Raymond James Financial Reports Fiscal Third Quarter of 2024 Results

Rhea-AI Summary

Raymond James Financial reported strong fiscal Q3 2024 results, with record quarterly net revenues of $3.23 billion, up 11% year-over-year. Net income available to common shareholders reached $491 million, or $2.31 per diluted share. Adjusted net income was $508 million, or $2.39 per diluted share.

Highlights include:

• Record client assets under administration of $1.48 trillion, up 15% from June 2023
• Private Client Group assets in fee-based accounts at $820.6 billion, up 18% year-over-year
• Domestic Private Client Group net new assets of $16.5 billion, representing 5.2% annualized growth
• Total clients' domestic cash sweep and ESP balances of $56.4 billion, down 3% from both June 2023 and March 2024

The company repurchased approximately 2 million shares for $243 million during the quarter.

Positive

• Record quarterly net revenues of $3.23 billion, up 11% year-over-year
• Net income available to common shareholders of $491 million, up from previous year
• Record client assets under administration of $1.48 trillion, up 15% year-over-year
• Private Client Group assets in fee-based accounts reached $820.6 billion, up 18% year-over-year
• Domestic Private Client Group net new assets of $16.5 billion, representing 5.2% annualized growth
• Record net loans of $45.1 billion, up 4% year-over-year
• Strong capital ratios with total capital ratio at 23.6% and tier 1 leverage ratio at 12.7%

Negative

• Total clients' domestic cash sweep and ESP balances down 3% compared to both June 2023 and March 2024
• Bank segment net interest margin decreased to 2.64%, down 62 basis points year-over-year
• Capital Markets segment reported a quarterly pre-tax loss of $14 million

Insights

Financial Analyst

Raymond James Financial's fiscal Q3 2024 results demonstrate robust growth and financial strength. The company reported record quarterly net revenues of $3.23 billion, up 11% year-over-year, driven primarily by higher asset management and related administrative fees. This growth reflects the company's ability to capitalize on favorable market conditions and expand its client base.

The Private Client Group segment showed particularly strong performance, with record assets under administration of $1.42 trillion and impressive net new asset growth. The 5.2% annualized growth rate in domestic net new assets indicates strong client acquisition and retention, which bodes well for future revenue streams.

However, the Bank segment faced some headwinds, with net revenues down 19% year-over-year due to a lower net interest margin. Despite this, the segment's pre-tax income grew significantly, benefiting from lower expenses and a bank loan benefit for credit losses.

The company's capital position remains strong, with a total capital ratio of 23.6% and a tier 1 leverage ratio of 12.7%, both well above regulatory requirements. This financial flexibility, combined with the ongoing share repurchase program, suggests confidence in the company's future prospects and commitment to shareholder returns.

Overall, Raymond James' diversified business model and strong market position have enabled it to deliver solid results in a challenging environment. The company's ability to grow assets and generate new business while maintaining a strong balance sheet positions it well for continued success.

Market Research Analyst

Raymond James' fiscal Q3 results reflect broader trends in the wealth management industry. The record $1.48 trillion in client assets under administration and $820.6 billion in fee-based accounts underscore the ongoing shift towards fee-based advisory services and the growing importance of asset management in the industry.

The company's success in attracting net new assets, with a 5.2% annualized growth rate, is particularly noteworthy in a competitive landscape. This suggests that Raymond James' advisor-centric model and technology investments are resonating with both clients and financial advisors.

However, the decline in clients' domestic cash sweep and Enhanced Savings Program balances, down 3% year-over-year, may indicate a broader trend of clients seeking higher-yielding investment options in the current interest rate environment. This could potentially pressure margins in the future if the trend continues.

The Capital Markets segment's performance, with investment banking revenues up 23% year-over-year, suggests a gradual recovery in deal activity. However, the segment's pre-tax loss indicates ongoing challenges in this cyclical business.

Looking ahead, Raymond James' strong recruiting pipeline and growing assets position it well to capitalize on industry consolidation and the increasing demand for comprehensive wealth management services. However, the company will need to navigate potential headwinds such as market volatility, interest rate fluctuations and regulatory changes to maintain its growth trajectory.

