We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Raymond James (RJF) Q3 Earnings Lag on Weak IB, High Provisions
Read MoreHide Full Article
Raymond James’ (RJF - Free Report) third-quarter fiscal 2022 (ended Jun 30) adjusted earnings of $1.61 per share lagged the Zacks Consensus Estimate by a penny. The bottom line was also down 14% from the prior-year quarter.
Results were adversely impacted by a rise in expenses and dismal investment banking (IB) performance due to heightened geopolitical and macroeconomic ambiguities. Also, RJF recorded bank loan provision for credit losses during the quarter, which indicates “a weaker macroeconomic outlook.”
Yet, higher interest income and a rise in loan demand acted as tailwinds. Further, the performance of the Private Client Group and Asset Management segments was impressive. Also, the acquisitions done over the past years supported the company’s financials to some extent.
The company CEO and chairman Paul Reilly, said, “Despite sharp equity market declines in the quarter, which are expected to negatively impact asset-based revenues in the fiscal fourth quarter, we are well positioned for the expected continued rise in short-term interest rates. Our strong balance sheet provides flexibility in this challenging and uncertain market environment.”
Net income (GAAP basis) was $299 million, down 3% year over year.
Revenues & Costs Increase
Net revenues were $2.71 billion, increasing 10% year over year. The rise was mainly driven by higher interest income and account and service fees. The top line also beat the Zacks Consensus Estimate of $2.59 billion.
Segment-wise, in the reported quarter, RJ Bank registered a surge of 63% from the prior year in net revenues. This was driven by rising rates and the acquisition of TriState during the quarter. Also, Private Client Group and Asset Management recorded 15% and 1% growth, respectively, in net revenues. Capital Markets’ top line declined 14%. Others recorded negative revenues of $21 million against revenues of $2 million in the prior-year quarter.
Non-interest expenses increased 10% to $2.30 billion. The rise was mainly due to an increase in all cost components. Also, RJF recorded a bank loan provision for credit losses of $56 million against a benefit of $19 million in the prior-year quarter.
As of Jun 30, 2022, client assets under administration were $1.13 trillion, down 3% from the end of the prior-year quarter. Financial assets under management were $182.4 billion, down 5%.
Strong Balance Sheet & Capital Ratios
As of Jun 30, 2022, Raymond James reported total assets of $86.1 billion, up 18% from the prior quarter. Total equity rose 9% sequentially to $9.4 billion.
Book value per share was $43.60, up from $38.28 as of Jun 30, 2021.
As of Jun 30, 2022, total capital ratio was 21.4% compared with 25.6% as of Jun 30, 2021. Tier 1 capital ratio was 20.1% compared with 24.4% as of June 2021-end.
Return on common equity (annualized basis) was 13.3% at the end of the reported quarter compared with 15.9% a year ago.
Share Repurchase Update
During the reported quarter, RJF repurchased 1.14 million shares for $100 million. As of Jun 30, 2022, approximately $900 million remained under the buyback authorization.
Our Take
Raymond James’ global diversification efforts, strategic acquisitions and higher rates are expected to keep supporting top-line growth. However, continuously mounting operating expenses, worsening operating backdrop and the volatile nature of capital markets businesses are near-term concerns.
Raymond James Financial, Inc. Price, Consensus and EPS Surprise
Charles Schwab’s (SCHW - Free Report) second-quarter 2022 adjusted earnings of 97 cents per share handily beat the Zacks Consensus Estimate of 91 cents. The bottom line also jumped 39% from the prior-year quarter.
Results gained from higher rates, which led to an increase in net interest income. Thus, SCHW’s revenues witnessed an improvement despite higher volatility hurting trading income. Also, lower fee waivers and growth in brokerage account numbers acted as tailwinds during the quarter. However, higher expenses were a headwind.
Interactive Brokers Group’s (IBKR - Free Report) second-quarter 2022 adjusted earnings per share of 84 cents missed the Zacks Consensus Estimate of 91 cents. The bottom line reflects a rise of 2.4% from the prior-year quarter.
