Jefferies Financial Group Inc.

10/09/2025 | Press release | Distributed by Public on 10/09/2025 14:22

Quarterly Report for Quarter Ending August 31, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial
Condition and Results of Operations
This report may contain or incorporate by reference certain
"forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, Section 21E of the Securities
Exchange Act of 1934 and/or the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include
statements about our future and statements that are not
historical or current facts. These forward-looking statements are
often preceded by the words "should," "expect," "believe,"
"intend," "may," "will," "would," "could" or similar expressions.
Forward-looking statements may contain expectations regarding
revenues, earnings, operations and other results, and may include
statements of future performance, plans and objectives. Forward-
looking statements also include statements pertaining to our
strategies for future development of our business and products.
Forward-looking statements represent only our belief regarding
future events, many of which by their nature are inherently
uncertain. It is possible that the actual results may differ, possibly
materially, from the anticipated results indicated in these
forward-looking statements. Information regarding important
factors that could cause actual results to differ, perhaps
materially, from those in our forward-looking statements is
contained in this report and other documents we file. You should
read and interpret any forward-looking statement together with
these documents, including the following:
•the description of our business and risk factors contained in
our Annual Report on Form 10-K for the year ended
November 30, 2024and filed with the Securities and Exchange
Commission ("SEC") on January 28, 2025;
•the discussion of our analysis of financial condition and results
of operations contained in this report under the caption
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" herein;
•the discussion of our risk management policies, procedures
and methodologies contained in this report under the caption
"Management's Discussion and Analysis of Financial Condition
and Results of Operations-Risk Management" herein;
•the consolidated financial statements and notes to the
consolidated financial statements contained in this report; and
•cautionary statements we make in our public documents,
reports and announcements.
Any forward-looking statement speaks only as of the date on
which that statement is made. We undertake no obligation to
update any forward-looking statement to reflect events or
circumstances that occur after the date on which the statement
is made, except as required by applicable law.
Our business, by its nature, does not produce predictable or
necessarily recurring earnings. Our results in any given period
can be materially affected by conditions in global financial
markets, economic conditions generally and our own activities
and positions.
Consolidated Results of Operations
Overview
Three Months Ended
August 31,
$ in thousands
2025
2024
% Change
Net revenues ....................................................
$2,047,432
$1,683,552
21.6%
Non-interest expenses ....................................
1,715,617
1,430,865
19.9%
Earnings from continuing operations
before income taxes ........................................
331,815
252,687
31.3%
Income tax expense from continuing
operations ..........................................................
89,311
78,011
14.5%
Net earnings from continuing operations .....
242,504
174,676
38.8%
Net earnings from discontinued operations,
net of income taxes .........................................
-
6,363
(100.0)%
Net losses attributable to noncontrolling
interests .............................................................
(10,041)
(6,874)
46.1%
Preferred stock dividends ...............................
28,559
20,785
37.4%
Net earnings attributable to common
shareholders .....................................................
223,986
167,128
34.0%
Effective tax rate from continuing
operations ........................................................
26.9%
30.9%
Nine Months Ended
August 31,
$ in thousands
2025
2024
% Change
Net revenues ....................................................
$5,274,898
$5,078,200
3.9%
Non-interest expenses ....................................
4,657,117
4,377,517
6.4%
Earnings from continuing operations
before income taxes ........................................
617,781
700,683
(11.8)%
Income tax expense from continuing
operations ..........................................................
147,033
207,077
(29.0)%
Net earnings from continuing operations .....
470,748
493,606
(4.6)%
Net losses from discontinued operations,
net of income taxes .........................................
-
(1,488)
(100.0)%
Net losses attributable to noncontrolling
interests .............................................................
(24,692)
(19,102)
29.3%
Preferred stock dividends ...............................
55,528
48,501
14.5%
Net earnings attributable to common
shareholders .....................................................
439,912
462,719
(4.9)%
Effective tax rate from continuing
operations ........................................................
23.8%
29.6%
August 2025Form 10-Q
Executive Summary
Three Months Ended August 31, 2025Versus August 31, 2024
Consolidated Results
•Net revenues were $2.05 billion, up 21.6%compared to $1.68
billionfor the prior year quarter and Earnings from continuing
operations before income taxes were $331.8 million, up 31.3%
compared to $252.7 millionfor the prior year quarter. This is
reflective of solid performance in our Investment Banking and
Equities businesses, along with a meaningful improvement in
investment returns generated by our Asset Management
business, partially offset by a decline in the performance of our
Fixed Income business.
•Non-compensation expenses were higher compared to the
prior year quarter largely associated with growth in business
activity, particularly in Equities. While non-compensation
expenses were higher for the period, our overall net revenues
for the period grew even faster. Non-compensation expenses
as a percentage of Net revenues was therefore 30.9%
compared to 32.2%for the prior year quarter.
Business Results
•Investment banking net revenues from Advisory, Equity
underwriting and Debt underwriting totaling $1.09 billionwere
up 17.4%compared to $925.6 millionfor the prior year quarter.
