Raymond James Financial Reports Fiscal Fourth Quarter and Fiscal 2023 Results
- Record annual net revenues of $11.62 billion and record net income available to common shareholders of $1.73 billion for fiscal 2023, up 6% and 15%, respectively, over fiscal 2022
- Return on common equity of 17.7% and adjusted return on tangible common equity of 22.5%(1) for fiscal 2023
- Domestic Private Client Group net new assets(2)(3) of $14.2 billion for the fiscal fourth quarter and $73.3 billion for fiscal 2023, annualized growth from beginning of period assets of 5.0% and 7.7%, respectively
- Record quarterly net revenues of $3.05 billion, up 8% over the prior year's fiscal fourth quarter and 5% over the preceding quarter
- Quarterly net income available to common shareholders of $432 million, or $2.02 per diluted share, and quarterly adjusted net income available to common shareholders of $457 million(1), or $2.13 per diluted share(1)
- Client assets under administration of $1.26 trillion and financial assets under management of $196.4 billion
- Net interest income and Raymond James Bank Deposit Program ("RJBDP") fees from third-party banks of $711 million during the quarter, up 17% over the prior year's fiscal fourth quarter and flat compared to the preceding quarter
Raymond James Financial, Inc. (NYSE:RJF) today reported record net revenues of $3.05 billion and net income available to common shareholders of $432 million, or $2.02 per diluted share, for the fiscal fourth quarter ended September 30, 2023. Excluding $34 million of expenses related to acquisitions, quarterly adjusted net income available to common shareholders was $457 million(1), or $2.13 per diluted share(1).
Record quarterly net revenues increased 8% over the prior year's fiscal fourth quarter primarily driven by higher asset management and related administrative fees and the benefit of higher short-term interest rates on net interest income and RJBDP fees from third-party banks. The 5% sequential increase in quarterly net revenues was primarily due to higher asset management and related administrative fees and investment banking revenues.
Quarterly earnings were negatively impacted by elevated provisions for legal and regulatory matters, including an incremental $55 million provision related to the previously-disclosed SEC industry sweep on off-platform communications.
Compared to the prior fiscal year, record net revenues of $11.62 billion increased 6%, record earnings per diluted common share of $7.97 increased 14%, and adjusted earnings per diluted common share of $8.30(1) increased 11%. The Private Client Group and Bank segments generated record net revenues and Private Client Group generated record pre-tax income for the fiscal year. Return on common equity was 17.7% and adjusted return on tangible common equity was 22.5%(1).
"We generated record net revenues and record net income to common shareholders for fiscal year 2023, despite the challenging macroeconomic environment," said Chair and CEO Paul Reilly. "Our third consecutive year of record results once again highlights the strength of our diverse and complementary businesses. We enter fiscal 2024 with strong client asset levels and healthy pipelines for growth across the business; however, given uncertainty around interest rates and geopolitical conditions, we remain relentlessly focused on maintaining strong capital ratios and a flexible balance sheet to support our results in any market environment."
Segment Results
Private Client Group
- Domestic Private Client Group net new assets(2)(3) of $14.2 billion for the fiscal fourth quarter and $73.3 billion for fiscal 2023, annualized growth from beginning of period assets of 5.0% and 7.7%, respectively
- Record quarterly net revenues of $2.27 billion, up 14% over the prior year's fiscal fourth quarter and 4% over the preceding quarter
- Record quarterly pre-tax income of $477 million, up 29% over the prior year's fiscal fourth quarter and 16% over the preceding quarter
- Record annual net revenues of $8.65 billion and record annual pre-tax income of $1.76 billion, up 12% and 71%, respectively, over fiscal 2022
- Private Client Group assets under administration of $1.20 trillion, up 16% over September 2022 and down 2% compared to June 2023
- Private Client Group assets in fee-based accounts of $683.2 billion, up 17% over September 2022 and down 2% compared to June 2023
- Total clients' domestic cash sweep and Enhanced Savings Program ("ESP") balances of $56.4 billion, down 16% compared to September 2022 and 3% compared to June 2023
Record quarterly results were primarily driven by higher asset management and related administrative fees, reflecting growth of assets in fee-based accounts during the year, along with an increase in RJBDP fees due to higher short-term interest rates.
Total clients' domestic cash sweep and ESP balances declined 3% compared to June 2023, reflecting lower cash sweep balances largely due to quarterly fee billings and cash sorting activity, which more than offset strong growth in ESP balances. Reflecting higher short-term interest rates, the average yield on RJBDP third-party bank balances of 3.60% increased 175 basis points over the prior year's fiscal fourth quarter and 23 basis points sequentially.
"Advisors are attracted to our robust technology capabilities and client-first values, leading to strong retention and recruiting across our employee, independent contractor and independent RIA affiliation options," said Reilly. "Furthermore, strong financial advisor retention and recruiting results helped us achieve attractive organic growth, with domestic Private Client Group net new asset(2)(3) growth of 7.7% over the prior 12 months."
