Raymond James Financial rises on FQ4 beat, expects fees to be hit in FQ1 2023

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Diversified financial services company Raymond James Financial (RJF) increased by ~7% after reporting a FQ4 beat, and the company expects fees to be adversely impacted in FQ1 2023.

FQ4 non-GAAP EPS of $2.08 beats by $0.08, while revenue of $2.83B (+4.8% Y/Y) beats by $80M.

The revenue growth was largely driven by the benefit of higher short-term interest rates on net interest income and the bank's deposit program fees from third-party banks.

Here is a Q/Q comparison of the company's net interest income and Raymond James Bank Deposit Program, or RJBDP, fees:

The private client group reported net revenues of $1.99B, up 11% Y/Y. Capital markets net revenue of $399B was down 28% on a yearly basis.

Net revenue at the asset management division was down 9% Y/Y to $216M. The banking segment reported a 143% growth to $428M.

Return on common equity stood at 18.7%, compared to 21.3% a year ago.

Common equity tier 1 ratio was 19%, compared to 25% a year ago and 20% in the previous quarter.

"Equity markets declined further during the quarter, resulting in a 3% sequential decline in private client group assets and fee-based accounts. This decline will create a headwind for asset management and related administrative fees in the fiscal first quarter, which I expect to be down close to 4% sequentially in the fiscal first quarter of 2023," CFO Paul Shoukry said during the company's earnings call.

The company expects a 20% decline in investment banking fees in FQ1 2023.