Merrill Lynch lost nearly $10 billion in the fourth quarter of 2007 in what was the company's biggest quarterly loss since it was founded 94 years ago.
The loss at the world's largest brokerage was accounted for by a write-down of some $14.6 billion of investments related to the recent crash in the US subprime mortgage market.
Merrill Lynch posted a net loss after preferred dividends of $9.91 billion, or $12.01 per share, compared to a profit of $2.3 billion, or $2.41 per share, a year earlier. It also recorded negative revenue of $8.19 billion, down from revenue of $8.39 billion a year earlier.
The New York-based brokerage marked down $11.5 billion from mortgage-backed securities, and an additional $3.1 billion in adjustments to hedge positions on them.
Exposure to risky collateralised debt obligations was $4.8 billion at the end of 2007, down from $15.8 billion three months earlier. For the same periods, exposure to subprime-residential mortgages fell to $2.71 billion from $5.66 billion.
Merrill Lynch joins rivals Morgan Stanley and Bear Stearns in posting losses in the last three months of fiscal 2007.
Citigroup, the nation's largest bank, reported on Tuesday a quarterly loss of almost $10 billion, the largest in its 196-year history.