Advisory had its best quarter ever with net revenues up 10.7%,
driven by an increase in the average fee per deal earned by us
from mergers and acquisitions advisory services. Total
underwriting net revenues were up 29.3%as market conditions
for equity and debt underwriting improved. Other investment
banking net revenues were $49.0 million, compared to
$17.9 millionfor the prior year quarter.Other investment
banking net revenues include the net returns on our
investments in our Jefferies Finance and Berkadia joint
ventures and net gains or losses on investments.
•Equities net revenues were $486.7 million, up 25.7%compared
to $387.3 millionfor the prior year quarter, primarily due to
increased global trading volumes, growth in prime brokerage
and corporate derivatives activity and strong results across
most of our equities business lines.
•Fixed income net revenues were $236.7 million, down 18.2%
compared to $289.2 millionfor the prior year quarter as activity
levels continued to be slow for the asset classes where we are
most active.
•Asset management net revenues were $176.9 million
compared to $59.0 millionfor the prior year quarter. Asset
management fees and revenues modestly increased driven by
higher management and performance fees realized during the
current quarter. Investment return net revenues meaningfully
increased due to improved returns generated across a number
of strategies.
Non-interest Expenses
•Compensation and benefits expenses were $1.08 billion, an
increaseof 21.9%, compared to $889.1 millionfor the prior
year quarter. Compensation and benefits expense as a
percentage of Net revenues was essentially flatcompared to
the prior year quarter percentage.
•Non-compensation expenses were $632.1 million, 16.7%higher
compared to $541.8 millionfor the prior year quarter and
versus a 21.6%increase in net revenues. Non-compensation
expenses were higher primarily due to increased brokerage and
clearing fees associated with increased global equities trading
volumes, and increased technology and communication and
business development expenses.
Nine Months Ended August 31, 2025Versus August 31, 2024
Consolidated Results
•Net revenues were $5.27 billion, up 3.9%compared to $5.08
billionfor the prior year period. Following a subdued first-half
of 2025 largely due to uncertainty surrounding U.S. policy and
geopolitical tensions, market activity began to accelerate in
June and demand for our services strengthened and we
continued to sustain growth in our market position.
•Despite the increase in net revenues, Earnings from continuing
operations before income taxes declined 11.8%to
$617.8 million, compared to $700.7 millionfor the prior year
period. This decrease was largely attributable to higher non-
compensation expenses as our revenues were driven more
heavily by our Equities business, which has higher
transactional costs. Operating margins have improved in
August and are expected to improve further as fixed income
market activity normalizes.
Business Results
•Investment banking net revenues from Advisory, Equity
underwriting and Debt underwriting totaling $2.60 billionwere
up 10.9%compared to $2.34 billionfor the prior year period.
Advisory net revenues were up 24.4%driven by market share
gains and an increase in mergers and acquisitions activity
levels across most sectors. Total underwriting net revenues
were down 3.6%as stronger results in debt underwriting were
offset by lower equity underwriting activity, consistent with the
overall industry slowdown in the first-half of 2025 associated
with the uncertainty related to U.S. policy and geopolitical
events. Other investment banking net revenues were $4.8
million, compared to net revenues of $116.7 millionfor the
prior year period. Other investment banking net revenues
include the net returns on our investments in our Jefferies
Finance and Berkadia joint ventures and net gains or losses on
investments, and the prior year period includes Foursight
operating revenues as well as the gain on the sale of Foursight
in April 2024.
•Equities net revenues were $1.42 billion, up 20.3%compared to
$1.18 billionfor the prior year period, attributable to market
share gains and increased global trading volumes driving
stronger results across most of our equities business lines.
•Fixed income net revenues were $703.8 million, down 24.0%
compared to $925.8 millionfor the prior year period, as lower
global activity levels and volatility in credit spreads for the first-
half of 2025 meaningfully impacted the overall trading
environment.
•Asset management net revenues were $523.2 million
compared to $488.9 millionfor the prior year period. Asset
management fees and revenues increased primarily driven by
higher performance fees realized during the current year.
Investment return net revenues were modestly higher.
Non-interest Expenses
•Compensation and benefits expenses were $2.78 billion, an
increaseof 3.8%, compared to $2.68 billionfor the prior year
periodconsistent with the increase in net revenues.
Compensation and benefits expense as a percentage of Net
revenues was 52.7%, flat with the prior year period.
•Non-compensation expenses were $1.88 billion, compared to
$1.70 billionfor the prior year period. The increase in non-
Jefferies Financial Group Inc.
compensation expenses was primarily due to increased
brokerage and clearing fees associated with increased global
equities trading volumes, and increased business development
and technology and communication expenses. The current
year also includes approximately $17.0 millionin charitable
donations, including $9.6 millionto support Los Angeles
wildfire relief efforts, as well as a $5.7 millionland donation by
HomeFed, and a write-down on certain assets held for sale.
Other expenses for the prior year period include bad debt
expenses of $26.2 millionlargely related to the shutdown of
Weiss Multi-Strategy Advisers ("Weiss"). In addition, non-
compensation expenses for the prior year period include
Foursight activity up through its sale in April 2024. Non-
compensation expenses as a percentage of Net revenues was
35.6%compared to 33.5%for the prior year period.
