Jefferies profit plunges on dealmaking lull

(Reuters) – Jefferies Financial Group on Monday reported a 53% fall in fourth-quarter profit, as lingering economic uncertainty kept dealmaking in check.

Investment banking giants struggled last year as high interest rates and an economic slowdown weighed on companies’ dealmaking confidence, resulting in mergers and acquisitions volume hitting a decade low globally.

Still, Jefferies posted investment banking revenue of $2.29 billion for 2023, above levels in 2019, the last “normal” year for investment banking, CEO Richard Handler and President Brian Friedman said in a statement.

Investment banking revenue rose 2.5% to $576.7 million in the quarter, driven by strong performance in equity and debt underwriting, while capital markets revenue fell 1.8% to $481.3 million due to weaker fixed income performance.

Total net revenue tumbled nearly 17% to $1.20 billion.

The bank’s profit fell to $65.6 million, or 29 cents per share, in the three months ended Nov. 30, from $140.2 million, or 57 cents per share, a year earlier.

The biggest hit to earnings came from the asset management unit, where revenue plunged nearly 64% from last year, which had included results from businesses Jefferies has since shed.

Jefferies kicks off the earnings season for U.S. banks, with Wall Street giants JPMorgan Chase (NYSE:), Bank of America, Wells Fargo and Citigroup set to report their results on Friday.

Last month, Jefferies expanded its international presence by setting up an investment banking and capital markets unit in Canada.