IBKR recorded a decline in revenues and higher expenses in the quarter under review. A fall in daily average revenue trades further hurt the results. However, the capital position remained strong.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Raymond James (RJF) Q3 Earnings Lag on Weak IB, High Provisions
Raymond James’ (RJF - Free Report) third-quarter fiscal 2022 (ended Jun 30) adjusted earnings of $1.61 per share lagged the Zacks Consensus Estimate by a penny. The bottom line was also down 14% from the prior-year quarter.
Results were adversely impacted by a rise in expenses and dismal investment banking (IB) performance due to heightened geopolitical and macroeconomic ambiguities. Also, RJF recorded bank loan provision for credit losses during the quarter, which indicates “a weaker macroeconomic outlook.”
Yet, higher interest income and a rise in loan demand acted as tailwinds. Further, the performance of the Private Client Group and Asset Management segments was impressive. Also, the acquisitions done over the past years supported the company’s financials to some extent.
The company CEO and chairman Paul Reilly, said, “Despite sharp equity market declines in the quarter, which are expected to negatively impact asset-based revenues in the fiscal fourth quarter, we are well positioned for the expected continued rise in short-term interest rates. Our strong balance sheet provides flexibility in this challenging and uncertain market environment.”
Net income (GAAP basis) was $299 million, down 3% year over year.
Revenues & Costs Increase
Net revenues were $2.71 billion, increasing 10% year over year. The rise was mainly driven by higher interest income and account and service fees. The top line also beat the Zacks Consensus Estimate of $2.59 billion.
Segment-wise, in the reported quarter, RJ Bank registered a surge of 63% from the prior year in net revenues. This was driven by rising rates and the acquisition of TriState during the quarter. Also, Private Client Group and Asset Management recorded 15% and 1% growth, respectively, in net revenues. Capital Markets’ top line declined 14%. Others recorded negative revenues of $21 million against revenues of $2 million in the prior-year quarter.
Non-interest expenses increased 10% to $2.30 billion. The rise was mainly due to an increase in all cost components. Also, RJF recorded a bank loan provision for credit losses of $56 million against a benefit of $19 million in the prior-year quarter.
As of Jun 30, 2022, client assets under administration were $1.13 trillion, down 3% from the end of the prior-year quarter. Financial assets under management were $182.4 billion, down 5%.
Strong Balance Sheet & Capital Ratios
As of Jun 30, 2022, Raymond James reported total assets of $86.1 billion, up 18% from the prior quarter. Total equity rose 9% sequentially to $9.4 billion.
Book value per share was $43.60, up from $38.28 as of Jun 30, 2021.
As of Jun 30, 2022, total capital ratio was 21.4% compared with 25.6% as of Jun 30, 2021. Tier 1 capital ratio was 20.1% compared with 24.4% as of June 2021-end.
Return on common equity (annualized basis) was 13.3% at the end of the reported quarter compared with 15.9% a year ago.
Share Repurchase Update
During the reported quarter, RJF repurchased 1.14 million shares for $100 million. As of Jun 30, 2022, approximately $900 million remained under the buyback authorization.
Our Take
Raymond James’ global diversification efforts, strategic acquisitions and higher rates are expected to keep supporting top-line growth. However, continuously mounting operating expenses, worsening operating backdrop and the volatile nature of capital markets businesses are near-term concerns.
Raymond James Financial, Inc. Price, Consensus and EPS Surprise
Raymond James Financial, Inc. price-consensus-eps-surprise-chart | Raymond James Financial, Inc. Quote
Currently, Raymond James carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance Other Brokerage Firms
Charles Schwab’s (SCHW - Free Report) second-quarter 2022 adjusted earnings of 97 cents per share handily beat the Zacks Consensus Estimate of 91 cents. The bottom line also jumped 39% from the prior-year quarter.
Results gained from higher rates, which led to an increase in net interest income. Thus, SCHW’s revenues witnessed an improvement despite higher volatility hurting trading income. Also, lower fee waivers and growth in brokerage account numbers acted as tailwinds during the quarter. However, higher expenses were a headwind.
Interactive Brokers Group’s (IBKR - Free Report) second-quarter 2022 adjusted earnings per share of 84 cents missed the Zacks Consensus Estimate of 91 cents. The bottom line reflects a rise of 2.4% from the prior-year quarter.
IBKR recorded a decline in revenues and higher expenses in the quarter under review. A fall in daily average revenue trades further hurt the results. However, the capital position remained strong.