Headcount
•At August 31, 2025, we had 7,866employees globally across
all of our consolidated subsidiaries within our Investment
Banking and Capital Markets and Asset Management
reportable segments, an increaseof 242employees from our
headcount of 7,624at August 31, 2024. Included within our
global headcount are 1,861employees at August 31, 2025and
1,907employees at August 31, 2024of our Stratos, Tessellis,
HomeFed and M Science subsidiaries.
Revenues by Source
We present our results as two reportable business segments:
Investment Banking and Capital Markets and Asset Management.
Additionally, corporate activities are fully allocated to each of
these reportable business segments.
Net revenues presented for our Investment Banking and Capital
Markets reportable segment include allocations of interest
income and interest expense as we assess the profitability of
these businesses inclusive of the net interest revenue or expense
associated with the respective activities, including the net
interest cost of allocated short- and long-term debt, which is a
function of the mix of each business's associated assets and
liabilities and the related funding costs.
The remainder of our "Consolidated Results of Operations" is
presented on a detailed product and expense basis. Our
"Revenues by Source" is reported along the following business
lines: Investment Banking, Equities, Fixed Income and Asset
Management.
Debt valuation adjustments on derivative contracts, gains and
losses on investments held in deferred compensation plans,
foreign currency transaction gains or losses or certain other
corporate income items are not considered by management in
assessing the financial performance of our operating businesses
and are, therefore, not reported as part of our business segment
results.
Three Months Ended August 31,
2025
2024
$ in thousands
Amount
% of Net
Revenues
Amount
% of Net
Revenues
% Change
Advisory ............................
$655,578
32.0%
$592,462
35.2%
10.7%
Equity underwriting ..........
181,205
8.9
150,096
8.9
20.7
Debt underwriting .............
249,525
12.2
183,078
10.9
36.3
Other investment
banking ........................
49,017
2.4
17,930
1.1
173.4
Total Investment
Banking ........................
1,135,325
55.5
943,566
56.1
20.3
Equities ..............................
486,695
23.8
387,342
23.0
25.6
Fixed income .....................
236,687
11.6
289,183
17.2
(18.2)
Total Capital Markets ......
723,382
35.4
676,525
40.2
6.9
Total Investment
Banking and Capital
Markets (1) ..................
1,858,707
90.9
1,620,091
96.3
14.7
Asset management fees
and revenues ..............
15,916
0.8
13,261
0.8
20.0
Investment return .............
68,026
3.3
(40,135)
(2.4)
N/M
Allocated net interest (2) .
(18,550)
(0.9)
(16,016)
(1.0)
15.8
Other investments,
inclusive of net
interest .........................
111,490
5.4
101,902
6.1
9.4
Total Asset
Management ...............
176,882
8.6
59,012
3.5
199.7
Other ...................................
11,843
0.5
4,449
0.2
166.2
Net revenues .....................
$2,047,432
100.0%
$1,683,552
100.0%
21.6%
Nine Months Ended August 31,
2025
2024
$ in thousands
Amount
% of Net
Revenues
Amount
% of Net
Revenues
% Change
Advisory ...............................
$1,511,218
28.6%
$1,214,927
23.9%
24.4%
Equity underwriting .............
432,091
8.2
608,586
12.0
(29.0)
Debt underwriting ................
654,250
12.4
517,771
10.2
26.4
Other investment banking ..
4,765
0.1
116,679
2.3
(95.9)
Total Investment Banking .
2,602,324
49.3
2,457,963
48.4
5.9
Equities .................................
1,421,997
27.0
1,182,025
23.3
20.3
Fixed income ........................
703,824
13.3
925,838
18.2
(24.0)
Total Capital Markets .........
2,125,821
40.3
2,107,863
41.5
0.9
Total Investment Banking
and Capital Markets
(1) ....................................
4,728,145
89.6
4,565,826
89.9
3.6
Asset management fees
and revenues .................
125,312
2.4
89,736
1.8
39.6
Investment return ................
112,796
2.1
110,447
2.2
2.1
Allocated net interest (2) ....
(54,915)
(1.0)
(47,031)
(0.9)
16.8
Other investments,
inclusive of net interest
340,025
6.4
335,767
6.6
1.3
Total Asset Management ..
523,218
9.9
488,919
9.7
7.0
Other ......................................
23,535
0.5
23,455
0.4
0.3
Net revenues ........................
$5,274,898
100.0%
$5,078,200
100.0%
3.9%
N/M - Not Meaningful
(1)Allocated net interest is not separately disaggregated for Investment Banking
and Capital Markets. This presentation is aligned to our Investment Banking
and Capital Markets internal performance measurement.
(2)Allocated net interest represents an allocation to Asset Management of our
long-term debt interest expense, net of interest income on our Cash and cash
equivalents and other sources of liquidity. Allocated net interest has been
disaggregated to increase transparency and to make clearer actual
Investment return. We believe that aggregating Investment return and
Allocated net interest would obscure the Investment return by including an
amount that is unique to our credit spreads, debt maturity profile, capital
structure, liquidity risks and allocation methods.
August 2025Form 10-Q
Beginning in the fourth quarter of 2024, revenues from corporate
equity derivative transactions historically included within Other
investment banking net revenues were reclassified to Equities net
revenues as the underlying business has matured and has
started to generate meaningful revenues. Prior year amounts
have been revised to conform to this reclassification change to
the current year reporting.
