December 19, 2017 / 3:17 PM / a year ago

Record year for Jefferies after strong Q4 in underwriting

LONDON, Dec 19 (IFR) - Jefferies has posted record revenues and profit for the year ended November, following buoyant debt and equity underwriting activity in the final three months of the year.

The independent US investment bank said investment banking revenues in the quarter to the end of November jumped 27% from a year ago to US$528.7m. Equity underwriting surged 97% to US$122.4m, while debt underwriting jumped 36% to US$174.5m.

Meanwhile, Jefferies said its advisory fees were up 3% on the year to US$231.8m.

The strong investment banking performance helped offset a difficult quarter for the bank’s fixed income trading business, where revenues fell 37% from a year ago to US$94.7m. Equities trading revenues were up 10% from a year ago to US$194.4m.

Despite the fall in trading revenues, the stellar quarter for underwriting quarter helped the bank to its best year in its 55-year history, however.

Jefferies, which is the investment banking unit of Leucadia National, reported net revenues of US$3.2bn for the year to the end of November, up 32% from a year before. Its pretax profit was US$504.9m, compared to just US$30m a year before.

“Our strategy of prioritising expansion of our investment banking effort continues to succeed and should yield further growth over the next several years,” said Rich Handler, chairman and chief executive.

He said the competitive landscape continued to provide opportunities for Jefferies, which is not constrained by some of the rules imposed on its big Wall Street rivals.

Jefferies’ December-November financial year means it reports a month ahead of most rivals so it is often seen as a barometer for Wall Street’s health.

Several big investment banks have warned that trading revenues could be down about 15% in the fourth quarter from a year ago. (Reporting by Steve Slater; Editing by Gareth Gore)

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