Banking bellwether Jefferies (JEF) delivered record second-quarter earnings results on Monday after the closing bell, led by continued strength in investment banking.
For the second quarter ended May 31, Jefferies Group posted total revenues of nearly $1.62 billion, up 56% from the $1.03 billion reported a year ago, a record at that time. The quarter’s net earnings came in at $318 million, up 147% from the year-ago period.
The bulge-bracket banks will report results next month. Generally speaking, banks across the board had blowout first-quarter results, with trading revenues lifted by elevated trading volumes across asset classes and investment banking reaping the benefits of the SPAC boom, which has since abated.
At Jefferies, investment banking revenues in the second quarter, driven by strength in advisory and debt underwriting, hit a record of $1.03 billion, increasing 227% from last year’s $316 million
“We are particularly pleased that our investment banking momentum continues to grow and gain market share. It is the result of many years of hard work and commitment to invest in human capital, build long-term relationships, maintain and enhance our brand and build a full-service global firm,” CEO Rich Handler told Yahoo Finance.
Handler added that while the “SPAC market was particularly subdued this quarter,” Jefferies’ “global capabilities in mergers and acquisitions, traditional IPOs and leveraged finance remained robust.”
‘More normalized’ trading
In recent weeks, the heads of the big banks have suggested more normalized trading, with JPMorgan Chase (JPM) CEO Jamie Dimon estimating a “more normal” quarter with revenue from trading fixed income and equities “a little bit north of $6 billion,” while Citigroup (C) CFO Mark Mason expects trading revenues to decline in the “low 30%’s range,” with a strong performance in equities offset by fixed income.
Jefferies’ trading business also shows a return to normalcy, albeit at higher levels than pre-pandemic, as the firm has gained market share. During the second quarter, the firm’s trading businesses, categorized as combined capital markets revenue, fell 31.5% from last year’s $730 million to $500 million, but still higher than the 2019 revenues of $379.3 million in that same period. The equities net revenues hit a second-quarter record of $243 million versus last year’s $237 million, while fixed income net revenues came in at $257 million compared to the $493 million delivered a year ago.
“While we anticipate everyone’s capital markets trading business returned to more normalized levels, we are pleased with our results which we believe show that we have not only gained market share in these businesses but have maintained it,” Handler added.
Elsewhere, while many Wall Street firms are drawing a hard line on returning to the office, Handler, who’s served as CEO since January 2001, making him the longest-tenured investment bank chief, touted a flexible work model for the firm’s 4,000 employees.
“Our people all want to come back to the office. We are transitioning through the summer with many events for both employees and clients. Our expectation and hope is that there will be a much more normalized office work experience post-Labor Day, but we believe our people want and deserve the flexibility that a smart hybrid [work from home] policy will afford,” the CEO added.
Julia La Roche is a correspondent for Yahoo Finance. Follow her on Twitter.