Merrill Lynch reports record quarterly net earnings

Merrill Lynch announced April 13 record quarterly net earnings of $1.3 billion, up 95 percent from $643 million in the 2003 first quarter. Earnings per diluted share were $1.22, compared with 67 cents for the year-ago quarter.

According to a company news release, the increase in net earnings was driven by growth in net revenues and pretax earnings in all three of Merrill Lynch's business segments: global markets and investment banking; global private client; and Merrill Lynch investment managers.

First-quarter net revenues were $6.1 billion, up 27 percent from the first quarter of 2003 and up 25 percent from the fourth quarter.

The first-quarter pretax profit margin rose to 27.8 percent, up almost nine percentage points from 18.9 percent in the year-ago quarter.

The return on average common equity was 17 percent, up from 10.5 percent in the first quarter of 2003.

Results this quarter include the impact of adopting the fair value method of accounting for stock-based compensation under SFAS 123, and results for prior periods have been restated to reflect this methodology.

Global markets, investment banking

Global markets net revenues increased strongly from both the 2003 first quarter and fourth quarter. Debt markets revenue growth was driven by increased client activity as a result of favorable interest rate and credit environments, as well as selective position-taking.

All major business lines within debt markets recorded strong increases in net revenues compared with the fourth quarter of 2003, with revenues from interest rate products demonstrating particularly strong sequential-quarter growth.

Equity markets revenues also grew strongly as volumes and volatility increased, with cash equity, equity-linked trading, and equity financing and services revenues all driving sequential-quarter and year-over-year increases.

Investment banking net revenues rose significantly from the year-ago quarter and were also up from the strong fourth quarter. Compared with the first quarter of 2003, equity origination, debt origination, and merger and acquisition advisory revenues all increased.

Growth in equity origination revenues more than offset a slight decline in debt origination to generate the increase from the fourth quarter.

Global private client

The global private client segment achieved record quarterly pretax earnings and the highest net revenues in 11 quarters.

Global private client's first-quarter pretax earnings of $510 million were double those of the year-ago quarter, as net revenues increased 19 percent to $2.5 billion.

The net revenue growth was driven by increased transaction activity, continued strength in revenues from fee-based products, and increased revenues from the distribution of new issues. Global private client's pretax margin was 20.4 percent, nearly nine percentage points higher than the prior-year quarter.

The number of financial advisors grew by 224 to 13,700 worldwide, and assets in GPC accounts increased 18 percent from the year-ago quarter, to $1.3 trillion.

Merrill Lynch investment managers

Merrill Lynch investment managers' first-quarter pretax earnings were $111 million, up almost threefold from $39 million in the first quarter of 2003.

Net revenues increased 22 percent to $412 million, driven by increased asset values and net inflows. The pretax margin was 26.9 percent, up over 15 percentage points from 11.6 percent in the year-ago period.

Merrill Lynch ranked No. 1 on the listing of "Springfield Area's Largest Financial Planning Consulting Firms" in SBJ's 2004 Book of Lists. Merrill Lynch has 13 financial professionals and 21 total staff.