US investment bank Jefferies saw its first-quarter earnings slashed on the back of weak trading in fixed income bonds and a slowdown in capital markets, results revealed yesterday.
Blaming a “tepid” bond market for a 56 per cent decline in fixed-income revenue to $126m (£85m) in the first quarter, the results will alarm Wall Street investors as Jefferies is seen as a bellwether of banking performance.
International bond markets have displayed marked volatility in recent months, as declining oil prices and renewed turbulence in Greece have tested investor sentiment.
The firm also experienced a sharp decline in revenues from its investment banking division, which fell 34 per cent to $272m as bond issuance dried up. However, revenue from equities inched up eight per cent on the year to $204m.
Overall company net revenues also declined by 35 per cent to $592m. However, net earnings plunged a startling 90 per cent to $11.7m, down from $112m in the same period of 2014.
Chairman and chief executive Richard Handler attempted to remain upbeat saying: “Despite these results, and in view of an improving environment, we believe Jefferies’ prospects for the remainder of 2015 are good. Our investment banking backlog is currently solid, and fixed income trading markets appear to have stabilised.”
Shares in parent company Leucadia National Corporation took a hit on the news, closing down 2.69 per cent at $23.14.