Post on 24-Sep-2020
����������������� ��������
������������
Goldman SachsFinancial Services ConferenceNovember 5, 1997
Philip PurcellChairman and CEO
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
Strong Financial Targets
� Average ROE of 18 to 20% over Economic Cycle
� Average Earnings Growth of 15%
4
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
Note: (1) Income before cumulative effect of accounting changeSource: SEC filings
CAGR 28.8%
����������� ��!�� ����������
1,980
2,586
3,276
4,791
1,544
5,456
1,075
1996 1997 1998 1999 2000 1Q2001(1)
5
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
��������"���#�����$��
Source: SEC filings
20.0%22.0% 22.7%
32.6%30.9%
22.5%
1996 1997 1998 1999 2000 1Q2001
6
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
���%� ���&&��!�'�&����������(��)�(��*�+
Global AssetManagement Industry
Global Credit CardIndustry
Global SecuritiesIndustry
n M&A Volume
n Equity UW
n Margin Debt
62%
42%
30%
n AUM(2)
n Mix shift to fixedincome caused by:
– NASDAQ
6%
49%
n Bankruptcy 19%
– S&P 12%
Notes: (1) Calendar quarter(2) Includes money market funds. 1Q01 data is through Feb. 28
Sources: Thomson Financial; ICI; NYSE; Visa USA Weekly Statistics from U.S. Courts; Commodity Systems, Inc.
7
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
! ���,��-��""����
� Cutting non-comp expense
� Headcount reduced
� Stabilizing margins at historically favorable levels
8
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
83218 326
813
1980 1985 1990 1995 2000Note: (1) Includes Regional Stock Exchanges only through November 2000Source: Securities Industry Association
����������������&�%��'��-�.��� /,��-��� #��'�������.��� �"��� 0���� /��/(��'�/��������12�2��3���-&�������� ���
5-Year10-Year15-Year20-Year
29.8%24.8%19.1%19.6%
CAGR
2,993
(1)
9
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
$235$382
$837
$3,263
1985 1990 1995 2000
������������-�&���/4��&�����&���#���/�����'����&����������
Source: Thomson Financial Services
5-Year10-Year15-Year
31.3%23.9%19.2%
CAGR
10
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
$12 $23 $32
$176
$460
1980 1985 1990 1995 2000
����������������&%��������#����4�����1�'�������-&����������
Source: Thomson Financial Services; worldwide public and Rule 144A equity offerings
5-Year10-Year15-Year20-Year
21.2%30.5%22.1%20.0%
CAGR
11
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
$44
$135
$117
$495
$240
$1,065
$1,249
$2,812
$3,961
1980 1985 1990 1995 2000
����������12�2�/&&������- ���������5��'�/&&�&����������
Source: Investment Company Institute, Open-End Funds Only
CAGR
5-Year10-Year15-Year
20-Year
Total
19.9%20.7%19.3%
21.8%
Equity
26.0% 32.4%26.5%
25.2%
Equity
$6,967
12
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
53
147
288
492
1984 1989 1994 1999
����������12�2���'������'&%�����$�,�#�&����������
CAGR
5-Year 11.3%
10-Year 12.9%
15-Year 16.0%
Source: Faulkner & Gray’s Card Industry Directory
13
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
140
293
582
1,096
1984 1989 1994 1999
����������12�2���'������'&%���������-�.��� ����������
CAGR
5-Year 13.5%
10-Year 14.1%
15-Year 14.7%
Source: Faulkner & Gray’s Card Industry Directory
14
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
!�'�&�������� �
Convergence� Consolidation of players to
meet competitive imperativeof global size and scale
Globalization
� Worldwide deregulation ofmarkets and financialsystems lead to globalizationof capital flows
Technology� Rapid change shapes the
platform and drives thespeed by which globalizationoccurs
15
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
���,�-��66��7���&��
Banks BrokersInvestment
Banks Insurers
(Merrill Lynch Merrill Lynch) Merrill Lynch
Dean Witter Morgan Stanley Morgan Stanley
DLJFirst BostonCredit Suisse CSFB
TravelersSmith Barney Salomon BrosSchroders
Citibank Citigroup
Goldman Goldman
AIG AIG
JP Morgan Chase
Chase
JP Morgan
Manufacturers Hanover
Chemical
Deutsche BankBankers Trust
Deutsche Bank
PaineWebber WarburgUBS UBS WarburgO’Connor Dillon ReadSwiss Bank
16
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
��-�&���/4��&�����&����8����������'��'�/�����'���/
0
10
20
30
40
50
1997 1998 1999 2000 1Q2001
(%)
MWD
JPMGSCSFBSSBLEH
MER
Note: (1) Calendar quarterSource: Thomson Financial Services
MWDGS
MERSSB
LEHCSFB
JPM
(1)
17
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
�4�����1�'�������-����8����������'��'��4����
0
5
10
15
20
25
1997 1998 1999 2000 1Q2001
(%) MWDGS
MERSSB
LEHCSFB
Note: (1) Calendar quarterSource: Thomson Financial Services
MWD
GS
MER
CSFB
LEH
SSB
(1)
18
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
�#��1�'�������-����8������ �����/ �����!�,&� ������'
0
5
10
15
20
25
1997 1998 1999 2000 1Q2001
(%)
Note: (1) Calendar quarterSource: Thomson Financial Services
MWD
GS
MER
CSFB
LEH
SSB
(1)
MWDGS
MERSSB
LEHCSFB
19
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
������-����8�������(��*�+�,&��(��
Worldwide Equity UW
Worldwide IPO UW
Global Announced M&A
(19%)
(49%)
(37%)
Industry
Note: (1) Calendar quarterSource: Thomson Financial Services
MWD
Rank
1
1
11Q01
20
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
13.3%
11.0%
4.5%
1.5% 1.0%
CSFB MWD GS SSB MER
34.5%
26.4%
19.1%
15.0% 14.3%
JPM MWD SSB LEH MER
���#�������-�����8�������(�����
European EquityEuropean Announced M&A
