December 20, 2016 / 4:16 PM / 9 months ago

Jefferies Q4 profits jump on record advisory fees

LONDON, Dec 20 (IFR) - A record level of advisory fees helped US investment bank Jefferies Group to report a tenfold jump in pre-tax earnings in its latest financial quarter, raising optimism the rest of Wall Street is enjoying a good end to the year too.

Jefferies reported pre-tax earnings of US$97m for the three months to the end of November, compared with US$9.5m in the same period of 2015 when the bank incurred restructuring charges in its fixed income business.

Net revenues were US$742m for the latest quarter, up 45% from US$513m a year ago.

Its investment banking net revenues rose 11% to US$415m while net revenues from equities and fixed income were US$325m, more than double the level a year ago.

Rich Handler, Jefferies’ chairman and chief executive, said the results reflected “a strong performance in investment banking, a solid performance from our core equities business, and a continuing significant improvement in our fixed income results”.

The bank said its advisory fees of US$224m in the quarter was a record, up 6% on the year.

Holder said the new issue capital market was increasingly active, which he said set the bank up well for 2017. Debt capital markets revenues were US$129m, up 87% on the year, but equity capital markets continued their poor year and revenues in the fourth quarter fell 34% to US$62m.

Jefferies said revenues from equities trading were up 43% to US$176m from a year ago and from fixed income trading swelled to US$149m, compared with just US$9.4m in a troubled fourth quarter of 2015.

Jefferies always reports ahead of its bigger rivals due to its fiscal year running from December to November and its results will back up indications the final quarter of 2016 has been a good one for investment banks.

Citigroup, Bank of America Merrill Lynch and JP Morgan executives said earlier this month that markets revenues were running 15%-20% ahead of last year.

For the full year, Jefferies reported pre-tax profit of US$30m, down from US$114m on 2015. Revenues dipped 2% on the year to US$2.4bn.

New York-based Jefferies provides investment banking, sales, trading, research and strategy across equities, fixed income and foreign exchange, and is fully owned by Leucadia National Corp. (Reporting by Steve Slater; Editing by Ian Edmondson)

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