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To: maceng2 who wrote (530)	1/21/2004 4:46:37 PM
From: maceng2	Read Replies (1) \| Respond to of 1417

US banks surge on investment banking upturn By Elizabeth Rigby and Paul J Davies Published: January 21 2004 13:40 \| Last Updated: January 21 2004 14:34 news.ft.com JP Morgan Chase and Merrill Lynch continued the stretch of Wall Street earnings growth on Wednesday, reporting rising profits from investment banking and retail financial services. JP Morgan, which last week agreed to buy Bank One for $58bn, reported net income for the year of $6.72bn, up 304 per cent. Net income for the fourth quarter was $1.86bn, compared with a loss of $387m a year earlier. Merrill Lynch reported its highest ever annual earnings as well as the best single quarter performance in its history. The $4bn of net income it reported for 2003 was a 59 per cent increase from 2002 even though revenue rose just 8 per cent to $20.2bn. Merrill's fourth quarter profit more than doubled to a $1.2bn. Both companies benefitted from the rising confidence of chief executives, who have started to place bets that the economy is improving and are raising money through stock and debt sales and are also starting to buy rivals. The companies also benefitted from the rising confidence of individual investors who are piling money into the stock market and other investment vehicles. JP Morgan's investment bank had record earnings for the year of $3.7bn, up 183 per cent. It generated $834m of fees in the fourth quarter, an increase of 28 per cent. For the full year, Merrill's global markets and investment banking division had pre-tax earnings of $3.9bn, up 65 per cent. JP Morgan is buying Bank One to achieve a better balance in its earnings between corporate and consumer clients. Bank One is the sixth largest US bank and the third largest credit card issuer. Profit at JP Morgan's existing branches, mortgage and credit card businesses increased 23 per cent to $560m. Merrill said its pre-tax profit margin for 2003 of 28 per cent is the highest full year margin it has ever reported. It's full year results included an after-tax gain of $94m in part related to September-11 insurance recoveries. Merrill's revenue for the quarter rose 17 per cent to $4.9bn. It included $759m from investment banking, a 32 per cent increase driven largely by debt and equity underwriting. Merrill's private client division had $2.3bn in revenue, an increase of 9 per cent. Brokerage client assets surged 14 per cent to $1,300bn as the stock market rose and customers added new money. Merrill's asset management business had revenue of $386m, an increase of 15 per cent. Stan O'Neal, chief executive, wants to increase profit from wealth management, which includes the brokerage and asset management units, to half the firm's earnings from about a third now. Merrill's expenses fell 6 per cent to $3.3bn. Mr O'Neal has cut a third of the staff of the biggest security firm by capital since 2001. But headcount rose by 300 people to 48,100 in the quarter.