- Domestic Private Client Group net new assets(1) of $21.5 billion for the fiscal second quarter, 8.4% annualized growth rate from beginning of period assets
- Record quarterly net revenues of $2.87 billion, up 7% over the prior year’s fiscal second quarter and 3% over the preceding quarter
- Quarterly net income available to common shareholders of $425 million, or $1.93 per diluted share, and quarterly adjusted net income available to common shareholders of $446 million(2), or $2.03 per diluted share(2)
- Client assets under administration of $1.22 trillion and financial assets under management of $194.4 billion
- Net interest income and Raymond James Bank Deposit Program (“RJBDP”) fees from third-party banks of $731 million during the quarter, up 226% over the prior year’s fiscal second quarter and 1% over the preceding quarter
- Record net revenues of $5.66 billion and record net income available to common shareholders of $932 million for the first half of fiscal 2023, up 4% and 21%, respectively, over the first half of fiscal 2022
- Annualized return on common equity of 19.3% and annualized adjusted return on tangible common equity of 24.2%(2) for the first half of fiscal 2023
Raymond James Financial, Inc. (NYSE: RJF) today reported record net revenues of $2.87 billion and net income available to common shareholders of $425 million, or $1.93 per diluted share, for the fiscal second quarter ended March 31, 2023. Excluding $28 million of expenses related to acquisitions, quarterly adjusted net income available to common shareholders was $446 million(2), or $2.03 per diluted share(2).
Record quarterly net revenues increased 7% over the prior year’s fiscal second quarter. The benefit of higher short-term interest rates on net interest income and RJBDP fees from third-party banks was partially offset by declines in asset management and related administrative fees, investment banking revenues and brokerage revenues. The 3% sequential increase in quarterly net revenues was primarily due to higher asset management and related administrative fees and net interest income.
Quarterly net income available to common shareholders increased 32% over the prior year’s fiscal second quarter, largely due to higher net interest income and RJBDP fees from third-party banks. Sequentially, net income available to common shareholders decreased 16% primarily due to higher compensation expense, as well as higher legal and regulatory costs predominantly related to one unfavorable arbitration award during the quarter. The preceding quarter also included receipt of a $32 million favorable insurance settlement.
For the first six months of the fiscal year, record net revenues of $5.66 billion increased 4%, record earnings per diluted share of $4.23 increased 17%, and adjusted earnings per diluted share of $4.31(2) increased 13% over the first half of fiscal 2022. The Private Client Group segment generated record net revenues and pre-tax income during the first six months of the fiscal year. Annualized return on common equity was 19.3% and annualized adjusted return on tangible common equity was 24.2%(2).
“Over our six decades, we have maintained an unwavering commitment to placing clients first through conservative decision making that keeps us well-positioned over the long term,” said Chair and CEO Paul Reilly. “Despite the challenging environment and high market volatility, we generated record net revenues and record net income to common shareholders during the first six months of the fiscal year, up 4% and 21%, respectively, over fiscal 2022, highlighting the strength of our complementary and diverse businesses. As we look ahead, we are well positioned with strong capital ratios and a flexible balance sheet to remain a source of strength and stability for advisors and their clients.”
Segment Results
Private Client Group
- Domestic Private Client Group net new assets(1) of $21.5 billion for the fiscal second quarter, 8.4% annualized growth rate from beginning of period assets
- Record quarterly net revenues of $2.14 billion, up 12% over the prior year’s fiscal second quarter and 4% over the preceding quarter
- Record quarterly pre-tax income of $441 million, up 107% over the prior year’s fiscal second quarter and 2% over the preceding quarter
- Private Client Group assets under administration of $1.17 trillion, down 2% compared to March 2022 and up 5% over December 2022
- Private Client Group assets in fee-based accounts of $666.3 billion, down 2% compared to March 2022 and up 5% over December 2022
- Total clients’ domestic cash sweep and Enhanced Savings Program (“ESP”) balances of $52.2 billion, down 32% compared to March 2022 and 14% compared to December 2022; the ESP raised $2.7 billion of net new balances in March 2023
The year-over-year 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. The quarter’s results were negatively impacted by an increase in legal expenses, largely driven by one unfavorable arbitration award.
