Jefferies Revenue Rises as Equities Gains Counter Bond Slump

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Jefferies Group said second-quarter net revenue increased 9.5 percent from a year earlier as gains in its advisory and capital markets business helped counter a 30 percent decline in bond trading.

Net revenue climbed to $791.6 million in the period ended May 31, led by investment banking, which rose 22 percent to $404.3 million from a year earlier, the New York-based company, which is owned by Leucadia National Corp., said Tuesday in a statement. Revenue from equities trading increased 29 percent to $228.2 million, while fixed-income revenue slid to $154.4 million from $217.7 million.

The rest of Wall Street tracks Jefferies’s trading results for clues about how larger rivals, which close their quarters a month later, are faring. Investment banks such as JPMorgan Chase & Co. and Citigroup Inc. report second-quarter results in July. Chief executive officers of those firms said last month the quarter would be similar to the same period last year.

“Our momentum has continued in investment banking,” Richard Handler, who is CEO of both Leucadia and Jefferies, said in the statement. “Our equity net revenues were strong.”

Bond trading at Jefferies improved from the first quarter, when fixed-income revenue plunged to $126 million, down 56 percent from the same period in 2014. Handler had blamed that decline on a lack of trading in the market and fewer companies selling junk bonds. Johan Eveland, who had been co-head of the division, departed in March, leaving Fred Orlan as sole chief.

“Fixed-income results improved each month during the quarter,” Handler, 54, said in Tuesday’s statement.

Bache Sale

Net income slipped 2.6 percent to $60.2 million from a year earlier as non-interest expenses increased 13 percent, according to the statement. Compensation costs rose 19 percent to $480.8 million.

Leucadia fell 0.6 percent to $23.88 at 12:47 p.m. in New York, trimming its yearly advance to 6.5 percent. The shares have declined 9.6 percent since the company acquired Jefferies in March 2013, compared with a 38 percent gain for the Standard & Poor’s 500 Index.

Jefferies said in April it would close its Bache futures division and transfer its clients to other brokers. The wind-down will be “substantially completed” by the end of the summer, the firm said in the statement.

(An earlier version of this story corrected the quarter being reported.)

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