- Domestic Private Client Group net new assets(1) of $23.2 billion for the fiscal first quarter, 9.8% annualized growth rate from beginning of period assets
- Quarterly net revenues of $2.79 billion, flat compared to the prior year’s fiscal first quarter and down 2% compared to the preceding quarter
- Record quarterly net income available to common shareholders of $507 million, or $2.30 per diluted share, and quarterly adjusted net income available to common shareholders of $505 million(2), or $2.29 per diluted share(2)
- Client assets under administration of $1.17 trillion and financial assets under management of $185.9 billion
- Record net loans in the Bank segment of $44.1 billion, up 69% over December 2021 and 2% over September 2022
- Net interest income and Raymond James Bank Deposit Program (“RJBDP”) fees from third-party banks of $723 million during the quarter, up 253% over the prior year’s fiscal first quarter and 19% over the preceding quarter
- Annualized return on common equity for the quarter of 21.3% and annualized adjusted return on tangible common equity for the quarter of 26.1%(2)
Raymond James Financial, Inc. (NYSE: RJF) today reported net revenues of $2.79 billion and net income available to common shareholders of $507 million, or $2.30 per diluted share, for the fiscal first quarter ended December 31, 2022. Excluding expenses related to acquisitions and the favorable impact of an insurance settlement received during the quarter, quarterly adjusted net income available to common shareholders was $505 million(2), or $2.29 per diluted share(2).
Quarterly net revenues were flat compared to the prior year’s fiscal first quarter and down 2% compared to the preceding quarter, largely driven by the benefit of higher short-term interest rates on net interest income and RJBDP fees from third-party banks, offset by lower investment banking revenues and asset management and related administrative fees.
Record quarterly net income available to common shareholders increased 14% over the prior year’s fiscal first quarter largely due to higher net interest income and RJBDP fees from third-party banks. Annualized return on common equity for the fiscal first quarter was 21.3% and annualized adjusted return on tangible common equity was 26.1%(2).
“During a volatile and challenging market environment, we generated record quarterly earnings as the benefit of higher interest rates more than offset the decline in capital markets results,” said Chair and CEO Paul Reilly. “Once again, our results highlight the value of having diverse and complementary businesses. While the economic outlook remains uncertain, we are well positioned with strong capital ratios and a flexible balance sheet.”
Segment Results
Private Client Group
- Domestic Private Client Group net new assets(1) of $23.2 billion for the fiscal first quarter, 9.8% annualized growth rate from beginning of period assets
- Record quarterly net revenues of $2.06 billion, up 12% over the prior year’s fiscal first quarter and 4% over the preceding quarter
- Record quarterly pre-tax income of $434 million, up 123% over the prior year’s fiscal first quarter and 17% over the preceding quarter
- Private Client Group assets under administration of $1.11 trillion, down 7% compared to December 2021 and up 7% over September 2022
- Private Client Group assets in fee-based accounts of $633.1 billion, down 7% compared to December 2021 and up 8% over September 2022
- Private Client Group financial advisors of 8,699 increased 235 over December 2021 and 18 over September 2022
- Clients’ domestic cash sweep balances of $60.4 billion, down 18% compared to December 2021 and 10% compared to September 2022
Growth in quarterly net revenues and pre-tax income was driven primarily by the increases in RJBDP fees and net interest income which more than offset the market-driven declines in asset management and related administrative fees and brokerage revenues.
Total clients’ domestic cash sweep balances ended the quarter at $60.4 billion, down 18% compared to December 2021 and 10% compared to September 2022. The sequential decline reflects continued cash sorting activity given the higher short-term interest rate environment. These balances do not include any high-yield savings deposits or money market fund balances. Reflecting higher short-term interest rates, the average yield on RJBDP third-party bank balances was 2.72% in the fiscal first quarter, an increase of 244 basis points over the prior year period and 87 basis points over the preceding quarter.
“With our continued focus on retaining, supporting and attracting high-quality financial advisors, we generated strong domestic net new assets of approximately $23 billion(1) during the quarter, an annualized growth rate of 9.8%,” said Reilly. “Recruiting activity remains strong across all of our affiliation options, driven by our advisor and client-focused culture and leading technology and product offerings.”
Capital Markets
- Quarterly net revenues of $295 million, down 52% compared to the prior year’s fiscal first quarter and 26% compared to the preceding quarter
- Quarterly pre-tax loss of $16 million
- Quarterly investment banking revenues of $133 million, down 68% compared to the prior year’s fiscal first quarter and 36% compared to the preceding quarter
The decline in quarterly net revenues and pre-tax income was largely attributable to lower investment banking revenues. Fixed income brokerage revenues declined from the prior-year quarter as the favorable impact of revenues from our July 1, 2022 acquisition of SumRidge Partners was more than offset by decreased activity from depository clients.
