Jefferies Financial Group Inc.’s earnings climbed as investment-banking revenue surged and debt underwriting more than doubled, adding to signs of brightening prospects for the biggest US banks.
Fiscal second-quarter investment-banking revenue jumped 59% in the three months through May, the New York-based firm said Wednesday in a statement. Earnings totaled $145.7 million, or 64 cents a share, up from $12.4 million or 5 cents, a year earlier.
The results suggest demand for investment-banking services is recovering after geopolitical concerns and stubbornly high interest rates dulled deal activity. Investment banks took a hit last year as dealmaking and sales of new securities remained muted, with many firms forced to cut thousands of jobs.
“We are well beyond green shoots, and we would suggest a broader recovery in capital-markets activity and M&A is underway,” President Brian Friedman said in an interview. “If this is going to get derailed, it will be by something that is not necessarily likely today.”
The firm’s fiscal second-quarter revenue jumped 59% to $1.66 billion, helped by a pickup in deals and strength in equities trading.
The improved performance from investment banking was due in large part to increases in equity and debt underwriting, which rose 68% and 129%, to $249.2 million and $205.5 million, respectively. Revenue from the advisory business rose 12% from a year earlier to $283.9 million.
The gains are expected to continue, with Jefferies feeling “increasingly optimistic about the second half of 2024 and 2025 based on our backlog and trends we observe today,” Chief Executive Officer Rich Handler said in the statement.
The sales and trading team recorded $691.3 million of revenue for the quarter, up 24% from a year earlier. Jefferies attributed the rise to a strong performance in equities, which jumped 46% to $407.1 million, and a modest 2.1% bump from fixed-income sales and trading.
Shares of the company, which rose 14% this year through the close of US markets on Wednesday, initially dipped in late trading and then recovered. While revenue rose from a year earlier, so too did expenses, climbing to $1.43 billion from $1.02 billion.
Jefferies said a challenging landscape in 2023 had cut into its performance. Now, after a flurry of initial public offerings at the start of 2024 and the potential for rate cuts later this year, there’s hope among dealmakers that mergers and acquisitions will rebound.
“A proportionate amount of the strengthening of our results is because of market-share gains on the back of investments we made in our platform,” Friedman said. “We are addressing more clients than we’ve ever addressed, and continuing to gain market position.”
Jefferies’s bigger rivals are scheduled to begin reporting second-quarter results next month.
Firms continue their quest to attract and retain the best advisor teams.
A survey from TacticalMind AI found 69% of advisors say a high-quality AI platform that makes investment recommendations and constructs portfolios is worth $500 monthly, while research-only tools are valued closer to $250.
The alts tech provider's latest integration lets advisors query fund data and surface portfolio insights without leaving their primary workspace.
The regulator is scrutinizing how some firms oversee concentrated positions in complex "worst-of" notes – and wants answers.
Meanwhile, Carson Group fully integrates a decades-old practice in Phoenix, Arizona, and Triad Wealth touts its 5x growth to hit a $2 billion milestone.
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline
