Profits Up at Merrill and J.P. Morgan

The surging stock market and a boom in investment banking helped Wall Street powerhouses J.P. Morgan Chase & Co. and Merrill Lynch & Co. post strong fourth-quarter profits, the companies said Wednesday.

J.P. Morgan, the No. 2 U.S. bank, reported a $1.86-billion profit, contrasted with a year-earlier loss of $387 million that included one-time charges.

Merrill, the largest full-service brokerage, said profit more than doubled to $1.2 billion.

“The fourth quarter was great for investment banking,” said Wayne Bopp, an analyst for Fifth Third Investment Advisors in Cincinnati. “People have high expectations for 2004 with a recovering economy and the positive direction” in stock prices.

J.P. Morgan, which agreed last week to acquire Bank One Corp. for $58 billion, said its quarterly per-share profit was 89 cents, beating the 77-cent average estimate of analysts polled by Thomson First Call. Revenue rose 21% to $7.9 billion.

For the year, J.P. Morgan reported profit of $6.7 billion, compared with $3.4 billion in 2002 before one-time charges.

J.P. Morgan shares rose $1.01 to $40.10 on the New York Stock Exchange.

Merrill Lynch reported fourth-quarter earnings of $1.23 a share, up from 56 cents a year earlier. Analysts had expected $1.02 a share. Revenue rose 17% to $4.9 billion.

Merrill has spent much of the last three years cutting costs. With a tight lid on expenses, Merrill’s profit has boomed amid the pickup in investment banking and retail brokerage revenue.

Merrill’s full-year profit was $4 billion, compared with $2.5 billion in 2002.

Merrill shares dropped 58 cents to $59.60 on the NYSE.

The stock market’s recovery also boosted results last year for online brokerage E-Trade Financial Corp. The firm said its quarterly profit more than tripled from a year earlier, to $107 million, or 27 cents a share.

Profit from continuing operations totaled $68 million, or 18 cents a share, compared with $52 million, or 14 cents, a year earlier.

Revenue rose to $383 million in the quarter, up 9.6% from the fourth quarter of 2002.

For the full year, E-Trade earned 59 cents a share from continuing operations, up 31% from 45 cents in 2002.

E-Trade shares fell 35 cents to $14.80 on the NYSE.

Briefly

The Securities and Exchange Commission, criticized by Congress for failing to collect almost $300 million in civil fines over six years, said it had set up a new unit to go after the assets of deadbeats. The team consists of three lawyers who specialize in ferreting out hidden wealth and obtaining court orders to enforce judgments, said SEC chief litigation counsel David Kornblau, who oversees the group.

Until now, collections were handled by the SEC enforcement lawyers who investigated cases. That system often fell short when the lawyers began work on new cases or left the agency, experts said.

From Bloomberg News