The bank has now written off an extra $9.7 billion according to the latest figures, on top of the $25 billion of write-downs announced since the start of the ongoing financial crisis.
Job cuts at Merrill for 2008 also now stand at 4,000 - including the extra 2,900 announced this week.
First-quarter losses of $1.96 billion and a 69 per cent plunge in year-on-year revenue were also admitted to by the bank, a result the New York Times termed "dismal".
Further bad news for Merrill has also come from Moody's - which signalled yesterday that it could reduce the bank's A1 long-term rating.
"[The] review is in response to continued deteriorating conditions in the mortgage market," Moody's said in a statement.
"Management at Merrill Lynch is focusing on the right issues for the rating - liquidity, capital and de-risking the balance sheet. However the mortgage market is not cooperating," senior vice-president at the ratings firm, Peter Nerby, added.