Jefferies beats earnings forecast as rebound in capital markets offsets weak trading

Finance


27 June (Reuters) – Jefferies Financial Group (JEF.N) said analysts expected second-quarter profit on Tuesday as a strong performance in the investment bank’s capital markets business softened a slowdown in trading. slightly exceeded.

The New York-based company’s results will be released in the middle of this year, including JPMorgan Chase (JPM.N), Goldman Sachs Group (GS.N) and Morgan Stanley.It portends profits for Wall Street giants such as -July.

At Jefferies, investment banking net revenues fell 26% to $510 million, weighed down by weak mergers and acquisitions, while capital markets net revenues rose 30% to $500 million in the quarter. $43 million.

Jefferies President Brian Friedman told Reuters, “During a difficult time in the world and a period of economic downturn, our sales business has performed well.”

In a statement, Friedman and CEO Richard Handler said the challenges of the second quarter included “the aftermath of the regional banking crisis, the forced government-backed merger of Credit Suisse and UBS, and the disruption of the U.S. debt ceiling extension. The process of

Excluding one-time items, Jefferies posted earnings of 28 cents per share, beating analyst estimates of 27 cents, according to Refinitiv IBES calculations.

June also brought “green shoots” to its investment banking and capital markets businesses, the bank said.

The company’s shares regained lost ground, dropping 1.4% at the end of extended trading.

Jefferies has hired 21 new managing directors to its investment banking division since the start of fiscal year 2023. This is in stark contrast to big rivals such as Goldman Sachs Group (GS.N) and Morgan Stanley (MS.N), which have laid off thousands of employees.

“Frankly, it makes hiring easier in times of high competition and low economic cycles,” Mr. Friedman said. “We can’t let the chance go to waste.”

He added that senior recruits left the big banks because they were “attracted by their entrepreneurial spirit and agile nature.”

Jefferies’ total net revenue fell 22% to $1.04 billion.

Meanwhile, Japan’s Sumitomo Mitsui Banking Corporation (SMBC) merged its U.S. equities and M&A business with Jefferies earlier this year.

The transaction will also see SMBC’s parent company Sumitomo Mitsui Financial Group (8316.T) increase its stake in Jefferies from 4.5% to a maximum of 15%, allowing Jefferies to provide more lending capacity. become.

Reported by Jaiveer Singh Shekwat of Bangalore and Ranang Nguyen of New York. Edited by Sriraj Kalluvila and David Gregorio

Our standards: Thomson Reuters Trust Principles.

Lanang Nguyen

thomson Reuters

Lanang Nguyen is the U.S. finance editor at Reuters in New York and leads coverage of U.S. banks. She joined Reuters in 2022 after reporting on Wall Street for The New York Times. Lannan has worked for Bloomberg in New York and London for more than a decade, where she has written extensively on banking and financial markets, and was formerly Dow Jones at Newswire/Wall at The Street Journal. I was working. She holds a BA in Political Science from Tufts University, where she earned her Master’s degree. She holds a PhD in Finance and Economic Policy from the University of London.



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