By Lananh Nguyen and Prakhar Srivastava
Jan 7 (Reuters) – Jefferies beat estimates for fourth-quarter profit on Wednesday, boosted by a rebound in dealmaking and strong underwriting, giving investors an early signal about the strength of Wall Street’s investment-banking business.
Banks have been buoyed by a rebound in merger activity, shaking off earlier pressures from spring tariff-driven market volatility and deal postponements tied to the October government shutdown.
Renewed corporate confidence and a friendlier regulatory environment have drawn companies back to the negotiating table, boosting banks’ fees from advising on takeovers and capital raises.
Total net revenue from investment banking jumped 20.4% to $1.19 billion from a year earlier.
However, Jefferies said it posted a pre-tax loss of $30 million related to its investment in Point Bonita in the quarter, reflecting lingering strains in private credit.
“2025 also delivered serious disappointment with the fraud and bankruptcy of First Brands substantially impacting Point Bonita, a fund of which we are the investment advisor,” company executives said in a letter to the shareholders.
Results from heavyweight rivals, including Morgan Stanley, Goldman Sachs and JPMorgan Chase, next week will provide a broader picture of how far the recovery in investment-banking activity has progressed.
“(This) should be a strong year for M&A and advisory activity, as well as capital markets new issuance,” Jefferies President Brian Friedman told Reuters in an interview.
“The resurgence is broad in the M&A business across really all sectors. The capital markets, particularly equity capital markets, skew a bit toward growth,” Friedman added.
DEALMAKING MAKES A COMEBACK
Global investment banking revenue rose 15% from a year earlier to almost $103 billion, the second-highest after 2021, Dealogic data shows. Jefferies’ fees were the seventh highest across banks over the same period.
Analysts expect the momentum to carry into the new year as expectations of additional interest-rate cuts and a more accommodating regulatory environment spur companies to pursue more deals.
Advisory revenue rose 6.3% to $634.2 million in the quarter, a performance that marked its second-best quarter on record.
The M&A market usually restarts for the year with big corporates taking the lead, which was the case in 2025, Friedman told Reuters.
Once large companies begin doing deals, activity typically spreads quickly to other corporates and then to private equity, he said, adding that dialog and activity with private equity firms were already picking up.
Jefferies said its equity and debt underwriting revenue climbed 77.7% and 25.8%, respectively.
It acted as underwriter on several of 2025’s most notable IPOs, including eToro, Bullish and Figure.
Revenue from the capital markets business, which houses its trading desks, rose 6.2% to $691.9 million.
On an adjusted basis, net earnings attributable to common shareholders rose to $213.5 million, or 96 cents per share, in the three months ended November 30. That compares with $205.8 million, or 91 cents per share, a year earlier.
Analysts on average had expected a profit of 94 cents per share, according to data compiled by LSEG.
Total quarterly net revenue rose nearly 5.7% to $2.07 billion.
(Reporting by Prakhar Srivastava in Bengaluru and Lananh Nguyen in New York; Editing by Anil D’Silva and Sherry Jacob-Phillips)