Total clients’ domestic cash sweep and ESP balances ended the quarter at $52.2 billion, down 32% compared to March 2022 and 14% compared to December 2022. The sequential decline reflects the expected cash sorting activity, slightly offset by the ESP which added $2.7 billion since its full launch in early March 2023. Reflecting higher short-term interest rates, the average yield on RJBDP third-party bank balances increased 53 basis points to 3.25% in the fiscal second quarter; however, the benefit of higher rates was more than offset by declining third-party bank sweep balances.
“We generated strong domestic net new assets of $21.5 billion(1) during the quarter, an annualized growth rate of 8.4%, in spite of the volatile market conditions, as advisors continue to value our advisor- and client-focused culture, along with conservative financial management,” said Reilly. “The strong net new asset growth, along with the inflow of balances into the newly-launched Enhanced Savings Program in March, demonstrated our advisors and clients’ confidence in the firm’s strength and stability.”
Capital Markets
- Quarterly net revenues of $302 million, down 27% compared to the prior year’s fiscal second quarter and up 2% over the preceding quarter
- Quarterly pre-tax loss of $34 million
- Quarterly investment banking revenues of $145 million, down 36% compared to the prior year’s fiscal second quarter and up 9% over the preceding quarter
The year-over-year decline in quarterly net revenues and pre-tax income was largely attributable to lower investment banking and brokerage revenues.
“Persistent market volatility and macroeconomic uncertainties continue to dampen capital markets activity across the industry – particularly for investment banking,” said Reilly. “Despite a healthy investment banking pipeline and solid new business activity, the timing of closings is largely dependent on improving market conditions.”
Asset Management
- Quarterly net revenues of $216 million, down 8% compared to the prior year’s fiscal second quarter and up 4% over the preceding quarter
- Quarterly pre-tax income of $82 million, down 20% compared to the prior year’s fiscal second quarter and up 3% over the preceding quarter
- Financial assets under management of $194.4 billion, flat from March 2022 and up 5% over December 2022
The decline in quarterly net revenues and pre-tax income compared to the prior-year quarter was largely attributable to lower assets in fee-based accounts in the Private Client Group, as net inflows were offset by fixed income and equity market declines.
Bank
- Record quarterly net revenues of $540 million, up 174% over the prior year’s fiscal second quarter and 6% over the preceding quarter
- Quarterly pre-tax income of $91 million, up 10% over the prior year’s fiscal second quarter and down 33% compared to the preceding quarter
- Bank segment net interest margin (“NIM”) of 3.63% for the quarter, up 162 basis points over the prior year’s fiscal second quarter and 27 basis points over the preceding quarter
- Net loans of $43.7 billion, up 57% over March 2022 and down 1% compared to December 2022
Growth in quarterly net revenues was primarily due to NIM expansion, along with higher assets. The Bank segment’s NIM increased 27 basis points during the quarter to 3.63%, reflecting higher short-term interest rates and the relatively high concentration of floating-rate assets. Net loans increased 57% over the prior-year quarter, helped by the TriState Capital acquisition, and declined 1% compared to the preceding quarter primarily driven by lower securities-based loans. The credit quality of the loan portfolio remained strong, with criticized loans as a percent of total loans held for investment ending the quarter at 0.92%, down from 2.63% at March 2022 and 1.01% at December 2022. Bank loan allowance for credit losses as a percent of total loans held for investment was 0.94%, and bank loan allowance for credit losses on corporate loans as a percent of corporate loans held for investment was 1.67%.
Other
During the fiscal second quarter, the firm repurchased 3.75 million shares of common stock for $350 million at an average price of $93 per share. As of April 26, 2023, approximately $1.1 billion remained available under the Board’s approved common stock repurchase authorization. At the end of the quarter, the total capital ratio was 21.4%(3) and the tier 1 leverage ratio was 11.5%(3), both well above regulatory requirements. In April, the firm renewed its revolving credit agreement, expanding it from $500 million to $750 million and extending the term for five years.
A conference call to discuss the results will take place today, Wednesday, April 26, 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: 800-928-9281 (conference code: 22026713). An audio replay of the call will be available at the same location until July 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 $1.22 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, future or conditional verbs such as “will,” “may,” “could,” “should,” and “would,” as well as any other statement that necessarily depends on future events, are 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
