Jefferies Profit Slumps As Geopolitical Upheaval Hurts Deals

Jefferies Financial Group Inc.’s second-quarter earnings declined on a slump in the firm’s investment-banking and capital-markets businesses, with activity muted by economic and geopolitical turmoil. 

Revenue for the three months ended May 31 also dropped, slipping 1.3% to $1.63 billion, the New York-based firm said in a statement Wednesday. The biggest drops came in equity underwriting and debt capital markets, which both fell from a year earlier, when trading and deals were both climbing.

“Heightened uncertainty slowed down deal formation and deal progress as well as capital raising generally,” Jefferies President Brian Friedman said in an interview. The beginning of 2025 has been a “period of adjustment and transition to the new US leadership as well as continuing geopolitical concerns.”

The results offer a glimpse into how Wall Street navigated the period as President Donald Trump’s tariff policies took hold and geopolitical upheaval intensified. The numbers signal that the nation’s biggest banks, scheduled to report their second-quarter results next month, may also report declines for investment-banking revenue.

Still, Jefferies struck an optimistic note about the second half of the year, citing overall improving activity levels and “an abundance of discussions with clients around capital formation, strategic opportunities and their need to transact,” Chief Executive Officer Rich Handler and Friedman wrote in the statement.

While Jefferies doesn’t give earnings guidance, executives continue to point to increased momentum, including a backlog of activity and “strong” dialog around potential investment-banking transactions. 

“Over the last several months, corporates and sponsors have become more comfortable that the impact of tariffs or other developments around the world will be less material than perhaps was originally believed,” Friedman said.

Interest-rate projections and geopolitical conditions are more balanced now than they were several months ago, he said. 

“The sum of all this is that the visibility and confidence to make meaningful decisions has increased considerably,” Friedman said.

Second-quarter investment-banking revenue fell 2.7% to $766.3 million, Jefferies said, pointing to stronger performance in advisory revenue, which rose 61% on market-share gains. That positive momentum was offset by a slump in equity-underwriting revenue, which fell 51% from a year earlier, in line with a reduction in deal activity caused by a volatile equity market, Jefferies said. Debt-underwriting net revenue was flat for the second quarter.

Jefferies’ capital-markets unit generated $704.2 million of revenue in the quarter, down less than 1% from a year earlier. The decline was due to lower volume in the fixed-income business, which slumped 37% to $177.9 million compared to the prior year. The firm’s equity capital markets business helped to counter that drop, with revenue rising 24% to $526.2 million amid increased global trading volume and activity in corporate derivatives, Jefferies said.

Asset-management revenue fell to $154.6 million from $156.5 million a year earlier, Jefferies said, pointing to improved performance across strategies.

Overall, Jefferies’ second-quarter earnings totaled $88 million, or 40 cents a share, down almost 40% from a year earlier.

The bank’s shares fell 2.6% at 4:21 p.m. in late New York trading. They declined 29% from the start of the year through Wednesday’s close.