Raymond James Earnings Decline 17 Percent on Market Slump

Raymond James Earnings Decline 17 Percent on Market Slump

Raymond James Financial’s fiscal first quarter earnings fell 17 percent from a year ago to 74 cents a share, missing analysts’ expectations by 11 cents a share, according to Seeking Alpha. Net income for the quarter was $106.3 million, down 16 percent from a year ago and 18 percent sequentially. Net revenues of $1.27 billion were up 2 percent from a year ago but down 5 percent over last quarter.

The firm attributes the results to equity market declines, higher expenses related to growth and increased reserves for legal and regulatory matters in the private client group.

“Our long-term results should benefit from the recent rise in short-term interest rates as well as the quarter-end records we achieved for client assets under administration and net loans at Raymond James Bank,” said CEO Paul Reilly.

Here are some of the highlights:

  • Within the firm’s private client group, net revenues were $872.3 million, up 3 percent from a year ago but down 3 percent sequentially, due to lower asset-based revenues caused by lower equity markets, lower transactional commissions and new issue sales credits.
  • The segment’s pre-tax income of $69.1 million, down 25 percent year-over-year, was impacted by the revenue decline and higher expenses associated with technology and recruiting advisors.
  • The firm added 91 net new advisors during the quarter, bringing the total headcount to 6,687, up 351 from December 2014.
  • In December, the company agreed to acquire Deutsche Asset & Wealth Management’s private client brokerage in a deal that will add about 200 advisors. The transaction is expected to close in September 2016, and the advisors will operate under the Alex. Brown division of Raymond James.
  • Assets under administration grew 3 percent from a year ago and 4 percent sequentially to $473.1 billion.
  • On a call with analysts Thursday morning, Reilly said the company doesn’t view the robo-advisor trend as an imperative for the business, nor a fundamental threat. The firm already does a lot of asset allocation, and most asset managers that have bought robos have volunteered to rent them to the firm. “It’ll be interesting when they compare their performance results with managed results and also the help they get in this kind of market through robo-advisors,” Reilly said. 
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