* Firm says trading and banking not meeting expectations
* Retail brokerage fees flat with January
* Company repeats outlook for cost-cutting
By Jed Horowitz
NEW YORK, March 20 (Reuters) - Raymond James Financial warned Wednesday that its capital markets business so far this year is underperforming expectations and that clients of its core retail brokerage sector are not rushing back into the stock market.
The statement released by Raymond James, which included selected operating data for February, offers further evidence that a revival of investor confidence that emerged in January may have been short-lived.
Earlier this month, Charles Schwab Corp. said its commission income from client trading fell 2 percent in February from January, while rival discount brokerage firms TD Ameritrade Holding and E*Trade Financial Corp said commission revenue fell 0.3 percent and 0.9 percent, respectively, from January.
Raymond James said its securities commission and fee revenues fell 9.2 percent in February from January, though on a per-day basis it said revenue was flat given that there were fewer trading days in February.
While most firms disclose only retail trading information, Raymond James emphasized that its monthly statistics "do not convey the weakness we are experiencing in our capital markets segment."
The St. Petersburg, Florida-based company repeated earlier statements that it will cut costs across much of the company to improve operating margins.
In capital markets, revenue from helping companies raise capital through stock sales has been "reasonably good but merger and acquisitions fees have been lackluster so far this quarter," Raymond James said in its statement.
Trading profits and commission volume from selling bonds and other fixed-income product "remains depressed," with both areas "tracking well below recent historic averages," the statement said.
Raymond James said it continues to "adjust our cost structure to improve margins in the future."
Capital markets in recent quarters has generated about 22 percent of the firm's revenue, compared with 63 percent from its retail, or private client, business. The company receives single-digit contributions from its asset management and commercial bank units.
Raymond James also said its priority in retail brokerage, where it employs about 6,500 financial advisers, is to cut support jobs now that it has integrated the accounts and technology of Morgan Keegan into its own operations. It bought the Tennessee-based firm last April for about $1.2 billion in cash.
Raymond James was more upbeat about its attempts to gather assets from clients, saying assets under management inched up 1.2 percent in February due to both rising stock prices and new money invested with the firm. The online brokerage firms also have been reporting gains in net new assets from clients.
Shares of Raymond James, which have risen about 29 percent in the past 52 weeks, including reinvested dividends, rose 71 cents, or 1.5 percent, Wednesday to $48.12 before the release of its statement.