Merrill Lynch bright spot in BofA earnings

Parent earnings miss estimates and stock takes a hit
MAY 03, 2013
Gains by Bank of America Corp.’s Thundering Herd provided the bank’s lone bright spot in the first quarter, with revenues at Merrill Lynch climbing 7% to $3.68 billion, from $3.44 billion in the year-ago period. The division also reported a record $1.83 trillion in total client assets and new asset flows of $18.7 billion. Overall, Bank of America’s first-quarter earnings, reported today, fell short of analysts’ expectations as weakness in consumer banking, mortgage lending and securities trading contributed to an 8.4% drop in revenue to $23.85 billion, versus the same quarter last year. The bank’s stock, which was the best-performing component of the Dow Jones industrial average last year, was off nearly 6% in afternoon trading. Revenues at Bank of America’s global wealth management division, which includes Merrill Lynch Wealth Management and private bank U.S. Trust, were up 7% to $4.4 billion, while net income soared 31% from the first quarter last year, to $720 million. The bank does not break out Merrill Lynch’s earnings separately. The total number of financial advisers in the wealth management division was down by more than 300, primarily due to attrition from Merrill’s training program, according to Susan McCabe, head of media relations in the wealth management division. While it didn’t provide specific numbers, the company said it lost the fewest number of experienced advisers to competitors in more than two years. Merrill’s adviser productivity was up substantially, with advisers contributing an average $971,000 in annualized revenue during the quarter, compared with $891,000 in the first quarter last year. Not including the thousands of trainees at the firm, that figure was $1.32 million. That productivity contributed to a 23.4% pretax profit margin for Merrill Lynch in the quarter, according to the company.

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