EUROPE – Merrill Lynch Investment Managers saw outflows from its European institutional business in the fourth quarter, according to its parent company’s latest earnings report.

“Strong inflows in European retail and Japan offset outflows for the European institutional business during the fourth quarter,” said Merrill Lynch in its fourth-quarter and 2003 earnings statement.

It said that MLIM’s 2003 pre-tax earnings declined 11% to 284 million dollars – though on a quarterly basis earnings were up. Net revenues at the unit for the year declined 10% to 1.4 billion dollars. Profit margin was stable at 20.3% due to a nine percent cut in costs, it added.

MLIM's pre-tax earnings in the fourth quarter were 98 million dollars, more than double a year before and 31% higher than the third quarter of 2003. Net revenues increased 15% to 386 million dollars.

Merrill Lynch said: “MLIM posted its second consecutive quarter of revenue and earnings growth in the fourth quarter of 2003, finishing the year with positive momentum despite a decline in annual revenues and pre-tax earnings.”

The division was “leveraging its strong investment performance to grow distribution while maintaining an efficient operating platform”. MLIM’s assets under management rose eight percent to 500 billion dollars.

Merrill posted total net earnings for 2003 of four billion dollars, up 59% on 2002. Net revenues were 20.2 billion dollars, up eight percent.

"By almost any measure, this was an extremely important year for Merrill Lynch," said chairman and chief executive Stan O'Neal.

“We have proven Merrill Lynch can be very profitable in a difficult market environment, and we are confident we can continue to manage the company for growth - always with an eye on profitability - in 2004."