Raymond James Financial(RJF) - 2025 Q2 - Quarterly Results

Fiscal Second Quarter of 2025 Results Overall Financial Highlights Raymond James Financial reported strong Q2 and record H1 fiscal 2025 results, driven by diverse revenue growth and robust capital Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Change vs. Q2 2024 | Change vs. Q1 2025 | | :--- | :--- | :--- | :--- | | Net Revenues | $3.40 billion | +9% | -4% | | Net Income (to common shareholders) | $493 million | +4% | -18% | | Diluted EPS | $2.36 | +6% | -17% | | Adjusted Net Income (to common shareholders) | $507 million | +3% | -17% | | Adjusted Diluted EPS | $2.42 | +5% | -17% | First Half Fiscal 2025 Key Financial Metrics | Metric | H1 2025 | Change vs. H1 2024 | | :--- | :--- | :--- | | Net Revenues | $6.94 billion (Record) | +13% | | Pre-tax Income | $1.42 billion (Record) | +15% | | Diluted EPS | $5.22 | +15% | | Adjusted Diluted EPS | $5.36 | +14% | - Client assets under administration reached $1.54 trillion, and Private Client Group assets in fee-based accounts were $872.8 billion, up 6% and 9% respectively over March 2024[4] - The firm repurchased $250 million of common stock in Q2 2025 and an additional $190 million in April 2025 Approximately $1.01 billion remains available under the repurchase authorization as of April 21, 2025[4][19] - CEO Paul Shoukry highlighted strong financial advisor recruiting, a robust investment banking pipeline despite macroeconomic uncertainty, and a strong balance sheet with capital and cash well above targets[3] Segment Results Private Client Group (PCG) The Private Client Group saw 6% YoY revenue growth from asset management fees and continued asset expansion, despite a sequential revenue dip PCG Q2 2025 Performance | Metric | Q2 2025 | Change vs. Q2 2024 | Change vs. Q1 2025 | | :--- | :--- | :--- | :--- | | Net Revenues | $2.49 billion | +6% | -2% | | Pre-tax Income | $431 million | -3% | -7% | | Assets Under Administration | $1.48 trillion | +6% | -1% | | Assets in Fee-Based Accounts | $872.8 billion | +9% | ~0% | | Domestic Net New Assets | $8.8 billion | - | - | - Domestic Private Client Group net new assets for the quarter represented an annualized growth rate of 2.6% from beginning of period assets[12] Capital Markets Capital Markets saw 23% YoY revenue growth from investment banking and fixed income, despite a sequential decline due to market volatility Capital Markets Q2 2025 Performance | Metric | Q2 2025 (millions) | Change vs. Q2 2024 | Change vs. Q1 2025 | | :--- | :--- | :--- | :--- | | Net Revenues | $396 | +23% | -18% | | Investment Banking Revenues | $207 | +21% | -35% | | Pre-tax Income | $36 | N/A (vs. loss) | -51% | - The sequential decrease in revenues was primarily due to unfavorable market conditions leading to decreased investment banking activity, though the pipeline remains robust[9] Asset Management Asset Management achieved strong 15% YoY revenue and 21% pre-tax income growth, driven by increased assets under management and net inflows Asset Management Q2 2025 Performance | Metric | Q2 2025 (millions) | Change vs. Q2 2024 | Change vs. Q1 2025 | | :--- | :--- | :--- | :--- | | Net Revenues | $289 | +15% | -2% | | Pre-tax Income | $121 | +21% | -3% | | Financial Assets Under Management | $245.0 billion | +8% | ~0% | Bank The Bank segment achieved 2% sequential revenue growth, record net loans, and an expanded NIM, while maintaining strong credit quality Bank Q2 2025 Performance | Metric | Q2 2025 | Change vs. Q2 2024 | Change vs. Q1 2025 | | :--- | :--- | :--- | :--- | | Net Revenues | $434 million | +2% | +2% | | Pre-tax Income | $117 million | +56% | -1% | | Net Loans | $48.3 billion (Record) | +9% | +2% | | Net Interest Margin (NIM) | 2.67% | +1 bps | +7 bps | - The loan portfolio continues to maintain strong credit quality and healthy reserves[17] Consolidated Financial Statements and Key Metrics Consolidated Statements of Income Q2 2025 total revenues increased 6% YoY and net revenues rose 9% YoY, driven by asset management and brokerage fees, with a higher effective tax rate Q2 2025 Revenue Breakdown (vs. Q2 2024) | Revenue Source | Q2 2025 (millions) | YoY Change | | :--- | :--- | :--- | | Asset management & related admin fees | $1,725 | +14% | | Total brokerage revenues | $580 | +10% | | Investment banking | $216 | +21% | | Net interest income (Net Revenues - Non-interest Revenues) | $882 | +1% | - Interest expense decreased by 15% YoY to $442 million, contributing to the 9% growth in net revenues despite an 8% decline in interest income[26] - The provision for income taxes increased by 32% YoY to $176 million, reflecting a higher effective tax rate of 26.2% for the quarter[18][26] Consolidated Selected Key Metrics As of March 31, 2025, the company maintained a robust financial position with increased assets, common equity, and strong capital ratios Key Balance Sheet & Capital Metrics (as of March 31, 2025) | Metric | Value (billions) | YoY Change | | :--- | :--- | :--- | | Total Assets | $83.1 | +2% | | Total Common Equity | $12.1 | +11% | | Book Value per Share | $59.74 | +14% | | Tangible Book Value per Share | $51.29 | +16% | | Tier 1 Leverage Ratio | 13.3% | - | Client Asset & Cash Metrics (as of March 31, 2025) | Metric | Value (billions) | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | Client Assets Under Administration | $1,535.9 | +6% | -1% | | Total Clients' Domestic Cash & ESP Balances | $57.8 | -1% | -3% | Consolidated Net Interest Analysis Q2 2025 firmwide net interest income was $521 million with a 2.77% NIM, showing a YoY decline but sequential improvement in the Bank segment Net Interest Margin (NIM) | Period | Firmwide NIM | Bank Segment NIM | | :--- | :--- | :--- | | Q2 2025 | 2.77% | 2.67% | | Q2 2024 | 2.91% | 2.66% | | Q1 2025 | 2.74% | 2.60% | - Total interest-earning assets averaged $76.2 billion for the quarter, yielding 5.08%, down from 5.71% in the prior-year quarter[34] - Total interest-bearing liabilities averaged $65.6 billion for the quarter, with an average rate of 2.74%, down from 3.26% in the prior-year quarter[34] Non-GAAP Financial Measures Reconciliation of Non-GAAP Measures Non-GAAP measures provide a clearer view of core operating results, with Q2 2025 adjusted net income of $507 million and 19.7% adjusted return on tangible common equity - Non-GAAP measures are used to exclude material items not indicative of core operating results, primarily expenses related to acquisitions and amortization of identifiable intangible assets[60] Q2 2025 GAAP to Non-GAAP Reconciliation Summary | Metric | GAAP (millions) | Adjustments (millions) | Non-GAAP (Adjusted) (millions) | | :--- | :--- | :--- | :--- | | Pre-tax Income | $671 | +$19 | $690 | | Net Income (to common shareholders) | $493 | +$14 | $507 | | Diluted EPS | $2.36 | +$0.06 | $2.42 | Q2 2025 Adjusted Returns | Metric | Value | | :--- | :--- | | Adjusted Return on Common Equity | 16.9% | | Adjusted Return on Tangible Common Equity | 19.7% |