Investment Banking Revenues
Investment banking is composed of revenues from:
•advisory services with respect to mergers and acquisitions,
debt financing, restructurings and private capital transactions;
•underwriting services, which include debt underwriting and
placement services related to investment grade debt, high yield
bonds, leveraged loans, emerging market debt, global
structured notes, municipal debt, mortgage-backed and asset-
backed securities; equity underwriting and placement services
related to equity offerings, preferred stock, and equity-linked
securities; and loan syndication;
•our 50%share of net earnings from our corporate lending joint
venture, Jefferies Finance;
•our 45%share of net earnings from our commercial real estate
joint venture, Berkadia (which includes commercial mortgage
origination and servicing);
•Foursight, our wholly-owned subsidiary engaged in the lending
and servicing of automobile loans (until the sale in April 2024);
•securities and loans received or acquired in connection with
our investment banking activities; and
•certain revenue-sharing agreements with SMBC primarily
associated with investment banking transactions.
Deals Completed
Three Months Ended
August 31,
Nine Months Ended
August 31,
2025
2024
2025
2024
Advisory transactions ........
Public and private equity
and convertible
offerings ...........................
Public and private debt
financings ........................
Aggregate Value
Three Months Ended
August 31,
Nine Months Ended
August 31,
$ in billions
2025
2024
2025
2024
Advisory transactions ..........
$128.9
$107.7
$327.9
$238.5
Public and private equity
and convertible offerings
25.8
14.8
69.8
59.2
Public and private debt
financings ..........................
154.2
133.3
401.7
401.3
Three Months Ended August 31, 2025Versus August 31, 2024
Investment banking net revenues were $1.14 billion, up 20.3%
compared to $943.6 millionfor the prior year quarter.
Advisory net revenues of $655.6 millionreflect our best quarter
ever and were up 10.7%compared to $592.5 millionfor the
strong prior year quarter, driven by increased deal values in
mergers and acquisitions across most sectors.
Total underwriting net revenues were $430.7 million, up 29.3%
from $333.2 millionfor the prior year quarter, as market
conditions for equity and debt underwriting improved.
Other investment banking net revenues were $49.0 million,
compared to net revenues of $17.9 millionfor the prior year
quarter and include mark-to-market net gains on certain
investment positions. Performance from our strategic Berkadia
joint venture increased while performance from our strategic
Jefferies Finance joint venture remained flat from the prior year
quarter.
Our investment banking backlog remains strong, although the
extent and timing of its realization is always subject to change.
Backlog snapshots are subject to limitations as the time frame
for the realization of revenues from these expected transactions
varies and is influenced by factors we do not control.
Transactions not included in the estimate may occur, and
expected transactions may be modified or cancelled.
Nine Months Ended August 31, 2025Versus August 31, 2024
Investment banking net revenues were $2.60 billion, up 5.9%
compared to $2.46 billionfor the prior year period.
Advisory net revenues were $1.51 billion, up 24.4%compared to
$1.21 billionfor the prior year period, driven by an increase in the
average fee per deal earned by us from mergers and acquisitions
advisory services.
Total underwriting net revenues were $1.09 billion, down 3.6%
compared to $1.13 billionfor the prior year period. Solid net
revenues in Debt underwriting were driven by an increase in
mergers and acquisition activity across most sectors and
collateralized loan origination activity. Equity underwriting net
revenues declined due to reduced transaction activity across
most sectors, reflecting a broader industry slowdown driven by
volatile equity market conditions in the first-half of 2025 as
activity was significantly muted during this period. However, by
June, market conditions began to strengthen and transaction
volumes accelerated as economic and market clarity improved.
Other investment banking net revenues were $4.8 million,
compared to net revenues of $116.7 millionfor the prior year
period. A significant portion of the decrease is attributable to the
prior year's inclusion of Foursight operating revenues as well as
the gain on the sale of Foursight in April 2024. The current year
also includes mark-to-market net losses on certain investment
positions compared to mark-to-market net gains in the prior year
period. Additionally, performance from our strategic Berkadia
joint venture increased while performance from our strategic
Jefferies Finance joint venture was lower than the prior year
period.
Equities Net Revenues
Equities is composed of net revenues from:
•services provided to our clients from which we earn
commissions or spread revenue by executing, settling and
clearing transactions for clients;
•advisory services offered to clients;
•financing, securities lending and other prime brokerage
services offered to clients, including capital introductions and
outsourced trading;
•corporate equity derivative transactions; and
•wealth management services.
Jefferies Financial Group Inc.
Three Months Ended August 31, 2025Versus August 31, 2024
Equities net revenues were $486.7 million, up 25.7%from
$387.3 millionfor the prior year quarter, as increased global
volumes and prime brokerage activity drove stronger results,
particularly within our U.S. and Europe equity cash business. Our
equity options, corporate derivatives and global electronic trading
businesses also produced strong results.
