Raymond James Financial on Wednesday reported net revenues of $1.86 billion and net income of $261 million—or a quarterly record $1.81 in earnings per diluted share—over its fiscal second quarter.
The St. Petersburg, Fla.-based financial services giant easily beat Wall Street earnings estimates of $1.63 per share, with reported revenues coming in line with expectations.
The numbers represent a 3 percent increase in net revenue over the fiscal second quarter of 2018, largely attributable to record investment banking revenues and higher net interest income. However, net revenue declined by 4 percent from the fiscal first quarter of this year because of a 9 percent decline in asset management and related administrative fees.
“We are pleased with our results, as all four of our core segments generated record net revenues during the first six months of the fiscal year,” said Chairman and CEO Paul Reilly in released comments. “Moreover, we are well positioned entering the second half of the fiscal year, with records for client assets under administration of $796 billion, total number of Private Client Group financial advisors of 7,862, and net loans at Raymond James Bank of $20.1 billion.”
Part of the revenue decline can be attributed to the volatility and financial market declines of late 2018, which caused a drop of asset totals in fee-based Raymond James Private Client Group accounts. Yet the firm reports that improvement of the pretax margin on net revenues caused the increase in its earnings per diluted share. The company’s $47 million worth of stock repurchases in the fiscal second quarter also helped earnings per share.
Overall, the $1.27 billion in fiscal second quarter revenues from the Private Client Group were the same as they were in 2018’s second quarter and down 6 percent from the first quarter of 2019, despite the firm’s reporting of record assets under administration at quarter’s close of $760 billion. The discrepancy between end-of-quarter assets and revenue occurs because most of the firm’s advisory clients are billed based on their account balances at the beginning of the quarter.
Raymond James also reported that it has increased its Private Client Group financial advisor head count by 47 in the fiscal second quarter to a total of 7,862 advisors.
Elsewhere, fiscal second quarter revenues increased year over year by 20 percent for the firm’s Capital Markets segment and 18 percent for Raymond James Bank, but declined 1 percent for the asset management segment.
For the first half of its fiscal year 2019, Raymond James Financial has posted record net revenues of $3.79 billion, a 7 percent increase, and adjusted earnings per share of $3.61, an 11 percent increase from the first half of fiscal 2018.
Over the past two years, Raymond James has beaten Wall Street’s estimates for earnings and revenue 50 percent of the time, according to Seeking Alpha.