Raymond James Q1 Results Show Earnings Strength Despite Capital Markets Ails

Raymond James delivered a solid Q1 FY2026 performance with adjusted earnings of $2.86 per share, narrowly surpassing the Zacks Consensus Estimate of $2.83. While bottom-line results declined 2% year-over-year, the financial services giant demonstrated its resilience through record-breaking revenues and robust asset growth. However, ongoing headwinds in the capital markets business and rising operating costs continued to create challenges for the firm’s overall profitability trajectory.

Record Revenues and Asset Growth Drive Results Forward

The firm’s quarterly performance was anchored by record net revenues of $3.74 billion, representing a 6% increase compared to the same quarter a year prior. This top-line beat exceeded the Zacks consensus target of $3.73 billion and reflected strength across multiple revenue streams. The Private Client Group achieved 9% year-over-year revenue growth, while the Asset Management division posted an impressive 11% increase. The Banking segment also contributed positively with a 15% revenue lift from the prior year.

Asset administration metrics reinforced the company’s market position, with client assets under administration reaching a record $1.77 trillion as of December 31, 2025—a 14% expansion from the year-ago period. Financial assets under management grew 15% year-over-year to $280.8 billion, underscoring the firm’s expanding role in wealth management services.

Capital Markets Struggles Offset Wealth Management Gains

The earnings story becomes more nuanced when examining business segment performance. While wealth and asset management operations flourished, the Capital Markets division experienced pronounced weakness, with revenues declining 21% year-over-year. This sharp deterioration reflected broader market dynamics affecting trading and investment banking activities across the financial services industry.

Simultaneously, Raymond James faced expense inflation pressures, with non-interest expenses surging 8% to $3.01 billion in the quarter. Cost escalation spanned nearly all operational categories, creating headwinds that offset revenue gains and pressured net income generation. The combination of Capital Markets ails and elevated operating costs reduced net income available to common shareholders to $562 million ($2.79 per share), down from $599 million ($2.86 per share) in the prior-year quarter.

Strong Capital Position and Share Repurchase Activity

On the balance sheet front, Raymond James maintained financial stability with total assets reaching $88.8 billion as of December 31, 2025, representing a 1% quarterly increase. Total common equity grew to $12.5 billion, while book value per share climbed to $63.41 from $49.49 at the close of 2024.

Capital ratios remained robust, though slightly compressed from year-ago levels. The total capital ratio stood at 24.3% as of December 31, 2025, compared to 25% a year earlier, while the Tier 1 capital ratio was 23.2% versus 23.7% previously. Return on common equity (annualized) declined to 18% from 20.4% year-over-year.

The firm demonstrated confidence in its long-term prospects through active capital deployment. Raymond James repurchased $400 million in shares at an average price of $162 per share during the quarter. The board authorized a new $2 billion share repurchase program, with $1.9 billion remaining available for deployment as of quarter-end.

Peer Performance and Market Outlook

In comparative perspective, Raymond James’s earnings performance aligned with peers navigating similar market conditions. Morgan Stanley’s fourth-quarter 2025 adjusted earnings of $2.68 per share surpassed consensus estimates and jumped 21% year-over-year, driven by robust investment banking deal flow and solid trading performance. Charles Schwab reported adjusted earnings of $1.39 per share, up 38% year-over-year, benefiting from strong asset management performance and increased trading revenues.

Looking ahead, Raymond James’s global diversification, strategic acquisition strategy, and favorable interest rate environment position the firm for continued revenue expansion. However, managing the ails affecting capital markets operations and controlling expense growth remain critical challenges. The firm carries a Zacks Rank #3 (Hold) rating, reflecting balanced opportunities and headwinds in the near term. Investors should monitor whether improved capital markets activity and expense discipline can support margin recovery in coming quarters.