Capital Markets
- Quarterly net revenues of $341 million, down 15% compared to the prior year's fiscal fourth quarter and up 24% over the preceding quarter
- Quarterly pre-tax loss of $7 million
- Quarterly investment banking revenues of $194 million, down 6% compared to the prior year's fiscal fourth quarter and up 38% over the preceding quarter
- Annual net revenues of $1.21 billion, down 33% compared to fiscal 2022; Annual pre-tax loss of $91 million
The year-over-year declines in quarterly net revenues and pre-tax income were driven primarily by lower fixed income brokerage, affordable housing investments and investment banking revenues. Sequentially, net revenues grew 24% primarily driven by improved M&A and advisory revenues.
"We are encouraged by the 38% sequential improvement in investment banking revenues during the quarter," said Reilly. "Entering fiscal 2024, the investment banking pipeline remains healthy and new business activity is solid, however, the timing of closings is largely dependent on market conditions."
Asset Management
- Quarterly net revenues of $236 million, up 9% over the prior year's fiscal fourth quarter and 4% over the preceding quarter
- Quarterly pre-tax income of $100 million, up 20% over the prior year's fiscal fourth quarter and 12% over the preceding quarter
- Annual net revenues of $885 million and annual pre-tax income of $351 million, down 3% and 9%, respectively, compared to fiscal 2022
- Financial assets under management of $196.4 billion, up 13% over September 2022 and down 2% compared to June 2023
Quarterly net revenues and pre-tax income increased over the prior year's fiscal fourth quarter driven primarily by higher financial assets under management due to net inflows to fee-based accounts in the Private Client Group and net inflows at Raymond James Investment Management ("RJIM"), as well as market appreciation over the prior year. RJIM generated $921 million of net inflows during the fiscal fourth quarter and $2.2 billion of net inflows during the fiscal year.
Bank
- Quarterly net revenues of $451 million, up 5% over the prior year's fiscal fourth quarter and down 12% compared to the preceding quarter
- Quarterly pre-tax income of $78 million, down 37% compared to the prior year's fiscal fourth quarter and up 18% over the preceding quarter
- Bank segment net interest margin ("NIM") of 2.87% for the quarter, down 4 basis points compared to the prior year's fiscal fourth quarter and 39 basis points compared to the preceding quarter
- Record annual net revenues of $2.01 billion and annual pre-tax income of $371 million, up 86% and down 3% compared to fiscal 2022, respectively
- Net loans of $43.8 billion, up 1% over September 2022 and June 2023
Quarterly net revenues increased 5% over the prior-year quarter but declined 12% sequentially, primarily due to lower NIM. The Bank segment's NIM decreased 39 basis points during the quarter to 2.87%, primarily due to increased interest expense from higher-cost funding as ESP balances replaced a portion of lower-cost RJBDP client cash sweep balances, which were swept to third-party banks. Quarterly bank loan provision for credit losses of $36 million primarily reflects an increase in the allowance on corporate loans. The credit quality of the loan portfolio is solid, with criticized loans as a percent of total loans held for investment ending the quarter at 1.17%. Bank loan allowance for credit losses as a percent of total loans held for investment was 1.07%, and bank loan allowance for credit losses on corporate loans as a percent of corporate loans held for investment was 2.03%.
Other
In the fiscal fourth quarter, the Other segment results include the incremental provision related to the previously-disclosed SEC industry sweep on off-platform communications of $55 million, resulting in a negative impact to earnings per diluted share during the quarter of $0.26.
During the fiscal year, the firm repurchased 8.35 million shares of common stock for $788 million at an average price of $94 per share. As of October 25, 2023, approximately $750 million remained available under the Board's approved common stock repurchase authorization. At the end of the quarter, the total capital ratio was 22.8%(4) and the tier 1 leverage ratio was 11.9%(4), both well above regulatory requirements.
A conference call to discuss the results will take place today, Wednesday, October 25, at 5:00 p.m. ET. The live audio webcast, and the presentation which management will review on the call, will be available at www.raymondjames.com/investor-relations/financial-information/quarterly-earnings. For a listen-only connection to the conference call, please dial: 877-400-4403 (conference code: 3778589). An audio replay of the call will be available at the same location until January 24, 2024.
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About Raymond James Financial, Inc.
Raymond James Financial, Inc. (NYSE:RJF) is a leading diversified financial services company providing private client group, capital markets, asset management, banking and other services to individuals, corporations and municipalities. The company has approximately 8,700 financial advisors. Total client assets are $1.26 trillion. Public since 1983, the firm is listed on the New York Stock Exchange under the symbol RJF. Additional information is available at www.raymondjames.com.
Forward-Looking Statements
Certain statements made in this press release may constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning future strategic objectives, business prospects, anticipated savings, financial results (including expenses, earnings, liquidity, cash flow and capital expenditures), industry or market conditions, demand for and pricing of our products, divestitures, anticipated results of litigation, regulatory developments, and general economic conditions. In addition, future or conditional verbs such as "will," "may," "could," "should," and "would," as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from those expressed in the forward-looking statements. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our filings with the Securities and Exchange Commission (the "SEC") from time to time, including our most recent Annual Report on Form 10-K, and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which are available at www.raymondjames.com and the SEC's website at www.sec.gov. We expressly disclaim any obligation to update any forward-looking statement in the event it later turns out to be inaccurate, whether as a result of new information, future events, or otherwise.
Media Contact: Steve Hollister Raymond James 727.567.2824 Investor Contact: Kristina Waugh Raymond James 727.567.7654