Nine Months Ended August 31, 2025Versus August 31, 2024
Equities net revenues were $1.42 billion, up 20.3%compared to
$1.18 billionfor the prior year period, as market share gains
drove stronger results in our global electronic trading, Europe and
Asia equity cash, equity options, prime services, and corporate
derivatives businesses. These increases were partially offset by
lower revenues from our U.S. equity cash business.
Fixed Income Net Revenues
Fixed income is composed of net revenues from:
•executing transactions for clients and making markets in
securitized products, investment grade, high-yield, distressed,
emerging markets, municipal, sovereign and emerging markets
securities and loans;
•customized products and corporate hedging and foreign
currency solutions through derivative products; and
•financing and other structuring services.
Three Months Ended August 31, 2025Versus August 31, 2024
Fixed incomenet revenues were $236.7 million, down 18.2%
compared to $289.2 millionfor the prior year quarter as a result
of a challenging market in the current quarter as tight credit
conditions continued to slow activity levels for the products and
services where we are most active, impacting the overall trading
environment and several of our businesses, including emerging
markets, leveraged loan trading and distressed.
Nine Months Ended August 31, 2025Versus August 31, 2024
Fixed income net revenues were $703.8 million, down 24.0%
compared to $925.8 millionfor the prior year period due to lower
global activity levels and volatility in credit spreads for the first-
half of 2025 meaningfully impacting the overall trading
environment and several of our businesses, including distressed
trading, emerging markets, municipals and rates.
Asset Management
We operate a diversified alternative asset management platform
offering institutional clients a range of investment strategies
directly and through our affiliated asset managers. We provide
certain of our affiliated asset managers access to our global
marketing and distribution platform, as well as operational
infrastructure and support. We often invest our own capital in the
strategies offered by us and associated third-party asset
managers in which we have an interest.
Asset management revenues include the following:
•management and performance fees from funds and accounts
managed by us;
•revenue from affiliated asset managers where we are entitled
to portions of their revenues and/or profits, as well as earnings
on our ownership interests in our affiliated asset managers;
•investment income from our capital invested in and managed
by us and our affiliated asset managers;
•investment and fund placement fees; and
•revenues from investments held in our other investments
portfolio, including consolidated operations from real estate
development activities, foreign exchange trading and
telecommunications activities.
Asset management fees and revenues are impacted by the level
of assets under management and the performance return of
those assets, for the most part on an absolute basis, and, in
certain cases, relative to a benchmark or hurdle. These
components can be affected by financial markets, profits and
losses in the applicable investment portfolios and client capital
activity. Further, asset management fees vary with the nature of
investment management services. The terms under which clients
may terminate our investment management agreements, and the
requisite notice period for such termination, vary depending on
the nature of the investment vehicle and the liquidity of the
portfolio assets. In some instances, performance fees and
similar revenues are recognized once a year, when they become
fixed and determinable and are not probable of being
significantly reversed, typically in December. As a result, a
significant portion of our performance fees and similar revenues
generated from investment returns in a calendar year are
recognized in our following fiscal year.
Three Months Ended
August 31,
$ in thousands
2025
2024
% Change
Asset management fees and other ..
$8,235
$7,189
14.6%
Revenue from strategic affiliates (1)
7,681
6,072
26.5%
Total asset management fees and
revenues ..........................................
15,916
13,261
20.0%
Investment return ................................
68,026
(40,135)
N/M
Allocated net interest ..........................
(18,550)
(16,016)
15.8%
Other investments ...............................
111,490
101,902
9.4%
Total Asset Management ..................
$176,882
$59,012
199.7%
Nine Months Ended
August 31,
$ in thousands
2025
2024
% Change
Asset management fees and other ..
$61,538
$43,540
41.3%
Revenue from strategic affiliates (1)
63,774
46,196
38.1%
Total asset management fees and
revenues ..........................................
125,312
89,736
39.6%
Investment return ................................
112,796
110,447
2.1%
Allocated net interest ..........................
(54,915)
(47,031)
16.8%
Other investments ...............................
340,025
335,767
1.3%
Total Asset Management ..................
$523,218
$488,919
7.0%
(1)These amounts include our share of fees received by affiliated asset
management companies with which we have revenue and profit share
arrangements, as well as earnings on our ownership interest in affiliated asset
managers.
Three Months Ended August 31, 2025Versus August 31, 2024
Asset management fees and revenues were $15.9 million, up
20.0%compared to $13.3 millionfor the prior year quarter,
reflecting higher management and performance fees on funds
managed by us and through our strategic affiliates.
Investment return was $68.0 million, compared to $(40.1) million
for the prior year quarter due to improved returns generated
across a number of fund strategies, particularly those with a long
equity bias.
Other investments net revenues were $111.5 million, up 9.4%
compared to $101.9 millionin the prior year quarter, primarily
driven by unrealized gains on certain investment positions.
August 2025Form 10-Q
Nine Months Ended August 31, 2025Versus August 31, 2024
Asset management fees and revenues were $125.3 million, up
39.6%compared to $89.7 millionfor the prior year period,
reflecting higher performance fees on funds managed by us and
through our strategic affiliates.
Investment return was $112.8 million, up 2.1%compared to
$110.4 millionfor the prior year period, as investment
outperformance across multiple fund strategies was partially
offset by losses in several other strategies during the current
year.
