investment securities	34,242		112,724		—		146,966
Securities purchased under agreements to resell	Securities purchased under agreements to resell	108,722		13,163		—		121,885		Securities purchased under agreements to resell	96,979		4,590		—		101,569
Securities borrowed	Securities borrowed	145,289		927		—		146,216		Securities borrowed	119,887		1,029		—		120,916
Customer and other receivables	Customer and other receivables	43,973		28,907		1,215		74,095		Customer and other receivables	43,317		31,916		1,262		76,495
Loans1	Loans1	71,008		143,684		4		214,696		Loans1	71,089		145,879		4		216,972
Other assets2	Other assets2	17,619		24,859		11,031		53,509		Other assets2	13,874		26,088		11,047		51,009
Total assets	Total assets	$	819,195	$	363,405	$	17,304	$	1,199,904	Total assets	$	790,180	$	361,490	$	17,343	$	1,169,013


	At December 31, 2022
$ in millions	IS		WM		IM		Total
Assets
Cash and cash equivalents	$	88,362	$	39,539	$	226	$	128,127
Trading assets at fair value	294,884		1,971		4,460		301,315
Investment securities	40,481		119,450		—		159,931
Securities purchased under agreements to resell	102,511		11,396		—		113,907
Securities borrowed	132,619		755		—		133,374
Customer and other receivables	47,515		29,620		1,405		78,540
Loans1	67,676		146,105		4		213,785
Other assets2	15,789		24,469		10,994		51,252
Total assets	$	789,837	$	373,305	$	17,089	$	1,180,231

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 sheet (see Note 9 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. Total assets of ~~$1,200~~

$1,169 billion at ~~March 31,~~September 30, 2023 were relatively unchanged from $1,180 billion at December 31, 2022.

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 2022 Form 10-K.

At ~~March 31,~~September 30, 2023 and December 31, 2022, 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. We actively manage the amount of our Liquidity Resources 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 appetite and is calibrated to meet various internal and 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					Average Daily Balance Three Months Ended
$ in millions	$ in millions	March 31, 2023		December 31, 2022		$ in millions	September 30, 2023		June 30, 2023
Cash deposits with central banks	Cash deposits with central banks	$	65,677	$	58,818	Cash deposits with central banks	$	66,330	$	60,876
Unencumbered HQLA Securities1:	Unencumbered HQLA Securities1:					Unencumbered HQLA Securities1:
U.S. government obligations	U.S. government obligations	132,225		136,020		U.S. government obligations	122,110		124,357
U.S. agency and agency mortgage-backed securities	U.S. agency and agency mortgage-backed securities	92,219		87,591		U.S. agency and agency mortgage-backed securities	86,628		94,367
Non-U.S. sovereign obligations2	Non-U.S. sovereign obligations2	21,113		20,583		Non-U.S. sovereign obligations2	23,416		21,393
Other investment grade securities	Other investment grade securities	694		694		Other investment grade securities	693		715
Total HQLA1	Total HQLA1	$	311,928	$	303,706	Total HQLA1	$	299,177	$	301,708
Cash deposits with banks (non-HQLA)	Cash deposits with banks (non-HQLA)	9,267		8,544		Cash deposits with banks (non-HQLA)	8,190		9,016
Total Liquidity Resources	Total Liquidity Resources	$	321,195	$	312,250	Total Liquidity Resources	$	307,367	$	310,724

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

2.Primarily composed of unencumbered Japanese, French, U.K., Italian and Spanish government obligations.


			1420			~~March 2023 Form 10-Q~~


Table of Contents
Management’s Discussion and Analysis

Liquidity Resources by Bank and Non-Bank Legal Entities


		Average Daily Balance Three Months Ended					Average Daily Balance Three Months Ended
$ in millions	$ in millions	March 31, 2023		December 31, 2022		$ in millions	September 30, 2023		June 30, 2023
Bank legal entities	Bank legal entities					Bank legal entities
U.S.	U.S.	$	140,029	$	134,845	U.S.	$	132,663	$	131,584
Non-U.S.	Non-U.S.	6,651		6,980		Non-U.S.	6,101		7,384
Total Bank legal entities	Total Bank legal entities	146,680		141,825		Total Bank legal entities	138,764		138,968
Non-Bank legal entities	Non-Bank legal entities					Non-Bank legal entities
U.S.:	U.S.:					U.S.:
Parent Company	Parent Company	52,315		56,111		Parent Company	53,681		49,988
Non-Parent Company	Non-Parent Company	58,027		54,813		Non-Parent Company	58,839		58,402
Total U.S.	Total U.S.	110,342		110,924		Total U.S.	112,520		108,390
Non-U.S.	Non-U.S.	64,173		59,501		Non-U.S.	56,083		63,366
Total Non-Bank legal entities	Total Non-Bank legal entities	174,515		170,425		Total Non-Bank legal entities	168,603		171,756
Total Liquidity Resources	Total Liquidity Resources	$	321,195	$	312,250	Total Liquidity Resources	$	307,367	$	310,724

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

We and our U.S. Bank Subsidiaries are required to maintain a minimum LCR and NSFR of 100%.

The LCR rule requires ~~that~~ large banking organizations to 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 rule requires large banking organizations to maintain ~~sufficiently~~an amount of available stable ~~sources of~~ funding, which is their regulatory capital and liabilities subject to standardized weightings, equal to or greater than their required stable funding, which is their projected minimum funding needs, over a one-year time horizon. The NSFR rule is designed to strengthen the ability of such organizations to withstand disruptions to their regular sources of funding without compromising their liquidity position or contributing to instability in the financial system.

As of ~~March 31,~~September 30, 2023, we and our U.S. Bank Subsidiaries are compliant with the minimum 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	March 31, 2023			December 31, 2022			$ in millions	September 30, 2023			June 30, 2023
Eligible HQLA1	Eligible HQLA1							Eligible HQLA1
Cash deposits with central banks	Cash deposits with central banks	$	58,133		$	52,765		Cash deposits with central banks	$	60,163		$	53,387
Securities2	Securities2	185,375			186,551			Securities2	181,010			186,913
Total Eligible HQLA1	Total Eligible HQLA1	$	243,508		$	239,316		Total Eligible HQLA1	$	241,173		$	240,300
Net cash outflows								Net cash outflows	$	190,336		$	181,772
LCR	LCR	135		%	132		%	LCR	127		%	132		%

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~~sovereign bonds.

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, bank notes, 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.

Treasury allocates interest expense to our businesses based on the tenor and interest rate profile of the assets being funded. Treasury similarly allocates interest income to businesses carrying deposit products and other liabilities across the businesses based on the characteristics of those deposits and other liabilities.

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 2022 Form 10-K.


			21


Table of Contents
Management’s Discussion and Analysis

Collateralized Financing Transactions


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Securities purchased under agreements to resell and Securities borrowed	Securities purchased under agreements to resell and Securities borrowed	$	268,101	$	247,281	Securities purchased under agreements to resell and Securities borrowed	$	222,485	$	247,281
Securities sold under agreements to repurchase and Securities loaned	Securities sold under agreements to repurchase and Securities loaned	$	76,079	$	78,213	Securities sold under agreements to repurchase and Securities loaned	$	89,725	$	78,213
Securities received as collateral1	Securities received as collateral1	$	9,867	$	9,954	Securities received as collateral1	$	7,904	$	9,954


		Average Daily Balance Three Months Ended					Average Daily Balance Three Months Ended
$ in millions	$ in millions	March 31, 2023		December 31, 2022		$ in millions	September 30, 2023		December 31, 2022
Securities purchased under agreements to resell and Securities borrowed	Securities purchased under agreements to resell and Securities borrowed	$	254,449	$	261,627	Securities purchased under agreements to resell and Securities borrowed	$	222,503	$	261,627
Securities sold under agreements to repurchase and Securities loaned	Securities sold under agreements to repurchase and Securities loaned	$	77,154	$	77,268	Securities sold under agreements to repurchase and Securities loaned	$	88,115	$	77,268

1.Included within Trading assets in the balance 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 2022 Form 10-K and Note 8 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 sheet, and payables under these financing transactions, primarily to prime brokerage customers, are included in Customer and other payables in the balance sheet. Our risk exposure on these transactions is mitigated by


~~March 2023 Form 10-Q~~			15


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

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 2022 Form 10-K.

Deposits


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Savings and demand deposits:	Savings and demand deposits:					Savings and demand deposits:
Brokerage sweep deposits1	Brokerage sweep deposits1	$	175,448	$	202,592	Brokerage sweep deposits1	$	145,532	$	202,592
Savings and other	Savings and other	122,882		117,356		Savings and other	134,476		117,356
Total Savings and demand deposits	Total Savings and demand deposits	298,330		319,948		Total Savings and demand deposits	280,008		319,948
Time deposits	Time deposits	49,193		36,698		Time deposits	65,450		36,698
Total2	Total2	$	347,523	$	356,646	Total2	$	345,458	$	356,646

1.Amounts represent balances swept from client brokerage accounts.

2.Excludes approximately ~~$2 billion and~~ $6 billion of off-balance sheet deposits at unaffiliated financial institutions as of ~~March 31, 2023 and~~ December 31, 2022 ~~respectively.~~and none as of September 30, 2023. This client cash held by third parties is not reflected in our balance 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 relative to other sources of funding. Each category of deposits presented above has a different cost profile and clients may respond differently to changes in interest rates and other macroeconomic conditions. The decrease in total deposits in the current ~~quarter~~year period was primarily driven by a continued reduction in Brokerage sweep deposits, largely due to net outflows to alternative cash-equivalent and ~~long-term~~other products, partially offset by an increase in Time deposits and Savings.

Borrowings by Remaining Maturity at ~~March 31,~~September 30, 20231


$ 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	$	—	$	4,587	$	4,587	Original maturities of one year or less	$	—	$	4,350	$	4,350
Original maturities greater than one year	Original maturities greater than one year							Original maturities greater than one year
2023	2023	$	4,504	$	6,418	$	10,922	2023	$	1,823	$	2,123	$	3,946
2024	2024	19,858		11,897		31,755		2024	11,750		11,611		23,361
2025	2025	21,666		9,428		31,094		2025	21,660		11,996		33,656
2026	2026	24,066		6,267		30,333		2026	23,760		7,874		31,634
2027	2027	18,855		6,876		25,731		2027	18,426		5,872		24,298
Thereafter	Thereafter	85,715		30,045		115,760		Thereafter	91,085		34,863		125,948
Total greater than one year								Total greater than one year	$	168,504	$	74,339	$	242,843
Total	Total	$	174,664	$	70,931	$	245,595	Total	$	168,504	$	78,689	$	247,193
Total Borrowings		$	174,664	$	75,518	$	250,182
Maturities over next 12 months2	Maturities over next 12 months2					$	20,382	Maturities over next 12 months2					$	21,514

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 ~~$250~~$247 billion as of ~~March 31,~~September 30, 2023 were ~~relatively~~largely unchanged when compared with $238 billion at December 31, 2022.

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 12 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


			22


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Management’s Discussion and Analysis

transactions. When determining credit ratings, rating agencies consider both company-specific and industry-wide factors. See also “Risk Factors—Liquidity Risk” in the 2022 Form 10-K.

Parent Company and U.S. Bank Subsidiaries Issuer Ratings at ~~April 28,~~October 31, 2023


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


	MSBNA
	Short-Term Debt	Long-Term Debt	Rating Outlook
Fitch Ratings, Inc.	F1+	AA-	Stable
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

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


			16			~~March 2023 Form 10-Q~~


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

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 6 to the financial statements for additional information on OTC derivatives that contain such contingent features.

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 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 March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
in millions, except for per share data	in millions, except for per share data		2023		2022			in millions, except for per share data	2023		2022		2023		2022
Number of shares	Number of shares		16		30			Number of shares	17		30		45		93
Average price per share	Average price per share		$	95.16	$	95.20		Average price per share	$	87.59	$	85.79	$	89.26	$	87.50
Total	Total		$	1,500	$	2,872		Total	$	1,500	$	2,555	$	4,000	$	8,165

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 16 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			~~April 19,~~October 18, 2023
Amount per share			$~~0.775~~0.850
Date to be paid			~~May~~November 15, 2023
Shareholders of record as of			~~May 1,~~October 31, 2023

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 16 to the financial statements.

Off-Balance Sheet Arrangements

We enter into various off-balance sheet arrangements, including through unconsolidated SPEs and lending-related financial instruments (~~e.g.~~(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 2022 Form 10-K.

For information on our commitments, obligations under certain guarantee arrangements and indemnities, see Note 13 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.

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


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Management’s Discussion and Analysis

oversight of the Federal Reserve. The Federal Reserve establishes capital requirements for us, including “well-capitalized” standards, and evaluates our compliance with such capital requirements. The OCC establishes similar capital requirements 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 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,~~swap entities, see Note 15 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 the 2022 Form 10-K. For additional information on TLAC,


~~March 2023 Form 10-Q~~			17


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

see “Total Loss-Absorbing Capacity, Long-Term Debt and Clean Holding Company Requirements” herein.

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 our capital buffer requirement. Capital requirements require certain adjustments to, and deductions from, capital for purposes of determining these ratios.

Risk-Based Regulatory Capital Ratio Requirements

At March 31, 2023 and December 31, 2022

At September 30, 2023 and December 31, 2022

Standardized

Advanced

Standardized

Advanced

Capital buffers

Capital conservation buffer

—

2.5%

Capital conservation buffer

—

2.5%

SCB1

5.8%

N/A

SCB1

5.8%

N/A

G-SIB capital surcharge2

3.0%

G-SIB capital surcharge2

3.0%

CCyB3

Capital buffer requirement

8.8%

5.5%

Capital buffer requirement

8.8%

5.5%

1.For additional information on the SCB, see “Capital Plans, Stress Tests and the Stress Capital Buffer” herein and in the 2022 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 2022 Form 10-K.

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

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 capital buffer requirement computed under the standardized approaches for calculating credit risk and market RWAs (“Standardized Approach”) is equal to the sum of our SCB, G-SIB capital surcharge and CCyB, and our capital buffer requirement computed under the applicable advanced approaches for calculating credit risk, market risk and operational risk RWAs (“Advanced Approach”) is equal to our 2.5% capital conservation buffer, G-SIB capital surcharge and CCyB.


		Regulatory Minimum		At March 31, 2023 and December 31, 2022			Regulatory Minimum		At September 30, 2023 and December 31, 2022
				Standardized	Advanced				Standardized	Advanced
Required ratios1	Required ratios1					Required ratios1
Common Equity Tier 1 capital ratio	Common Equity Tier 1 capital ratio	4.5	%	13.3%	10.0%	Common Equity Tier 1 capital ratio	4.5	%	13.3%	10.0%
Tier 1 capital ratio	Tier 1 capital ratio	6.0	%	14.8%	11.5%	Tier 1 capital ratio	6.0	%	14.8%	11.5%
Total capital ratio	Total capital ratio	8.0	%	16.8%	13.5%	Total capital ratio	8.0	%	16.8%	13.5%

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 Approach and (ii) the 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

weights. At ~~March 31,~~September 30, 2023 and December 31, 2022, the differences between the actual and required ratios were lower under the Standardized Approach.

Leverage-Based Regulatory Capital. Leverage-based capital requirements include a minimum Tier 1 leverage ratio of 4%, a minimum SLR of 3% and an enhanced SLR capital buffer of at least 2%.

CECL Deferral. Beginning on January 1, 2020, we elected to defer the effect of the adoption of CECL on our risk-based and leverage-based capital amounts and ratios, as well as our RWA, adjusted average assets and supplementary leverage exposure calculations, over a five-year transition period. The deferral impacts began to phase in at 25% per year from January 1, 2022 and are phased-in at 50% from January 1, 2023. The deferral impacts will become fully phased-in beginning on January 1, 2025.


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Management’s Discussion and Analysis

Regulatory Capital Ratios


$ in millions	$ in millions	Required Ratio1		At March 31, 2023			At December 31, 2022			$ in millions	Required Ratio1		At September 30, 2023			At December 31, 2022
Risk-based capital— Standardized	Risk-based capital— Standardized									Risk-based capital— Standardized
Common Equity Tier 1 capital	Common Equity Tier 1 capital			$	69,454		$	68,670		Common Equity Tier 1 capital			$	69,148		$	68,670
Tier 1 capital	Tier 1 capital			77,947			77,191			Tier 1 capital			77,891			77,191
Total capital	Total capital			89,794			86,575			Total capital			88,573			86,575
Total RWA	Total RWA			459,107			447,849			Total RWA			443,816			447,849
Common Equity Tier 1 capital ratio	Common Equity Tier 1 capital ratio	13.3	%	15.1		%	15.3		%	Common Equity Tier 1 capital ratio	13.3	%	15.6		%	15.3		%
Tier 1 capital ratio	Tier 1 capital ratio	14.8	%	17.0		%	17.2		%	Tier 1 capital ratio	14.8	%	17.6		%	17.2		%
Total capital ratio	Total capital ratio	16.8	%	19.6		%	19.3		%	Total capital ratio	16.8	%	20.0		%	19.3		%


$ in millions	$ in millions	Required Ratio1		At March 31, 2023			At December 31, 2022			$ in millions	Required Ratio1		At September 30, 2023			At December 31, 2022
Risk-based capital— Advanced	Risk-based capital— Advanced									Risk-based capital— Advanced
Common Equity Tier 1 capital	Common Equity Tier 1 capital			$	69,454		$	68,670		Common Equity Tier 1 capital			$	69,148		$	68,670
Tier 1 capital	Tier 1 capital			77,947			77,191			Tier 1 capital			77,891			77,191
Total capital	Total capital			89,321			86,159			Total capital			87,949			86,159
Total RWA	Total RWA			444,796			438,806			Total RWA			429,125			438,806
Common Equity Tier 1 capital ratio	Common Equity Tier 1 capital ratio	10.0	%	15.6		%	15.6		%	Common Equity Tier 1 capital ratio	10.0	%	16.1		%	15.6		%
Tier 1 capital ratio	Tier 1 capital ratio	11.5	%	17.5		%	17.6		%	Tier 1 capital ratio	11.5	%	18.2		%	17.6		%
Total capital ratio	Total capital ratio	13.5	%	20.1		%	19.6		%	Total capital ratio	13.5	%	20.5		%	19.6		%

$ in millions	$ in millions	Required Ratio1		At March 31, 2023			At December 31, 2022			$ in millions	Required Ratio1		At September 30, 2023			At December 31, 2022
Leverage-based capital	Leverage-based capital									Leverage-based capital
Adjusted average assets2	Adjusted average assets2			$	1,168,328		$	1,150,772		Adjusted average assets2			$	1,152,379		$	1,150,772
Tier 1 leverage ratio	Tier 1 leverage ratio	4.0	%	6.7		%	6.7		%	Tier 1 leverage ratio	4.0	%	6.8		%	6.7		%
Supplementary leverage exposure3	Supplementary leverage exposure3			$	1,422,808		$	1,399,403		Supplementary leverage exposure3			$	1,416,310		$	1,399,403
SLR	SLR	5.0	%	5.5		%	5.5		%	SLR	5.0	%	5.5		%	5.5		%

1.Required ratios are inclusive of any buffers applicable as of the date presented.

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.


			18			~~March 2023 Form 10-Q~~


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

Regulatory Capital


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		Change		$ in millions	At September 30, 2023		At December 31, 2022		Change
Common Equity Tier 1 capital	Common Equity Tier 1 capital							Common Equity Tier 1 capital
Common stock and surplus	Common stock and surplus	$	1,395	$	2,782	$	(1,387)	Common stock and surplus	$	(344)	$	2,782	$	(3,126)
Retained earnings	Retained earnings	96,516		95,047		1,469		Retained earnings	98,132		95,047		3,085
AOCI	AOCI	(5,711)		(6,253)		542		AOCI	(7,202)		(6,253)		(949)
Regulatory adjustments and deductions:	Regulatory adjustments and deductions:							Regulatory adjustments and deductions:
Net goodwill	Net goodwill	(16,388)		(16,393)		5		Net goodwill	(16,388)		(16,393)		5
Net intangible assets	Net intangible assets	(5,914)		(6,048)		134		Net intangible assets	(5,665)		(6,048)		383
Other adjustments and deductions1	Other adjustments and deductions1	(444)		(465)		21		Other adjustments and deductions1	615		(465)		1,080
Total Common Equity Tier 1 capital	Total Common Equity Tier 1 capital	$	69,454	$	68,670	$	784	Total Common Equity Tier 1 capital	$	69,148	$	68,670	$	478
Additional Tier 1 capital	Additional Tier 1 capital							Additional Tier 1 capital
Preferred stock	Preferred stock	$	8,750	$	8,750	$	—	Preferred stock	$	8,750	$	8,750	$	—
Noncontrolling interests	Noncontrolling interests	571		552		19		Noncontrolling interests	752		552		200
Additional Tier 1 capital	Additional Tier 1 capital	$	9,321	$	9,302	$	19	Additional Tier 1 capital	$	9,502	$	9,302	$	200
Deduction for investments in covered funds	Deduction for investments in covered funds	(828)		(781)		(47)		Deduction for investments in covered funds	(759)		(781)		22
Total Tier 1 capital	Total Tier 1 capital	$	77,947	$	77,191	$	756	Total Tier 1 capital	$	77,891	$	77,191	$	700
Standardized Tier 2 capital	Standardized Tier 2 capital							Standardized Tier 2 capital
Subordinated debt	Subordinated debt	$	9,997	$	7,846	$	2,151	Subordinated debt	$	8,665	$	7,846	$	819

Eligible ACL	Eligible ACL	1,898		1,613		285		Eligible ACL	2,040		1,613		427
Other adjustments and deductions	Other adjustments and deductions	(48)		(75)		27		Other adjustments and deductions	(23)		(75)		52
Total Standardized Tier 2 capital	Total Standardized Tier 2 capital	$	11,847	$	9,384	$	2,463	Total Standardized Tier 2 capital	$	10,682	$	9,384	$	1,298
Total Standardized capital	Total Standardized capital	$	89,794	$	86,575	$	3,219	Total Standardized capital	$	88,573	$	86,575	$	1,998
Advanced Tier 2 capital	Advanced Tier 2 capital							Advanced Tier 2 capital
Subordinated debt	Subordinated debt	$	9,997	$	7,846	$	2,151	Subordinated debt	$	8,665	$	7,846	$	819

Eligible credit reserves	Eligible credit reserves	1,425		1,197		228		Eligible credit reserves	1,416		1,197		219
Other adjustments and deductions	Other adjustments and deductions	(48)		(75)		27		Other adjustments and deductions	(23)		(75)		52
Total Advanced Tier 2 capital	Total Advanced Tier 2 capital	$	11,374	$	8,968	$	2,406	Total Advanced Tier 2 capital	$	10,058	$	8,968	$	1,090
Total Advanced capital	Total Advanced capital	$	89,321	$	86,159	$	3,162	Total Advanced capital	$	87,949	$	86,159	$	1,790

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.


			25


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Management’s Discussion and Analysis

RWA Rollforward


		Three Months Ended March 31, 2023					Nine Months Ended September 30, 2023
$ in millions	$ in millions	Standardized		Advanced		$ in millions	Standardized		Advanced
Credit risk RWA	Credit risk RWA					Credit risk RWA
Balance at December 31, 2022	Balance at December 31, 2022	$	397,275	$	285,638	Balance at December 31, 2022	$	397,275	$	285,638
Change related to the following items:	Change related to the following items:					Change related to the following items:
Derivatives	Derivatives	1,388		1,399		Derivatives	(969)		(5,361)
Securities financing transactions	Securities financing transactions	4,672		1,842		Securities financing transactions	(462)		238
Investment securities	Investment securities	(290)		77		Investment securities	(1,364)		(1,296)
Commitments, guarantees and loans	Commitments, guarantees and loans	(1,968)		1,374		Commitments, guarantees and loans	(88)		5,977
Equity investments	Equity investments	(370)		(380)		Equity investments	(416)		(409)
Other credit risk	Other credit risk	5,258		4,714		Other credit risk	2,253		551
Total change in credit risk RWA	Total change in credit risk RWA	$	8,690	$	9,026	Total change in credit risk RWA	$	(1,046)	$	(300)
Balance at March 31, 2023		$	405,965	$	294,664
Balance at September 30, 2023						Balance at September 30, 2023	$	396,229	$	285,338
Market risk RWA	Market risk RWA					Market risk RWA
Balance at December 31, 2022	Balance at December 31, 2022	$	50,574	$	50,563	Balance at December 31, 2022	$	50,574	$	50,563
Change related to the following items:	Change related to the following items:					Change related to the following items:
Regulatory VaR	Regulatory VaR	242		242		Regulatory VaR	(2,210)		(2,210)
Regulatory stressed VaR	Regulatory stressed VaR	(1,042)		(1,042)		Regulatory stressed VaR	(5,517)		(5,517)
Incremental risk charge	Incremental risk charge	(405)		(405)		Incremental risk charge	(216)		(216)
Comprehensive risk measure	Comprehensive risk measure	24		(84)		Comprehensive risk measure	355		366
Specific risk	Specific risk	3,749		3,749		Specific risk	4,601		4,601
Total change in market risk RWA	Total change in market risk RWA	$	2,568	$	2,460	Total change in market risk RWA	$	(2,987)	$	(2,976)
Balance at March 31, 2023		$	53,142	$	53,023
Balance at September 30, 2023						Balance at September 30, 2023	$	47,587	$	47,587
Operational risk RWA	Operational risk RWA					Operational risk RWA
Balance at December 31, 2022	Balance at December 31, 2022	N/A		$	102,605	Balance at December 31, 2022	N/A		$	102,605
Change in operational risk RWA	Change in operational risk RWA	N/A		(5,496)		Change in operational risk RWA	N/A		(6,405)
Balance at March 31, 2023		N/A		$	97,109
Balance at September 30, 2023						Balance at September 30, 2023	N/A		$	96,200
Total RWA	Total RWA	$	459,107	$	444,796	Total RWA	$	443,816	$	429,125

Regulatory VaR—VaR for regulatory capital requirements

In the current ~~quarter,~~year period, Credit risk RWA ~~increased~~remained relatively unchanged under both the Standardized and Advanced Approaches. Under the Standardized Approach, slight decreases in investment securities, derivatives, and securities financing transactions were offset by a slight increase in Other credit risk driven by higher deferred tax assets and securitizations. Under the Advanced Approach, decreases in derivatives and investment securities were offset by growth in Corporate lending.

Market risk RWA decreased in the current year period under both the Standardized and Advanced Approaches, primarily due to lower Regulatory stressed VaR and Regulatory VaR driven by ~~higher deferred tax assets, higher Securities financing~~reductions in macro and ~~increased exposure in interest rate Derivatives.~~

~~Market risk RWA increased in the current quarter under both the Standardized and Advanced Approaches primarily driven~~commodities businesses, partially offset by higher Specific risk charges on securitization and higher non-securitization standardized ~~charges partially offset by lower Regulatory Stressed VaR.~~charges.

The decrease in Operational risk RWA in the current year period reflects lower execution-related losses.

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~~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.


~~March 2023 Form 10-Q~~			19


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

Required and Actual TLAC and Eligible LTD Ratios


						Actual Amount/Ratio											Actual Amount/Ratio
$ in millions	$ in millions	Regulatory Minimum		Required Ratio1		At March 31, 2023			At December 31, 2022			$ in millions	Regulatory Minimum		Required Ratio1		At September 30, 2023			At December 31, 2022
External TLAC2	External TLAC2					$	250,191		$	245,951		External TLAC2					$	248,739		$	245,951
External TLAC as a % of RWA	External TLAC as a % of RWA	18.0	%	21.5	%	54.5		%	54.9		%	External TLAC as a % of RWA	18.0	%	21.5	%	56.0		%	54.9		%
External TLAC as a % of leverage exposure	External TLAC as a % of leverage exposure	7.5	%	9.5	%	17.6		%	17.6		%	External TLAC as a % of leverage exposure	7.5	%	9.5	%	17.6		%	17.6		%
Eligible LTD3	Eligible LTD3					$	162,775		$	159,444		Eligible LTD3					$	161,898		$	159,444
Eligible LTD as a % of RWA	Eligible LTD as a % of RWA	9.0	%	9.0	%	35.5		%	35.6		%	Eligible LTD as a % of RWA	9.0	%	9.0	%	36.5		%	35.6		%
Eligible LTD as a % of leverage exposure	Eligible LTD as a % of leverage exposure	4.5	%	4.5	%	11.4		%	11.4		%	Eligible LTD as a % of leverage exposure	4.5	%	4.5	%	11.4		%	11.4		%

1.Required ratios are inclusive of applicable buffers.

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 ~~March 31,~~September 30, 2023 and December 31, 2022.

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—Total Loss-Absorbing Capacity, Long-Term Debt and Clean Holding Company Requirements” in the 2022 Form 10-K.

Capital Plans, Stress Tests and the Stress Capital Buffer

The Federal Reserve has 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.

As part of its annual capital supervisory stress testing process, the Federal Reserve determines an SCB for each large BHC, including us.

Our SCB will remain at 5.8% through September 30, 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 13.3%.

Our Board of Directors approved a new multi-year repurchase authorization of up to $20 billion of outstanding common stock, without a set expiration date, beginning in the third quarter of 2022, which will be exercised from time to time as conditions warrant.

For the 2023 capital planning and stress test cycle, we submitted our capital plan and company-run stress test results to the Federal Reserve on April 5, 2023. ~~The~~On June 28, 2023, the Federal Reserve ~~is expected to publish~~published summary results of ~~the CCAR and Dodd-Frank Act~~its supervisory stress tests of each large BHC, ~~including us,~~in which the projected decline in our Common Equity Tier 1 ratio in the


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Table of Contents
Management’s Discussion and Analysis

severely adverse scenario improved from the prior annual supervisory stress test by ~~June~~50 basis points, from 4.6% to 4.1%. Following the publication of the supervisory stress test results, and as a result of the increase in our common stock dividend and the resulting dividend add-on, we announced that our SCB will be 5.4% from October 1, 2023 through September 30, ~~2023.~~ 2024. Together with other features of the regulatory capital framework, this SCB results in an aggregate Standardized Approach Common Equity Tier 1 ratio of 12.9%. Generally, our SCB is determined annually based on the results of the supervisory stress test.

We ~~are required to disclose~~also disclosed a summary of the results of our company-run stress tests ~~within 15 days~~on our Investor Relations website and increased our quarterly common stock dividend to $0.85 per share from $0.775, beginning with the common stock dividend announced on July 18, 2023. Additionally, our Board of Directors reauthorized a multi-year common stock repurchase program of up to $20 billion, without a set expiration date, beginning in the ~~date the Federal Reserve discloses the results~~third quarter of ~~the supervisory stress tests.~~2023, which will be exercised from time to time as conditions warrant.

For additional information, 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” in the 2022 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 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 Company common equity. We generally hold Parent Company 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 March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in billions	$ in billions		2023		2022			$ in billions	2023		2022		2023		2022
Institutional Securities	Institutional Securities		$	45.6	$	48.8		Institutional Securities	$	45.6	$	48.8	$	45.6	$	48.8
Wealth Management	Wealth Management		28.8		31.0			Wealth Management	28.8		31.0		28.8		31.0
Investment Management	Investment Management		10.4		10.6			Investment Management	10.4		10.6		10.4		10.6
Parent			6.6		6.3
Parent Company								Parent Company	6.0		2.5		6.3		4.3
Total	Total		$	91.4	$	96.7		Total	$	90.8	$	92.9	$	91.1	$	94.7

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

We continue to evaluate our Required Capital framework with respect to the impact of evolving regulatory requirements, as appropriate.


			20			~~March 2023 Form 10-Q~~


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

Resolution and Recovery Planning

We are required to 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. In November 2022, we received joint feedback on our 2021 resolution plan from the Federal Reserve and the FDIC (“Agencies”). The feedback indicated that there are no shortcomings or deficiencies in our 2021 resolution plan and that we had successfully addressed a prior shortcoming identified by the Agencies in the review of our 2019 full resolution plan. ~~Our next resolution plan submission will be a~~We submitted our 2023 full resolution plan ~~in July~~on June 30, 2023.

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 supported entities and/or the Funding IHC. The Funding IHC would be obligated to provide capital and liquidity, as applicable, to our supported 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 supported 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~~


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Management’s Discussion and Analysis

“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Regulatory Requirements—Resolution and Recovery Planning” in the 2022 Form 10-K.

Regulatory Developments and Other Matters

Covered Funds Restrictions under the Volcker Rule

The Volcker Rule prohibits certain investments and relationships by banking entities with covered funds, as defined in the Volcker Rule. ~~During~~We previously received a one-year extension of the ~~current quarter, we determined and began implementing various~~ conformance ~~options permitted under the Volcker Rule with respect~~date to ~~interests in~~July 21, 2023 for certain legacy illiquid ~~funds for which we previously received a conformance extension until July 21, 2023. These conformance options include selling a portion or all~~funds. All of our ~~interests, restructuring our investments, and relying on other applicable exemptions and exclusions under the Volcker Rule. As of March 31, 2023, the carrying value of our investments in those~~ legacy illiquid funds ~~approximated $210 million.~~were fully conformed to the Volcker Rule’s requirements prior to the end of the extension period. For additional information on the Volcker Rule, see “Business—Supervision and Regulation—Financial Holding Company—Activities Restrictions Under the Volcker Rule” in the 2022 Form 10-K. ~~For information on investments measured at NAV, see Note 4 to the financial statements.~~

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

Central banks around the world, including the Federal Reserve, have sponsored initiatives in recent years to replace LIBOR and replace or reform certain other interest rate benchmarks (collectively, the “IBORs”). A transition away from use of the IBORs to alternative rates and other potential interest rate benchmark reforms ishas been underway ~~and is~~for a ~~multi-year initiative.~~number of years.

~~The~~With the cessation of publication of ~~most non-U.S.~~U.S. dollar LIBOR rates ~~ceased~~on a representative basis as of June 30, 2023, all LIBOR publications have ceased on a representative basis. However, the ~~end of December 2021, although certain~~one, three and six-month U.S. dollar LIBOR and three-month Sterling ~~and Yen~~ LIBOR rates ~~have been~~are being published for a limited period ~~following this date~~for use in legacy transactions on the basis of a ~~“synthetic”~~synthetic methodology (known as “synthetic LIBOR”). The synthetic Yen LIBOR rates ceased as of the end of December 2022 and following the announcement of the U.K. Financial Conduct Authority (“UK FCA”), which regulates the publisher of LIBOR (ICE Benchmark Administration), publication of the one- and six-month tenors of synthetic Sterling LIBOR ceased at the end of March 2023 and publicationPublication of the three-month synthetic Sterling LIBOR will cease at the end of March ~~2024.~~

2024 and publication of the one, three and six-month synthetic U.S. dollar LIBOR ~~rates are expected to~~will cease being published as of the end of June 2023. On March 15, 2022 the U.S. 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 U.S. law-governed contracts under certain circumstances with a SOFR-based rate identified in a Federal Reserve rule plus a statutory spread adjustment. 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. In addition, the UK FCA has announced that it will require ICE Benchmark Administration


~~March 2023 Form 10-Q~~			21


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

~~to continue the publication of the one-, three- and six-month tenors of U.S. dollar LIBOR on a synthetic basis until~~at the end of September 2024. ~~This may result in certain non-U.S. law-governed contracts and U.S. law-governed contracts not covered by the federal legislation to remain on synthetic U.S. dollar LIBOR until the end of this period.~~

As of ~~March 31,~~September 30, 2023, ~~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 ~~derivative~~U.S. dollar LIBOR-referenced contracts ~~and a majority of our non-derivative contracts, contain~~contained fallback provisions or otherwise ~~have an expected~~had a path that ~~will allow~~allowed for the transition to an alternative reference rate ~~upon~~following the cessation of the applicable ~~LIBOR rate.~~

While we have made substantial progress in the transition away from the IBORs, we nonetheless currently remain party to a significant number of U.S. dollar LIBOR-linked contracts. For the limited number of U.S. dollar LIBOR-linked contracts without a current market standard fallback, or to which the federal legislation does not apply, we are actively developing appropriate transition plans in light of the planned June 30, 2023 cessation date for the remaining U.S. dollar LIBOR ~~tenors.~~

~~Our IBOR transition plan is overseen by a global steering committee, with senior management oversight, and we~~rate. We continue to execute against our Firm-wide IBOR transition plan to complete the transition in all relevant markets to alternative reference rates.

See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Regulatory Requirements—Regulatory Developments and Other Matters” and “Risk Factors—Risk Management” in the 2022 Form 10-K for a further discussion of the replacement of the IBORs and/or reform of other interest rate benchmarks and related risks.

FDIC Proposed Rulemaking on Special Assessment

Following the recent failures of certain banks and resulting losses to the FDIC’s Deposit Insurance Fund, the FDIC approved a notice of proposed rulemaking on May 11, 2023 that would implement a special assessment to recover the cost associated with protecting uninsured depositors. Under the proposed rule, the assessment base for the special assessment would be equal to an insured depository institution’s estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion of uninsured deposits. The $5 billion exclusion would be applied once to the aggregate uninsured deposits of our U.S. Bank Subsidiaries. The FDIC is proposing to collect the special assessment at an annual rate of approximately 12.5 basis points over eight quarterly assessment periods, subject to change depending on any adjustments to the loss estimate, mergers, failures, or amendments to reported estimates of uninsured deposits. While we continue to assess the impact to our future operating results, we expect to record the impact of the proposed special assessment, estimated to be approximately $270 million under the current proposal, after the final rule is published in the Federal Register.

Basel III Endgame Proposal

On July 27, 2023, U.S. banking agencies proposed revisions to risk-based capital and related standards applicable to us and our U.S. Bank Subsidiaries (“Basel III Endgame Proposal”). The proposal would introduce a new measure of RWAs known as “Expanded Total RWAs” (the “Expanded Approach”), reflecting new RWA methodologies that generally align with changes to the global Basel Accord adopted by the Basel Committee. The proposal would eliminate the current capital rule’s Advanced Approach and effectively replace it with the Expanded Approach, which more heavily relies on standardized methodologies. As compared with the Standardized Approach, the Expanded Approach includes more granular risk weights for credit risk and introduces a new market risk framework. In addition, unlike the Standardized Approach, the Expanded Approach includes operational risk and credit valuation adjustment RWA components.

The Basel III Endgame Proposal, if adopted as a final rule, would maintain the current capital rule’s dual-requirement structure, whereby we and our U.S. Bank Subsidiaries would be required to calculate our risk-based capital ratios under both the Expanded Approach and the Standardized Approach. In addition, the proposal would modify the Standardized Approach by requiring that the new market risk standards from the proposal also be applied in the Standardized Approach.

The Basel III Endgame Proposal would apply the SCB and G-SIB surcharge to risk-based capital requirements calculated under both the Expanded Approach and the Standardized Approach. The proposal includes a proposed effective date of


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Management’s Discussion and Analysis

July 1, 2025, with three-year transition arrangements until revised standards are fully phased in on July 1, 2028.

Based on our current understanding of the Basel III Endgame Proposal, we estimate that, if the Expanded Approach had applied on a fully phased-in basis as of June 30, 2023, and in the absence of taking any actions to mitigate its impact, our Expanded Approach RWAs as of that date would have been approximately 40% higher than our actual Standardized Approach RWAs as of that date.

The increase in RWAs resulting from the Expanded Approach would result, assuming all other surcharge elements remained unchanged, in a lower SCB and lower G-SIB Method 2 surcharge as compared with current surcharges, as RWAs are included in the denominators of the relevant calculations for each buffer. Lower surcharges would, therefore, partially decrease the otherwise higher regulatory capital requirements under the Expanded Approach. The proposal would phase in the higher Expanded Approach RWAs on July 1 of each year during the transition, thereby increasing our regulatory capital requirements, with delayed incorporation of the potentially lower SCB and G-SIB Method 2 capital surcharge calculations.

Any estimate of how the Expanded Approach may impact us is a forward-looking statement and subject to uncertainty, as actual results may differ from the anticipated results and may be materially affected by and dependent on a range of factors, including business performance, future capital actions, the results of future supervisory stress tests, and potential modifications to the proposal by the U.S. banking agencies in a final rulemaking. The Firm does not undertake to update any forward-looking statement.

G-SIB Surcharge Proposal

On July 27, 2023, the Federal Reserve proposed revisions to the G-SIB capital surcharge framework applicable to us (“G-SIB Surcharge Proposal”). The G-SIB Surcharge Proposal includes various technical revisions to the G-SIB capital surcharge methodology and would revise the resulting Method 2 G-SIB capital surcharge from 0.5-percentage point increments to 0.1-percentage point increments. The G-SIB Surcharge Proposal includes a proposed effective date two calendar quarters after the date of adoption of a final rule by the Federal Reserve. We continue to evaluate the G-SIB Surcharge Proposal and the potential impacts, if adopted, on our capital requirements and our Required Capital framework.


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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 2022 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 2022 Form 10-K.

Trading Risks

We have exposures to a wide range of risks related to interest rates and credit spreads, equity prices, foreign exchange rates and commodity prices as well as the associated implied volatilities, correlations and spreads 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 2022 Form 10-K.

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


		Three Months Ended									Three Months Ended
		March 31, 2023									September 30, 2023
$ in millions	$ in millions	Period End		Average		High1		Low1		$ in millions	Period End		Average		High1		Low1
Interest rate and credit spread	Interest rate and credit spread	$	32	$	36	$	43	$	31	Interest rate and credit spread	$	35	$	36	$	43	$	29
Equity price	Equity price	29		25		31		16		Equity price	26		23		27		18
Foreign exchange rate	Foreign exchange rate	10		10		18		6		Foreign exchange rate	7		8		10		7
Commodity price	Commodity price	21		24		35		16		Commodity price	20		16		21		12
Less: Diversification benefit2	Less: Diversification benefit2	(44)		(47)		N/A				Less: Diversification benefit2	(50)		(41)		N/A
Primary Risk Categories	Primary Risk Categories	$	48	$	48	$	60	$	39	Primary Risk Categories	$	38	$	42	$	48	$	35
Credit Portfolio	Credit Portfolio	21		19		21		18		Credit Portfolio	22		22		23		21
Less: Diversification benefit2	Less: Diversification benefit2	(19)		(12)		N/A				Less: Diversification benefit2	(19)		(16)		N/A
Total Management VaR	Total Management VaR	$	50	$	55	$	72	$	45	Total Management VaR	$	41	$	48	$	57	$	41


		Three Months Ended									Three Months Ended
		December 31, 2022									June 30, 2023
$ in millions	$ in millions	Period End		Average		High1		Low1		$ in millions	Period End		Average		High1		Low1
Interest rate and credit spread	Interest rate and credit spread	$	37	$	36	$	43	$	32	Interest rate and credit spread	$	36	$	36	$	42	$	31
Equity price	Equity price	16		20		28		16		Equity price	25		25		34		20
Foreign exchange rate	Foreign exchange rate	10		9		12		7		Foreign exchange rate	8		10		12		8
Commodity price	Commodity price	26		30		41		20		Commodity price	12		17		25		12
Less: Diversification benefit2	Less: Diversification benefit2	(36)		(39)		N/A				Less: Diversification benefit2	(33)		(40)		N/A
Primary Risk Categories	Primary Risk Categories	$	53	$	56	$	65	$	47	Primary Risk Categories	$	48	$	48	$	56	$	39
Credit Portfolio	Credit Portfolio	19		18		19		15		Credit Portfolio	23		22		23		20
Less: Diversification benefit2	Less: Diversification benefit2	(9)		(10)		N/A				Less: Diversification benefit2	(20)		(18)		N/A
Total Management VaR	Total Management VaR	$	63	$	64	$	71	$	56	Total Management VaR	$	51	$	52	$	57	$	46

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.

Average Total Management VaR and average Management VaR for the Primary Risk Categories decreased from the three months ended ~~December 31, 2022,~~June 30, 2023, primarily ~~due to~~driven by reduced ~~exposures~~exposure in the ~~commodity price~~Foreign exchange rate category and ~~increased diversification benefits.~~lower market volatility.

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. There ~~were 2~~was one loss ~~days~~day in the current quarter, ~~one of~~ which ~~exceeded~~did not exceed 95% Total Management VaR.


~~March 2023 Form 10-Q~~			2330


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 March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At June 30, 2023
Derivatives	Derivatives	$	6	$	7	Derivatives	$	6	$	6
Borrowings carried at fair value	Borrowings carried at fair value	42		39		Borrowings carried at fair value	40		43

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 March 31, 2023 increased from December 31, 2022 primarily due to tightening credit spreads, in addition to new debt issuance.~~

The Wealth Management business segment reflects a substantial portion of our non-trading interest rate risk. Net interest income in the Wealth Management business segment primarily consists of interest income earned on non-trading assets held, 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 Analysis

$ in millions At
March 31,
2023 At
December 31,
2022
Basis point change
+100 $ 533 $ 643
-100 (637) (745)


$ in millions	At September 30, 2023		At June 30, 2023
Basis point change
+100	$	506	$	532
-100	(535)		(596)

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 Wealth Management business segment. These shocks are applied to our 12-month forecast for our Wealth Management business segment, which incorporates market expectations of interest rates and our forecasted business activity, including deposit forecasts as a key assumption.

We do not manage to any single rate scenario but rather manage net interest income in our 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.

Our Wealth Management business segment balance sheet is asset sensitive, given assets reprice faster than liabilities, resulting in higher net interest income in increasing interest rate scenarios. The level of interest rates may impact the amount of deposits held at the Firm, given competition for deposits from other institutions and alternative cash-equivalent products available to depositors. Further, rising interest rates could also impact client demand for loans. Net ~~interest income sensitivity to interest rates at March 31, 2023~~


			2431			~~March 2023 Form 10-Q~~


Table of Contents
Risk Disclosures

~~decreased~~interest income sensitivity to interest rates at September 30, 2023 was relatively unchanged from ~~December 31, 2022, primarily driven by the effects of changes in the mix of our assets and liabilities.~~June 30, 2023.

Investments Sensitivity, Including Related Carried Interest


		Loss from 10% Decline					Loss from 10% Decline
$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At June 30, 2023
Investments related to Investment Management activities	Investments related to Investment Management activities	$	449	$	431	Investments related to Investment Management activities	$	472	$	458
Other investments:	Other investments:					Other investments:
MUMSS	MUMSS	144		143		MUMSS	129		132
Other Firm investments	Other Firm investments	375		378		Other Firm investments	395		399

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.

Investments sensitivity changed between March 31, 2023 and December 31, 2022 with an increase in sensitivity in Investments related to Investment Management activity primarily due to new investments in public funds.

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. These revenues depend on multiple factors including, but 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 may 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 2022 Form 10-K.

Loans and Lending Commitments


		At March 31, 2023									At September 30, 2023
$ in millions	$ in millions	HFI		HFS		FVO2		Total		$ in millions	HFI		HFS		FVO1		Total
Institutional Securities:	Institutional Securities:									Institutional Securities:
Corporate	Corporate	$	7,435	$	11,150	$	—	$	18,585	Corporate	$	7,181	$	11,086	$	—	$	18,267
Secured lending facilities	Secured lending facilities	37,187		3,006		6		40,199		Secured lending facilities	39,119		2,861		—		41,980
Commercial and Residential real estate	Commercial and Residential real estate	8,601		948		2,535		12,084		Commercial and Residential real estate	8,389		259		3,139		11,787
Securities-based lending and Other	Securities-based lending and Other	3,430		16		5,276		8,722		Securities-based lending and Other	3,039		—		4,419		7,458
Total Institutional Securities	Total Institutional Securities	56,653		15,120		7,817		79,590		Total Institutional Securities	57,728		14,206		7,558		79,492
Wealth Management:	Wealth Management:									Wealth Management:
Residential real estate	Residential real estate	55,400		25		—		55,425		Residential real estate	59,002		23		—		59,025
Securities-based lending and Other	Securities-based lending and Other	88,463		1		—		88,464		Securities-based lending and Other	87,165		1		—		87,166
Total Wealth Management	Total Wealth Management	143,863		26		—		143,889		Total Wealth Management	146,167		24		—		146,191
Total Investment Management1		4		—		214		218
Total Investment Management2										Total Investment Management2	4		—		427		431
Total loans	Total loans	200,520		15,146		8,031		223,697		Total loans	203,899		14,230		7,985		226,114
ACL	ACL	(970)						(970)		ACL	(1,157)						(1,157)
Total loans, net of ACL	Total loans, net of ACL	$	199,550	$	15,146	$	8,031	$	222,727	Total loans, net of ACL	$	202,742	$	14,230	$	7,985	$	224,957
Lending commitments3	Lending commitments3							$	140,096	Lending commitments3							$	147,800
Total exposure	Total exposure							$	362,823	Total exposure							$	372,757


		At December 31, 2022									At December 31, 2022
$ in millions	$ in millions	HFI		HFS		FVO2		Total		$ in millions	HFI		HFS		FVO1		Total
Institutional Securities:	Institutional Securities:									Institutional Securities:
Corporate	Corporate	$	6,589	$	10,634	$	—	$	17,223	Corporate	$	6,589	$	10,634	$	—	$	17,223
Secured lending facilities	Secured lending facilities	35,606		3,176		6		38,788		Secured lending facilities	35,606		3,176		6		38,788
Commercial and Residential real estate	Commercial and Residential real estate	8,515		926		2,548		11,989		Commercial and Residential real estate	8,515		926		2,548		11,989
Securities-based lending and Other	Securities-based lending and Other	2,865		39		5,625		8,529		Securities-based lending and Other	2,865		39		5,625		8,529
Total Institutional Securities	Total Institutional Securities	53,575		14,775		8,179		76,529		Total Institutional Securities	53,575		14,775		8,179		76,529
Wealth Management:	Wealth Management:									Wealth Management:
Residential real estate	Residential real estate	54,460		4		—		54,464		Residential real estate	54,460		4		—		54,464
Securities-based lending and Other	Securities-based lending and Other	91,797		9		—		91,806		Securities-based lending and Other	91,797		9		—		91,806
Total Wealth Management	Total Wealth Management	146,257		13		—		146,270		Total Wealth Management	146,257		13		—		146,270
Total Investment Management1		4		—		218		222
Total Investment Management2										Total Investment Management2	4		—		218		222
Total loans	Total loans	199,836		14,788		8,397		223,021		Total loans	199,836		14,788		8,397		223,021
ACL	ACL	(839)						(839)		ACL	(839)						(839)
Total loans, net of ACL	Total loans, net of ACL	$	198,997	$	14,788	$	8,397	$	222,182	Total loans, net of ACL	$	198,997	$	14,788	$	8,397	$	222,182
Lending commitments3	Lending commitments3							$	136,960	Lending commitments3							$	136,960
Total exposure	Total exposure							$	359,142	Total exposure							$	359,142

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

1.FVO includes the fair value of certain unfunded lending commitments.

2.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.


			32


Table of Contents
Risk Disclosures

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 2022 Form 10-K.

Total loans and lending commitments increased by approximately $4$14 billion since December 31, 2022, primarily


~~March 2023 Form 10-Q~~			25


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

due to an increase in Corporate lending and Secured lending facilities within the Institutional Securities business segment.

See Notes 4, 5, 9 and 13 to the financial statements for further information.

Allowance for Credit Losses—Loans and Lending Commitments


$ in millions
ACL—Loans	$	839
ACL—Lending Commitments	504
Total at December 31, 2022	$	1,343
Gross charge-offs	~~(71)~~(141)
Recoveries	1
Net (charge-offs) recoveries	(140)
Provision for credit losses	~~234~~529
Other	3(6)
Total at ~~March 31,~~September 30, 2023	$	~~1,509~~1,726
ACL—Loans	$	~~970~~1,157
ACL—Lending commitments	~~539~~569

Provision for Credit Losses by Business Segment


		Three Months Ended March 31, 2023					Three Months Ended September 30, 2023						Nine Months Ended September 30, 2023
$ in millions	$ in millions		IS		WM			Total		$ in millions	IS		WM		Total		IS		WM		Total
Loans	Loans		$	160	$	41		$	201	Loans	$	80	$	43	$	123	$	314	$	148	$	462
Lending commitments	Lending commitments		29		4			33		Lending commitments	13		(2)		11		65		2		67
Total	Total		$	189	$	45		$	234	Total	$	93	$	41	$	134	$	379	$	150	$	529

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 allowance for credit losses for loans and 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 allowance for credit losses for loans and lending commitments increased ~~since December 31, 2022, reflecting deterioration~~ in ~~both~~ the ~~macroeconomic outlook and our expectations of~~current year period, primarily due to deteriorating conditions in the commercial real estate ~~borrowers.~~sector, including provisions for certain specific loans, mainly in the office portfolio, and modest growth in certain other loan portfolios. Charge-offs in the current year period were primarily related to commercial real estate and corporate loans.

The base scenario used in our ACL models as of ~~March 31,~~September 30, 2023 was generated using a combination of consensus economic forecasts, forward rates, and internally developed and validated models, and assumes anweak economic ~~contraction~~growth in 2023 ~~followed by a recovery in~~and 2024. Given the nature of our lending portfolio, the most sensitive model input is U.S. gross domestic product (“GDP”).

Forecasted U.S. Real GDP Growth Rates in Base Scenario

4Q 2023 4Q 2024
Year-over-year growth rate (0.1) % 2.0 %


	4Q 2023		4Q 2024
Year-over-year growth rate	0.9	%	1.2	%

See Note 9 to the financial statements for further information. See Note 2 to the financial statements in the 2022 Form 10-K for a discussion of the Firm’s ACL methodology under CECL.

Status of Loans Held for Investment


		At March 31, 2023				At December 31, 2022					At September 30, 2023				At December 31, 2022
		IS		WM		IS		WM			IS		WM		IS		WM
Accrual	Accrual	98.9	%	99.9	%	99.3	%	99.9	%	Accrual	99.4	%	99.8	%	99.3	%	99.9	%
Nonaccrual1	Nonaccrual1	1.1	%	0.1	%	0.7	%	0.1	%	Nonaccrual1	0.6	%	0.2	%	0.7	%	0.1	%

1.~~These~~Nonaccrual loans are ~~on nonaccrual status because the~~ loans ~~were~~where principal or interest is not expected when contractually due or are past due ~~for a period of~~ 90 days or ~~more or payment of principal or interest was~~more. For further information on our nonaccrual policy, see Note 2 to the financial statements in ~~doubt.~~the 2022 Form 10-K.

Net Charge-off Ratios for Loans Held for Investment


$ in millions	$ in millions	Corporate			Secured Lending Facilities			CRE			Residential Real Estate			SBL and Other			Total			$ in millions	Corporate			Secured Lending Facilities			CRE			Residential Real Estate			SBL and Other			Total
For the Three Months Ended March 31, 2023
For the Nine Months Ended September 30, 2023																				For the Nine Months Ended September 30, 2023
Net charge-off (recovery) ratio1	Net charge-off (recovery) ratio1	0.01		%	—		%	0.81		%	—		%	—		%	0.04		%	Net charge-off (recovery) ratio1	0.43		%	—		%	1.25		%	—		%	—		%	0.07		%
Average loans	Average loans	$	6,953		$	36,322		$	8,568		$	54,802		$	93,021		$	199,666		Average loans	$	7,057		$	37,346		$	8,612		$	56,330		$	91,583		$	200,928
For the Three Months Ended March 31, 2022
Net charge-off ratio1		—		%	0.01		%	0.09		%	—		%	—		%	0.01		%
For the Nine Months Ended September 30, 2022																				For the Nine Months Ended September 30, 2022
Net charge-off (recovery) ratio1																				Net charge-off (recovery) ratio1	(0.09)		%	0.01		%	0.09		%	—		%	0.02		%	0.01		%
Average loans	Average loans	$	5,802		$	31,353		$	7,805		$	45,521		$	87,900		$	178,381		Average loans	$	6,441		$	32,367		$	8,196		$	48,675		$	92,681		$	188,360

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 Commitments~~1

At March 31, 2023
Contractual Years to Maturity
$ in millions <1 1-5 5-15 >15 Total
Loans
AA $ 48 $ — $ 105 $ — $ 153
A 1,184 2,020 186 — 3,390
BBB 5,157 11,706 453 — 17,316
BB 13,020 17,732 623 377 31,752
Other NIG 7,942 11,081 3,440 181 22,644
Unrated2
72 956 586 1,956 3,570
Total loans, net of ACL 27,423 43,495 5,393 2,514 78,825
Lending commitments
AAA — 50 — — 50
AA 2,273 2,775 289 — 5,337
A 5,336 19,947 407 — 25,690
BBB 11,852 41,144 747 — 53,743
BB 3,680 17,212 863 171 21,926
Other NIG 1,226 13,411 861 3 15,501
Unrated2
2 5 — — 7
Total lending commitments 24,369 94,544 3,167 174 122,254
Total exposure $ 51,792 $ 138,039 $ 8,560 $ 2,688 $ 201,079


			2633			~~March 2023 Form 10-Q~~


Table of Contents
Risk Disclosures

Institutional Securities Loans and Lending Commitments1


	At September 30, 2023
	Contractual Years to Maturity
$ in millions	<1		1-5		5-15		>15		Total
Loans
AA	$	2	$	10	$	421	$	—	$	433
A	953		1,390		184		—		2,527
BBB	8,702		11,301		407		—		20,410
BB	10,124		15,569		1,807		229		27,729
Other NIG	8,725		11,720		3,387		132		23,964
Unrated2	58		781		271		2,474		3,584
Total loans, net of ACL	28,564		40,771		6,477		2,835		78,647
Lending commitments
AAA	—		50		—		—		50
AA	1,821		3,941		53		—		5,815
A	5,186		19,315		687		—		25,188
BBB	12,805		45,677		959		—		59,441
BB	3,589		16,221		1,571		468		21,849
Other NIG	1,076		14,135		1,126		3		16,340
Unrated2	2		2		2		—		6
Total lending commitments	24,479		99,341		4,398		471		128,689
Total exposure	$	53,043	$	140,112	$	10,875	$	3,306	$	207,336


	At December 31, 2022
	Contractual Years to Maturity
$ in millions	<1		1-5		5-15		>15		Total
Loans
AA	$	66	$	—	$	139	$	—	$	205
A	1,331		787		185		—		2,303
BBB	5,632		10,712		465		—		16,809
BB	11,045		19,219		796		162		31,222
Other NIG	7,274		10,249		3,945		139		21,607
Unrated2	95		924		624		2,066		3,709
Total loans, net of ACL	25,443		41,891		6,154		2,367		75,855
Lending commitments
AAA	—		50		—		—		50
AA	2,515		2,935		11		—		5,461
A	5,030		19,717		202		330		25,279
BBB	10,263		39,615		566		—		50,444
BB	3,691		17,656		1,416		96		22,859
Other NIG	1,173		13,872		530		—		15,575
Unrated2	—		20		—		3		23
Total lending commitments	22,672		93,865		2,725		429		119,691
Total exposure	$	48,115	$	135,756	$	8,879	$	2,796	$	195,546

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 “Quantitative and Qualitative Disclosures about Risk—Market Risk” herein.

Institutional Securities Loans and Lending Commitments by Industry


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Industry	Industry					Industry
Financials	Financials	$	52,298	$	54,222	Financials	$	55,932	$	54,222
Real estate	Real estate	36,203		32,358		Real estate	35,538		32,358
Industrials						Industrials	18,911		14,557
Communications services	Communications services	14,857		15,336		Communications services	15,182		15,336
Industrials		14,620		14,557
Consumer discretionary						Consumer discretionary	14,263		11,592
Information technology	Information technology	14,379		13,790		Information technology	11,987		13,790
Utilities						Utilities	11,785		10,542
Healthcare	Healthcare	12,506		12,353		Healthcare	11,580		12,353
Utilities		11,730		10,542
Consumer discretionary		11,540		11,592
Consumer staples	Consumer staples	10,317		7,823		Consumer staples	9,350		7,823
Energy	Energy	8,672		9,115		Energy	9,170		9,115
Insurance						Insurance	6,155		5,925
Materials	Materials	6,210		6,102		Materials	6,008		6,102
Insurance		5,979		5,925
Other	Other	1,768		1,831		Other	1,475		1,831
Total exposure	Total exposure	$	201,079	$	195,546	Total exposure	$	207,336	$	195,546

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 ~~March 31,~~September 30, 2023, 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 2022 Form 10-K.

Institutional Securities Event-Driven Loans and Lending Commitments


		At March 31, 2023								At September 30, 2023
		Contractual Years to Maturity								Contractual Years to Maturity
$ in millions	$ in millions	<1		1-5		5-15		Total			$ in millions	<1		1-5		5-15		Total
Loans, net of ACL	Loans, net of ACL	$	2,361	$	1,193	$	2,401	$	5,955		Loans, net of ACL	$	2,168	$	1,018	$	2,793	$	5,979
Lending commitments	Lending commitments	4,507		481		459		5,447			Lending commitments	4,361		1,710		622		6,693
Total exposure	Total exposure	$	6,868	$	1,674	$	2,860	$	11,402		Total exposure	$	6,529	$	2,728	$	3,415	$	12,672


	At December 31, 2022
	Contractual Years to Maturity
$ in millions	<1		1-5		5-15		Total
Loans, net of ACL	$	2,385	$	1,441	$	2,771	$	6,597
Lending commitments	3,079		861		603		4,543
Total exposure	$	5,464	$	2,302	$	3,374	$	11,140

Event-driven loans and lending commitments are associated with an underwriting and/or syndication to finance a specific transaction, such as 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 March 31, 2023
$ in millions Loans Lending Commitments Total
Corporate $ 7,435 $ 82,758 $ 90,193
Secured lending facilities 37,187 13,893 51,080
Commercial real estate 8,601 371 8,972
Securities-based lending and Other 3,430 955 4,385
Total, before ACL $ 56,653 $ 97,977 $ 154,630
ACL $ (765) $ (515) $ (1,280)

At December 31, 2022
$ in millions Loans Lending Commitments Total
Corporate $ 6,589 $ 79,882 $ 86,471
Secured lending facilities 35,606 12,803 48,409
Commercial real estate 8,515 374 8,889
Securities-based lending and Other 2,865 985 3,850
Total, before ACL $ 53,575 $ 94,044 $ 147,619
ACL $ (674) $ (484) $ (1,158)


~~March 2023 Form 10-Q~~			2734


Table of Contents
Risk Disclosures

Institutional Securities Loans and Lending Commitments Held for Investment


	At September 30, 2023
$ in millions	Loans		Lending Commitments		Total
Corporate	$	7,181	$	88,333	$	95,514
Secured lending facilities	39,119		15,055		54,174
Commercial real estate	8,389		389		8,778
Securities-based lending and Other	3,039		1,017		4,056
Total, before ACL	$	57,728	$	104,794	$	162,522
ACL	$	(845)	$	(547)	$	(1,392)


	At December 31, 2022
$ in millions		Loans		Lending Commitments		Total
Corporate		$	6,589	$	79,882	$	86,471
Secured lending facilities		35,606		12,803		48,409
Commercial real estate		8,515		374		8,889
Securities-based lending and Other		2,865		985		3,850
Total, before ACL		$	53,575	$	94,044	$	147,619
ACL		$	(674)	$	(484)	$	(1,158)

Institutional Securities Commercial Real Estate Loans and Lending Commitments

By Region


		At March 31, 2023						At December 31, 2022							At September 30, 2023						At December 31, 2022
$ in millions	$ in millions	Loans1		LC1		Total		Loans1		LC1		Total		$ in millions	Loans1		LC1		Total		Loans1		LC1		Total
Americas	Americas	$	6,103	$	367	$	6,470	$	6,320	$	378	$	6,698	Americas	$	5,752	$	334	$	6,086	$	6,320	$	378	$	6,698
EMEA	EMEA	3,367		84		3,451		3,040		79		3,119		EMEA	2,939		59		2,998		3,040		79		3,119
Asia	Asia	427		5		432		445		5		450		Asia	376		121		497		445		5		450
Total	Total	$	9,897	$	456	$	10,353	$	9,805	$	462	$	10,267	Total	$	9,067	$	514	$	9,581	$	9,805	$	462	$	10,267

By Property Type


		At March 31, 2023						At December 31, 2022							At September 30, 2023						At December 31, 2022
$ in millions	$ in millions	Loans1		LC1		Total		Loans1		LC1		Total		$ in millions	Loans1		LC1		Total		Loans1		LC1		Total
Office	Office	$	3,869	$	273	$	4,142	$	3,861	$	301	$	4,162	Office	$	3,529	$	217	$	3,746	$	3,861	$	301	$	4,162
Industrial	Industrial	2,689		18		2,707		2,561		25		2,586		Industrial	2,085		26		2,111		2,561		25		2,586
Multifamily	Multifamily	1,647		82		1,729		1,889		85		1,974		Multifamily	1,622		188		1,810		1,889		85		1,974
Hotel														Hotel	797		77		874		780		45		825
Retail	Retail	846		6		852		659		6		665		Retail	785		6		791		659		6		665
Hotel		834		77		911		780		45		825
Other	Other	12		—		12		55		—		55		Other	249		—		249		55		—		55
Total	Total	$	9,897	$	456	$	10,353	$	9,805	$	462	$	10,267	Total	$	9,067	$	514	$	9,581	$	9,805	$	462	$	10,267

LC–Lending Commitments

1. Amounts include HFI, HFS and ~~FVO.~~FVO loans and lending commitments. HFI loans are presented net of ACL.

The current economic environment and changes in business and consumer behavior ~~post-COVID~~ have adversely impacted commercial real estate borrowers due to pressure from higher interest rates, tenant lease renewals, and elevated refinancing risks for loans with near-term maturities, among other issues. While we continue to actively monitor all our loan portfolios, the commercial real estate sector remains under heightened focus given the sector’s sensitivity to economic and secular factors, credit conditions, and difficulties specific to certain property types, most notably office.

As of ~~March 31,~~September 30, 2023, our lending against commercial real estate (“CRE”) properties totaled ~~$10.4~~$9.6 billion within the Institutional Securities business ~~segment. Commercial real estate~~segment, which represents

4.6% of total exposure reflected in the Institutional Securities Loans and Lending Commitments table above. Those CRE loans are originated for experienced sponsors and are generally secured by specific institutional ~~commercial real estate~~CRE properties. In many cases, loans are subsequently syndicated or ~~securitized~~securitized on a full or partial basis, reducing our ongoing exposure.

In addition to the amounts included in the table above, we provide certain secured lending facilities which are collateralized by pooled CRE mortgage loans and are included in Secured lending facilities in the Institutional Securities Loans and Lending Commitments Held for Investment table above. These secured lending facilities benefit from structural protections including cross-collateralization and diversification across property types.

Institutional Securities Allowance for Credit Losses—Loans and Lending Commitments


$ in millions	$ in millions	Corporate		Secured Lending Facilities		Commercial Real Estate		Other		Total		$ in millions	Corporate		Secured Lending Facilities		Commercial Real Estate		Other		Total
ACL—Loans	ACL—Loans	$	235	$	153	$	275	$	11	$	674	ACL—Loans	$	235	$	153	$	275	$	11	$	674
ACL—Lending commitments	ACL—Lending commitments	411		51		15		7		484		ACL—Lending commitments	411		51		15		7		484
Total at December 31, 2022	Total at December 31, 2022	$	646	$	204	$	290	$	18	$	1,158	Total at December 31, 2022	$	646	$	204	$	290	$	18	$	1,158
Gross charge-offs	Gross charge-offs	(1)		—		(69)		—		(70)		Gross charge-offs	(30)		—		(108)		(1)		(139)

Provision for credit losses	Provision for credit losses	53		—		136		—		189		Provision for credit losses	73		26		273		7		379
Other	Other	2		(1)		—		2		3		Other	(2)		(1)		(3)		—		(6)
Total at March 31, 2023		$	700	$	203	$	357	$	20	$	1,280
Total at September 30, 2023												Total at September 30, 2023	$	687	$	229	$	452	$	24	$	1,392
ACL—Loans	ACL—Loans	$	265	$	152	$	335	$	13	$	765	ACL—Loans	$	248	$	154	$	426	$	17	$	845
ACL—Lending commitments	ACL—Lending commitments	435		51		22		7		515		ACL—Lending commitments	439		75		26		7		547

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


		At March 31, 2023		At December 31, 2022			At September 30, 2023		At December 31, 2022
Corporate	Corporate	3.6	%	3.6	%	Corporate	3.5	%	3.6	%
Secured lending facilities	Secured lending facilities	0.4	%	0.4	%	Secured lending facilities	0.4	%	0.4	%
Commercial real estate	Commercial real estate	3.9	%	3.2	%	Commercial real estate	5.1	%	3.2	%
Securities-based lending and Other	Securities-based lending and Other	0.4	%	0.4	%	Securities-based lending and Other	0.6	%	0.4	%
Total Institutional Securities loans	Total Institutional Securities loans	1.4	%	1.3	%	Total Institutional Securities loans	1.5	%	1.3	%

Wealth Management Loans and Lending Commitments


		At March 31, 2023											At September 30, 2023
		Contractual Years to Maturity											Contractual Years to Maturity
$ in millions	$ in millions	<1		1-5		5-15		>15		Total		$ in millions	<1		1-5		5-15		>15		Total
Securities-based lending and Other loans	Securities-based lending and Other loans	$	76,801	$	9,789	$	1,647	$	137	$	88,374	Securities-based lending and Other loans	$	76,816	$	8,488	$	1,522	$	137	$	86,963
Residential real estate loans	Residential real estate loans	1		39		1,351		53,919		55,310		Residential real estate loans	1		80		1,292		57,543		58,916
Total loans, net of ACL	Total loans, net of ACL	$	76,802	$	9,828	$	2,998	$	54,056	$	143,684	Total loans, net of ACL	$	76,817	$	8,568	$	2,814	$	57,680	$	145,879
Lending commitments	Lending commitments	12,985		4,492		32		333		17,842		Lending commitments	16,079		2,659		27		346		19,111
Total exposure	Total exposure	$	89,787	$	14,320	$	3,030	$	54,389	$	161,526	Total exposure	$	92,896	$	11,227	$	2,841	$	58,026	$	164,990


	At December 31, 2022
	Contractual Years to Maturity
$ in millions	<1		1-5		5-15		>15		Total
Securities-based lending and Other loans	$	80,526	$	9,371	$	1,692	$	140	$	91,729
Residential real estate loans	1		32		1,375		52,968		54,376
Total loans, net of ACL	$	80,527	$	9,403	$	3,067	$	53,108	$	146,105
Lending commitments	12,408		4,501		37		323		17,269
Total exposure	$	92,935	$	13,904	$	3,104	$	53,431	$	163,374


			35


Table of Contents
Risk Disclosures

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. Other loans include structured loans originated through the Firm’s private banking platform to high and ultra-high net worth clients that are mostly secured by various types of collateral, including stock, private investments, commercial real estate and other financial assets. For more information about our Securities-based lending and


			28			~~March 2023 Form 10-Q~~


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

Residential real estate loans, see “Quantitative and Qualitative Disclosures about Risk—Credit Risk” in the 2022 Form 10-K.

Wealth Management Commercial Real Estate Loans and Lending Commitments by Property Type


		At March 31, 2023						At December 31, 2022							At September 30, 2023						At December 31, 2022
$ in millions	$ in millions	Loans1		LC		Total		Loans1		LC		Total		$ in millions	Loans1		LC1		Total		Loans1		LC1		Total
Multifamily														Multifamily	$	1,925	$	155	$	2,080	$	1,661	$	142	$	1,803
Retail														Retail	2,045		12		2,057		2,135		6		2,141
Office	Office	$	1,669	$	1	$	1,670	$	1,675	$	1	$	1,676	Office	1,670		1		1,671		1,675		1		1,676
Industrial	Industrial	330		—		330		330		—		330		Industrial	415		—		415		330		—		330
Multifamily		1,848		140		1,988		1,661		142		1,803
Retail		2,125		9		2,134		2,135		6		2,141
Hotel	Hotel	418		—		418		419		—		419		Hotel	411		—		411		419		—		419
Other	Other	185		10		195		183		10		193		Other	438		10		448		183		10		193
Total	Total	$	6,575	$	160	$	6,735	$	6,403	$	159	$	6,562	Total	$	6,904	$	178	$	7,082	$	6,403	$	159	$	6,562

LC–Lending Commitments

1.Amounts include HFI ~~Loans~~loans and lending commitments. HFI loans are presented net of ACL.

As of ~~March 31,~~September 30, 2023, our direct lending against ~~commercial real estate properties~~CRE totaled ~~$6.7~~$7.1 billion within the Wealth Management business segment, which represents 4.3% of total exposure reflected in the Wealth Management Loans and ~~are~~Lending Commitmentstable above, primarily included within Securities-based lending and Other. Such loans are originated through our ~~private~~private banking platform, are both secured and generally benefiting from full or partial guarantees from high or ultra-high net worth ~~clients. All of our lending against commercial real estate properties within Wealth Management are in the Americas region.~~clients, which partially reduce associated credit risk. At both ~~March 31,~~September 30, 2023 and December 31, 2022, greater than 95% of the ~~commercial real estate~~CRE loans balance in the Wealth Management business segment ~~benefited from full or partial guarantees from high or ultra-high net worth clients.~~received guarantees. All of our lending against CRE properties within Wealth Management are in the Americas region.

Wealth Management Allowance for Credit Losses—Loans and Lending Commitments


$ in millions
ACL—Loans	$	165
ACL—Lending commitments	20
Total at December 31, 2022	$	185
Gross charge-offs	~~(1)~~(2)
Recoveries	1
Net (charge-offs) recoveries	(1)
Provision for credit losses	45150

Total at ~~March 31,~~September 30, 2023	$	~~229~~334
ACL—Loans	$	~~205~~312
ACL—Lending commitments	2422

At ~~March 31,~~September 30, 2023, more than 75% of Wealth Management residential real estate loans were to borrowers with “Exceptional” or “Very Good” FICO scores (i.e., exceeding 740). Additionally, Wealth Management’s 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


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Institutional Securities	Institutional Securities	$	18,304	$	16,591	Institutional Securities	$	19,670	$	16,591
Wealth Management	Wealth Management	21,050		21,933		Wealth Management	23,029		21,933
Total	Total	$	39,354	$	38,524	Total	$	42,699	$	38,524

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. 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 2022 Form 10-K.

