Morgan Stanley (MS) Risk Analysis

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 material financial distress or failure. If the Federal Reserve and the FDIC were to jointly determine that our resolution plan submission was not credible or would not facilitate an orderly resolution, and if we were unsuccessful in addressing any deficiencies identified by the regulators, we or any of our subsidiaries may be subject to more stringent capital, leverage or liquidity requirements or restrictions on our growth, activities or operations, or after a two-year period, we may be required to divest assets or operations. In addition, provided that certain procedures are met, we can be subject to a resolution proceeding under the orderly liquidation authority under Title II of the Dodd-Frank Act with the FDIC being appointed as receiver instead of being resolved under the U.S. Bankruptcy Code. The FDIC's power under the orderly liquidation authority to disregard the priority of creditor claims and treat similarly situated creditors differently in certain circumstances, subject to certain limitations, could adversely impact holders of our unsecured debt. See "Business-Supervision and Regulation" and "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Regulatory Requirements." Further, because both our resolution plan contemplates an SPOE strategy under the U.S. Bankruptcy Code and the FDIC has indicated that it expects to use an SPOE strategy through which it may apply its orderly liquidation authority powers for a U.S. G-SIB, we believe that the application of an SPOE strategy is the reasonably likely outcome if either our resolution plan were implemented or a resolution proceeding were commenced under the orderly liquidation authority. An SPOE strategy generally contemplates the provision of adequate capital and liquidity by the Parent Company to certain of its subsidiaries so that such subsidiaries have the resources necessary to implement the resolution strategy, and the Parent Company has entered into a secured amended and restated support agreement with such entities, pursuant to which it would provide such capital and liquidity to such entities. In addition, a wholly owned, direct subsidiary of the Parent Company, Morgan Stanley Holdings LLC ("Funding IHC"), serves as a resolution funding vehicle. The Parent Company has transferred, and has agreed to transfer on an ongoing basis, certain assets to the Funding IHC. In the event of a resolution scenario, the Parent Company would be obligated to contribute all of its material assets that can be contributed under the terms of the amended and restated support agreement (other than shares in subsidiaries of the Parent Company and certain other assets) to the Funding IHC. The Funding IHC would be obligated to provide capital and liquidity, as applicable, to certain supported subsidiaries, pursuant to the terms of the secured amended and restated support agreement. The obligations of the Parent Company and of the Funding IHC, respectively, under the amended and restated support agreement are in most cases secured on a senior basis by the assets of the Parent Company (other than shares in subsidiaries of the Parent Company and certain other assets), and the assets of the Funding IHC, as applicable. As a result, claims of certain supported subsidiaries, including the Funding IHC, against the assets of the Parent Company with respect to such secured assets are effectively senior to unsecured obligations of the Parent Company. Although an SPOE strategy, whether applied pursuant to our resolution plan or in a resolution proceeding under the orderly liquidation authority, is intended to result in better outcomes for creditors overall, there is no guarantee that the application of an SPOE strategy, including the provision of support to the Parent Company's supported subsidiaries pursuant to the secured amended and restated support agreement, will not result in greater losses for holders of our securities compared with a different resolution strategy for us. Regulators have taken and proposed various actions to facilitate an SPOE strategy under the U.S. Bankruptcy Code, the orderly liquidation authority and other resolution regimes. For example, the Federal Reserve requires top-tier BHCs of U.S. G-SIBs, including the Firm, to maintain adequate TLAC, including equity and eligible long-term debt, in order to ensure that such institutions have enough loss-absorbing resources at the point of failure to be recapitalized through the conversion of debt to equity or otherwise by imposing losses on eligible TLAC where the SPOE strategy is used. The combined implication of the SPOE resolution strategy and the TLAC requirement is that our losses will 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 the creditors of our supported subsidiaries without requiring taxpayer or government financial support. In addition, certain jurisdictions, including the U.K. and E.U. jurisdictions, have implemented changes to resolution regimes to provide resolution authorities with the ability to recapitalize a failing entity organized in such jurisdiction by writing down certain unsecured liabilities or converting certain unsecured liabilities into equity. Such "bail-in" powers are intended to enable the recapitalization of a failing institution by allocating losses to its shareholders and unsecured creditors. This may increase the overall level of capital and liquidity required by us on a consolidated basis and may result in limitations on our ability to efficiently distribute capital and liquidity among our affiliated entities, including in times of stress. Non-U.S. regulators are also considering requirements that certain subsidiaries of large financial institutions maintain minimum amounts of TLAC that would pass losses up from the subsidiaries to the Parent Company and, ultimately, to security holders of the Parent Company in the event of failure.

Other revenues for Institutional Securities include revenues and losses from equity method investments, fees earned in association with lending activities, mark-to-market gains and losses on loans and lending commitments held for sale, as well as gains and losses on economic derivative hedges associated with certain held-for-sale and held-for-investment loans and lending commitments. Other revenues for Wealth Management include realized gains and losses on AFS securities, account handling fees, referral fees and other miscellaneous revenues. Provision for Credit Losses The Provision for credit losses includes the provision for credit losses for loans and lending commitments held for investment. Institutional Securities-Fixed Income and Equities Fixed income and Equities net revenues are composed of Trading revenues, Commissions and fees, Asset management revenues, Net interest, and certain Investments and Other revenues directly attributable to those businesses. These revenues, which can be affected by a variety of interrelated factors, including market volumes, bid-offer spreads and the impact of market conditions on inventory held to facilitate client activity, as well as the effect of hedging activity, are viewed in the aggregate when assessing the performance and profitability of our businesses. Following is a description of the revenue-generating activities within our equity and fixed income businesses, as well as how their results impact the income statement line items. Equity-Financing. We provide financing, prime brokerage and fund administration services to our clients active in the equity markets through a variety of products, including margin lending, securities lending and swaps. Results from this business are largely driven by the difference between financing income earned and financing and liquidity costs incurred, which are reflected in Net interest for securities lending products, and in Trading revenues for derivative products. Fees for providing fund administration services are reflected in Asset management revenues. Equity-Execution services. A significant portion of the results for this business is generated by commissions and fees from executing and clearing client transactions on major stock and derivative exchanges, as well as from OTC transactions. We make markets for our clients principally in equity-related securities and derivative products, including those that provide liquidity and are utilized for hedging. Market-making also generates gains and losses on inventory held to facilitate client activity, which are reflected in Trading revenues. Execution services also includes certain Investments and Other revenues. Fixed Income-Within fixed income, we make markets in various flow and structured products in order to facilitate client activity as part of the following products and services: - Global macro products. We make markets for our clients in interest rate, foreign exchange and emerging market products, including exchange-traded and OTC securities and derivative instruments. The results of this market-making activity are primarily driven by gains and losses from buying and selling positions to stand ready for and satisfy client demand and are recorded in Trading revenues. - Credit products. We make markets in credit-sensitive products, such as corporate bonds and mortgage securities and other securitized products, and related derivative instruments. The values of positions in this business are sensitive to changes in credit spreads and interest rates, which result in gains and losses reflected in Trading revenues. We undertake lending activities, which include commercial mortgage lending, secured lending facilities and financing extended to sales and trading customers. Due to the amount and type of the interest-bearing securities and loans making up this business, a significant portion of the results is also reflected in Net interest revenues. - Commodities products and Other. We make markets in various commodity products related primarily to electricity, natural gas, oil and metals. These activities are primarily recorded in Trading revenues. Fixed income also includes certain Investments and Other revenues. Institutional Securities-Other Net Revenues Other net revenues include impacts from certain treasury functions, such as liquidity and funding costs and gains and losses on economic hedges related to certain borrowings. Other net revenues also include mark-to-market gains and losses on held-for-sale corporate loans and lending commitments, as well as net interest and gain and losses on economic hedges associated with held-for-sale and held-for-investment corporate loans and lending commitments. Also included are gains and losses from financial instruments used to economically hedge compensation expense related to certain DCP, income and losses from the equity method investment related to our Japanese securities joint venture with MUFG, as well as Investments and Other revenues that are not directly attributable to Fixed income and Equities businesses. Compensation Expense Compensation and benefits expenses include base salaries and fixed allowances, formulaic programs, discretionary incentive compensation, amortization of deferred cash and equity awards, changes in the fair value of DCP investments, carried interest allocated to employees, severance costs, and other items such as health and welfare benefits. For additional information on DCP, refer to "Other Matters" herein. The factors that drive compensation for our employees vary from period to period, from segment to segment and within a segment. For certain revenue-producing employees in the Wealth Management and Investment Management business segments, compensation is largely paid on the basis of formulaic payouts that link employee compensation to revenues. Compensation for other employees, including revenue-producing employees in the Institutional Securities business segment and employees in corporate support functions, include base salary and benefits and may also include incentive compensation that is determined following the assessment of the performance of the Firm, business unit and individual. Income Taxes The Income tax provision for our business segments is generally determined based on the revenues, expenses and activities directly attributable to each business segment. Certain items have been allocated to each business segment, generally in proportion to its respective net revenues or other relevant measures. Institutional Securities Income Statement Information % Change$ in millions20242023202220242023RevenuesAdvisory$2,378 $2,244 $2,946 6 %(24)%Equity1,599 889 851 80 %4 %Fixed income2,193 1,445 1,438 52 %- %Total Underwriting3,792 2,334 2,289 62 %2 %Total Investment banking6,170 4,578 5,235 35 %(13)%Equity12,230 9,986 10,769 22 %(7)%Fixed income8,418 7,673 9,022 10 %(15)%Other1,262 823 (633)53 %N/MNet revenues28,080 23,060 24,393 22 %(5)%Provision for credit losses202 401 211 (50)%90 %Compensation and benefits8,669 8,369 8,246 4 %1 %Non-compensation expenses10,460 9,814 9,221 7 %6 %Total non-interest expenses19,129 18,183 17,467 5 %4 %Income before provision for income taxes8,749 4,476 6,715 95 %(33)%Provision for income taxes1,947 884 1,308 120 %(32)%Net income6,802 3,592 5,407 89 %(34)%Net income applicable to noncontrolling interests136 139 165 (2)%(16)%Net income applicable to Morgan Stanley$6,666 $3,453 $5,242 93 %(34)% Investment Banking Investment Banking Volumes $ in billions202420232022Completed mergers and acquisitions1$628 $677 $881 Equity and equity-related offerings2, 363 32 23 Fixed income offerings2, 4323 236 229 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.

Commissions and fees result from arrangements in which the client is charged a fee for executing transactions related to securities, services related to sales and trading activities, and sales of other products. Within the Institutional Securities business segment, commissions and fees include fees earned from market-making activities, such as executing and clearing client transactions on major stock and derivative exchanges, as well as from OTC derivatives. Within the Wealth Management business segment, commissions and fees arise from client transactions including in equity securities, insurance products, mutual funds, alternative investments, futures and options. Wealth Management also earns revenues from order flow payments for directing customer orders to broker-dealers, exchanges and market centers for execution.

The Board has also authorized the Firm Risk Committee ("FRC"), a management committee appointed and co-chaired by the Chief Executive Officer and Chief Risk Officer, which includes the most senior officers of the Firm from the business, independent risk functions and control groups, to help oversee the ERM framework. The FRC's responsibilities include: oversight of our risk management principles, procedures, limits and tolerances; the monitoring of capital levels and material market, credit, model, operational, liquidity, legal, compliance, reputational and other risks, as appropriate; and the steps management has taken to monitor and manage such risks. The FRC also establishes and communicates risk appetite, including aggregate Firm limits and tolerances, as appropriate. The Governance Process Review Subcommittee of the FRC oversees governance and process issues on behalf of the FRC. The FRC reports to the Board, the BAC, the BOTC and the BRC through the Chief Risk Officer, Chief Financial Officer, Chief Legal Officer and Head of Non-Financial Risk.

The Audit Committee of the Board ("BAC") oversees the integrity of our financial statements, compliance with legal and regulatory requirements, and system of internal controls; oversees risk management and risk assessment guidelines in coordination with the Board and other Board committees; reviews the major legal, compliance and financial crime risk exposures of the Firm and the steps management has taken to monitor and control such exposures; appoints, compensates, retains, oversees, evaluates and, when appropriate, replaces the independent auditor; oversees the qualifications, performance and independence of our independent auditor and pre-approves audit and permitted non-audit services; oversees the performance of our Chief Audit Officer; and, after review, recommends to the Board the acceptance and inclusion of the annual audited financial statements in the Firm's annual report on Form 10-K. The BAC reports to the Board on a regular basis.

