Raymond James Financial, Inc. Q2 FY2026 earnings call

• Raymond James delivered strong results despite challenging market environment, with record quarterly revenues of $3.86 billion, up 13% year-over-year and 3% sequentially; pretax income of $735 million, up 10% year-over-year and 1% sequentially. • Private Client Group ended quarter with $1.7 trillion of client assets under administration, with quarterly domestic net new assets of $23 billion, and recruited financial advisers with trailing 12-month production totaling $141 million and nearly $21 billion of client assets. • Capital Markets results improved, primarily driven by stronger investment banking revenues, with a robust pipeline. • Asset Management segment had record net revenues and pretax income due to higher financial assets under management and strong net inflows. • Continued investment in automation, process improvement, and AI as part of over $1.1 billion annual technology spend, including a proprietary AI operations agent rolled out to a few hundred advisers and their team. • Bank segment had strong loan growth driven by securities-based lending, but net interest income affected by fewer interest earning days and interest rate cuts

Private Client Group: Ended quarter with $1.7 trillion of client assets under administration, down slightly from preceding quarter but up 15% year-over-year; quarterly domestic net new assets were $23 billion, representing a 5.8% annualized growth rate; pretax income of $416 million on record quarterly net revenues of $2.81 billion, but declined 3% year-over-year due to interest rate reductions. Capital Markets: Generated quarterly net revenues of $464 million and pretax income of $51 million, with segment net revenues growing year-over-year and sequentially due to higher debt and equity underwriting, M&A, and advisory revenues. Asset Management: Generated pretax income of $137 million on record net revenues of $327 million, largely attributable to higher financial assets under management and strong net inflows into PCG fee-based accounts. Bank: Generated net revenues of $486 million and pretax income of $166 million; sequentially, net interest income increased marginally despite robust loan growth driven by securities-based lending, with incremental interest revenues nearly offset by fewer interest earning days and interest rate cuts

• Expect fiscal third quarter 2026 asset management and related administrative fees to be higher by approximately 1% over the second quarter level, driven by 1 additional billing day and slightly higher PCG assets and fee-based accounts balance. • Based on April activity to date, domestic cash sweep and enhanced savings program balances have declined; on static interest rates and unchanged quarter end balances, expect aggregate of NII in RJBDP third-party fees in third quarter to be up approximately 1% from second quarter level, due to 1 additional interest-earning day. • Estimate effective tax rate for fiscal 2026 to be approximately 24% to 25%

Q: Talk about competitive environment and recruiting pipeline.

A: Confidence driven by home office visits, new commits, and focus on being best destination; private equity has challenges, but strong net new assets from recruiting and retention.

Q: Follow-up on PCG pretax yield.

A: Year-over-year short-term rates down and ramped up recruiting contribute to pretax yield decline.

Q: AI question, including cash sweep optimization.

A: AI seen as net positive to help advisers spend time on personal relationships; cash sweep balances stabilized, and AI helps advisers with bespoke insights.

Q: Technology spend priorities and AI initiative success.

A: $1.1 billion tech spend focused on Private Client Group, guided by Technology Advisory Council of financial advisers.

Q: Capital market pipeline.

A: Strong pipeline, March was strong, with motivated buyers and sellers.

Q: Long-term profitability and AI margin impact.

A: Early in AI journey, hard to dimension margin impact now.

Q: Larger deals and private equity.

A: Obstacle is competitors not for sale, but confident in finding partners.

Q: FA comp ratio in PCG.

A: Mix shift to independent channel with higher payouts contributes to comp ratio.

Q: Adviser behavior and offerings.

A: Culture of bringing advisers like clients, technology and products to help with holistic advice.

Q: SBLs and deposit growth.

A: SBL growth consistent, deposit growth from TriState acquisition helps, with its leadership team intact