After reporting its all-time strongest quarterly and yearly profit growth, Merrill Lynch & Co. Inc.'s chief financial officer outlined several initiatives to maintain its momentum.
The New York brokerage company plans international expansion, further development of its investment banking business, continued interest in acquisitions, and hiring of financial advisers.
Merrill announced Thursday that its fourth-quarter profit rose 68%, to $2.3 billion, or $2.41 per share after preferred dividends. It beat analyst expectations of $1.92 a share, according to estimates provided by Thomson Financial.
The CFO, Jeffrey Edwards, who is also a senior vice president at Merrill, said it would not buy just for the sake of buying.
"We are going to identify targets across a broad range of businesses," he said. "We are not going to highlight any particular areas. We continue to look for places where acquisitions can accelerate our growth opportunities, but we want to remain disciplined."
Mr. Edwards said there may be more opportunities for international growth, "but we have also found opportunities in the U.S. from an acquisition standpoint, so we continue to look in both places."
Merrill's top competitors - Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., Morgan Stanley Inc., and Bear, Stearns & Co. Inc. - posted strong 2006 results as U.S. stock indexes reached record highs and volume in mergers and acquisitions surpassed $4 trillion in deal value.
Analysts said Merrill, which has made 17 acquisitions in the past three years, is trying to close a competitive gap with Goldman and Morgan Stanley in commodities trading and with Lehman and Bear Stearns in mortgage bond trading.
Merrill made several major deals last year. In the third quarter it merged its investment management arm with BlackRock Inc., which had been majority-owned by PNC Financial Services Group Inc. of Pittsburgh. That gave Merrill a 49.8% stake in BlackRock.
In the fourth quarter Merrill bought First Franklin Financial Corp. of San Jose, an originator of loans through brokers, from National City Corp. for $1.3 billion.
First Franklin was Merrill's fourth mortgage company acquisition in the last two years but its first buyout of a U.S. originator. In October, Merrill bought boutique investment bank Petrie Parkman & Co.
Mr. Edwards said the firm added a net of 720 financial advisers in the quarter.
"We are adding FAs at a quicker pace outside of the U.S. than we are inside of the U.S.," he said.
Revenue from Merrill's global market and investment bank rose 55%, to $5.4 billion, in the three months, and investment banking revenue rose 48%, to $1.51 billion.
Mr. Edwards said the pipeline for investment banking deals was at an all-time high at the end of 2006 and is now "up meaningfully from the end of both the third quarter and the end of last year."
Merrill's stock declined 0.06% by midday Thursday.