Other investments net revenues were $340.0 millionand
remained relatively flat compared to $335.8 millionfor the prior
year period.
Assets Under Management
Aggregate net asset values or net asset value equivalent assets
under management:
$ in millions
August 31,
2025
November 30,
2024
Net asset values of seed investments .................
$1,923
$1,761
Net asset values of financed investments ..........
1,025
1,174
Net asset values of investments (1) .....................
2,948
2,935
Assets under management by affiliated asset
managers with revenue sharing
arrangements (2) ................................................
25,262
22,515
Third-party and other investments actively
managed by our wholly-owned managers (3)
2,671
2,596
Total aggregate net asset values or net asset
value equivalent assets under management .
$30,881
$28,046
(1)Revenues related to the investments made by us are presented in Investment
return within the results of our asset management businesses.
(2)Revenues from our share of fees received by affiliated asset managers are
presented in Revenue from strategic affiliates within the results of our asset
management business. November 30, 2024 includes an adjustment of
$3.02 billion.
(3)We earn asset management fees as a result of the third-party investments,
which are presented in Asset management fees and revenues within the
results of our asset management business.
Assets under management are based on the net asset value or
net asset value equivalent of a fund plus unfunded capital
commitments to the fund, the net asset value equivalents of
separately managed accounts and the fair value of any invested
capital in our consolidated funds and separately managed
accounts. Assets under management is generally based on how
fee and revenues are calculated and the measure also includes
funds and separately managed accounts for which we do not
charge fees.
Our definition of assets under management is not based on any
definition contained in any of our investment management
agreements and differs from the manner in which "Regulatory
Assets Under Management" is reported to the SEC on Form ADV.
Asset Management Investments
Our asset management business makes seed and additional
strategic investments directly in alternative asset management
separately managed accounts and co-mingled funds where we
act as the asset manager or in affiliated asset managers where
we have strategic relationships and participate in the revenues or
profits of the affiliated manager.
Investments by type of asset manager:
$ in thousands
August 31,
2025
November 30,
2024
Jefferies Financial Group Inc.; as manager:
Fund investments (1) ...................................................
$183,556
$199,248
Separately managed accounts (2) ............................
224,663
177,998
Total ...............................................................................
$408,219
$377,246
Strategic affiliates; as manager:
Fund investments (1) ...................................................
$1,189,355
$944,940
Separately managed accounts (2) ............................
325,837
439,043
Investments in asset managers .................................
168,124
81,403
Total ...............................................................................
$1,683,316
$1,465,386
Total asset management investments ...................
$2,091,535
$1,842,632
(1)Due to the level or nature of an investment in a fund, we may consolidate that
fund; and accordingly, the assets and liabilities of the fund are included in the
representative line items in our consolidated financial statements. At
August 31, 2025and November 30, 2024 $12.4 millionand $11.3 million,
respectively, represent net investments in funds that have been consolidated
in our financial statements.
(2)Where we have investments in a separately managed account, the assets and
liabilities of such account are presented in our consolidated financial
statements within each respective line item.
Other
Other revenues include foreign currency transaction gains or
losses, debt valuation adjustments on derivative contracts, gains
and losses on investments held in deferred compensation plans
or certain other corporate income items that are not attributed to
business segments as management does not consider such
amounts in assessing the financial performance of our operating
businesses.
Non-interest Expenses
Three Months Ended
August 31,
$ in thousands
2025
2024
% Change
Compensation and benefits ...........
$1,083,510
$889,098
21.9%
Brokerage and clearing fees ..........
121,164
101,119
19.8
Underwriting costs ..........................
20,332
14,017
45.1
Technology and communications
157,171
136,953
14.8
Occupancy and equipment rental .
32,908
30,078
9.4
Business development ...................
78,999
68,152
15.9
Professional services .....................
73,329
64,630
13.5
Depreciation and amortization ......
53,230
45,977
15.8
Cost of sales ....................................
34,430
37,400
(7.9)
Other ..................................................
60,544
43,441
39.4
Total non-interest expenses .........
$1,715,617
$1,430,865
19.9%
Nine Months Ended
August 31,
$ in thousands
2025
2024
% Change
Compensation and benefits ...........
$2,779,476
$2,677,962
3.8%
Brokerage and clearing fees ..........
360,345
321,325
12.1
Underwriting costs ..........................
52,703
51,053
3.2
Technology and communications
442,844
409,703
8.1
Occupancy and equipment rental .
93,818
87,558
7.1
Business development ...................
231,360
194,433
19.0
Professional services .....................
223,563
217,967
2.6
Depreciation and amortization ......
136,471
139,125
(1.9)
Cost of sales ....................................
118,959
109,533
8.6
Other ..................................................
217,578
168,858
28.9
Total non-interest expenses .........
$4,657,117
$4,377,517
6.4%
Jefferies Financial Group Inc.
Total Non-interest Expenses
Three Months Ended August 31, 2025Versus August 31, 2024
Non-interest expenses were $1.72 billion, an increaseof 19.9%,
compared to $1.43 billionfor the prior year quarter, primarily due
to an increase in compensation and benefits expenses
attributable to higher net revenues.