As a global financial services firm, we face the risk of investigations and proceedings by governmental and self-regulatory organizations in all countries in which we conduct our business. These investigations and proceedings, as well as the amount of penalties and fines sought, continue to impact the financial services industry. Certain U.S. and international governmental entities have brought criminal actions against, or have sought criminal convictions, pleas, deferred prosecution agreements or non-prosecution agreements from financial institutions. Significant regulatory or law enforcement action against us could materially adversely affect our business, reputation, financial condition or results of operations, and increase our exposure to civil litigation. Investigations and proceedings initiated by these authorities may result in adverse judgments, settlements, fines, penalties, disgorgement, restitution, forfeiture, injunctions or other relief, and have included and may in the future include requirements that the Firm admit certain conduct, which may result in increased exposure to civil litigation. In addition, these measures have caused and may in the future cause collateral consequences. For example, such matters could impact our ability to engage in, or impose limitations on, certain of our businesses. As part of the resolution of certain investigations and proceedings, the Firm has been and may in the future be required to undertake certain measures and failure to do so may result in adverse consequences, such as further investigations or proceedings-both civil and criminal-and additional penalties, fines, judgments or other relief. The Dodd-Frank Act also provides compensation to whistleblowers who present the SEC or CFTC with information related to securities or commodities law violations that leads to a successful enforcement action. As a result of this compensation, it is possible we could face an increased number of investigations by the SEC or CFTC. We have been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, as well as investigations or proceedings brought by regulatory agencies, arising in connection with our activities as a global diversified financial services institution. Certain of the actual or threatened legal or regulatory actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages, or may result in material penalties, fines or other results adverse to us. In some cases, the third-party entities that would otherwise be the primary defendants in such cases are bankrupt, in financial distress or may not honor applicable indemnification obligations. In other cases, including antitrust litigation, we may be subject to claims for joint and several liability with other defendants for treble damages or other relief related to alleged conspiracies involving other institutions. Like any large corporation, we are also subject to risk from potential employee misconduct, including noncompliance with policies, laws, rules and regulations, and improper use or disclosure of confidential information, or improper sales practices or other conduct.

Our results of operations have been in the past and may, in the future, be materially affected by global financial market and economic conditions, including, in particular, by periods of low or slowing economic growth in the United States and other major markets, both directly and indirectly through their impact on client activity levels. These include the level and volatility of equity, fixed income and commodity prices; the level, term structure and volatility of interest rates; inflation, currency values and unemployment rates; the level of other market indices, fiscal or monetary policies established by governments, central banks and financial regulators; and uncertainty concerning the future path of interest rates, government shutdowns, debt ceilings or funding, which may be driven by economic conditions, recessionary fears, market uncertainty or lack of confidence among investors and clients due to the effects of widespread events such as global pandemics, natural disasters, climate-related incidents, acts of war or aggression, geopolitical instability, changes as a result of global elections, including changes in U.S. presidential administrations or Congress, changes to global trade policies, supply chain complications and the implementation of tariffs, protectionist trade policies, trade sanctions or investment restrictions and other factors, or a combination of these or other factors. The results of our Institutional Securities business segment, particularly results relating to our involvement in primary and secondary markets for all types of financial products, are subject to substantial market fluctuations due to a variety of factors that we cannot control or predict with great certainty. These fluctuations impact results by causing variations in business flows and activity and in the fair value of securities and other financial products. Fluctuations also occur due to the level of global market activity, which, among other things,can be impacted by market uncertainty or lack of investor and client confidence due to unforeseen economic, geopolitical or market conditions that in turn affect the size, number and timing of investment banking client assignments and transactions and the realization of returns from our principal investments. Periods of unfavorable market or economic conditions, including equity market levels and the level and pace of changes in interest rates and asset valuation, may have adverse impacts on the level of individual investor confidence and participation in the global markets and/or the level of and mix of client assets, including deposits. This could also impact the level of net new asset flows and/or flows into fee-based assets. Any of these factors could negatively impact the results of our Wealth Management business segment. Substantial market fluctuations or divergence in asset performance could also cause variations in the value of our investments in our funds, the flow of investment capital into or from AUM, and the way customers allocate capital among money market, equity, fixed income or other investment alternatives, which could negatively impact the results of our Investment Management business segment. The value of our financial instruments may be materially affected by market fluctuations. Market volatility, illiquid market conditions and disruptions in the markets may make it difficult to value and monetize certain of our financial instruments, particularly during periods of market uncertainty or displacement. Subsequent valuations in future periods, in light of factors then prevailing, may result in significant changes in the value of these instruments and may adversely impact historical or prospective fees and performance-based income (also known as incentive fees, which include carried interest) in respect of certain businesses. In addition, at the time of any sales and settlements of these financial instruments, the price we ultimately realize will depend on the demand and liquidity in the market at that time and may be materially lower than their current fair value. Any of these factors could cause a decline in the value of our financial instruments, which may adversely affect our results of operations in future periods. In addition, financial markets are susceptible to severe events evidenced by rapid depreciation in asset values accompanied by a reduction in asset liquidity. Under these extreme conditions, hedging and other risk management strategies may not be as effective at mitigating trading losses as they would be under more normal market conditions. Moreover, under these conditions, market participants are particularly exposed to trading strategies employed by many market participants simultaneously and on a large scale, which could lead to increased individual counterparty risk for our businesses. Although our risk management and monitoring processes seek to quantify and mitigate risk to more extreme market moves, severe market events have historically been difficult to predict, and we could realize significant losses if extreme market events were to occur.

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. We are exposed to interest rate and credit spread risk as a result of our market-making activities and other trading in interest rate-sensitive financial instruments (i.e., risk arising from changes in the level or implied volatility of interest rates, the timing of mortgage prepayments, the shape of the yield curve and/or credit spreads). The activities from which those exposures arise and the markets in which we are active include, but are not limited to: derivatives, corporate and government debt across both developed and emerging markets and asset-backed debt, including mortgage-related securities. We are exposed to equity price, correlation and implied volatility risk as a result of making markets in equity securities and derivatives and maintaining other positions, including positions in non-public entities. Positions in non-public entities may include, but are not limited to, exposures to private equity, venture capital, private partnerships, real estate funds and other funds. Such positions are less liquid, have longer investment horizons and are more difficult to hedge than listed equities. We are exposed to foreign exchange rate, correlation and implied volatility risk as a result of making markets in foreign currencies and foreign currency derivatives, from maintaining foreign exchange positions and from holding non-U.S. dollar-denominated financial instruments. We are exposed to commodity price and implied volatility risk as a result of market-making activities in commodity products related primarily to electricity, natural gas, oil and precious metals. Commodity exposures are subject to periods of high price volatility as a result of changes in supply and demand. These changes can be caused by weather conditions, physical production and transportation, or geopolitical and other events that affect the available supply and level of demand for these commodities. We manage our trading positions by employing a variety of risk-mitigation strategies. These strategies include diversification of risk exposures and hedging. Hedging activities consist of the purchase or sale of positions in related securities and financial instruments, including a variety of derivative products (e.g., futures, forwards, swaps and options). Hedging activities may not always provide effective mitigation against trading losses due to differences in the terms, specific characteristics or other basis risks that may exist between the hedge instrument and the risk exposure that is being hedged. We manage the market risk associated with our trading activities on a Firmwide basis, on a worldwide trading division level and on an individual product basis. We manage and monitor our market risk exposures in such a way as to maintain a portfolio that we believe is well diversified in the aggregate with respect to market risk factors and that reflects our aggregate risk tolerance as established by our senior management. Aggregate market risk limits have been approved for the Firm across all divisions worldwide. Additional market risk limits are assigned to trading desks and, as appropriate, products and regions. Trading division risk managers, desk risk managers, traders and the Market Risk Department monitor market risk measures against limits in accordance with policies set by our senior management.

Our Required Liquidity Framework establishes the amount of liquidity we must hold in both normal and stressed environments to ensure that our financial condition and overall soundness are not adversely affected by an inability (or perceived inability) to meet our financial obligations in a timely manner. The Required Liquidity Framework considers the most constraining liquidity requirement to satisfy all regulatory and internal limits at a consolidated and legal entity level.

We use Liquidity Stress Tests to model external and intercompany liquidity flows across multiple scenarios and a range of time horizons. These scenarios contain various combinations of idiosyncratic and systemic stress events of different severity and duration. The methodology, implementation, production and analysis of our Liquidity Stress Tests are important components of the Required Liquidity Framework. The assumptions used in our various Liquidity Stress Test scenarios include, but are not limited to, the following: - No government support;- No access to equity and limited access to unsecured debt markets;- Repayment of all unsecured debt maturing within the stress horizon;- Higher haircuts for and significantly lower availability of secured funding;- Additional collateral that would be required by trading counterparties, certain exchanges and clearing organizations related to credit rating downgrades;- Additional collateral that would be required due to collateral substitutions, collateral disputes and uncalled collateral;- Discretionary unsecured debt buybacks;- Drawdowns on lending commitments provided to third parties; and - Client cash withdrawals and reduction in customer short positions that fund long positions. Liquidity Stress Tests are produced and results are reported at different levels, including major operating subsidiaries and major currencies, to capture specific cash requirements and cash availability across the Firm, including a limited number of asset sales in a stressed environment. The Liquidity Stress Tests assume that subsidiaries will use their own liquidity first to fund their obligations before drawing liquidity from the Parent Company and that the Parent Company will support its subsidiaries and will not have access to subsidiaries' liquidity reserves. In addition to the assumptions underpinning the Liquidity Stress Tests, we take into consideration settlement risk related to intraday settlement and clearing of securities and financing activities. At December 31, 2024 and December 31, 2023, we maintained sufficient Liquidity Resources to meet current and contingent funding obligations as modeled in our Liquidity Stress Tests.

