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Jefferies Financial Group (NYSE:JEF) posted stronger-than-expected Q4 2023 earnings in a transition year, even as its investment banking business felt the pain of lower capital markets issuance and muted M&A activity.
Q4 EPS of $0.29, vs $0.22 consensus, increased from $0.22 in Q3 and dropped from $0.57 in Q4 2022, which was an unusually strong quarter for the capital markets and investment banking.
Total net revenue of $1.20B for the quarter ended Nov. 30, 2023, topping the $1.15B consensus estimate, increased from $1.18B in Q3 and slid from $1.44B in Q4 2022.
"2023 was a transition year in the economy, in capital markets, in our industry, and at Jefferies (JEF)," said CEO Richard Handler and President Brian Feldman.
While its Investment Banking and Capital Markets units dealt with challenging conditions, its Equities, Fixed Income, and Asset Management businesses performed well.
"We are hopeful that 2023's results will represent a trough year and, as such, it wasn't too bad," Handler and Feldman said. During the transition, the firm built up its ranks to take advantage of the next upturn. "While our recruiting efforts have largely been in Investment Banking, we have also hired incremental talent in Equities, Fixed Income, Research, Alternative Asset Management and Support," management said.
Jefferies (JEF) stock dipped 2.4% in Monday after-hours trading.
Investment Banking and Capital Markets net revenue of $1.06B slipped from $1.17B in the previous quarter and edged up from $1.05B in the year-ago period.
Asset Management net revenue of $140.6M rose from $10.1M (which was reduced by negative revenue of $25M from its merchant banking business) in Q3 and compared with $389.1M in Q4 2022.
Total non-interest expenses of $1.11B rose from $1.09B in the previous quarter and dropped from $1.24B a year ago. Compensation and benefits expense was $612.3M down from $644.1M in Q3 and $659.1M in Q4 2022.