Raymond James showed improvement year-over-year, but growth slowed in the third quarter of this year as rising interest rates dampened earnings across business segments.
Revenue for the firm was $1.1 billion, up 2% year-over-year, but down 3% from last quarter. From that, the firm brought in $84 million in profit, up 7% from the prior years quarter and up 5% from the preceding quarter.
Most of our businesses performed as expected in the June quarter with the exception of Fixed Income, Raymond James chairman and CEO, Paul Reilly, said in a statement. An upsurge in interest rates in June resulted in trading losses despite lower inventory levels.
Results for the firms private client group, which includes both its independent and traditional employee brokerage channel, were similarly affected by rising interest rates. Revenue for the third quarter was $741 million, up 2% from last years quarter and 8% from the second quarter. Net income of $56.7 million was up 8% year-over-year but down 12% from last quarter.
Lower margins were partially due to a fall in Canadian-based client assets and a negative impact from a rise in medium- and long-term interest rates in June, the firm said. Total client assets under administration fell about $1 billion from $406.8 billion in the second quarter to $405.8 in the third quarter.
Total headcount of financial advisors in the U.S. was also down slightly, falling from 5,489 at the end of last June to 5,428 this year.
Those declines were offset, however, by a boost in securities commissions and investment advisor fees, which were up 4% and 29% respectively from last quarter.
Expenses related to the acquisition of Morgan Keegan, which was finalized in February of this year, also fell to $13.5 million from $20 million last quarter.
We continue to operate at elevated support levels as the familiarization and utilization of our systems by our legacy Morgan Keegan advisors will take some time, Reilly said. We are proud of the retention and integration efforts of our associates. With a continuation of good equity markets and some improvement in Fixed Income results, we look forward to resuming revenue growth and overall margins.