Morgan Stanley 2015 Annual Report Download - page 45

Executive Summary.
Overview of Financial Results.
2015 Compared with 2014.
Consolidated Results.
• The Company reported net revenues of $35,155 million in 2015, a 3% increase from net revenues of $34,275
million in 2014. The impact of debt valuation adjustment (“DVA”) included in net revenues was positive $618
million and $651 million in 2015 and 2014, respectively.
• Net income applicable to Morgan Stanley for the current year was $6,127 million, or $2.90 per diluted common
share, compared with $3,467 million, or $1.60 per diluted common share, a year ago. The current year included net
discrete tax benefits of $564 million, or $0.29 per diluted common share, compared with $2,226 million, or $1.13
per diluted common share, in the prior year. For a further discussion of these net discrete tax benefits, see
“Supplemental Financial Information and Disclosures—Income Tax Matters” herein. The prior year also included
litigation costs related to residential mortgage-backed securities and credit crisis matters of $3,083 million, or a loss
of $1.47 per diluted common share, 2014 compensation actions of approximately $1,137 million (see also
“Supplemental Financial Information and Disclosures—Discretionary Incentive Compensation” herein), or a loss of
$0.39 per diluted common share, and a funding valuation adjustment (“FVA”) implementation charge of $468
million, or a loss of $0.17 per diluted common share.
• Excluding DVA, net revenues were $34,537 million in 2015 compared with $33,624 million in 2014, and net
income applicable to Morgan Stanley was $5,728 million, or $2.70 per diluted common share, in 2015 compared
with $3,049 million, or $1.39 per diluted common share, in 2014. Excluding both DVA and the net discrete tax
benefits, net income applicable to Morgan Stanley was $5,164 million, or $2.41 per diluted common share, in 2015
compared with $823 million, or $0.26 per diluted common share, in 2014.
Business Segments.
• Institutional Securities net revenues of $17,953 million in 2015 increased 6% compared with $16,871 million in
2014, primarily as a result of higher Sales and trading net revenues, partially offset by lower Other revenues and
lower revenues in Investment banking.
• Wealth Management net revenues of $15,100 million in 2015 increased 1% from $14,888 million in 2014, primarily
as a result of higher net interest income and asset management revenues, partially offset by lower transactional
revenues.
• Investment Management net revenues of $2,315 million in 2015 decreased 15% from $2,712 million in 2014,
primarily reflecting the reversal of previously accrued carried interest, reduction in revenues attributable to non-
controlling interests and markdowns on principal investments.
Expenses.
• Compensation and benefits expenses of $16,016 million in 2015 were down 10% from $17,824 million in 2014,
primarily due to the 2014 compensation actions, a decrease in 2015 in the fair value of deferred compensation plan
referenced investments and carried interest, and a decrease in the level of discretionary incentive compensation in
2015 (see also “Supplemental Financial Information and Disclosures—Discretionary Incentive Compensation”
herein).
• Non-compensation expenses were $10,644 million in 2015 compared with $12,860 million in 2014, representing a
17% decrease, primarily as a result of lower legal expenses in the Institutional Securities business segment
associated with residential mortgage-backed securities and credit crisis-related matters.
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