Jefferies profit falls but fixed income shines

City A.M. Reporter
INVESTMENT bank Jefferies Group posted a lower profit yesterday on weak equity trading volumes and lower earnings from its underwriting business, but the company’s bond trading business recorded a robust quarter.

As the first US investment bank to report earnings, Jefferies is often viewed as an indicator for larger Wall Street banks such as Goldman Sachs and Morgan Stanley.

Fixed income revenue rose 31 per cent to $293m (£186m), while investment banking revenue fell 10 per cent to $297m.

The midsized investment bank earned $63.5m, or 28 cents per share, compared with $80.6m, or 36 cents per share, a year earlier. Revenue fell two per cent to $711m.

Excluding items related to its acquisition of historic stockbroker Hoare Govett from Royal Bank of Scotland and other items, the company earned 31 cents per share.

Jefferies shares came under intense pressure after brokerage MF Global filed for bankruptcy in October 2011 as investors worried that Jefferies might have similar troubles. The company has since taken steps to boost investor confidence by selling billions of dollars of Greek, Irish, Italian, Portuguese and Spanish debt in a matter of days.