Wall Street just got a new sign that dealmaking is making a comeback.
Jefferies Financial Group (JEF) reported third-quarter results Wednesday afternoon showing that investment banking fees rose 47% from a year ago and 18% from the previous quarter.
Those numbers were slightly below what analysts were expecting, and the stock fell 1% in after-hours trading.
But the stock is up 53% since the start of the year.
The Jefferies results give investors the first official look at how investment banking is playing out on Wall Street after a two-year drought. Rivals JPMorgan Chase ( JPM ) and Citigroup ( C ) reported their third-quarter earnings on Oct. 11.
Big banks reaped high profits with a recovery in M&A, IPOs, and underwritten loans in the first half of 2024.
But it’s not yet clear how that will play out in the second half as corporate customers shrug off a new rate hike from the Federal Reserve and doubts about everything from the end of the economy of America to the outcome of the US presidential election.
But other big banks also said that investment banking had risen in the third quarter.
Earlier this month, Citigroup CFO Mark Mason told investors that his company’s investment banking fees could be “up 20% year-over-year,” while JPMorgan COO Daniel Pinto said those fees they will be up “about 15% plus/minus” compared to the same. years ago.
Bank of America (BAC) CEO Brian Moynihan told investors these rates are “essentially flat.” Bank of America reports earnings for the week after JPMorgan and Citigroup.
At Jefferies, the mergers and acquisitions advisory business generated revenue of $592 million, up 108%. Total investment banking fees rose to $949 million.
Revenue from its IPO business, however, fell 2.6%.
“We are pleased with the strength and direction of our profit and return metrics, and we are confident about this year’s balance and our outlook for 2025,” Jefferies CEO Richard Handler and president Brian Friedman said. in the sentence.
Where Jefferies exceeded analyst expectations was in its trading performance, where revenue of $670 million was up 28% from last year. That power was driven by equity trading.
The business picture may not be appealing to all of Jefferies’ biggest players.
Citi’s Mason earlier this month warned of a “4%” year-on-year drop in business, driven by bond market volatility in August.
JPMorgan and Bank of America expected better trading performance for the period, both rising slightly in the low single digits.
Goldman Sachs CEO David Solomon said two weeks ago that corporate income is expected to fall 10% in the third quarter from last year, citing “a very strong quarter in 2023” and “a tougher environment , especially in the month of August.
Solomon did not share expectations for Goldman’s investment banking performance, though he indicated some disappointment in the flow of deals from the private equity community.
“I’m surprised that the investor activity hasn’t opened up as quickly as I expected,” Solomon said at the Barclays event.
“But I expect that as we go through the fall to 2025, we’re going to see donor activity pick up a little bit more.”
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other financial areas.
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