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Stan O’NealChairman & CEOMerrill Lynch & Co., Inc.
Stan O’NealChairman & CEOMerrill Lynch & Co., Inc.
2003 Merrill Lynch Banking & Financial Services Investor Conference2003 Merrill Lynch Banking & Financial Services Investor Conference
November 19, 2003November 19, 2003
Merrill Lynch: Beyond the NumbersMerrill Lynch: Beyond the NumbersMerrill Lynch: Beyond the NumbersMerrill Lynch: Beyond the Numbers
Statements made herein may contain forward-looking information about management’s expectations, strategic objectives, business prospects, anticipated expense savings and financial results, anticipated results of litigation and regulatory proceedings, and other similar matters. A variety of factors, many of which are beyond Merrill Lynch's control, affect its operations, performance, business strategy and results and could cause its actual results and experiences to differ materially from the expectations and objectives expressed in any such statements. These factors include, but are not limited to, the factors described in Merrill Lynch’s reports on Forms 10-K, 10-Q and 8-K filed with SEC, which are available on the Merrill Lynch Investor Relations website, www.ir.ml.com and on the SEC's website, www.sec.gov. Accordingly, investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Merrill Lynch does not undertake to update such statements to reflect the impact of circumstances or events that arise after the date the statements are made. Investors should, however, consult any further disclosures Merrill Lynch may make in its reports filed with the SEC.
Statements made herein may contain forward-looking information about management’s expectations, strategic objectives, business prospects, anticipated expense savings and financial results, anticipated results of litigation and regulatory proceedings, and other similar matters. A variety of factors, many of which are beyond Merrill Lynch's control, affect its operations, performance, business strategy and results and could cause its actual results and experiences to differ materially from the expectations and objectives expressed in any such statements. These factors include, but are not limited to, the factors described in Merrill Lynch’s reports on Forms 10-K, 10-Q and 8-K filed with SEC, which are available on the Merrill Lynch Investor Relations website, www.ir.ml.com and on the SEC's website, www.sec.gov. Accordingly, investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Merrill Lynch does not undertake to update such statements to reflect the impact of circumstances or events that arise after the date the statements are made. Investors should, however, consult any further disclosures Merrill Lynch may make in its reports filed with the SEC.
Safe HarborSafe Harbor
2
A Look at the EnvironmentA Look at the Environment
Still uncertain, but…Still uncertain, but…
S&P 500 up 15% from a year ago
3Q03 S&P operating earnings up 24% from 3Q02
GDP up 3.3% from a year ago
Capital gains tax rates lowest in almost 50 years
10-year treasury yields are near 40-year lows
Still uncertain, but…Still uncertain, but…
S&P 500 up 15% from a year ago
3Q03 S&P operating earnings up 24% from 3Q02
GDP up 3.3% from a year ago
Capital gains tax rates lowest in almost 50 years
10-year treasury yields are near 40-year lows
4
On the Other Hand...On the Other Hand...
5
Structural imbalances
Geopolitical uncertainty
Financial Services Industry:
Overcapacity
Mutual fund revelations/regulation
Structural imbalances
Geopolitical uncertainty
Financial Services Industry:
Overcapacity
Mutual fund revelations/regulation
Cautiously Optimistic Cautiously Optimistic
Achieving Our Margin GoalAchieving Our Margin Goal
6
Increased profitability
Re-shaped businesses
Strengthened liquidity & capital base
Enhanced operating discipline
Increased profitability
Re-shaped businesses
Strengthened liquidity & capital base
Enhanced operating discipline13.3%
24.2%
29.8%
3Q01 3Q02 3Q03
Pre-Tax Profit MarginPre-Tax Profit Margin
Quarterly Financial ResultsQuarterly Financial Results
3Q023Q03 Change
Net EarningsNet Earnings
Pre-Tax Profit MarginPre-Tax Profit Margin
$ 5.1 B $ 4.4 B + 16%
29.8% + 5.6 pts 24.2%
MER’s Highest-Ever Third Quarter Earnings & Second-Best Quarterly Earnings
MER’s Highest-Ever Third Quarter Earnings & Second-Best Quarterly Earnings
Net RevenuesNet Revenues
+ 50%$ 0.7 B $ 1.0 B
Note: Third quarter 2003 net earnings include $13 million after tax attributable to a September 11-related net insurance recovery. Third quarter 2002 net earnings included $115 million after tax related primarily to September 11-related net recoveries. 7
Year-to-Date Financial ResultsYear-to-Date Financial Results
1st Nine
Months 2003
Change
Net EarningsNet Earnings
Pre-Tax Profit MarginPre-Tax Profit Margin
$2.7 B $2.0 B + 39%
26.2% + 5.3 pts 20.9%
Year-to-Date 2003 Earnings Exceed Full-Year 2002Year-to-Date 2003 Earnings Exceed Full-Year 2002
Net RevenuesNet Revenues + 6%$14.4 B $15.2 B
8Note: Year-to-date 2003 net earnings include $49 million after tax attributable to September 11-related net insurance recoveries. Year-to-date 2002 net earnings included $114 million after tax of September 11-related net recoveries, $78 million after tax of research-related expenses and a $1 million after tax restructuring-related credit.
