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Higher M&A fee helps I-bank Jefferies double Q3 profit

19 September, 2017

US investment bank Jefferies Group LLC’s third-quarter profit more than doubled as it earned more from advising on debt and equity offerings as well as mergers and acquisitions.

New York-based Jefferies, a unit of Leucadia National Corp, traditionally kicks off the earnings reporting season for investment banks. Its results are viewed as an indicator of big Wall Street banks’ performance.

Despite posting record net revenue for the quarter, Jefferies’ trading revenue fell 7%, hurt by lower volatility during much of the quarter.

JPMorgan Chase & Co, Bank of America Corp and Goldman Sachs Group Inc have already warned that trading conditions during the third quarter will likely be poor as bonds and stocks continue to suffer from decreased market activity and volatility.

JPMorgan has said it expects a 20% slide in trading revenue, while BofA and Citi expect a nearly 15% fall.

Jefferies said revenue from investment banking, which includes underwriting and advisory services, soared 61% to $475.7 million.

In the quarter, Jefferies provided debt financing to Sycamore Partners’ $6.9 billion deal to buy Staples Inc. US oil and gas company Penn Virginia Corp also hired Jefferies as it explored a possible sale.

Jefferies completed 50 M&A deals, 381 debt financings and 34 equity financings in the quarter.

Total equities and fixed income revenue fell to $319.5 million, hurt by subdued trading volumes and volatility during much of the quarter.

Jefferies said on Tuesday net income attributable to the company rose to $83.8 million in the quarter ended Aug. 31, compared with $41.2 million, a year earlier.

Jefferies, which has over $45 billion in assets, said net revenue jumped 22.3% to $800.7 million.

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Higher M&A fee helps I-bank Jefferies double Q3 profit

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