Jefferies Financial Group Inc. reported record revenue last year as the pandemic fueled a surge in trading and investment banking. Executives said the success has prompted them to consider a new model that gives employees more flexibility to work from home.
Calling 2020 a “seminal year” for the company, Chief Executive Officer Richard Handler said he envisions a hybrid work arrangement that features central offices and meeting places along with more flexibility for where employees choose to work.
“This will have implications for the size and layout of our offices, technology decisions, ability for people to live in a greater radius of their primary Jefferies location, and the elimination of the misguided notion that people raising families or caring for ailing loved ones can’t be completely effective when they spend time at home,” Handler and President Brian Friedman said Monday in a letter to shareholders.
Jefferies said its fixed-income and equity traders brought in a combined $2.47 billion, an all-time high. Wall Street closely watches the firm’s results as a harbinger for what could come from larger rivals such as JPMorgan Chase & Co. and Bank of America Corp., which report earnings later this month.
Net revenue at Jefferies for the 12 months through November increased 67% to $5.2 billion from a year earlier. The New York-based firm’s investment bankers posted record revenue of $2.4 billion for the year on strong performances from equity underwriters and merger-and-acquisition bankers.
Jefferies’s merchant-banking division, which makes direct investments in outside companies, was helped by record results at Idaho Timber in its fiscal fourth quarter. But the unit still suffered a $25 million pretax loss for the year after it wrote down investments, including in the beleaguered office-sharing company WeWork.
“With our continuing efforts to smartly manage down our legacy merchant-banking portfolio, we intend to reinvest in our core business while continuing to return excess capital to shareholders,” Handler and Friedman said. “We believe there is solid upside in the remaining portfolio.”
A second surge in coronavirus cases has meant many employers that started returning workers to the office have shut their doors once more. Still, with the advent of vaccines, firms have begun weighing how they’ll bring employees back to the office once the pandemic ends.
For now, Handler and Friedman said they’re continuing to let staff decide on their own whether and when to come to the office. Jefferies has been surveying employees about how and where they might want to work in the future and holding focus groups on the topic.
“We wish it didn’t take a pandemic to show us this was possible, but we certainly aren’t going to let any of these newfound insights go to waste,” Handler and Friedman said in the letter.
— With assistance by Gillian Tan
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