Nine Months Ended August 31, 2025Versus August 31, 2024
Non-interest expenses were $4.66 billion, an increaseof 6.4%,
compared to $4.38 billionfor the prior year period.
Compensation and Benefits
Compensation and benefits expense consists of salaries,
benefits, commissions, annual cash compensation and share-
based awards and the amortization of share-based and cash
compensation awards to employees.
Cash and share-based awards and a portion of cash awards
granted to employees as part of year end compensation generally
contain provisions such that employees who terminate their
employment or are terminated without cause may continue to
vest in their awards, so long as those awards are not forfeited as
a result of other forfeiture provisions (primarily non-compete
clauses) of those awards. Accordingly, the compensation
expense for a portion of awards granted at year end as part of
annual compensation is recorded during the year of the award.
Compensation and benefits expense includes amortization
expense associated with these awards to the extent vesting is
contingent on future service. In addition, certain awards to our
Chief Executive Officer and our President contain performance
conditions and the awards are amortized over their service
periods.
Compensation and benefits expense for the current quarter and
current year was $1.08 billionand $2.78 billion, respectively,
compared to $889.1 millionand $2.68 billionfor the prior year
quarter and prior year period, respectively. A significant portion of
our compensation expense is highly variable with net revenues.
Compensation and benefits expense as a percentage of Net
revenues was 52.9%and 52.7%for the current quarter and
current year, respectively, compared to 52.8%and 52.7%for the
prior year quarter and prior year period, respectively.
Compensation expense related to the amortization of share- and
cash-based awards amounted to $140.3 millionand $440.7
millionfor the current quarter and current year, respectively,
compared to $117.1 millionand $363.7 millionfor the prior year
quarter and prior year period, respectively.
At August 31, 2025, we had 7,866employees globally across all
of our consolidated subsidiaries within our Investment Banking
and Capital Markets and Asset Management reportable
segments, an increaseof 242employees from our headcount of
7,624at November 30, 2024. Included within our global
headcount are 1,861employees at August 31, 2025and 1,907
employees at November 30, 2024of our Stratos, Tessellis,
HomeFed, and M Science subsidiaries.
Non-interest Expenses (Excluding Compensation and Benefits)
Three Months Ended August 31, 2025Versus August 31, 2024
Non-compensation expenses as a percentage of Net revenues
was 30.9%compared to 32.2%for the current quarter and prior
year quarter, respectively, and was impacted by the following:
•Technology and communication were higher by $20.2 million
related to the continued development of various trading and
management systems as well as higher data related costs.
•Brokerage and clearing fees were higher by $20.0 million
primarily due to increased global equities trading volumes.
•Business development was higher by $10.8 milliondue to
increased deal related costs.
•Other expenses were higher by $17.1 million, including
$8.1 millionrelated to litigation reserves.
Nine Months Ended August 31, 2025Versus August 31, 2024
Non-compensation expenses as a percentage of Net revenues
was 35.6%compared to 33.5%for the current year and the prior
year period, respectively, and was impacted by the following:
•Brokerage and clearing fees were higher by $39.0 million
primarily due to increased global equities trading volumes.
•Business development was higher by $36.9 milliondue to
increased deal related costs and increased expenses related to
business travel, conferences and other events.
•Technology and communication were higher by $33.1 million
related to the continued development of various trading and
management systems as well as higher data related costs.
•Other expenses were higher by $48.7 millionand the current
year period includesapproximately $17.0 million in charitable
donations, including $9.6 millionto support Los Angeles
wildfire relief efforts, as well as a $5.7 millionland donation
from HomeFed. Other expenses also include a write-down on
certain assets held for sale. Other expenses for the prior year
period include bad debt expenses of $26.2 millionlargely
related to the shutdown of Weiss. In addition, the prior year
period includes activity from Foursight, which was sold in April
2024.
Income Taxes
Three Months Ended August 31, 2025Versus August 31, 2024
The provision for income taxes on continuing operations was
$89.3 millionand $78.0 millionfor the three months ended
August 31, 2025and 2024, respectively, representing an effective
tax rate of 26.9%and 30.9%, respectively. The lower rate was
primarily driven by the resolution of certain state and local tax
matters.
Nine Months Ended August 31, 2025Versus August 31, 2024
The provision for income taxes on continuing operations was
$147.0 millionand $207.1 millionfor the nine months ended
August 31, 2025and 2024, respectively, representing an effective
tax rate of 23.8%, and 29.6%, respectively. The lower rate was
primarily driven by the resolution of certain state and local tax
matters.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA")was
signed into law. The OBBBA permanently extends and modifies
certain domestic and international provisions from the 2017 Tax
Cuts and Jobs Act and phases out certain provisions from the
2022 Inflation Reduction Act. Certain domestic provisions will
have retroactive effects beginning in 2025, while the international
provisions will generally be effective for years beginning after
December 31, 2025. The OBBBA is not expected to materially
impact our fiscal 2025 results.
