Merrill’s Private Client Results: Strong, But Not Spectacular

Contributing Editor

20 July 2005

Merrill Lynch yesterday released its second quarter 2005 results which showed a 5 per cent rise in pre-tax profits year-on-year for its global private client business to $457 million. The firm said the rise was driven by higher net interest profit and record fee-based revenues. Net new money flows were very strong. Merrill added in a statement: “Compared with the 2004 second quarter, non-interest expenses were higher, primarily due to increased compensation costs associated with higher revenues and growth in the number of financial advisors.” Total assets in GPC accounts increased 6 per cent from the year-ago quarter, to $1.4 trillion. Net new client assets into annuitized products were $8.1 billion for the quarter and $21.6 billion for the first half, matching record levels for the first half of 2004. Total net new client assets were $7.8 billion for the quarter and $18.6 billion for the first half, the latter more than double the net inflows in the first half of 2004. "The strong second quarter earnings in GPC reflect the strength of our business strategy and our ability to execute,” Robert McCann, president of Merrill’s GPC business, told WealthBriefing. He added: “We saw year-over-year increases in net revenues and pre-tax earnings and solid inflows of both annuitized and total client assets. We grew our financial advisor headcount by 240 in the quarter to a total of 14,420 and turnover of top producers remains low." Merrill provides no breakdown of its US business verses its international business, but around 90 per cent of GPC revenues are generated in the domestic US market. A major interview with James E. Hays, head of US private banking and investment group, and Ausaf Abbas, head of GPC in Europe, the Middle East and Africa, who discuss their approaches to acquisitions, is today’s feature on WealthBriefing.