GLOBAL - Merrill Lynch's woes continue with news that the firm's fund management operation, Merrill Lynch Investment Managers (MLIM), suffered a 61% drop in operating earnings for the fourth quarter of 2001.
MLIM saw fourth quarter asset management pre-tax earnings of $48m, compared to $123m in Q4 2000. Net revenues were $489m, a decline of 22% on the same period the year before. MLIM’s pre-tax profit margin plummeted to 9.8% from 19.4%.
MLIM’s full year figures were little better than its Q4 results. Pre-tax operating earnings were $307m, 39% lower than 2000. Those earnings were recorded on net revenues of $2.1bn, a 15% fall on 2000. The pre-tax operating margin was 14.7% compared with 20.4% in 2000.
Although Merrill claimed that asset management had performed strongly in 2001, it conceded that its results were negatively affected by litigation costs and the state of markets world-wide.
Additionally, Merrill registered an after-tax charge of $1.7bn to cut jobs and restructure its operations. The breakdown of the after-tax charge saw the private client division take a $1.08bn hit; global markets and investment banking, $833m; and asset management $283m.
Merrill Lynch is currently fighting claims of racial discrimination in the UK and only recently settled its lawsuit with the Unilever pension scheme.
By Geoffrey Ho
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