Management's role in assessing and managing material risks from cybersecurity threatsOur Cybersecurity Program is operated and maintained by management, including the Chief Information Officer of Cyber, Data, Risk and Resilience ("CIO") and the Chief Information Security Officer ("CISO"). These senior officers are responsible for assessing and managing the Firm's cybersecurity risks. Our Cybersecurity Program strategy, which is set by the CISO and overseen by the Head of Cyber, Technology, and Information Security Non-Financial Risk ("Head of NFR CTIS"), is informed by various risk and control assessments, control testing, external assessments, threat intelligence, and public and private information sharing. Our Cybersecurity Program also includes processes from cybersecurity threats. At least annually, senior management representatives in Technology and NFR discuss the status of the Cybersecurity Program and key cybersecurity risks with the Board and, in accordance with the Board's Corporate Governance Policies, all Board members are invited to attend BOTC meetings and have access to meeting materials. The BOTC, which meets at least quarterly, also reviews and approves significant policies related to cybersecurity, receives an annual independent assessment of key aspects of our Cybersecurity Program from an independent third party and holds joint meetings with the BAC and BRC, as necessary and appropriate. The chair of the BOTC regularly discusses cybersecurity developments with senior management, including the senior officers mentioned above, and reports to the Board on cybersecurity risks and threats and other related matters. Firm Resilience The Firm's critical processes and businesses could be disrupted by events including cyberattacks, failure or loss of access to technology and/or associated data, military conflicts, acts of terror, natural disasters, severe weather events and infectious disease. The Firm maintains a Firmwide resilience program that is designed to provide for operational resilience and enable it to respond to and recover critical processes and supporting assets in the event of a disruption impacting our people, technology, facilities and third parties. The key elements of the Firm's resilience program include business continuity management, technology disaster recovery, third party resilience and key business service resilience. Resilience testing is performed both internally and with critical third parties to validate recovery capability in accordance with business requirements. Third-Party Risk Management In connection with our ongoing operations, we utilize the products and/or services of third parties, which we anticipate will continue and may increase in the future. These products and/or services include, for example, outsourced processing and support functions and other professional services. Our risk-based approach to managing exposure to our third parties includes the performance of due diligence, implementation of service-level and other contractual agreements, consideration of operational risks and ongoing monitoring of the performance of our third parties. We maintain and continue to enhance our third-party risk management program, which is designed to align with our risk tolerance and meet regulatory requirements. The program includes appropriate governance, policies, procedures and enabling technology. The third-party risk management program includes the adoption of appropriate risk management controls and practices throughout the third-party management life cycle to manage risk of service failure, risk of data loss and reputational risk, among others. Model Risk Model risk is 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, noncompliance with applicable laws and/or regulations or damage to the Firm's 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. Sound model risk management is an integral part of our Risk Management Framework. The Model Risk Management Department ("MRM") is a distinct department in Risk Management responsible for the oversight of model risk. The MRM establishes a model risk tolerance in line with our risk appetite. The tolerance is based on an assessment of the materiality of the risk of financial loss or reputational damage due to errors in design, implementation and/or inappropriate use of models. The tolerance is monitored through model-specific and aggregate business-level assessments, which are based upon qualitative and quantitative factors. The effective challenge of models consists of critical analysis by objective, informed parties who can identify model limitations and assumptions and drive appropriate changes. The MRM provides effective challenge of models, independently validates and approves models for use, annually recertifies models, periodically revalidates, identifies and tracks remediation plans for model limitations and reports on model risk metrics. The department also oversees the development of controls to support a complete and accurate Firmwide model inventory. 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. Liquidity risk also encompasses the associated funding risks triggered by the market or idiosyncratic stress events that may negatively affect our liquidity and may impact our ability to raise new funding or the cost of new funding. Generally, we incur liquidity and funding risk as a result of our trading, lending, investing and client facilitation activities. Our Liquidity Risk Management Framework is critical to helping ensure that we maintain sufficient liquidity reserves and durable funding sources to meet our daily obligations and to withstand unanticipated stress events. The Liquidity Risk Department is a distinct area in Risk Management responsible for the oversight and monitoring of liquidity risk. The Liquidity Risk Department ensures transparency of material liquidity and funding risks, compliance with established risk limits and escalation of risk concentrations to appropriate senior management. To execute these responsibilities, the Liquidity Risk Department establishes limits in line with our risk appetite, identifies and analyzes emerging liquidity and funding risks to ensure such risks are appropriately mitigated, monitors and reports risk exposures against metrics and limits, and reviews the methodologies and assumptions underpinning our Liquidity Stress Tests to ensure sufficient liquidity and funding under a range of adverse scenarios. The Treasury Department and applicable business units have primary responsibility for evaluating, monitoring and controlling the liquidity and funding risks arising from our business activities and for maintaining processes and controls to manage the key risks inherent in their respective areas. The Liquidity Risk Department coordinates with the Treasury Department and these business units to help ensure a consistent and comprehensive framework for managing liquidity and funding risk across the Firm. See also "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources" herein. Legal, Regulatory and Compliance Risk Legal, regulatory 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. We are generally subject to extensive regulation in the different jurisdictions in which we conduct our business (see also "Business-Supervision and Regulation" and "Risk Factors"). We have established procedures based on legal and regulatory requirements on a worldwide basis that are designed to facilitate compliance with applicable statutory and regulatory requirements and to require that our policies relating to business conduct, ethics and practices are followed globally. In addition, we have established procedures to mitigate the risk that a counterparty's performance obligations will be unenforceable, including consideration of counterparty legal authority and capacity, adequacy of legal documentation, the permissibility of a transaction under applicable law and whether applicable bankruptcy or insolvency laws limit or alter contractual remedies. The heightened legal and regulatory focus on the financial services and banking industries globally presents a continuing business challenge for us. Climate Risk Climate change manifests as physical and transition risks. The physical risks of climate change include harm to people and property arising from acute climate-related events, such as floods, hurricanes, heatwaves, droughts and wildfires, and chronic, longer-term shifts in climate patterns, such as higher global average temperatures, rising sea levels and long-term droughts. The transition risk of climate change include policy, legal, technology and market changes. Examples of these transition risks include changes in consumer and business sentiment, related technologies, shareholder preferences and any additional regulatory and legislative requirements, including increased disclosure or regulation of carbon emissions. 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. Physical risk may lead to increased credit risk by diminishing borrowers' repayment capacity or impacting the value of collateral. In addition, physical risk could pose increased operational risk to our facilities and people. The impacts of transition risk may lead to and amplify credit or liquidity risk by reducing our customers' operating income or the value of their assets as well as exposing us to reputational, compliance and/or litigation risk due to increased legal and regulatory scrutiny or negative public sentiment. As climate risk is interconnected with other risk types, we have developed and continue to enhance processes to embed climate risk considerations into our risk management practices and governance structures. The BRC oversees Firmwide risks, which include climate risk, and, as part of its oversight, receives updates on our risk management approach to climate risk, including our approaches toward scenario analysis and integration of climate risk into our existing risk management processes. Our climate risk management efforts are overseen by the Climate Risk Committee, which is co-chaired by our Chief Risk Officer and Chief Sustainability Officer and shapes our approach to managing climate-related risks in line with our overall risk framework. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Morgan Stanley and subsidiaries (the "Firm") as of December 31, 2024 and 2023, the related consolidated income statements, comprehensive income statements, cash flow statements and statements of changes in total equity for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Firm as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Firm's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 21, 2025, expressed an unqualified opinion on the Firm's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Firm's management. Our responsibility is to express an opinion on the Firm's financial statements based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Valuation of Level 3 Financial Assets and Liabilities Carried at Fair Value on a Recurring Basis and Level 3 Loans Held for Sale - Refer to Note 4 to the financial statements Critical Audit Matter Description The Firm's trading and financing activities result in the Firm carrying material financial instruments having limited price transparency. These financial instruments can span a broad array of product types and generally include derivatives, securities, loans, and borrowings. As described in Note 4, these Level 3 financial assets and liabilities carried at fair value on a recurring basis approximate $6.8 billion and $4.1 billion, respectively, and the Level 3 loans held for sale approximate $6.1 billion at December 31, 2024. Unlike financial instruments whose inputs are readily observable and, therefore, more easily independently corroborated, the valuation of these financial instruments is inherently subjective and often involves the use of unobservable inputs and proprietary valuation models whose underlying algorithms and valuation methodologies are complex. We identified the valuation of Level 3 financial assets and liabilities carried at fair value on a recurring basis and Level 3 loans held for sale as a critical audit matter given the Firm uses complex valuation models and/or valuation inputs that are not observable in the marketplace to determine the respective carrying values. Performing our audit procedures to evaluate the appropriateness of these models and inputs involved a high degree of auditor judgment, professionals with specialized skills and knowledge, and an increased extent of testing. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the valuation of Level 3 financial assets and liabilities carried at fair value on a recurring basis and Level 3 loans held for sale included the following, among others: - We tested the design and operating effectiveness of the Firm's model review and price verification controls. The Firm maintains these internal controls to assess the appropriateness of its valuation methodologies and the relevant inputs and assumptions. - We independently evaluated the appropriateness of management's valuation methodologies, for selected financial instruments, including the input assumptions, considering the expected assumptions of other market participants and external data when available. - We developed independent estimates for selected financial instruments, using externally sourced inputs and independent valuation models, and used such estimates to further evaluate management's estimates. For certain of our selected financial instruments, this included a comparison to the Firm's estimates for similar transactions and an evaluation of the Firm's assumptions inclusive of the inputs, as applicable. - We tested the revenues arising from the trade date fair value estimates for selected structured transactions for which we developed independent fair value estimates to test the valuation inputs and assumptions used by the Firm and evaluated whether these methods were consistent with the Firm's relevant valuation policies. - We assessed the consistency by which management has applied significant and unobservable valuation assumptions used in developing the Firm's estimates. - We performed a retrospective assessment of management's fair value estimates for certain of our selected financial instruments, for which there were events or transactions occurring after the valuation date. We did so by comparing management's estimates to the relevant evidence provided by such events or transactions, as applicable. /s/ Deloitte & Touche LLP New York, New York February 21, 2025 We have served as the Firm's auditor since 1997. December 2024 Form 10-K78See Notes to Consolidated Financial Statements See Notes to Consolidated Financial Statements79December 2024 Form 10-K December 2024 Form 10-K80See Notes to Consolidated Financial Statements See Notes to Consolidated Financial Statements81December 2024 Form 10-K 1. Introduction and Basis of Presentation The FirmMorgan 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-K.A description of the clients and principal products and services of each of the Firm's 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 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 clients. 