ST. PETERSBURG, Fla., July 24, 2024 (GLOBE NEWSWIRE) --

• Record client assets under administration of $1.48 trillion and record Private Client Group assets in fee-based accounts of $820.6 billion, up 15% and 18%, respectively, over June 2023
• Domestic Private Client Group net new assets(1) of $16.5 billion for the fiscal third quarter, annualized growth from beginning of period assets of 5.2%
• Record quarterly net revenues of $3.23 billion, up 11% over the prior year’s fiscal third quarter and 4% over the preceding quarter
• Quarterly net income available to common shareholders of $491 million, or $2.31 per diluted share; quarterly adjusted net income available to common shareholders of $508 million(2), or $2.39 per diluted share(2)
• Total clients’ domestic cash sweep and Enhanced Savings Program (“ESP”) balances of $56.4 billion, down 3% compared to both June 2023 and March 2024
• Record net revenues of $9.36 billion and record net income available to common shareholders of $1.46 billion for the first nine months of fiscal 2024, up 9% and 12%, respectively, over the first nine months of fiscal 2023
• Repurchased approximately 2 million shares of common stock for $243 million during the fiscal third quarter
• Annualized return on common equity of 18.2% and annualized adjusted return on tangible common equity of 22.5%(2) for the first nine months of fiscal 2024

Raymond James Financial, Inc. (NYSE: RJF) today reported net revenues of $3.23 billion and net income available to common shareholders of $491 million, or $2.31 per diluted share, for the fiscal third quarter ended June 30, 2024. Excluding $23 million of expenses related to acquisitions, quarterly adjusted net income available to common shareholders was $508 million(2), or $2.39 per diluted share(2).

Record quarterly net revenues increased 11% over the prior year’s fiscal third quarter and 4% over the preceding quarter, primarily driven by higher asset management and related administrative fees which grew to $1.61 billion. Compared to both the prior-year and preceding quarters, quarterly net income available to common shareholders increased largely due to higher net revenues and a bank loan benefit for credit losses compared to a bank loan provision in the comparative periods.

For the first nine months of the fiscal year, record net revenues of $9.36 billion increased 9%, record earnings per diluted share of $6.85 increased 15%, and record adjusted earnings per diluted share of $7.10(2) increased 15% over the first nine months of fiscal 2023. The Private Client Group and Asset Management segments generated record net revenues and pre-tax income during the first nine months of the fiscal year. For this period, annualized return on common equity was 18.2% and annualized adjusted return on tangible common equity was 22.5%(2).

“We generated another strong quarter of results with record revenues, record client assets, record bank loans and strong domestic Private Client Group net new asset annualized growth of 5.2%,” said Chair and CEO Paul Reilly. “We are well positioned entering the fiscal fourth quarter with strong capital ratios and a flexible balance sheet.”

Segment Results
Private Client Group

• Record quarterly net revenues of $2.42 billion, up 11% over the prior year’s fiscal third quarter and 3% over the preceding quarter
• Quarterly pre-tax income of $441 million, up 7% over the prior year’s fiscal third quarter and down 1% compared to the preceding quarter
• Record Private Client Group assets under administration of $1.42 trillion, up 15% over June 2023 and 2% over March 2024
• Record Private Client Group assets in fee-based accounts of $820.6 billion, up 18% over June 2023 and 3% over March 2024
• Domestic Private Client Group net new assets(1) of $16.5 billion for the fiscal third quarter, or annualized growth from beginning of period assets of 5.2%; Domestic Private Client Group net new assets(1) of $47.7 billion for the first nine months of fiscal 2024, or annualized growth from beginning of period assets of 5.8%
• Total clients’ domestic cash sweep and ESP balances of $56.4 billion, down 3% compared to both the prior year’s fiscal third quarter and the preceding quarter

Record quarterly net revenues grew 11% year-over-year and 3% sequentially primarily driven by higher asset management and related administrative fees, reflecting growth of assets in fee-based accounts during the year.

“As we remain focused on retaining, supporting and attracting high-quality financial advisors, we generated strong domestic net new assets of $16.5 billion(1) during the quarter, an annualized growth rate of 5.2%,” said Reilly. “Recruiting activity remains strong and existing and prospective advisors continue to be attracted to our advisor and client-focused culture and leading technology and product offerings.”

