Jefferies posts record revenue with dealmaking staging comeback
The biggest US banks have benefited from volatile markets, fuelled by changing policies under the Trump administration, which has roiled the market for most of the year
[NEW YORK] Jefferies Financial Group posted its best fiscal third-quarter revenue ever, buoyed by what the firm said is a strengthening environment for dealmaking and trading activity across the globe.
Total revenue for the three months to August jumped almost 22 per cent to US$2.1 billion, the New York-based firm said on Monday (Sep 29). That is the highest third quarter in the investment bank’s history, and the most revenue for any quarter since the first three months of 2021, when dealmaking surged coming out of the pandemic.
Jefferies said that the last quarter was its best period ever for advisory revenue, as deal activity picked up and market conditions improved. Trading activity also came in higher than a year ago, as volatility in the equity market continued to push results higher.
“We have been experiencing a strengthening of corporate mergers and acquisitions,” Jefferies president Brian Friedman said. “We don’t think this is a one-off, we think this is a trend that continues into next quarter, and into the foreseeable future”.
The results offer an early look into how Wall Street has navigated the period amid US President Donald Trump’s trade war and ongoing geopolitical tensions. Jefferies’ numbers signal that the nation’s biggest banks, scheduled to report their third-quarter results next month, may also report improvements in their investment-banking revenue.
“There was a delay in momentum, and since May and June, that momentum is back in force,” Friedman said.
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The biggest US banks have benefited from volatile markets, fuelled by changing policies under the Trump administration, which has roiled the market for most of the year. That has been good news for trading desks that have seen their revenue rise to records, while dealmaking has also begun to make a comeback.
Jefferies capital markets unit generated US$723 million in revenue, up 6.9 per cent from a year earlier. The bank touted strength in equities, as higher volumes drove “stronger results”, particularly in the US and European equity cash business. Equity options, corporate derivatives and electronic trading also delivered strong results, Jefferies said.
The bank struck an exuberant tone about the remaining half of the year, citing a rebound in market sentiment across the globe.
“While the world will remain volatile and full of challenges, we are increasingly optimistic about the near- and long-term outlook for Jefferies,” chief executive officer Rich Handler and Friedman said.
Overall, investment banking revenue grew 17 per cent to US$1.1 billion, Jefferies said, calling out strength in advisory revenue, which climbed to almost US$656 million, the business’s best quarter ever, fuelled by increased deal values in mergers and acquisitions across sectors. Debt and equity underwriting revenue also increased, to almost US$431 million, due to improving market conditions, Jefferies said.
“Despite whatever uncertainties and worries, businesses, corporates and sponsors are forging ahead,” Friedman said, adding that dialogue around initial public offerings and mergers and acquisitions are increasing. “Everything that we are seeing would portend greater activity in the future.”
Asset-management net revenue nearly tripled, to almost US$177 million from US$59 million a year earlier, driven by improved performance across fund strategies, the firm said.
The bank’s shares climbed 0.4 per cent at 4.17 pm in late New York trading. They had fallen 15 per cent this year to Monday’s close.
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