Employee Loans

For information on employee loans and related ACL, see Note 9 to the financial statements.


~~March 2023 Form 10-Q~~			2936


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 March 31, 2023
At September 30, 2023														At September 30, 2023
Less than 1 year	Less than 1 year	$	2,071	$	15,151	$	32,023	$	29,160	$	9,933	$	88,338	Less than 1 year	$	2,018	$	18,524	$	40,635	$	27,488	$	8,951	$	97,616
1-3 years	1-3 years	1,520		7,243		14,507		16,267		7,213		46,750		1-3 years	1,359		11,520		19,873		14,941		8,006		55,699
3-5 years	3-5 years	633		6,542		7,117		8,750		3,196		26,238		3-5 years	864		11,450		9,207		7,126		3,423		32,070
Over 5 years	Over 5 years	3,959		39,743		38,447		37,361		6,011		125,521		Over 5 years	4,006		62,666		52,066		31,760		6,103		156,601
Total, gross	Total, gross	$	8,183	$	68,679	$	92,094	$	91,538	$	26,353	$	286,847	Total, gross	$	8,247	$	104,160	$	121,781	$	81,315	$	26,483	$	341,986
Counterparty netting	Counterparty netting	(3,599)		(55,095)		(66,179)		(71,713)		(14,946)		(211,532)		Counterparty netting	(3,884)		(87,437)		(89,407)		(60,211)		(15,375)		(256,314)
Cash and securities collateral	Cash and securities collateral	(2,929)		(11,078)		(22,797)		(13,729)		(5,456)		(55,989)		Cash and securities collateral	(2,234)		(14,725)		(28,196)		(14,445)		(6,368)		(65,968)
Total, net	Total, net	$	1,655	$	2,506	$	3,118	$	6,096	$	5,951	$	19,326	Total, net	$	2,129	$	1,998	$	4,178	$	6,659	$	4,740	$	19,704


	Counterparty Credit Rating1
$ in millions	AAA		AA		A		BBB		NIG		Total
At December 31, 2022
Less than 1 year	$	2,903	$	18,166	$	40,825	$	32,373	$	10,730	$	104,997
1-3 years	1,818		8,648		17,113		19,365		6,974		53,918
3-5 years	655		6,834		8,632		9,105		4,049		29,275
Over 5 years	4,206		42,613		45,488		46,660		8,244		147,211
Total, gross	$	9,582	$	76,261	$	112,058	$	107,503	$	29,997	$	335,401
Counterparty netting	(4,037)		(60,451)		(79,334)		(85,786)		(17,415)		(247,023)
Cash and securities collateral	(3,632)		(13,402)		(28,776)		(14,457)		(5,198)		(65,465)
Total, net	$	1,913	$	2,408	$	3,948	$	7,260	$	7,384	$	22,913


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Industry	Industry					Industry
Financials	Financials	$	5,677	$	6,294	Financials	$	6,225	$	6,294
Utilities	Utilities	4,562		5,656		Utilities	4,155		5,656
Regional governments	Regional governments	1,839		2,052		Regional governments	2,256		2,052
Energy	Energy	1,480		2,851		Energy	1,222		2,851
Industrials	Industrials	1,287		1,433		Industrials	1,186		1,433
Communications services	Communications services	1,036		1,051		Communications services	1,013		1,051
Consumer discretionary						Consumer discretionary	630		290
Information technology						Information technology	585		480
Consumer staples	Consumer staples	707		687		Consumer staples	553		687
Sovereign governments						Sovereign governments	453		410
Healthcare	Healthcare	509		565		Healthcare	352		565
Information technology		468		480
Consumer Discretionary		453		290
Materials	Materials	310		317		Materials	291		317
Insurance						Insurance	191		185
Not-for-profit organizations	Not-for-profit organizations	214		204		Not-for-profit organizations	118		204
Insurance		174		185
Sovereign governments		162		410
Real estate	Real estate	113		95		Real estate	83		95
Other	Other	335		343		Other	391		343
Total	Total	$	19,326	$	22,913	Total	$	19,704	$	22,913

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. For more information on derivatives, see “Quantitative and Qualitative Disclosures about Risk—Credit Risk—Derivatives” in the 2022 Form 10-K and Note 6 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 2022 Form 10-K.

Top 10 Non-U.S. Country Exposures at ~~March 31,~~September 30, 2023


$ in millions	$ in millions	United Kingdom		Germany		Japan		France		Australia		$ in millions	United Kingdom		France		Germany		Brazil		Japan
Sovereign	Sovereign											Sovereign
Net inventory1	Net inventory1	$	(419)	$	(611)	$	300	$	75	$	132	Net inventory1	$	(555)	$	959	$	(470)	$	3,449	$	(123)
Net counterparty exposure2	Net counterparty exposure2	10		118		196		12		88		Net counterparty exposure2	31		1		130		—		35

Exposure before hedges	Exposure before hedges	(409)		(493)		496		87		220		Exposure before hedges	(524)		960		(340)		3,449		(88)
Hedges3	Hedges3	(56)		(273)		(187)		(6)		—		Hedges3	(55)		(6)		(262)		(161)		(182)
Net exposure	Net exposure	$	(465)	$	(766)	$	309	$	81	$	220	Net exposure	$	(579)	$	954	$	(602)	$	3,288	$	(270)

Non-sovereign	Non-sovereign											Non-sovereign
Net inventory1	Net inventory1	$	1,491	$	190	$	1,140	$	17	$	498	Net inventory1	$	1,635	$	818	$	983	$	125	$	910
Net counterparty exposure2	Net counterparty exposure2	9,992		3,819		4,572		3,487		881		Net counterparty exposure2	7,597		3,016		2,201		403		3,919
Loans	Loans	5,481		990		329		1,001		1,494		Loans	7,972		819		1,014		386		40
Lending commitments	Lending commitments	6,760		4,108		—		2,742		1,084		Lending commitments	7,107		2,954		4,456		306		—
Exposure before hedges	Exposure before hedges	23,724		9,107		6,041		7,247		3,957		Exposure before hedges	24,311		7,607		8,654		1,220		4,869
Hedges3	Hedges3	(2,026)		(1,706)		(625)		(2,210)		(297)		Hedges3	(1,791)		(1,998)		(1,743)		(36)		(524)
Net exposure	Net exposure	$	21,698	$	7,401	$	5,416	$	5,037	$	3,660	Net exposure	$	22,520	$	5,609	$	6,911	$	1,184	$	4,345
Total net exposure	Total net exposure	$	21,233	$	6,635	$	5,725	$	5,118	$	3,880	Total net exposure	$	21,941	$	6,563	$	6,309	$	4,472	$	4,075


$ in millions	$ in millions	Brazil		China		India		Canada		Spain		$ in millions	China		Australia		Canada		Ireland		Spain
Sovereign	Sovereign											Sovereign
Net inventory1	Net inventory1	$	2,555	$	290	$	1,356	$	242	$	141	Net inventory1	$	1,171	$	(1)	$	335	$	153	$	(619)
Net counterparty exposure2	Net counterparty exposure2	5		197		—		67		51		Net counterparty exposure2	114		153		66		—		1

Exposure before hedges	Exposure before hedges	2,560		487		1,356		309		192		Exposure before hedges	1,285		152		401		153		(618)
Hedges3	Hedges3	(195)		(65)		—		—		(8)		Hedges3	(65)		—		—		—		(8)
Net exposure	Net exposure	$	2,365	$	422	$	1,356	$	309	$	184	Net exposure	$	1,220	$	152	$	401	$	153	$	(626)

Non-sovereign	Non-sovereign											Non-sovereign
Net inventory1	Net inventory1	$	167	$	2,048	$	1,028	$	510	$	305	Net inventory1	$	1,545	$	509	$	456	$	665	$	296
Net counterparty exposure2	Net counterparty exposure2	574		188		1,006		1,094		375		Net counterparty exposure2	158		747		937		385		401
Loans	Loans	308		568		135		382		2,171		Loans	470		1,623		368		1,577		1,935
Lending commitments	Lending commitments	404		652		—		1,381		857		Lending commitments	664		1,009		1,384		457		1,147
Exposure before hedges	Exposure before hedges	1,453		3,456		2,169		3,367		3,708		Exposure before hedges	2,837		3,888		3,145		3,084		3,779
Hedges3	Hedges3	(42)		(125)		—		(183)		(584)		Hedges3	(86)		(411)		(57)		(4)		(334)
Net exposure	Net exposure	$	1,411	$	3,331	$	2,169	$	3,184	$	3,124	Net exposure	$	2,751	$	3,477	$	3,088	$	3,080	$	3,445
Total net exposure	Total net exposure	$	3,776	$	3,753	$	3,525	$	3,493	$	3,308	Total net exposure	$	3,971	$	3,629	$	3,489	$	3,233	$	2,819

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 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 2022 Form 10-K.


			3037			~~March 2023 Form 10-Q~~


Table of Contents
Risk Disclosures

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

Collateral Held against Net Counterparty Exposure1


$ in millions		At ~~March 31,~~September 30, 2023
Country of Risk	Collateral2
United Kingdom	U.K., U.S. and ~~France~~Japan	$	~~8,122~~8,914
~~Germany~~Japan	~~France, Spain,~~Japan and ~~Portugal~~U.S.	~~6,442~~7,150
Other	~~Japan,~~U.S., France and ~~Spain~~Italy	~~15,217~~16,453

1.The benefit of collateral received is reflected in the Top 10 Non-U.S. Country Exposures at ~~March 31,~~September 30, 2023.

2.Primarily consists of cash 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, legal and compliance risks, or damage to physical 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 2022 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 2022 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 2022 Form 10-K and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” herein.

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 2022 Form 10-K.

Climate Risk

Climate change manifests as physical and transition risks. The physical risks of climate change include acute events, such as flooding, hurricanes, heatwaves and wildfires, and chronic, longer-term shifts in climate patterns, such as increasing global average temperatures, rising sea levels, and droughts. Transition risks are policy, legal, technological, and market changes to address climate risks and include changes in consumer behavior, shareholder preferences, and any additional regulatory and legislative requirements, such as carbon taxes. Climate risk, which is not expected to have a significant effect on our consolidated results of operations or financial condition in the near-term, is an overarching risk that can impact other categories of risk over the longer-term. For a further discussion about our climate risk, see “Quantitative and Qualitative Disclosures about Risk—Climate Risk” in the 2022 Form 10-K.


~~March 2023 Form 10-Q~~			3138


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 ~~March 31,~~September 30, 2023, and the related condensed consolidated income statements, comprehensive income statements ~~cash flow statements~~ and statements of changes in total equity for the three-month and nine-month periods ended ~~March 31,~~September 30, 2023 and 2022, and the cash flow statements for the nine-month periods ended September 30, 2023 and 2022, 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, 2022, 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 24, 2023, 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, 2022, 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
~~May 2,~~November 3, 2023


			3239			~~March 2023 Form 10-Q~~


Table of Contents
Consolidated Income Statement (Unaudited)


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
in millions, except per share data	in millions, except per share data		2023		2022			in millions, except per share data	2023		2022		2023		2022
Revenues	Revenues							Revenues
Investment banking	Investment banking		$	1,330	$	1,758		Investment banking	$	1,048	$	1,373	$	3,533	$	4,281
Trading	Trading		4,477		3,983			Trading	3,679		3,331		11,958		10,911
Investments	Investments		145		75			Investments	144		(168)		384		(70)
Commissions and fees	Commissions and fees		1,239		1,416			Commissions and fees	1,098		1,133		3,427		3,769
Asset management	Asset management		4,728		5,119			Asset management	5,031		4,744		14,576		14,775
Other	Other		252		234			Other	296		63		1,036		245
Total non-interest revenues	Total non-interest revenues		12,171		12,585			Total non-interest revenues	11,296		10,476		34,914		33,911
Interest income	Interest income		10,870		2,650			Interest income	13,305		6,101		36,223		12,363
Interest expense	Interest expense		8,524		434			Interest expense	11,328		3,591		29,890		5,355
Net interest	Net interest		2,346		2,216			Net interest	1,977		2,510		6,333		7,008
Net revenues	Net revenues		14,517		14,801			Net revenues	13,273		12,986		41,247		40,919
Provision for credit losses	Provision for credit losses		234		57			Provision for credit losses	134		35		529		193
Non-interest expenses	Non-interest expenses							Non-interest expenses
Compensation and benefits	Compensation and benefits		6,410		6,274			Compensation and benefits	5,935		5,614		18,607		17,438
Brokerage, clearing and exchange fees	Brokerage, clearing and exchange fees		881		882			Brokerage, clearing and exchange fees	855		847		2,611		2,607
Information processing and communications	Information processing and communications		915		829			Information processing and communications	947		874		2,788		2,560
Professional services	Professional services		710		705			Professional services	759		755		2,236		2,217
Occupancy and equipment	Occupancy and equipment		440		427			Occupancy and equipment	456		429		1,367		1,286
Marketing and business development	Marketing and business development		247		175			Marketing and business development	191		215		674		610
Other	Other		920		864			Other	851		829		2,718		2,713
Total non-interest expenses	Total non-interest expenses		10,523		10,156			Total non-interest expenses	9,994		9,563		31,001		29,431
Income before provision for income taxes	Income before provision for income taxes		3,760		4,588			Income before provision for income taxes	3,145		3,388		9,717		11,295
Provision for income taxes	Provision for income taxes		727		873			Provision for income taxes	710		726		2,028		2,382
Net income	Net income		$	3,033	$	3,715		Net income	$	2,435	$	2,662	$	7,689	$	8,913
Net income applicable to noncontrolling interests	Net income applicable to noncontrolling interests		53		49			Net income applicable to noncontrolling interests	27		30		119		120
Net income applicable to Morgan Stanley	Net income applicable to Morgan Stanley		$	2,980	$	3,666		Net income applicable to Morgan Stanley	$	2,408	$	2,632	$	7,570	$	8,793
Preferred stock dividends	Preferred stock dividends		144		124			Preferred stock dividends	146		138		423		366
Earnings applicable to Morgan Stanley common shareholders	Earnings applicable to Morgan Stanley common shareholders		$	2,836	$	3,542		Earnings applicable to Morgan Stanley common shareholders	$	2,262	$	2,494	$	7,147	$	8,427
Earnings per common share	Earnings per common share							Earnings per common share
Basic	Basic		$	1.72	$	2.04		Basic	$	1.39	$	1.49	$	4.37	$	4.95
Diluted	Diluted		$	1.70	$	2.02		Diluted	$	1.38	$	1.47	$	4.33	$	4.88
Average common shares outstanding	Average common shares outstanding							Average common shares outstanding
Basic	Basic		1,645		1,733			Basic	1,624		1,674		1,635		1,704
Diluted	Diluted		1,663		1,755			Diluted	1,643		1,697		1,653		1,725

Consolidated Comprehensive Income Statement

(Unaudited)

Three Months Ended
March 31,
$ in millions 2023 2022
Net income $ 3,033 $ 3,715
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments 20 (105)
Change in net unrealized gains (losses) on available-for-sale securities 512 (2,395)
Pension and other (1) 5
Change in net debt valuation adjustment (15) 660
Net change in cash flow hedges 7 —
Total other comprehensive income (loss) $ 523 $ (1,835)
Comprehensive income $ 3,556 $ 1,880
Net income applicable to noncontrolling interests 53 49
Other comprehensive income (loss) applicable to noncontrolling interests (19) (35)
Comprehensive income applicable to Morgan Stanley $ 3,522 $ 1,866


	Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	2023		2022		2023		2022
Net income	$	2,435	$	2,662	$	7,689	$	8,913
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(149)		(268)		(240)		(661)
Change in net unrealized gains (losses) on available-for-sale securities	(366)		(1,307)		125		(4,778)
Pension and other	(1)		5		(3)		13
Change in net debt valuation adjustment	(414)		816		(960)		2,628
Net change in cash flow hedges	(3)		—		(16)		—
Total other comprehensive income (loss)	$	(933)	$	(754)	$	(1,094)	$	(2,798)
Comprehensive income	$	1,502	$	1,908	$	6,595	$	6,115
Net income applicable to noncontrolling interests	27		30		119		120
Other comprehensive income (loss) applicable to noncontrolling interests	(31)		(17)		(145)		(142)
Comprehensive income applicable to Morgan Stanley	$	1,506	$	1,895	$	6,621	$	6,137


September 2023 Form 10-Q			40			See Notes to Consolidated Financial Statements			33			~~March 2023 Form 10-Q~~


Table of Contents
Consolidated Balance Sheet


$ in millions, except share data	$ in millions, except share data	(Unaudited) At March 31, 2023		At December 31, 2022		$ in millions, except share data	(Unaudited) At September 30, 2023		At December 31, 2022
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	111,258	$	128,127	Cash and cash equivalents	$	108,401	$	128,127
Trading assets at fair value ($127,205 and $124,411 were pledged to various parties)		320,301		301,315
Trading assets at fair value ($137,504 and $124,411 were pledged to various parties)						Trading assets at fair value ($137,504 and $124,411 were pledged to various parties)	346,685		301,315
Investment securities:	Investment securities:					Investment securities:
Available-for-sale at fair value (amortized cost of $88,738 and $89,772)		83,932		84,297
Held-to-maturity (fair value of $64,419 and $65,006)		74,012		75,634
Securities purchased under agreements to resell (includes $8 and $8 at fair value)		121,885		113,907
Available-for-sale at fair value (amortized cost of $81,573 and $89,772)						Available-for-sale at fair value (amortized cost of $81,573 and $89,772)	76,261		84,297
Held-to-maturity (fair value of $58,324 and $65,006)						Held-to-maturity (fair value of $58,324 and $65,006)	70,705		75,634
Securities purchased under agreements to resell (includes $— and $8 at fair value)						Securities purchased under agreements to resell (includes $— and $8 at fair value)	101,569		113,907
Securities borrowed	Securities borrowed	146,216		133,374		Securities borrowed	120,916		133,374
Customer and other receivables	Customer and other receivables	74,095		78,540		Customer and other receivables	76,495		78,540
Loans:	Loans:					Loans:
Held for investment (net of allowance for credit losses of $970 and $839)		199,550		198,997
Held for investment (net of allowance for credit losses of $1,157 and $839)						Held for investment (net of allowance for credit losses of $1,157 and $839)	202,742		198,997
Held for sale	Held for sale	15,146		14,788		Held for sale	14,230		14,788
Goodwill	Goodwill	16,657		16,652		Goodwill	16,699		16,652
Intangible assets (net of accumulated amortization of $4,404 and $4,253)		7,470		7,618
Intangible assets (net of accumulated amortization of $4,704 and $4,253)						Intangible assets (net of accumulated amortization of $4,704 and $4,253)	7,204		7,618
Other assets	Other assets	29,382		26,982		Other assets	27,106		26,982
Total assets	Total assets	$	1,199,904	$	1,180,231	Total assets	$	1,169,013	$	1,180,231
Liabilities	Liabilities					Liabilities
Deposits (includes $5,042 and $4,796 at fair value)		$	347,523	$	356,646
Deposits (includes $6,318 and $4,796 at fair value)						Deposits (includes $6,318 and $4,796 at fair value)	$	345,458	$	356,646
Trading liabilities at fair value	Trading liabilities at fair value	170,764		154,438		Trading liabilities at fair value	150,298		154,438
Securities sold under agreements to repurchase (includes $872 and $864 at fair value)		60,491		62,534
Securities sold under agreements to repurchase (includes $1,002 and $864 at fair value)						Securities sold under agreements to repurchase (includes $1,002 and $864 at fair value)	76,661		62,534
Securities loaned	Securities loaned	15,588		15,679		Securities loaned	13,064		15,679
Other secured financings (includes $5,005 and $4,550 at fair value)		8,670		8,158
Other secured financings (includes $7,012 and $4,550 at fair value)						Other secured financings (includes $7,012 and $4,550 at fair value)	9,668		8,158
Customer and other payables	Customer and other payables	220,700		216,134		Customer and other payables	200,479		216,134
Other liabilities and accrued expenses	Other liabilities and accrued expenses	24,032		27,353		Other liabilities and accrued expenses	26,034		27,353
Borrowings (includes $86,422 and $78,720 at fair value)		250,182		238,058
Borrowings (includes $86,556 and $78,720 at fair value)						Borrowings (includes $86,556 and $78,720 at fair value)	247,193		238,058
Total liabilities	Total liabilities	1,097,950		1,079,000		Total liabilities	1,068,855		1,079,000
Commitments and contingent liabilities (see Note 13)	Commitments and contingent liabilities (see Note 13)					Commitments and contingent liabilities (see Note 13)
Equity	Equity					Equity
Morgan Stanley shareholders’ equity:	Morgan Stanley shareholders’ equity:					Morgan Stanley shareholders’ equity:
Preferred stock	Preferred stock	8,750		8,750		Preferred stock	8,750		8,750
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: 1,670,318,320 and 1,675,487,409		20		20
Shares authorized: 3,500,000,000; Shares issued: 2,038,893,979; Shares outstanding: 1,642,250,165 and 1,675,487,409						Shares authorized: 3,500,000,000; Shares issued: 2,038,893,979; Shares outstanding: 1,642,250,165 and 1,675,487,409	20		20
Additional paid-in capital	Additional paid-in capital	28,856		29,339		Additional paid-in capital	29,595		29,339
Retained earnings	Retained earnings	96,392		94,862		Retained earnings	98,007		94,862
Employee stock trusts	Employee stock trusts	5,343		4,881		Employee stock trusts	5,244		4,881
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(5,711)		(6,253)		Accumulated other comprehensive income (loss)	(7,202)		(6,253)
Common stock held in treasury at cost, $0.01 par value (368,575,659 and 363,406,570 shares)		(27,481)		(26,577)
Common stock held in treasury at cost, $0.01 par value (396,643,814 and 363,406,570 shares)						Common stock held in treasury at cost, $0.01 par value (396,643,814 and 363,406,570 shares)	(29,959)		(26,577)
Common stock issued to employee stock trusts	Common stock issued to employee stock trusts	(5,343)		(4,881)		Common stock issued to employee stock trusts	(5,244)		(4,881)
Total Morgan Stanley shareholders’ equity	Total Morgan Stanley shareholders’ equity	100,826		100,141		Total Morgan Stanley shareholders’ equity	99,211		100,141
Noncontrolling interests	Noncontrolling interests	1,128		1,090		Noncontrolling interests	947		1,090
Total equity	Total equity	101,954		101,231		Total equity	100,158		101,231
Total liabilities and equity	Total liabilities and equity	$	1,199,904	$	1,180,231	Total liabilities and equity	$	1,169,013	$	1,180,231


~~March 2023 Form 10-Q~~			34			See Notes to Consolidated Financial Statements			41			September 2023 Form 10-Q


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


		Three Months Ended March 31,					Three Months Ended September 30, 2023				Nine Months Ended September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
Preferred Stock	Preferred Stock							Preferred Stock
Beginning and ending balance			$	8,750	$	7,750
Beginning balance								Beginning balance	$	8,750	$	7,750	$	8,750	$	7,750
Issuance of preferred stock								Issuance of preferred stock	—		1,000		—		1,000

Ending balance								Ending balance	8,750		8,750		8,750		8,750
Common Stock	Common Stock							Common Stock
Beginning and ending balance	Beginning and ending balance		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		29,339		28,841			Beginning balance	29,245		28,394		29,339		28,841
Share-based award activity	Share-based award activity		(483)		(834)			Share-based award activity	350		505		256		57

Issuance of preferred stock								Issuance of preferred stock	—		(6)		—		(6)
Other net increases (decreases)								Other net increases (decreases)	—		—		—		1
Ending balance	Ending balance		28,856		28,007			Ending balance	29,595		28,893		29,595		28,893
Retained Earnings	Retained Earnings							Retained Earnings
Beginning balance	Beginning balance		94,862		89,432			Beginning balance	97,151		92,889		94,862		89,432
Net income applicable to Morgan Stanley	Net income applicable to Morgan Stanley		2,980		3,666			Net income applicable to Morgan Stanley	2,408		2,632		7,570		8,793
Preferred stock dividends1	Preferred stock dividends1		(144)		(124)			Preferred stock dividends1	(146)		(138)		(423)		(366)
Common stock dividends1	Common stock dividends1		(1,305)		(1,252)			Common stock dividends1	(1,404)		(1,329)		(4,001)		(3,802)
Other net increases (decreases)	Other net increases (decreases)		(1)		—			Other net increases (decreases)	(2)		1		(1)		(2)
Ending balance	Ending balance		96,392		91,722			Ending balance	98,007		94,055		98,007		94,055
Employee Stock Trusts	Employee Stock Trusts							Employee Stock Trusts
Beginning balance	Beginning balance		4,881		3,955			Beginning balance	5,258		4,900		4,881		3,955
Share-based award activity	Share-based award activity		462		1,020			Share-based award activity	(14)		(40)		363		905
Ending balance	Ending balance		5,343		4,975			Ending balance	5,244		4,860		5,244		4,860
Accumulated Other Comprehensive Income (Loss)	Accumulated Other Comprehensive Income (Loss)							Accumulated Other Comprehensive Income (Loss)
Beginning balance	Beginning balance		(6,253)		(3,102)			Beginning balance	(6,300)		(5,021)		(6,253)		(3,102)
Net change in Accumulated other comprehensive income (loss)	Net change in Accumulated other comprehensive income (loss)		542		(1,800)			Net change in Accumulated other comprehensive income (loss)	(902)		(737)		(949)		(2,656)
Ending balance	Ending balance		(5,711)		(4,902)			Ending balance	(7,202)		(5,758)		(7,202)		(5,758)
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		(26,577)		(17,500)			Beginning balance	(28,480)		(22,436)		(26,577)		(17,500)
Share-based award activity	Share-based award activity		1,304		1,485			Share-based award activity	77		95		1,479		1,677
Repurchases of common stock and employee tax withholdings	Repurchases of common stock and employee tax withholdings		(2,208)		(3,681)			Repurchases of common stock and employee tax withholdings	(1,556)		(2,608)		(4,861)		(9,126)
Ending balance	Ending balance		(27,481)		(19,696)			Ending balance	(29,959)		(24,949)		(29,959)		(24,949)
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		(4,881)		(3,955)			Beginning balance	(5,258)		(4,900)		(4,881)		(3,955)
Share-based award activity	Share-based award activity		(462)		(1,020)			Share-based award activity	14		40		(363)		(905)
Ending balance	Ending balance		(5,343)		(4,975)			Ending balance	(5,244)		(4,860)		(5,244)		(4,860)
Noncontrolling Interests	Noncontrolling Interests							Noncontrolling Interests
Beginning balance	Beginning balance		1,090		1,157			Beginning balance	975		1,066		1,090		1,157
Net income applicable to noncontrolling interests	Net income applicable to noncontrolling interests		53		49			Net income applicable to noncontrolling interests	27		30		119		120
Net change in Accumulated other comprehensive income (loss) applicable to noncontrolling interests	Net change in Accumulated other comprehensive income (loss) applicable to noncontrolling interests		(19)		(35)			Net change in Accumulated other comprehensive income (loss) applicable to noncontrolling interests	(31)		(17)		(145)		(142)
Other net increases (decreases)	Other net increases (decreases)		4		3			Other net increases (decreases)	(24)		(1)		(117)		(57)
Ending balance	Ending balance		1,128		1,174			Ending balance	947		1,078		947		1,078
Total Equity	Total Equity		$	101,954	$	104,075		Total Equity	$	100,158	$	102,089	$	100,158	$	102,089

1.See Note 16 for information regarding dividends per share for each class of stock.


September 2023 Form 10-Q			42			See Notes to Consolidated Financial Statements			35			~~March 2023 Form 10-Q~~


Table of Contents
Consolidated Cash Flow Statement (Unaudited)


		Three Months Ended March 31,					Nine Months Ended September 30,
$ in millions	$ in millions	2023		2022		$ in millions	2023		2022
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net income	Net income	$	3,033	$	3,715	Net income	$	7,689	$	8,913
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	558		431		Stock-based compensation expense	1,348		1,377
Depreciation and amortization	Depreciation and amortization	940		942		Depreciation and amortization	2,850		2,791
Provision for credit losses	Provision for credit losses	234		57		Provision for credit losses	529		193
Other operating adjustments	Other operating adjustments	66		51		Other operating adjustments	44		508
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	2,582		5,069		Trading assets, net of Trading liabilities	(53,171)		(23,285)
Securities borrowed	Securities borrowed	(12,842)		(21,282)		Securities borrowed	12,458		(6,765)
Securities loaned	Securities loaned	(91)		1,923		Securities loaned	(2,615)		798
Customer and other receivables and other assets	Customer and other receivables and other assets	4,899		1,227		Customer and other receivables and other assets	3,884		7,966
Customer and other payables and other liabilities	Customer and other payables and other liabilities	777		17,994		Customer and other payables and other liabilities	(15,265)		8,283
Securities purchased under agreements to resell	Securities purchased under agreements to resell	(7,978)		(7,768)		Securities purchased under agreements to resell	12,338		8,875
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	(2,043)		(2,120)		Securities sold under agreements to repurchase	14,127		(2,055)
Net cash provided by (used for) operating activities	Net cash provided by (used for) operating activities	(9,865)		239		Net cash provided by (used for) operating activities	(15,784)		7,599
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	Other assets—Premises, equipment and software	(719)		(652)		Other assets—Premises, equipment and software	(2,483)		(2,308)
Changes in loans, net	Changes in loans, net	(822)		(7,479)		Changes in loans, net	(4,186)		(23,280)
AFS securities1:
AFS securities:						AFS securities:
Purchases	Purchases	(3,475)		(14,125)		Purchases	(9,522)		(22,636)
Proceeds from sales	Proceeds from sales	1,466		18,469		Proceeds from sales	5,315		21,922
Proceeds from paydowns and maturities	Proceeds from paydowns and maturities	3,460		4,301		Proceeds from paydowns and maturities	12,017		11,682
HTM securities1:
HTM securities:						HTM securities:
Purchases	Purchases	—		(3,334)		Purchases	—		(5,231)
Proceeds from paydowns and maturities	Proceeds from paydowns and maturities	1,617		3,102		Proceeds from paydowns and maturities	4,922		7,837
Other investing activities	Other investing activities	(2,568)		(124)		Other investing activities	(346)		(516)
Net cash provided by (used for) investing activities	Net cash provided by (used for) investing activities	(1,041)		158		Net cash provided by (used for) investing activities	5,717		(12,530)
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	356		(636)		Other secured financings	146		(1,352)
Deposits	Deposits	(9,084)		5,834		Deposits	(11,188)		(16,816)
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	21,219		20,284		Proceeds from issuance of Borrowings	60,916		54,283
Payments for:	Payments for:					Payments for:
Borrowings	Borrowings	(15,201)		(11,094)		Borrowings	(48,847)		(27,019)
Repurchases of common stock and employee tax withholdings	Repurchases of common stock and employee tax withholdings	(2,205)		(3,681)		Repurchases of common stock and employee tax withholdings	(4,836)		(9,126)
Cash dividends	Cash dividends	(1,406)		(1,314)		Cash dividends	(4,286)		(4,023)
Other financing activities	Other financing activities	33		(102)		Other financing activities	(325)		(202)
Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	(6,288)		9,291		Net cash provided by (used for) financing activities	(8,420)		(3,261)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	325		(1,327)		Effect of exchange rate changes on cash and cash equivalents	(1,239)		(7,837)
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	(16,869)		8,361		Net increase (decrease) in cash and cash equivalents	(19,726)		(16,029)
Cash and cash equivalents, at beginning of period	Cash and cash equivalents, at beginning of period	128,127		127,725		Cash and cash equivalents, at beginning of period	128,127		127,725
Cash and cash equivalents, at end of period	Cash and cash equivalents, at end of period	$	111,258	$	136,086	Cash and cash equivalents, at end of period	$	108,401	$	111,696
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	$	8,912	$	623	Interest	$	30,299	$	4,339
Income taxes, net of refunds	Income taxes, net of refunds	307		383		Income taxes, net of refunds	1,248		2,805

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.~~


~~March 2023 Form 10-Q~~			36			See Notes to Consolidated Financial Statements			43			September 2023 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. 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:

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 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 2022 Form 10-K. Certain footnote disclosures included in the 2022 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 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 2022 Form 10-K.

2. Significant Accounting Policies

For a detailed discussion about the Firm’s significant accounting policies and for further information on accounting

~~March~~September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

updates adopted in the prior year, see Note 2 to the financial statements in the 2022 Form 10-K.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2023 there were no significant updates to the Firm’s significant accounting policies, other than for the accounting ~~update~~updates adopted.

Accounting ~~Update~~Updates Adopted in 2023

Fair Value Measurement - Equity Securities Subject to Contractual Sale Restrictions

The Firm early adopted the Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions accounting update on July 1, 2023, with no material impact on the Firm’s financial condition or results of operations upon adoption. The update clarifies that a contractual sale restriction is not considered part of the unit of account of an equity security and, therefore, is not considered in measuring fair value.

Financial Instruments - Credit Losses

The Firm adopted the Financial Instruments-Credit Losses accounting update on January 1, 2023, with no impact on the Firm’s financial condition or results of operations upon adoption.

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. Refer to Note 9, Loans, Lending Commitments and Related Allowance for Credit Losses, for the new disclosures.

3. Cash and Cash Equivalents


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Cash and due from banks	Cash and due from banks	$	5,336	$	5,409	Cash and due from banks	$	7,029	$	5,409
Interest bearing deposits with banks	Interest bearing deposits with banks	105,922		122,718		Interest bearing deposits with banks	101,372		122,718
Total Cash and cash equivalents	Total Cash and cash equivalents	$	111,258	$	128,127	Total Cash and cash equivalents	$	108,401	$	128,127
Restricted cash	Restricted cash	$	33,229	$	35,380	Restricted cash	$	28,638	$	35,380

For additional information on cash and cash equivalents, including restricted cash, see Note 2 to the financial statements in the 2022 Form 10-K.

