The results season has started, and the figures are, as expected, nothing to crow about. In fact, for one bank that announced its quarterly results on Thursday, they are quite a bit worse from even the gloomiest of estimates. Merrill Lynch & Co., the world's largest brokerage and the third largest US securities firm by market value, announced a net quarterly loss of $1.96 billion after fresh write-downs of $6 billion.

It also said it would cut 4,000 jobs, a figure which represents as much as 10 per cent of its workforce, excluding financial advisers and investment associates. It will focus the reductions in its global markets and investment banking division, and expects to record a restructuring charge of $350 million in the current quarter for the layoffs.

Merrill Lynch reported losses, write-downs and reserve increases of $1.5 billion on collateralised debt obligations, $925 million on loans financing leveraged buyouts, $3.5 billion on an investment portfolio, more than $800 million on residential mortgages, and $3 billion for exposure to bond insurers. This resulted in net revenue of $2.93 billion, a 69 per cent drop from corresponding figures of $9.6 billion a year earlier.

The write-downs caused Merrill Lynch to lose $2.14 billion, or $2.19 per share, after paying preferred dividends, compared to a profit of $2.11 billion, or $2.26 per share, a year earlier. The results were below projections made by analysts, who had consistently reduced their estimates in the recent months.

Only a month ago, analysts were predicting profit of 48 cents per share. At the start of 2008, the consensus estimate was $1.52 per share. Latest estimates had been a $1.99 per share loss on a net loss of $1.4 billion and revenue of $3.7 billion.

A $2.1 billion benefit from widening credit spreads partly offset the write-downs and losses on risky assets.

CEO John Thain also cautioned that things were unlikely to improve much in the next couple of quarters. "This was about as difficult a quarter as I've seen in my 30 years on Wall Street," Thain told analysts during a conference call. "We are planning for a slower and more difficult next couple of months and probably next couple of quarters, but are also hopeful for our full year 2008 results."

However, he struck a positive note when he said, "Despite this quarter's loss, Merrill Lynch's underlying businesses produced solid results in a difficult market environment," adding that the bank remained well-capitalized with $82 billion of excess liquidity to help protect against choppy market conditions.

The bank reported that fixed-income trading revenue was $3.38 billion because of the tightening credit markets. Equity-trading revenue was $1.88 billion, down from $2.39 billion a year earlier.

Meanwhile, debt underwriting fell to $231 million from $586 million last year. Stock underwriting revenue fell to $199 million from $363 million a year ago.

As far as its peers are concerned, some of them have managed to beat analysts' expectations even while they recorded losses. While Wells Fargo & Co. reported earnings of 60 cents a share on $2 billion of income and record revenue of $10.6 billion on Wednesday, JPMorgan Chase also beat estimates with net income of $2.4 billion, or 68 cents a share, on $16.9 billion of revenue.

Now, Wall Street is waiting with bated breath for the two banking giants Citigroup and bank of America to announce their results on Friday and Monday respectively.