Lazard Rides High
Investment bank Lazard (NYS: LAZ) posted a 24% increase in its second-quarter profit on the back of higher merger advisory fees and improved results from its asset management business.
Corporate advisors such as Lazard and Evercore saw improved quarterly results as they benefited from a higher number of deals in an improving economy. However, their bigger peers such as Goldman Sachs (NYS: GS) and Morgan Stanley (NYS: MS) reported mixed numbers as trading volumes declined this quarter.
A look at the numbers
Operating revenues for the quarter increased to $491.7 million from $438.3 million, up 12% on a year-on-year basis, helped by higher brokerage commissions and its merger business. During the quarter, Lazard helped close Mosaic's (NYS: MOS) spin-off from Cargill, and also Vodafone's (NAS: VOD) $11.3 billion stake sale in France's SFR.
Revenues from the firm's asset management business increased by almost 27% to $237.7 million. Higher asset management fees coupled with increased deal-making this quarter helped send net income higher. Net income rose to $65.8 million from $53.0 million, up 24% from the year-ago period.
It set a new record in assets under management which rose to an all time high of $161.6 billion, up a staggering 31% from last year.
Lazard has been looking to return as much cash back to its shareholders as possible. The company repurchased 3.2 million shares this fiscal year. To add to that, it bumped up its quarterly dividend by nearly 28%, which should come as more good news to shareholders.
What lies ahead?
As financial markets have improved faster than economic conditions, we see a number of companies entering into deals and looking at acquisitions as a means of inorganic growth. The resumption of deals has benefited investment and brokerage firms such as Lazard. Lazard is currently overseeing Express Scripts and Medco's (NYS: MHS) merger and is also involved in Duke Energy's (NYS: DUK) $26 billion acquisition of Progress Energy. These deals should add to Lazard's revenues going forward.
The Foolish bottom line
Lazard, all in all, had a good quarter this time out. It is currently overseeing a number of deals that should add to both its top- and bottom-line growth. Also as the economic situation improves, more and more deals could lie ahead, thus benefiting Lazard in the process. Investors should take note.
At the time this article was published Shubh Datta doesn't own any shares in the companies mentioned above.The Motley Fool owns shares of MedcoHealth Solutions.Motley Fool newsletter serviceshave recommended buying shares of Vodafone Group and MedcoHealth Solutions. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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