4. Fair Values

Recurring Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis


		At March 31, 2023											At September 30, 2023
$ in millions	$ in millions	Level 1		Level 2		Level 3		Netting1		Total		$ in millions	Level 1		Level 2		Level 3		Netting1		Total
Assets at fair value	Assets at fair value											Assets at fair value
Trading assets:	Trading assets:											Trading assets:
U.S. Treasury and agency securities	U.S. Treasury and agency securities	$	53,525	$	40,345	$	1	$	—	$	93,871	U.S. Treasury and agency securities	$	63,418	$	36,553	$	—	$	—	$	99,971
Other sovereign government obligations	Other sovereign government obligations	29,842		5,785		196		—		35,823		Other sovereign government obligations	36,432		6,050		94		—		42,576
State and municipal securities	State and municipal securities	—		1,685		3		—		1,688		State and municipal securities	—		1,153		112		—		1,265
MABS	MABS	—		1,540		454		—		1,994		MABS	—		1,499		536		—		2,035
Loans and lending commitments2	Loans and lending commitments2	—		5,974		2,057		—		8,031		Loans and lending commitments2	—		5,946		2,039		—		7,985
Corporate and other debt	Corporate and other debt	—		27,804		2,243		—		30,047		Corporate and other debt	—		29,292		2,463		—		31,755
Corporate equities3		97,102		944		144		—		98,190
Corporate equities3,5												Corporate equities3,5	104,786		676		195		—		105,657
Derivative and other contracts:	Derivative and other contracts:											Derivative and other contracts:
Interest rate	Interest rate	5,112		153,365		647		—		159,124		Interest rate	7,172		197,954		524		—		205,650
Credit	Credit	—		9,437		356		—		9,793		Credit	—		9,471		448		—		9,919
Foreign exchange	Foreign exchange	64		83,371		180		—		83,615		Foreign exchange	23		95,172		83		—		95,278
Equity	Equity	1,900		46,948		307		—		49,155		Equity	1,807		46,557		607		—		48,971
Commodity and other	Commodity and other	4,184		14,300		3,546		—		22,030		Commodity and other	2,075		12,334		2,910		—		17,319
Netting1	Netting1	(10,169)		(233,264)		(1,103)		(38,758)		(283,294)		Netting1	(7,953)		(280,170)		(1,023)		(42,600)		(331,746)
Total derivative and other contracts	Total derivative and other contracts	1,091		74,157		3,933		(38,758)		40,423		Total derivative and other contracts	3,124		81,318		3,549		(42,600)		45,391
Investments4		795		711		955		—		2,461
Investments4,5												Investments4,5	624		646		934		—		2,204
Physical commodities	Physical commodities	—		2,349		—		—		2,349		Physical commodities	—		2,381		—		—		2,381
Total trading assets4	Total trading assets4	182,355		161,294		9,986		(38,758)		314,877		Total trading assets4	208,384		165,514		9,922		(42,600)		341,220
Investment securities—AFS	Investment securities—AFS	53,047		30,885		—		—		83,932		Investment securities—AFS	46,572		29,654		35		—		76,261
Securities purchased under agreements to resell		—		8		—		—		8

Total assets at fair value	Total assets at fair value	$	235,402	$	192,187	$	9,986	$	(38,758)	$	398,817	Total assets at fair value	$	254,956	$	195,168	$	9,957	$	(42,600)	$	417,481


		At March 31, 2023											At September 30, 2023
$ 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	$	—	$	5,013	$	29	$	—	$	5,042	Deposits	$	—	$	6,302	$	16	$	—	$	6,318
Trading liabilities:	Trading liabilities:											Trading liabilities:
U.S. Treasury and agency securities	U.S. Treasury and agency securities	23,790		32		—		—		23,822		U.S. Treasury and agency securities	22,819		106		—		—		22,925
Other sovereign government obligations	Other sovereign government obligations	35,965		2,531		73		—		38,569		Other sovereign government obligations	30,965		2,435		3		—		33,403
Corporate and other debt	Corporate and other debt	—		11,007		46		—		11,053		Corporate and other debt	—		9,979		50		—		10,029
Corporate equities3	Corporate equities3	67,878		371		41		—		68,290		Corporate equities3	51,164		125		41		—		51,330
Derivative and other contracts:	Derivative and other contracts:											Derivative and other contracts:
Interest rate	Interest rate	5,094		145,101		864		—		151,059		Interest rate	6,183		192,109		773		—		199,065
Credit	Credit	—		9,703		308		—		10,011		Credit	—		9,735		358		—		10,093
Foreign exchange	Foreign exchange	55		81,981		114		—		82,150		Foreign exchange	208		86,626		212		—		87,046
Equity	Equity	2,194		52,453		1,084		—		55,731		Equity	1,667		55,795		1,389		—		58,851
Commodity and other	Commodity and other	4,616		12,695		1,947		—		19,258		Commodity and other	2,561		11,626		1,629		—		15,816
Netting1	Netting1	(10,169)		(233,264)		(1,103)		(44,644)		(289,180)		Netting1	(7,953)		(280,170)		(1,023)		(49,114)		(338,260)
Total derivative and other contracts	Total derivative and other contracts	1,790		68,669		3,214		(44,644)		29,029		Total derivative and other contracts	2,666		75,721		3,338		(49,114)		32,611
Total trading liabilities	Total trading liabilities	129,423		82,610		3,374		(44,644)		170,763		Total trading liabilities	107,614		88,366		3,432		(49,114)		150,298
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	—		358		514		—		872		Securities sold under agreements to repurchase	—		544		458		—		1,002
Other secured financings	Other secured financings	—		4,890		115		—		5,005		Other secured financings	—		6,914		98		—		7,012
Borrowings	Borrowings	—		84,773		1,649		—		86,422		Borrowings	—		85,028		1,528		—		86,556
Total liabilities at fair value	Total liabilities at fair value	$	129,423	$	177,644	$	5,681	$	(44,644)	$	268,104	Total liabilities at fair value	$	107,614	$	187,154	$	5,532	$	(49,114)	$	251,186

~~March~~September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)


	At December 31, 2022
$ in millions	Level 1		Level 2		Level 3		Netting1		Total
Assets at fair value
Trading assets:
U.S. Treasury and agency securities	$	38,462	$	42,263	$	17	$	—	$	80,742
Other sovereign government obligations	24,644		4,769		169		—		29,582
State and municipal securities	—		1,503		145		—		1,648
MABS	—		1,774		416		—		2,190
Loans and lending commitments2	—		6,380		2,017		—		8,397
Corporate and other debt	—		23,351		2,096		—		25,447
Corporate equities3	97,869		1,019		116		—		99,004
Derivative and other contracts:
Interest rate	4,481		166,392		517		—		171,390
Credit	—		7,876		425		—		8,301
Foreign exchange	49		115,766		183		—		115,998
Equity	2,778		40,171		406		—		43,355
Commodity and other	5,609		21,152		3,701		—		30,462
Netting1	(9,618)		(258,821)		(1,078)		(55,777)		(325,294)
Total derivative and other contracts	3,299		92,536		4,154		(55,777)		44,212
Investments4	652		685		923		—		2,260
Physical commodities	—		2,379		—		—		2,379
Total trading assets4	164,926		176,659		10,053		(55,777)		295,861
Investment securities—AFS	53,866		30,396		35		—		84,297
Securities purchased under agreements to resell	—		8		—		—		8
Total assets at fair value	$	218,792	$	207,063	$	10,088	$	(55,777)	$	380,166


	At December 31, 2022
$ in millions	Level 1		Level 2		Level 3		Netting1		Total
Liabilities at fair value
Deposits	$	—	$	4,776	$	20	$	—	$	4,796
Trading liabilities:
U.S. Treasury and agency securities	20,776		228		—		—		21,004
Other sovereign government obligations	23,235		2,688		3		—		25,926
Corporate and other debt	—		8,786		29		—		8,815
Corporate equities3	59,998		518		42		—		60,558
Derivative and other contracts:
Interest rate	3,446		161,044		668		—		165,158
Credit	—		7,987		315		—		8,302
Foreign exchange	89		113,383		117		—		113,589
Equity	3,266		46,923		1,142		—		51,331
Commodity and other	6,187		17,574		2,618		—		26,379
Netting1	(9,618)		(258,821)		(1,078)		(57,107)		(326,624)
Total derivative and other contracts	3,370		88,090		3,782		(57,107)		38,135
Total trading liabilities	107,379		100,310		3,856		(57,107)		154,438
Securities sold under agreements to repurchase	—		352		512		—		864
Other secured financings	—		4,459		91		—		4,550
Borrowings	—		77,133		1,587		—		78,720
Total liabilities at fair value	$	107,379	$	187,030	$	6,066	$	(57,107)	$	243,368

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 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.

5.At September 30, 2023, the Firm's Trading assets included an insignificant amount of equity securities subject to contractual sale restrictions that generally prohibit the Firm from selling the security for a period of time as of the measurement date.

Detail of Loans and Lending Commitments at Fair Value


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022

Secured lending facilities	Secured lending facilities	$	6	$	6	Secured lending facilities	$	—	$	6
Commercial Real Estate	Commercial Real Estate	581		528		Commercial Real Estate	584		528
Residential Real Estate	Residential Real Estate	1,954		2,020		Residential Real Estate	2,555		2,020
Securities-based lending and Other loans	Securities-based lending and Other loans	5,490		5,843		Securities-based lending and Other loans	4,846		5,843
Total	Total	$	8,031	$	8,397	Total	$	7,985	$	8,397

Unsettled Fair Value of Futures Contracts1


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Customer and other receivables (payables), net	Customer and other receivables (payables), net	$	788	$	1,219	Customer and other receivables (payables), net	$	1,062	$	1,219

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 2022 Form 10-K. During the current quarter,


September 2023 Form 10-Q			46


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	2023		2022		2023		2022
U.S. Treasury and agency securities
Beginning balance	$	—	$	9	$	17	$	2
Realized and unrealized gains (losses)	—		—		—		(1)
Purchases	—		1		—		2
Sales	—		(4)		(10)		(7)

Net transfers	—		(5)		(7)		5
Ending balance	$	—	$	1	$	—	$	1
Unrealized gains (losses)	$	—	$	—	$	—	$	(1)
Other sovereign government obligations
Beginning balance	$	128	$	161	$	169	$	211
Realized and unrealized gains (losses)	—		23		6		(24)
Purchases	17		43		18		69
Sales	(30)		(57)		(112)		(60)

Net transfers	(21)		(33)		13		(59)
Ending balance	$	94	$	137	$	94	$	137
Unrealized gains (losses)	$	1	$	23	$	1	$	(22)
State and municipal securities
Beginning balance	$	40	$	29	$	145	$	13
Realized and unrealized gains (losses)	(3)		(1)		(2)		(2)
Purchases	147		4		255		54
Sales	(20)		—		(218)		—

Net transfers	(52)		20		(68)		(13)
Ending balance	$	112	$	52	$	112	$	52
Unrealized gains (losses)	$	(3)	$	(3)	$	(3)	$	(2)
MABS
Beginning balance	$	486	$	339	$	416	$	344
Realized and unrealized gains (losses)	(1)		8		13		(366)
Purchases	88		3		149		448
Sales	(33)		(33)		(79)		(116)
Settlements	—		—		50		—
Net transfers	(4)		27		(13)		34
Ending balance	$	536	$	344	$	536	$	344
Unrealized gains (losses)	$	4	$	9	$	5	$	(12)
Loans and lending commitments
Beginning balance	$	2,400	$	2,507	$	2,017	$	3,806
Realized and unrealized gains (losses)	(6)		(26)		(91)		8
Purchases and originations	997		541		1,569		800
Sales	(539)		(353)		(686)		(801)
Settlements	(666)		(144)		(717)		(618)
Net transfers	(147)		58		(53)		(612)
Ending balance	$	2,039	$	2,583	$	2,039	$	2,583
Unrealized gains (losses)	$	(6)	$	(27)	$	(91)	$	—


	Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	2023		2022		2023		2022
Corporate and other debt
Beginning balance	$	2,223	$	2,113	$	2,096	$	1,973
Realized and unrealized gains (losses)	108		(43)		231		446
Purchases and originations	346		132		561		752
Sales	(465)		(528)		(618)		(1,400)
Settlements	(6)		(30)		(6)		(26)
Net transfers	257		254		199		153
Ending balance	$	2,463	$	1,898	$	2,463	$	1,898
Unrealized gains (losses)	$	113	$	(42)	$	239	$	454
Corporate equities
Beginning balance	$	166	$	246	$	116	$	115
Realized and unrealized gains (losses)	(29)		(60)		(64)		(71)
Purchases	32		15		101		79
Sales	(34)		(37)		(38)		(67)

Net transfers	60		(19)		80		89
Ending balance	$	195	$	145	$	195	$	145
Unrealized gains (losses)	$	(25)	$	(60)	$	(36)	$	(65)
Investments
Beginning balance	$	968	$	1,027	$	923	$	1,125
Realized and unrealized gains (losses)	17		(140)		24		(275)
Purchases	6		6		153		52
Sales	(76)		(18)		(183)		(33)

Net transfers	19		(2)		17		4
Ending balance	$	934	$	873	$	934	$	873
Unrealized gains (losses)	$	19	$	(136)	$	17	$	(267)
Investment securities—AFS
Beginning balance	$	—	$	38	$	35	$	—
Realized and unrealized gains (losses)	(5)		(2)		(4)		(2)



Net transfers	40		—		4		38
Ending balance	$	35	$	36	$	35	$	36
Unrealized gains (losses)	$	(5)	$	(2)	$	(4)	$	(2)









Net derivatives: Interest rate
Beginning balance	$	49	$	(102)	$	(151)	$	708
Realized and unrealized gains (losses)	49		(200)		(318)		(482)
Purchases	26		—		57		—
Issuances	(7)		—		(63)		—
Settlements	(110)		122		329		(38)
Net transfers	(256)		3		(103)		(365)
Ending balance	$	(249)	$	(177)	$	(249)	$	(177)
Unrealized gains (losses)	$	7	$	(120)	$	(94)	$	(201)


			3947			~~March~~September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

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


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
U.S. Treasury and agency securities
Net derivatives: Credit								Net derivatives: Credit
Beginning balance	Beginning balance		$	17	$	2		Beginning balance	$	96	$	190	$	110	$	98
Realized and unrealized gains (losses)								Realized and unrealized gains (losses)	9		3		(12)		91
Purchases								Purchases	—		—		—		3
Issuances								Issuances	—		—		—		(1)
Settlements								Settlements	(7)		(78)		(7)		(59)
Net transfers								Net transfers	(8)		7		(1)		(10)
Ending balance								Ending balance	$	90	$	122	$	90	$	122
Unrealized gains (losses)								Unrealized gains (losses)	$	8	$	7	$	4	$	83
Net derivatives: Foreign exchange								Net derivatives: Foreign exchange
Beginning balance								Beginning balance	$	28	$	(331)	$	66	$	52
Realized and unrealized gains (losses)								Realized and unrealized gains (losses)	(13)		38		(53)		(18)

Settlements								Settlements	16		73		(68)		47
Net transfers								Net transfers	(160)		395		(74)		94
Ending balance								Ending balance	$	(129)	$	175	$	(129)	$	175
Unrealized gains (losses)								Unrealized gains (losses)	$	(16)	$	44	$	(51)	$	18
Net derivatives: Equity								Net derivatives: Equity
Beginning balance								Beginning balance	$	(775)	$	(530)	$	(736)	$	(945)
Realized and unrealized gains (losses)								Realized and unrealized gains (losses)	195		1		192		275
Purchases								Purchases	38		48		157		167
Issuances								Issuances	(166)		(92)		(492)		(253)
Settlements								Settlements	252		68		229		379
Net transfers								Net transfers	(326)		49		(132)		(79)
Ending balance								Ending balance	$	(782)	$	(456)	$	(782)	$	(456)
Unrealized gains (losses)								Unrealized gains (losses)	$	160	$	(3)	$	93	$	399
Net derivatives: Commodity and other								Net derivatives: Commodity and other
Beginning balance								Beginning balance	$	1,416	$	1,344	$	1,083	$	1,529
Realized and unrealized gains (losses)								Realized and unrealized gains (losses)	(7)		238		549		546
Purchases								Purchases	7		2		70		107
Issuances								Issuances	(9)		(7)		(80)		(97)
Settlements								Settlements	(92)		69		(313)		(247)
Net transfers								Net transfers	(34)		155		(28)		(37)
Ending balance								Ending balance	$	1,281	$	1,801	$	1,281	$	1,801
Unrealized gains (losses)								Unrealized gains (losses)	$	(142)	$	72	$	216	$	25
Deposits								Deposits
Beginning balance								Beginning balance	$	36	$	19	$	20	$	67
Realized and unrealized losses (gains)								Realized and unrealized losses (gains)	(1)		—		(1)		—

Issuances								Issuances	6		2		26		2
Settlements								Settlements	—		(1)		—		(3)
Net transfers								Net transfers	(25)		(13)		(29)		(59)
Ending balance								Ending balance	$	16	$	7	$	16	$	7
Unrealized losses (gains)								Unrealized losses (gains)	$	(1)	$	—	$	(1)	$	—
Nonderivative trading liabilities								Nonderivative trading liabilities
Beginning balance								Beginning balance	$	89	$	104	$	74	$	61
Realized and unrealized losses (gains)								Realized and unrealized losses (gains)	(4)		(8)		(12)		(41)
Purchases	Purchases		—		1			Purchases	(29)		(20)		(49)		(39)
Sales	Sales		(9)		—			Sales	23		16		77		88

Net transfers	Net transfers		(7)		5			Net transfers	15		(2)		4		21
Ending balance	Ending balance		$	1	$	8		Ending balance	$	94	$	90	$	94	$	90
Unrealized gains (losses)			$	—	$	—
Other sovereign government obligations
Beginning balance			$	169	$	211
Realized and unrealized gains (losses)			4		—
Purchases			78		6
Sales			(54)		(40)

Net transfers			(1)		11
Ending balance			$	196	$	188
Unrealized gains (losses)			$	4	$	—
State and municipal securities
Beginning balance			$	145	$	13

Sales			(40)		—

Net transfers			(102)		(13)
Ending balance			$	3	$	—
Unrealized gains (losses)			$	—	$	—
MABS
Beginning balance			$	416	$	344
Realized and unrealized gains (losses)			2		(1)
Purchases			57		56
Sales			(45)		(96)

Net transfers			24		48
Ending balance			$	454	$	351
Unrealized gains (losses)			$	1	$	(3)
Loans and lending commitments
Beginning balance			$	2,017	$	3,806
Realized and unrealized gains (losses)			(26)		26
Purchases and originations			535		369
Sales			(193)		(210)
Settlements			(235)		(409)
Net transfers			(41)		(441)
Ending balance			$	2,057	$	3,141
Unrealized gains (losses)			$	(25)	$	22
Corporate and other debt
Beginning balance			$	2,096	$	1,973
Realized and unrealized gains (losses)			34		12
Purchases and originations			508		71
Sales			(446)		(160)

Net transfers			51		(143)
Ending balance			$	2,243	$	1,753
Unrealized gains (losses)			$	64	$	7
Corporate equities
Beginning balance			$	116	$	115
Realized and unrealized gains (losses)			(8)		—
Purchases			19		24
Sales			(25)		(82)

Net transfers			42		182
Ending balance			$	144	$	239
Unrealized gains (losses)			$	(2)	$	—
Unrealized losses (gains)								Unrealized losses (gains)	$	(2)	$	(8)	$	(11)	$	(41)

Three Months Ended
March 31,
$ in millions 2023 2022
Investments
Beginning balance $ 923 $ 1,125
Realized and unrealized gains (losses) 14 (24)
Purchases 47 20
Sales (24) (4)
Net transfers (5) 3
Ending balance $ 955 $ 1,120
Unrealized gains (losses) $ 10 $ (26)
Investment securities—AFS
Beginning balance $ 35 $ —
Realized and unrealized gains (losses) 1 —
Net transfers (36) —
Ending balance $ — $ —
Unrealized gains (losses) $ 1 $ —
Net derivatives: Interest rate
Beginning balance $ (151) $ 708
Realized and unrealized gains (losses) (149) 39
Purchases 10 3
Issuances (8) (2)
Settlements 189 (21)
Net transfers (108) (93)
Ending balance $ (217) $ 634
Unrealized gains (losses) $ 29 $ 147
Net derivatives: Credit
Beginning balance $ 110 $ 98
Realized and unrealized gains (losses) (27) 43
Purchases — 8
Issuances — (8)
Settlements (31) (68)
Net transfers (4) 20
Ending balance $ 48 $ 93
Unrealized gains (losses) $ (28) $ 28
Net derivatives: Foreign exchange
Beginning balance $ 66 $ 52
Realized and unrealized gains (losses) (11) (145)
Purchases — 5
Issuances (3) —
Settlements 40 81
Net transfers (26) (26)
Ending balance $ 66 $ (33)
Unrealized gains (losses) $ (10) $ (138)
Net derivatives: Equity
Beginning balance $ (736) $ (945)
Realized and unrealized gains (losses) 16 98
Purchases 39 28
Issuances (161) (68)
Settlements (30) 117
Net transfers 95 116
Ending balance $ (777) $ (654)
Unrealized gains (losses) $ (30) $ 88


~~March 2023 Form 10-Q~~			40


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


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
Net derivatives: Commodity and other
Beginning balance			$	1,083	$	1,529
Realized and unrealized gains (losses)			446		4
Purchases			16		9
Issuances			(3)		(11)
Settlements			(103)		(47)
Net transfers			160		(50)
Ending balance			$	1,599	$	1,434
Unrealized gains (losses)			$	211	$	(216)
Deposits
Beginning balance			$	20	$	67

Issuances			6		—
Settlements			—		(5)
Net transfers			3		(36)
Ending balance			$	29	$	26
Unrealized losses (gains)			$	—	$	—
Nonderivative trading liabilities
Beginning balance			$	74	$	61
Realized and unrealized losses (gains)			(7)		(3)
Purchases			(44)		(33)
Sales			113		11

Net transfers			24		12
Ending balance			$	160	$	48
Unrealized losses (gains)			$	(5)	$	(3)
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase		Securities sold under agreements to repurchase
Beginning balance	Beginning balance		$	512	$	651		Beginning balance	$	454	$	514	$	512	$	651
Realized and unrealized losses (gains)	Realized and unrealized losses (gains)		11		2			Realized and unrealized losses (gains)	4		5		11		(3)

Issuances								Issuances	—		—		1		9
Settlements	Settlements		(9)		(10)			Settlements	—		(11)		(9)		(22)
Net transfers	Net transfers		—		(127)			Net transfers	—		—		(57)		(127)
Ending balance	Ending balance		$	514	$	516		Ending balance	$	458	$	508	$	458	$	508
Unrealized losses (gains)	Unrealized losses (gains)		$	11	$	2		Unrealized losses (gains)	$	4	$	5	$	11	$	—
Other secured financings	Other secured financings		Other secured financings
Beginning balance	Beginning balance		$	91	$	403		Beginning balance	$	90	$	112	$	91	$	403
Realized and unrealized losses (gains)	Realized and unrealized losses (gains)		2		(3)			Realized and unrealized losses (gains)	(1)		(5)		2		(11)

Issuances	Issuances		41		28			Issuances	15		13		59		44
Settlements	Settlements		(19)		(305)			Settlements	(6)		(7)		(54)		(320)
Net transfers	Net transfers		—		(3)			Net transfers	—		—		—		(3)
Ending balance	Ending balance		$	115	$	120		Ending balance	$	98	$	113	$	98	$	113
Unrealized losses (gains)	Unrealized losses (gains)		$	2	$	(3)		Unrealized losses (gains)	$	(1)	$	(5)	$	2	$	(11)
Borrowings	Borrowings		Borrowings
Beginning balance	Beginning balance		$	1,587	$	2,157		Beginning balance	$	1,787	$	2,325	$	1,587	$	2,157
Realized and unrealized losses (gains)	Realized and unrealized losses (gains)		48		(143)			Realized and unrealized losses (gains)	18		(185)		83		(625)

Issuances	Issuances		239		161			Issuances	342		65		626		230
Settlements	Settlements		(82)		(42)			Settlements	(182)		(65)		(355)		(263)
Net transfers	Net transfers		(143)		266			Net transfers	(437)		(203)		(413)		438
Ending balance	Ending balance		$	1,649	$	2,399		Ending balance	$	1,528	$	1,937	$	1,528	$	1,937
Unrealized losses (gains)	Unrealized losses (gains)		$	45	$	(143)		Unrealized losses (gains)	$	18	$	(185)	$	48	$	(629)
Portion of Unrealized losses (gains) recorded in OCI—Change in net DVA	Portion of Unrealized losses (gains) recorded in OCI—Change in net DVA		9		(29)			Portion of Unrealized losses (gains) recorded in OCI—Change in net DVA	(4)		(36)		10		(126)

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 statement.

Additionally, in the previous tables, consolidations of VIEs are included in Purchases, and deconsolidations of VIEs are included in Settlements.


September 2023 Form 10-Q			48


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 March 31, 2023 At December 31, 2022
Assets at Fair Value on a Recurring Basis
Other sovereign government obligations $ 196 $ 169
Comparable pricing:
Bond price 61 to 119 points (92 points) 57 to 124 points (89 points)
State and municipal securities $ 3 $ 145
Comparable pricing:
Bond price N/M 86 to 100 points (97 points)
MABS $ 454 $ 416
Comparable pricing:
Bond price 0 to 95 points (60 points) 0 to 95 points (68 points)
Loans and lending
commitments $ 2,057 $ 2,017
Margin loan model:
Margin loan rate 2% to 4% (3%) 2% to 4% (3%)
Comparable pricing:
Loan price 88 to 104 points (99 points) 87 to 105 points (99 points)
Corporate and
other debt $ 2,243 $ 2,096
Comparable pricing:
Bond price 51 to 129 points (88 points) 51 to 132 points (90 points)
Discounted cash flow:
Loss given default 54% to 84% (62% / 54%) 54% to 84% (62% / 54%)
Corporate equities $ 144 $ 116
Comparable pricing:
Equity price 100% 100%
Investments $ 955 $ 923
Discounted cash flow:
WACC 15% to 17% (16%) 15% to 17% (16%)
Exit multiple 7 to 17 times (14 times) 7 to 17 times (14 times)
Market approach:
EBITDA multiple 6 to 21 times (11 times) 7 to 21 times (11 times)
Comparable pricing:
Equity price 24% to 100% (89%) 24% to 100% (89%)


			41			~~March 2023 Form 10-Q~~


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

Balance / Range (Average1)

$ in millions, except inputs

At March 31, 2023

At December 31, 2022

$ in millions, except inputs

At September 30, 2023

At December 31, 2022

Assets at Fair Value on a Recurring Basis

Other sovereign government obligations

169

Comparable pricing:

Bond price

61 to 111 points (86 points)

57 to 124 points (89 points)

State and municipal securities

112

145

Comparable pricing:

Bond price

90 to 104 points (100 points)

86 to 100 points (97 points)

MABS

536

416

Comparable pricing:

Bond price

0 to 90 points (65 points)

0 to 95 points (68 points)

Loans and lending commitments

2,039

2,017

Margin loan model:

Margin loan rate

2% to 4% (3%)

Comparable pricing:

Loan price

91 to 102 points (99 points)

87 to 105 points (99 points)

Corporate and other debt

2,463

2,096

Comparable pricing:

Bond price

30 to 136 points (82 points)

51 to 132 points (90 points)

Discounted cash flow:

Loss given default

54% to 84% (62% / 54%)

Corporate equities

195

116

Comparable pricing:

Equity price

100%

Investments

934

923

Discounted cash flow:

WACC

15% to 18% (16%)

15% to 17% (16%)

Exit multiple

9 to 17 times (14 times)

7 to 17 times (14 times)

Market approach:

EBITDA multiple

21 times

7 to 21 times (11 times)

Comparable pricing:

Equity price

24% to 100% (87%)

24% to 100% (89%)

Net derivative and other contracts:

Interest rate

(217)

(151)

Interest rate

(249)

(151)

Option model:

IR volatility skew

36% to 138% (90% / 84%)

105% to 130% (113% / 109%)

IR volatility skew

62% to 118% (75% / 77%)

105% to 130% (113% / 109%)

IR curve correlation

53% to 99% (83% / 86%)

47% to 100% (80% / 84%)

IR curve correlation

51% to 97% (82% / 86%)

47% to 100% (80% / 84%)

Bond volatility

1% to 2% (1% / 1%)

N/M

Bond volatility

1% to 1% (1% / 1%)

N/M

Inflation volatility

22% to 70% (43% / 39%)

22% to 65% (43% / 38%)

Inflation volatility

22% to 70% (44% / 38%)

22% to 65% (43% / 38%)

IR curve

4% to 11% (6% / 5%)

4% to 5% (5% / 5%)

IR curve

N/M

4% to 5% (5% / 5%)

Credit

110

Credit

110

Credit default swap model:

Cash-synthetic basis

7 points

Cash-synthetic basis

7 points

Bond price

0 to 92 bps (49 points)

0 to 83 points (43 points)

Bond price

0 to 90 bps (48 points)

0 to 83 points (43 points)

Credit spread

10 to 449 bps (111 bps)

10 to 528 bps (115 bps)

Credit spread

10 to 464 bps (108 bps)

10 to 528 bps (115 bps)

Funding spread

18 to 590 bps (81 bps)

18 to 590 bps (93 bps)

Funding spread

18 to 590 bps (57 bps)

18 to 590 bps (93 bps)

Foreign exchange2

Option model:

IR curve

-8% to 18% (5% / 4%)

-2% to 38% (8% / 4%)

Foreign exchange volatility skew

-18% to 30% (2% / 0%)

10% to 10% (10% / 10%)

Contingency probability

95% to 95% (95% / 95%)

Equity2

(777)

(736)

Option model:

Equity volatility

6% to 95% (22%)

5% to 96% (25%)

Equity volatility skew

-5% to 0% (-1%)

-4% to 0% (-1%)

Equity correlation

17% to 95% (83%)

10% to 93% (71%)

FX correlation

-79% to 65% (-25%)

-79% to 65% (-26%)

IR correlation

10% to 30% (13%)

10% to 30% (-14%)

Commodity and other

1,599

1,083

Option model:

Forward power price

$0 to $282 ($45) per MWh

$1 to $292 ($43) per MWh

Commodity volatility

8% to 113% (35%)

12% to 169% (34%)

Cross-commodity correlation

54% to 100% (93%)

70% to 100% (94%)

Liabilities Measured at Fair Value on a Recurring Basis

Securities sold under agreements to repurchase

514

512

Discounted cash flow:

Funding spread

80 to 157 bps (118 bps)

96 to 165 bps (131 bps)

Other secured financings

115

Comparable pricing:

Loan price

23 to 101 points (82 points)

23 to 101 points (75 points)

Balance / Range (Average1)

$ in millions, except inputs

At March 31, 2023

At December 31, 2022

$ in millions, except inputs

At September 30, 2023

At December 31, 2022

Foreign exchange2

(129)

Option model:

IR curve

-3% to 10% (3% / 1%)

-2% to 38% (8% / 4%)

Foreign exchange volatility skew

-2% to 8% (2% / 0%)

10% to 10% (10% / 10%)

Contingency probability

95% to 95% (95% / 95%)

Equity2

(782)

(736)

Option model:

Equity volatility

6% to 97% (21%)

5% to 96% (25%)

Equity volatility skew

-2% to 0% (0%)

-4% to 0% (-1%)

Equity correlation

9% to 97% (58%)

10% to 93% (71%)

FX correlation

-79% to 40% (-27%)

-79% to 65% (-26%)

IR correlation

13% to 30% (15%)

10% to 30% (14%)

Commodity and other

1,281

1,083

Option model:

Forward power price

$0 to $208 ($49) per MwH

$1 to $292 ($43) per MWh

Commodity volatility

12% to 145% (33%)

12% to 169% (34%)

Cross-commodity correlation

57% to 100% (94%)

70% to 100% (94%)

Liabilities Measured at Fair Value on a Recurring Basis

Securities sold under agreements to repurchase

458

512

Discounted cash flow:

Funding spread

22 to 141 bps (77 bps)

96 to 165 bps (131 bps)

Other secured financings

Comparable pricing:

Loan price

23 to 100 points (81 points)

23 to 101 points (75 points)

Borrowings

1,649

1,587

Borrowings

1,528

1,587

Option model:

Equity volatility

6% to 66% (22%)

7% to 86% (23%)

Equity volatility

6% to 71% (18%)

7% to 86% (23%)

Equity volatility skew

-1% to 0% (0%)

-2% to 0% (0%)

Equity volatility skew

-3% to 0% (0%)

-2% to 0% (0%)

Equity correlation

41% to 95% (80%)

39% to 98% (86%)

Equity correlation

50% to 95% (77%)

39% to 98% (86%)

Equity - FX correlation

-55% to 6% (-26%)

-50% to 0% (-21%)

Equity - FX correlation

-52% to 35% (-29%)

-50% to 0% (-21%)

IR curve correlation

49% to 98% (85% / 90%)

N/M

IR curve correlation

51% to 88% (71% / 71%)

N/M

IR volatility skew

N/M

47% to 136% (74% / 59%)

IR volatility skew

N/M

47% to 136% (74% / 59%)

Discounted cash flow:

Loss given default

54% to 84% (62% / 54%)

Loss given default

54% to 84% (62% / 5%)

54% to 84% (62% / 54%)

Nonrecurring Fair Value Measurement

Loans

5,812

6,610

Loans

5,224

6,610

Corporate loan model:

Credit spread

105 to 1286 bps (830 bps)

91 to 1276 bps (776 bps)

Credit spread

120 to 1215 bps (794 bps)

91 to 1276 bps (776 bps)

Comparable pricing:

Loan price

17 to 97 points (66 points)

36 to 80 points (65 points)

Loan price

15 to 98 points (70 points)

36 to 80 points (65 points)

Warehouse model:

Credit spread

108 to 311 bps (246 bps)

110 to 319 bps (245 bps)

Credit spread

120 to 298 bps (237 bps)

110 to 319 bps (245 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 table provides information on the valuation techniques, significant unobservable inputs, and the ranges and averages for each major category of assets and liabilities


			49			September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

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 2022 Form 10-K. During the current quarter, there were no significant revisions made to the descriptions of the Firm’s significant unobservable inputs.


~~March 2023 Form 10-Q~~			42


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

Net Asset Value Measurements

Fund Interests


		At March 31, 2023				At December 31, 2022					At September 30, 2023				At December 31, 2022
$ in millions	$ in millions	Carrying Value		Commitment		Carrying Value		Commitment		$ in millions	Carrying Value		Commitment		Carrying Value		Commitment
Private equity	Private equity	$	2,664	$	637	$	2,622	$	638	Private equity	$	2,587	$	747	$	2,622	$	638
Real estate	Real estate	2,566		256		2,642		239		Real estate	2,804		244		2,642		239
Hedge1	Hedge1	194		3		190		3		Hedge1	74		3		190		3
Total	Total	$	5,424	$	896	$	5,454	$	880	Total	$	5,465	$	994	$	5,454	$	880

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 2022 Form 10-K.

See Note 13 for information regarding general partner guarantees, which include potential obligations to return performance fee distributions previously received. See Note 19 for information regarding unrealized carried interest at risk of reversal.

Nonredeemable Funds by Contractual Maturity


		Carrying Value at March 31, 2023					Carrying Value at September 30, 2023
$ in millions	$ in millions	Private Equity		Real Estate		$ in millions	Private Equity		Real Estate
Less than 5 years	Less than 5 years	$	1,085	$	975	Less than 5 years	$	1,338	$	979
5-10 years	5-10 years	1,515		1,554		5-10 years	1,172		1,771
Over 10 years	Over 10 years	64		37		Over 10 years	77		54
Total	Total	$	2,664	$	2,566	Total	$	2,587	$	2,804

Nonrecurring Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis


		At March 31, 2023							At September 30, 2023
		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	$	5,083	$	5,812	$	10,895	Loans	$	3,711	$	5,224	$	8,935

Other assets—Other investments		—		—		—

Other assets—ROU assets		—		—		—

Total	Total	$	5,083	$	5,812	$	10,895	Total	$	3,711	$	5,224	$	8,935
Liabilities	Liabilities							Liabilities
Other liabilities and accrued expenses—Lending commitments	Other liabilities and accrued expenses—Lending commitments	$	195	$	97	$	292	Other liabilities and accrued expenses—Lending commitments	$	156	$	78	$	234
Total	Total	$	195	$	97	$	292	Total	$	156	$	78	$	234


	At December 31, 2022
	Fair Value
$ in millions	Level 2		Level 31		Total
Assets
Loans	$	4,193	$	6,610	$	10,803
Other assets—Other investments	—		7		7
Other assets—ROU assets	4		—		4
Total	$	4,197	$	6,617	$	10,814
Liabilities
Other liabilities and accrued expenses—Lending commitments	$	275	$	153	$	428
Total	$	275	$	153	$	428

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 March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions	2023		2022			$ in millions	2023		2022		2023		2022
Assets	Assets						Assets
Loans2	Loans2	$	19	$	(43)		Loans2	$	(35)	$	(118)	$	(117)	$	(365)

Other assets—Other investments3	Other assets—Other investments3	—		(2)			Other assets—Other investments3	5		(2)		4		(8)
Other assets—Premises, equipment and software4	Other assets—Premises, equipment and software4	(3)		(1)			Other assets—Premises, equipment and software4	(2)		(1)		(6)		(3)
Other assets—ROU assets5	Other assets—ROU assets5	—		(2)			Other assets—ROU assets5	—		(1)		(10)		(7)
Total	Total	$	16	$	(48)		Total	$	(32)	$	(122)	$	(129)	$	(383)
Liabilities	Liabilities						Liabilities
Other liabilities and accrued expenses—Lending commitments2	Other liabilities and accrued expenses—Lending commitments2	$	34	$	(49)		Other liabilities and accrued expenses—Lending commitments2	$	7	$	(13)	$	38	$	(172)
Total	Total	$	34	$	(49)		Total	$	7	$	(13)	$	38	$	(172)

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, 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.

5.Losses related to Other Assets—ROU assets include impairments related to the discontinued leased properties.

~~March~~September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

Financial Instruments Not Measured at Fair Value


		At March 31, 2023											At September 30, 2023
		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	$	111,258	$	111,258	$	—	$	—	$	111,258	Cash and cash equivalents	$	108,401	$	108,401	$	—	$	—	$	108,401
Investment securities—HTM	Investment securities—HTM	74,012		26,253		37,090		1,076		64,419		Investment securities—HTM	70,705		24,323		32,964		1,037		58,324
Securities purchased under agreements to resell	Securities purchased under agreements to resell	121,877		—		119,067		2,826		121,893		Securities purchased under agreements to resell	101,569		—		99,208		2,355		101,563
Securities borrowed	Securities borrowed	146,216		—		146,216		—		146,216		Securities borrowed	120,916		—		120,916		—		120,916
Customer and other receivables	Customer and other receivables	69,249		—		65,219		3,750		68,969		Customer and other receivables	71,146		—		66,917		3,899		70,816
Loans1	Loans1	214,696		—		24,842		183,035		207,877		Loans1	216,972		—		27,399		180,698		208,097
Other assets	Other assets	3,139		—		3,139		—		3,139		Other assets	704		—		704		—		704
Financial liabilities	Financial liabilities											Financial liabilities
Deposits	Deposits	$	342,481	$	—	$	342,312	$	—	$	342,312	Deposits	$	339,140	$	—	$	338,677	$	—	$	338,677
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	59,619		—		59,599		—		59,599		Securities sold under agreements to repurchase	75,659		—		75,638		—		75,638
Securities loaned	Securities loaned	15,588		—		15,583		—		15,583		Securities loaned	13,064		—		13,059		—		13,059
Other secured financings	Other secured financings	3,665		—		3,665		—		3,665		Other secured financings	2,656		—		2,656		—		2,656
Customer and other payables	Customer and other payables	220,556		—		220,556		—		220,556		Customer and other payables	200,415		—		200,415		—		200,415
Borrowings	Borrowings	163,760		—		163,329		4		163,333		Borrowings	160,637		—		160,139		4		160,143
		Commitment Amount											Commitment Amount
Lending commitments2	Lending commitments2	$	139,447	$	—	$	1,814	$	914	$	2,728	Lending commitments2	$	147,201	$	—	$	1,509	$	749	$	2,258


	At December 31, 2022
	Carrying Value		Fair Value
$ in millions			Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	128,127	$	128,127	$	—	$	—	$	128,127
Investment securities—HTM	75,634		26,754		37,218		1,034		65,006
Securities purchased under agreements to resell	113,899		—		111,188		2,681		113,869
Securities borrowed	133,374		—		133,370		—		133,370
Customer and other receivables	73,248		—		69,268		3,664		72,932
Loans1	213,785		—		24,153		181,561		205,714
Other assets	704		—		704		—		704
Financial liabilities
Deposits	$	351,850	$	—	$	351,721	$	—	$	351,721
Securities sold under agreements to repurchase	61,670		—		61,620		—		61,620
Securities loaned	15,679		—		15,673		—		15,673
Other secured financings	3,608		—		3,608		—		3,608
Customer and other payables	216,018		—		216,018		—		216,018
Borrowings	159,338		—		157,780		4		157,784
	Commitment Amount
Lending commitments2	$	136,241	$	—	$	1,789	$	1,077	$	2,866

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 13.

