Jefferies revenue misses estimates on investment banking drag

JEFFERIES Financial Group’s third-quarter revenue missed analyst estimates as the bank continued to weather a challenging environment for dealmaking, sparking an initial share sell-off as much as 7 per cent.

The firm’s revenue from investment banking fell, driven by a 30 per cent drop in advisory revenue, it said on Wednesday (Sep 27). Overall, net revenue was US$1.18 billion, lower than the US$1.25 billion analyst estimate.

“2023 has been a challenging one in investment banking, with much of the new issue market shut or subdued until the last few months,” chief executive officer Richard Handler and president Brian Friedman said. “We are increasingly optimistic that we have come off the bottom of the cycle and that momentum in investment banking will continue.”

Jefferies is closely watched on Wall Street as it offers an early look into how banks navigated the quarter. Investment banks have taken a hit as corporate dealmaking and sales of new securities waned. Last quarter, Jefferies said those pressures also cut into its performance.

This quarter, Jefferies capital markets revenue came in at US$524 million, which the bank said reflected normal seasonal slowness.

The shares fell as much as 7 per cent in late New York trading after closing at US$36.24, up 10 per cent for the year. BLOOMBERG