* Firm says trading and banking not meeting expectations
* Retail brokerage fees flat with January
* Company repeats outlook for cost-cutting
By Jed Horowitz
NEW YORK, March 20 Raymond James Financial
warned Wednesday that its capital markets business so
far this year is underperforming expectations and that clients
of its core retail brokerage sector are not rushing back into
the stock market.
The statement released by Raymond James, which included
selected operating data for February, offers further evidence
that a revival of investor confidence that emerged in January
may have been short-lived.
Earlier this month, Charles Schwab Corp. said its
commission income from client trading fell 2 percent in February
from January, while rival discount brokerage firms TD Ameritrade
Holding and E*Trade Financial Corp said
commission revenue fell 0.3 percent and 0.9 percent,
respectively, from January.
Raymond James said its securities commission and fee
revenues fell 9.2 percent in February from January, though on a
per-day basis it said revenue was flat given that there were
fewer trading days in February.
While most firms disclose only retail trading information,
Raymond James emphasized that its monthly statistics "do not
convey the weakness we are experiencing in our capital markets
The St. Petersburg, Florida-based company repeated earlier
statements that it will cut costs across much of the company to
improve operating margins.
In capital markets, revenue from helping companies raise
capital through stock sales has been "reasonably good but merger
and acquisitions fees have been lackluster so far this quarter,"
Raymond James said in its statement.
Trading profits and commission volume from selling bonds and
other fixed-income product "remains depressed," with both areas
"tracking well below recent historic averages," the statement
Raymond James said it continues to "adjust our cost
structure to improve margins in the future."
Capital markets in recent quarters has generated about 22
percent of the firm's revenue, compared with 63 percent from its
retail, or private client, business. The company receives
single-digit contributions from its asset management and
commercial bank units.
Raymond James also said its priority in retail brokerage,
where it employs about 6,500 financial advisers, is to cut
support jobs now that it has integrated the accounts and
technology of Morgan Keegan into its own operations. It bought
the Tennessee-based firm last April for about $1.2 billion in
Raymond James was more upbeat about its attempts to gather
assets from clients, saying assets under management inched up
1.2 percent in February due to both rising stock prices and new
money invested with the firm. The online brokerage firms also
have been reporting gains in net new assets from clients.
Shares of Raymond James, which have risen about 29 percent
in the past 52 weeks, including reinvested dividends, rose 71
cents, or 1.5 percent, Wednesday to $48.12 before the release of