Source Credit : Portfolio Prints
Jefferies Financial Group missed analysts’ expectations on Wednesday, even as its first-quarter profit rose 22%, driven by strong investment banking performance but weighed down by loan losses tied to collapsed companies.
The firm reported $17 million in losses related to exposures to failed British lender Market Financial Solutions and bankrupt U.S. auto-parts supplier First Brands. After adjustments for compensation and taxes, Jefferies said its exposure to First Brands has now been reduced to zero.
Despite ongoing geopolitical uncertainty, Wall Street executives remain optimistic about dealmaking in 2026. Investments in artificial intelligence and a more supportive regulatory environment in the U.S. are expected to drive a rebound in mergers and acquisitions.
“Assuming a reasonable resolution to hostilities in the Middle East, we expect an increasingly strong M&A environment alongside a more active IPO market,” Jefferies President Brian Friedman said in an interview with Reuters.
Jefferies, which has offices across the United Arab Emirates, Saudi Arabia, and Israel, has relocated some staff from the region, while others continue to work remotely. Trading operations, however, remain largely unaffected, Friedman noted.
Global dealmaking activity has already shown strong momentum, with more than $1 trillion in transactions announced so far this year—up 27% compared to the same period last year, according to Dealogic data.
The bank’s investment banking net revenue surged 45% year-on-year to $1.02 billion, helping lift total revenue to $2.02 billion for the quarter.
However, adjusted earnings came in at 85 cents per share, falling short of Wall Street expectations of 96 cents, according to LSEG data.
Jefferies also recorded a non-cash, after-tax goodwill impairment of $36 million related to the sale of its stake in Italian telecommunications company Tessellis.
Morningstar analyst Sean Dunlop noted that compensation expenses were slightly higher than expected, though he described the overall results as solid.
The firm, which acted as a lead underwriter on several major IPOs during the quarter—including York Space and Forgent—also increased its share buyback authorization to $250 million.
Jefferies’ results mark the start of a closely watched earnings season for major Wall Street banks, with JPMorgan Chase, Goldman Sachs, and Morgan Stanley set to report in the coming weeks.
