WealthManagement Magazine

Merrill Retail Profits Jumped 17% in 2000

Merrill Lynch’s pretax earnings from its retail operation jumped 17% to $1.6 billion for the year 2000. According to a 10-K report filed with the SEC on March 16, staff reductions combined with a strong performance in Merrill’s international operations, helped boost the Private Client Group's results. The firm also took a $70 million charge in 2000 to pay for “compensation and benefits expenses related

Merrill Lynch’s pretax earnings from its retail operation jumped 17% to $1.6 billion for the year 2000.

According to a 10-K report filed with the SEC on March 16, staff reductions combined with a strong performance in Merrill’s international operations, helped boost the Private Client Group's results. The firm also took a $70 million charge in 2000 to pay for “compensation and benefits expenses related to staff reductions.”

Net revenues for the Private Client Group increased 14% to $12.1 billion. But the largest area of growth for Merrill’s Private Client Group was the interest its banks earned on their investments, and the interest PCG earned on money it loaned to retail clients. Profits from interest jumped 40% to $1.7 billion for the year.

Other highlights from the Private Client Group include:

· Commission revenues were up 6% to $4.4 billion in 2000 “as a result of increased mutual fund commissions.”

· Revenues from fees increased 23% to $3.8 billion. “The increase was largely due to a rise in portfolio fees, as assets shifted to asset-priced accounts such as Unlimited Advantage and Merrill Lynch Consults ... ” the documents reports.

· Unlimited Advantage assets increased 31%, reaching $83 billion.

· Assets in ML Direct grew to $3 billion, including $1 billion of net new money. “Over 850,000 clients now have online access to their Merrill Lynch accounts through either Merrill Lynch OnLine or Merrill Lynch Direct,” the report says.

Merrill also says it attempted to cut costs in 2000 by outsourcing a variety of services, including sending its mortgage origination services to Cendant Mortgage Corp., the employee stock purchase plan to Computer-share Ltd. and the administration of its smaller 401(k) plans to BISYS Plan Services.

For the complete filing, go to Merrill’s Web site for investors (www.ir.ml.com) and click on “Financial Reports” and then click on “SEC Reports.”

Editor's note: For any comments regarding this article, or to suggest a story idea for RR Online or Registered Representative magazine, contact Editor in Chief Dan Jamieson at [email protected], Online Editor Rick Weinberg at [email protected], Online Managing Editor Cheryl Cooper at [email protected] or Senior Editor Michael Hayes at [email protected]

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