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Jefferies beats quarterly profit estimates on lift from merchant banking

Sept 28 (Reuters) – Jefferies Financial Group Inc (JEF.N) on Wednesday beat analysts’ estimates for third-quarter profit as robust performance in its merchant banking unit helped cushion the blow from sluggish dealmaking.

The merchant banking division was boosted by the sale of its wood and lumber products business, Idaho Timber, the lender said.

The lender said in July it would decrease the size of its merchant banking portfolio which includes investments in property, coal and oil, along with other public companies within a restructuring.

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The machine reported a 60% jump in revenue to $397.8 million in the 90 days ended Aug. 31, Jefferies said, weighed against a 32% drop in its crown jewel, the investment banking and capital markets unit.

Investors have a tendency to look at Jefferies’ results as a harbinger for Wall Street, because the company reports before its bigger rivals such as for example JPMorgan Chase & Co (JPM.N), Goldman Sachs Group Inc and Morgan Stanley .

Following a stellar run in 2021, U.S. investment banking giants have struggled for some of the year as market sell-off crushes corporate appetite for dealmaking.

Monetary policy tightening by the U.S. Federal Reserve to tame decades-high inflation and aggressive rhetoric from policymakers also have crushed hopes of any relief in the near term.

Excluding costs linked with a regulatory settlement, New York-based Jefferies earned $1.10 per share, comfortably beating Refinitiv IBES estimate of 73 cents.

Net gain tumbled 52%, while revenue slumped 21% from the year earlier.

The business’s shares were up 2.7% in extended trading on Wednesday, after closing the standard session 2.3% higher.

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Reporting by Niket Nishant in Bengaluru

Our Standards: The Thomson Reuters Trust Principles.

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