Morgan Stanley 2014 Annual Report Download - page 92

Subsidiary Banks and optimization of lending products and AFS securities; reducing funding costs due to the
improvement in the Company’s credit spreads and the refinancing of borrowings issued at higher interest rates;
and prudently returning capital to shareholders, as appropriate, subject to regulatory approval.
The Company’s Return on Equity goal and its related strategies are forward-looking statements that may be
materially affected by many factors including, among other things: macroeconomic and market conditions;
legislative and regulatory developments; industry trading and investment banking volumes; equity market levels;
interest rate environment; and legal expenses. Given the uncertainties surrounding these and other factors, there
are significant risks that the Company’s Return on Equity goal may not be realized, and actual results may differ
from the goal and the differences may be material and adverse. Accordingly, the Company cautions that undue
reliance is not to be placed on any of these forward-looking statements. See “Forward-Looking Statements”
immediately preceding Part I, Item 1, and “Risk Factors” in Part I, Item 1A for additional information regarding
these forward-looking statements. Return on Equity is a non-GAAP financial measure that the Company
considers to be a useful measure to the Company and investors to assess operating performance.
U.S. Subsidiary Banks’ Lending Activities.
The Company provides loans to a variety of customers, from large corporate and institutional clients to high net
worth individuals, primarily through the Company’s U.S. Subsidiary Banks. The Company’s lending activities in
its Institutional Securities business segment primarily include corporate lending activities, in which the Company
provides loans or lending commitments to certain corporate clients. In addition to corporate lending activities, the
Institutional Securities business segment engages in other lending activities. The Company’s lending activities in
its Wealth Management business segment include securities-based lending that allows clients to borrow money
against the value of qualifying securities in PLAs and residential mortgage lending. The Company expects its
lending activities to continue to grow through further penetration of the Company’s Institutional Securities and
Wealth Management business segments’ client base.
The following table presents the Company’s U.S. Subsidiary Banks’ lending activities included in its
consolidated statements of financial condition:
At
December 31,
2014
At
December 31,
2013
(dollars in billions)
Institutional Securities U.S. Subsidiary Banks data:
Corporate lending ........................................ $ 9.6 $ 8.8
Other lending(1):
Corporate loans ..................................... 8.0 2.3
Wholesale real estate loans ............................ 8.6 1.8
Wealth Management U.S. Subsidiary Banks data:
Securities-based lending and other loans ...................... $21.9 $14.7
Residential real estate loans ................................ 15.8 10.1
(1) In addition to primary corporate lending activity, the Company’s Institutional Securities business segment engages in other lending
activities. These activities include commercial and residential mortgage lending, asset-backed lending, corporate loans purchased in the
secondary market, financing extended to Institutional equities clients and loans to municipalities. The increase in other lending from
2013 primarily reflects growth in commercial mortgage and asset-backed loans.
For a further discussion of the Company’s credit risks, see “Quantitative and Qualitative Disclosures about
Market Risk—Credit Risk” in Item 7A. Also see Notes 8 and 13 to the Company’s consolidated financial
statements in Item 8 for additional information about the Company’s loans and lending commitments,
respectively.
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