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Bank of America’s Global Wealth and Investment Management (GWIM) division, which includes Merrill Lynch, reported its highest earnings since Bank of America’s takeover of Merrill in late 2008, as asset management and brokerage fees rose. Client assets, advisor headcount and advisor productivity all improved in the quarter.

The GWIM division earned $531 million in income, up 22 percent from $434 million in the year ago quarter. Revenue totaled $4.5 billion, up 13 percent from $4.0 billion in revenue in the year ago quarter. Stripping out U.S. Trust and retirement services from GWIM, Merrill wealth management revenues (which includes Merrill’s online/call center brokerage Merrill Edge) totaled $3.54 billion for the quarter, up from $2.99 billion in the year ago quarter.

Profit margins for the GWIM division hit 19 percent for the quarter, while return on economic equity was 30 percent, said Bank of America CEO Brian T. Moynihan, on a conference call. The division continues to have record low attrition and referrals to the business are strong, he said.

Retail investors, it seems, are regaining their appetite for the market. Asset management fees for the GWIM division rose $85 million reflecting the strong market and good client asset inflows, Merrill’s report says, while brokerage fees rose $137 million in the quarter, due to increased transactional activity.

Financial advisor headcount, which has been creeping higher for the past several quarters, jumped by 184 in the quarter, bringing total FA headcount to 15,695. Advisor productivity (defined as total revenue for Merrill Lynch Global Wealth Management divided by the total number of financial advisors--excluding Merrill Edge FAs) jumped to $931,000 from $913,000 in the fourth quarter and $808,000 in the year ago quarter. And client asset balances grew by $45 billion, with net new asset inflows of $14 billion. Total assets under management, including Merrill Edge, were $664.7 billion and total client balances were $2.3 trillion.

“This year is going to be vital in fight over who is Number 1 between Merrill and Morgan,” said Alois Pirker, Aite Group analyst. “Assets, productivity, number of advisors, these are all the key indicators. Who is the leading franchise? Merrill, who used to be it, has a real competitor in Morgan Stanley now. Whoever has a really good 2011 will be well positioned to take that top spot. Those $14 billion in net new assets, that’s very good.” Morgan Stanley reports earnings on April 21st.

Merrill Lynch reported improved revenue and advisor productivity in the fourth quarter, while Morgan Stanley reported a jump in revenues and progress with its integration of Smith Barney.

Cross-selling from Merrill to Bank of America seems to be working, as deposits from Merrill clients were up. Average deposit balances, rose $1.5 billion from a year ago, “driven by organic growth in liquid products, including Merrill Edge, partially offset by the net transfer of certain deposits to other client-managed businesses,” the firm reported.

Overall, Bank of America reported earnings of $2 billion in the first quarter of 2011 on revenue of $26.88 billion, down from $3.2 billion on $31.97 billion in revenue in the year ago quarter. Analysts were predicting a steeper decline in revenue for the quarter, to $26.69 billion.