The previous tables exclude all non-financial assets and liabilities, such as Goodwill and Intangible assets, and certain financial instruments, such as equity method investments and certain receivables.

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 March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Business Unit Responsible for Risk Management	Business Unit Responsible for Risk Management					Business Unit Responsible for Risk Management
Equity	Equity	$	43,705	$	38,945	Equity	$	43,951	$	38,945
Interest rates	Interest rates	27,791		26,077		Interest rates	27,180		26,077
Commodities	Commodities	11,187		10,717		Commodities	11,952		10,717
Credit	Credit	1,954		1,564		Credit	2,093		1,564
Foreign exchange	Foreign exchange	1,785		1,417		Foreign exchange	1,380		1,417
Total	Total	$	86,422	$	78,720	Total	$	86,556	$	78,720

Net Revenues from Borrowings under the Fair Value Option


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
Trading revenues	Trading revenues		$	(4,378)	$	4,655		Trading revenues	$	3,479	$	4,034	$	(1,412)	$	16,361
Interest expense	Interest expense		108		72			Interest expense	124		67		351		203
Net revenues1	Net revenues1		$	(4,486)	$	4,583		Net revenues1	$	3,355	$	3,967	$	(1,763)	$	16,158

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,
	2023				2022
$ in millions	Trading Revenues		OCI		Trading Revenues		OCI
Loans and other receivables1	$	(8)	$	—	$	(68)	$	—
Lending commitments	—		—		(2)		—
Deposits	—		4		—		(9)
Borrowings	(6)		(547)		—		1,091


		Three Months Ended March 31,									Nine Months Ended September 30,
		2023				2022					2023				2022
$ in millions	$ in millions	Trading Revenues		OCI		Trading Revenues		OCI		$ in millions	Trading Revenues		OCI		Trading Revenues		OCI
Loans and other receivables1	Loans and other receivables1	$	(43)	$	—	$	24	$	—	Loans and other receivables1	$	(112)	$	—	$	(59)	$	—
Lending commitments	Lending commitments	11		—		—		—		Lending commitments	11		—		(3)		—
Deposits	Deposits	—		93		—		(7)		Deposits	—		21		—		5
Borrowings	Borrowings	(6)		(117)		—		878		Borrowings	(15)		(1,289)		1		3,468

$ in millions At
March 31,
2023 At
December 31,
2022
Cumulative pre-tax DVA gain (loss) recognized in AOCI $ (481) $ (457)

1.~~Loans and other receivables-specific credit gains (losses) were determined by excluding the non-credit components of gains and losses.~~

~~March~~September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)


$ in millions	At September 30, 2023		At December 31, 2022
Cumulative pre-tax DVA gain (loss) recognized in AOCI	$	(1,725)	$	(457)

1.Loans and other 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 March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Loans and other receivables2	Loans and other receivables2	$	11,794	$	11,916	Loans and other receivables2	$	10,707	$	11,916
Nonaccrual loans2	Nonaccrual loans2	9,071		9,128		Nonaccrual loans2	8,162		9,128
Borrowings3	Borrowings3	4,282		5,203		Borrowings3	5,564		5,203

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 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 March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Nonaccrual loans	Nonaccrual loans	$	504	$	585	Nonaccrual loans	$	410	$	585
Nonaccrual loans 90 or more days past due	Nonaccrual loans 90 or more days past due	55		116		Nonaccrual loans 90 or more days past due	49		116

6. Derivative Instruments and Hedging Activities

Fair Values of Derivative Contracts


		Assets at March 31, 2023									Assets at September 30, 2023
$ 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	$	14	$	4	$	—	$	18	Interest rate	$	43	$	—	$	—	$	43
Foreign exchange	Foreign exchange	44		28		—		72		Foreign exchange	243		65		—		308
Total	Total	58		32		—		90		Total	286		65		—		351
Not designated as accounting hedges	Not designated as accounting hedges									Not designated as accounting hedges
Economic hedges of loans	Economic hedges of loans									Economic hedges of loans
Credit	Credit	1		58		—		59		Credit	2		47		—		49
Other derivatives	Other derivatives									Other derivatives
Interest rate	Interest rate	130,291		27,241		1,574		159,106		Interest rate	146,995		57,701		911		205,607
Credit	Credit	6,952		2,782		—		9,734		Credit	6,409		3,461		—		9,870
Foreign exchange	Foreign exchange	81,249		2,222		72		83,543		Foreign exchange	92,515		2,419		36		94,970
Equity	Equity	18,623		—		30,532		49,155		Equity	17,550		—		31,421		48,971
Commodity and other	Commodity and other	17,338		—		4,692		22,030		Commodity and other	14,536		—		2,783		17,319
Total	Total	254,454		32,303		36,870		323,627		Total	278,007		63,628		35,151		376,786
Total gross derivatives	Total gross derivatives	$	254,512	$	32,335	$	36,870	$	323,717	Total gross derivatives	$	278,293	$	63,693	$	35,151	$	377,137
Amounts offset	Amounts offset									Amounts offset
Counterparty netting	Counterparty netting	(181,978)		(29,554)		(33,832)		(245,364)		Counterparty netting	(194,644)		(61,670)		(33,407)		(289,721)
Cash collateral netting	Cash collateral netting	(35,948)		(1,982)		—		(37,930)		Cash collateral netting	(40,734)		(1,291)		—		(42,025)
Total in Trading assets	Total in Trading assets	$	36,586	$	799	$	3,038	$	40,423	Total in Trading assets	$	42,915	$	732	$	1,744	$	45,391
Amounts not offset1	Amounts not offset1									Amounts not offset1
Financial instruments collateral	Financial instruments collateral	(18,059)		—		—		(18,059)		Financial instruments collateral	(23,943)		—		—		(23,943)
Net amounts	Net amounts	$	18,527	$	799	$	3,038	$	22,364	Net amounts	$	18,972	$	732	$	1,744	$	21,448
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							$	3,076	Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable							$	3,487

Liabilities at March 31, 2023
$ in millions Bilateral OTC Cleared OTC Exchange-Traded Total
Designated as accounting hedges
Interest rate $ 363 $ — $ — $ 363
Foreign exchange 126 65 — 191
Total 489 65 — 554
Not designated as accounting hedges
Economic hedges of loans
Credit 10 489 — 499
Other derivatives
Interest rate 124,206 25,480 1,010 150,696
Credit 6,659 2,853 — 9,512
Foreign exchange 79,661 2,229 69 81,959
Equity 26,072 — 29,659 55,731
Commodity and other 14,096 — 5,162 19,258
Total 250,704 31,051 35,900 317,655
Total gross derivatives $ 251,193 $ 31,116 $ 35,900 $ 318,209
Amounts offset
Counterparty netting (181,978) (29,554) (33,832) (245,364)
Cash collateral netting (42,260) (1,556) — (43,816)
Total in Trading liabilities $ 26,955 $ 6 $ 2,068 $ 29,029
Amounts not offset1
Financial instruments collateral (2,008) — (202) (2,210)
Net amounts $ 24,947 $ 6 $ 1,866 $ 26,819
Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable 5,497


		Assets at December 31, 2022									Liabilities at September 30, 2023
$ 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	$	62	$	1	$	—	$	63	Interest rate	$	564	$	1	$	—	$	565
Foreign exchange	Foreign exchange	15		44		—		59		Foreign exchange	16		7		—		23
Total	Total	77		45		—		122		Total	580		8		—		588
Not designated as accounting hedges	Not designated as accounting hedges									Not designated as accounting hedges
Economic hedges of loans	Economic hedges of loans									Economic hedges of loans
Credit	Credit	2		59		—		61		Credit	24		581		—		605
Other derivatives	Other derivatives									Other derivatives
Interest rate	Interest rate	141,291		29,007		1,029		171,327		Interest rate	137,420		60,141		939		198,500
Credit	Credit	5,888		2,352		—		8,240		Credit	6,187		3,301		—		9,488
Foreign exchange	Foreign exchange	113,540		2,337		62		115,939		Foreign exchange	84,080		2,725		218		87,023
Equity	Equity	16,505		—		26,850		43,355		Equity	26,669		—		32,182		58,851
Commodity and other	Commodity and other	24,298		—		6,164		30,462		Commodity and other	12,418		—		3,398		15,816
Total	Total	301,524		33,755		34,105		369,384		Total	266,798		66,748		36,737		370,283
Total gross derivatives	Total gross derivatives	$	301,601	$	33,800	$	34,105	$	369,506	Total gross derivatives	$	267,378	$	66,756	$	36,737	$	370,871
Amounts offset	Amounts offset									Amounts offset
Counterparty netting	Counterparty netting	(214,773)		(32,250)		(32,212)		(279,235)		Counterparty netting	(194,644)		(61,670)		(33,407)		(289,721)
Cash collateral netting	Cash collateral netting	(44,711)		(1,348)		—		(46,059)		Cash collateral netting	(43,675)		(4,864)		—		(48,539)
Total in Trading assets		$	42,117	$	202	$	1,893	$	44,212
Total in Trading liabilities										Total in Trading liabilities	$	29,059	$	222	$	3,330	$	32,611
Amounts not offset1	Amounts not offset1									Amounts not offset1
Financial instruments collateral	Financial instruments collateral	(19,406)		—		—		(19,406)		Financial instruments collateral	(4,049)		—		(562)		(4,611)
Net amounts	Net amounts	$	22,711	$	202	$	1,893	$	24,806	Net amounts	$	25,010	$	222	$	2,768	$	28,000
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							$	4,318	Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable							4,581


			4552			~~March~~September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)


	Assets at December 31, 2022
$ in millions	Bilateral OTC		Cleared OTC		Exchange-Traded		Total
Designated as accounting hedges
Interest rate	$	62	$	1	$	—	$	63
Foreign exchange	15		44		—		59
Total	77		45		—		122
Not designated as accounting hedges
Economic hedges of loans
Credit	2		59		—		61
Other derivatives
Interest rate	141,291		29,007		1,029		171,327
Credit	5,888		2,352		—		8,240
Foreign exchange	113,540		2,337		62		115,939
Equity	16,505		—		26,850		43,355
Commodity and other	24,298		—		6,164		30,462
Total	301,524		33,755		34,105		369,384
Total gross derivatives	$	301,601	$	33,800	$	34,105	$	369,506
Amounts offset
Counterparty netting	(214,773)		(32,250)		(32,212)		(279,235)
Cash collateral netting	(44,711)		(1,348)		—		(46,059)
Total in Trading assets	$	42,117	$	202	$	1,893	$	44,212
Amounts not offset1
Financial instruments collateral	(19,406)		—		—		(19,406)
Net amounts	$	22,711	$	202	$	1,893	$	24,806
Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable							$	4,318


	Liabilities at December 31, 2022
$ in millions	Bilateral OTC		Cleared OTC		Exchange-Traded		Total
Designated as accounting hedges
Interest rate	$	457	$	4	$	—	$	461
Foreign exchange	550		101		—		651
Total	1,007		105		—		1,112
Not designated as accounting hedges
Economic hedges of loans
Credit	9		368		—		377
Other derivatives
Interest rate	135,661		28,581		455		164,697
Credit	5,535		2,390		—		7,925
Foreign exchange	110,322		2,512		104		112,938
Equity	23,138		—		28,193		51,331
Commodity and other	19,631		—		6,748		26,379
Total	294,296		33,851		35,500		363,647
Total gross derivatives	$	295,303	$	33,956	$	35,500	$	364,759
Amounts offset
Counterparty netting	(214,773)		(32,250)		(32,212)		(279,235)
Cash collateral netting	(45,884)		(1,505)		—		(47,389)
Total in Trading liabilities	$	34,646	$	201	$	3,288	$	38,135
Amounts not offset1
Financial instruments collateral	(2,545)		—		(1,139)		(3,684)
Net amounts	$	32,101	$	201	$	2,149	$	34,451
Net amounts for which master netting or collateral agreements are not in place or may not be legally enforceable							$	6,430

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.

See Note 4 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 March 31, 2023									Assets at September 30, 2023
$ in billions	$ in billions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total		$ in billions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total
Designated as accounting hedges	Designated as accounting hedges									Designated as accounting hedges
Interest rate	Interest rate	$	—	$	66	$	—	$	66	Interest rate	$	—	$	67	$	—	$	67
Foreign exchange	Foreign exchange	4		1		—		5		Foreign exchange	12		3		—		15
Total	Total	4		67		—		71		Total	12		70		—		82
Not designated as accounting hedges	Not designated as accounting hedges									Not designated as accounting hedges
Economic hedges of loans	Economic hedges of loans									Economic hedges of loans
Credit	Credit	—		2		—		2		Credit	—		1		—		1
Other derivatives	Other derivatives									Other derivatives
Interest rate	Interest rate	3,679		9,530		696		13,905		Interest rate	3,943		8,316		563		12,822
Credit	Credit	214		136		—		350		Credit	209		167		—		376
Foreign exchange	Foreign exchange	3,803		190		16		4,009		Foreign exchange	3,413		194		7		3,614
Equity	Equity	521		—		390		911		Equity	559		—		437		996
Commodity and other	Commodity and other	141		—		66		207		Commodity and other	138		—		72		210
Total	Total	8,358		9,858		1,168		19,384		Total	8,262		8,678		1,079		18,019
Total gross derivatives	Total gross derivatives	$	8,362	$	9,925	$	1,168	$	19,455	Total gross derivatives	$	8,274	$	8,748	$	1,079	$	18,101


		Liabilities at March 31, 2023									Liabilities at September 30, 2023
$ in billions	$ in billions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total		$ in billions	Bilateral OTC		Cleared OTC		Exchange- Traded		Total
Designated as accounting hedges	Designated as accounting hedges									Designated as accounting hedges
Interest rate	Interest rate	$	2	$	183	$	—	$	185	Interest rate	$	2	$	195	$	—	$	197
Foreign exchange	Foreign exchange	10		3		—		13		Foreign exchange	2		1		—		3
Total	Total	12		186		—		198		Total	4		196		—		200
Not designated as accounting hedges	Not designated as accounting hedges									Not designated as accounting hedges
Economic hedges of loans	Economic hedges of loans									Economic hedges of loans
Credit	Credit	—		18		—		18		Credit	1		20		—		21
Other derivatives	Other derivatives									Other derivatives
Interest rate	Interest rate	3,975		8,944		432		13,351		Interest rate	4,123		8,125		466		12,714
Credit	Credit	205		136		—		341		Credit	221		161		—		382
Foreign exchange	Foreign exchange	3,910		147		34		4,091		Foreign exchange	3,387		167		28		3,582
Equity	Equity	542		—		582		1,124		Equity	596		—		621		1,217
Commodity and other	Commodity and other	97		—		87		184		Commodity and other	106		—		83		189
Total	Total	8,729		9,245		1,135		19,109		Total	8,434		8,473		1,198		18,105
Total gross derivatives	Total gross derivatives	$	8,741	$	9,431	$	1,135	$	19,307	Total gross derivatives	$	8,438	$	8,669	$	1,198	$	18,305


	Assets at December 31, 2022
$ in billions	Bilateral OTC		Cleared OTC		Exchange-Traded		Total
Designated as accounting hedges
Interest rate	$	2	$	62	$	—	$	64
Foreign exchange	2		2		—		4
Total	4		64		—		68
Not designated as accounting hedges
Economic hedges of loans
Credit	—		3		—		3
Other derivatives
Interest rate	3,404		7,609		614		11,627
Credit	190		130		—		320
Foreign exchange	3,477		126		15		3,618
Equity	488		—		358		846
Commodity and other	141		—		59		200
Total	7,700		7,868		1,046		16,614
Total gross derivatives	$	7,704	$	7,932	$	1,046	$	16,682


			53			September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)


	Liabilities at December 31, 2022
$ in billions	Bilateral OTC		Cleared OTC		Exchange-Traded		Total
Designated as accounting hedges
Interest rate	$	3	$	187	$	—	$	190
Foreign exchange	12		2		—		14
Total	15		189		—		204
Not designated as accounting hedges
Economic hedges of loans
Credit	—		15		—		15
Other derivatives
Interest rate	3,436		7,761		497		11,694
Credit	199		125		—		324
Foreign exchange	3,516		123		35		3,674
Equity	488		—		552		1,040
Commodity and other	101		—		79		180
Total	7,740		8,024		1,163		16,927
Total gross derivatives	$	7,755	$	8,213	$	1,163	$	17,131

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


~~March 2023 Form 10-Q~~			46


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

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 2022 Form 10-K.

Gains (Losses) on Accounting Hedges


		Three Months Ended					Three Months Ended				Nine Months Ended
		March 31,					September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
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		$	(372)	$	795		Interest rate contracts	$	259	$	846	$	457	$	2,037
Investment Securities—AFS	Investment Securities—AFS		381		(751)			Investment Securities—AFS	(239)		(836)		(423)		(1,960)
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		$	2,284	$	(6,233)		Interest rate contracts	$	(2,742)	$	(5,379)	$	(2,806)	$	(15,629)
Deposits	Deposits		(54)		88			Deposits	(15)		25		(31)		143
Borrowings	Borrowings		(2,240)		6,155			Borrowings	2,781		5,372		2,856		15,499
Net investment hedges—Foreign exchange contracts	Net investment hedges—Foreign exchange contracts		Net investment hedges—Foreign exchange contracts
Recognized in OCI	Recognized in OCI		$	(89)	$	139		Recognized in OCI	$	375	$	662	$	381	$	1,436
Forward points excluded from hedge effectiveness testing—Recognized in Interest income	Forward points excluded from hedge effectiveness testing—Recognized in Interest income		43		(41)			Forward points excluded from hedge effectiveness testing—Recognized in Interest income	60		18		166		(59)
Cash flow hedges—Interest rate contracts1	Cash flow hedges—Interest rate contracts1		Cash flow hedges—Interest rate contracts1
Recognized in OCI	Recognized in OCI		$	7	$	—		Recognized in OCI	$	(12)	$	—	$	(30)	$	—
Less: Realized gains (losses) (pre-tax) reclassified from AOCI to interest income	Less: Realized gains (losses) (pre-tax) reclassified from AOCI to interest income		(1)		—			Less: Realized gains (losses) (pre-tax) reclassified from AOCI to interest income	(6)		—		(9)		—
Net change in cash flow hedges included within AOCI	Net change in cash flow hedges included within AOCI		8		—			Net change in cash flow hedges included within AOCI	(6)		—		(21)		—

1.For the current quarter ended ~~March 31,~~September 30, 2023, there were no forecasted transactions that failed to occur. The net gains (losses) associated with cash flow hedges expected to be reclassified from AOCI within 12 months as of ~~March 31,~~September 30, 2023, is approximately ~~$(7)~~$(25) million. The maximum length of time over which forecasted cash flows are hedged is 2 years.

Fair Value Hedges—Hedged Items


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Investment Securities—AFS	Investment Securities—AFS					Investment Securities—AFS
Amortized cost basis currently or previously hedged	Amortized cost basis currently or previously hedged	$	34,559	$	34,073	Amortized cost basis currently or previously hedged	$	33,348	$	34,073
Basis adjustments included in amortized cost1	Basis adjustments included in amortized cost1	$	(1,152)	$	(1,628)	Basis adjustments included in amortized cost1	$	(1,800)	$	(1,628)
Deposits	Deposits					Deposits
Carrying amount currently or previously hedged	Carrying amount currently or previously hedged	$	6,162	$	3,735	Carrying amount currently or previously hedged	$	10,278	$	3,735
Basis adjustments included in carrying amount1	Basis adjustments included in carrying amount1	$	(65)	$	(119)	Basis adjustments included in carrying amount1	$	(88)	$	(119)
Borrowings	Borrowings					Borrowings
Carrying amount currently or previously hedged	Carrying amount currently or previously hedged	$	147,736	$	146,025	Carrying amount currently or previously hedged	$	147,076	$	146,025
Basis adjustments included in carrying amount—Outstanding hedges	Basis adjustments included in carrying amount—Outstanding hedges	$	(10,510)	$	(12,748)	Basis adjustments included in carrying amount—Outstanding hedges	$	(15,567)	$	(12,748)
Basis adjustments included in carrying amount—Terminated hedges	Basis adjustments included in carrying amount—Terminated hedges	$	(692)	$	(715)	Basis adjustments included in carrying amount—Terminated hedges	$	(677)	$	(715)

1.Hedge accounting basis adjustments are primarily related to outstanding hedges.

Gains (Losses) on Economic Hedges of Loans


		Three Months Ended					Three Months Ended				Nine Months Ended
		March 31,					September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
Recognized in Other revenues	Recognized in Other revenues		Recognized in Other revenues
Credit contracts1	Credit contracts1		$	(161)	$	51		Credit contracts1	$	(104)	$	(44)	$	(330)	$	160

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 March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Net derivative liabilities with credit risk-related contingent features	Net derivative liabilities with credit risk-related contingent features	$	18,180	$	20,287	Net derivative liabilities with credit risk-related contingent features	$	19,204	$	20,287
Collateral posted	Collateral posted	13,064		12,268		Collateral posted	13,338		12,268

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 ~~March 31,~~September 30, 2023
One-notch downgrade	$	~~497~~562
Two-notch downgrade	~~359~~375
Bilateral downgrade agreements included in the amounts above1	$	~~748~~811

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 ~~event of one-notch or two-notch downgrade scenarios based on the relevant contractual downgrade triggers.~~

~~Maximum Potential Payout/Notional of Credit Protection Sold~~1

Years to Maturity at March 31, 2023
$ in billions < 1 1-3 3-5 Over 5 Total
Single-name CDS
Investment grade $ 12 $ 30 $ 33 $ 15 $ 90
Non-investment grade 5 13 17 6 41
Total $ 17 $ 43 $ 50 $ 21 $ 131
Index and basket CDS
Investment grade $ 3 $ 9 $ 14 $ 1 $ 27
Non-investment grade 8 21 104 49 182
Total $ 11 $ 30 $ 118 $ 50 $ 209
Total CDS sold $ 28 $ 73 $ 168 $ 71 $ 340
Other credit contracts — — — — —
Total credit protection sold $ 28 $ 73 $ 168 $ 71 $ 340
CDS protection sold with identical protection purchased $ 282

~~March~~September 2023 Form 10-Q


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, 2023
$ in billions	< 1		1-3		3-5		Over 5		Total
Single-name CDS
Investment grade	$	16	$	30	$	39	$	14	$	99
Non-investment grade	7		13		20		6		46
Total	$	23	$	43	$	59	$	20	$	145
Index and basket CDS
Investment grade	$	3	$	18	$	51	$	21	$	93
Non-investment grade	8		11		85		35		139
Total	$	11	$	29	$	136	$	56	$	232
Total CDS sold	$	34	$	72	$	195	$	76	$	377
Other credit contracts	—		—		—		3		3
Total credit protection sold	$	34	$	72	$	195	$	79	$	380
CDS protection sold with identical protection purchased									$	312


	Years to Maturity at December 31, 2022
$ in billions	< 1		1-3		3-5		Over 5		Total
Single-name CDS
Investment grade	$	12	$	29	$	29	$	9	$	79
Non-investment grade	5		13		16		2		36
Total	$	17	$	42	$	45	$	11	$	115
Index and basket CDS
Investment grade	$	3	$	13	$	37	$	3	$	56
Non-investment grade	8		17		108		19		152
Total	$	11	$	30	$	145	$	22	$	208
Total CDS sold	$	28	$	72	$	190	$	33	$	323
Other credit contracts	—		—		—		—		—
Total credit protection sold	$	28	$	72	$	190	$	33	$	323
CDS protection sold with identical protection purchased									$	262

Fair Value Asset (Liability) of Credit Protection Sold1


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Single-name CDS	Single-name CDS					Single-name CDS
Investment grade	Investment grade	$	1,168	$	762	Investment grade	$	1,472	$	762
Non-investment grade	Non-investment grade	(722)		(808)		Non-investment grade	(228)		(808)
Total	Total	$	446	$	(46)	Total	$	1,244	$	(46)
Index and basket CDS	Index and basket CDS					Index and basket CDS
Investment grade	Investment grade	$	924	$	859	Investment grade	$	1,295	$	859
Non-investment grade	Non-investment grade	(2,110)		(1,812)		Non-investment grade	(1,855)		(1,812)
Total	Total	$	(1,186)	$	(953)	Total	$	(560)	$	(953)
Total CDS sold	Total CDS sold	$	(740)	$	(999)	Total CDS sold	$	684	$	(999)
Other credit contracts	Other credit contracts	6		(1)		Other credit contracts	178		(1)
Total credit protection sold	Total credit protection sold	$	(734)	$	(1,000)	Total credit protection sold	$	862	$	(1,000)

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.

Protection Purchased with CDS


		Notional					Notional
$ in billions	$ in billions	At March 31, 2023		At December 31, 2022		$ in billions	At September 30, 2023		At December 31, 2022
Single name	Single name	$	159	$	140	Single name	$	172	$	140
Index and basket	Index and basket	181		173		Index and basket	197		173
Tranched index and basket	Tranched index and basket	31		26		Tranched index and basket	32		26
Total	Total	$	371	$	339	Total	$	401	$	339


		Fair Value Asset (Liability)					Fair Value Asset (Liability)
$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Single name	Single name	$	(645)	$	(33)	Single name	$	(1,553)	$	(33)
Index and basket	Index and basket	1,595		1,248		Index and basket	1,023		1,248
Tranched index and basket	Tranched index and basket	(428)		(217)		Tranched index and basket	(481)		(217)
Total	Total	$	522	$	998	Total	$	(1,011)	$	998

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 2022 Form 10-K.

7. Investment Securities

AFS and HTM Securities


		At March 31, 2023									At September 30, 2023
$ 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	$	54,861	$	31	$	1,845	$	53,047	U.S. Treasury securities	$	47,939	$	27	$	1,394	$	46,572
U.S. agency securities2	U.S. agency securities2	25,272		2		2,508		22,766		U.S. agency securities2	26,221		—		3,436		22,785
Agency CMBS	Agency CMBS	6,020		—		465		5,555		Agency CMBS	5,741		—		504		5,237

State and municipal securities	State and municipal securities	1,492		32		22		1,502		State and municipal securities	817		32		20		829
FFELP student loan ABS3	FFELP student loan ABS3	1,093		—		31		1,062		FFELP student loan ABS3	855		—		17		838

Other ABS										Other ABS	—		—		—		—
Total AFS securities	Total AFS securities	88,738		65		4,871		83,932		Total AFS securities	81,573		59		5,371		76,261
HTM securities	HTM securities									HTM securities
U.S. Treasury securities	U.S. Treasury securities	27,709		—		1,456		26,253		U.S. Treasury securities	26,208		—		1,885		24,323
U.S. agency securities2	U.S. agency securities2	43,343		—		7,885		35,458		U.S. agency securities2	41,612		—		10,136		31,476
Agency CMBS	Agency CMBS	1,770		—		138		1,632		Agency CMBS	1,656		—		168		1,488
Non-agency CMBS	Non-agency CMBS	1,190		2		116		1,076		Non-agency CMBS	1,229		—		192		1,037
Total HTM securities	Total HTM securities	74,012		2		9,595		64,419		Total HTM securities	70,705		—		12,381		58,324
Total investment securities	Total investment securities	$	162,750	$	67	$	14,466	$	148,351	Total investment securities	$	152,278	$	59	$	17,752	$	134,585

At December 31, 2022
$ in millions
Amortized Cost1
Gross Unrealized Gains Gross Unrealized Losses Fair Value
AFS securities
U.S. Treasury securities $ 56,103 $ 17 $ 2,254 $ 53,866
U.S. agency securities2
23,926 1 2,753 21,174
Agency CMBS 5,998 — 470 5,528
Non-agency CMBS — — — —
Corporate bonds — — — —
State and municipal securities 2,598 71 42 2,627
FFELP student loan ABS3
1,147 — 45 1,102
Total AFS securities 89,772 89 5,564 84,297
HTM securities
U.S. Treasury securities 28,599 — 1,845 26,754
U.S. agency securities2
44,038 — 8,487 35,551
Agency CMBS 1,819 — 152 1,667
Non-agency CMBS 1,178 — 144 1,034
Total HTM securities 75,634 — 10,628 65,006
Total investment securities $ 165,406 $ 89 $ 16,192 $ 149,303


			55			September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)


	At December 31, 2022
$ in millions	Amortized Cost1		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
AFS securities
U.S. Treasury securities	$	56,103	$	17	$	2,254	$	53,866
U.S. agency securities2	23,926		1		2,753		21,174
Agency CMBS	5,998		—		470		5,528


State and municipal securities	2,598		71		42		2,627
FFELP student loan ABS3	1,147		—		45		1,102

Total AFS securities	89,772		89		5,564		84,297
HTM securities
U.S. Treasury securities	28,599		—		1,845		26,754
U.S. agency securities2	44,038		—		8,487		35,551
Agency CMBS	1,819		—		152		1,667
Non-agency CMBS	1,178		—		144		1,034
Total HTM securities	75,634		—		10,628		65,006
Total investment securities	$	165,406	$	89	$	16,192	$	149,303

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.


~~March 2023 Form 10-Q~~			48


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

AFS Securities in an Unrealized Loss Position


		At March 31, 2023				At December 31, 2022					At September 30, 2023				At December 31, 2022
$ 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	$	22,043	$	1,078	$	42,144	$	1,711	Less than 12 months	$	6,932	$	214	$	42,144	$	1,711
12 months or longer	12 months or longer	24,271		767		11,454		543		12 months or longer	31,798		1,180		11,454		543
Total	Total	46,314		1,845		53,598		2,254		Total	38,730		1,394		53,598		2,254
U.S. agency securities	U.S. agency securities									U.S. agency securities
Less than 12 months	Less than 12 months	8,293		485		13,662		1,271		Less than 12 months	4,716		91		13,662		1,271
12 months or longer	12 months or longer	13,505		2,023		7,060		1,482		12 months or longer	17,968		3,345		7,060		1,482
Total	Total	21,798		2,508		20,722		2,753		Total	22,684		3,436		20,722		2,753
Agency CMBS	Agency CMBS									Agency CMBS
Less than 12 months	Less than 12 months	5,299		436		5,343		448		Less than 12 months	2,111		201		5,343		448
12 months or longer	12 months or longer	256		29		185		22		12 months or longer	3,053		303		185		22
Total	Total	5,555		465		5,528		470		Total	5,164		504		5,528		470

State and municipal securities	State and municipal securities									State and municipal securities
Less than 12 months	Less than 12 months	231		1		2,106		40		Less than 12 months	288		1		2,106		40
12 months or longer	12 months or longer	516		21		65		2		12 months or longer	253		19		65		2
Total	Total	747		22		2,171		42		Total	541		20		2,171		42
FFELP student loan ABS	FFELP student loan ABS									FFELP student loan ABS
Less than 12 months	Less than 12 months	475		11		627		23		Less than 12 months	68		1		627		23
12 months or longer	12 months or longer	573		20		476		22		12 months or longer	693		16		476		22
Total	Total	1,048		31		1,103		45		Total	761		17		1,103		45

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	36,341		2,011		63,882		3,493		Less than 12 months	14,115		508		63,882		3,493
12 months or longer	12 months or longer	39,121		2,860		19,240		2,071		12 months or longer	53,765		4,863		19,240		2,071
Total	Total	$	75,462	$	4,871	$	83,122	$	5,564	Total	$	67,880	$	5,371	$	83,122	$	5,564

For AFS securities, the Firm believes there are no securities in an unrealized loss position that have credit losses after performing the analysis described in Note 2 in the 2022 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 ~~March 31,~~September 30, 2023 and December 31, 2022, the securities in an unrealized loss position are predominantly investment grade.

The HTM securities net carrying amounts at ~~March 31,~~September 30, 2023 and December 31, 2022 reflect an ACL of ~~$30~~$45 million and $34 million, respectively, predominantly related to Non-agency CMBS. See Note 2 in the 2022 Form 10-K for a description of the ACL methodology used for HTM Securities. As of ~~March 31,~~September 30, 2023 and December 31, 2022, Non-Agency CMBS HTM securities were predominantly on accrual status and investment grade.

See Note 14 for additional information on securities issued by VIEs, including U.S. agency mortgage-backed securities, non-agency CMBS, and FFELP student loan ABS.

Investment Securities by Contractual Maturity


		At March 31, 2023							At September 30, 2023
$ in millions	$ in millions	Amortized Cost1		Fair Value		Annualized Average Yield2,3		$ in millions	Amortized Cost1		Fair Value		Annualized Average Yield2,3
AFS securities	AFS securities							AFS securities
U.S. Treasury securities:	U.S. Treasury securities:							U.S. Treasury securities:
Due within 1 year	Due within 1 year	$	16,150	$	15,862	1.0	%	Due within 1 year	$	15,009	$	14,680	1.1	%
After 1 year through 5 years	After 1 year through 5 years	38,017		36,492		1.3	%	After 1 year through 5 years	32,224		31,187		1.8	%
After 5 years through 10 years	After 5 years through 10 years	694		693		3.6	%	After 5 years through 10 years	706		705		3.9	%

Total	Total	54,861		53,047				Total	47,939		46,572
U.S. agency securities:	U.S. agency securities:							U.S. agency securities:
Due within 1 year	Due within 1 year	23		22		(0.2)	%	Due within 1 year	24		23		(0.6)	%
After 1 year through 5 years	After 1 year through 5 years	422		394		1.5	%	After 1 year through 5 years	431		397		1.6	%
After 5 years through 10 years	After 5 years through 10 years	716		659		1.8	%	After 5 years through 10 years	572		510		1.8	%
After 10 years	After 10 years	24,111		21,691		3.1	%	After 10 years	25,194		21,855		3.6	%
Total	Total	25,272		22,766				Total	26,221		22,785
Agency CMBS:	Agency CMBS:							Agency CMBS:

Due within 1 year								Due within 1 year	1		1		(2.2)	%
After 1 year through 5 years	After 1 year through 5 years	1,773		1,676		1.8	%	After 1 year through 5 years	2,068		1,973		1.8	%
After 5 years through 10 years	After 5 years through 10 years	2,992		2,823		2.0	%	After 5 years through 10 years	2,459		2,309		2.1	%
After 10 years	After 10 years	1,255		1,056		1.3	%	After 10 years	1,213		954		1.4	%
Total	Total	6,020		5,555				Total	5,741		5,237

State and municipal securities:	State and municipal securities:							State and municipal securities:
Due within 1 year	Due within 1 year	12		12		3.8	%	Due within 1 year	24		24		5.2	%
After 1 year through 5 years	After 1 year through 5 years	48		49		3.9	%	After 1 year through 5 years	172		172		4.8	%
After 5 years through 10 years	After 5 years through 10 years	88		90		3.8	%	After 5 years through 10 years	17		20		4.7	%
After 10 Years	After 10 Years	1,344		1,351		3.9	%	After 10 Years	604		613		4.3	%
Total	Total	1,492		1,502				Total	817		829
FFELP student loan ABS:	FFELP student loan ABS:							FFELP student loan ABS:

After 1 year through 5 years	After 1 year through 5 years	110		105		5.5	%	After 1 year through 5 years	101		98		5.8	%
After 5 years through 10 years	After 5 years through 10 years	114		109		5.4	%	After 5 years through 10 years	104		100		6.0	%
After 10 years	After 10 years	869		848		5.6	%	After 10 years	650		640		6.3	%
Total	Total	1,093		1,062				Total	855		838

Total AFS securities	Total AFS securities	88,738		83,932		1.9	%	Total AFS securities	81,573		76,261		2.3	%

~~March~~September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)


		At March 31, 2023					At September 30, 2023
$ in millions	$ in millions	Amortized Cost1	Fair Value	Annualized Average Yield2		$ in millions	Amortized Cost1	Fair Value	Annualized Average Yield2
HTM securities	HTM securities					HTM securities
U.S. Treasury securities:	U.S. Treasury securities:					U.S. Treasury securities:
Due within 1 year	Due within 1 year	6,634	6,515	1.8	%	Due within 1 year	8,102	7,982	1.9	%
After 1 year through 5 years	After 1 year through 5 years	15,649	14,907	1.9	%	After 1 year through 5 years	12,683	11,863	1.8	%
After 5 years through 10 years	After 5 years through 10 years	3,866	3,614	2.4	%	After 5 years through 10 years	3,864	3,445	2.4	%
After 10 years	After 10 years	1,560	1,217	2.3	%	After 10 years	1,559	1,033	2.3	%
Total	Total	27,709	26,253			Total	26,208	24,323
U.S. agency securities:	U.S. agency securities:					U.S. agency securities:

After 1 year through 5 years	After 1 year through 5 years	8	7	1.8	%	After 1 year through 5 years	7	6	1.8	%
After 5 years through 10 years	After 5 years through 10 years	351	326	2.1	%	After 5 years through 10 years	311	276	2.1	%
After 10 years	After 10 years	42,984	35,125	1.8	%	After 10 years	41,294	31,194	1.8	%
Total	Total	43,343	35,458			Total	41,612	31,476
Agency CMBS:	Agency CMBS:					Agency CMBS:
Due within 1 year	Due within 1 year	329	322	0.8	%	Due within 1 year	482	469	1.4	%
After 1 year through 5 years	After 1 year through 5 years	1,136	1,053	1.4	%	After 1 year through 5 years	928	828	1.2	%
After 5 years through 10 years	After 5 years through 10 years	174	150	1.4	%	After 5 years through 10 years	118	95	1.4	%
After 10 years	After 10 years	131	107	1.6	%	After 10 years	128	96	1.6	%
Total	Total	1,770	1,632			Total	1,656	1,488
Non-agency CMBS:	Non-agency CMBS:					Non-agency CMBS:
Due within 1 year	Due within 1 year	198	195	4.0	%	Due within 1 year	195	177	4.2	%
After 1 year through 5 years	After 1 year through 5 years	251	233	4.1	%	After 1 year through 5 years	353	315	4.4	%
After 5 years through 10 years	After 5 years through 10 years	706	617	3.8	%	After 5 years through 10 years	630	500	3.7	%
After 10 years	After 10 years	35	31	3.6	%	After 10 years	51	45	4.6	%
Total	Total	1,190	1,076			Total	1,229	1,037
Total HTM securities	Total HTM securities	74,012	64,419	1.9	%	Total HTM securities	70,705	58,324	1.9	%
Total investment securities	Total investment securities	162,750	148,351	1.9	%	Total investment securities	152,278	134,585	2.1	%

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 excludes the effect of related hedging derivatives.

