UPDATE 2-Evercore profit falls but beats estimates amid weak M&A market
* Q3 adj EPS $0.40 vs est $0.34
* Net revenue down 6 percent to $153 mln
* Investment banking revenue down 7 percent
* Shares up 7 pct
By Tanya Agrawal
Oct 25 (Reuters) - Evercore Partners Inc's adjusted profit fell in the third quarter as a difficult mergers and acquisitions market weighed on its revenue but the boutique investment bank said it remains cautiously optimistic about the economic environment.
"The business will be better next year but I wouldn't bet my kids on it," Roger Altman, the firm's founder and chairman said on a post-earnings conference call.
Evercore shares, which have fallen 6 percent since the beginning of the year, were trading up 7 percent at $27.47 on Thursday on the New York Stock Exchange.
Evercore, founded as a merger and asset management firm in 1996 by Altman, a former U.S. deputy treasury secretary, said investment banking revenue fell 7 percent to $128.2 million.
"Everyone thought it would be a terrible quarter. It was bad but not horrible and that is why there is positive stock reaction," said Richard Bove, an analyst at Rochdale Securities.
There have been roughly $1.7 trillion in deals announced so far this year, down 14 percent from last year, according to Thomson Reuters data.
Global investment banking fee income has fallen this year to its lowest since early 2009.
Global investment banking fees totalled $15.5 billion in the third quarter, down 3.8 percent from the year earlier, according to data from Thomson Reuters and Freeman Consulting, as the euro zone debt crisis unsettled markets.
INVESTMENT BANKS TIGHTEN BELTS
Volatile financial markets, a dearth of deals and tighter capital rules in the wake of the financial crisis are forcing investment banks across the world to slash costs.
Rival Lazard Ltd on Thursday said it would embark on a cost-savings program that will cut annual expenses by $125 million, which include staff cuts.
Swiss bank UBS is set to cut 400 investment bank jobs while Credit Suisse said it would cut an extra 1 billion Swiss francs ($1.1 billion) of costs, including axing more jobs.
Evercore, however, said it would continue to hire steadily.
Evercore's ratio of compensation to revenue - a closely watched metric on Wall Street, where bonuses and benefits dominate expenses - fell on an adjusted pro forma basis to 62 percent of revenue from 60 percent a year earlier.
"Smaller investment banks like Evercore and Greenhill are focusing on niche markets and continue to gain market share," analyst Bove said.
Adjusted net income fell to $17.3 million, or 40 cents per share, from $19.8 million, or 46 cents per share, a year earlier. Net revenue fell 6 percent to $153 million.
Analysts had expected a profit of 34 cents per share, on revenue of $139 million, excluding items, according to Thomson Reuters I/B/E/S.
The company, which has a market value of about $730.7 million, announced a new stock repurchase program for 5 million shares, more than double the size of its prior program.