Morgan Stanley, the last big U.S. bank to report second-quarter earnings, said its net income from continuing operations applicable to the company fell to $1.67 billion, or 85 cents per share, from $1.82 billion, or 92 cents per share, a year earlier.
The bank's profit in the year-earlier quarter was boosted by a one-time tax benefit of $609 million.
Excluding items, the investment banking behemoth posted second-quarter earnings of 79 cents per share.
Revenue rose to $9.6 billion from $8.52 billion a year ago.
Wall Street expected the banking giant to post quarterly profit of 74 cents a share on revenues of $9.1 billion, according to a Thomson Reuters consensus estimates.
Fixed-income trading dragged on the earnings of other big Wall Street banks during the quarter as concerns ranging from the Greek debt crisis to the timing of a long-awaited U.S. interest rate hike kept traders on the sidelines.
Adjusted equities trading revenue jumped 27 percent to $2.27 billion, beating arch rival Goldman Sachs Group Inc's $2 billion in revenue from that business in the period.
Morgan Stanley has been focusing on stable businesses such as wealth management and backing away from volatile businesses such as bond trading as a way to free up capital and comply with stricter regulations.
The bank's revenue from investment banking, which includes advising on takeovers and underwriting equity and bond issues, fell 1 percent to $1.61 billion.
Morgan Stanley ranked second globally after Goldman Sachs in advising on deals in the first half of 2015, according to Thomson Reuters data.
Morgan Stanley is the latest big bank to report quarterly earnings. On Thursday, Goldman posted sub-par quarterly profits, citing a large litigation charge . JPMorgan Chase , however, topped analysts expectations with the help of lower expenses .
Last quarter, Morgan Stanley handily beat earnings expectations amid higher revenue from trading bonds and equities.
-Reuters contributed to this report.