Going with the herd

22 January 2003

Revenues and compensation costs are still coming down through the industry. Two of the few line items rising are legal fees and provisions to cover potential lawsuits.

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Merrill Lynch earned $603m in the fourth quarter of 2002 as hefty cost cuts by chief executive Stan O'Neal outpaced a fall in revenues.

Last year, O'Neal said total revenues for the year would be no lower than $8.4bn. Final revenues came in a hair above that, at $8.6bn, although that's still a 15% decline from the year before. Costs meanwhile fell 28% to $14.8bn. In the fourth quarter, the group earned an annualised return on equity of 10.7%.

Meanwhile, JP Morgan lost $387m in the fourth quarter after it set aside $400m to cover losses related to Enron and another $900m to cover the cost of lawsuits.

Over the year, net revenues fell 3% while costs dropped by 4%. Its return on equity for the quarter stood at 7%.

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