3.At ~~March 31,~~September 30, 2023, the annualized average yield, including the interest rate swap accrual of related hedges, was ~~1.0%~~1.2% for AFS securities contractually maturing within 1 year and ~~2.6%~~3.3% for all AFS securities.

Gross Realized Gains (Losses) on Sales of AFS Securities


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
Gross realized gains	Gross realized gains		$	44	$	126		Gross realized gains	$	15	$	13	$	66	$	163
Gross realized (losses)	Gross realized (losses)		(3)		(82)			Gross realized (losses)	(1)		(4)		(21)		(92)
Total1	Total1		$	41	$	44		Total1	$	14	$	9	$	45	$	71

1.Realized gains and losses are recognized in Other revenues in the income statement.

8. Collateralized Transactions

Offsetting of Certain Collateralized Transactions


		At March 31, 2023											At September 30, 2023
$ 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	$	223,056	$	(101,171)	$	121,885	$	(118,330)	$	3,555	Securities purchased under agreements to resell	$	244,528	$	(142,959)	$	101,569	$	(98,203)	$	3,366
Securities borrowed	Securities borrowed	157,967		(11,751)		146,216		(142,775)		3,441		Securities borrowed	133,184		(12,268)		120,916		(116,818)		4,098
Liabilities	Liabilities											Liabilities
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	$	161,662	$	(101,171)	$	60,491	$	(56,242)	$	4,249	Securities sold under agreements to repurchase	$	219,620	$	(142,959)	$	76,661	$	(70,871)	$	5,790
Securities loaned	Securities loaned	27,339		(11,751)		15,588		(15,135)		453		Securities loaned	25,332		(12,268)		13,064		(13,049)		15
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									$	3,252	Securities purchased under agreements to resell									$	2,160
Securities borrowed	Securities borrowed									620		Securities borrowed									380
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase									3,368		Securities sold under agreements to repurchase									4,311
Securities loaned	Securities loaned									215		Securities loaned									4


	At December 31, 2022
$ in millions	Gross Amounts		Amounts Offset		Balance Sheet Net Amounts		Amounts Not Offset1		Net Amounts
Assets
Securities purchased under agreements to resell	$	240,355	$	(126,448)	$	113,907	$	(109,902)	$	4,005
Securities borrowed	145,340		(11,966)		133,374		(128,073)		5,301
Liabilities
Securities sold under agreements to repurchase	$	188,982	$	(126,448)	$	62,534	$	(57,395)	$	5,139
Securities loaned	27,645		(11,966)		15,679		(15,199)		480
Net amounts for which master netting agreements are not in place or may not be legally enforceable
Securities purchased under agreements to resell									$	1,696
Securities borrowed									624
Securities sold under agreements to repurchase									3,861
Securities loaned									250

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~~Notes 2 and ~~Note~~ 9 to the financial statements in the 2022 Form 10-K. For information related to offsetting of derivatives, see Note 6.

Gross Secured Financing Balances by Remaining Contractual Maturity


		At March 31, 2023											At September 30, 2023
$ 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	$	63,922	$	41,521	$	17,262	$	38,957	$	161,662	Securities sold under agreements to repurchase	$	93,944	$	68,289	$	23,622	$	33,765	$	219,620
Securities loaned	Securities loaned	14,786		1		987		11,565		27,339		Securities loaned	13,266		—		900		11,166		25,332
Total included in the offsetting disclosure	Total included in the offsetting disclosure	$	78,708	$	41,522	$	18,249	$	50,522	$	189,001	Total included in the offsetting disclosure	$	107,210	$	68,289	$	24,522	$	44,931	$	244,952
Trading liabilities— Obligation to return securities received as collateral	Trading liabilities— Obligation to return securities received as collateral	25,112		—		—		—		25,112		Trading liabilities— Obligation to return securities received as collateral	16,548		—		—		—		16,548
Total	Total	$	103,820	$	41,522	$	18,249	$	50,522	$	214,113	Total	$	123,758	$	68,289	$	24,522	$	44,931	$	261,500

~~March~~September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)


	At December 31, 2022
$ in millions	Overnight and Open		Less than 30 Days		30-90 Days		Over 90 Days		Total
Securities sold under agreements to repurchase	$	54,551	$	77,359	$	20,586	$	36,486	$	188,982
Securities loaned	15,150		882		1,984		9,629		27,645
Total included in the offsetting disclosure	$	69,701	$	78,241	$	22,570	$	46,115	$	216,627
Trading liabilities— Obligation to return securities received as collateral	22,880		—		—		—		22,880
Total	$	92,581	$	78,241	$	22,570	$	46,115	$	239,507

Gross Secured Financing Balances by Class of Collateral Pledged


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
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	$	46,714	$	57,761	U.S. Treasury and agency securities	$	83,594	$	57,761
Other sovereign government obligations	Other sovereign government obligations	78,048		98,839		Other sovereign government obligations	102,679		98,839
Corporate equities	Corporate equities	20,250		19,340		Corporate equities	17,976		19,340
Other	Other	16,650		13,042		Other	15,371		13,042
Total	Total	$	161,662	$	188,982	Total	$	219,620	$	188,982
Securities loaned	Securities loaned					Securities loaned
Other sovereign government obligations	Other sovereign government obligations	$	913	$	862	Other sovereign government obligations	$	714	$	862
Corporate equities	Corporate equities	25,312		26,289		Corporate equities	23,939		26,289
Other	Other	1,114		494		Other	679		494
Total	Total	$	27,339	$	27,645	Total	$	25,332	$	27,645
Total included in the offsetting disclosure	Total included in the offsetting disclosure	$	189,001	$	216,627	Total included in the offsetting disclosure	$	244,952	$	216,627
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	$	25,025	$	22,833	Corporate equities	$	16,523	$	22,833
Other	Other	87		47		Other	25		47
Total	Total	$	25,112	$	22,880	Total	$	16,548	$	22,880
Total	Total	$	214,113	$	239,507	Total	$	261,500	$	239,507

Carrying Value of Assets Loaned or Pledged without Counterparty Right to Sell or Repledge

$ in millions At
March 31,
2023 At
December 31,
2022
$ 34,669 $ 34,524


$ in millions	At September 30, 2023		At December 31, 2022
Trading assets	$	38,682	$	34,524

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 sheet.

Fair Value of Collateral Received with Right to Sell or Repledge


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Collateral received with right to sell or repledge	Collateral received with right to sell or repledge	$	681,133	$	637,941	Collateral received with right to sell or repledge	$	656,290	$	637,941
Collateral that was sold or repledged1	Collateral that was sold or repledged1	525,199		486,820		Collateral that was sold or repledged1	499,905		486,820

1.Does not include securities used to meet federal regulations for the Firm’s U.S. broker-dealers.

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 to deliver to counterparties to cover short positions.

Securities Segregated for Regulatory Purposes


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Segregated securities1	Segregated securities1	$	28,959	$	32,254	Segregated securities1	$	21,936	$	32,254

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 sheet.

Customer Margin and Other Lending


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Margin and other lending	Margin and other lending	$	39,354	$	38,524	Margin and other lending	$	42,699	$	38,524

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 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 2022 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 12.

~~March~~September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

9. Loans, Lending Commitments and Related Allowance for Credit Losses

Loans by Type


		At March 31, 2023							At September 30, 2023
$ in millions	$ in millions	HFI Loans		HFS Loans		Total Loans		$ in millions	HFI Loans		HFS Loans		Total Loans
Corporate	Corporate	$	7,435	$	11,150	$	18,585	Corporate	$	7,181	$	11,086	$	18,267
Secured lending facilities	Secured lending facilities	37,187		3,006		40,193		Secured lending facilities	39,119		2,861		41,980
Commercial real estate	Commercial real estate	8,601		948		9,549		Commercial real estate	8,389		259		8,648
Residential real estate	Residential real estate	55,400		25		55,425		Residential real estate	59,002		23		59,025
Securities-based lending and Other loans	Securities-based lending and Other loans	91,897		17		91,914		Securities-based lending and Other loans	90,208		1		90,209
Total loans	Total loans	200,520		15,146		215,666		Total loans	203,899		14,230		218,129
ACL	ACL	(970)				(970)		ACL	(1,157)				(1,157)
Total loans, net	Total loans, net	$	199,550	$	15,146	$	214,696	Total loans, net	$	202,742	$	14,230	$	216,972
Loans to non-U.S. borrowers, net	Loans to non-U.S. borrowers, net					$	24,395	Loans to non-U.S. borrowers, net					$	26,246


	At December 31, 2022
$ in millions	HFI Loans		HFS Loans		Total Loans
Corporate	$	6,589	$	10,634	$	17,223
Secured lending facilities	35,606		3,176		38,782
Commercial real estate	8,515		926		9,441
Residential real estate	54,460		4		54,464
Securities-based lending and Other loans	94,666		48		94,714
Total loans	199,836		14,788		214,624
ACL	(839)				(839)
Total loans, net	$	198,997	$	14,788	$	213,785
Loans to non-U.S. borrowers, net					$	23,651

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 2022 Form 10-K.

Loans by Interest Rate Type


		At March 31, 2023				At December 31, 2022					At September 30, 2023				At December 31, 2022
$ in millions	$ in millions	Fixed Rate		Floating or Adjustable Rate		Fixed Rate		Floating or Adjustable Rate		$ in millions	Fixed Rate		Floating or Adjustable Rate		Fixed Rate		Floating or Adjustable Rate
Corporate	Corporate	$	—	$	18,584	$	—	$	17,223	Corporate	$	—	$	18,267	$	—	$	17,223
Secured lending facilities	Secured lending facilities	—		40,193		—		38,782		Secured lending facilities	—		41,980		—		38,782
Commercial real estate	Commercial real estate	204		9,346		204		9,237		Commercial real estate	198		8,450		204		9,237
Residential real estate	Residential real estate	25,515		29,909		24,903		29,561		Residential real estate	28,282		30,743		24,903		29,561
Securities-based lending and Other loans	Securities-based lending and Other loans	22,253		69,662		24,077		70,637		Securities-based lending and Other loans	22,525		67,684		24,077		70,637
Total loans, before ACL	Total loans, before ACL	$	47,972	$	167,694	$	49,184	$	165,440	Total loans, before ACL	$	51,005	$	167,124	$	49,184	$	165,440

See Note 4 for further information regarding Loans and lending commitments held at fair value. See Note 13 for details of current commitments to lend in the future.

Loans Held for Investment before Allowance by Origination Year


		At March 31, 2023						At December 31, 2022							At September 30, 2023						At December 31, 2022
		Corporate													Corporate
$ in millions	$ in millions	IG		NIG		Total		IG		NIG		Total		$ in millions	IG		NIG		Total		IG		NIG		Total
Revolving	Revolving	$	2,907	$	4,004	$	6,911	$	2,554	$	3,456	$	6,010	Revolving	$	2,349	$	4,189	$	6,538	$	2,554	$	3,456	$	6,010
2023	2023	—		13		13								2023	134		20		154
2022	2022	—		143		143		6		107		113		2022	—		166		166		6		107		113
2021	2021	—		137		137		—		139		139		2021	15		101		116		—		139		139
2020	2020	—		59		59		—		58		58		2020	33		25		58		—		58		58
2019	2019	—		153		153		—		154		154		2019	—		149		149		—		154		154
Prior	Prior	—		19		19		115		—		115		Prior	—		—		—		115		—		115
Total	Total	$	2,907	$	4,528	$	7,435	$	2,675	$	3,914	$	6,589	Total	$	2,531	$	4,650	$	7,181	$	2,675	$	3,914	$	6,589


		At March 31, 2023						At December 31, 2022							At September 30, 2023						At December 31, 2022
		Secured Lending Facilities													Secured Lending Facilities
$ in millions	$ in millions	IG		NIG		Total		IG		NIG		Total		$ in millions	IG		NIG		Total		IG		NIG		Total
Revolving	Revolving	$	9,338	$	21,713	$	31,051	$	9,445	$	21,243	$	30,688	Revolving	$	11,329	$	19,873	$	31,202	$	9,445	$	21,243	$	30,688
2023	2023	956		255		1,211								2023	2,324		750		3,074
2022	2022	1,090		1,489		2,579		1,135		1,336		2,471		2022	667		2,150		2,817		1,135		1,336		2,471
2021	2021	257		211		468		254		208		462		2021	254		151		405		254		208		462
2020	2020	—		88		88		—		98		98		2020	—		85		85		—		98		98
2019	2019	60		418		478		60		486		546		2019	60		345		405		60		486		546
Prior	Prior	212		1,100		1,312		215		1,126		1,341		Prior	302		829		1,131		215		1,126		1,341
Total	Total	$	11,913	$	25,274	$	37,187	$	11,109	$	24,497	$	35,606	Total	$	14,936	$	24,183	$	39,119	$	11,109	$	24,497	$	35,606


		At March 31, 2023						At December 31, 2022							At September 30, 2023						At December 31, 2022
		Commercial Real Estate													Commercial Real Estate
$ in millions	$ in millions	IG		NIG		Total		IG		NIG		Total		$ in millions	IG		NIG		Total		IG		NIG		Total
Revolving	Revolving	$	—	$	175	$	175	$	—	$	204	$	204	Revolving	$	—	$	168	$	168	$	—	$	204	$	204
2023	2023	—		297		297								2023	10		805		815
2022	2022	388		2,067		2,455		379		2,201		2,580		2022	382		1,791		2,173		379		2,201		2,580
2021	2021	310		1,554		1,864		239		1,609		1,848		2021	286		1,574		1,860		239		1,609		1,848
2020	2020	—		739		739		—		728		728		2020	—		739		739		—		728		728
2019	2019	559		1,218		1,777		659		1,152		1,811		2019	325		1,242		1,567		659		1,152		1,811
Prior	Prior	185		1,109		1,294		211		1,133		1,344		Prior	85		982		1,067		211		1,133		1,344
Total	Total	$	1,442	$	7,159	$	8,601	$	1,488	$	7,027	$	8,515	Total	$	1,088	$	7,301	$	8,389	$	1,488	$	7,027	$	8,515


		At March 31, 2023													At September 30, 2023
		Residential Real Estate													Residential Real Estate
		by FICO Scores						by LTV Ratio				Total			by FICO Scores						by LTV Ratio				Total
$ in millions	$ in millions	≥ 740		680-739		≤ 679		≤ 80%		> 80%				$ in millions	≥ 740		680-739		≤ 679		≤ 80%		> 80%
Revolving	Revolving	$	85	$	30	$	5	$	120	$	—	$	120	Revolving	$	98	$	32	$	8	$	137	$	1	$	138
2023	2023	1,365		293		72		1,514		216		1,730		2023	5,735		1,180		178		6,304		789		7,093
2022	2022	11,347		2,503		407		13,123		1,134		14,257		2022	11,039		2,445		390		12,771		1,103		13,874
2021	2021	11,486		2,467		254		13,240		967		14,207		2021	11,210		2,392		245		12,911		936		13,847
2020	2020	7,198		1,489		112		8,349		450		8,799		2020	7,006		1,443		105		8,118		436		8,554
2019	2019	4,151		929		137		4,899		318		5,217		2019	4,012		901		132		4,739		306		5,045
Prior	Prior	8,280		2,448		342		10,200		870		11,070		Prior	7,845		2,292		314		9,632		819		10,451
Total	Total	$	43,912	$	10,159	$	1,329	$	51,445	$	3,955	$	55,400	Total	$	46,945	$	10,685	$	1,372	$	54,612	$	4,390	$	59,002


	At December 31, 2022
	Residential Real Estate
	by FICO Scores						by LTV Ratio				Total
$ in millions	≥ 740		680-739		≤ 679		≤ 80%		> 80%
Revolving	$	90	$	29	$	5	$	124	$	—	$	124
2022	11,481		2,533		411		13,276		1,149		14,425
2021	11,604		2,492		257		13,378		975		14,353
2020	7,292		1,501		115		8,452		456		8,908
2019	4,208		946		137		4,968		323		5,291
2018	1,635		447		52		1,965		169		2,134
Prior	6,853		2,072		300		8,492		733		9,225
Total	$	43,163	$	10,020	$	1,277	$	50,655	$	3,805	$	54,460

~~March~~September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)


		At March 31, 2023									At September 30, 2023
		Securities-based Lending1		Other2							Securities-based Lending1		Other2
$ in millions	$ in millions			IG		NIG		Total		$ in millions			IG		NIG		Total
Revolving	Revolving	$	73,763	$	5,988	$	1,089	$	80,840	Revolving	$	71,389	$	6,096	$	1,220	$	78,705
2023	2023	468		138		148		754		2023	1,369		543		238		2,150
2022	2022	1,514		1,115		729		3,358		2022	1,474		820		792		3,086
2021	2021	701		481		295		1,477		2021	375		417		341		1,133
2020	2020	—		579		376		955		2020	—		464		425		889
2019	2019	16		970		545		1,531		2019	14		903		522		1,439
Prior	Prior	202		1,706		1,074		2,982		Prior	202		1,466		1,138		2,806
Total	Total	$	76,664	$	10,977	$	4,256	$	91,897	Total	$	74,823	$	10,709	$	4,676	$	90,208


	December 31, 2022
	Securities-based Lending1		Other2
$ in millions			IG		NIG		Total
Revolving	$	77,115	$	5,760	$	1,480	$	84,355
2022	1,425		1,572		269		3,266
2021	725		525		223		1,473
2020	—		580		418		998
2019	16		913		644		1,573
2018	202		268		304		774
Prior	—		1,581		646		2,227
Total	$	79,483	$	11,199	$	3,984	$	94,666

IG—Investment Grade

NIG—Non-investment Grade

1. Securities-based loans are subject to collateral maintenance provisions, and at ~~March 31,~~September 30, 2023 and December 31, 2022, 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 2022 Form 10-K.

2. Other loans primarily include certain loans originated in the tailored lending business within the Wealth Management business ~~segment.~~segment, which typically consist of bespoke lending arrangements provided to ultra-high worth net clients. These facilities are generally secured by eligible collateral.

Past Due Loans Held for Investment before Allowance1


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Corporate	Corporate	$	46	$	112	Corporate	$	42	$	112
Secured lending facilities	Secured lending facilities	80		85		Secured lending facilities	—		85

Commercial real estate						Commercial real estate	21		—
Residential real estate	Residential real estate	126		158		Residential real estate	153		158
Securities-based lending and Other loans	Securities-based lending and Other loans	19		1		Securities-based lending and Other loans	—		1
Total	Total	$	271	$	356	Total	$	216	$	356

1.~~The~~As of September 30, 2023, the majority of the amounts are past due for a period of ~~greater~~less than 90 days. As of December 31, 2022, the majority of the amounts are 90 days or more past due.

Nonaccrual Loans Held for Investment before Allowance1


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Corporate	Corporate	$	177	$	71	Corporate	$	115	$	71
Secured lending facilities	Secured lending facilities	89		94		Secured lending facilities	92		94
Commercial real estate	Commercial real estate	353		209		Commercial real estate	153		209
Residential real estate	Residential real estate	125		118		Residential real estate	101		118
Securities-based lending and Other loans	Securities-based lending and Other loans	66		10		Securities-based lending and Other loans	120		10
Total1		$	810	$	502
Total						Total	$	581	$	502
Nonaccrual loans without an ACL	Nonaccrual loans without an ACL	$	140	$	117	Nonaccrual loans without an ACL	$	133	$	117

1.~~Includes all~~There were no loans held for investment that ~~are~~were 90 days or more past due and still accruing as of ~~March 31,~~September 30, 2023 and December 31, 2022. For further information on the Firm’s nonaccrual policy, see Note 2 to the financial statements in the 2022 Form 10-K .

See Note 2 to the financial statements in the 2022 Form 10-K for a description of the ACL calculated under the CECL

methodology, including credit quality indicators, used for HFI loans.

The Firm may modify the terms of certain loans for economic or legal reasons related to a borrower's financial difficulties, and these modifications include interest rate reductions,

principal forgiveness, term extensions and other-than-insignificant payment delays or a combination of these aforementioned modifications. Modified loans are typically evaluated individually for allowance for credit losses. As of ~~March 31,~~September 30, 2023, there were no loans held for investment modified in the current ~~quarter~~year period with subsequent ~~default or past due.~~default.

Modified Loans Held for Investment1


Modified during the three months ended September 30, 20231						Modified during the three months ended September 30, 20231
							At September 30, 2023
$ in millions						$ in millions	Amortized Cost		% of Total Loans2

							Term Extension
Corporate						Corporate	$	82	1.1	%

Commercial real estate						Commercial real estate	198		2.4	%

Securities-based lending and Other loans						Securities-based lending and Other loans	105		0.1	%
Total						Total	$	385

Modified during the nine months ended September 30, 20231						Modified during the nine months ended September 30, 20231
		At March 31, 20232					At September 30, 2023
$ in millions	$ in millions	Amortized Cost		% of Total Loans3		$ in millions	Amortized Cost		% of Total Loans2

		Term Extension					Term Extension
Corporate	Corporate	$	17	0.2	%	Corporate	$	114	1.6	%

Commercial real estate	Commercial real estate	62		0.7	%	Commercial real estate	219		2.6	%
Residential real estate	Residential real estate	1		—	%	Residential real estate	1		—	%

Securities-based lending and Other loans						Securities-based lending and Other loans	129		0.1	%
Total	Total	$	80			Total	$	463
		Other-than-insignificant Payment Delay

Commercial real estate		$	67	0.8	%

							Combination - Multiple Modifications3

Commercial real estate						Commercial real estate	$	40	0.5	%

1.Lending commitments to borrowers for which the Firm has modified terms of the receivable are ~~$607~~$424 million and $877 million during the current quarter and current year period, respectively as of ~~March 31,~~September 30, 2023.

2.~~Loans held for investment that were modified during the current quarter.~~

3.Percentage of total loans represents the percentage of modified loans to total loans held for investment by loan type.

3.Combination - Multiple Modifications includes loans with Term extension and Other-than-insignificant payment delay.


September 2023 Form 10-Q			60


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

Financial Impact on Modified Loans Held for Investment


Modified during the three months ended September 30, 20231
			At ~~March 31,~~September 30, 2023












			Term Extension2
Corporate			Added ~~a weighted-average 8~~1 year, 11 months to the life of the modified ~~loans.~~loan(s)

Commercial real estate			Added ~~a weighted-average 2~~3 months to the life of the modified ~~loans.~~loan(s)

Securities-based lending and Other loans			Added 4 months to the life of the modified loan(s)


Modified during the nine months ended September 30, 20231
			At September 30, 2023












			Term Extension2
Corporate			Added 1 year, 9 months to the life of the modified loan(s)

Commercial real estate			Added 3 months to the life of the modified loan(s)
Residential real estate			Added 4 months to the life of the modified ~~loan.~~loan(s)
Securities-based lending and Other loans			Added 8 months to the life of the modified loan(s)






			~~Other-than-insignificant Payment Delay~~Combination - Multiple Modification


Commercial real estate			~~Provided a forbearance period~~Added 7 months of 8Term extension and 6 months of Other-than-insignificant payment delay to the ~~borrower~~life of the modified ~~loan.~~loan(s)

1.Percentage of total loans represents the percentage of modified loans to total loans held for investment by loan type.

2.In instances where more than one loan was modified, modification impact is presented on a weighted-average basis.

Past Due Status for Loans Held for Investment Modified in the Last 12 months


	At September 30, 2023
$ in millions	30-89 Days Past Due		90+ days Past Due		Total


Commercial real estate	$	21	$	—	$	21
Residential real estate	—		1		1

Total	$	21	$	1	$	22

Troubled Debt Restructurings


$ in millions	At December 31, 2022
Loans, before ACL	$	29

~~Allowance for credit losses~~Lending commitments	—

TDRs included modifications of interest rates, collateral requirements, other loan covenants and payment extensions. See Note 2 to the financial statements in the 2022 Form 10-K for further information on TDRs guidance. The accounting guidance for TDRs was eliminated for the Firm, beginning on January 1, 2023. See Note 2 for further information herein.

Gross Charge-offs by Origination Year
Three Months Ended March 31, 2023
$ in millions Corporate Secured Lending Facilities CRE Residential Real Estate SBL and Other Total
Revolving $ (1) $ — $ — $ — $ — $ (1)
2019 — — (29) — (1) (30)
Prior — — (40) — — (40)
Total $ (1) $ — $ (69) $ — $ (1) $ (71)


	Three Months Ended September 30, 2023
$ in millions	Corporate		Secured Lending Facilities		CRE		Residential Real Estate		SBL and Other		Total
Revolving	$	—	$	—	$	—	$	—	$	—	$	—



2020	—		—		—		—		(1)		(1)
2019	—		—		(39)		—		—		(39)

Total	$	—	$	—	$	(39)	$	—	$	(1)	$	(40)


	Nine Months Ended September 30, 2023
$ in millions	Corporate		Secured Lending Facilities		CRE		Residential Real Estate		SBL and Other		Total
Revolving	$	(30)	$	—	$	—	$	—	$	—	$	(30)



2020	—		—		—		—		(2)		(2)
2019	—		—		(68)		—		(1)		(69)
Prior	—		—		(40)		—		—		(40)
Total	$	(30)	$	—	$	(108)	$	—	$	(3)	$	(141)

Provision for Credit Losses


	Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	2023		2022		2023		2022
Loans	$	123	$	6	$	462	$	137
Lending commitments	11		29		67		56

Allowance for Credit Losses Rollforward and Allocation—Loans


$ in millions	Corporate			Secured Lending Facilities			CRE			Residential Real Estate			SBL and Other			Total
December 31, 2022	$	235		$	153		$	275		$	87		$	89		$	839
Gross charge-offs	(30)			—			(108)			—			(3)			(141)
Recoveries	—			—			—			1			—			1
Net (charge-offs) recoveries	(30)			—			(108)			1			(3)			(140)
Provision (release)	44			2			261			22			133			462
Other	(1)			(1)			(2)			—			—			(4)
September 30, 2023	$	248		$	154		$	426		$	110		$	219		$	1,157
Percent of loans to total loans1	4		%	19		%	4		%	29		%	44		%	100		%


$ 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 recoveries (charge-offs)	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		%	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.


			5361			~~March~~September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

Allowance for Credit Losses ~~Rollforward and Allocation—Loans~~

$ in millions Corporate Secured Lending Facilities CRE Residential Real Estate SBL and Other Total
December 31, 2022 $ 235 $ 153 $ 275 $ 87 $ 89 $ 839
Gross charge-offs (1) — (69) — (1) (71)
Provision (release) 31 — 129 26 15 201
Other — (1) — — 2 1
March 31, 2023 $ 265 $ 152 $ 335 $ 113 $ 105 $ 970
Percent of loans to total loans1
4 % 18 % 4 % 28 % 46 % 100 %

$ 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) — (1) (11)
Provision (release) 6 12 6 13 2 39
Other (1) — (2) — — (3)
March 31, 2022 $ 170 $ 172 $ 203 $ 73 $ 61 $ 679
Percent of loans to total loans1
3 % 16 % 5 % 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	$ in millions	Corporate		Secured Lending Facilities		CRE		Residential Real Estate		SBL and Other		Total		$ in millions	Corporate		Secured Lending Facilities		CRE		Residential Real Estate		SBL and Other		Total
December 31, 2022	December 31, 2022	$	411	$	51	$	15	$	4	$	23	$	504	December 31, 2022	$	411	$	51	$	15	$	4	$	23	$	504
Provision (release)	Provision (release)	22		—		7		1		3		33		Provision (release)	29		24		12		—		2		67
Other	Other	2		—		—		—		—		2		Other	(1)		—		(1)		—		—		(2)
March 31, 2023		$	435	$	51	$	22	$	5	$	26	$	539
September 30, 2023														September 30, 2023	$	439	$	75	$	26	$	4	$	25	$	569

$ 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) 20 8 (7) — (3) 18
Other (3) — — — — (3)
March 31, 2022 $ 373 $ 49 $ 13 $ 1 $ 23 $ 459


$ 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

The allowance for credit losses for loans and lending commitments increased for the nine months ended September 30, 2023, primarily due to deteriorating conditions in the ~~current quarter, reflecting deterioration in both the macroeconomic outlook and our expectations of~~ commercial real estate ~~borrowers.~~sector, including provisions for certain specific loans, mainly in the office portfolio, and modest growth in certain other loan portfolios. Charge-offs for the nine months ended September 30, 2023 were primarily related to commercial real estate and corporate loans. The base scenario used in our ACL models as of ~~March 31,~~September 30, 2023 was generated using a combination of consensus economic forecasts, forward rates, and internally developed and validated models, and assumes anweak economic ~~contraction~~growth in 2023 ~~followed by a recovery in~~and 2024. Given the nature of our lending portfolio, the most sensitive model input is U.S. gross domestic product (“GDP”). 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 2022 Form 10-K.

Selected Credit Ratios


		At March 31, 2023		At December 31, 2022			At September 30, 2023		At December 31, 2022
ACL for loans to total HFI loans	ACL for loans to total HFI loans	0.5	%	0.4	%	ACL for loans to total HFI loans	0.6	%	0.4	%
Nonaccrual HFI loans to total HFI loans1		0.4	%	0.3	%
Nonaccrual HFI loans to total HFI loans						Nonaccrual HFI loans to total HFI loans	0.3	%	0.3	%
ACL for loans to nonaccrual HFI loans	ACL for loans to nonaccrual HFI loans	119.8	%	167.1	%	ACL for loans to nonaccrual HFI loans	199.1	%	167.1	%

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.~~

Employee Loans


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Currently employed by the Firm1	Currently employed by the Firm1	$	4,065	$	4,023	Currently employed by the Firm1	$	4,262	$	4,023
No longer employed by the Firm2	No longer employed by the Firm2	105		97		No longer employed by the Firm2	98		97
Employee loans	Employee loans	$	4,170	$	4,120	Employee loans	$	4,360	$	4,120
ACL	ACL	(138)		(139)		ACL	(130)		(139)
Employee loans, net of ACL	Employee loans, net of ACL	$	4,032	$	3,981	Employee loans, net of ACL	$	4,230	$	3,981
Remaining repayment term, weighted average in years	Remaining repayment term, weighted average in years	5.8		5.8		Remaining repayment term, weighted average in years	5.8		5.8

1.These loans are predominantly current.

2.These loans are predominantly past due for a period of 90 days or more.

Employee loans are granted in conjunction with a program established primarily to recruit certain Wealth Management financial advisors, 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 sheet. See Note 2 to the financial statements in the 2022 Form 10-K for a description of the CECL allowance methodology, including credit quality indicators, for employee loans.

10. Other Assets—Equity Method Investments

Equity Method Investments


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Investments	Investments	$	1,962	$	1,927	Investments	$	1,775	$	1,927


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
Income (loss)	Income (loss)		$	25	$	6		Income (loss)	$	19	$	21	$	105	$	44

Equity method investments, other than investments in certain fund interests, are summarized above and are included in Other assets in the balance sheet with related income or loss included in Other revenues in the income statement. See “Net Asset Value Measurements—Fund Interests” in Note 4 for the carrying value of certain of the Firm’s fund interests, which are composed of general and limited partnership interests, as well as any related carried interest.

Japanese Securities Joint Venture


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
Income (loss) from investment in MUMSS	Income (loss) from investment in MUMSS		$	29	$	4		Income (loss) from investment in MUMSS	$	10	$	17	$	102	$	35

For more information on MUMSS and other relationships with MUFG, see Note 12 to the financial statements in the 2022 Form 10-K.

11. Deposits

Deposits


$ in millions	At September 30, 2023		At December 31, 2022
Savings and demand deposits	$	280,008	$	319,948
Time deposits	65,450		36,698
Total	$	345,458	$	356,646
Deposits subject to FDIC insurance	$	272,015	$	260,420
Deposits not subject to FDIC insurance	$	73,443	$	96,226

Time Deposit Maturities


$ in millions	At September 30, 2023
2023	$	13,058
2024	29,378
2025	11,302
2026	4,716
2027	3,372
Thereafter	3,624
Total	$	65,450


~~March~~September 2023 Form 10-Q			5462


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

~~For more information on MUMSS and other relationships with MUFG, see Note 12 to the financial statements in the 2022 Form 10-K.~~

~~11. Deposits~~

~~Deposits~~

$ in millions At
March 31,
2023 At
December 31,
2022
Savings and demand deposits $ 298,330 $ 319,948
Time deposits 49,193 36,698
Total $ 347,523 $ 356,646
Deposits subject to FDIC insurance $ 263,420 $ 260,420
Deposits not subject to FDIC insurance $ 84,103 $ 96,226

~~Time Deposit Maturities~~

$ in millions At
March 31,
2023
2023 $ 22,647
2024 15,815
2025 5,204
2026 1,982
2027 1,847
Thereafter 1,698
Total $ 49,193

12. Borrowings and Other Secured Financings

Borrowings


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Original maturities of one year or less	Original maturities of one year or less	$	4,587	$	4,191	Original maturities of one year or less	$	4,350	$	4,191
Original maturities greater than one year	Original maturities greater than one year					Original maturities greater than one year
Senior	Senior	$	231,205	$	221,667	Senior	$	231,047	$	221,667
Subordinated	Subordinated	14,390		12,200		Subordinated	11,796		12,200
Total greater than one year						Total greater than one year	$	242,843	$	233,867
Total	Total	$	245,595	$	233,867	Total	$	247,193	$	238,058
Total borrowings		$	250,182	$	238,058
Weighted average stated maturity, in years1	Weighted average stated maturity, in years1	6.7		6.7		Weighted average stated maturity, in years1	6.5		6.7

1.Only includes borrowings with original maturities greater than one year.

Other Secured Financings


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Original maturities:	Original maturities:					Original maturities:
One year or less	One year or less	$	980	$	944	One year or less	$	2,391	$	944
Greater than one year	Greater than one year	7,690		7,214		Greater than one year	7,277		7,214
Total	Total	$	8,670	$	8,158	Total	$	9,668	$	8,158
Transfers of assets accounted for as secured financings	Transfers of assets accounted for as secured financings	$	1,138	$	1,119	Transfers of assets accounted for as secured financings	$	3,092	$	1,119

Other secured financings include the liabilities related to collateralized notes, transfers of financial assets that are accounted for as financings rather than sales and consolidated VIEs where the Firm is deemed to be the primary beneficiary. These liabilities are generally payable from the cash flows of the related assets accounted for as Trading assets. See Note 14 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 sheet.

