Raymond James Financial: Fall in Trading Revenues Continues



Capital markets

Raymond James Financial ‘s (RJF) capital markets division declined due to low volatility in the equity markets and a flattening of the yield curve. That led to low institutional, fixed income, and equity commissions, a fall of 15% compared to 1Q17. On a YoY (year-over-year) basis, the numbers fell mainly due to the M&A (mergers and acquisition) department of the investment banking division. The main reason for the fall has been identified as the timing of the closing of the M&A deals and a fairly strong fiscal 1Q17.

Fiscal 1Q18 net revenues of $216.7 million were 7% lower than 1Q17 and 18% lower than 4Q17. Pretax income of $4.8 million was 78% below 1Q17 and 89% below 4Q17.

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Asset management

Net revenues of RJF’s asset management division were $150.6 million, a 32% rise compared to 1Q17 and a 15% rise compared to 4Q17. Pretax income of $57.4 million was 37% more than 1Q17 and 18% more than 4Q17.

Financial assets under management were $130.3 billion, reflecting a growth of 63% compared to 4Q17 and 35% compared to 3Q17. The main reason for the increase in revenue was an increase in assets driven by strong organic growth, an increase in private client penetration, market appreciation, and the acquisitions of Scout Investments and Reams Asset Management. The acquisitions added $27 billion to RJF’s assets.

During 2017, its Private Client Group contributed 68% of its total revenues. Capital markets contributed 15.9%, Raymond James Bank contributed 9.6%, and the asset management division contributed 7.5%.

RJF operates in the United States, Canada, and the United Kingdom. Its peers (XLF) Financial Engines (FNGN), Charles Schwab (SCHW), and TD Ameritrade (AMTD) operate in the United States.


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