By AP Business Writer
updated 7/18/2006 11:20:41 AM ET 2006-07-18T15:20:41

Quarterly profits at Wall Street brokerage Merrill Lynch & Co. climbed 42 percent as the company managed a strong performance in its proprietary stock trading despite a second-quarter downturn in the markets, the company said Tuesday.

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For the quarter ended June 30, Merrill Lynch reported a profit of $1.58 billion, or $1.63 per diluted share, compared with $1.14 billion, or $1.14 per share, in the second quarter of 2005. Revenue jumped 29 percent to $8.2 billion for the quarter.

The results surpassed Wall Street projections for earnings of $1.52 per share on revenue of $7.53 billion, according to analysts polled by Thomson Financial.

"Merrill Lynch continued to perform well in the second quarter despite uncertainty in the markets," said Chairman and Chief Executive Stan O'Neal in a statement.

Revenue from investment banking rose 33 percent, with strong increases in equity underwriting and merger advisory fees offsetting a slight decrease in bond underwriting.

Despite the second quarter's volatility in stocks, Merrill Lynch's proprietary stock trading revenue rose 84 percent for the quarter, while debt trading revenue climbed 7 percent.

Interest and fees helped Merrill's global private client business post a 19 percent jump in revenue, while its investment management business, which includes the company's primary brokerage business, saw sales climb 56 percent.

The investment management business is slated to be acquired by BlackRock Inc., with the purchase set to close in the current quarter. The division manages $589 billion in assets, up 23 percent from a year ago.

Total expenses climbed 23 percent for the quarter, with compensation and benefits — the biggest expense for any Wall Street firm — rising 26 percent year-over-year.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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