13. Commitments, Guarantees and Contingencies

Commitments


		Years to Maturity at March 31, 2023											Years to Maturity at September 30, 2023
$ 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	$	16,630	$	26,698	$	57,883	$	1,819	$	103,030	Corporate	$	16,247	$	36,269	$	53,156	$	2,356	$	108,028
Secured lending facilities	Secured lending facilities	7,379		5,943		2,884		1,027		17,233		Secured lending facilities	7,773		5,032		3,662		2,140		18,607
Commercial and Residential real estate	Commercial and Residential real estate	171		201		19		336		727		Commercial and Residential real estate	309		112		14		352		787
Securities-based lending and Other	Securities-based lending and Other	13,175		4,995		414		522		19,106		Securities-based lending and Other	16,229		3,360		395		394		20,378
Forward-starting secured financing receivables1	Forward-starting secured financing receivables1	70,011		—		—		—		70,011		Forward-starting secured financing receivables1	73,474		—		—		—		73,474
Central counterparty	Central counterparty	300		—		—		7,255		7,555		Central counterparty	300		—		—		14,966		15,266
Underwriting	Underwriting	300		—		—		—		300		Underwriting	645		—		—		—		645
Investment activities	Investment activities	1,313		290		118		356		2,077		Investment activities	1,777		314		110		284		2,485
Letters of credit and other financial guarantees	Letters of credit and other financial guarantees	107		35		—		8		150		Letters of credit and other financial guarantees	145		—		—		6		151
Total	Total	$	109,386	$	38,162	$	61,318	$	11,323	$	220,189	Total	$	116,899	$	45,087	$	57,337	$	20,498	$	239,821
Lending commitments participated to third parties	Lending commitments participated to third parties									$	7,509	Lending commitments participated to third parties									$	7,408

1.Forward-starting secured financing receivables are generally settled within three business days.

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 2022 Form 10-K.

Guarantees


		At March 31, 2023											At September 30, 2023
		Maximum Potential Payout/Notional of Obligations by Years to Maturity								Carrying Amount Asset (Liability)			Maximum Potential Payout/Notional of Obligations by Years to Maturity								Carrying Amount Asset (Liability)
$ in millions	$ in millions	Less than 1		1-3		3-5		Over 5				$ in millions	Less than 1		1-3		3-5		Over 5
Non-credit derivatives1	Non-credit derivatives1	$	1,418,449	$	1,132,093	$	347,086	$	692,818	$	(60,437)	Non-credit derivatives1	$	1,303,613	$	1,337,393	$	295,171	$	713,579	$	(67,659)
Standby letters of credit and other financial guarantees issued2	Standby letters of credit and other financial guarantees issued2	1,634		635		1,389		2,676		(6)		Standby letters of credit and other financial guarantees issued2	1,545		1,054		1,100		2,801		(15)
Market value guarantees	Market value guarantees	2		—		—		—		—		Market value guarantees	1		—		—		—		—
Liquidity facilities	Liquidity facilities	2,593		—		—		—		(2)		Liquidity facilities	2,035		—		—		—		(9)
Whole loan sales guarantees	Whole loan sales guarantees	—		52		34		23,079		—		Whole loan sales guarantees	—		69		17		23,076		—
Securitization representations and warranties3	Securitization representations and warranties3	—		—		—		78,695		(3)		Securitization representations and warranties3	—		—		—		80,081		(3)
General partner guarantees	General partner guarantees	364		30		143		37		(87)		General partner guarantees	381		32		130		33		(87)
Client clearing guarantees	Client clearing guarantees	45		—		—		—		—		Client clearing guarantees	77		—		—		—		—

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 ~~$0.6~~$0.8 billion of notional and collateral/recourse, due to the nature of the Firm’s obligations under these arrangements. As of ~~March 31,~~September 30, 2023, the carrying amount of standby letters of credit and other financial guarantees issued includes an allowance for credit losses of ~~$77~~$76 million.

3.Related to commercial and residential mortgage securitizations.

The Firm has obligations under certain guarantee arrangements, including contracts and indemnification agreements, that contingently require the Firm to make


			5563			~~March~~September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

~~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 2022 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 2022 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 described 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, arising in connection with its activities as a global diversified financial services institution. Certain of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. In some cases, the entities that would otherwise be the primary defendants in such cases are bankrupt or are in

financial distress. These actions have included, but are not limited to, antitrust claims, claims under various false claims

act statutes, and matters arising from our sales and trading businesses, and our activities in the capital markets.

The Firm is also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental and self-regulatory agencies regarding the Firm’s business, and involving, among other matters, sales, trading, financing, prime brokerage, market-making activities, investment banking advisory services, capital market activities, financial products or offerings sponsored, underwritten or sold by the Firm, wealth and investment management services, and accounting and operational matters, certain of which may result in adverse judgments, settlements, fines, penalties, injunctions, limitations on our ability to conduct certain business, or other relief.

While the Firm has identified below any individual proceedings or investigations where the Firm believes a material loss to be reasonably possible and, in some cases, 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.

The Firm contests liability and/or the amount of damages as appropriate in each pending matter. Where available information indicates that it is probable a liability had been incurred at the date of 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.

Three Months Ended
March 31,
$ in millions 2023 2022
Legal expenses $ 151 $ 84

The Firm’s legal expenses can, and may in the future, fluctuate from period to period, given the current environment regarding government investigations and private litigation affecting global financial services firms, including the 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 determination of important factual matters, determination of issues related to class certification and the calculation of damages or other relief, and consideration of novel or unsettled legal questions relevant to the proceedings or investigations in question.


	Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	2023		2022		2023		2022
Legal expenses	$	18	$	41	$	214	$	387


~~March~~September 2023 Form 10-Q			5664


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

~~issues related~~The Firm’s legal expenses can, and may in the future, fluctuate from period to ~~class certification~~period, given the current environment regarding government investigations and private litigation affecting global financial services firms, including the ~~calculation of damages or other relief, and consideration of novel or unsettled legal questions relevant to the proceedings or investigations in question.~~Firm.

For certain other legal proceedings and investigations, the Firm can, in some instances, estimate reasonably possible losses, additional losses, ranges of loss or ranges of additional loss in excess of amounts accrued (if any) 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,~~condition, other than the matter referred to in the following 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 ~~$135~~$131 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 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 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. The Dutch criminal authorities have requested additional information, and the Firm is continuing to respond to them in connection with their ongoing investigation.

For certain other legal proceedings and investigations, though the Firm believes a loss is probable, the Firm cannot reasonably estimate such losses, additional losses, ranges of loss or ranges of additional loss in excess of amounts accrued (if any), 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 condition, other than the matter referred to in the following paragraph.

Block Trading Matter

The Firm has been responding to requests for information from the Enforcement Division of the SEC and the United States Attorney’s Office for the Southern District of New York in connection with their investigations into various aspects of the Firm's blocks business, certain related sales and trading practices, and applicable controls (the “Investigations”). The Investigations are focused on whether the Firm and/or its employees shared and/or used information regarding impending block transactions in violation of federal securities laws and regulations. The Firm continues to cooperate with, and has continued to engage in ongoing discussions regarding potential resolution of, the Investigations. There can be no assurance that these discussions and continuing engagement will lead to resolution of either matter. The Firm also faces potential civil liability arising from claims that have been or may be asserted by, among others, block transaction participants who contend they were harmed or disadvantaged including, among other things, as a result of a share price decline allegedly caused by the activities of the Firm and/or its employees, or as a result of the Firm’s and/or its employees’ failure to adhere to applicable laws and regulations. In addition, the Firm has responded to demands from shareholders under Section 220 of the Delaware General Corporation Law for books and records concerning the Investigations.

For certain other legal proceedings and investigations including the following matter, the Firm can estimate probable losses but does not believe, based on current knowledge and after consultation with counsel, that additional loss in excess of amounts accrued could have a material adverse effect on the Firm’s financial ~~statements as a whole.~~condition.

Antitrust Related Matter

In August of 2017, the Firm was named as a defendant in a purported antitrust class action in the United States District Court for the ~~SDNY~~Southern District of New York styled Iowa Public Employees’ Retirement System et al. v. Bank of America Corporation et al. Plaintiffs allege, inter alia, that the Firm, together with a number of other financial institution defendants, violated U.S. antitrust laws and New York state law in connection with their alleged efforts to prevent the development of electronic exchange-based platforms for securities lending. The class action complaint was filed on behalf of a purported class of borrowers and lenders who entered into stock loan transactions with the defendants. The class action complaint seeks, among other relief, certification of the class of plaintiffs and treble damages. On September 27, 2018, the court denied the defendants’ motion to dismiss the class action complaint. Plaintiffs’ motion for class certification was referred by the District Court to a magistrate judge who, on June 30, 2022, issued a report and recommendation that the District Court certify a class. ~~The motion for class certification and~~On May 20, 2023, the ~~parties’ objections~~Firm reached an agreement in principle to


			65			September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

settle the ~~report and recommendation are pending before~~litigation. On September 1, 2023, the ~~District Court.~~court granted preliminary approval of the settlement.

14. Variable Interest Entities and Securitization Activities

Consolidated VIE Assets and Liabilities by Type of Activity


		At March 31, 2023				At December 31, 2022					At September 30, 2023				At December 31, 2022
$ in millions	$ in millions	VIE Assets		VIE Liabilities		VIE Assets		VIE Liabilities		$ in millions	VIE Assets		VIE Liabilities		VIE Assets		VIE Liabilities
MABS1	MABS1	$	944	$	659	$	1,153	$	520	MABS1	$	526	$	156	$	1,153	$	520
Investment vehicles2	Investment vehicles2	634		272		638		272		Investment vehicles2	856		508		638		272
MTOB	MTOB	664		614		371		322		MTOB	406		402		371		322
Other	Other	572		199		519		199		Other	508		202		519		199
Total	Total	$	2,814	$	1,744	$	2,681	$	1,313	Total	$	2,296	$	1,268	$	2,681	$	1,313

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. 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.

2.Amounts include investment funds and CLOs.


			57			~~March 2023 Form 10-Q~~


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

Consolidated VIE Assets and Liabilities by Balance Sheet Caption


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	141	$	142	Cash and cash equivalents	$	220	$	142

Trading assets at fair value	Trading assets at fair value	1,885		2,066		Trading assets at fair value	1,542		2,066
Investment securities	Investment securities	577		255		Investment securities	319		255
Securities purchased under agreements to resell	Securities purchased under agreements to resell	200		200		Securities purchased under agreements to resell	200		200
Customer and other receivables	Customer and other receivables	9		16		Customer and other receivables	13		16

Other assets	Other assets	2		2		Other assets	2		2
Total	Total	$	2,814	$	2,681	Total	$	2,296	$	2,681
Liabilities	Liabilities					Liabilities
Other secured financings	Other secured financings	$	1,618	$	1,185	Other secured financings	$	1,133	$	1,185
Other liabilities and accrued expenses	Other liabilities and accrued expenses	122		124		Other liabilities and accrued expenses	131		124
Borrowings	Borrowings	4		4		Borrowings	4		4
Total	Total	$	1,744	$	1,313	Total	$	1,268	$	1,313
Noncontrolling interests	Noncontrolling interests	$	75	$	71	Noncontrolling interests	$	77	$	71

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 March 31, 2023											At September 30, 2023
$ in millions	$ in millions	MABS1		CDO		MTOB		OSF		Other2		$ in millions	MABS1		CDO		MTOB		OSF		Other2
VIE assets (UPB)	VIE assets (UPB)	$	132,049	$	926	$	3,688	$	2,619	$	52,661	VIE assets (UPB)	$	139,804	$	2,216	$	2,931	$	2,751	$	47,136
Maximum exposure to loss3	Maximum exposure to loss3											Maximum exposure to loss3
Debt and equity interests	Debt and equity interests	$	16,917	$	74	$	—	$	1,749	$	11,751	Debt and equity interests	$	20,141	$	81	$	—	$	1,857	$	8,692
Derivative and other contracts	Derivative and other contracts	—		—		2,593		—		5,615		Derivative and other contracts	—		—		2,035		—		4,471
Commitments, guarantees and other	Commitments, guarantees and other	1,290		—		—		—		892		Commitments, guarantees and other	2,519		—		—		—		74
Total	Total	$	18,207	$	74	$	2,593	$	1,749	$	18,258	Total	$	22,660	$	81	$	2,035	$	1,857	$	13,237
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	$	16,917	$	74	$	—	$	1,558	$	11,751	Debt and equity interests	$	20,141	$	81	$	—	$	1,640	$	8,692
Derivative and other contracts	Derivative and other contracts	—		—		3		—		1,731		Derivative and other contracts	—		—		2		—		1,641
Total	Total	$	16,917	$	74	$	3	$	1,558	$	13,482	Total	$	20,141	$	81	$	2	$	1,640	$	10,333
Additional VIE assets owned4	Additional VIE assets owned4									$	14,419	Additional VIE assets owned4									$	15,204
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	$	—	$	—	$	5	$	—	$	306	Derivative and other contracts	$	—	$	—	$	11	$	—	$	371


	At December 31, 2022
$ in millions	MABS1		CDO		MTOB		OSF		Other2
VIE assets (UPB)	$	123,601	$	3,162	$	4,632	$	2,403	$	50,178
Maximum exposure to loss3
Debt and equity interests	$	13,104	$	274	$	—	$	1,694	$	11,596
Derivative and other contracts	—		—		3,200		—		5,211
Commitments, guarantees and other	674		—		—		—		1,410
Total	$	13,778	$	274	$	3,200	$	1,694	$	18,217
Carrying value of variable interests–Assets
Debt and equity interests	$	13,104	$	274	$	—	$	1,577	$	11,596
Derivative and other contracts	—		—		3		—		1,564
Total	$	13,104	$	274	$	3	$	1,577	$	13,160
Additional VIE assets owned4									$	13,708
Carrying value of variable interests—Liabilities
Derivative and other contracts	$	—	$	—	$	3	$	—	$	281

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 4). The Firm does not provide additional support in these transactions through contractual facilities, guarantees or similar derivatives.

The previous tables include VIEs sponsored by unrelated parties, as well as VIEs sponsored by the Firm; 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 7).

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


September 2023 Form 10-Q			66


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

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 March 31, 2023				At December 31, 2022					At September 30, 2023				At December 31, 2022
$ 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	$	16,999	$	2,441	$	20,428	$	2,570	Residential mortgages	$	15,852	$	3,231	$	20,428	$	2,570
Commercial mortgages	Commercial mortgages	69,821		4,594		67,540		4,236		Commercial mortgages	75,060		8,112		67,540		4,236
U.S. agency collateralized mortgage obligations	U.S. agency collateralized mortgage obligations	39,959		5,959		32,567		4,729		U.S. agency collateralized mortgage obligations	40,147		6,296		32,567		4,729
Other consumer or commercial loans	Other consumer or commercial loans	5,270		3,923		3,066		1,569		Other consumer or commercial loans	8,745		2,502		3,066		1,569
Total	Total	$	132,049	$	16,917	$	123,601	$	13,104	Total	$	139,804	$	20,141	$	123,601	$	13,104


~~March 2023 Form 10-Q~~			58


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

Transferred Assets with Continuing Involvement


		At March 31, 2023									At September 30, 2023
$ 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)2,3	SPE assets (UPB)2,3	$	4,095	$	72,848	$	7,061	$	10,689	SPE assets (UPB)2,3	$	3,868	$	73,138	$	10,274	$	11,388
Retained interests	Retained interests									Retained interests
Investment grade	Investment grade	$	138	$	888	$	424	$	—	Investment grade	$	148	$	658	$	360	$	—
Non-investment grade	Non-investment grade	81		512		—		42		Non-investment grade	64		769		—		47
Total	Total	$	219	$	1,400	$	424	$	42	Total	$	212	$	1,427	$	360	$	47
Interests purchased in the secondary market3	Interests purchased in the secondary market3									Interests purchased in the secondary market3
Investment grade	Investment grade	$	17	$	49	$	10	$	—	Investment grade	$	12	$	24	$	11	$	—
Non-investment grade	Non-investment grade	6		16		—		—		Non-investment grade	—		16		—		—
Total	Total	$	23	$	65	$	10	$	—	Total	$	12	$	40	$	11	$	—
Derivative assets	Derivative assets	$	—	$	—	$	—	$	1,151	Derivative assets	$	—	$	—	$	—	$	1,088
Derivative liabilities	Derivative liabilities	—		—		—		288		Derivative liabilities	—		—		—		347


	At December 31, 2022
$ in millions	RML		CML		U.S. Agency CMO		CLN and Other1
SPE assets (UPB)2,3	$	3,732	$	73,069	$	6,448	$	10,928
Retained interests
Investment grade	$	137	$	927	$	367	$	—
Non-investment grade	26		465		11		44
Total	$	163	$	1,392	$	378	$	44
Interests purchased in the secondary market3
Investment grade	$	82	$	51	$	10	$	—
Non-investment grade	35		23		—		—
Total	$	117	$	74	$	10	$	—
Derivative assets	$	—	$	—	$	—	$	1,114
Derivative liabilities	—		—		—		201


		Fair Value At March 31, 2023							Fair Value At September 30, 2023
$ 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	$	561	$	—	$	561	Investment grade	$	475	$	—	$	475
Non-investment grade	Non-investment grade	17		51		68		Non-investment grade	5		59		64
Total	Total	$	578	$	51	$	629	Total	$	480	$	59	$	539
Interests purchased in the secondary market3	Interests purchased in the secondary market3							Interests purchased in the secondary market3
Investment grade	Investment grade	$	74	$	2	$	76	Investment grade	$	46	$	1	$	47
Non-investment grade	Non-investment grade	13		9		22		Non-investment grade	12		4		16
Total	Total	$	87	$	11	$	98	Total	$	58	$	5	$	63
Derivative assets	Derivative assets	$	1,151	$	—	$	1,151	Derivative assets	$	1,088	$	—	$	1,088
Derivative liabilities	Derivative liabilities	288		—		288		Derivative liabilities	347		—		347


	Fair Value at December 31, 2022
$ in millions	Level 2		Level 3		Total
Retained interests
Investment grade	$	489	$	—	$	489
Non-investment grade	25		16		41
Total	$	514	$	16	$	530
Interests purchased in the secondary market3
Investment grade	$	140	$	3	$	143
Non-investment grade	42		16		58
Total	$	182	$	19	$	201
Derivative assets	$	1,114	$	—	$	1,114
Derivative liabilities	153		48		201

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.

3.Amounts are only included for transactions where the Firm also holds retained interests as part of the transfer.

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 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. Certain retained interests are carried at fair value in the balance sheet with changes in fair value recognized in the income 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 2022 Form 10-K and Note 4 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 March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
New transactions1	New transactions1		$	2,521	$	8,260		New transactions1	$	9,132	$	5,332	$	15,257	$	19,809
Retained interests	Retained interests		1,575		1,622			Retained interests	115		500		2,767		3,553
Sales of corporate loans to CLO SPEs1, 2	Sales of corporate loans to CLO SPEs1, 2		—		4			Sales of corporate loans to CLO SPEs1, 2	—		37		—		53

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.

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 13).


			67			September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

Assets Sold with Retained Exposure


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Gross cash proceeds from sale of assets1	Gross cash proceeds from sale of assets1	$	49,167	$	49,059	Gross cash proceeds from sale of assets1	$	49,472	$	49,059
Fair value	Fair value					Fair value
Assets sold	Assets sold	$	49,824	$	47,281	Assets sold	$	49,642	$	47,281
Derivative assets recognized in the balance sheet	Derivative assets recognized in the balance sheet	885		116		Derivative assets recognized in the balance sheet	529		116
Derivative liabilities recognized in the balance sheet	Derivative liabilities recognized in the balance sheet	228		1,893		Derivative liabilities recognized in the balance sheet	359		1,893

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 2022 Form 10-K.


			59			~~March 2023 Form 10-Q~~


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

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 2022 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.

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 requirements require certain adjustments to, and deductions from, capital for purposes of determining these ratios. At ~~March 31,~~September 30, 2023 and December 31, 2022, the differences between the actual and required ratios were lower under the Standardized Approach.

CECL Deferral. Beginning on January 1, 2020, the Firm elected to defer the effect of the adoption of CECL on its risk-based and leverage-based capital amounts and ratios, as well as RWA, adjusted average assets and supplementary leverage exposure calculations, over a five-year transition period. The deferral impacts began to phase in at 25% per year from January 1, 2022 and are phased-in at 50% from January 1, 2023. The deferral impacts will become fully phased-in beginning on January 1, 2025.

Capital Buffer Requirements

At March 31, 2023 and December 31, 2022

At September 30, 2023 and December 31, 2022

Standardized

Advanced

Standardized

Advanced

Capital buffers

Capital conservation buffer

—

2.5%

Capital conservation buffer

—

2.5%

SCB

5.8%

N/A

SCB

5.8%

N/A

G-SIB capital surcharge

3.0%

G-SIB capital surcharge

3.0%

CCyB1

Capital buffer requirement

8.8%

5.5%

Capital buffer requirement

8.8%

5.5%

1.The CCyB can be set up to 2.5%, but is currently set by the Federal Reserve at zero.

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 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 capital buffer requirement computed under the standardized approaches for calculating credit risk and market risk RWA (“Standardized Approach”) is equal to the sum of the SCB, G-SIB capital surcharge and CCyB, and the capital buffer requirement computed under the applicable advanced approaches for calculating credit risk, market risk and ~~opeational~~operational risk RWA (“Advanced Approach”) is equal to the

2.5% capital conservation buffer, G-SIB capital surcharge and CCyB.

Risk-Based Regulatory Capital Ratio Requirements


		Regulatory Minimum		At March 31, 2023 and December 31, 2022			Regulatory Minimum		At September 30, 2023 and December 31, 2022
				Standardized	Advanced				Standardized	Advanced
Required ratios1	Required ratios1					Required ratios1
Common Equity Tier 1 capital ratio	Common Equity Tier 1 capital ratio	4.5	%	13.3%	10.0%	Common Equity Tier 1 capital ratio	4.5	%	13.3%	10.0%
Tier 1 capital ratio	Tier 1 capital ratio	6.0	%	14.8%	11.5%	Tier 1 capital ratio	6.0	%	14.8%	11.5%
Total capital ratio	Total capital ratio	8.0	%	16.8%	13.5%	Total capital ratio	8.0	%	16.8%	13.5%

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


September 2023 Form 10-Q			68


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

The Firm’s Regulatory Capital and Capital Ratios


$ in millions	$ in millions	Required Ratio1		At March 31, 2023			At December 31, 2022			$ in millions	Required Ratio1		At September 30, 2023			At December 31, 2022
Risk-based capital	Risk-based capital									Risk-based capital
Common Equity Tier 1 capital	Common Equity Tier 1 capital			$	69,454		$	68,670		Common Equity Tier 1 capital			$	69,148		$	68,670
Tier 1 capital	Tier 1 capital			77,947			77,191			Tier 1 capital			77,891			77,191
Total capital	Total capital			89,794			86,575			Total capital			88,573			86,575
Total RWA	Total RWA			459,107			447,849			Total RWA			443,816			447,849
Common Equity Tier 1 capital ratio	Common Equity Tier 1 capital ratio	13.3	%	15.1		%	15.3		%	Common Equity Tier 1 capital ratio	13.3	%	15.6		%	15.3		%
Tier 1 capital ratio	Tier 1 capital ratio	14.8	%	17.0		%	17.2		%	Tier 1 capital ratio	14.8	%	17.6		%	17.2		%
Total capital ratio	Total capital ratio	16.8	%	19.6		%	19.3		%	Total capital ratio	16.8	%	20.0		%	19.3		%

$ in millions	$ in millions	Required Ratio1		At March 31, 2023			At December 31, 2022			$ in millions	Required Ratio1		At September 30, 2023			At December 31, 2022
Leverage-based capital	Leverage-based capital									Leverage-based capital
Adjusted average assets2	Adjusted average assets2			$	1,168,328		$	1,150,772		Adjusted average assets2			$	1,152,379		$	1,150,772
Tier 1 leverage ratio	Tier 1 leverage ratio	4.0	%	6.7		%	6.7		%	Tier 1 leverage ratio	4.0	%	6.8		%	6.7		%
Supplementary leverage exposure3	Supplementary leverage exposure3			$	1,422,808		$	1,399,403		Supplementary leverage exposure3			$	1,416,310		$	1,399,403
SLR	SLR	5.0	%	5.5		%	5.5		%	SLR	5.0	%	5.5		%	5.5		%

1.Required ratios are inclusive of any buffers applicable as of the date presented.

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.

U.S. Bank Subsidiaries’ Regulatory Capital and Capital Ratios

The OCC establishes capital requirements for the U.S. Bank Subsidiaries, and evaluates their compliance with such capital requirements. Regulatory capital requirements for 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.

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 must remain well-capitalized in accordance with the OCC’s PCA standards. In addition, failure by the U.S. Bank Subsidiaries to meet minimum


~~March 2023 Form 10-Q~~			60


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

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’ and the Firm’s financial statements.

At ~~March 31,~~September 30, 2023 and December 31, 2022, MSBNA and MSPBNA risk-based capital ratios are based on the Standardized Approach rules. Beginning on January 1, 2020, MSBNA and MSPBNA elected to defer the effect of the adoption of CECL on risk-based capital amounts and ratios, as well as RWA, adjusted average assets and supplementary leverage exposure calculations, over a five-year transition period. The deferral impacts began to phase in at 25% per

year from January 1, 2022 and are phased-in at 50% from January 1, 2023. The deferral impacts will become fully phased-in beginning on January 1, 2025.

MSBNA’s Regulatory Capital


		Well-Capitalized Requirement		Required Ratio1		At March 31, 2023				At December 31, 2022					Well-Capitalized Requirement		Required Ratio1		At September 30, 2023				At December 31, 2022
$ in millions	$ in millions					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	%	$	21,485	21.5	%	$	20,043	20.5	%	Common Equity Tier 1 capital	6.5	%	7.0	%	$	21,250	20.9	%	$	20,043	20.5	%
Tier 1 capital	Tier 1 capital	8.0	%	8.5	%	21,485		21.5	%	20,043		20.5	%	Tier 1 capital	8.0	%	8.5	%	21,250		20.9	%	20,043		20.5	%
Total capital	Total capital	10.0	%	10.5	%	22,221		22.3	%	20,694		21.1	%	Total capital	10.0	%	10.5	%	22,129		21.7	%	20,694		21.1	%
Leverage-based capital	Leverage-based capital													Leverage-based capital
Tier 1 leverage	Tier 1 leverage	5.0	%	4.0	%	$	21,485	10.5	%	$	20,043	10.1	%	Tier 1 leverage	5.0	%	4.0	%	$	21,250	10.2	%	$	20,043	10.1	%
SLR	SLR	6.0	%	3.0	%	21,485		8.3	%	20,043		8.1	%	SLR	6.0	%	3.0	%	21,250		7.9	%	20,043		8.1	%

MSPBNA’s Regulatory Capital


		Well-Capitalized Requirement		Required Ratio1		At March 31, 2023				At December 31, 2022					Well-Capitalized Requirement		Required Ratio1		At September 30, 2023				At December 31, 2022
$ in millions	$ in millions					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	%	$	16,321	28.3	%	$	15,546	27.5	%	Common Equity Tier 1 capital	6.5	%	7.0	%	$	16,012	26.9	%	$	15,546	27.5	%
Tier 1 capital	Tier 1 capital	8.0	%	8.5	%	16,321		28.3	%	15,546		27.5	%	Tier 1 capital	8.0	%	8.5	%	16,012		26.9	%	15,546		27.5	%
Total capital	Total capital	10.0	%	10.5	%	16,521		28.6	%	15,695		27.8	%	Total capital	10.0	%	10.5	%	16,315		27.4	%	15,695		27.8	%
Leverage-based capital	Leverage-based capital													Leverage-based capital
Tier 1 leverage	Tier 1 leverage	5.0	%	4.0	%	$	16,321	8.1	%	$	15,546	7.6	%	Tier 1 leverage	5.0	%	4.0	%	$	16,012	8.0	%	$	15,546	7.6	%
SLR	SLR	6.0	%	3.0	%	16,321		7.8	%	15,546		7.4	%	SLR	6.0	%	3.0	%	16,012		7.7	%	15,546		7.4	%

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.

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 March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Net capital	Net capital	$	17,616	$	17,224	Net capital	$	18,947	$	17,224
Excess net capital	Excess net capital	13,134		12,861		Excess net capital	14,683		12,861

MS&Co. is registered as a broker-dealer and a futures commission merchant with the SEC and the CFTC,

respectively, and ~~provisionally~~is registered as a swap dealer with 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~~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 ~~March 31,~~September 30, 2023 and December 31, 2022, MS&Co. exceeded its net


			69			September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

capital requirement and had tentative net capital in excess of the minimum and notification requirements.

Other Regulated Subsidiaries

Certain subsidiaries are also subject to various regulatory capital requirements. Such subsidiaries include the following, each of which operated with capital in excess of their respective regulatory capital requirements as of ~~March 31,~~September 30, 2023 and December 31, 2022, as applicable:

•MSSB,

•MSIP,

•MSESE,

•MSMS,

•MSCS,

•MSCG, and

•E*TRADE Securities LLC.

MSESE is subject to stand-alone capital requirements beginning on January 1, 2023. Previously, requirements were met at the consolidated level of the MSEHSE Group.

See Note 17 to the financial statements in the 2022 Form 10-K for further information.


			61			~~March 2023 Form 10-Q~~


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

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 March 31, 2023	Liquidation Preference per Share		At March 31, 2023		At December 31, 2022		$ in millions, except per share data	At September 30, 2023	Liquidation Preference per Share		At September 30, 2023		At December 31, 2022
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
I	I	40,000	25,000		1,000		1,000		I	40,000	25,000		1,000		1,000
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		O	52,000	25,000		1,300		1,300
P	P	40,000	25,000		1,000		1,000		P	40,000	25,000		1,000		1,000
Total	Total				$	8,750	$	8,750	Total				$	8,750	$	8,750
Shares authorized	Shares authorized						30,000,000		Shares authorized						30,000,000

1.Series C preferred stock is held by MUFG.

For a description of Series A through Series P preferred stock, see Note 18 to the financial statements in the 2022 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 accordance with regulatory capital requirements (see Note 15).

Share Repurchases


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
Repurchases of common stock under the Firm’s Share Repurchase Authorization	Repurchases of common stock under the Firm’s Share Repurchase Authorization		$	1,500	$	2,872		Repurchases of common stock under the Firm’s Share Repurchase Authorization	$	1,500	$	2,555	$	4,000	$	8,165

On June ~~27, 2022,~~30, 2023, the Firm announced that its Board of Directors ~~approved~~reauthorized a ~~new~~ multi-year repurchase ~~authorization~~program of up to $20 billion of outstanding common stock, without a set expiration date, beginning in the third quarter of ~~2022,~~2023, which will be exercised from time to time as conditions warrant. For more information on share repurchases, see Note 18 to the financial statements in the 2022 Form 10-K.

Common Shares Outstanding for Basic and Diluted EPS


		Three Months Ended March 31,		Three Months Ended September 30,			Nine Months Ended September 30,
in millions	in millions	2023	2022		in millions	2023	2022	2023	2022
Weighted average common shares outstanding, basic	Weighted average common shares outstanding, basic	1,645	1,733		Weighted average common shares outstanding, basic	1,624	1,674	1,635	1,704
Effect of dilutive RSUs and PSUs	Effect of dilutive RSUs and PSUs	18	22		Effect of dilutive RSUs and PSUs	19	23	18	21
Weighted average common shares outstanding and common stock equivalents, diluted	Weighted average common shares outstanding and common stock equivalents, diluted	1,663	1,755		Weighted average common shares outstanding and common stock equivalents, diluted	1,643	1,697	1,653	1,725
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)	4	5		Weighted average antidilutive common stock equivalents (excluded from the computation of diluted EPS)	—	1	3	5

~~Dividends~~


September 2023 Form 10-Q			70

Table of Contents

Notes to Consolidated Financial Statements
(Unaudited)

$ in millions, except per
share data Three Months Ended
March 31, 2023 Three Months Ended
March 31, 2022
Per Share1
Total
Per Share1
Total
Preferred stock series
A $ 343 $ 15 $ 242 $ 11
C 25 13 25 13
E 445 15 445 15
F 430 14 430 14
I 398 16 398 16
K 366 15 366 15
L 305 6 305 6
M2
29 12 29 12
N3
2,650 8 2,650 8
O4
266 14 266 14
P 406 16 — —
Total Preferred stock $ 144 $ 124
Common stock $ 0.775 $ 1,305 $ 0.700 $ 1,252

Dividends



$ in millions, except per share data	Three Months Ended September 30, 2023				Three Months Ended September 30, 2022
	Per Share1		Total		Per Share1		Total
Preferred stock series
A	$	396	$	17	$	261	$	11
C	25		13		25		13
E	445		15		445		15
F	430		15		430		15

I	398		16		398		16

K	366		15		366		15
L	305		6		305		6
M2	29		12		29		12
N3	2,226		7		2,650		8
O	266		14		266		14
P	406		16		330		13
Total Preferred stock			$	146			$	138
Common stock	$	0.850	$	1,404	$	0.775	$	1,329


$ in millions, except per share data	Nine Months Ended September 30, 2023				Nine Months Ended September 30, 2022
	Per Share1		Total		Per Share1		Total
Preferred stock series
A	$	1,116	$	49	$	756	$	33
C	75		39		75		39
E	1,336		46		1,336		45
F	1,289		44		1,289		44
I	1,195		48		1,195		48
K	1,097		44		1,097		45
L	914		18		914		18
M2	59		24		59		24
N3	6,928		21		5,300		16
O	797		41		797		41
P	1,219		49		330		13
Total Preferred stock			$	423			$	366
Common stock	$	2.40	$	4,001	$	2.175	$	3,802

1.Common and Preferred Stock dividends are payable quarterly unless otherwise noted.

2.Series M is payable semiannually until September 15, 2026 and thereafter will be payable quarterly.

3.Series N was payable semiannually until March 15, 2023 and thereafter is payable quarterly.

4.~~Series O is payable semiannually until January 15, 2027 and thereafter will be payable quarterly.~~

Accumulated Other Comprehensive Income (Loss)1


$ in millions	$ in millions	CTA		AFS Securities		Pension and Other		DVA		Cash Flow Hedges		Total		$ in millions	CTA		AFS Securities		Pension and Other		DVA		Cash Flow Hedges		Total
June 30, 2023														June 30, 2023	$	(1,199)	$	(3,701)	$	(510)	$	(873)	$	(17)	$	(6,300)
OCI during the period														OCI during the period	(120)		(366)		(1)		(412)		(3)		(902)
September 30, 2023														September 30, 2023	$	(1,319)	$	(4,067)	$	(511)	$	(1,285)	$	(20)	$	(7,202)
June 30, 2022														June 30, 2022	$	(1,226)	$	(3,226)	$	(543)	$	(26)	$	—	$	(5,021)
OCI during the period														OCI during the period	(207)		(1,307)		5		772		—		(737)
September 30, 2022														September 30, 2022	$	(1,433)	$	(4,533)	$	(538)	$	746	$	—	$	(5,758)
December 31, 2022														December 31, 2022	$	(1,204)	$	(4,192)	$	(508)	$	(345)	$	(4)	$	(6,253)
OCI during the period														OCI during the period	(115)		125		(3)		(940)		(16)		(949)
September 30, 2023														September 30, 2023	$	(1,319)	$	(4,067)	$	(511)	$	(1,285)	$	(20)	$	(7,202)
December 31, 2021														December 31, 2021	$	(1,002)	$	245	$	(551)	$	(1,794)	$	—	$	(3,102)
OCI during the period														OCI during the period	(431)		(4,778)		13		2,540		—		(2,656)
September 30, 2022														September 30, 2022	$	(1,433)	$	(4,533)	$	(538)	$	746	$	—	$	(5,758)

December 31, 2022		$	(1,204)	$	(4,192)	$	(508)	$	(345)	$	(4)	$	(6,253)
OCI during the period		32		512		(1)		(8)		7		542
March 31, 2023		$	(1,172)	$	(3,680)	$	(509)	$	(353)	$	3	$	(5,711)
December 31, 2021		$	(1,002)	$	245	$	(551)	$	(1,794)	$	—	$	(3,102)
OCI during the period		(48)		(2,395)		5		638		—		(1,800)
March 31, 2022		$	(1,050)	$	(2,150)	$	(546)	$	(1,156)	$	—	$	(4,902)

1.Amounts are net of tax and noncontrolling interests.