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. Wealth Management covers: 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 and commercial 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,of accounting with net gains and losses recorded within Other revenues (see Note 11) unless the Firm has elected to measure the investment at fair value, in which case net gains and losses are recorded within Investments revenues (see Note 5).Equity and partnership interests held by entities qualifying for accounting purposes as investment companies are carried at fair value.The Firm's significant regulated U.S. and international subsidiaries include:- Morgan Stanley & Co. LLC ("MS&Co."),- Morgan Stanley Smith Barney LLC ("MSSB"),- Morgan Stanley Europe SE ("MSESE"), - Morgan Stanley & Co. International plc ("MSIP"),- Morgan Stanley Capital Services LLC ("MSCS"),- Morgan Stanley Capital Group Inc. ("MSCG"),- Morgan Stanley MUFG Securities Co., Ltd. ("MSMS"),- Morgan Stanley Bank, N.A. ("MSBNA") and- Morgan Stanley Private Bank, National Association ("MSPBNA").For further information on the Firm's significant regulated U.S. and international subsidiaries, see Note 16. 2. Significant Accounting Policies Presentation Changes in 2024In the first quarter of 2024, the Firm implemented certain presentation changes which resulted in a decrease to both interest income and interest expense of $4,432 million for the year ended December 31, 2023, and no effect on net interest income, with the entire impact to the Firm recorded within the Institutional Securities segment. These changes further aligned the accounting treatment between the balance sheet and the related interest income or expense, primarily by offsetting interest income and expense for certain prime brokerage-related customer receivables and payables that are currently accounted for as a single unit of account on the balance sheet. The current and previous presentation of these interest income and interest expense amounts are acceptable and the change does not represent a change in accounting principle. These changes were applied retrospectively to the consolidated income statement for 2023 and accordingly, 2023 amounts were adjusted to conform with the current presentation.Revenue RecognitionRevenues are recognized when the promised goods or services are delivered to our customers in an amount that is based on the consideration the Firm expects to receive in exchange for those goods or services when such amounts are not probable of significant reversal. Accounting Update Adopted in 2022Reference Rate Reform The Firm has adopted the Reference Rate Reform accounting update, which extends the period of time entities can utilize the reference rate reform relief guidance from December 31, 2022 to December 31, 2024. The relief provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions that reference LIBOR or other interest rate benchmarks for which the referenced rate is expected to be discontinued or replaced. The Firm is applying the accounting relief as relevant contract and hedge accounting relationship modifications are made during the course of the reference rate reform transition period. There was no impact to the Firm's financial statements upon issuance of this accounting standard update. 3. Cash and Cash Equivalents $ in millionsAtDecember 31,2024 AtDecember 31,2023 Cash and due from banks$4,436 $7,323 Interest bearing deposits with banks100,950 81,909 Total Cash and cash equivalents$105,386 $89,232 Restricted cash$29,643 $30,571 For additional information on cash and cash equivalents, including restricted cash, see Note 2. 4. Fair Values Recurring Fair Value Measurements     Assets and Liabilities Measured at Fair Value on a Recurring Basis At December 31, 2024$ in millionsLevel 1Level 2Level 3Netting1TotalAssets at fair valueTrading assets:U.S. Treasury and agency securities$54,436 $44,332 $- $- $98,768 Other sovereign government obligations25,179 9,969 17 - 35,165 State and municipal securities- 2,993 - - 2,993 MABS- 2,231 281 - 2,512 Loans and lending commitments2- 7,602 1,059 - 8,661 Corporate and other debt- 30,394 1,258 - 31,652 Corporate equities3,5102,874 606 154 - 103,634 Derivative and other contracts:Interest rate4,154 124,309 343 - 128,806 Credit- 8,783 367 - 9,150 Foreign exchange65 108,037 620 - 108,722 Equity2,704 72,532 446 - 75,682 Commodity and other1,366 12,370 2,195 - 15,931 Netting1(6,471)(251,771)(645)(40,835)(299,722)Total derivative and other contracts1,818 74,260 3,326 (40,835)38,569 Investments4,5808 933 754 - 2,495 Physical commodities- 1,229 - - 1,229 Total trading assets4185,115 174,549 6,849 (40,835)325,678 Investment securities -AFS69,834 28,774 - - 98,608 Total assets at fair value$254,949 $203,323 $6,849 $(40,835)$424,286 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 millionsAtDecember 31, 2024AtDecember 31, 2023Business Unit Responsible for Risk ManagementEquity$49,144 $46,073 Interest rates34,451 31,055 Commodities14,829 12,798 Credit3,306 2,400 Foreign exchange1,602 1,574 Total$103,332 $93,900 Net Revenues from Liabilities under the Fair Value Option $ in millionsTrading RevenuesInterest ExpenseNet Revenues12024Borrowings$(1,118)$650 $(1,767)Deposits(134)242 (376)2023Borrowings(7,991)503 (8,494)2022Borrowings12,370 293 12,077 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 $ in millionsTradingRevenuesOCI2024Loans and other receivables1$(53)$- Lending commitments(3)- Deposits- (39)Borrowings(27)(663)2023Loans and other receivables1$(123)$- Lending commitments14 - Deposits- 17 Borrowings(19)(1,726)2022Loans and other receivables1$(108)$- Lending commitments(12)- Deposits- (24)Borrowings- 2,006 $ in millionsAtDecember 31, 2024AtDecember 31, 2023Cumulative pre-tax DVA gain (loss) recognized in AOCI$(2,868)$(2,166)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 millionsAtDecember 31, 2024AtDecember 31, 2023Loans and other receivables2$10,207 $11,086 Nonaccrual loans2 7,719 8,566 Borrowings33,249 3,030 1.Amounts indicate contractual principal greater than or (less than) fair value. 2.The majority of the difference between principal and fair value amounts for loans and other receivables relates to distressed debt positions purchased at amounts well below par. 3.Excludes borrowings where the repayment of the initial principal amount fluctuates based on changes in a reference price or index. The previous tables exclude non-recourse debt from consolidated VIEs, liabilities related to transfers of financial assets treated as collateralized financings, pledged commodities and other liabilities that have specified assets attributable to them. Fair Value Loans on Nonaccrual Status$ in millionsAtDecember 31, 2024AtDecember 31, 2023Nonaccrual loans$647 $440 Nonaccrual loans 90 or more days past due$155 $75 6. Derivative Instruments and Hedging Activities The Firm trades and makes markets globally in listed futures, OTC swaps, forwards, options and other derivatives referencing, among other things, interest rates, equities, currencies, investment grade and non-investment grade corporate credits, loans, bonds, U.S. and other sovereign securities, emerging market bonds and loans, credit indices, ABS indices, property indices, mortgage-related and other ABS, and real estate loan products. The Firm uses these instruments for market-making, managing foreign currency and credit exposure, and asset/liability management.The Firm manages its market-making positions by employing a variety of risk mitigation strategies. These strategies include diversification of risk exposures and hedging. Hedging activities consist of the purchase or sale of positions in related securities and financial instruments, including a variety of derivative products (e.g., futures, forwards, swaps and options). The Firm manages the market risk associated with its market-making activities on a Firmwide basis, on a worldwide trading division level and on an individual product basis. tranche, they are passed on to the next most senior tranche in the capital structure.Other Credit Contracts.  The Firm has invested in CLNs and CDOs, which are hybrid instruments containing embedded derivatives, in which credit protection has been sold to the issuer of the note. If there is a credit event of a reference entity underlying the instrument, the principal balance of the note may not be repaid in full to the Firm. 7. Investment Securities AFS and HTM SecuritiesAt December 31, 2024$ in millionsAmortizedCost1GrossUnrealizedGainsGrossUnrealizedLossesFairValueAFS securitiesU.S. Treasury securities$70,160 $62 $388 69,834 U.S. agency securities224,113 6 2,652 21,467 Agency CMBS5,704 - 388 5,316 State and municipal securities1,373 18 4 1,387 FFELP student loan ABS3612 1 9 604 Unallocated basis adjustment4(2)2 - - Total AFS securities101,960 89 3,441 98,608 HTM securitiesU.S. Treasury securities16,885 - 1,082 15,803 U.S. agency securities241,582 4 8,592 32,994 Agency CMBS1,154 - 88 1,066 Non-agency CMBS1,450 3 113 1,340 Total HTM securities61,071 7 9,875 51,203 Total investment securities$163,031 $96 $13,316 $149,811 At December 31, 2023$ in millionsAmortizedCost1GrossUnrealizedGainsGrossUnrealizedLossesFairValueAFS securitiesU.S. Treasury securities$58,484 $24 $1,103 $57,405 U.S. agency securities225,852 4 2,528 23,328 Agency CMBS5,871 - 456 5,415 State and municipal securities 1,132 46 5 1,173 FFELP student loan ABS3810 - 18 792 Total AFS securities92,149 74 4,110 88,113 HTM securitiesU.S. Treasury securities23,222 - 1,285 21,937 U.S. agency securities240,894 - 7,699 33,195 Agency CMBS1,337 - 121 1,216 Non-agency CMBS1,241 2 138 1,105 Total HTM securities66,694 2 9,243 57,453 Total investment securities$158,843 $76 $13,353 $145,566 1.Amounts are net of any ACL.2.U.S. agency securities consist mainly of agency mortgage pass-through pool securities, CMOs and agency-issued debt.3.Underlying loans are backed by a guarantee, ultimately from the U.S. Department of Education, of at least 95% of the principal balance and interest outstanding.4.Represents the amount of unallocated portfolio layer method basis adjustments related to AFS securities hedged in a closed portfolio. Portfolio layer method basis adjustments are not allocated to individual securities. Refer to Note 2 and Note 6 for additional information. At December 31, 2024$ in millionsAmortizedCost1FairValueAnnualized Average Yield2HTM securitiesU.S. Treasury securities:Due within 1 year$4,635 $4,558 1.2 %After 1 year through 5 years10,191 9,777 2.3 %After 5 years through 10 years503 414 1.1 %After 10 years1,556 1,054 2.3 %Total16,885 15,803 U.S. agency securities:After 1 year through 5 years8 8 1.8 %After 5 years through 10 years223 208 2.1 %After 10 years41,351 32,778 2.1 %Total41,582 32,994 Agency CMBS:Due within 1 year294 289 1.5 %After 1 year through 5 years632 591 1.2 %After 5 years through 10 years176 144 1.6 %After 10 years52 42 1.3 %Total1,154 1,066 Non-agency CMBS:Due within 1 year146 124 3.9 %After 1 year through 5 years648 618 4.5 %After 5 years through 10 years455 403 4.0 %After 10 years201 195 7.4 %Total1,450 1,340 Total HTM securities61,071 51,203 2.1 %Total investment securities$163,031 $149,811 2.9 %1.Amounts are net of any ACL.2.Annualized average yield is computed using the effective yield, weighted based on the amortized cost of each security. The effective yield is shown pre-tax and excludes the effect of related hedging derivatives. 3.At December 31, 2024, the annualized average yield, including the interest rate swap accrual of related hedges, was 2.7% for AFS securities contractually maturing within 1 year and 3.8% for all AFS securities.4.Represents the amount of unallocated portfolio layer method basis adjustments related to AFS securities hedged in a closed portfolio. Portfolio layer method basis adjustments are not allocated to individual securities. Refer to Note 2 and Note 6 for additional information.Gross Realized Gains (Losses) on Sales of AFS Securities$ in millions202420232022Gross realized gains$52 $70 $164 Gross realized (losses)- (21)(94)Total1$52 $49 $70 1.Realized gains and losses are recognized in Other revenues in the income statement. 8. Collateralized Transactions The Firm enters into securities purchased under agreements to resell, securities sold under agreements to repurchase, securities borrowed and securities loaned transactions to, among other things, acquire securities to cover short positions and settle other securities obligations, to accommodate customers' needs and to finance its inventory positions. The Firm monitors the fair value of the underlying securities as compared with the related receivable or payable, including accrued interest, and, as necessary, requests additional collateral, as provided under the applicable agreement to ensure such transactions are adequately collateralized, or returns excess collateral. $437 million at December 31, 2024 and $3,472 million at December 31, 2023. 9. Loans, Lending Commitments and Related Allowance for Credit Losses The Firm's held-for-investment and held-for-sale loan portfolios consist of the following types of loans:- Corporate. Corporate includes revolving lines of credit, term loans and bridge loans made to corporate entities for a variety of purposes.- Secured Lending Facilities. Secured lending facilities include loans provided to clients, which are collateralized by various assets, including residential and commercial real estate mortgage loans, investor commitments for capital calls, corporate loans and other assets.- Commercial Real Estate.  Commercial real estate loans include owner-occupied loans and income-producing loans.- Residential Real Estate. Residential real estate loans mainly include non-conforming loans and HELOC.- Securities-based Lending and Other.  