First-quarter profits up 31% for Merrill Lynch

20 April 2007

Merrill Lynch has posted a 31 per cent increase in profits for the first quarter of 2007, discounting a one-off charge the bank paid in the same period in 2006.

Quarterly net income for the bank was up to $2.2 billion - equivalent to $2.26 per share - compared with $475 million, or 44 cents a share, for the same period last year, and exceeded analysts' expectations of 29 cents per share.

Merrill's profit announcement follows similarly impressive first-quarter returns from Goldman Sachs, Lehman Brothers, Bear Sterns and Morgan Stanley as the top investment banks continue to prosper in spite of debts incurred in the US subprime mortgage market.

Commenting on the results, Erin Archer, of Thrivent Financial, told Reuters: "Maybe this will prolong the belief that the economy isn't falling off a cliff."

The one-off charge incurred during the first quarter of 2006 resulted from Merrill opting for a new accounting standard, which cost the bank $1.2 billion to implement.

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