MORGAN STANLEY

Table of Contents

Management’s Discussion and Analysis

Institutional Securities

Investment Banking Volumes

Source: LSEG Data & Risk Analytics (formerly known as Refinitiv) as of January 2, 2025. 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

Net revenues of $6,170 million in 2024 increased 35% compared with the prior year, reflecting an increase in underwriting and Advisory revenues.

•Advisory revenues increased primarily due to higher completed M&A transactions.

•Equity underwriting revenues increased primarily on higher initial public offerings and follow-on offerings.

•Fixed income underwriting revenues increased primarily reflecting higher bond issuances, non-investment grade loan issuances and securitized products revenues.

While Investment Banking results improved from the prior year, we continue to operate in a market environment with lower completed M&A activity relative to longer-term averages.

See “Investment Banking Volumes” herein.

Equity, Fixed Income and Other Net Revenues

Equity and Fixed Income Net Revenues

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 $12,230 million in 2024 increased 22% compared with the prior year, reflecting an increase in both Execution services and Financing, particularly in Asia and the Americas.

•Financing revenues increased primarily due to higher client activity and lower funding and liquidity costs.

•Execution services revenues increased primarily due to higher gains on inventory held to facilitate client activity and increased client activity in derivatives and cash equities.

Fixed Income

Net revenues of $8,418 million in 2024 increased 10% compared with the prior year, reflecting an increase across businesses, particularly in Credit and Global macro products.

•Global macro products increased primarily due to lower losses on foreign exchange products and higher gains on rates products, on inventory held to facilitate client activity.

•Credit products revenues increased primarily due to higher lending and securitized products revenues and lower losses

Table of Contents

Management’s Discussion and Analysis

on inventory held to facilitate client activity in corporate credit products.

•Commodities products and other fixed income revenues were relatively unchanged.

Other Net Revenues

Other net revenues were $1,262 million in 2024 compared with $823 million in the prior year, primarily due to lower mark-to-market losses on corporate loans, inclusive of hedges, and higher net interest income and fees on corporate loans.

In 2024, the Provision for credit losses on loans and lending commitments of $202 million was primarily related to growth in the corporate loan portfolio and provisions for certain specific commercial real estate loans, partially offset by improvements in the macroeconomic outlook. The Provision for credit losses on loans and lending commitments of $401 million in 2023 was primarily related to credit deterioration in the commercial real estate sector, including provisions for certain specific loans, mainly in the office portfolio, and modest growth in certain other loan portfolios.

Non-interest expenses of $19,129 million in 2024 increased 5% compared with the prior year as a result of higher Non-compensation expenses and Compensation and benefits expenses.

•Compensation and benefits expenses increased primarily reflecting higher discretionary incentive compensation on higher revenues, partially offset by lower severance costs.

•Non-compensation expenses increased primarily reflecting higher execution-related expenses and increased technology spend, partially offset by lower legal expenses and lower FDIC special assessment cost.