Lazard Reports Surge in Third-Quarter Profit

By Manya Saini and Tatiana Bautzer

(Reuters) – Investment bank Lazard (NYSE:LAZ) reported a surge in third-quarter profit on Thursday, driven by an industry-wide recovery in dealmaking.

After a dry spell lasting more than two years due to elevated interest rates and market volatility, corporate clients are now once again looking to pursue large multi-billion dollar deals and raise funds through equity or debt offerings.

In a call with journalists, CEO Peter Orszag expressed optimism about merger and acquisition (M&A) activity following the U.S. presidential election.

New York-based Lazard's financial advisory revenue climbed 39% in the third quarter to $371 million, contributing to a 50% increase in overall revenue to $785 million.

Lazard ranked as the ninth most active investment bank in global M&A for the first nine months of the year, according to Dealogic data.

Orszag noted that some deals have been delayed short-term pending the election results but maintains a positive outlook for M&A activity.

Regulatory Environment

Orszag highlighted that the “worst case scenario” for dealmaking in a new administration would be for the regulatory environment to remain unchanged. However, a victory for Vice President Kamala Harris might lead to a more deal-friendly regulatory environment with new officials in charge of antitrust reviews and judicial-defined deal outcomes.

There’s also potential for a more accommodating regulatory climate under a Trump administration, but dealmakers must consider factors like tax system changes, tariffs, and initiatives affecting sectors such as healthcare and energy.

Lazard's gains align with larger Wall Street firms, with all six top U.S. banks exceeding analysts' profit expectations for the third quarter. For instance, Goldman Sachs’ investment banking fees grew by 20%, while JPMorgan Chase's increased by 31%.

Additionally, Lazard's asset management division saw a 3% rise in quarterly revenue, buoyed by equity market rallies that led to record highs in benchmark indexes. Orszag stated, "Asset Management delivered another solid quarter, providing a durable source of revenue for the firm."

The bank ended the quarter with $246 billion in average assets under management, up from $236 billion a year prior.

Net income rose to $108 million, or $1.02 per share, in the third quarter compared to $7 million, or 6 cents per share, a year earlier. Adjusted earnings were 38 cents per share, versus 10 cents per share a year earlier.

Investor optimism regarding a recovery in Lazard's core businesses has driven the bank’s stock up 46% this year.