UBS 2007 Financial Services Conference Greg Fleming and Dow Kim Presidents Global Markets & Investment Banking May 14, 2007
Safe Harbor Statements made herein may contain forward-looking information about management s expectations, strategic objectives, growth opportunities, business prospects, investment banking pipelines, acquisition synergies, anticipated expense levels and financial results, anticipated results of litigation and regulatory proceedings, and other similar matters. A variety of factors, many of which are beyond Merrill Lynch's control, affect its operations, performance, business strategy and results and could cause its actual results and experiences to differ materially from the expectations and objectives expressed in any such statements. These factors include, but are not limited to, the factors described in Merrill Lynch s reports on Forms 10-K, 10-Q and 8-K filed with SEC, which are available on the Merrill Lynch Investor Relations website, www.ir.ml.com and on the SEC's website, www.sec.gov. Accordingly, investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Merrill Lynch does not undertake to update such statements to reflect the impact of circumstances or events that arise after the date the statements are made. Investors should, however, consult any further disclosures Merrill Lynch may make in its reports filed with the SEC. Investors should also read the information on the calculations of non- GAAP financial measures that are included in Exhibit 99.1 of Merrill Lynch s latest 10-Q and are also available on www.ir.ml.com. 2
Dow Kim President Global Markets & Investment Banking
GMI Strategy Manage a diversified and balanced portfolio of businesses across asset classes, sectors and regions Measure progress by market rank, client share of wallet, revenue growth and profitability Use capital prudently Employ and develop world-class talent Well-positioned for accelerating global growth 4
Evolution of GMI GMI Net Revenues and Pre-Tax Margins ($ billions) 37.6% 35.0% 36.0% 37.6% $18.9 (1) 2002 2003: Focus on profitability Define growth strategy Begin investing $10.0 $11.1 $13.8 2004 2006: Aggressive organic and inorganic investments to fill gaps Disciplined execution Realized significant revenue acceleration 2003 2004 2005 2006 Net Revenues Pre-Tax Margin 2007 and beyond: Globalization Smart principal risk-taking Connecting the dots (1) Excludes one-time compensation expenses associated with the adoption of SFAS No. 123R in the first quarter of 2006. For reconciliations between en these non-gaap measures and GAAP results, please see Exhibit 99.1 to Merrill Lynch s 2006 Annual Report on Form 10-K K or go to www.ir.ml.com. 5
Accelerating Revenue Growth GMI Net Revenues Compound Annual Growth in Average Quarterly Net Revenues: 23% 2003 Average: $2.5 billion 2004 Average: $2.8 billion 2005 Average: $3.5 billion 2006 Average: $4.7 billion 1Q07 $6.5 billion 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 Fixed Income, Currencies and Commodities (FICC) Equity Markets Investment Banking 6
Strategic Activities Integral to Growth 2004 2005 2006 2007 Mortgages / Consumer Finance (1) (2) Commodities/ Investment Banking Petrie Parkman & Co. Emerging Markets Onshore Principal Investing (1) DiMaio Ahmad Capital (1) LLC Equities Electronic Trading U.S. Equity & Options Execution & Clearing unit of ABN Amro (1) (1) (1) (1) (1) (1) (1) Market Structure (2) (1) Note: Represents selected acquisitions in GMI unless otherwise noted. (1) Represents minority investment in the company. (2) Represents joint venture with the company. 7
Globalization: Improved Regional Balance GMI 2003 Net Revenues GMI 1Q07 Net Revenues Pacific Rim 15% Other (1) 5% Pacific Rim 16% Other (1) 7% U.S. 54% U.S. 46% EMEA 26% EMEA 31% Non-U.S. revenues up 48% versus 37% for U.S. in 1Q07 (2) (1) Other includes Latin America and Canada. (2) Represents revenue growth in 1Q07 compared to 1Q06. 8
Expanding Emerging Markets Franchise Opened office in in 1998 Onshore IBK presence Innovative financing transactions Cash equity and equity derivatives FX trading Principal activities Acquired 100% of of Tatbank (2006) Local equity and debt sales & trading capabilities Top investment banking franchise Strong equities franchise and principal investments Best Debt House 2006 (Euromoney) Local market access Onshore trading of of local currency debt Onshore IBK presence JV with Celfin (investment banking, research) Local equities trading BRIC countries Other key growth opportunities Licensed GMI office in in Dubai (2007) Local equities trading in in selected countries GPC presence Best India Equity House 2006 (Euromoney) Increased stake in in DSP Merrill Lynch to to 90% from 50% (2006) Leading local equities house IBK and structuring capability US investment bank with longest history in in China Top China Equity House 2005 (IFR); ; Joint bookrunner on world s largest IPO (ICBC $22bn) 9
Fixed Income, Currencies & Commodities FICC Net Revenues ($ billions) $5.1 $5.1 $6.2 $8.1 $2.1 $2.8 2003 2004 2005 2006 1Q07 Global Rates Increase proprietary risk-taking capabilities Global Credit Build upon #1 CDO position Expand flow trading capabilities Global Structured Finance & Investments Accelerate international diversification Leverage vertically integrated platforms Global Commodities Add products and geographic reach Link capabilities to investment banking and GPC clients Global Commercial Real Estate Leverage vertically integrated platform Continue expansion of principal investing Global Currencies Capitalize on client demand for hedging solutions, including cross-border M&A 10
