Jefferies Reports Continued Record Performance in Q3 of FY2020

Jefferies Financial Group Inc., (NYSE: JEF) the parent company of FXCM Group, has published its financial results for the third quarter of the 2020 financial year, in which the company has achieved record quarterly net revenues.

Jefferies 2020 financial year ends on the 30th of November 2020. Therefore, the company’s third-quarter is the three months ended on the 31st of August 2020.

During the quarter, the American investment bank and financial services company achieved record quarterly net revenues, according to a filing with the Securities and Exchange Commission (SEC), with revenues coming in at $1.38 billion.

In the third quarter, Jefferies also posted record pre-tax income of $363 million and record net earnings of $268 million and return on tangible equity of 23.2 per cent. This solid performance follows on from a record previous quarter.

Jefferies Q3 performance builds on Q2 2020 record results

As Finance Magnates reported, in the second quarter of 2020, the firm saw net revenue of $1.03 billion, pre-tax income of $173 million, net earnings of $129 million, and return on tangible equity of 11.6 per cent. 

Therefore, in Q3, net revenue was higher by around 34.0 per cent, pre-tax income more than doubled quarter-on-quarter, rising by 109.8 per cent, and return on tangible equity was also stronger comparatively in the third quarter.

For the company’s combined Capital Markets operations, net revenues were $655 million for the third quarter. From this, Jefferies noted record Equities net revenues of $319 million and Fixed Income net revenues of $336 million. Before allocated net interest, the firm also reported record asset management revenues of $122 million for the three-month period. 

For the first three quarters of Jefferies 2020 financial year, which is the nine months ended on the 31st of August 2020, the company recorded Merchant Banking pre-tax loss of $58 million, reflecting positive contributions from Idaho Timber, Vitesse and FXCM, the company said.

Capital Markets revenue led by fixed income and equities

Rich Handler, the CEO of Jefferies, and Brian Friedman, the President, said in the statement: “We are very pleased to report Jefferies Financial Group quarterly net income of $304 million, driven by Jefferies Group record quarterly net revenues and record quarterly net earnings for the second time this year. Jefferies Group’s return on tangible equity of 23.2%1 demonstrates the operating leverage inherent in our business model. 

“Our strong results reflect Jefferies Group becoming an ever increasing portion of our overall business, greater productivity through growing market share with a limited increase in headcount and constant focus on control of operating costs. Our depth of capital markets knowledge and capabilities, combined with the breadth of our investment banking relationships, have positioned Jefferies as a leading firm serving an ever expanding client base across the world.

“Capital Markets quarterly net revenues of $655 million was led by record Equity revenues and strong Fixed Income results across virtually every business line, which included material contributions from Europe and Asia. The strong equity markets and more clarity from the Federal Reserve on future rate policy provided a supportive trading environment for investors.

“Jefferies Group experienced record net revenues across Leucadia Asset Management, which were $122 million for the third quarter and $173 million for the first nine months of the year, 44% higher than the first nine months of 2019 (before allocated net interest2) on allocated capital of approximately $1 billion.”