Raymond James' Q2 Earnings Lag, Stock Slides 2.3% on Muted IB Business

Core Viewpoint - Raymond James (RJF) reported lower-than-expected second-quarter fiscal 2025 results, leading to a 2.3% decline in shares during after-hours trading. Adjusted earnings per share were $2.42, slightly below the Zacks Consensus Estimate of $2.44, but showed a 5% increase year-over-year [1][2]. Financial Performance - Net income available to common shareholders was $493 million, or $2.36 per share, up from $474 million, or $2.22 per share, in the prior-year quarter [3]. - Quarterly net revenues reached $3.40 billion, a 9% increase year-over-year, but fell short of the Zacks Consensus Estimate of $3.43 billion. The Private Client Group saw a 6% growth in net revenues, Asset Management's revenues rose 15%, and Capital Markets' revenues jumped 23% [4]. - Non-interest expenses increased by 9% year-over-year to $2.73 billion, primarily due to higher compensation, commissions, and investment sub-advisory fees. The company recorded a bank loan provision for credit losses of $16 million, down 24% [5]. Asset Management - As of March 31, 2025, client assets under administration totaled $1.54 trillion, up 6% from the prior-year quarter, while financial assets under management grew 8% to $245 billion [6]. Balance Sheet Strength - Total assets were $83.13 billion, a 1% increase from the prior quarter, and total equity rose 2% to $12.13 billion. Book value per share increased to $59.74 from $52.60 a year ago. The total capital ratio improved to 24.8% from 23.3% year-over-year, and the Tier 1 capital ratio rose to 23.5% from 21.9% [7]. Return on Equity - Return on common equity on an annualized basis was 16.4%, down from 17.5% a year ago [8]. Share Repurchase Activity - In the reported quarter, Raymond James repurchased shares worth $250 million [9]. Strategic Outlook - The company’s global diversification efforts, strategic acquisitions, and relatively high interest rates are expected to support top-line growth, despite concerns over elevated operating expenses and macroeconomic uncertainties related to tariff negotiations [10][11].