Equity Markets: Successfully Re-oriented Equity Markets Net Revenues ($ billions) $2.8 $3.0 $4.4 $6.7 $1.6 $2.4 2003 2004 2005 2006 1Q07 Global Cash Equity Trading Leverage high touch strength Class-leading global program trading Expanded trading in global algorithmic and direct market access products Global Equity-Linked Products Expand structured product offerings Increase distribution to institutional and wholesale retail clients Global Markets Financing and Services Expand prime brokerage offerings for equity, fixed income, currencies and commodities Increase market share with large hedge funds Global Strategic Risk Group Diversify overall trading strategies Enhance proprietary trading capabilities Global Private Equity Breakout year in 2006 11
Driving Merrill Lynch s Return on Equity Total Firm ROE (1) 21.6% 23.2% Enhance ROE in GMI Expand risk-taking appetite and capabilities in a disciplined way 14.8% 14.9% 16.0% Continue to refine capital allocation framework Monetize investments made while continuing to make additional investments for growth 2003 2004 2005 2006 1Q07 (1) Excludes one-time compensation expenses associated with the adoption of SFAS No. 123R and the positive net impact of the BlackRock merger. For r reconciliations between these non-gaap measures and GAAP results, please see Exhibit 99.1 to Merrill Lynch s 2006 Annual Report on Form 10-K K or go to www.ir.ml.com. 12
Greg Fleming President Global Markets & Investment Banking
The Investment Banking Marketplace: Rapidly Evolving Traditional Mergers and acquisitions Equity capital markets Debt capital markets Leveraged finance Non - Traditional Derivatives Commodities Structured finance Principal risk taking Private equity 14
Traditional: Building on Our Success Global Investment Banking Revenues Merrill Lynch Global League Table Rankings (1) ($ billions) $4.1 Product 2005 2006 1Q07 $2.9 $3.3 Equity Underwriting 6 5 2 IPO 5 5 1 Debt Underwriting 5 5 4 $2.1 High Yield Debt 6 5 4 $0.9 $1.4 Leveraged Loans 14 9 5 M&A (Completed) 5 5 3 Fee Rank (All Products) 7 6 3 2003 2004 2005 2006 1Q06 1Q07 Strategic Advisory Equity Origination Debt Origination GMI has delivered on market rank objectives (1) Source: Dealogic 15
Traditional: Market-Leading Performance 1Q07 Reported Origination Revenues 1Q07 Reported Advisory Revenues ($ billions) ($ billions) $1.26 $1.17 $0.47 $0.86 $0.86 $0.79 $0.73 $0.95 $0.86 $0.66 $0.60 $0.43 $0.42 $0.37 $0.33 $0.40 $0.39 $0.25 JPM C CS UBS DB MER GS MS LEH JPM C CS UBS DB GS MER MS LEH Universal Banks Investment Banks Universal Banks Investment Banks Source: Company reports; CS and UBS results converted at 1.21 CHF F to USD; DB converted at 1.33 USD to EUR. 16
Non-Traditional Products: Strong Revenue Growth Net Revenues and Growth Rates Significant non-traditional revenues realized in 2006 > 50% CAGR 24% CAGR Non- Traditional Product Revenues Reported Investment Banking Revenues Since 2003, relative contribution of non-traditional increased over 60% Meaningful opportunity to further drive non-traditional revenues 2003 2006 17
Commodities: Coordinated Coverage, Capabilities and Capital ENERGY ML Petrie Merrill Lynch Divestitures & Capital IBK Energy Group Merrill Lynch Commodities POWER IBK Power Group Advisory / Hedging and Financing Reserve- Based Lending Flow Trading Structured Hedging Advisory / Hedging and Financing Private, Mid-Cap and Upstream and Refining Clients Power Generators and Merchant Utilities Clients 18
Private Equity: Remarkable Growth Story Organically built a world-class business Exceptional investment professionals Broad origination footprint sources opportunities across industries and regions Financial Sponsors group identifies co-investment opportunities Incentives to promote actionable ideas Strong conflict management processes Proven track record including successful partnerships with clients Highly profitable business with significant incremental opportunities DEBENHAMS 19
Connecting the Dots: Across GMI Freeport McMoran Equity M&A Debt Leveraged Finance Principal / Structured Private Finance Commodities Equity HCA Debenhams Hertz Reader s Digest Rexel Targa Resources Asia Aluminum 20
Connecting the Dots: GMI-GPC New Market Opportunities Leverage existing and new GMI capabilities Increase distribution of new market products through coordinated GMI/GPC efforts Transforming Mature Businesses Upgrade trading capabilities through technology Create synergies with retail order flow Enhance our best execution standards Client Coverage Aligned management structure to increase referral activity between GMI and GPC Particularly important in non-u.s. markets 21
Recognition from Clients and the Market 2006 and 2007 Selected Awards Best M&A House in Germany Best Equity House in India Best Debt House in Brazil Best Global CDO House Bank of the Year Derivatives House of the Year Named Global Investment Bank of the Year 2006 by Euromoney Best Global Equity Bank World's Best Investment Bank in FIG World's Best Investment Bank in Oil & Gas World's Best Investment Bank in Real Estate 22
To Recap: Focus Going Forward Globalization Smart principal risk-taking Connecting the dots 23
UBS 2007 Financial Services Conference Greg Fleming and Dow Kim Presidents Global Markets & Investment Banking May 14, 2007