Merrill Lynch heaped further disappointment on its investors last night as the US brokerage reported that another $9.75 billion hit from the credit crunch had driven it to a larger-than-expected $4.6 billion (£2.3 billion) group loss in its second quarter.

Merrill’s fourth consecutive quarterly loss brought the group’s total loss for the past year to $18.65 billion, a period that has seen it take $43.4 billion in writedowns prompted by the fallout from the worst housing market since the Great Depression.

The group’s shares, which had jumped 9.75 per cent yesterday, fell by $2.88, or 9.37 per cent, in after-hours trading following the announcement. The rally had been prompted by better-than-expected results from Wells Fargo and JPMorgan Chase in the previous 48 hours that had given investors hope that the fortunes of the banking industry may be improving.

Merrill also announced the sale back to Bloomberg of its 20 per cent stake in the financial news and data group, for $4.4 billion in a move to bolster its capital reserves and said it was also negotiating to sell a controlling interest in its Financial Data Services division for at least $3.5 billion.

John Thain, Merrill’s chief executive, added that he had abandoned an effort to sell his group’s 49.8 per cent share of the BlackRock fund manager saying the two had “agreed to extend and strengthen our global distribution agreement”.

Merrill’s $9.75 billion hit, which included a $3.5 billion writedown on declining valuations of collateralised debt obligations, was much greater than analysts’ forecasts of up to $6 billion.

It disclosed its losses just hours after JPMorgan Chase announced a $4.6 billion hit that dragged its second-quarter profits down 52 per cent to $2 billion. However, the market was relieved that the figures did not contain any nasty surprises. The exceptional losses included a $540 million deficit relating to costs associated with its rescue of Bear Stearns in the spring.

JPMorgan’s shares rose by $4.86, or 13.5 per cent, to close at $40.80.

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