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Jefferies sees earnings boost from bond trading despite coronavirus-hit economy

Julia La Roche
Correspondent

Investment bank Jefferies (JEF), a bellwether for Wall Street, reported strong second-quarter results on Monday and provided a glimpse into what might be expected for the financial sector during the COVID-19 pandemic.

For the quarter ended May 31, Jefferies posted total revenues of over $1 billion, up from $901 million in the same period a year ago. Net earnings for the quarter came in at $130.7 million, up from $109.9 million during the second quarter of 2019. 

Shares of Jefferies climbed more than 1% in the late session, after closing up 4.65% to end the day at $15.14 per share.

In March, as the COVID-19 pandemic took its grip, Jefferies pivoted its 4,000 member team across the globe to work almost entirely from home to execute trades for clients, and put together deals. The firm also lost its CFO, Peg Broadbent, to the coronavirus and later raised $9.25 million, mostly from trading commissions, in his memory. 

“Despite the incredibly challenging, volatile and sad environment, our Jefferies team not only survived the quarter, but truly achieved remarkable results and continued momentum across our products, services, and geographies,” CEO Rich Handler said in a statement. 

Banking revenues for the quarter came in at $316.3 million versus $447.7 million a year ago, a 29% decline. However, for the first six months of the year, investment banking revenues were $894 million — up from $725.7 million in the comparable six month period in 2019, and boosted by record half-year Advisory revenues. 

During the quarter, the bank also posted its best ever combined Capital Markets net revenues, which checked in at $730 million. Equities and fixed income revenues hit $237 million and $493 million, respectively.

In the earnings release, CEO Rich Handler went on to address racial inequality and social injustice plaguing the U.S., which is being roiled by protests tied to the killing of George Floyd.

“As we move forward in our second half of 2020, we at Jefferies will be working to fully acknowledge and attempt to do our part to help eradicate the pain of racism so many African Americans (and others) have been living with for too long. We will listen intently and with open eyes, ears and hearts to learn how we can best be part of the solution,” he said. 

Handler also waded into the increasingly polarizing debate over COVID-19 mitigation measures, concluding the letter by imploring people to wear masks out in public during the pandemic. 

"When you wear a mask, you do it out of respect for your fellow humans and we believe masks (and testing) will be critical to allowing all of us to protect those most at risk as our medical experts work tirelessly to develop the needed therapeutics, vaccines and methods of delivering them in mass quantities,” the CEO wrote.

“Working together will allow us all to best navigate this incredibly difficult period and bridge our path to a more normal way of life that we will never take for granted,” he added.

The second quarter officially ends on Tuesday. Major U.S. companies and Wall Street banks will begin reporting Q2 earnings within the next few weeks, which is expected to reveal the full extent of coronavirus lockdowns.

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