Where Morgan Stanley Is Doing Better Than Goldman Sachs

Morgan Stanley is doing a pretty good Goldman Sachs impression these days. In fact, it’s topping the Wall Street titan in a number of critical categories.

Although Goldman’s investment bankers and bond traders can still thump their chests over happy hour beers on Manhattan’s Stone Street, Morgan Stanley’s minions are gaining some bragging rights. A big bet on wealth management is paying off, according to Morgan Stanley’s financial update (PDF) this morning. The company now has $2 trillion in assets under management, compared with Goldman’s $1.14 trillion. And Morgan Stanley is making an impressive 21 percent operating margin on its investing services.

The company is also doing a brisk business in stock trading. In the second quarter, 13 percent of Goldman’s equity trading revenue disappeared, while Morgan Stanley’s held even. Here’s a look at how the two banks stacked up last quarter in a number of business lines:

All told, Morgan Stanley booked $1.94 billion in profit last quarter on $8.52 billion in sales. Goldman’s results were remarkably similar: $2.04 billion in profit on $9.13 billion in sales. Goldman, however, still gets more done with fewer people. It had 32,400 employees at the end of the second quarter, almost 24,000 fewer than Morgan Stanley.

What does that mean on Stone Street? Earning power. Goldman set aside $121,000 in compensation per employee last quarter, vs. the $75,000 for Morgan workers.