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RJ

RAYMOND JAMES FINANCIAL INC (RJF)·Q4 2025 Earnings Summary

Executive Summary

  • RJF delivered record net revenues of $3.73B and net income to common of $603M; adjusted diluted EPS was $3.11, with annualized ROE of 19.6% and adjusted ROTCE of 23.9% . Versus S&P Global consensus, RJF beat EPS ($3.11 vs. $2.83*) and revenue ($3.73B vs. $3.64B*), driven by asset management fees and investment banking strength . Values retrieved from S&P Global.*
  • Sequentially, net revenues rose 10% and EPS increased 39% as legal provisions normalized and the effective tax rate fell to 17.4% .
  • Segment performance was broad-based: PCG net revenues hit $2.66B (+7% y/y, +7% q/q), Capital Markets net revenues were $513M (+6% y/y, +35% q/q), Asset Management reached $314M (+14% y/y, +8% q/q), and Bank net revenues were $459M (+6% y/y) .
  • Management guided FQ1’26 asset management and related administrative fees to be ~6.5% higher than Q4, expects NII + RJBDP third-party fees to be approximately flat, and set an FY’26 effective tax rate of ~24–25% . Planned buybacks of $400–$500M per quarter continue, supported by $3.7B corporate cash and robust capital ratios .

What Went Well and What Went Wrong

  • What Went Well
    • “Record net revenues and record net income for the fourth quarter and fiscal year 2025,” underscoring diversified growth across businesses (CEO) .
    • Asset Management strength: record quarterly net revenues ($314M) and pre-tax income ($132M) on higher AUM and fee-based inflows .
    • Capital Markets rebound: net revenues up 35% q/q; investment banking up 52% q/q, aided by M&A advisory and debt underwriting; pipeline remains strong .
  • What Went Wrong
    • PCG pre-tax income declined 10% y/y, pressured by lower short-term rates despite fee growth .
    • Bank NIM slipped 3 bps q/q to 2.71%; RJBDP third-party yields declined to 2.91%, reflecting rate cuts .
    • Prior quarter legal matter impacted ytd Capital Markets “Other” expense; though normalized in Q4, it muted full-year margins .

Financial Results

Key Metrics by Quarter

MetricQ2 2025Q3 2025Q4 2025
Net Revenues ($USD Billions)$3.40 $3.40 $3.73
Diluted EPS ($)$2.36 $2.12 $2.95
Adjusted Diluted EPS ($)$2.42 $2.18 $3.11
Pre-tax Margin (%)19.7% 16.6% 19.6%
Return on Common Equity (Annualized, %)16.4% 14.3% 19.6%

Actual vs. Wall Street Consensus (S&P Global)

MetricQ4 2025 ConsensusQ4 2025 Actual
Revenue ($USD Billions)$3.64*$3.73
Primary EPS ($)$2.83*$3.11

Values retrieved from S&P Global.*

Segment Breakdown (Q4 2025)

SegmentNet Revenues ($USD Millions)Pre-tax Income ($USD Millions)
Private Client Group2,660 416
Capital Markets513 90
Asset Management314 132
Bank459 133
Other12 (40)
Intersegment Eliminations(231) —

KPIs and Balance Sheet

KPIQ4 2025Q3 2025Q4 2024
Client Assets Under Administration ($T)$1.73 $1.64 $1.57
PCG Fee-based Assets ($T)$1.01 $0.94 $0.88
Domestic PCG Net New Assets ($B)$17.93 $11.65 $12.97
Sweep + ESP Balances ($B)$56.35 $55.18 $57.88
Bank Loans, Net ($B)$51.57 $49.84 $45.99
Bank NIM (%)2.71 2.74 2.62
RJBDP Yield (Third-Party, %)2.91 2.96 3.34
Effective Tax Rate (%)17.4 22.6 20.8
Total Compensation Ratio (%)64.2 64.8 62.4
Capital Ratios (Total / Tier 1 Leverage, %)24.1 / 13.1 24.2 / 13.1 24.1 / 12.8
RJF Corporate Cash ($B)$3.7 $2.3 —

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Asset Mgmt & Related Admin FeesFQ1 2026Q4’25 expected +~9% vs Q3 (prior) ~+6.5% vs Q4’25 level Lowered (sequential % pace)
NII + RJBDP Third-Party FeesFQ1 2026Q4’25 expected ~-2% q/q (prior) Approximately flat vs Q4’25 Raised
Effective Tax RateFY 2026FY 2025 ~24% (prior) ~24%–25% Maintained to Slightly Raised
Adjusted Pre-tax Margin TargetOngoing≥20% (Investor Day) ≥20% reiterated Maintained
Share RepurchasesOngoingFloor $250M/qtr (prior) $400–$500M/qtr run-rate; pauses possible for M&A/debt Raised
Capital Management TargetOngoingTier 1 leverage target ~10% (prior) Target unchanged; ~$2.6B excess capital capacity Maintained