Note: (1) Calendar quarterSource: Thomson Financial Services
21
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
$275
$170
$106
$45
Visa Mastercard Amex Discover
Source: Discover, Company ReportsNote: Discover data based on fiscal quarters (December - May); all others based on calendar quarters (January - June)
��'������'�%���&������.��� �9���������������
45.7% 28.2% 17.7% 7.4%MarketShare
22
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
40.3%
21.5% 21.5%
8.9%
Discover Amex Mastercard Visa
��'������'%���&������.��� �:�����-
Note: Transaction volume percent change from 1H 1999 to 1H 2000. Discover data based on fiscal quarters(December - May); all others based on calendar quarters (January - June)
23
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
5��������/',�&������8�������������66;�7�����
Source: Company Earnings Releases/SIA Yearbook
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1996 1997 1998 1999 2000
MWDMER
CPRU
PWJAGE
(# FAs)
24
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
Note: (1) Excludes commissions and asset management, distribution and administration feesSource: Annual reports
1997 1998 1999 2000
13%
26%
7%
18%
19%
14%
17%
25%
8%4%
26%
17%
10%
22%
4%
17%
27%
16%
14%
19%
3%12%
33%
15%
Fixed Income Trading
Foreign Exchange
Underwriting
Commodities
Advisory Fee
Equity Trading
������&�$,��&*�+
3%3%
4%4%
Net Interest +Other
25
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
$�&8�����- �� ��$,������.�$�$����*�+
0.810.68 0.64
0.47
0.0
0.2
0.4
0.6
0.8
1.0
MER MWD C GS JPM
1998:
2000:
Notes: (1) Average daily trading Net Revenue divided by year end VaR using a 99% confidence interval to estimate potential trading losses over a one day period; excludes commissions(2) JPMChase pro forma(3) Merrill 2000 net interest estimated based on 1999 proportions
Source: Company 10Ks with Morgan Stanley estimates
0.380.28 0.22 0.15 0.1
0.0
0.2
0.4
0.6
0.8
1.0
MWD MER JPM GS C
(3)
(2)
0.85
26
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
$�����������&<�������/&&�&!�'3'*�+
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
1Q1997
2Q1997
3Q1997
4Q1997
1Q1998
2Q1998
3Q1998
4Q1998
1Q1999
2Q1999
3Q1999
4Q1999
1Q2000
2Q2000
3Q2000
4Q2000
1Q2001
157.1
161.4
162.0
249.0
Client AssetsS&P 500
DJIANASDAQ Composite
Note: (1) Market indices as of calendar quarter end; Morgan Stanley assets as of fiscal quarter endSource: Internal Morgan Stanley database & Bloomberg
27
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
/&&������- ��/&&�&�1�'������- ��*=>�+
Sources: 2000 Annual Report, 1Q 2001 Earnings Release
338
412
472500 492
1997 1998 1999 2000 1Q2001
28
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
Notes: (1) Includes gain on sale of businesses(2) Income before cumulative effect of accounting change
Source: SEC filings
CAGR 15.4%
��'�����,��>�&��&& ��!�� ����������
473
721662
140
726
142
1997 1998 1999 2000 1Q2001(1) (2)
29
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
13.2 13.5
16.418.7 19.2
1997 1998 1999 2000 1Q2001
5������������-���� ����4�������������66?7�(��*=�>������&+
Source: Internal reporting database
EOP CAGR: 9.8%
30
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
5������������-����������$����'�� �����,*=��������&+
Sources: Morgan Stanley Annual and Quarterly Reports, 1997-2000
540
3,444
2,949
4,465 11,398
1997 1998 1999 2000 1997-2000
DividendsPurchases of Common Stock
2,434
8,964
31
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
5������������-��/,��-�/������$�����-����������,&2��� ������&�666�7��(��
Sources: Annual Reports, Earnings Press Releases
28.7%27.5%
24.7%23.1% 22.5%
0%
5%
10%
15%
20%
25%
30%
35%
MWD GS AXP Citi MER
32
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
JP Morgan Chase(1)
Salomon Smith Barney(2)
���#��������-&����'��'��,��������"������-�����-���(����������)%�3�������-&�"���%������-����(�����&
Sources: Company press releases, 10Qs.
Morgan Stanley(3)
Bear Stearns
Lehman Brothers
Goldman Sachs(4)
Merrill Lynch
296
117
78
58
41
39
31
Notes: (1) Excludes Merger and Restructuring Costs of $1,302MM in 4Q00(2) Trailing 8 quarters only. Prior 4 quarters restated not available(3) Includes Securities and Asset Management segments only(4) Excludes SLK charge $290MM, net in 4Q00; amount taken from press release excluding non-recurring expenses associated with the Firm’s
conversion to corporate form in 2Q99
33
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
.�&���
Connecting people, ideas and capital,we will be the world’s first choicefor achieving financial aspirations
34
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
��������������
� Segmenting client base
� Developing client P&L models
� Aligning client satisfaction with internal reward system
� Unifying retail platform
35
NOTICE: This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on informationgenerally available to the public and does not contain any material, nonpublic information. The presentation has been prepared solely for informationpurposes, is not a solicitation of an offer to buy or sell any security or instrument and has not been updated since it was originally presented on May 14, 2001.
��&����-����-�&&
� Client satisfaction
� Higher market share
� Revenue growth
� Industry leading margins and ROE
� Lower volatility of earnings relative to peers