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Jefferies sees record Q3 earnings and revenues, sets tone for Wall Street's quarter

Julia La Roche
·Correspondent
·3 mins read

Jefferies Financial Group (JEF) reported record earnings results during the third-quarter, driven by record revenues and strong trading activity, despite ongoing uncertainty from the coronavirus pandemic and rock-bottom interest rates.

For the quarter ended Aug. 31, the investment bank — considered a bellwether for Wall Street — posted total revenues of over $1.38 billion, up 78% from the $777 million reported in the same period a year ago.

The quarter's net earnings came in at $268 million, up from the $65 million reported during the third quarter of 2019.

The results sent Jefferies' shares 15% higher in the after-market session to trade near $19.75, after closing at $17.07 on Wednesday.

Jeffries Group LLC headquarters at 520 Madison Ave. in New York (Photo by James Leynse/Corbis via Getty Images)
Jeffries Group LLC headquarters at 520 Madison Ave. in New York (Photo by James Leynse/Corbis via Getty Images)

With the economy continuing to expand in the face of still rising COVID-19 infections, Jefferies’ strong quarter also sets the tone for the bulge bracket banks’ Q3 earnings, which kick off next month.

“It really takes a crisis like this one where the office is taken away to know what you truly have,” CEO Rich Handler told Yahoo Finance in an email.

“At Jefferies, we have a lot of really talented, collaborative and dedicated people who are working tirelessly for their clients and they are doing it from their dens, kitchens and bedrooms. We could not be prouder of our team,” he added.

Jefferies earnings since 1990
Jefferies earnings since 1990

Investment banking revenues, driven by equity underwriting, hit a record for the quarter, coming in at $589 million versus $403 million a year ago — a surge of 46%.

The pandemic’s uncertainty "encouraged companies across the world to raise long-term and permanent capital," Handler said in a statement. He noted that dealmaking and merger activity were "a bit muted" in the quarter, but that the fourth quarter backlog "remains robust."

During the quarter, the bank also posted $655 million combined Capital Markets net revenues, compared to $342 million in the same period a year prior, a 91% jump. Breaking those markets revenues down, equities hit a record of $319 million in the quarter, while fixed income revenues hit $336 million.

"The strong equity markets and more clarity from the Federal Reserve on future rate policy provided a supportive trading environment for investors," Handler added.

In a company-wide memo, Handler gave a nod to the economic strains being created by COVID-19 and ongoing social turmoil.

"The world is in pain and, while individuals at Jefferies are also having personal challenges in 2020, we still must count our blessings,” the CEO wrote.

“Our collective success this year must serve as a growing reminder of our good fortune and reinforce our obligation and privilege to do our fair share in helping those in need, promoting fairness and equality, and doing our best both individually and as a firm to help society heal in this moment of extreme challenge," he added.

Handler mentioned the firm's offices are open with social distance protocols in place for those who want to use them. However, it's up the individuals to make their own decisions regarding where to work without any pressure, he added.

"Vaccines and therapeutics will eventually arrive, but we are not going to take any unnecessary chances with any of you, our partners. Choose what is right for you and your family to remain safe and comfortable," Handler wrote.

Julia La Roche is a Correspondent at Yahoo Finance. Follow her on Twitter.