US investment banking giant Merrill Lynch today posted its worst quarter since 1998, as the stock market slump hurt most securities businesses, and said it will cut 2,300 jobs in the third quarter to reduce costs in the downturn.
Stock markets stumbled through the third quarter, posting some of their worst performances since the Great Depression. The September 11th attacks on the World Trade Center roiled stocks further and closed equity markets for four days, keeping brokers and traders from doing business.
Merrill, which has been displaced from its downtown Manhattan headquarters because of the attacks, was hit on several fronts by marked declines in brokerage and investment banking activity. Investors are sitting on the sidelines as markets drop and companies aren't selling shares or doing merger deals - undertakings that carry fat banking fees.
Merrill reported third-quarter net income of $422 million, or 44 cents a share. That compared with earnings of $885 million, or 94 cents a share, a year earlier. The results included costs stemming from the September 11th attacks, which amounted to 6 cents a share.
Trading revenues fell 35 percent as equity trading declines offset strength in bond trading. Merrill is more dependent on stock trading than rivals such as Bear Stearns and Lehman Brothers which posted results helped by strong fixed-income operations.
The profit was Merrill's worst since the fourth quarter of 1998, when Merrill helped to bail out troubled hedge fund Long-Term Capital Management.