“Capital markets activity slowed considerably from record-setting results a year ago, driven by continued market volatility and macroeconomic uncertainties,” said Reilly. “Although the investment banking pipeline is healthy, we expect the current headwinds will continue negatively impacting the timing of closings.”
Asset Management
- Quarterly net revenues of $207 million, down 12% compared to the prior year’s fiscal first quarter and 4% compared to the preceding quarter
- Quarterly pre-tax income of $80 million, down 25% compared to the prior year’s fiscal first quarter and 4% compared to the preceding quarter
- Financial assets under management of $185.9 billion, down 9% compared to December 2021 and up 7% over September 2022
The decline of quarterly net revenues and pre-tax income compared to the prior-year quarter was largely attributable to lower financial assets under management, as net inflows into fee-based accounts in the Private Client Group were offset by fixed income and equity market declines.
Bank
- Record quarterly net revenues of $508 million, up 178% over the prior year’s fiscal first quarter and 19% over the preceding quarter
- Quarterly pre-tax income of $136 million, up 33% over the prior year’s fiscal first quarter and 11% over the preceding quarter
- Bank segment net interest margin (“NIM”) of 3.36% for the quarter, up 144 basis points over the prior year’s fiscal first quarter and 45 basis points over the preceding quarter
- Record net loans of $44.1 billion, up 69% over December 2021 and 2% over September 2022
Growth in quarterly net revenues and pre-tax income was primarily due to NIM expansion, along with higher assets. The Bank segment’s NIM increased 45 basis points during the quarter to 3.36%, reflecting higher short-term interest rates and the relatively high concentration of floating-rate assets. Net loans grew 2% over the preceding quarter primarily driven by higher corporate loans and residential mortgages. The bank loan loss provision for credit losses of $14 million in the quarter reflects changes to macroeconomic assumptions, in contrast to the bank loan benefit for credit losses in the prior-year quarter. The credit quality of the loan portfolio remains strong, with criticized loans as a percent of total loans held for investment ending the quarter at 1.01%, down from 2.75% at December 2021 and 1.14% at September 2022. Bank loan allowance for credit losses as a percent of total loans held for investment was 0.92%, and bank loan allowance for credit losses on corporate loans as a percent of corporate loans held for investment was 1.64%.
Other
The Other segment includes the receipt of a $32 million insurance settlement related to a previously settled litigation matter. The effective tax rate for the quarter was 21.9%, reflecting a tax benefit recognized for share-based compensation that vested during the period.
In December, the Board of Directors increased the quarterly cash dividend on common shares 24% to $0.42 per share and authorized common stock repurchases of up to $1.5 billion, replacing the previous authorization of $1 billion. During the fiscal first quarter, the firm repurchased 1.29 million shares of common stock for $138 million at an average price of $106 per share. As of January 25, 2023, $1.4 billion remained available under the Board’s approved common stock repurchase authorization. At the end of the quarter, the total capital ratio was 21.5%(3) and the tier 1 leverage ratio was 11.3%(3), both well above the regulatory requirements.
A conference call to discuss the results will take place today, Wednesday, January 25, at 5:00 p.m. ET. The live audio webcast, and the presentation which management will review on the call, will be available at www.raymondjames.com/investor-relations/financial-information/quarterly-earnings. For a listen-only connection to the conference call, please dial: 800-954-0647 (conference code: 22025784). An audio replay of the call will be available at the same location until April 28, 2023.
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About Raymond James Financial, Inc.
Raymond James Financial, Inc. (NYSE: RJF) is a leading diversified financial services company providing private client group, capital markets, asset management, banking and other services to individuals, corporations and municipalities. The company has approximately 8,700 financial advisors. Total client assets are $1.17 trillion. Public since 1983, the firm is listed on the New York Stock Exchange under the symbol RJF. Additional information is available at www.raymondjames.com.
Forward-Looking Statements
Certain statements made in this press release may constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning future strategic objectives, business prospects, anticipated savings, financial results (including expenses, earnings, liquidity, cash flow and capital expenditures), industry or market conditions, demand for and pricing of our products, acquisitions, divestitures, anticipated results of litigation, regulatory developments, and general economic conditions. In addition, words such as “expects,” and future or conditional verbs such as “will,” “may,” “could,” “should,” and “would,” as well as any other statement that necessarily depends on future events, is intended to identify forward-looking statements. Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from those expressed in the forward-looking statements. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our filings with the Securities and Exchange Commission (the “SEC”) from time to time, including our most recent Annual Report on Form 10-K, and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which are available at www.raymondjames.com and the SEC’s website at www.sec.gov. We expressly disclaim any obligation to update any forward-looking statement in the event it later turns out to be inaccurate, whether as a result of new information, future events, or otherwise.
Media Contact: Steve Hollister Raymond James 727.567.2824 Investor Contact: Kristina Waugh Raymond James 727.567.7654
