Raymond James’ (RJF Quick QuoteRJF - Free Report) first-quarter fiscal 2024 (ended Dec 31, 2023) adjusted earnings of $2.40 per share surpassed the Zacks Consensus Estimate of $2.25. The bottom line was up 5% from the prior-year quarter.

Robust investment banking and brokerage performances aided the Capital Markets segment’s results. The performances of the Private Client Group and the Asset Management segments were also decent. The acquisitions over the past years supported the company’s financials to some extent.

However, RJF recorded bank loan provision for credit losses during the quarter on the tough macroeconomic outlook. Also, expenses increased in the quarter, which hurt the results to some extent.

Net income available to common shareholders (GAAP basis) was $497 million or $2.32 per share compared with $507 million or $2.30 per share in the prior-year quarter.

Revenues Improve, Costs Rise

Net revenues were $3.01 billion, up 8% year over year. The top line beat the Zacks Consensus Estimate of $2.99 billion.

Segment-wise, in the reported quarter, the Private Client Group recorded 8% growth in net revenues, Asset Management’s net revenues rose 14%, and Capital Markets’ top line increased 15%. Others recorded revenues of $26 million compared with $9 million in the prior-year quarter. RJ Bank registered a fall of 13% from the prior year in net revenues.

Non-interest expenses rose 12% year over year to $2.38 billion. Our estimate for non-interest expenses was also $2.38 billion. Also, RJF recorded a bank loan provision for credit losses of $12 million.

As of Dec 31, 2023, client assets under administration were $1.37 trillion, up 17% from the end of the prior-year quarter. Financial assets under management of $215 billion grew 16%. Our estimates for client assets under administration and financial assets under management were $1.26 trillion and $198.6 billion, respectively.

Balance Sheet & Capital Ratios Strong

As of Dec 31, 2023, Raymond James has total assets of $80.13 billion, up 2% from the prior quarter. Total equity rose 6% sequentially to $10.71 billion.

Book value per share was $51.32, up from $45.28 as of Dec 31, 2022.

As of Dec 31, 2023, the total capital ratio was 23.0% compared with 21.6% as of Dec 31, 2022. The Tier 1 capital ratio was 21.6% compared with 20.3% as of December 2022-end.

Return on common equity (annualized basis) was 19.1% at the end of the reported quarter compared with 21.3% a year ago.

Share Repurchase Update

In the reported quarter, RJF repurchased 1.41 million shares for $150 million.
As of Jan 24, 2024, $1.39 billion remained under the buyback authorization.

Our Take

Raymond James’ global diversification efforts, strategic acquisitions and higher rates are expected to support top-line growth. However, elevated operating expenses and the volatile nature of capital markets businesses are near-term concerns.

Currently, Raymond James carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance & Earnings Release Date of Other Investment Banks

Jefferies Financial Group Inc.’s (JEF Quick QuoteJEF - Free Report) fourth-quarter fiscal 2023 (ended Nov 30) earnings per share of 29 cents beat the Zacks Consensus Estimate of 26 cents. However, the bottom line compared unfavorably with 57 cents earned in the prior-year quarter.

JEF’s results were aided by a decline in expenses and an improvement in the equity and debt underwriting business. However, a decrease in equities and fixed-income capital markets revenues acted as an undermining factor.

Moelis & Company (MC Quick QuoteMC - Free Report) is slated to report quarterly results on Feb 7.

Over the past seven days, the Zacks Consensus Estimate for MC’s quarterly loss has been unchanged.