Earnings Call Themes & Trends

TopicQ-2 (Q2 2025)Q-1 (Q3 2025)Current (Q4 2025)Trend
AI/TechnologyEstablished Chief AI Officer; early use cases; internal tooling Continued investments; pipeline of use cases ~$1B FY tech spend incl. AI; roles created; efficiency and advisor insights focus Accelerating
Advisor RecruitingStrong pipelines; consistent success Accelerating activity; broad-based across channels Record recruiting TTM; pipeline “strongest ever” Improving
Investment BankingRobust pipeline; tariff uncertainty affected timing Expected next two quarters better than prior two Strong q/q rebound; pipeline “strong,” broad-based Improving
Sweep/NIIExpected flat-to-slight decline near-term Q4 guide ~-2% vs Q3 FQ1’26 guide approx flat vs Q4 Stabilizing
Bank Loans & CreditSBL and mortgages lead growth; credit metrics strong Loans +3% q/q; allowance stable Net loans $51.6B; allowance 0.88%; NPA 0.29% Improving volumes, stable credit
Capital ReturnBuybacks resumed; raised run-rate Continued repurchases $350M repurchased; plan $400–$500M/qtr Consistent
Strategic M&A (GreensLedge)Evaluating opportunities Active pipeline; discipline on valuation Majority stake in GreensLedge to add structured credit expertise Executing

Management Commentary

  • CEO: “This marks our fifth consecutive year of record annual results…demonstrating our consistent focus on generating sustainable growth over the long term” .
  • CFO: “Adjusted compensation ratio was 64.0%, better than the 65% target level we shared at our Investor Day” .
  • On AI: “We made significant investments of approximately $1 billion in technology including AI…creating the new positions of Chief AI Officer and Head of AI Strategy” .
  • On Capital Markets: “Net revenues increased 35% [q/q] largely due to higher M&A and advisory, debt underwriting and affordable housing investments revenues. The investment banking pipeline remains strong” .
  • On credit: “Nonperforming assets remained low at 29 bps of bank segment assets…allowance for credit losses 0.88%” .

Q&A Highlights

  • Recruiting momentum: Broad-based across employee/independent/RAA custody; pipeline “strongest ever,” with stability valued amid industry consolidation .
  • AI initiatives: Focus on infrastructure resiliency, service efficiency, and data-driven insights for advisors; budgeted increases in AI spend to differentiate vs. smaller/regional firms .
  • Loan growth outlook: SBL expected to remain highest growth; lower rates could accelerate demand; mortgage growth also supported by lower rates .
  • Underwriting dynamics: Debt underwriting strength included large private placements and improved public finance capacity from senior banker hires .
  • Capital deployment: Buybacks paused briefly for senior notes; run-rate of $400–$500M/qtr maintained; criteria for larger M&A emphasize culture, strategic fit, and valuation discipline .

Estimates Context

  • RJF beat consensus EPS and revenue: adjusted EPS $3.11 vs. $2.83*; net revenues $3.73B vs. $3.64B* . Values retrieved from S&P Global.*
  • With management guiding FQ1’26 asset management fees ~+6.5% q/q and NII + RJBDP third-party fees ~flat, Street models may raise near-term fee revenue and maintain spread revenue, while applying a ~24–25% tax rate framework .

Key Takeaways for Investors

  • Broad-based upside: Revenue and EPS beat on asset management and investment banking strength, while legal/tax headwinds eased; margins returned toward target .
  • Durable PCG engine: Record PCG fee-based assets ($1.01T) and strong net new assets ($17.9B) position RJF well for fee growth into FQ1’26 .
  • Capital markets recovery: Sequential rebound suggests improving deal environment; GreensLedge adds structured credit capabilities to deepen platform .
  • Rate path supports bank: SBL and mortgages driving loan growth; credit metrics remain conservative; expect stable spread revenues near-term .
  • Capital return cadence: Continuing $400–$500M buybacks per quarter, supported by $3.7B corporate cash and strong capital ratios, offers downside support .
  • AI as differentiator: Elevated tech/AI spend aimed at advisor productivity and client insights should compound PCG competitiveness over multi-year horizon .
  • Near-term setup: Street likely to nudge fee revenue higher for FQ1’26 and align tax rate assumptions to ~24–25%; watch investment banking conversion and sweep dynamics .

Appendix: Additional Q4 2025 Press Releases

  • Majority stake acquisition in GreensLedge Holdings LLC to bolster structured credit/securitization advisory, pending customary approvals .
  • Priced $1.5B of senior notes (4.90% due 2035; 5.65% due 2055), expanding liquidity for growth and client needs .