Securities-based lending includes loans that allow clients to borrow money against the value of qualifying securities, generally for any suitable purpose other than purchasing, trading, or carrying securities or refinancing margin debt. The majority of these loans are structured as revolving lines of credit. Other primarily includes certain loans originated in the tailored lending business within the Wealth Management business segment.Loans by Type At December 31, 2024$ in millionsHFI LoansHFS LoansTotal LoansCorporate$6,889 $9,183 $16,072 Secured lending facilities48,842 2,507 51,349 Commercial real estate8,412 628 9,040 Residential real estate66,738 - 66,738 Securities-based lending and Other96,019 1 96,020 Total loans226,900 12,319 239,219 ACL(1,066)(1,066)Total loans, net$225,834 $12,319 $238,153 Loans to non-U.S. borrowers, net$23,335 $4,763 $28,098  At December 31, 2023$ in millionsHFI LoansHFS LoansTotal LoansCorporate$6,758 $11,862 $18,620 Secured lending facilities39,498 3,161 42,659 Commercial real estate8,678 209 8,887 Residential real estate60,375 22 60,397 Securities-based lending and Other 89,245 1 89,246 Total loans204,554 15,255 219,809 ACL(1,169)(1,169)Total loans, net$203,385 $15,255 $218,640 Loans to non-U.S. borrowers, net$21,152 $5,043 $26,195 Year Ended December 31, 2023$ in millionsCorporateSecured Lending FacilitiesCREResidential Real EstateSBL and OtherTotalRevolving$(34)$- $- $- $- $(34)2020- - - - (3)(3)2019- - (85)- (1)(86)Prior- - (44)- - (44)Total$(34)$- $(129)$- $(4)$(167)CRE-Commercial real estateSBL-Securities-based lending Selected Credit RatiosAtDecember 31,2024 AtDecember 31,2023 ACL for loans to total HFI loans0.5 %0.6 %Nonaccrual HFI loans to total HFI loans0.4 %0.4 %ACL for loans to nonaccrual HFI loans 104.6 %133.3 %Employee Loans$ in millionsAtDecember 31, 2024AtDecember 31, 2023Currently employed by the Firm1$4,255 $4,257 No longer employed by the Firm283 92 Employee loans$4,338 $4,349 ACL(112)(121)Employee loans, net of ACL$4,226 $4,228 Remaining repayment term, weighted average in years5.65.81.These loans are predominantly current.2.These loans are predominantly past due for a period of 90 days or more.Employee loans are granted in conjunction with a program established primarily to recruit certain Wealth Management financial advisors, are full recourse and generally require periodic repayments, and are due in full upon termination of employment with the Firm. These loans are recorded in Customer and other receivables in the balance sheet. See Note 2 for a description of the CECL allowance methodology, including credit quality indicators, for employee loans. 10. Goodwill and Intangible Assets Goodwill Rollforward$ in millionsISWMIMTotalAt December 31, 2022¹$429 $10,202 $6,021 $16,652 Foreign currency(5)2 7 4 Acquired- - 56 56 Disposals- (5)- (5)At December 31, 2023¹$424 $10,199 $6,084 $16,707 Foreign currency(12)(8)(3)(23)Acquired23 - - 23 Disposals- (1)- (1)At December 31, 2024¹$435 $10,190 $6,081 $16,706 Accumulated impairments2$673 $- $27 $700 1.Balances represent the amount of the Firm's goodwill after accumulated impairments.2.There were no impairments recorded in 2024, 2023 or 2022.Intangible Assets Rollforward$ in millionsISWMIM TotalAt December 31, 2022$36 $3,911 $3,671 $7,618 Acquired- 9 37 46 Disposals- (13)- (13)Amortization expense(10)(481)(110)(601)Other- 1 4 5 At December 31, 2023$26 $3,427 $3,602 $7,055 Acquired13 - - 13 Disposals- (6)- (6)Amortization expense(10)(479)(113)(602)Other(2)(3)(2)(7)At December 31, 2024$27 $2,939 $3,487 $6,453 Intangible Assets by TypeNon-amortizableAmortizable$ in millionsGrossCarryingAmountGrossCarryingAmountAccumulatedAmortizationAt December 31, 2024Management contracts$2,112 $245 $93 Customer relationships- 8,746 5,121 Trade names- 769 223 Other- 26 8 Total$2,112 $9,786 $5,445 At December 31, 2023Management contracts2,113 245 72 Customer relationships- 8,763 4,582 Trade names- 767 187 Other- 14 6 Total$2,113 $9,789 $4,847 Intangible Assets Estimated Future Amortization Expense$ in millionsAt December 31, 20242025$451 2026343 2027340 2028336 2029333 The Firm's annual goodwill and non-amortizable intangible asset impairment testing as of July 1, 2024 did not indicate any impairment. For more information, see Note 2. 11. Other Assets and Leases Equity Method Investments $ in millionsAtDecember 31, 2024AtDecember 31, 2023Investments$1,869 $1,915 $ in millions202420232022Income (loss)$241 $124 $39 Equity method investments, other than investments in certain fund interests, are summarized above and are included in Other assets in the balance sheet with related income or loss included in Other revenues in the income statement. See "Net Asset Value Measurements-Fund Interests" in Note 4 for the carrying value of certain of the Firm's fund interests, which are composed of general and limited partnership interests, as well as any related carried interest. Japanese Securities Joint Venture$ in millions202420232022Income (loss) from investment in MUMSS$146 $129 $35 The Firm and Mitsubishi UFJ Financial Group, Inc. ("MUFG") formed a joint venture in Japan comprising their respective investment banking and securities businesses by forming two joint venture companies, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. ("MUMSS") and Morgan Stanley MUFG Securities Co., Ltd. ("MSMS") (collectively, the "Joint Venture"). The Firm owns a 40% economic interest in the Joint Venture, and MUFG owns the other 60%.The Firm's 40% voting interest in MUMSS is accounted for under the equity method within the Institutional Securities business segment and is included in the equity method investment balances above. The Firm consolidates MSMS into the Institutional Securities business segment, based on its 51% voting interest.The Firm engages in transactions in the ordinary course of business with MUFG and its affiliates; for example, investment banking, financial advisory, sales and trading, derivatives, investment management, lending, securitization and other financial services transactions. Such transactions are on substantially the same terms as those that would be available to unrelated third parties for comparable transactions. Additionally, during 2024 the Firm further expanded its alliance with MUFG to collaborate in the foreign exchange trading and Japanese research and equity businesses for institutional clients.Tax Equity InvestmentsThe Firm invests in tax equity investment interests which entitle the Firm to a share of tax credits and other income tax benefits generated by the projects underlying the investments. Lease Liabilities$ in millionsAtDecember 31, 2024AtDecember 31, 20232024$913 2025$772 846 2026790 774 2027736 716 2028716 644 2029562 500 Thereafter2,405 2,137 Total undiscounted cash flows5,981 6,530 Imputed interest(1,044)(1,113)Amount on balance sheet$4,937 $5,417 Committed leases not yet commenced$63 $248 Lease Costs$ in millions202420232022Fixed costs$917 $938 $841 Variable costs1181 206 170 Less: Sublease income(6)(10)(7)Total lease cost, net$1,092 $1,134 $1,004 1.Includes common area maintenance charges and other variable costs not included in the measurement of ROU assets and lease liabilities.Cash Flows Statement Supplemental Information$ in millions202420232022Cash outflows-Lease liabilities$942 $892 $881 Non-cash-ROU assets recorded for new and modified leases489 1,055 544 Occupancy lease agreements, in addition to base rentals, generally provide for rent and operating expense escalations resulting from increased assessments for real estate taxes and other charges. 12. Deposits Deposits$ in millionsAtDecember 31,2024 AtDecember 31,2023 Savings and demand deposits$299,898 $288,252 Time deposits76,109 63,552 Total deposits$376,007 $351,804 Deposits subject to FDIC insurance$298,351 $276,598 Deposits not subject to FDIC insurance$77,656 $75,206 Time Deposit Maturities$ in millionsAtDecember 31, 20242025$38,046 202618,016 20279,433 20286,047 20294,148 Thereafter419 Total$76,109 Uninsured Non-U.S. Time Deposit Maturities$ in millionsAtDecember 31, 2024Less than 3 months$2,659 3 - 6 months431 6 - 12 months390 Over 12 months- Total$3,480 Deposits in U.S. Bank Subsidiaries from Non-U.S. Depositors$ in millionsAt December 31, 2024At December 31, 2023Deposits in U.S. bank subsidiaries from non-U.S. depositors$700 $880 13. Borrowings and Other Secured Financings Maturities and Terms of BorrowingsParent CompanySubsidiariesAtDecember 31, 2024AtDecember 31, 2023$ in millionsFixed Rate1Variable Rate2Fixed Rate1Variable Rate2Original maturities of one year or less:Next 12 months$- $- $146 $4,366 $4,512 $3,188 Original maturities greater than one year:2024$20,151 2025$6,617 $927 $2,672 $11,705 $21,921 35,523 202623,288 1,450 3,828 9,403 37,969 35,423 202718,833 1,883 3,452 9,882 34,050 25,338 202812,478 1,366 5,808 9,067 28,719 21,239 202916,129 189 1,278 8,563 26,159 22,193 Thereafter96,378 2,508 11,499 25,104 135,489 100,677 Total greater than one year$173,723 $8,323 $28,537 $73,724 $284,307 $260,544 Total$173,723 $8,323 $28,683 $78,090 $288,819 $263,732 Weighted average coupon at period end33.9 %4.9 %5.1 %5.9 %4.1 %3.6 %1.Fixed rate borrowings include instruments with step-up, step-down and zero coupon features.2.Variable rate borrowings include those that bear interest based on a variety of indices, including SOFR and federal funds rates, in addition to certain notes carried at fair value with various payment provisions, including notes linked to the performance of a specific index, a basket of stocks, a specific equity security, a commodity, a credit exposure or basket of credit exposures. 3.Only includes borrowings with original maturities greater than one year. Weighted average coupon is calculated utilizing U.S. and non-U.S. dollar interest rates and excludes the effect of related hedging derivatives and financial instruments for which the fair value option was elected. See "Rates for Borrowings with Original Maturities Greater than One Year" table herein for more information. Borrowings with Original Maturities Greater than One Year$ in millionsAtDecember 31, 2024AtDecember 31, 2023Senior$270,594 $248,174 Subordinated13,713 12,370 Total$284,307 $260,544 Weighted average stated maturity, in years6.66.6Certain senior debt securities are denominated in various non-U.S. dollar currencies and may be structured to provide a return that is linked to equity, credit, commodity or other indices (e.g., the consumer price index). Senior debt also may be structured to be callable by the Firm or extendible at the option of holders of the senior debt securities. For transfers of assets that fail to meet accounting criteria for a sale, the Firm continues to record the assets and recognizes the associated liabilities in the balance sheet. 14. Commitments, Guarantees and Contingencies CommitmentsYears to Maturity at December 31, 2024$ in millionsLess than 11-33-5Over 5TotalLending:Corporate$17,393 $40,373 $64,851 $6,357 $128,974 Secured lending facilities6,894 6,646 7,169 3,874 24,583 Commercial and Residential real estate762 404 126 411 1,703 Securities-based lending and Other16,453 3,418 788 612 21,271 Forward-starting secured financing receivables1122,535 1,503 - - 124,038 Central counterparty300 - - 20,747 21,047 Investment activities1,509 107 84 466 2,166 Letters of credit and other financial guarantees39 2 - 6 47 Total$165,885 $52,453 $73,018 $32,473 $323,829 Lending commitments participated to third parties$10,859 1.These amounts primarily include secured financing receivables yet to settle as of December 31, 2024, with settlement generally occurring within three business days. These amounts also include commitments to enter into certain collateralized financing transactions.Since commitments associated with these instruments may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements.Types of CommitmentsLending Commitments.  Lending commitments primarily represent the notional amount of legally binding obligations to provide funding to clients for different types of loan transactions. For syndications that are led by the Firm, the lending commitments accepted by the borrower but not yet closed are net of the amounts agreed to by counterparties that will participate in the syndication. For syndications that the Firm participates in and does not lead, lending commitments accepted by the borrower but not yet closed include only the amount that the Firm expects it will be allocated from the lead syndicate bank. Due to the nature of the Firm's obligations under the commitments, these amounts include certain commitments participated to third parties.Forward-Starting Secured Financing Receivables.  These amounts include securities purchased under agreements to resell and securities borrowed that the Firm has entered into prior to the balance sheet date that will settle after the balance sheet date. These transactions are primarily secured by collateral from U.S. government agency securities and other sovereign government obligations when they are funded.Central Counterparty.  These commitments relate to the Firm's membership in certain clearinghouses and are affiliate bank deposit program and compliance with the Investment Advisers Act of 1940, and from a state securities regulator regarding brokerage account cash balances swept to the affiliate bank deposit program. 15. Variable Interest Entities and Securitization Activities OverviewThe Firm is involved with various SPEs in the normal course of business. In most cases, these entities are deemed to be VIEs.The Firm's variable interests in VIEs include debt and equity interests, commitments, guarantees, derivative instruments and certain fees. The Firm's involvement with VIEs arises primarily from:- Interests purchased in connection with market-making activities, securities held in its Investment securities portfolio and retained interests held as a result of securitization activities, including re-securitization transactions.- Guarantees issued and residual interests retained in connection with municipal bond securitizations.- Loans made to and investments in VIEs that hold debt, equity, real estate or other assets.- Derivatives entered into with VIEs.- Structuring of CLNs or other asset-repackaging notes designed to meet the investment objectives of clients.- Other structured transactions designed to provide tax-efficient yields to the Firm or its clients.The Firm determines whether it is the primary beneficiary of a VIE upon its initial involvement with the VIE and reassesses whether it is the primary beneficiary on an ongoing basis as long as it has any continuing involvement with the VIE. This determination is based upon an analysis of the design of the VIE, including the VIE's structure and activities, the power to make significant economic decisions held by the Firm and by other parties, and the variable interests owned by the Firm and other parties.The power to make the most significant economic decisions may take a number of different forms in different types of VIEs. The Firm considers servicing or collateral management decisions as representing the power to make the most significant economic decisions in transactions such as securitizations or CDOs. As a result, the Firm does not consolidate securitizations or CDOs for which it does not act as the servicer or collateral manager unless it holds certain other rights to replace the servicer or collateral manager or to require the liquidation of the entity. If the Firm serves as servicer or collateral manager, or has certain other rights described in the previous sentence, the Firm analyzes the interests in the VIE that it holds and consolidates only those VIEs for which it holds a potentially significant interest in the VIE. 16. Regulatory Requirements Regulatory Capital FrameworkThe Firm is an FHC under the Bank Holding Company Act of 1956, as amended, and is subject to the regulation and oversight of the Board of Governors of the Federal Reserve System ("Federal Reserve"). The Federal Reserve establishes capital requirements for the Firm, including "well-capitalized" standards, and evaluates the Firm's compliance with such capital requirements. The OCC establishes similar capital requirements and standards for the Firm's U.S. bank subsidiaries, including, among others, MSBNA and MSPBNA (together, "U.S. Bank Subsidiaries"). The regulatory capital requirements are largely based on the Basel III capital standards established by the Basel Committee on Banking Supervision and also implement certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In addition, many of the Firm's regulated subsidiaries are subject to regulatory capital requirements, including regulated subsidiaries 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.Regulatory Capital RequirementsThe 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 ("CET1") 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.