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
This week's edition of Professional Pensions is out now
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