Merrill Lynch clients eased trading in third quarter

Clients gave their brokers and bankers at Merrill Lynch Wealth Management and U.S. Trust more money to manage in the third quarter, but revenue at the main wealth businesses of Bank of America Corp fell from the second quarter on reduced trading activity and seasonal lassitude, the bank said Wednesday.

Revenue at Merrill Lynch fell 2.6 percent from the second quarter, but was up 6.6 percent to $3.6 billion from a year earlier. Merrill ended the quarter with just over 14,000 brokers, down 133 from the end of June, primarily due to attrition of trainees who were not meeting their targets, a spokeswoman said in an email.

She said that turnover among Merrill's most productive brokers, or the top two quintiles, was "at historically low levels."

Revenue at U.S. Trust, the private banking unit for high-net-worth clients, rose 11.3 percent to $730 million from a year earlier but was down from the previous quarter.

The results track recent wealth management trends in which rising markets and aggressive efforts to collect fee-generating assets have raised client balances even as customer confidence in the markets remains cautious. On Monday, Charles Schwab Corp said it had gained $43 billion in net new assets during the third quarter, up 97 percent from a year earlier despite relatively flat trading volume.

Merrill clients ended the quarter with $1.85 trillion in their accounts, up 3 percent from a year earlier. That is the highest level since Bank of America bought the brokerage firm in January 2009. A bank spokeswoman declined to comment on how much of the rise was due to new assets gathered by brokers and how much stemmed from the rising stock market this year.

The wealth management results came as Bank of America reported a profit of $2.2 billion for the third quarter, reversing a year-earlier loss on lower expenses and better credit quality.

Bank of America's global wealth management and investment management unit, which includes its money management activities for all clients as well as its retail wealth businesses, also reported revenue higher than a year earlier but lower than the previous quarter. Asset management fees in the quarter reached a record $1.7 billion.

The unit earned a quarterly profit of $719 million, behind the $1.8 billion from Bank of America's consumer banking operation and $1.1 billion from the company's corporate banking and investment banking sector.

The bank's effort to increase cross-selling of mortgages and other banking products to its investment customers progressed. Total loans and leases on its Global Wealth and Investment Management balance sheet rose to $114.2 billion, the highest level this year and up 11.5 percent from September 30, 2012.

"Wealth management balances helped us maintain our industry-leading position" in client deposits, Bank of America Chief Executive Officer Brian Moynihan said in a conference call with analysts.

(This version of the story changes U.S. Trust revenue in paragraph 4 to $730 million.)

(Reporting by Jed Horowitz; Editing by Lisa Von Ahn)