Foreshadowing

30 June 2020 By John Foley Follow @johnsfoley

As markets gyrated, the U.S. investment bank almost tripled its quarterly top line from fixed-income trading. Where revenue goes, traders’ pay goes too. That will be a theme as bigger banks report their earnings, reinforcing one of Covid-19’s more unequal economic side effects.

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Jefferies Group, the investment banking unit of Jefferies Financial, reported $129 million of earnings for the three months ended May 31, a 17% year-on-year increase including record revenue from its capital markets business, which includes sales and trading.

The Wall Street firm made $493 million of revenue from trading fixed income securities, almost tripling from $173 million a year earlier. Underwriting revenue fell 21% to $205 million.

For the first six months of Jefferies’ fiscal year, revenue increased 39% to $2.2 billion, and compensation costs increased 42% to $1.2 billion.

Chief Executive Richard Handler said the quarter had been “surreal” as a result of the coronavirus pandemic and its impact on markets. Jefferies Chief Financial Officer Peg Broadbent died of complications of the disease in March, and was succeeded by Teresa Gendron.

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The Wall Street firm made $493 million of revenue from trading fixed income securities, almost tripling from $173 million a year earlier. Underwriting revenue fell 21% to $205 million.

For the first six months of Jefferies’ fiscal year, revenue increased 39% to $2.2 billion, and compensation costs increased 42% to $1.2 billion.

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