Merrill Profits Fall as Assets Shift to BofA Retail Division

In its quarterly earnings statement released today, Bank of America reported a first-quarter profit net income of $3.2 billion, compared with a net loss of $194 million in the fourth quarter and net income of $4.2 billion in 2009. Increased retail sales and trading activity from Merrill Lynch Global Wealth Management, as well as improved credit quality, helped drive profits.

Total revenue at Merrill Lynch Global Wealth Management declined $202 million to $3.1 billion from a year earlier, mainly due to the impact of certain deposits and loan balances migrating to BofA’s Deposits and Home Loans and Insurance businesses. BofA said the impact of the transfers were partially offset by improvements in investment and brokerage income due to increased transactions and success in the equity markets. Nonetheless, Q1 profits for the brokerage giant were down 19% from a year earlier, to $360 million, Reuters reported.

Meanwhile, Merrill was able to retain advisers in the first quarter. The second-largest brokerage firm held steady with 15,005 financial advisers, though the number was 15,822 in the first quarter of 2009. Merrill’s revenue per adviser was down slightly to $807,000 from $830,000 in the fourth quarter of 2009. (Rivals Morgan Stanley Smith Barney and Wells Fargo have not yet released their quarterly reports.)

BofA highlighted an increase in cross-selling between its commercial division and Merrill Lynch Global Wealth Management. Consumer referral and sales to wealth management clients accelerated in the first quarter, as approximately 60,000 lending and deposit products were sold to Merrill Lynch clients. Furthermore, referrals between Global Wealth and Investment Management and the company’s commercial and corporate businesses increased 56% compared with the fourth quarter of 2009.

Average retail deposits in the first quarter increased 2%, or $15.2 billion, from a year earlier, paced by growth from Merrill “as momentum in the affluent customer base continued,” the bank said.

Global Wealth and Investment Management, which houses wealth management and the Retirement and Philanthropic Services business, saw a net income of $497 million, driven mainly by higher investment and brokerage activity, according to BofA. Net revenue increased to $4.4 billion.

U.S. Trust, Bank of America Private Wealth Management saw stayed flat with a net revenue of $688 million.