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 were phased-in at 75% from January 1, 2024. The deferral impacts were fully phased-in from January 1, 2025. 17. Total Equity Morgan Stanley Shareholders' EquityPreferred Stock SharesOutstanding Carrying Value$ in millions, except per share dataAtDecember 31,2024 LiquidationPreferenceper ShareAtDecember 31,2024 AtDecember 31,2023 SeriesA44,000 $25,000 $1,100 $1,100 C1519,882 1,000 408 408 E34,500 25,000 862 862 F34,000 25,000 850 850 I40,000 25,000 1,000 1,000 K40,000 25,000 1,000 1,000 L20,000 25,000 500 500 M400,000 1,000 430 430 N3,000 100,000 300 300 O52,000 25,000 1,300 1,300 P40,000 25,000 1,000 1,000 Q40,000 25,000 1,000 - Total$9,750 $8,750 Shares authorized30,000,000 1.Series C preferred stock is held by MUFG.The Firm's preferred stock has a preference over its common stock upon liquidation. The Firm's preferred stock qualifies as and is included in Tier 1 capital in accordance with regulatory capital requirements (see Note 16). 2022$ in millionsPre-taxGain(Loss)Income Tax Benefit (Provision)After-taxGain(Loss)Non-controllingInterestsNetCTAOCI activity$(179)$(217)$(396)$(135)$(261)Reclassified to earnings- 59 59 - 59 Net OCI$(179)$(158)$(337)$(135)$(202)Change in net unrealized gains (losses) on AFS securitiesOCI activity$(5,720)$1,337 $(4,383)$- $(4,383)Reclassified to earnings(70)16 (54)- (54)Net OCI$(5,790)$1,353 $(4,437)$- $(4,437)Pension and otherOCI activity$38 $(13)$25 $- $25 Reclassified to earnings22 (4)18 - 18 Net OCI$60 $(17)$43 $- $43 Change in net DVAOCI activity$1,982 $(480)$1,502 $53 $1,449 Reclassified to earnings- - - - - Net OCI$1,982 $(480)$1,502 $53 $1,449 Change in fair value of cash flow hedge derivativesOCI activity$(4)$- $(4)$- $(4)Reclassified to earnings- - - - - Net OCI$(4)$- $(4)$- $(4)Cumulative Foreign Currency Translation Adjustments$ in millionsAtDecember 31,2024 AtDecember 31,2023 Associated with net investments in subsidiaries with a non-U.S. dollar functional currency$(4,326)$(2,917)Hedges, net of tax2,849 1,764 Total$(1,477)$(1,153)Carrying value of net investments in non-U.S. dollar functional currency subsidiaries subject to hedges$18,303 $18,761 Cumulative foreign currency translation adjustments include gains or losses resulting from translating foreign currency financial statements from their respective functional currencies to U.S. dollars, net of hedge gains or losses and related tax effects. The Firm uses foreign currency contracts to manage the currency exposure relating to its net investments in non-U.S. dollar functional currency subsidiaries and determines the amount of exposure to hedge on a pre-tax basis. The Firm may also elect not to hedge its net investments in certain foreign operations due to market conditions or other reasons, including the availability of various currency contracts at acceptable costs. Information relating to the effects on cumulative foreign currency translation adjustments that resulted from the translation of foreign currency financial statements and from gains and losses from hedges of the Firm's net investments in non-U.S. dollar functional currency subsidiaries is summarized in the previous table. 18. Interest Income and Interest Expense $ in millions202420232022Interest incomeCash and cash equivalents1$3,068 $3,408 $914 Investment securities5,161 3,992 3,066 Loans13,771 12,424 6,988 Securities purchased under agreements to resell212,416 7,762 2,188 Securities borrowed35,391 5,191 1,020 Trading assets, net of Trading liabilities5,924 4,488 2,484 Customer receivables and Other1,48,404 8,584 4,935 Total interest income$54,135 $45,849 $21,595 Interest expenseDeposits$10,368 $8,216 $1,825 Borrowings13,242 11,437 5,054 Securities sold under agreements to repurchase510,787 6,737 1,760 Securities loaned61,036 784 503 Customer payables and Other4,710,091 10,445 3,126 Total interest expense$45,524 $37,619 $12,268 Net interest$8,611 $8,230 $9,327 1.In 2023, interest-bearing Cash and cash equivalents and related interest were presented separately for the first time. The prior year amounts for Customer receivables and Other have been disaggregated to exclude Cash and cash equivalents to align with the current presentation.2.Includes interest paid on Securities purchased under agreements to resell. 3.Includes fees paid on Securities borrowed. 4.Certain prior-period amounts have been adjusted to conform with the current-period presentation. This adjustment resulted in a decrease to both interest income and interest expense of $4,432 million for the year ended December 31, 2023, and no effect on net interest income, with the entire impact to the Firm recorded within the Institutional Securities segment. See Note 2 for additional information. 5.Includes interest received on Securities sold under agreements to repurchase. 6.Includes fees received on Securities loaned. 7.Includes fees received from Equity Financing customers related to their short transactions, which can be under either margin or securities lending arrangements.Interest income and Interest expense are classified in the income statement based on the nature of the instrument and related market conventions. When included as a component of the instrument's fair value, interest is included within Trading revenues or Investments revenues. Otherwise, it is included within Interest income or Interest expense.Accrued Interest$ in millionsAtDecember 31,2024 AtDecember 31,2023 Customer and other receivables$3,322 $4,206 Customer and other payables3,938 4,360 19. Deferred Compensation Plans and Carried Interest Compensation Stock-Based Compensation PlansCertain current and former employees of the Firm participate in the Firm's stock-based compensation plans. These plans include RSUs, PSUs and an ESPP. PSU Awards - Fair Value on Award Date202420232022MS Average ROTCE/ Relative ROTCE1$83.86 $85.76 $100.12 MS Relative TSR- - 102.17 1. Weighted average price on award dateThe MS Relative TSR fair values on the award date were estimated using a Monte Carlo simulation and the following assumptions.Monte Carlo Simulation AssumptionsRisk-FreeInterest RateExpectedStock PriceVolatilityCorrelationCoefficientAward year20221.3 %38.9 %0.91 The risk-free interest rate was determined based on the yields available on U.S. Treasury zero-coupon issues. The expected stock price volatility was determined using historical volatility. The correlation coefficient was developed based on historical price data of the Firm and the S&P 500 Financials Sector Index. The model uses an expected dividend yield equivalent to reinvesting dividends.Deferred Cash-Based Compensation PlansDCP generally provide a return to the plan participants based upon the performance of each participant's referenced investments.Deferred Cash-Based Compensation Expense$ in millions202420232022Deferred cash-based awards$770 $693 $761 Return on referenced investments672 668 (716)Total$1,442 $1,361 $45 Retirement-eligible awards1$287 $259 $264 1.Total expense includes deferred cash-based compensation anticipated to be awarded in January of the following year that does not contain a future service requirement.Carried Interest CompensationThe Firm generally recognizes compensation expense for any portion of carried interest (both realized and unrealized) that is allocated to employees.Carried Interest Compensation Expense$ in millions202420232022Expense$114 $44 $225 20. Employee Benefit Plans Pension PlansNet Periodic Benefit Expense (Income) Pension Plans$ in millions202420232022Service cost, benefits earned during the period$20 $20 $19 Interest cost on projected benefit obligation137 140 111 Expected return on plan assets(99)(99)(56)Net amortization of prior service cost1 1 1 Amortization of net (gains) losses21 (9)25 Plan settlements- 2 - Net periodic benefit expense$80 $55 $100 Certain current and former U.S. employees of the Firm and its U.S. affiliates who were hired before July 1, 2007 are covered by the U.S. pension plan, a non-contributory defined benefit pension plan that is qualified under Section 401(a) of the Internal Revenue Code ("U.S. Qualified Plan"). The U.S. Qualified Plan has ceased future benefit accruals.The Morgan Stanley Supplemental Executive Retirement and Excess Plan ("SEREP"), is a non-contributory defined benefit plan that is not qualified under Section 401(a) of the Internal Revenue Code, has ceased future benefit accruals.Certain of the Firm's non-U.S. subsidiaries also have defined benefit pension plans covering their eligible current and former employees.The Firm's pension plans generally provide pension benefits that are based on each employee's years of credited service and on compensation levels specified in the plans.Rollforward of Pre-tax AOCI Pension Plans$ in millions202420232022Beginning balance$(821)$(716)$(768)Net gain (loss)(12)(100)26 Amortization of prior service cost1 1 1 Amortization of net (gains) losses 21 (9)25 Plan settlements, curtailments and amendments(1)3 - Changes recognized in OCI9 (105)52 Ending balance$(812)$(821)$(716)The Firm generally amortizes into net periodic benefit expense (income) the unrecognized net gains and losses exceeding 10% of the greater of the projected benefit obligation or the market-related value of plan assets. The U.S. pension plans amortize the unrecognized net gains and losses over the average life expectancy of participants. The remaining plans generally amortize the unrecognized net gains and losses and prior service credit over the average remaining service period of active participants. 401(k) Plan$ in millions202420232022Expense$400 $397 $355 U.S. employees meeting certain eligibility requirements may participate in the Firm's 401(k) plan.Eligible employees receive discretionary 401(k) matching cash contributions as determined annually by the Firm. The Firm generally matched eligible employee contributions up to the IRS limit at 4%, or 5% up to a certain compensation level, in 2024 and 2023. Eligible employees with eligible pay less than or equal to $100,001 also received a fixed contribution equal to 2% of eligible pay. Contributions are invested among available funds according to each participant's investment direction and are included in the Firm's 401(k) expense.Non-U.S. Defined Contribution Pension Plans$ in millions202420232022Expense$181 $173 $163 The Firm maintains separate defined contribution pension plans that cover eligible employees of certain non-U.S. subsidiaries. Under such plans, contributions are generally determined based on a fixed rate of base salary with certain vesting requirements. 21. Income Taxes Components of Provision for Income Taxes$ in millions202420232022CurrentU.S.:Federal$2,011 $1,190 $2,518 State and local660 542 442 Non-U.S.:U.K.487 267 405 India1243 127 17 Japan115 139 105 Brazil257 437 24 Other3342 344 248 Total$3,915 $3,046 $3,759 DeferredU.S.:Federal$8 $(295)$(803)State and local(6)(59)(142)Non-U.S.:U.K.42 12 55 India155 (12)- Japan9 (13)20 Brazil26 (43)25 Other338 (53)(4)Total$152 $(463)$(849)Provision for income taxes$4,067 $2,583 $2,910 1.In 2024, India was presented separately for the first time. The prior period amounts for Other have been disaggregated to exclude India to align with the current presentation. 2.In 2023, Brazil was presented separately for the first time. The prior period amounts for Other have been disaggregated to exclude Brazil to align with the current presentation.3.Other Non-U.S. tax provisions for 2024, 2023 and 2022 primarily include Germany, Hong Kong and Singapore.Reconciliation of the U.S. Federal Statutory Income Tax Rate to the Effective Income Tax Rate202420232022U.S. federal statutory income tax rate21.0 %21.0 %21.0 %U.S. state and local income taxes, net of U.S. federal income tax benefits3.0 3.4 1.8 Domestic tax credits and tax exempt income(0.6)(1.3)(0.9)Non-U.S. earnings1.8 1.9 0.6 Employee share-based awards(0.6)(1.5)(1.7)Non-taxable income1(1.9)(2.3)(0.8)Other0.4 0.7 0.7 Effective income tax rate23.1 %21.9 %20.7 %1.In 2023, Non-taxable income was presented separately for the first time. The prior period amounts for Non-U.S. earnings and Other have been disaggregated to exclude Non-taxable income to align with the current presentation. Interest Expense (Benefit) and Penalties Associated with Unrecognized Tax Benefits, Net of Federal and State Income Tax Benefits$ in millions202420232022Recognized in income statement$92 $65 $39 Accrued at end of period255 237 175 Interest and penalties related to unrecognized tax benefits are recognized as a component of the provision for income taxes. Earliest Tax Year Subject to Examination in Major Tax JurisdictionsJurisdictionTax YearU.S.2017New York State and New York City2010U.K.2014Japan2020Hong Kong2018The 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. 