Components of Period Changes in OCI



	Three Months Ended September 30, 2023
$ in millions	Pre-tax Gain (Loss)		Income Tax Benefit (Provision)		After-tax Gain (Loss)		Non-controlling Interests		Net
CTA
OCI activity	$	(38)	$	(111)	$	(149)	$	(29)	$	(120)
Reclassified to earnings	—		—		—		—		—
Net OCI	$	(38)	$	(111)	$	(149)	$	(29)	$	(120)
Change in net unrealized gains (losses) on AFS securities
OCI activity	$	(464)	$	108	$	(356)	$	—	$	(356)
Reclassified to earnings	(14)		4		(10)		—		(10)
Net OCI	$	(478)	$	112	$	(366)	$	—	$	(366)
Pension and other
OCI activity	$	—	$	—	$	—	$	—	$	—
Reclassified to earnings	(1)		—		(1)		—		(1)
Net OCI	$	(1)	$	—	$	(1)	$	—	$	(1)
Change in net DVA
OCI activity	$	(549)	$	130	$	(419)	$	(2)	$	(417)
Reclassified to earnings	6		(1)		5		—		5
Net OCI	$	(543)	$	129	$	(414)	$	(2)	$	(412)
Change in fair value of cash flow hedge derivatives
OCI activity	$	(12)	$	3	$	(9)	$	—	$	(9)
Reclassified to earnings	6		—		6		—		6
Net OCI	$	(6)	$	3	$	(3)	$	—	$	(3)


	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

~~March~~September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

~~Components of Period Changes in OCI~~


	Nine Months Ended September 30, 2023
$ in millions	Pre-tax Gain (Loss)		Income Tax Benefit (Provision)		After-tax Gain (Loss)		Non-controlling Interests		Net
CTA
OCI activity	$	(136)	$	(104)	$	(240)	$	(125)	$	(115)
Reclassified to earnings	—		—		—		—		—
Net OCI	$	(136)	$	(104)	$	(240)	$	(125)	$	(115)
Change in net unrealized gains (losses) on AFS securities
OCI activity	$	208	$	(49)	$	159	$	—	$	159
Reclassified to earnings	(45)		11		(34)		—		(34)
Net OCI	$	163	$	(38)	$	125	$	—	$	125
Pension and other
OCI activity	$	(1)	$	—	$	(1)	$	—	$	(1)
Reclassified to earnings	(2)		—		(2)		—		(2)
Net OCI	$	(3)	$	—	$	(3)	$	—	$	(3)
Change in net DVA
OCI activity	$	(1,283)	$	311	$	(972)	$	(20)	$	(952)
Reclassified to earnings	15		(3)		12		—		12
Net OCI	$	(1,268)	$	308	$	(960)	$	(20)	$	(940)
Change in fair value of cash flow hedge derivatives
OCI activity	$	(30)	$	6	$	(24)	$	—	$	(24)
Reclassified to earnings	9		(1)		8		—		8
Net OCI	$	(21)	$	5	$	(16)	$	—	$	(16)

Three Months Ended March 31, 2023
$ in millions Pre-tax Gain (Loss) Income Tax Benefit (Provision) After-tax Gain (Loss) Non-controlling Interests Net
CTA
OCI activity $ (10) $ 30 $ 20 $ (12) $ 32
Reclassified to earnings — — — — —
Net OCI $ (10) $ 30 $ 20 $ (12) $ 32
Change in net unrealized gains (losses) on AFS securities
OCI activity $ 710 $ (167) $ 543 $ — $ 543
Reclassified to earnings (41) 10 (31) — (31)
Net OCI $ 669 $ (157) $ 512 $ — $ 512
Pension and other
OCI activity $ — $ — $ — $ — $ —
Reclassified to earnings (1) — (1) — (1)
Net OCI $ (1) $ — $ (1) $ — $ (1)
Change in net DVA
OCI activity $ (30) $ 10 $ (20) $ (7) $ (13)
Reclassified to earnings 6 (1) 5 — 5
Net OCI $ (24) $ 9 $ (15) $ (7) $ (8)
Change in fair value of cash flow hedge derivatives
OCI activity $ 7 $ (1) $ 6 $ — $ 6
Reclassified to earnings 1 — 1 — 1
Net OCI $ 8 $ (1) $ 7 $ — $ 7


		Three Months Ended March 31, 2022											Nine Months Ended September 30, 2022
$ in millions	$ in millions	Pre-tax Gain (Loss)		Income Tax Benefit (Provision)		After-tax Gain (Loss)		Non-controlling Interests		Net		$ in millions	Pre-tax Gain (Loss)		Income Tax Benefit (Provision)		After-tax Gain (Loss)		Non-controlling Interests		Net
CTA	CTA											CTA
OCI activity	OCI activity	$	(60)	$	(45)	$	(105)	$	(57)	$	(48)	OCI activity	$	(279)	$	(441)	$	(720)	$	(230)	$	(490)
Reclassified to earnings	Reclassified to earnings	—		—		—		—		—		Reclassified to earnings	—		59		59		—		59
Net OCI	Net OCI	$	(60)	$	(45)	$	(105)	$	(57)	$	(48)	Net OCI	$	(279)	$	(382)	$	(661)	$	(230)	$	(431)
Change in net unrealized gains (losses) on AFS securities	Change in net unrealized gains (losses) on AFS securities											Change in net unrealized gains (losses) on AFS securities
OCI activity	OCI activity	$	(3,084)	$	723	$	(2,361)	$	—	$	(2,361)	OCI activity	$	(6,169)	$	1,445	$	(4,724)	$	—	$	(4,724)
Reclassified to earnings	Reclassified to earnings	(44)		10		(34)		—		(34)		Reclassified to earnings	(71)		17		(54)		—		(54)
Net OCI	Net OCI	$	(3,128)	$	733	$	(2,395)	$	—	$	(2,395)	Net OCI	$	(6,240)	$	1,462	$	(4,778)	$	—	$	(4,778)
Pension and other	Pension and other											Pension and other
OCI activity	OCI activity	$	—	$	—	$	—	$	—	$	—	OCI activity	$	(1)	$	—	$	(1)	$	—	$	(1)
Reclassified to earnings	Reclassified to earnings	5		—		5		—		5		Reclassified to earnings	17		(3)		14		—		14
Net OCI	Net OCI	$	5	$	—	$	5	$	—	$	5	Net OCI	$	16	$	(3)	$	13	$	—	$	13
Change in net DVA	Change in net DVA											Change in net DVA
OCI activity	OCI activity	$	871	$	(211)	$	660	$	22	$	638	OCI activity	$	3,474	$	(845)	$	2,629	$	88	$	2,541
Reclassified to earnings	Reclassified to earnings	—		—		—		—		—		Reclassified to earnings	(1)		—		(1)		—		(1)
Net OCI	Net OCI	$	871	$	(211)	$	660	$	22	$	638	Net OCI	$	3,473	$	(845)	$	2,628	$	88	$	2,540

17. Interest Income and Interest Expense


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
Interest income	Interest income							Interest income
Investment securities	Investment securities		$	1,018	$	777		Investment securities	$	1,019	$	743	$	2,886	$	2,261
Loans	Loans		2,815		1,156			Loans	3,236		1,910		9,105		4,469
Securities purchased under agreements to resell1	Securities purchased under agreements to resell1		1,477		13			Securities purchased under agreements to resell1	1,977		664		5,282		870
Securities borrowed2	Securities borrowed2		1,172		(217)			Securities borrowed2	1,307		385		3,848		97
Trading assets, net of Trading liabilities	Trading assets, net of Trading liabilities		913		524			Trading assets, net of Trading liabilities	1,334		635		3,171		1,722
Customer receivables and Other3	Customer receivables and Other3		3,475		397			Customer receivables and Other3	4,432		1,764		11,931		2,944
Total interest income	Total interest income		$	10,870	$	2,650		Total interest income	$	13,305	$	6,101	$	36,223	$	12,363

Interest expense	Interest expense							Interest expense
Deposits	Deposits		$	1,575	$	73		Deposits	$	2,271	$	476	$	5,793	$	684
Borrowings	Borrowings		2,506		685			Borrowings	2,992		1,370		8,267		2,990
Securities sold under agreements to repurchase4	Securities sold under agreements to repurchase4		1,218		49			Securities sold under agreements to repurchase4	1,897		501		4,567		725
Securities loaned5	Securities loaned5		164		93			Securities loaned5	208		135		575		340
Customer payables and Other6	Customer payables and Other6		3,061		(466)			Customer payables and Other6	3,960		1,109		10,688		616
Total interest expense	Total interest expense		$	8,524	$	434		Total interest expense	$	11,328	$	3,591	$	29,890	$	5,355
Net interest	Net interest		$	2,346	$	2,216		Net interest	$	1,977	$	2,510	$	6,333	$	7,008

1.Includes interest paid on Securities purchased under agreements to resell.

2.Includes fees paid on Securities borrowed.

3.Includes interest from Cash and cash equivalents.

4.Includes interest received on Securities sold under agreements to repurchase.

5.Includes fees received on Securities loaned.

6.Includes fees received from Equity Financing customers related to their short transactions, which can be under either margin or securities lending arrangements.

Interest income and Interest expense are classified in the income 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 March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Customer and other receivables	Customer and other receivables	$	3,842	$	4,139	Customer and other receivables	$	4,705	$	4,139
Customer and other payables	Customer and other payables	3,957		4,273		Customer and other payables	4,718		4,273

18. Income Taxes

The Firm is routinely under 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.~~

~~March~~September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

of unrecognized tax benefits and the impact on the Firm’s effective tax rate over the next 12 months.

19. Segment, Geographic and Revenue Information

Selected Financial Information by Business Segment



	Three Months Ended September 30, 2023
$ in millions	IS		WM		IM		I/E		Total
Investment banking	$	938	$	126	$	—	$	(16)	$	1,048
Trading	3,660		(10)		24		5		3,679
Investments	100		22		22		—		144
Commissions and fees1	606		562		—		(70)		1,098
Asset management1,2	150		3,629		1,312		(60)		5,031
Other	164		123		10		(1)		296
Total non-interest revenues	5,618		4,452		1,368		(142)		11,296
Interest income	9,790		3,797		37		(319)		13,305
Interest expense	9,739		1,845		69		(325)		11,328
Net interest	51		1,952		(32)		6		1,977
Net revenues	$	5,669	$	6,404	$	1,336	$	(136)	$	13,273
Provision for credit losses	$	93	$	41	$	—	$	—	$	134
Compensation and benefits	2,057		3,352		526		—		5,935
Non-compensation expenses	2,320		1,302		569		(132)		4,059
Total non-interest expenses	$	4,377	$	4,654	$	1,095	$	(132)	$	9,994
Income before provision for income taxes	$	1,199	$	1,709	$	241	$	(4)	$	3,145
Provision for income taxes	263		389		59		(1)		710


Net income	936		1,320		182		(3)		2,435
Net income applicable to noncontrolling interests	24		—		3		—		27
Net income applicable to Morgan Stanley	$	912	$	1,320	$	179	$	(3)	$	2,408



	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 March 31, 2023
$ in millions IS WM IM I/E Total
Investment banking $ 1,247 $ 104 $ — $ (21) $ 1,330
Trading 4,257 227 (16) 9 4,477
Investments 28 16 101 — 145
Commissions and fees1
714 590 — (65) 1,239
Asset management1,2
148 3,382 1,248 (50) 4,728
Other 180 82 (6) (4) 252
Total non-interest revenues 6,574 4,401 1,327 (131) 12,171
Interest income 7,758 3,627 29 (544) 10,870
Interest expense 7,535 1,469 67 (547) 8,524
Net interest 223 2,158 (38) 3 2,346
Net revenues $ 6,797 $ 6,559 $ 1,289 $ (128) $ 14,517
Provision for credit losses $ 189 $ 45 $ — $ — $ 234
Compensation and benefits 2,365 3,477 568 — 6,410
Non-compensation expenses 2,351 1,325 555 (118) 4,113
Total non-interest expenses $ 4,716 $ 4,802 $ 1,123 $ (118) $ 10,523
Income before provision for income taxes $ 1,892 $ 1,712 $ 166 $ (10) $ 3,760
Provision for income taxes 363 336 30 (2) 727
Net income 1,529 1,376 136 (8) 3,033
Net income applicable to noncontrolling interests 51 — 2 — 53
Net income applicable to Morgan Stanley $ 1,478 $ 1,376 $ 134 $ (8) $ 2,980


		Three Months Ended March 31, 2022											Nine Months Ended September 30, 2023
$ in millions	$ in millions	IS		WM		IM		I/E		Total		$ in millions	IS		WM		IM		I/E		Total
Investment banking	Investment banking	$	1,634	$	143	$	—	$	(19)	$	1,758	Investment banking	$	3,260	$	339	$	—	$	(66)	$	3,533
Trading	Trading	4,205		(231)		(9)		18		3,983		Trading	11,511		425		(2)		24		11,958
Investments	Investments	99		12		(36)		—		75		Investments	151		60		173		—		384
Commissions and fees1	Commissions and fees1	774		723		—		(81)		1,416		Commissions and fees1	1,925		1,704		—		(202)		3,427
Asset management1,2	Asset management1,2	147		3,626		1,388		(42)		5,119		Asset management1,2	448		10,463		3,828		(163)		14,576
Other	Other	117		122		(2)		(3)		234		Other	669		366		9		(8)		1,036
Total non-interest revenues	Total non-interest revenues	6,976		4,395		1,341		(127)		12,585		Total non-interest revenues	17,964		13,357		4,008		(415)		34,914
Interest income	Interest income	1,062		1,637		7		(56)		2,650		Interest income	26,364		11,124		95		(1,360)		36,223
Interest expense	Interest expense	381		97		13		(57)		434		Interest expense	26,208		4,858		197		(1,373)		29,890
Net interest	Net interest	681		1,540		(6)		1		2,216		Net interest	156		6,266		(102)		13		6,333
Net revenues	Net revenues	$	7,657	$	5,935	$	1,335	$	(126)	$	14,801	Net revenues	$	18,120	$	19,623	$	3,906	$	(402)	$	41,247
Provision for credit losses	Provision for credit losses	$	44	$	13	$	—	$	—	$	57	Provision for credit losses	$	379	$	150	$	—	$	—	$	529
Compensation and benefits	Compensation and benefits	2,604		3,125		545		—		6,274		Compensation and benefits	6,637		10,332		1,638		—		18,607
Non-compensation expenses	Non-compensation expenses	2,222		1,224		562		(126)		3,882		Non-compensation expenses	7,036		4,039		1,691		(372)		12,394
Total non-interest expenses	Total non-interest expenses	$	4,826	$	4,349	$	1,107	$	(126)	$	10,156	Total non-interest expenses	$	13,673	$	14,371	$	3,329	$	(372)	$	31,001
Income before provision for income taxes	Income before provision for income taxes	$	2,787	$	1,573	$	228	$	—	$	4,588	Income before provision for income taxes	$	4,068	$	5,102	$	577	$	(30)	$	9,717
Provision for income taxes	Provision for income taxes	535		301		37		—		873		Provision for income taxes	802		1,098		135		(7)		2,028

Net income	Net income	2,252		1,272		191		—		3,715		Net income	3,266		4,004		442		(23)		7,689
Net income applicable to noncontrolling interests	Net income applicable to noncontrolling interests	61		—		(12)		—		49		Net income applicable to noncontrolling interests	117		—		2		—		119
Net income applicable to Morgan Stanley	Net income applicable to Morgan Stanley	$	2,191	$	1,272	$	203	$	—	$	3,666	Net income applicable to Morgan Stanley	$	3,149	$	4,004	$	440	$	(23)	$	7,570


	Nine Months Ended September 30, 2022
$ in millions	IS		WM		IM		I/E		Total
Investment banking	$	3,983	$	354	$	—	$	(56)	$	4,281
Trading	11,511		(681)		38		43		10,911
Investments	(69)		45		(46)		—		(70)
Commissions and fees1	2,110		1,869		—		(210)		3,769
Asset management1,2	442		10,525		3,961		(153)		14,775
Other	(131)		388		(2)		(10)		245
Total non-interest revenues	17,846		12,500		3,951		(386)		33,911
Interest income	6,797		6,208		34		(676)		12,363
Interest expense	5,050		917		71		(683)		5,355
Net interest	1,747		5,291		(37)		7		7,008
Net revenues	$	19,593	$	17,791	$	3,914	$	(379)	$	40,919
Provision for credit losses	$	150	$	43	$	—	$	—	$	193
Compensation and benefits	6,602		9,191		1,645		—		17,438
Non-compensation expenses	6,874		3,814		1,676		(371)		11,993
Total non-interest expenses	$	13,476	$	13,005	$	3,321	$	(371)	$	29,431
Income before provision for income taxes	$	5,967	$	4,743	$	593	$	(8)	$	11,295
Provision for income taxes	1,235		1,028		121		(2)		2,382


Net income	4,732		3,715		472		(6)		8,913
Net income applicable to noncontrolling interests	146		—		(26)		—		120
Net income applicable to Morgan Stanley	$	4,586	$	3,715	$	498	$	(6)	$	8,793

1.Substantially all revenues are from contracts with customers.

2.Includes certain fees that may relate to services performed in prior periods.

For a discussion about the Firm’s business segments, see Note 23 to the financial statements in the 2022 Form 10-K.


			73			September 2023 Form 10-Q


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

Detail of Investment Banking Revenues


		Three Months Ended March 31,						Three Months Ended September 30,					Nine Months Ended September 30,
$ in millions	$ in millions		2023			2022			$ in millions	2023			2022			2023			2022
Institutional Securities Advisory	Institutional Securities Advisory		$	638		$	944		Institutional Securities Advisory	$	449		$	693		$	1,542		$	2,235
Institutional Securities Underwriting	Institutional Securities Underwriting		609			690			Institutional Securities Underwriting	489			584			1,718			1,748
Firm Investment banking revenues from contracts with customers	Firm Investment banking revenues from contracts with customers		89		%	90		%	Firm Investment banking revenues from contracts with customers	94		%	89		%	91		%	89		%

Trading Revenues by Product Type


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
Interest rate	Interest rate		$	1,368	$	391		Interest rate	$	1,124	$	1,070	$	3,701	$	1,930
Foreign exchange	Foreign exchange		262		648			Foreign exchange	284		31		672		1,154
Equity1	Equity1		2,212		2,007			Equity1	2,167		1,872		6,782		5,869
Commodity and other	Commodity and other		539		525			Commodity and other	447		279		1,321		1,288
Credit	Credit		96		412			Credit	(343)		79		(518)		670
Total	Total		$	4,477	$	3,983		Total	$	3,679	$	3,331	$	11,958	$	10,911

1.Dividend income is included within equity contracts.

The previous table summarizes realized and unrealized gains and losses primarily related to the Firm’s Trading assets and liabilities, from derivative and non-derivative financial instruments, included in Trading revenues in the income 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 March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Net cumulative unrealized performance-based fees at risk of reversing	Net cumulative unrealized performance-based fees at risk of reversing	$	815	$	819	Net cumulative unrealized performance-based fees at risk of reversing	$	782	$	819

The Firm’s portion of net cumulative performance-based 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 13 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 March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
Fee waivers	Fee waivers		$	18	$	124		Fee waivers	$	27	$	28	$	73	$	193

The Firm waives a portion of its fees in the Investment Management business segment from certain registered money


~~March 2023 Form 10-Q~~			64


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

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 March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
Transaction taxes	Transaction taxes		$	214	$	258		Transaction taxes	$	222	$	215	$	683	$	701

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 Region


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
Americas	Americas		$	10,791	$	10,464		Americas	$	10,268	$	10,094	$	31,453	$	30,220
EMEA	EMEA		1,737		2,311			EMEA	1,479		1,392		4,716		5,381
Asia	Asia		1,989		2,026			Asia	1,526		1,500		5,078		5,318
Total	Total		$	14,517	$	14,801		Total	$	13,273	$	12,986	$	41,247	$	40,919

For a discussion about the Firm’s geographic net revenues, see Note 23 to the financial statements in the 2022 Form 10-K.

Revenues Recognized from Prior Services


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
$ in millions	$ in millions		2023		2022			$ in millions	2023		2022		2023		2022
Non-interest revenues	Non-interest revenues		$	704	$	1,005		Non-interest revenues	$	468	$	788	$	1,350	$	2,036

The previous table includes revenues from contracts with customers recognized where some or all services were performed in prior periods. These revenues primarily include investment banking advisory fees.

Receivables from Contracts with Customers


$ in millions	$ in millions	At March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Customer and other receivables	Customer and other receivables	$	2,182	$	2,577	Customer and other receivables	$	2,334	$	2,577


September 2023 Form 10-Q			74


Table of Contents
Notes to Consolidated Financial Statements (Unaudited)

Receivables from contracts with customers, which are included within Customer and other receivables in the balance

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 March 31, 2023		At December 31, 2022		$ in millions	At September 30, 2023		At December 31, 2022
Institutional Securities	Institutional Securities	$	819,195	$	789,837	Institutional Securities	$	790,180	$	789,837
Wealth Management	Wealth Management	363,405		373,305		Wealth Management	361,490		373,305
Investment Management	Investment Management	17,304		17,089		Investment Management	17,343		17,089
Total1	Total1	$	1,199,904	$	1,180,231	Total1	$	1,169,013	$	1,180,231

1. Parent assets have been fully allocated to the business segments.


			6575			~~March~~September 2023 Form 10-Q


Table of Contents
Financial Data Supplement (Unaudited)

Average Balances and Interest Rates and Net Interest Income


	Three Months Ended September 30,
	2023						2022
$ in millions	Average Daily Balance		Interest		Annualized Average Rate		Average Daily Balance		Interest		Annualized Average Rate
Interest earning assets
Investment securities1	$	149,855	$	1,019	2.7	%	$	164,889	$	743	1.8	%
Loans1	215,797		3,236		5.9	%	209,551		1,910		3.6	%
Securities purchased under agreements to resell2:
U.S.	39,154		1,152		11.7	%	56,111		513		3.6	%
Non-U.S.	56,439		825		5.8	%	61,118		151		1.0	%
Securities borrowed3:
U.S.	109,269		1,204		4.4	%	126,061		373		1.2	%
Non-U.S.	17,641		103		2.3	%	17,966		12		0.3	%
Trading assets, net of Trading liabilities4:
U.S.	99,865		1,105		4.4	%	74,651		535		2.8	%
Non-U.S.	17,237		229		5.3	%	12,976		100		3.1	%
Customer receivables and Other5:
U.S.	103,860		3,240		12.4	%	105,345		1,378		5.2	%
Non-U.S.	59,641		1,192		7.9	%	76,056		386		2.0	%
Total	$	868,758	$	13,305	6.1	%	$	904,724	$	6,101	2.7	%
Interest bearing liabilities
Deposits1	$	341,475	$	2,271	2.6	%	$	337,288	$	476	0.6	%
Borrowings1,6	250,440		2,992		4.7	%	229,821		1,370		2.4	%
Securities sold under agreements to repurchase7,9:
U.S.	26,790		1,047		15.5	%	19,344		324		6.6	%
Non-U.S.	48,171		850		7.0	%	40,110		177		1.8	%
Securities loaned8,9:
U.S.	3,422		20		2.3	%	7,103		20		1.1	%
Non-U.S.	9,732		188		7.7	%	6,930		115		6.6	%
Customer payables and Other10:
U.S.	130,722		2,704		8.2	%	145,061		738		2.0	%
Non-U.S.	62,004		1,256		8.0	%	72,328		371		2.0	%
Total	$	872,756	$	11,328	5.1	%	$	857,985	$	3,591	1.7	%
Net interest income and net interest rate spread			$	1,977	1.0	%			$	2,510	1.0	%

Three Months Ended March 31,
2023 2022
$ in millions Average Daily Balance Interest Annualized Average Rate Average Daily Balance Interest Annualized Average Rate
Interest earning assets
Investment securities1
$ 159,061 $ 1,018 2.6 % $ 177,572 $ 777 1.8 %
Loans1
214,185 2,815 5.3 % 191,551 1,156 2.4 %
Securities purchased under agreements to resell2:
U.S. 46,847 932 8.1 % 52,389 36 0.3 %
Non-U.S. 65,713 545 3.4 % 64,150 (23) (0.1) %
Securities borrowed3:
U.S. 123,206 1,095 3.6 % 122,203 (176) (0.6) %
Non-U.S. 18,683 77 1.7 % 21,229 (41) (0.8) %
Trading assets, net of Trading liabilities4:
U.S. 87,631 786 3.6 % 79,509 430 2.2 %
Non-U.S. 7,264 127 7.1 % 16,606 94 2.3 %
Customer receivables and Other5:
U.S. 107,055 2,428 9.2 % 129,162 355 1.1 %
Non-U.S. 69,288 1,047 6.1 % 76,545 42 0.2 %
Total $ 898,933 $ 10,870 4.9 % $ 930,916 $ 2,650 1.2 %
Interest bearing liabilities
Deposits1
$ 346,973 $ 1,575 1.8 % $ 348,916 $ 73 0.1 %
Borrowings1,6
245,600 2,506 4.1 % 228,942 685 1.2 %
Securities sold under agreements to repurchase7,9:
U.S. 21,075 670 12.9 % 22,979 40 0.7 %
Non-U.S. 41,071 548 5.4 % 36,148 9 0.1 %
Securities loaned8,9:
U.S. 4,992 13 1.1 % 5,489 (1) (0.1) %
Non-U.S. 10,016 151 6.1 % 7,771 94 4.9 %
Customer payables and Other10:
U.S. 137,766 2,045 6.0 % 136,407 (368) (1.1) %
Non-U.S. 65,818 1,016 6.3 % 74,919 (98) (0.5) %
Total $ 873,311 $ 8,524 4.0 % $ 861,571 $ 434 0.2 %
Net interest income and net interest rate spread $ 2,346 0.9 % $ 2,216 1.0 %


	Nine Months Ended September 30,
	2023						2022
$ in millions	Average Daily Balance		Interest		Annualized Average Rate		Average Daily Balance		Interest		Annualized Average Rate
Interest earning assets
Investment securities1	$	154,304	$	2,886	2.5	%	$	169,926	$	2,261	1.8	%
Loans1	215,071		9,105		5.7	%	201,655		4,469		3.0	%
Securities purchased under agreements to resell2:
U.S.	46,670		3,216		9.2	%	56,451		719		1.7	%
Non-U.S.	61,648		2,066		4.5	%	62,273		151		0.3	%
Securities borrowed3:
U.S.	118,788		3,568		4.0	%	124,628		167		0.2	%
Non-U.S.	18,496		280		2.0	%	19,819		(70)		(0.5)	%
Trading assets, net of Trading liabilities4:
U.S.	91,621		2,662		3.9	%	74,993		1,418		2.5	%
Non-U.S.	11,548		509		5.9	%	14,668		304		2.8	%
Customer receivables and Other5:
U.S.	103,145		8,634		11.2	%	116,515		2,396		2.7	%
Non-U.S.	65,014		3,297		6.8	%	76,649		548		1.0	%
Total	$	886,305	$	36,223	5.5	%	$	917,577	$	12,363	1.8	%
Interest bearing liabilities
Deposits1	$	342,628	$	5,793	2.3	%	$	340,166	$	684	0.3	%
Borrowings1,6	248,534		8,267		4.4	%	228,589		2,990		1.7	%
Securities sold under agreements to repurchase7,9:
U.S.	22,851		2,467		14.4	%	20,957		487		3.1	%
Non-U.S.	44,373		2,100		6.3	%	39,694		238		0.8	%
Securities loaned8,9:
U.S.	4,097		50		1.6	%	6,354		21		0.4	%
Non-U.S.	10,000		525		7.0	%	7,308		319		5.8	%
Customer payables and Other10:
U.S.	135,061		7,281		7.2	%	144,691		311		0.3	%
Non-U.S.	64,771		3,407		7.0	%	75,510		305		0.5	%
Total	$	872,315	$	29,890	4.6	%	$	863,269	$	5,355	0.8	%
Net interest income and net interest rate spread			$	6,333	0.9	%			$	7,008	1.0	%

1.Amounts include primarily U.S. balances.

2.Includes interest paid on Securities purchased under agreements to resell.

3.Includes fees paid on Securities borrowed.

4.Excludes non-interest earning assets and non-interest bearing liabilities, such as equity securities.

5.Includes Cash and cash equivalents.

6.Average daily balance includes borrowings carried at fair value, but for certain borrowings, interest expense is considered part of fair value and is recorded in Trading revenues.

7.Includes interest received on Securities sold under agreements to repurchase.

8.Includes fees received on Securities loaned.

9.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 sheet and (b) net average on-balance sheet balances, which exclude certain securities-for-securities transactions.

10.Includes fees received from Equity Financing customers related to their short transactions, which can be under either margin or securities lending arrangements.


~~March~~September 2023 Form 10-Q			6676


Table of Contents
Glossary of Common Terms and Acronyms


2022 Form 10-K			Annual report on Form 10-K for year ended December 31, 2022 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 sheet			Consolidated balance sheet
BHC			Bank holding company
bps			Basis points; one basis point equals 1/100th of 1%
Cash flow statement			Consolidated cash flow 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)
CRE			Commercial real estate
CRM			Credit Risk Management Department
CTA			Cumulative foreign currency translation adjustments

DCP			Certain employee deferred cash-based compensation plans linked to investment performance
DCP investments			Investments associated with DCP
DVA			Debt valuation adjustment
EBITDA			Earnings before interest, taxes, depreciation and amortization

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

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 statement			Consolidated income statement
IRS			Internal Revenue Service
IS			~~Institutional Securities~~


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
MSEHSE			Morgan Stanley Europe Holdings SE
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

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. Bank Subsidiaries			Morgan Stanley Bank N.A. (“MSBNA”) and Morgan Stanley Private Bank, National Association (“MSPBNA”)
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


			6777			~~March~~September 2023 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 2022 Form ~~10-K.~~10-K and the Firm's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023 (the “First Quarter Form 10-Q”) and the quarterly period ended June 30, 2023 (the “Second Quarter Form 10-Q”). See also the disclosures set forth under “Legal Proceedings” in the 2022 Form ~~10-K.~~10-K, the First Quarter Form 10-Q and the Second Quarter Form 10-Q.

Block Trading Matter

The Firm ~~is currently engaged in discussions regarding potential resolution of the investigations by~~has been responding to requests for information from the Enforcement Division of the ~~U.S. Securities and Exchange Commission~~SEC and the United States Attorney’s Office for the Southern District of New York in connection with their investigations into various aspects of the ~~Firm’s~~Firm's blocks business, certain related sales and trading practices, and applicable ~~controls.~~controls (the “Investigations”). The Investigations are focused on whether the Firm and/or its employees shared and/or used information regarding impending block transactions in violation of federal securities laws and regulations. The Firm continues to cooperate with, and has continued to engage in ongoing discussions regarding potential resolution of, the Investigations. There can be no assurance that these discussions and continuing engagement will lead to resolution of either matter.

~~Residential Mortgage~~ The Firm also faces potential civil liability arising from claims that have been or may be asserted by, among others, block transaction participants who contend they were harmed or disadvantaged including, among other things, as a result of a share price decline allegedly caused by the activities of the Firm and/or its employees, or as a result of the Firm’s and/or its employees’ failure to adhere to applicable laws and ~~Credit Crisis Matters~~regulations. In addition, the Firm has responded to demands from shareholders under Section 220 of the Delaware General Corporation Law for books and records concerning the Investigations.

Antitrust Related Matters

On ~~March~~September 1, 2023, the court in ~~IKB International S.A. in Liquidation,~~Iowa Public Employees’ Retirement System et al. v. ~~Morgan Stanley,~~Bank of America Corporation et al. granted preliminary approval of the settlement.

The Firm is a defendant in three antitrust class action complaints which have been consolidated into one proceeding in the United States District Court for the Southern District of New York under the caption City of Philadelphia, et al. v. Bank of America Corporation, et al. Plaintiffs allege, inter alia, that the Firm, along with a number of other financial institution defendants, violated U.S. antitrust laws and relevant state laws in connection with alleged efforts to artificially inflate interest rates for Variable Rate Demand Obligations (“VRDO”). Plaintiffs seek, among other relief, treble damages. The class action complaint was filed on behalf of a class of municipal issuers of VRDO for which defendants served as remarketing agent. On November 2, 2020, the court granted in part and denied in part the ~~Firm’s~~defendants’ motion to dismiss the consolidated complaint, dismissing state law claims, but denying dismissal of the U.S. antitrust claims. On September 21, 2023, the court granted plaintiffs’ motion for ~~summary judgment, narrowing~~class certification. On October 5, 2023, defendants sought leave to appeal this ruling from the ~~alleged misrepresentations at issue~~United States Court of Appeals for the Second Circuit.

Qui Tam Matter

On August 22, 2023, the Firm reached an agreement in principle to settle the ~~case. In March 2023, both parties appealed the decision.~~litigation in State of New Jersey ex. rel. Hayes v. Bank of America Corp., et al.

U.K. Gilt Matter

On ~~March 3,~~September 28, 2023, the ~~parties~~defendants in Oklahoma Firefighters Pension and Retirement System v. 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.~~ ~~executed an agreement to settle the litigation.~~

~~On March 3, 2023, the parties in~~ Deutsche Bank National Trust Company, solely in its capacity as Trustee for Morgan Stanley ABS Capital I Inc. Trust, Series 2007-NC3 v. Morgan Stanley Mortgage Capital Holdings LLC, as Successor-by-Merger to Morgan Stanley Mortgage Capital Inc~~. executed an agreement to settle the litigation.~~

~~European Matter~~

In connection with the Dutch tax matters, the Dutch criminal authorities have requested additional information, and the Firm is continuing to respond to them in connection with their ongoing investigation.

~~Other~~

~~On March 10, 2023, the plaintiff in~~ ~~Camelot Event Driven Fund, a Series of Frank Funds Trust v. Morgan Stanley & Co. LLC,~~Aktiengesellschaft, et al. filed a ~~Notice of Appeal of~~joint motion to dismiss the ~~dismissal of Viacom and the individual Viacom defendants.~~complaint.

Risk Factors

For a discussion of the risk factors affecting the Firm, see “Risk Factors” in Part I, Item 1A of the 2022 Form 10-K.


September 2023 Form 10-Q			78


Table of Contents

Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

$ in millions, except per share data
Total Number of Shares Purchased1
Average Price Paid per Share2
Total Shares Purchased as Part of Share Repurchase Authorization3,4
Dollar Value of Remaining Authorized Repurchase
January 8,974,630 $ 96.61 2,725,102 $ 15,484
February 7,212,253 $ 98.48 6,284,841 $ 14,865
March 6,830,645 $ 92.29 6,752,720 $ 14,245
Three Months Ended March 31, 2023 23,017,528 $ 95.91 15,762,663


$ in millions, except per share data	Total Number of Shares Purchased1	Average Price Paid per Share2		Total Shares Purchased as Part of Share Repurchase Authorization3,4	Dollar Value of Remaining Authorized Repurchase
July	2,421,782	$	93.85	2,376,848	$	19,777
August	8,834,821	$	87.14	8,443,489	$	19,043
September	6,329,787	$	86.04	6,305,725	$	18,500
Three Months Ended September 30, 2023	17,586,390	$	87.67	17,126,062

1.Includes ~~7,254,865~~460,328 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 ~~March 31,~~September 30, 2023.

2.~~Includes~~Excludes excise tax of $14 million levied on share repurchases, net of issuances, payable in April 2024.

3.Share purchases under publicly announced 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.

4.The Firm’s Board of Directors has approved the repurchase of the Firm’s outstanding common stock under a share repurchase authorization (the “Share Repurchase Authorization”) from time to time as conditions warrant and subject to limitations on distributions from the Federal Reserve. The Share Repurchase Authorization is for capital management purposes and considers, among other things, business segment capital needs, as well as equity-based compensation and benefit plan requirements. The Share Repurchase Authorization has no set expiration or termination date.

On June ~~27, 2022,~~30, 2023, the Firm announced that its Board of Directors ~~approved~~reauthorized a ~~new~~ multi-year repurchase authorization of up to $20 billion of outstanding common stock, without a set expiration date, beginning in the third quarter of ~~2022,~~2023, which will be exercised from time to time as conditions warrant. For further information, see “Liquidity and Capital Resources—Regulatory Requirements—Capital Plans, Stress Tests and the Stress Capital Buffer.”


~~March 2023 Form 10-Q~~			68


~~Table of Contents~~

Other Information

On April 26, 2023, the Compensation, Management Development and Succession Committee of the Company’s Board of Directors approved that Raja J. Akram, Deputy Chief Financial Officer, Chief Accounting Officer and Controller, be treated as retirement-eligible for purposes of any year-end deferred incentive compensation awards and, accordingly, any such awards will vest upon Mr. Akram’s resignation of employment from the Company, subject to certain conditions, and remain subject to all other provisions of the awards, including specified cancellation and clawback provisions, until the applicable distribution date.None.

Exhibits


Exhibit No.			Description
10.1			Seventh Amendment to Investor Agreement, dated October 13, 2023, between Morgan Stanley and Mitsubishi UFJ Financial Group, Inc.
15			Letter of awareness from Deloitte & Touche LLP, dated M ay 2 ,November 3, 2023 , 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).

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: ~~May 2,~~November 3, 2023


			6979			~~March~~September 2023 Form 10-Q


$ in millions, except per share data	Three Months Ended March 31, 2023				Three Months Ended March 31, 2022
	Per Share1		Total		Per Share1		Total
Preferred stock series
A	$	343	$	15	$	242	$	11
C	25		13		25		13
E	445		15		445		15
F	430		14		430		14
I	398		16		398		16
K	366		15		366		15
L	305		6		305		6
M2	29		12		29		12
N3	2,650		8		2,650		8
O4	266		14		266		14
P	406		16		—		—
Total Preferred stock			$	144			$	124
Common stock	$	0.775	$	1,305	$	0.700	$	1,252