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Last updated: February 7, 2013 4:48 pm
Lazard posted a fourth-quarter loss of $5.37m – higher than the $4.79m it reported for the same period a year earlier. Earnings after stripping out certain one-time costs, such as a $103m charge related to the bank’s recently announced restructuring, were 61 cents a share. That’s much higher than the 1 cent reported in the fourth quarter of 2011 and beat analysts’ forecasts of 32 cents.
Independent investment banks such as Lazard, Greenhill and Evercore Partners, say they have been taking more deals business from bulge-bracket banks such as Goldman Sachs and Morgan Stanley. But like their larger competitors, they have also had to contend with a general slump in dealmaking in the past few years.
Lazard announced in October that it planned to slash jobs and salaries to help combat the downturn and save $125m in annual costs. The cost-cutting hit the bank’s bottom line in the fourth quarter despite a last-minute burst of M&A activity. Lazard worked on a number of big deals in the period, and also benefited from a boost in activity at its middle-market business aimed at midsized companies.
“2012 was a great year for that business,” Ken Jacobs, Lazard chief executive, told the Financial Times. Some of the pick-up in activity was “a result of people’s concerns about the change in [US tax] rates. But it’s also a reflection of an environment where there’s a lot of liquidity and financing available for these companies.”
Revenues from the bank’s financial advisory business – where it works on M&A deals – rose 19 per cent to $390m in the quarter. That helped offset a 36 per cent fall in sales in Lazard’s restructuring business, which posted revenues of $48m.
The amount of money Lazard pays to its bankers jumped 31 per cent cent to $445m in the period thanks to bonuses given in 2008 accruing in the period. Adjusted remuneration as a proportion of the bank’s revenues was 59.6 per cent, compared with 71.9 per cent a year earlier.
Revenues at the bank’s asset management business – where it invests in bonds and stocks on behalf of customers – jumped a fifth in the period to $245m.
“Sentiment generally in the equity market markets is improving compared to 2011, and it’s probably better than any time than it’s been since the crash,” Mr Jacobs told analysts. “Part of that is attributable to the anticipated global recovery, which, while fragile, seems to be taking hold particularly in the United States.”
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