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Merrill Lynch notches record revenue of $4B

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Merrill Lynch posted record quarterly revenue of $4 billion, boosted by higher asset management fees and net interest income.

"Merrill Lynch advisors are reacting positively to our growth initiatives, including the 2018 compensation program which incentivizes household and other types of responsible organic growth," CFO Paul Donofrio said Monday during an earnings call.

The firm closed out a strong quarter in which Bank of America laid out plans to aggressively grow its Merrill Edge unit, opening 600 new investment centers by 2020 and hiring an additional 300 financial advisors by year-end.

Merrill Lynch's advisor headcount, at 14,829, was up 2% from the year-ago period but down 1% from the prior quarter. The company said the slight quarter-to-quarter decline was due to seasonal trends, which led to fewer hires into its training program. Advisor productivity rose 4.5% year-over-year to $1.04 million per FA.

One of the biggest notable losses came from Merrill Lynch, which lost a team managing $1 billion to the independent space.
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The firm's client balances rose to $2.28 trillion from $2.17 trillion, up 5% year-over-year.

"We also had our strongest start to the year in terms of total net new money since the merger," Donofrio said.

Bank of America's wealth management unit, which also includes U.S. Trust, reported net income of $1 billion, up 34% from the year-ago period, and revenue of $4.9 billion, up 6%. The unit also notched AUM flows of $24 billion for the quarter, the third highest on record, Bank of America said. The bank attributed the strong flows to the shift from IRA brokerage accounts to managed relationships.

The wealth management unit's pretax margin hit a record 29%, up from 27% for the year-ago period.

Bank of America is the second wirehouse to report earnings. Last week, Wells Fargo said its brokerage force shrank again to 14,399, down by 258 from the year-ago period. Meanwhile, Wells Fargo's wealth and investment management profits grew 7% year-over-year to $714 million.

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