22. Segment, Geographic and Revenue Information The Firm structures its segments primarily based upon the nature of the financial products and services provided to customers and its management organization, which is consistent with the approach used by the Firm's chief operating decision maker ("CODM") to assess the Firm's financial performance. The Firm provides a wide range of financial products and services to its customers in each of its business segments: Institutional Securities, Wealth Management and Investment Management. For a further discussion of the business segments, see Note 1.Revenues and expenses directly associated with each respective business segment are included in determining its operating results. Other revenues and expenses that are not directly attributable to a particular business segment are generally allocated based on each business segment's respective net revenues, non-interest expenses or other relevant measures.As a result of revenues and expenses from transactions with other operating segments being treated as transactions with external parties for purposes of segment disclosures, the Firm includes an Intersegment Eliminations category to reconcile the business segment results to the consolidated results. performed in prior periods. These revenues primarily include investment banking advisory fees.Receivables from Contracts with Customers$ in millionsAtDecember 31,2024 AtDecember 31,2023 Customer and other receivables$2,628 $2,339 Receivables from contracts with customers, which are included within Customer and other receivables in the balance sheet, arise when the Firm has both recorded revenues and the right per the contract to bill the customer.Assets by Business Segment$ in millionsAtDecember 31,2024 AtDecember 31,2023 Institutional Securities$796,608 $810,506 Wealth Management400,848 365,168 Investment Management17,615 18,019 Total1$1,215,071 $1,193,693 1. Parent assets have been fully allocated to the business segments.Total Assets by Region$ in millionsAtDecember 31,2024 AtDecember 31,2023 Americas893,170 $832,714 EMEA179,187 218,923 Asia142,714 142,056 Total$1,215,071 $1,193,693 23. Parent Company Parent Company Only-Condensed Income Statement and Comprehensive Income Statement$ in millions202420232022RevenuesDividends from bank subsidiaries$5,571 $5,770 $2,875 Dividends from BHC and non-bank subsidiaries5,229 6,812 8,661 Total dividends from subsidiaries10,800 12,582 11,536 Trading(827)(775)(1,143)Other36 (31)170 Total non-interest revenues10,009 11,776 10,563 Interest income15,739 13,596 5,805 Interest expense15,377 13,618 6,162 Net interest362 (22)(357)Net revenues10,371 11,754 10,206 Non-interest expenses358 287 252 Income before income taxes10,013 11,467 9,954 Provision for (benefit from) income taxes(499)(520)(456)Net income before undistributed gain of subsidiaries10,512 11,987 10,410 Undistributed (loss) gain of subsidiaries2,878 (2,900)619 Net income13,390 9,087 11,029 Other comprehensive income (loss), net of tax:Foreign currency translation adjustments(324)51 (202)Change in net unrealized gains (losses) on available-for-sale securities521 1,098 (4,437)Pensions and other12 (87)43 Change in net debt valuation adjustment(551)(1,250)1,449 Net change in cash flow hedges(51)20 (4)Comprehensive income$12,997 $8,919 $7,878 Net income$13,390 $9,087 $11,029 Preferred stock dividends and other590 557 489 Earnings applicable to Morgan Stanley common shareholders$12,800 $8,530 $10,540 Average Balances and Interest Rates and Net Interest Income 20242023$ in millionsAverageDailyBalanceInterestAverageRateAverageDailyBalanceInterestAverageRateInterest earning assetsCash and cash equivalents1:U.S.$47,751 $2,004 4.2 %$56,920 $2,386 4.2 %Non-U.S.43,406 1,064 2.5 %48,373 1,022 2.1 %Investment securities2156,920 5,161 3.3 %153,307 3,992 2.6 %Loans2226,454 13,771 6.1 %215,628 12,424 5.8 %Securities purchased under agreements to resell3:U.S.65,222 7,332 11.2 %47,604 4,714 9.9 %Non-U.S.47,735 5,084 10.7 %61,766 3,048 4.9 %Securities borrowed4:U.S.110,024 4,985 4.5 %115,279 4,794 4.2 %Non-U.S.18,224 406 2.2 %18,514 397 2.1 %Trading assets, net of Trading liabilities:U.S.106,063 5,016 4.7 %93,409 3,792 4.1 %Non-U.S.14,385 908 6.3 %12,788 696 5.4 %Customer receivables and Other1,10:U.S.52,510 6,223 11.9 %45,815 6,314 13.8 %Non-U.S.15,889 2,181 13.7 %14,485 2,270 15.7 %Total$904,583 $54,135 6.0 %$883,888 $45,849 5.2 %Interest bearing liabilitiesDeposits2$350,487 $10,368 3.0 %$342,583 $8,216 2.4 %Borrowings2,5265,473 13,242 5.0 %238,164 11,437 4.8 %Securities sold under agreements to repurchase6,8:U.S.18,442 5,336 28.9 %22,718 3,591 15.8 %Non-U.S.52,135 5,451 10.5 %46,392 3,146 6.8 %Securities loaned7,8:U.S.9,499 108 1.1 %4,244 67 1.6 %Non-U.S.6,853 928 13.5 %9,470 717 7.6 %Customer payables and Other9,10:U.S.128,853 6,478 5.0 %133,069 6,954 5.2 %Non-U.S.61,237 3,613 5.9 %63,916 3,491 5.5 %Total$892,979 $45,524 5.1 %$860,556 $37,619 4.4 %Net interest income and net interest rate spread$8,611 0.9 %$8,230 0.8 % Effect of Volume and Rate Changes on Net Interest Income 2024 versus 2023 Increase (Decrease)Due to Change in: $ in millionsVolumeRateNet ChangeInterest earning assetsCash and cash equivalents1:U.S.$(384)$2 $(382)Non-U.S.(105)147 42 Investment securities294 1,075 1,169 Loans2624 723 1,347 Securities purchased under agreements to resell3:U.S.1,745 873 2,618 Non-U.S.(692)2,728 2,036 Securities borrowed4:U.S.(219)410 191 Non-U.S.(6)15 9 Trading assets, net of Trading liabilities:U.S.514 710 1,224 Non-U.S.87 125 212 Customer receivables and Other1,10:U.S.923 (1,014)(91)Non-U.S.220 (309)(89)Change in interest income$2,801 $5,485 $8,286 Interest bearing liabilitiesDeposits2$190 $1,962 $2,152 Borrowings2,51,311 494 1,805 Securities sold under agreements to repurchase6,8:U.S.(676)2,421 1,745 Non-U.S.389 1,916 2,305 Securities loaned7,8:U.S.83 (42)41 Non-U.S.(198)409 211 Customer payables and Other9,10:U.S.(220)(256)(476)Non-U.S.(146)268 122 Change in interest expense$733 $7,172 $7,905 Change in net interest income$2,068 $(1,687)$381 Average Balances and Interest Rates and Net Interest Income 2022$ in millionsAverageDailyBalanceInterestAverageRateInterest earning assetsCash and cash equivalents1:U.S.$57,889 $692 1.2 %Non-U.S.58,052 222 0.4 %Investment securities2167,494 3,066 1.8 %Loans2205,069 6,988 3.4 %Securities purchased under agreements to resell3:U.S.57,565 1,643 2.9 %Non-U.S.62,585 545 0.9 %Securities borrowed4:U.S.123,288 1,039 0.8 %Non-U.S.19,345 (19)(0.1)%Trading assets, net of Trading liabilities:U.S.74,932 2,068 2.8 %Non-U.S.14,748 416 2.8 %Customer receivables and Other1:U.S.56,040 3,798 6.8 %Non-U.S.15,891 1,137 7.2 %Total$912,898 $21,595 2.4 %Interest bearing liabilitiesDeposits2$340,741 $1,825 0.5 %Borrowings2,5229,255 5,054 2.2 %Securities sold under agreements to repurchase6,8:U.S.21,481 1,086 5.1 %Non-U.S.39,631 674 1.7 %Securities loaned7,9:U.S.6,277 37 0.6 %Non-U.S.7,669 466 6.1 %Customer payables and Other9:U.S.143,448 1,991 1.4 %Non-U.S.73,291 1,135 1.5 %Total$861,793 $12,268 1.4 %Net interest income and net interest rate spread$9,327 1.0 % Effect of Volume and Rate Changes on Net Interest Income 2023 versus 2022 Increase (Decrease)Due to Change in: $ in millionsVolumeRateNet ChangeInterest earning assetsCash and cash equivalents1:U.S.$(12)$1,706 $1,694 Non-U.S.(37)837 800 Investment securities2(260)1,186 926 Loans2360 5,076 5,436 Securities purchased under agreements to resell3:U.S.(284)3,355 3,071 Non-U.S.(7)2,510 2,503 Securities borrowed4:U.S.(67)3,822 3,755 Non-U.S.1 415 416 Trading assets, net of Trading liabilities:U.S.510 1,214 1,724 Non-U.S.(55)335 280 Customer receivables and Other1,10:U.S.(693)3,209 2,516 Non-U.S.(101)1,234 1,133 Change in interest income$(645)$24,899 $24,254 Interest bearing liabilitiesDeposits2$10 $6,381 $6,391 Borrowings2,5196 6,187 6,383 Securities sold under agreements to repurchase6,8:U.S.63 2,442 2,505 Non-U.S.115 2,357 2,472 Securities loaned7,9:U.S.(12)42 30 Non-U.S.109 142 251 Customer payables and Other9,10:U.S.(144)5,107 4,963 Non-U.S.(145)2,501 2,356 Change in interest expense$192 $25,159 $25,351 Change in net interest income$(837)$(260)$(1,097)1.In 2023, interest-bearing Cash and cash equivalents and related interest were presented separately for the first time. The prior year amounts for Customer receivables and Other have been disaggregated to exclude Cash and cash equivalents to align with the current presentation. 2.Amounts include primarily U.S. balances. 3.Includes interest paid on Securities purchased under agreements to resell. 4.Includes fees paid on Securities borrowed. 5.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. 6.Includes interest received on Securities sold under agreements to repurchase. 7.Includes fees received on Securities loaned. 8.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. 9.Includes fees received from Equity Financing customers related to their short transactions, which can be under either margin or securities-lending arrangements. 10.Certain prior-period amounts have been adjusted to conform with the current-period presentation. This adjustment resulted in a decrease to both interest income and interest expense of $4,432 million for the year ended December 31, 2023, and no effect on net interest income, with the entire impact to the Firm recorded within the Institutional Securities segment. See Note 2 for additional information. Deposits Average Daily Deposits 202420232022$ in millionsAverageAmountAverageRateAverageAmountAverageRateAverageAmountAverageRateDeposits1:Savings and demand$280,926 2.5 %$286,513 2.0 %$321,316 0.4 %Time69,561 4.8 %56,070 4.3 %19,425 2.7 %Total$350,487 3.0 %$342,583 2.4 %$340,741 0.5 %1.The Firm's deposits were primarily held in U.S. offices. ABSAsset-backed securitiesACLAllowance for credit lossesAFSAvailable-for-saleAMLAnti-money launderingAOCIAccumulated other comprehensive income (loss)AUMAssets under management or supervisionBalance sheetConsolidated balance sheetBHCBank holding companybpsBasis points; one basis point equals 1/100th of 1%Cash flow statementConsolidated cash flow statementCCARComprehensive Capital Analysis and ReviewCCyBCountercyclical capital bufferCDOCollateralized debt obligation(s), including Collateralized loan obligation(s)CDSCredit default swapsCECLCurrent Expected Credit Losses, as calculated under the Financial Instruments-Credit Losses accounting updateCEOChief Executive OfficerCET1Common Equity Tier 1CFTCU.S. Commodity Futures Trading CommissionCLNCredit-linked note(s)CLOCollateralized loan obligation(s)CMBSCommercial mortgage-backed securitiesCMOCollateralized mortgage obligation(s)CRECommercial real estateCRMCredit Risk Management DepartmentCTACumulative foreign currency translation adjustmentsCVACredit valuation adjustmentDCPEmployee deferred cash-based compensation plans linked to investment performanceDCP investmentsInvestments associated with certain DCPDVADebt valuation adjustmentEBITDAEarnings before interest, taxes, depreciation and amortizationELNEquity-linked note(s)EMEAEurope, Middle East and AfricaEPSEarnings per common shareE.U.European UnionFDICFederal Deposit Insurance CorporationFFELPFederal Family Education Loan ProgramFHCFinancial holding companyFICCFixed Income Clearing CorporationFICOFair Isaac CorporationFinancial statementsConsolidated financial statementsFVAFunding valuation adjustmentFVOFair value optionG-SIBGlobal systemically important bankHELOCHome Equity Line of CreditHFIHeld-for-investmentHFSHeld-for-saleHQLAHigh-quality liquid assetsHTMHeld-to-maturityI/EIntersegment eliminationsIHCIntermediate holding companyIMInvestment Management Income statementConsolidated income statementIRSInternal Revenue ServiceISInstitutional SecuritiesLCRLiquidity coverage ratio, as adopted by the U.S. banking agenciesLIBORLondon Interbank Offered RateLTVLoan-to-valueM&AMerger, acquisition and restructuring transactionMSBNAMorgan Stanley Bank, N.A.MS&Co.Morgan Stanley & Co. LLCMSCGMorgan Stanley Capital Group Inc.MSCSMorgan Stanley Capital Services LLCMSEHSEMorgan Stanley Europe Holdings SEMSESEMorgan Stanley Europe SEMSIPMorgan Stanley & Co. International plcMSMSMorgan Stanley MUFG Securities Co., Ltd.MSPBNAMorgan Stanley Private Bank, National AssociationMSSBMorgan Stanley Smith Barney LLCMUFGMitsubishi UFJ Financial Group, Inc.MUMSSMitsubishi UFJ Morgan Stanley Securities Co., Ltd.MWhMegawatt hourN/ANot ApplicableN/MNot MeaningfulNAVNet asset valueNon-GAAPNon-generally accepted accounting principles in the U.S. NSFRNet stable funding ratio, as adopted by the U.S. banking agenciesOCCOffice of the Comptroller of the CurrencyOCIOther comprehensive income (loss)OISOvernight index swapOTCOver-the-counterPRAPrudential Regulation AuthorityPSUPerformance-based stock unitRMBSResidential mortgage-backed securitiesROEReturn on average common equityROTCEReturn on average tangible common equityROURight-of-useRSURestricted stock unitRWARisk-weighted assetsSCBStress capital bufferSECU.S. Securities and Exchange CommissionSLRSupplementary leverage ratioSOFRSecured Overnight Financing RateS&PStandard & Poor'sSPESpecial purpose entitySPOESingle point of entryTLACTotal loss-absorbing capacityU.K.United KingdomUPBUnpaid principal balanceU.S.United States of AmericaU.S. Bank SubsidiariesMSBNA and MSPBNAU.S. GAAPAccounting principles generally accepted in the U.S.VaRValue-at-RiskVIEVariable interest entityWACCImplied weighted average cost of capitalWMWealth Management Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Controls and Procedures Conclusion Regarding the Effectiveness of Disclosure 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 annual report. Management's Report on Internal Control Over Financial Reporting The Firm's management is responsible for establishing and maintaining adequate internal control over financial reporting. The Firm's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). The internal control over financial reporting includes those policies and procedures that: - Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Firm;- Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and that receipts and expenditures are being made only in accordance with authorizations of the Firm's management and directors; and - Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Firm assets that could have a material effect on the Firm's financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of the Firm's internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework (2013). Based on management's assessment and those criteria, management believes that the Firm maintained effective internal control over financial reporting as of December 31, 2024. The Firm's independent registered public accounting firm has audited and issued a report on the Firm's internal control over financial reporting, which appears below. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Morgan Stanley and subsidiaries (the "Firm") as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Firm maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the financial statements of the Firm as of and for the year ended December 31, 2024 and our report dated February 21, 2025 expressed an unqualified opinion on those financial statements. Basis for Opinion The Firm's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Firm's internal control over financial reporting based on our audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP New York, New York February 21, 2025 Changes in Internal Control Over Financial Reporting No change in the Firm's internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) occurred during the quarter ended December 31, 2024 that materially affected, or is reasonably likely to materially affect, the Firm's internal control over financial reporting. Other Information None Disclosure Regarding Foreign Jurisdictions That Prevent Inspections Not applicable.

