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Wall Avenue simply bought a style of what to anticipate when funding banks publish second-quarter earnings subsequent month and it isn’t glad.
(ticker: JEF) posted outcomes for its fiscal quarter ending Could 31 and noticed income slide 30% year-over-year to $1.37 billion amid a difficult capital markets local weather. Earnings got here in at 45 cents a share, lacking the 51 cents per share analysts surveyed by FactSet had anticipated. Not solely did the financial institution miss expectations, it additionally noticed a 65% lower in earnings per share from the year-ago quarter.
“Our second quarter outcomes are affordable within the face of a particularly difficult capital markets surroundings, with some markets being all however shut to new points,” Jefferies Chief Govt Richard Handler and President Brian Friedman stated in a joint assertion Monday.
As a result of Jefferies is on a distinct fiscal calendar than lots of its monetary friends, it posts outcomes roughly three weeks earlier than friends do for the calendar quarter. Its outcomes are seen as an indicator for what rival banks akin to
(MS) will report subsequent month.
Thus far, the outlook is gloomy.
For a lot of the final two years, funding banks may depend on sturdy buying and selling and capital markets exercise to spice up earnings however latest recession worries have made markets extra risky, making corporations much less prone to go public. Along with volatility, a rising rate of interest surroundings has made it difficult for offers to get carried out as corporations are reluctant to tackle debt. Complete underwriting income at Jefferies was down by 62%.
Nonetheless, Jefferies contends that its advisory exercise stays “sturdy” and that the financial institution is well-positioned for when market situations normalize.
“Our backlog is according to final quarter’s sturdy ranges however execution stays depending on market situations. Primarily based on our ongoing dialogues with our shoppers, we consider that M&A and capital markets exercise will decide up when stability and visibility enhance,” the corporate stated Monday.
Wall Avenue was much less positive, as Jefferies shares slid 4.5% in after-hours buying and selling Monday.
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