Excluding certain one-time gains, the company reported that revenue fell to $6.6 billion from $9 billion in the period a year earlier. Including adjustments, revenue fell to $6.95 billion from $9.2 billion in the year-ago quarter.


The response by James P. Gorman, Morgan Stanley's chairman and chief executive, has been to work to transform his firm into a smaller, safer company that takes fewer risks. That has involved expanding its wealth management operations by buying out Citigroup's share of the Smith Barney brokerage.

"Although global economic uncertainty remains a headwind, we are proactively positioning the firm for success," Mr. Gorman said in a statement. "We continue to be focused on taking the necessary steps to deliver strong returns for our shareholders."

But the recasting of Morgan Stanley has hit a few snags. Last month, Moody's Investors Service cut the firm's credit rating by two notches -- though in a small victory for Morgan Stanley, it spared the bank from what could have been a three-level downgrade.

Still, Morgan Stanley now bears a credit rating that is only three notches above junk status.

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