1 / 19

UBS Warburg Global Financial Services Conference

This presentation highlights the sales and trading trends and analysis discussed at the UBS Warburg Global Financial Services Conference in April 2002. The presentation covers firm revenues, asset class diversification, financial instruments, customer segments, market making, services and advice, research rankings, analyst ratings, risk efficiency, equity capital markets penetration, and turnover velocity.

nland
Download Presentation

UBS Warburg Global Financial Services Conference

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. UBS WarburgGlobal Financial Services Conference Stephen Crawford Chief Financial Officer April 24, 2002

  2. % of Firm Revenues 27% 27% 31% 34% 37% 39% Sales and Trading Sales and Trading Net Revenues ($MM, % Total) 1997-2001 CAGR: 20%

  3. Diversification Sales and Trading Net Revenues ($MM, % Total) Equity Fixed Income

  4. Balance $MMs % of Total Asset Class Total Assets Cash and cash equivalents Financing transactions, including:Reverse repos and securities borrowed Financial instruments, including: Cash products ($118,770) Derivative products ($31,814) Receivables, net of allowances: Other assets, primarily includes:Aircraft, cash collateral, goodwill, office facilities etc. $491,651 74,298 194,222 158,846 47,885 16,400 15% 40% 32% 10% 3% Balance Sheet(1) $MMs Note: (1) As February 28, 2002

  5. Financial Instruments – Cash(1) • Bank Loans: $4.9Bn • Private Equity: $900MM(2) • High Yield: $1.6Bn Selected Financial Instruments Loans and Commitments Investment Grade 75% 25% Non-Investment Grade Total: $10.2Bn Note: (1) As of February 28, 2002 (2) Of which only $250 MM is in inventory

  6. AAA AA A BBB NIG Financial Instruments – Derivatives(1) Maturity Profile by Counterparty Rating Counterparty Rating by Product ($MMs) ($MMs) Note: (1) As February 28, 2002

  7. Product Lifecycle Credit Derivatives 2002 Interest Rate Swaps 2002 Margins Volume Time

  8. Revenue Drivers • Trading Volumes • Volatility • Primary Activity • Market Direction

  9. Lowers Risk Increase Flow Strengthens Client Relationships Business Model

  10. AIM MFS Janus Fidelity PIMCO Vanguard All Others TIAA-CREF T. Rowe Price Oppenheimer Cap Research Putnam Funds Morgan Stanley American Century American Express Franklin Templeton BHT SSGA Vanguard Deutsche Mellon Other Brandes Rittenhouse Alliance 1838Advisors Lazard Other Top 20 Next 20 Next 60 Next 535 Consolidation and Fragmentation 2001 Mutual Funds 2001 Passive Funds Top 15 Complexes (Cumulative Share %) (%) 2001 Hedge Funds 2001 Separately Managed Accounts (%) (Cumulative Share %) Source for above charts: Morgan Stanley/Freeman Securities Research

  11. Client Service Model • Three customer segments • Mutual funds • Hedge funds • Asset owners • Different value chains • Best execution • Enhanced services • Advice • Capital • One prerequisite: Scale operations

  12. Execution Automated Options Market Making OTC Market Making • Applied OTC market making technology and strategy to options business • Making markets in 40,000 instruments, representing 435 names – from standing start in August 1999 • Largely automated operations – handful of traders Total Number of Stocks

  13. Services and Advice • Analytics • Financing • Settlement • Securities lending • Dedicated trading • Tax and regulatory advice • Technology

  14. Research Top Ranked Analysts by Institutional Investor North America II First Teams 2001 Europe II First Teams 2002 • Specialty Chemicals • Data Networking • Autos & Auto Parts • Brokers & Asset Managers • Insurance/Nonlife • Medical Supplies & Devices • Cable • Publishing & Information Services • Radio & TV Broadcasting • Enterprise Software • Internet Infrastructure Services • Autos & Auto Parts • Luxury Goods • Telecommunications Equipment • Tobacco • Convertibles • Economics/Developed Markets • Equity Strategy/Developed Markets Japan II First Teams 2002 Global II First Teams 2001 • Chemicals • Construction • Metals • Software/Business • Autos & Auto Parts • Insurance • Telecommunications Equipment • Equity Strategy Morgan Stanley Proprietary Research Ratings System Pre- 3/18/2002 Ratings: Ratings as of 3/18/2002: • SB = Strong Buy • O = Outperform • N = Neutral • U = Underperform • O or Over = Overweight • E or Equal = Equal-weight • U or Under = Underweight Currently 22% of stocks are ranked Underweight by MWD Analysts

  15. Scale Morgan Stanley Institutional Securities Trading Volume and Cost per Trade (Indexed) Gross Volumes Operations Expenses Cost per Trade

  16. Ex-ante Risk Efficiency(1) Ex-post Risk Efficiency(2) Firm Avg. VaR Risk Efficiency Firm Risk Efficiency and VaR Ratio ($MM) Note: (1) Ex-ante Risk Efficiency is calculated as Average P&L / Average VaR (2) Ex-post Risk Efficiency is calculated as Average P&L / Standard Deviation (P&L)

  17. European Opportunity: Equities Equity Capital Markets Penetration, U.S. Equity Capital Markets Penetration, Europe Market Capitalization/GDP (%) Market Capitalization/GDP (%) Source: FIBV, Bureau of Economic Analysis Source: FIBV, Bureau of Economic Analysis, Eurostat Yearbook 2001 Turnover Velocity of Domestic Shares, U.S. (1) Turnover Velocity of Domestic Shares, Europe (2) (%) (%) Source: FIBV Source: FIBV Notes: (1) Based on blended turnover velocity of NYSE and Nasdaq. Turnover velocity defined as Total Trading Volume/Exchange Market Capitalization, calculated using monthly figures. (2) Based on blended turnover of LSE, Deutsche Börse, Euronext Paris, and Milan. Turnover velocity declined as Total Trading Volume/Exchange Market Capitalization, calculated using monthly figures. From 1995-2000, Euronext data is for Euronext Paris only; 2001 data consolidates other Euronext exchanges (Brussels, Amsterdam). Consequently, 2001 weighted-average turnover velocity gives greater weight to Euronext than in previous years.

  18. 3,920 3,867 3,773 3,618 3,502 3,379 3,263 3,159 3,028 3,055 2,934 2,929 2,861 2,826 2,769 2,707 Bank Loans Bonds Bank Loans Bonds European Opportunity: Fixed Income Percent of Private Non-financial Debt Outstanding in U.S. (%) Source: Federal Reserve Board Main Financial Liabilities of Euro-Area Non-Financial Corporations 4Q97 – 3Q01 CAGR: (€Bn) 10.4% 13.8% 9.9% (1) (1) (1) Source: ECB Monthly Bulletin, March 2002 Note: (1) Data reflects expanded Euro-Area (addition of Greece) from 1Q01 onward.

  19. Relative Returns Annual ROE Comparison (Indexed to MWD) C MWD LEH MER GS JPM Source: Company filings and Morgan Stanley Research

More Related