1st Nine
Months 2002
Consistent, Strong ResultsConsistent, Strong Results
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Identify opportunities early Execute with agility and intelligence Deliver for clients Deepen relationships Diversify revenues Grow with discipline Lead in our chosen markets
Identify opportunities early Execute with agility and intelligence Deliver for clients Deepen relationships Diversify revenues Grow with discipline Lead in our chosen markets
Realize Full Potential of the Merrill Lynch FranchiseRealize Full Potential of the Merrill Lynch Franchise
3Q02 3Q03
Net Revenues Earnings Margins
Global Markets & Investment BankingGlobal Markets & Investment Banking
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Debt Markets Principal Investments Foreign Exchange Municipals Mortgages Derivatives
Equity Markets Portfolio Trading/Direct Execution High Touch Services/Research Prime Brokerage
Investment Banking Increased Resources in
Select Industries Leveraged Finance
Debt Markets Principal Investments Foreign Exchange Municipals Mortgages Derivatives
Equity Markets Portfolio Trading/Direct Execution High Touch Services/Research Prime Brokerage
Investment Banking Increased Resources in
Select Industries Leveraged Finance
$1.9 B
$2.5 B
41.1%
28.3%
GMI Third Quarter ResultsGMI Third Quarter Results
Note: Earnings and profit margins for business segments are reported on a pre-tax basis.
Growth InitiativesGrowth Initiatives
$0.5 B
$1.0 B
Global Private ClientGlobal Private Client
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Wealth Management Recruiting/Training Top FAs Total MerrillSM
Private Wealth Services Fee-based Services Insurance
Banking Services Beyond Banking® Small Business Services Middle Market Services Credit Cards
Retirement Services IRA 401-K
Wealth Management Recruiting/Training Top FAs Total MerrillSM
Private Wealth Services Fee-based Services Insurance
Banking Services Beyond Banking® Small Business Services Middle Market Services Credit Cards
Retirement Services IRA 401-K
3Q02 3Q03
Net Revenues Earnings Margins
$0.5 B
$2.1 B
20.2%
15.2%
$0.3 B
$2.3 B
GPC Third Quarter ResultsGPC Third Quarter Results
Note: Earnings and profit margins for business segments are reported on a pre-tax basis.
Growth InitiativesGrowth Initiatives
Merrill Lynch Investment ManagersMerrill Lynch Investment Managers
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Sustain Strong Investment Performance
GPC Distribution
Third Party Distribution US Non-US: Europe
Further Penetrate US Institutional Market
Alternative Investments
Sustain Strong Investment Performance
GPC Distribution
Third Party Distribution US Non-US: Europe
Further Penetrate US Institutional Market
Alternative Investments
3Q02 3Q03
Net Revenues Earnings Margins
$360 M $352 M
21.9%
18.6%
MLIM Third Quarter ResultsMLIM Third Quarter Results
$67 M $77 M
Note: Earnings and profit margins for business segments are reported on a pre-tax basis.
Growth InitiativesGrowth Initiatives
Beyond the NumbersBeyond the Numbers
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Discipline creates the opportunity to invest in the future for our:Discipline creates the opportunity to invest in the future for our:
Clients Clients Employees Employees
Creating a Climate for Success:Creating a Climate for Success:
Appropriately sized to opportunity - operating leverage
Effective resource allocation
Products & service innovation
Performance-based culture
Appropriately sized to opportunity - operating leverage
Effective resource allocation
Products & service innovation
Performance-based culture
Shareholders Shareholders
Stan O’NealChairman & CEOMerrill Lynch & Co., Inc.
Stan O’NealChairman & CEOMerrill Lynch & Co., Inc.
2003 Merrill Lynch Banking & Financial Services Investor Conference2003 Merrill Lynch Banking & Financial Services Investor Conference
November 19, 2003November 19, 2003
Merrill Lynch: Beyond the NumbersMerrill Lynch: Beyond the NumbersMerrill Lynch: Beyond the NumbersMerrill Lynch: Beyond the Numbers
