Jefferies profit falls on weaker bond trading, equity underwriting

Published: 2025-03-26 16:23:16 ET JEF

(Reuters) - Jefferies' first-quarter profit fell nearly 15%, the bank reported on Wednesday, as bond trading weakened and stock market deals were stalled due to uncertainty sparked by shifting U.S. trade policy and geopolitical turmoil.

The results offer investors an early glimpse at how Wall Street's investment banking units may fare in early 2025, as equity underwriting struggles with market volatility and uneven demand for IPOs, follow-on offerings and private placements.

While some deals have moved forward, geopolitical tensions and rapidly evolving U.S. policy under President Donald Trump's administration have dampened expectations for a broader rebound in dealmaking, prolonging a three-year slowdown.

"The capital markets have become increasingly more challenging due to the uncertainties that have arisen around U.S. policy and geopolitical events," Jefferies CEO Richard Handler and President Brian Friedman said in a statement.

But the executives also said that "there remains strong dialogue around potential investment banking transactions (capital raising and advisory)".

Jefferies' revenue from equity underwriting fell 39% in the reported quarter.

The bank's capital markets business, which houses its trading desks, reported revenues of $698 million, down nearly 4% versus a year earlier.

Fixed-income net revenues decreased 18% to $289 million due to a strong year-ago quarter and lower volatility translating to a decline in overall volumes, Jefferies said.

In a bright spot, market share gains helped the bank report a 17% jump in revenues from advisory. It also posted a 54% surge in debt underwriting revenue, together lifting investment banking performance by 7%.

Among deals in the quarter, Jefferies was a bookrunner on cybersecurity firm SailPoint's $1.4 billion U.S. IPO and served as a financial adviser to Intra-Cellular Therapies on its $14.6 billion acquisition by Johnson & Johnson.

Larger rivals Morgan Stanley, Goldman Sachs and JPMorgan Chase are set to report earnings next month, offering a broader view of Wall Street's dealmaking recovery.

Net earnings attributable to common shareholders fell to $127.8 million, or 57 cents per share, in the three months ended February 28. That compares to $149.6 million or 69 cents per share, a year earlier.

(Reporting by Manya Saini in Bengaluru and Lananh Nguyen in New York; Editing by Pooja Desai)