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LEAD: Merrill Lynch reports $2.24 bil. net loss in July-Sept.

NEW YORK, Oct. 24 Kyodo


Merrill Lynch & Co. said Wednesday it swung into a net loss of

$2.24 billion, or $2.82 per share, in the July-September quarter, hit by $7.9 billion in write-downs on collateralized debt obligations and subprime mortgages.

The investment bank forecast earlier this month its write-downs on such mortgages will reach about $4.5 billion.

In the July-September quarter of 2006, the New York-based bank booked net earnings of $3.05 billion.

The sharply higher-than-expected subprime write-downs indicate bad loan woes are expanding among financial institutions.

Revenue for the three-month period under review dropped 94 percent from a year earlier to $577 million.

''Mortgage and leveraged finance-related write-downs in our FICC (fixed income, currencies & commodities) business depressed our financial performance for the quarter,'' said Stan O'Neal, chairman and chief executive officer, in a statement.

''In light of difficult credit markets and additional analysis by management during our quarter-end closing process, we re-examined our remaining CDO positions with more conservative assumptions. The result is a larger write-down of these assets than initially anticipated.

''We expect market conditions for subprime mortgage-related assets to continue to be uncertain and we are working to resolve the remaining impact from our positions,'' O'Neal said.
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Publication:Japan Weekly Monitor
Article Type:Financial report
Date:Oct 27, 2007
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