(Reuters) – Raymond James Financial Inc missed Wall Street estimates for second-quarter profit on Tuesday as a prolonged dealmaking slump weighed on the investment bank and brokerage’s mainstay business.
Investment banking revenue fell 36% to $145 million from a year earlier. Dealmaking was at a virtual halt for most of last year as risk appetite waned amid deteriorating macroeconomic conditions and geopolitical tensions.
“Persistent market volatility and macroeconomic uncertainties continue to dampen capital markets activity across the industry – particularly for investment banking,” Chief Executive Paul Reilly said.
The gloom follows a bumper 2021 for Wall Street’s investment bankers who advised on multi-billion dollar mergers and buyouts, while underwriting listings of some of the biggest clients to tap the public markets in more than a decade.
“Despite a healthy investment banking pipeline and solid new business activity, the timing of closings is largely dependent on improving market conditions,” Reilly said.
Earlier in April, Wall Street’s investment banking giants Goldman Sachs Group Inc and Morgan Stanley also reported a drop quarterly profit amid a downswing in mainstay investment banking business.
On an adjusted basis, Raymond James’ net income available to common shareholders was up at $446 million, or $2.03 per share, in the three months ended March 31, compared with $346 million, or $1.62 per share, a year ago.
Analysts on average had expected $2.23 per share, according to Refinitiv data. Raymond James shares fell 1% to $91.15 in extended trading after results as profit lagged estimates.
However, net interest income and Raymond James Bank Deposit Program fees from third-party banks was a bright spot. It surged 226% to $731 million from a year ago.
(Reporting by Manya Saini and Mehnaz Yasmin in Bengaluru; Editing by Shailesh Kuber and Arun Koyyur)
