The investment firm reported earnings of $877 million, or 93 cents per share, compared with $793 million, or 91 cents per share, during the same period of 1999.

Analysts had been expecting results of 88 cents per share. Merrill Lynch's stock rose $2.75 to $77.88 in New York Stock Exchange trading.

Fourth-quarter revenues increased 3.7 percent, growing to $6.3 billion from $6 billion a year earlier.

Merrill Lynch, the nation's largest full-service brokerage, credited the gains to cost savings and improvements in its private client business. In the last year, the company has shifted away from fees based on transactions to fees based on the size of a customer's assets.

As a result, although commission revenues fell 11 percent in the fourth quarter, asset management and portfolio service fees rose 13 percent.

Merrill Lynch also reported strong growth in its overseas business. But the stock market downturn, which accelerated in the last three months of 2000, did hurt Merrill Lynch's results.

In particular, investment banking and underwriting suffered, slipping to $673 million, down 6 percent from $715 billion in the fourth-quarter of 1999, despite an overall gain for the year.

Compensation and benefits continued to be a major expense for the brokerage, increasing 6 percent from the fourth-quarter in 1999 to $3.2 billion, reflecting higher incentive compensation.

For all of 2000, earnings were $3.8 billion, or $4.11 per share, compared with $2.7 billion, or $3.11, in 1999.

Revenues for all of 2000 were $26.8 billion, up 20 percent from $22.3 billion the previous year.

Investment banking and underwriting was up 12.8 percent for the full year, rising to $2.6 billion in 2000 from $2.3 billion in 1999.