US banking giant Goldman Sachs reported a drop in net earnings while Morgan Stanley saw an increase in profits.

Goldman Sachs' earnings fell in the first quarter as bond trading slumped, but the results still came in ahead of what investors expected as other parts of the bank performed well.

EARNINGS AND REVENUE: The bank earned $1.95 billion in the quarter, down 11 percent from $2.19 billion in the same period a year earlier. The earnings were equivalent to $4.02 a share, compared with $4.29 in the first quarter of 2013.

Revenue totaled $9.33 billion, down 8 percent from $10.09 billion a year earlier.

EXPECTATIONS EXCEEDED: Goldman's earnings easily beat the $3.49 a share that analysts surveyed by FactSet predicted. First-quarter revenue also beat analysts' expectations of $8.7 billion.

BOND TRADING SLUMP: Revenue from the bank's bond trading business fell 11 percent to $2.85 billion. Goldman, like other big Wall Street banks including JPMorgan and Citigroup, has seen bonding trading slump in the first quarter. The business is "operating in a challenging environment and levels of activity generally remained low," Goldman said in its earnings release.

THE BRIGHT SPOT: Revenue at Goldman's investment banking unit rose, driven partly by higher client activity in its financial advisory business in Europe and more stock underwriting. The bank's investment banking revenue rose 13 percent to $1.78 billion in the first quarter.

COMPENSATION EXPENSE: Compensation expense, the banks biggest single cost, was $4.01 billion, down 8 percent from $4.34 billion a year earlier.

Investment bank Morgan Stanley, meanwhile, said its first-quarter income rose 18 percent from a year ago, helped by higher earnings in its trading and merger and acquisitions advisory businesses.

Morgan Stanley earned $1.4 billion, up from $1.2 billion in the same period a year ago. The figures exclude accounting adjustments related to the value of the bank's debt.

The earnings were equivalent to 68 cents per share. That easily beat the 61 cents per share analysts were expecting, according to FactSet, a financial data provider.

Revenue from continuing operations was $8.8 billion, ahead of the $8.5 billion analysts had expected.

All major segments of Morgan Stanley's business increased.

Institutional securities, the name of Morgan Stanley's trading, M&A advisory and stock sales division, grew the most. That division earned $1.2 billion versus $1.1 billion a year ago. The firm's fixed-income and commodities division reported a larger-than-expected rise in revenues this quarter: $1.7 billion from $1.5 billion a year ago.

Wealth management, which includes Morgan Stanley Smith Barney, had pre-tax income of $691 million versus $597 million a year ago.

The firm also announced it would buy back $1 billion of its own stock as well as increase its quarterly dividend to 10 cents per share. Morgan Stanley's stock rose $1.01, or 3.4 percent, to $30.80 in pre-market trading.