Merrill Lynch Profit Up More Than Expected

Merrill Lynch & Co., the biggest U.S. brokerage, said third-quarter net income rose a better-than-expected 49% as underwriting and trading revenue jumped.

Merrill’s long-dormant asset management and individual investor businesses also turned in higher revenue and profit margins, giving investors hope about the company’s future earnings and helping Merrill shares to edge higher Tuesday.

The stock climbed 12 cents to $61.21, after rising as high as $62.06.

Net income rose to $1.38 billion, or $1.40 a share, from $922 million, or 93 cents, a year earlier. Analysts had expected per-share profit of about $1.18.

Revenue climbed 38% to $6.69 billion, the company said.

Investment banking net revenue rose 33%, trading revenue surged 73%, and global private client revenue, which includes retail and wealthy investors, was up 16% from a year earlier.

Despite the good news, Chief Financial Officer Jeff Edwards in New York warned that the current quarter could be tougher for investing given the sharp drop in the stock market this month.

Merrill’s compensation and benefits expenses, the heart of Wall Street’s people-centric balance sheets, climbed to $3.3 billion last quarter, or 48.7% of net revenue, compared with 47.1% a year earlier. Edwards expected a ratio of 49%, or “perhaps a bit lower,” for the full year.