Jefferies Profit Falls Sharply

Jefferies Group LLC on Thursday said earnings in its third quarter fell by almost half, the first indicator of how a recent spate of volatility has whipsawed parts of Wall Street.

The New York securities firm attributed the weak results to a disappointing trading environment for fixed-income, especially in distressed debt and high-yield bonds.

"The third quarter's sales and trading environment was initially slow due to concerns about a possible Greek exit from the Euro, and then became more volatile and challenging in the second half of the quarter as news of China's economic growth deceleration led to a further deterioration of trading volumes and continuing declines in global asset prices," the bank's CEO, Richard Handler, said in a news release.

For the quarter ended Aug. 31, net income was $2.1 million compared with $83.6 million a year earlier. Revenue was $578.9 million, down by nearly one-third from the $843.3 million it took in the year-ago period.

Excluding impacts related to the company's exit from the Bache commodities and financial derivatives unit, earnings declined 48% to $46.8 million and revenue fell 27% to $583.2 million.

The investment firm lost money trading bonds during the quarter, posting negative fixed income revenue of $18.2 million, compared with year-earlier revenue of $195.3 million. Equities-trading revenue rose 18% to $203.1 million.

Concerns over the growth of the Chinese and global economies dragged down stock markets around the world in August. The Dow Jones Industrial Average fell 6.6% in the month, the largest percentage decline in over five years.

Fees from underwriting stocks and bonds fell 10% to $241 million, while fees from advising on deals dropped 25% to $148.8 million.

Write to Peter Rudegeair at [e-mail]

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(END) Dow Jones Newswires

September 17, 2015 10:25 ET (14:25 GMT)

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