Merrill Lynch today posted a 42 per cent hike in second-half profits as the Wall Street broker turned in a strong proprietary trading performance amid a downturn in the markets.

For the three months to June 30, Merrill Lynch reported profits of $1.58 billion, or $1.63 a share, compared with $1.14 billion, or $1.14 a share, in the second quarter of last year. Revenue jumped 29 per cent to $8.2 billion.

The results beat Wall Street forecasts for earnings of $1.52 a share on revenue of $7.53 billion.

The shares traded flat in early deals in New York, up 12 cents at $68.39. For more information on the company click here.

Despite the second quarter’s volatility in stocks, Merrill Lynch’s proprietary stock trading revenue rose 84 per cent , while debt trading revenue climbed 7 per cent.

Chairman and chief executive Stan O’Neal said: "Merrill Lynch continued to perform well in the second quarter despite uncertainty in the markets," .

Revenue from investment banking rose 33 per cent, with strong increases in equity underwriting and merger advisory fees offsetting a slight decrease in bond underwriting.

Interest and fees helped Merrill’s global private client business post a 19 per cent jump in revenue, while its investment management business, which includes the company’s primary brokerage business, saw sales climb 56 per cent.

The investment management business is due to be acquired by BlackRock, with the purchase set to close in the current quarter. The division manages $589 billion in assets, up 23 per cent from a year ago.

Total expenses climbed 23 per cent for the quarter, with compensation and benefits - the biggest expense for any Wall Street firm - rising 26 per cent compared with the same period last year.

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