Morgan Stanley 2014 Annual Report Download - page 228

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The Company’s outstanding loans at December 31, 2014 and December 31, 2013 included the following:
December 31, 2014 December 31, 2013
Loans by Product Type
Loans Held
for
Investment
Loans Held
for Sale
Total
Loans(1)(2)
Loans Held
for
Investment
Loans Held
for Sale
Total
Loans(1)(2)
(dollars in millions)
Corporate loans .................. $19,659 $8,200 $27,859 $13,263 $6,168 $19,431
Consumer loans .................. 16,576 — 16,576 11,577 — 11,577
Residential real estate loans ......... 15,735 114 15,849 10,006 112 10,118
Wholesale real estate loans ......... 5,298 1,144 6,442 1,855 49 1,904
Total loans, gross of allowance
for loan losses ............. 57,268 9,458 66,726 36,701 6,329 43,030
Allowance for loan losses .......... (149) — (149) (156) — (156)
Total loans, net of allowance for loan
losses ........................ $57,119 $9,458 $66,577 $36,545 $6,329 $42,874
(1) Amounts include loans that are made to non-U.S. borrowers of $7,017 million and $4,729 million at December 31, 2014 and
December 31, 2013, respectively.
(2) At December 31, 2014, loans at fixed interest rates and floating or adjustable interest rates were $6,663 million and $59,914 million,
respectively. At December 31, 2013, loans at fixed interest rates and floating or adjustable interest rates were $6,318 million and
$36,556 million, respectively.
The above table does not include loans and loan commitments held at fair value of $11,962 million and
$12,612 million that were recorded as Trading assets in the Company’s consolidated statement of financial
condition at December 31, 2014 and December 31, 2013, respectively. At December 31, 2014, loans held at fair
value consisted of $7,093 million of Corporate loans, $1,682 million of Residential real estate loans and $3,187
million of Wholesale real estate loans. At December 31, 2013, loans held at fair value consisted of $9,774 million
of Corporate loans, $1,434 million of Residential real estate loans and $1,404 million of Wholesale real estate
loans. See Note 4 for further information regarding loans held at fair value.
Credit Quality.
The Company’s Credit Risk Management Department evaluates new obligors before credit transactions are
initially approved, and at least annually thereafter for corporate and wholesale real estate loans. For corporate
loans, credit evaluations typically involve the evaluation of financial statements, assessment of leverage,
liquidity, capital strength, asset composition and quality, market capitalization and access to capital markets, cash
flow projections and debt service requirements, and the adequacy of collateral, if applicable. The Company’s
Credit Risk Management Department also evaluates strategy, market position, industry dynamics, obligor’s
management and other factors that could affect an obligor’s risk profile. For wholesale real estate loans, the
credit evaluation is focused on property and transaction metrics including property type, loan-to-value ratio,
occupancy levels, debt service ratio, prevailing capitalization rates, and market dynamics. For residential real
estate and consumer loans, the initial credit evaluation typically includes, but is not limited to, review of the
obligor’s income, net worth, liquidity, collateral, loan-to-value ratio, and credit bureau information. Subsequent
credit monitoring for residential real estate loans is performed at the portfolio level. Consumer loan collateral
values are monitored on an ongoing basis.
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