Morgan Stanley's quarterly profit dropped almost 60% on a provision related to the new US tax law.
But the bank's adjusted profit beat analyst expectations as strength in wealth management offset a drop in trading revenue.
Charges taken for the tax overhaul have crimped results for most big Wall Street banks. Morgan Stanley's one-time $1.2 billion tax provision, however, was the smallest.
"Most of Morgan Stanley's tax hit came from deferred tax assets, which decline in value when corporate tax rates decline," the bank's chief financial officer Jonathan Pruzan said.
Pruzan called the fourth-quarter results strong, despite ongoing issues with trading.
"It was a really challenging environment this year, particularly for the macro business, given rates and volatility," he said.
JPMorgan took a 37% hit to quarterly profit due to a $2.4 billion charge related to the tax law, while Citigroup flagged a $19 billion write-down, and posted a $18-billion quarterly loss earlier this week.
Morgan Stanley said its earnings fell to $686m or 29 cents per share in the fourth quarter ended December 31, from $1.67 billion or 81 cents per share, last year.
Excluding the one-off charge and other items, adjusted profit was $1.68 billion, or 84 cents per share. Analysts on average were looking for 77 cents per share, according to Thomson Reuters.
Revenue from investment banking, which included advising on M&A and equity and fixed income underwriting, rose 12.4% to $1.55 billion, while wealth management rose 10.5%.
Trading revenue, which is traditionally Morgan Stanley's biggest source of income, fell 19.5% to $2.25 billion.
Goldman Sachs' earnings were also hurt by a big drop in fixed income, currency and commodity revenue as historically low market volatility rattled the struggling unit.
Banks like Citigroup, Bank of America and Morgan Stanley have been increasingly turning to wealth management, and targeting the rich and ultra-rich, to offset market volatility affecting their bottomlines.
"We enter 2018 with strong momentum aided by rising interest rates, tax reform and an evolving regulatory framework," chief executive James Gorman said.
The bank said its return on equity for the full year was 9.4%, excluding the impact of the tax provision.
Gorman had set an ROE target of 9-11% last year.
Wealth management pre-tax margin of 26% exceeded his 23-25% target.
Total revenue rose to $9.5 billion from $9.02 billion. Analysts were looking for $9.20 billion.