Employees of the Firm are accountable for conducting themselves in accordance with our core values: Put Clients First, Do the Right Thing, Lead with Exceptional Ideas, Commit to Diversity and Inclusion, and Give Back. We are committed to reinforcing and confirming adherence to our core values through our governance framework, tone from the top, management oversight, risk management and controls, and three lines of defense structure (risk owners within the business, our independent risk management functions, including the Financial Risk Management and Non-Financial Risk Management functions, and IAD). The Board is responsible for overseeing the Firm's practices and procedures relating to culture, values and conduct, as set forth in the Board's Corporate Governance Policies. Senior management committees oversee the Firmwide culture, values and conduct program and report regularly to the Board. A fundamental building block of these programs is the Firm's Code of Conduct, which establishes standards for employee conduct that further reinforce the Firm's commitment to integrity and ethical conduct. Every new hire and every employee annually is required to certify to their understanding of and adherence to the Code of Conduct. The Firm's Global Conduct Risk Management Policy also sets out a consistent global framework for managing conduct risk (i.e., the risk arising from misconduct by employees or contingent workers) and conduct risk incidents at the Firm. The employee annual performance review process includes evaluation of employee conduct related to risk management practices and the Firm's expectations. We also have several mutually reinforcing processes to identify employee conduct that may have an impact on employment status, current-year compensation and/or prior-year compensation. For example, the Global Incentive Compensation Discretion Policy sets forth standards for managers when making annual compensation decisions and specifically provides that managers must consider whether their employees effectively managed and/or supervised risk control practices during the performance year. Control function management meets to discuss employees whose conduct is not in line with our expectations. These results are incorporated into identified employees' performance reviews and compensation and promotion decisions. The Firm's clawback and cancellation provisions apply to deferred incentive compensation and cover a broad scope of employee conduct, including any act or omission (including with respect to direct supervisory responsibilities) that constitutes a breach of obligation to the Firm or causes a restatement of the Firm's financial results, constitutes a violation of the Firm's global risk management principles, policies and standards, or causes a loss of revenue associated with a position on which the employee was paid and the employee operated outside of risk management policies. Risk Limits Framework Risk limits and quantitative metrics provide the basis for monitoring risk-taking activity and avoiding outsized risk taking. Our risk-taking capacity is sized through the Firm's capital planning process where losses are estimated under the Firm's BHC Severely Adverse stress testing scenario. We also maintain a comprehensive suite of risk limits and quantitative metrics to support and implement our risk-appetite statement. Our risk limits support linkages between the overall risk appetite, which is reviewed by the Board, and more granular risk-taking decisions and activities. Risk limits, once established, are reviewed and updated on an annual basis, with more frequent updates as necessary. Board-level risk limits address the most important Firmwide aggregations of risk. Additional risk limits approved by the FRC address more specific types of risk and are bound by the higher-level Board risk limits. Risk Management Process In subsequent sections, we discuss our risk management policies and procedures for our primary risks involved in the activities of our Institutional Securities, Wealth Management and Investment Management business segments. These sections and the estimated amounts of our risk exposure generated by our statistical analyses are forward-looking statements. However, the analyses used to assess such risks are not predictions of future events, and actual results may vary significantly from such analyses due to events in the markets in which we operate and certain other factors described in the following paragraphs. 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. Market risk also includes non-trading interest rate risk. Non-trading interest rate risk in the banking book (amounts classified for regulatory capital purposes under the banking book regime) refers to the exposure that a change in interest rates will result in prospective earnings and fair value changes for assets and liabilities in the banking book. Sound market risk management is an integral part of our culture. The various business units and trading desks are responsible for ensuring that market risk exposures are well-managed and prudent. The Firm's control functions help ensure that these risks are measured and closely monitored and are made transparent to senior management. The Market Risk Department is responsible for ensuring the transparency of material market risks, monitoring compliance with established limits and escalating risk concentrations to appropriate senior management. To execute these responsibilities, the Market Risk Department monitors our risk against limits on aggregate risk exposures, performs a variety of risk analyses, routinely reports risk summaries, and maintains our VaR and scenario analysis systems. Market risk is also monitored through various measures: by use of statistics (including VaR and related analytical measures), by measures of position size and sensitivity, and through routine stress testing, which measures the impact on the value of existing portfolios of specified changes in market factors and scenarios designed by the Market Risk Department in collaboration with the business units. The material risks identified by these processes are summarized in reports produced by the Market Risk Department that are circulated to and discussed with senior management, the FRC, the BRC and the Board. Trading Risks

Performance-based income and other revenues increased to $234 million in 2024, from $139 million in the prior year, primarily due to higher accrued carried interest in infrastructure and real estate funds, partially offset by lower accrued carried interest in certain private equity funds. Non-interest expenses of $4,724 million in 2024 increased 4% from the prior year, as a result of higher Non-compensation and Compensation and benefits expenses. - Compensation and benefits expenses increased primarily due to higher compensation associated with carried interest. - Non-compensation expenses increased primarily due to higher distribution expenses on higher AUM. Assets Under Management or Supervision Rollforwards $ in billionsAtDec 31,2023Inflows1Outflows2Market Impact3Other4AtDec 31,2024 Equity$295 $44 $(66)$49 $(10)$312 Fixed Income171 69 (49)7 (6)192 Alternatives and Solutions508 140 (108)62 (9)593 Long-Term AUM$974 $253 $(223)$118 $(25)$1,097 Liquidity and Overlay Services485 2,349 (2,268)20 (17)569 Total$1,459 $2,602 $(2,491)$138 $(42)$1,666 $ in billionsAtDec 31,2022 Inflows1Outflows2Market Impact3Other4,5AtDec 31,2023 Equity$259 $40 $(57)$57 $(4)$295 Fixed Income173 56 (62)11 (7)171 Alternatives and Solutions431 108 (91)57 3 508 Long-Term AUM$863 $204 $(210)$125 $(8)$974 Liquidity and Overlay Services442 2,282 (2,244)20 (15)485 Total$1,305 $2,486 $(2,454)$145 $(23)$1,459 $ in billionsAtDec 31,2021Inflows1Outflows2Market Impact3Other4AtDec 31,2022Equity$395 $56 $(74)$(106)$(12)$259 Fixed Income207 66 (78)(16)(6)173 Alternatives and Solutions466 102 (83)(47)(7)431 Long-Term AUM$1,068 $224 $(235)$(169)$(25)$863 Liquidity and Overlay Services497 2,224 (2,268)(6)(5)442 Total$1,565 $2,448 $(2,503)$(175)$(30)$1,305 1.Inflows represent investments or commitments from new and existing clients in new or existing investment products, including reinvestments of client dividends and increases in invested capital. Inflows exclude the impact of exchanges, whereby a client changes positions within the same asset class. 2.Outflows represent redemptions from clients' funds, transition of funds from the committed capital period to the invested capital period and decreases in invested capital. Outflows exclude the impact of exchanges, whereby a client changes positions within the same asset class. 3.Market impact includes realized and unrealized gains and losses on portfolio investments. This excludes any funds where market impact does not impact management fees. 4.Other contains both distributions and foreign currency impact for all periods. Distributions represent decreases in invested capital due to returns of capital after the investment period of a fund. It also includes fund dividends that the client has not reinvested. Foreign currency impact reflects foreign currency changes for non-U.S. dollar denominated funds. 5.In 2023, 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 $ in billions202420232022Equity$305 $279 $298 Fixed income180 170 186 Alternatives and Solutions557 466 435 Long-Term AUM Subtotal1,042 915 919 Liquidity and Overlay Services498 464 462 Total AUM$1,540 $1,379 $1,381 Average Fee Rates1 Fee rate in bps202420232022Equity71 71 70 Fixed income36 35 35 Alternatives and Solutions28 32 34 Long-Term AUM42 44 46 Liquidity and Overlay Services12 13 11 Total AUM32 34 34 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. Asset management and other related fees within the Investment Management segment are primarily generated from Equity, Fixed Income and the following products: Alternatives and Solutions. Includes products in fund of funds, real estate, infrastructure, private equity and credit strategies and multi-asset portfolios, as well as systematic strategies that create custom investment solutions. Liquidity and Overlay Services. Includes liquidity fund products, as well as overlay services, which represent investment strategies that use passive exposure instruments to obtain, offset or substitute specific portfolio exposures, beyond those provided by the underlying holdings of the fund. Supplemental Financial Information U.S. Bank Subsidiaries Our 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 our U.S. Bank Subsidiaries from the Institutional Securities business segment primarily includes Secured lending facilities, Commercial and Residential real estate and Corporate loans. Lending activity in our 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" herein. For a further discussion about loans and lending commitments, see Notes 9 and 14 to the financial statements. U.S. Bank Subsidiaries' Supplemental Financial Information1 $ in billionsAtDecember 31,2024AtDecember 31,2023 Investment securities:Available-for-sale at fair value$76.5 $66.6 Held-to-maturity47.8 51.4 Total Investment securities$124.3 $118.0 Wealth Management loans2Residential real estate$66.6 $60.3 Securities-based lending and Other392.9 86.2 Total Wealth Management loans$159.5 $146.5 Institutional Securities loans2Corporate$7.1 $10.1 Secured lending facilities50.2 40.8 Commercial and Residential real estate10.5 10.7 Securities-based lending and Other5.6 4.1 Total Institutional Securities loans$73.4 $65.7 Total assets$434.8 $396.1 Deposits4$369.7 $346.1 1.Amounts exclude transactions between the bank subsidiaries, as well as deposits from the Parent Company and affiliates. 2.Represents loans, net of ACL. 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. For a further discussion of Other loans, see "Quantitative and Qualitative Disclosures about Risk-Credit Risk" herein. 4.For further information on deposits, see "Liquidity and Capital Resources-Funding Management-Balance Sheet-Unsecured Financing" herein. Other Matters Deferred Cash-Based Compensation The Firm sponsors a number of deferred cash-based compensation programs for current and former employees, which generally contain vesting, clawback and cancellation provisions. Employees are permitted to allocate the value of their deferred awards among a menu of notional investments, whereby the value of their awards will track the performance of the referenced notional investments. The menu of investments, which is selected by the Firm, includes fixed income, equity, commodity and money market funds. Compensation expense for DCP awards is calculated based on the notional value of the award granted, adjusted for changes in the fair value of the referenced investments that employees select. Compensation expense is recognized over the vesting period relevant to each separately vesting portion of deferred awards. We invest directly, as principal, in financial instruments and other investments to economically hedge certain of our obligations under these DCP awards. Changes in the fair value of such investments, net of financing costs, are recorded in net revenues, and included in Transactional revenues in the Wealth Management business segment. Although changes in compensation expense resulting from changes in the fair value of the referenced investments will generally be offset by changes in the fair value of investments recognized in net revenues, there is typically a timing difference between the immediate recognition of gains and losses on our investments and the deferred recognition of the related compensation expense over the vesting period. While this timing difference may not be material to our Income before provision for income taxes in any individual period, it may impact the Wealth Management business segment reported ratios and operating metrics in certain periods due to potentially significant impacts to net revenues and compensation expenses. At December 31, 2024 and December 31, 2023, substantially all employee-referenced investments that subjected the Firm to price risk were economically hedged. Amounts Recognized in Compensation Expense $ in millions202420232022Deferred cash-based awards$770 $693 $761 Return on referenced investments672 668 (716)Total recognized in compensation expense$1,442 $1,361 $45 Amounts Recognized in Compensation Expense by Segment $ in millions202420232022Institutional Securities$150 $162 $(97)Wealth Management1,100 984 11 Investment Management 192 215 131 Total recognized in compensation expense$1,442 $1,361 $45 Projected Future Compensation Obligation1 $ in millionsAward liabilities at December 31, 20242, 3$5,658 Fully vested amounts to be distributed by the end of February 20254(772)Unrecognized portion of prior awards at December 31, 202431,590 2024 performance year awards granted in 20253432 Total5$6,908 1.Amounts relate to performance years 2024 and prior. 2.Balance is reflected in Other liabilities and accrued expenses in the balance sheet as of December 31, 2024. 3.Amounts do not include assumptions regarding forfeitures or assumptions about future market conditions with respect to referenced investments. 4.Distributions after February of each year are generally immaterial. 5.Of the total projected future compensation obligation, approximately 18% relates to Institutional Securities, approximately 74% relates to Wealth Management and approximately 8% relates to Investment Management. The previous table presents a rollforward of the Firm's estimated projected future compensation obligation for existing deferred cash-based compensation awards, exclusive of any assumptions about future market conditions with respect to referenced investments. Projected Future Compensation Expense1 $ in millionsEstimated to be recognized in:2025$623 2026389 Thereafter1,010 Total$2,022 1.Amounts relate to performance years 2024 and prior, and do not include assumptions regarding forfeitures or assumptions about future market conditions with respect to referenced investments. The previous table sets forth an estimate of compensation expense associated with the projected future compensation obligation. Our projected future compensation obligation and expense for DCP for performance years 2024 and prior are forward-looking statements subject to uncertainty. Actual results may be materially affected by various factors, including, among other things: the performance of each participant's referenced investments; changes in market conditions; participants' allocation of their deferred awards; and participant cancellations or accelerations. See "Forward-Looking Statements" and "Risk Factors" for additional information. For further information on the Firm's deferred stock-based plans and carried interest compensation, which are excluded from the previous tables, see Notes 2 and 19 to the financial statements. 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 updates; however, we do not expect a material impact on our financial condition or results of operations upon adoption: - Disaggregation of Income Statement Expenses. This update requires quantitative and qualitative disclosure of certain expense categories contained within their relevant expense lines in the income statement, including but not limited to: (1) employee compensation; (2) depreciation; and (3) intangible asset amortization. The update requires the disaggregation of these expense lines in a tabular format in the notes to the financial statements, including the separate disclosure of certain other expenses and gains or losses included within these expense lines which are required under existing U.S. GAAP, with all other expenses permitted to be disclosed in an "other items" category. Additionally, the update requires disclosure of the total amount and definition of the Firm's selling expenses. The update is effective for annual periods beginning January 1, 2027, and interim reporting periods beginning January 1, 2028, with early adoption permitted. - Income Tax Disclosures. This update enhances annual income tax disclosures primarily to further disaggregate disclosures related to the income tax rate reconciliation and income taxes paid. For the income tax rate reconciliation, this update requires (1) disclosure of specific categories of reconciling items (where applicable), and (2) providing additional information for reconciling items that meet a quantitative threshold. For income taxes paid (net of refunds), this update requires disclosure of amounts disaggregated by (1) federal, state, and foreign taxes; and (2) individual jurisdictions that meet a quantitative threshold. Additionally, the update requires disclosure of (1) income (or loss) before income taxes, disaggregated between domestic and foreign; and (2) income tax expense disaggregated by federal, state and foreign. The update is effective for annual periods beginning January 1, 2025, 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), the following policies involve a higher degree of judgment and complexity. Fair Value