Capital Markets

• Quarterly net revenues of $330 million, up 20% over the prior year’s fiscal third quarter and 3% over the preceding quarter
• Quarterly pre-tax loss of $14 million
• Quarterly investment banking revenues of $173 million, up 23% over the prior year’s fiscal third quarter and 1% over the preceding quarter

Quarterly net revenues grew 20% over the prior-year quarter primarily the result of higher investment banking revenues. Sequentially, quarterly net revenues increased 3%, largely due to higher affordable housing investments business revenues.

“Investment banking revenues increased slightly from the preceding quarter driven by higher debt and equity underwriting revenues, whereas M&A revenues declined,” said Reilly. “We continue to be optimistic about our healthy M&A pipeline and new business activity; however, timing of closings remains difficult to predict.”

Asset Management

• Record quarterly net revenues of $265 million, up 17% over the prior year’s fiscal third quarter and 5% over the preceding quarter
• Quarterly pre-tax income of $112 million, up 26% over the prior year’s fiscal third quarter and 12% over the preceding quarter
• Record financial assets under management of $229.3 billion, up 14% over June 2023 and 1% over March 2024

Record quarterly net revenues grew 17% year-over-year and 5% sequentially largely attributable to higher financial assets under management due to higher equity markets and net inflows into fee-based accounts in the Private Client Group.

Bank

• Quarterly net revenues of $418 million, down 19% compared to the prior year’s fiscal third quarter and 1% compared to the preceding quarter
• Quarterly pre-tax income of $115 million, up 74% over the prior year’s fiscal third quarter and 53% over the preceding quarter
• Bank segment net interest margin (“NIM”) of 2.64% for the quarter, down 62 basis points compared to the prior year’s fiscal third quarter and 2 basis points compared to the preceding quarter
• Record net loans of $45.1 billion, up 4% over June 2023 and 2% over March 2024

Quarterly pre-tax income grew 74% year-over-year predominantly driven by lower expenses which more than offset a decline in net revenues, which was mostly due to lower NIM. The current quarter included a bank loan benefit for credit losses compared to a bank loan provision for credit losses in the same year-ago period, as well as lower RJBDP fees paid to our Private Client Group segment.

The credit quality of the loan portfolio remains solid, with criticized loans as a percent of total loans held for investment ending the quarter at 1.15%, down from 1.21% in the preceding quarter. Bank loan allowance for credit losses as a percent of total loans held for investment was 1.00%, and bank loan allowance for credit losses on corporate loans as a percent of corporate loans held for investment was 2.00%.

Other

During the fiscal third quarter, the firm repurchased 2 million shares of common stock for $243 million at an average price of $122 per share. The firm has repurchased $600 million of common shares through the first nine months of fiscal 2024 leaving approximately $945 million available under the Board’s approved common stock repurchase authorization. At the end of the quarter, the total capital ratio was 23.6%(3) and the tier 1 leverage ratio was 12.7%(3), both well above regulatory requirements.

A conference call to discuss the results will take place today, Wednesday, July 24, 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. A replay of the call will be available at the same location until October 23, 2024. For a connection to the conference call, please dial: 888-596-4144 (conference code: 3778589).

Click here to view full earnings results, earnings supplement, and earnings presentation.

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 8,800 financial advisors. Total client assets are $1.48 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 (including changes in interest rates and inflation), demand for and pricing of our products (including cash sweep and deposit offerings), anticipated timing and benefits of our acquisitions, and our level of success integrating acquired businesses, 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.

FAQ

What were Raymond James Financial's (RJF) key financial results for Q3 2024?

Raymond James Financial (RJF) reported record quarterly net revenues of $3.23 billion, up 11% year-over-year, and net income available to common shareholders of $491 million, or $2.31 per diluted share, for Q3 2024.

How much did Raymond James Financial's (RJF) client assets under administration grow in Q3 2024?

Raymond James Financial's (RJF) client assets under administration reached a record $1.48 trillion in Q3 2024, up 15% compared to June 2023.

What was Raymond James Financial's (RJF) Private Client Group net new asset growth for Q3 2024?

Raymond James Financial's (RJF) Domestic Private Client Group net new assets were $16.5 billion for Q3 2024, representing an annualized growth rate of 5.2% from the beginning of the period.

How many shares did Raymond James Financial (RJF) repurchase in Q3 2024?

Raymond James Financial (RJF) repurchased approximately 2 million shares of common stock for $243 million during Q3 2024, at an average price of $122 per share.