4 Brokers’ Profits Beat Estimates

Charles Schwab Corp., Merrill Lynch & Co., Bear Stearns & Co. and PaineWebber Group Inc. reported quarterly profits that beat estimates, as gains in commissions and asset management offset declines in trading and investment banking.

A surging stock market spurred investors to buy and sell equities, boosting trading and the commissions that brokerages earn. It also drew new money into mutual funds.

Schwab was the only brokerage of the four to report a profit increase. The company benefited from its online business and was spared the bumps the others suffered because it doesn’t have investment banking and does little trading in bonds.

At a Glance

* Merrill’s fourth-quarter net income fell 23% to $359 million, or 86 cents a share, compared with forecasts of 64 cents. Net revenue rose 1.8% to $4.08 billion. Asset management fees climbed 29%, reflecting new funds flowing in and gains from rising markets at both Merrill Lynch Asset Management and Merrill Lynch Mercury Asset Management. Those gains helped offset a 66% decline in trading revenue. Return on shareholders’ equity, a key measure of profitability, was 14.8%.

* PaineWebber’s net income fell 7.6% to $100.4 million, or 63 cents a diluted share, in the fourth quarter, beating estimates of 55 cents. Revenue rose 2.8% to $1.1 billion. Return on equity was 16.3%. Commissions rose 7.1%, while asset management rose 21%.

* Bear Stearns’ fiscal second-quarter earnings fell 15% to $359 million, or 86 cents a basic share, compared with forecasts of 63 cents. Revenue net of interest expense fell 4.9%. Return on equity was 14.6%. Investment banking revenue dropped 41%.

* Schwab’s earnings jumped 69% in the fourth quarter to $106.4 million, or 26 cents a diluted share, amid booming demand for trading over the Internet. Analysts were expecting 23 cents.