Merrill Lynch, the larges U.S. brokerage firm, beat Wall Street expectations on Tuesday as it reported a better than expected net quarterly income attributed to high equity trading revenue growth.
Net profit for the second quarter was $1.6 billion, up 44 percent from the first quarter and a diluted earnings per share (EPS) of $1.63, up 43 percent. However compared to the last quarter both figures were 1 percent lower.
A survey of analysts at Thompson Financial had forecasted 32 percent income growth with an estimated net income of $1.5 billion. Earnings per share were expected to be $1.52.
For the second quarter, Merrill Lynch attained net revenue of $8.2 billion up 29 percent from the prior quarter. It was also 2 percent higher from the first quarter. The brokerage firm surpassed the revenue forecast of a 19 percent rise to $7.53 billion.
The revenue was derived from the companyâ€™s strong equity trading. This segment posted an 84 percent increase in net revenue, up nearly threefold from the prior year.
The segment withstood a difficult time in the equity market, which in the past two months was affected by volatility about the future of the economy and high energy prices.
â€œMerrill Lynch continued to perform well in the second quarter despite uncertainty in the markets, said Stan O'Neal, chairman and chief executive officer of Merrill Lynch.
Jeff Hart, an analyst from Sandler Oâ€™Neill and Partners said it is unlikely that the equity trading revenue can be sustained in the next quarter. He added that private equity in the short term remained volatile but would be a consistent long term source growth for the firm.