A strong overall performance in the first half of the year was impacted by difficult market conditions in the second half that dampened trading activity," said Morgan Stanley chairman and chief executive James Gorman.
"In the fourth quarter, we took action to meaningfully restructure our fixed-income business on a capital and expense basis."
Similarly, Bank of America has cut costs in its commercial lending, investment banking and wealth management businesses to try and offset sluggish revenue growth.
"We increased net interest income [and] managed expenses tightly," Bank of American boss Brian Moynihan said in a statement.
Both banks' figures were in line with those reported last week by Citibank and JP Morgan Chase, where profits also rose helped by lower legal costs.
US banks in general have had a tough start to the year, with volatile global stocks, falling oil prices and slowing growth in China, leading to weak credit markets and putting pressure on revenues.