August 2025Form 10-Q
Recent Business Developments
On September 19, 2025, we and the SMBC Group announced a
significant expansion of our Japanese strategic alliance originally
established in 2021. Key developments include:
•A planned formation of a joint venture in Japan to integrate our
global equities platform with SMBC Group's domestic equity
research, sales, trading, and equity capital markets businesses,
expected to launch in January 2027;
•Expansion of joint sponsor coverage in EMEA, targeting larger
sponsors with our combined investment banking and
corporate banking capabilities;
•SMBC Group's intent to increase its economic ownership from
14.5% to up to 20% (on an as-converted and fully diluted basis),
while maintaining less than 5% voting interest; and
•SMBC Group's commitment to provide approximately $2.5
billion in new credit facilities to us and Jefferies Finance.
These initiatives are designed to deepen the partnership, leverage
complementary strengths, and deliver enhanced services to
clients.
Accounting Developments
There are no accounting standard updates, except as discussed
in Note 3, Accounting Developmentsin our consolidated financial
statements included in this Quarterly Report on Form 10-Q which
we have either determined are applicable or expected to have a
material impact on our consolidated financial statements.
Critical Accounting Estimates
Our consolidated financial statements are prepared in conformity
with U.S. generally accepted accounting principles ("U.S. GAAP"),
which requires management to make estimates and
assumptions that affect the amounts reported in our
consolidated financial statements and related notes. Actual
results can and may differ from estimates. These differences
could be material to our consolidated financial statements.
We believe our application of U.S. GAAP and the associated
estimates are reasonable. Our accounting estimates are
reevaluated, and adjustments are made when facts and
circumstances dictate a change. Historically, we have found our
application of accounting policies to be appropriate, and actual
results have not differed materially from those determined using
necessary estimates.
For further discussions of the following significant accounting
policies and other significant accounting policies, refer to Note 2,
Summary of Significant Accounting Policies, in our consolidated
financial statements included in Part II, Item 8 of our Annual
Report on Form 10-K for the year ended November 30, 2024.
Valuation of Financial Instruments
Financial instruments owned and Financial instruments sold, not
yet purchased are recorded at fair value. The fair value of a
financial instrument is the amount that would be received to sell
an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date (the exit
price). Unrealized gains or losses are generally recognized in
Principal transactions revenues.
Fair Value Hierarchy - In determining fair value, we maximize the
use of observable inputs and minimize the use of unobservable
inputs by requiring that observable inputs be used when
available. Observable inputs are inputs that market participants
would use in pricing the asset or liability based on market data
obtained from independent sources. Unobservable inputs reflect
our assumptions that market participants would use in pricing
the asset or liability developed based on the best information
available in the circumstances. We apply a hierarchy to
categorize our fair value measurements broken down into three
levels based on the transparency of inputs, where Level 1 uses
observable prices in active markets and Level 3 uses valuation
techniques that incorporate significant unobservable inputs.
Greater use of management judgment is required in determining
fair value when inputs are less observable or unobservable in the
marketplace, such as when the volume or level of trading activity
for a financial instrument has decreased and when certain
factors suggest that observed transactions may not be reflective
of orderly market transactions. Judgment must be applied in
determining the appropriateness of available prices, particularly
in assessing whether available data reflects current prices and/or
reflects the results of recent market transactions. Prices or
quotes are weighed when estimating fair value with greater
reliability placed on information from transactions that are
considered to be representative of orderly market transactions.
Fair value is a market-based measure; therefore, when market
observable inputs are not available, our judgment is applied to
reflect those judgments that a market participant would use in
valuing the same asset or liability. The availability of observable
inputs can vary for different products. We use prices and inputs
that are current as of the measurement date even in periods of
market disruption or illiquidity. The valuation of financial
instruments categorized within Level 3 of the fair value hierarchy
involves the greatest extent of management judgment. (Refer to
Note 2, Summary of Significant Accounting Policies, in our
consolidated financial statements included in Part II, Item 8 of
our Annual Report on Form 10-K for the year ended November 30,
2024 and Note 6, Fair Value Disclosuresin our consolidated
financial statements included in this Quarterly Report on Form
10-Q for further information on the definitions of fair value, Level
1, Level 2 and Level 3 and related valuation techniques.)
For information on the composition of our Financial instruments
owned and Financial instruments sold, not yet purchased
recorded at fair value and the composition of activity of our Level
3 assets and Level 3 liabilities, refer to Note 6, Fair Value
Disclosuresin our consolidated financial statements included in
this Quarterly Report on Form 10-Q.
Controls Over the Valuation Process for Financial Instruments -
Our Independent Price Verification Group, independent of the
trading function, plays an important role in determining that our
financial instruments are appropriately valued and that fair value
measurements are reliable. This is particularly important where
prices or valuations that require inputs are less observable. In the
event that observable inputs are not available, the control
processes are designed to assure that the valuation approach
utilized is appropriate and consistently applied and that the
assumptions are reasonable. Where a pricing model is used to
determine fair value, these control processes include reviews of
the pricing model's theoretical soundness and appropriateness
by risk management personnel with relevant expertise who are
independent from the trading desks. In addition, recently
executed comparable transactions and other observable market
data are considered for purposes of validating assumptions
underlying the model.
Income Taxes
Significant judgment is required in estimating our provision for
income taxes. In determining the provision for income taxes, we
must make judgments and interpretations about how to apply
inherently complex tax laws to numerous transactions and
Jefferies Financial Group Inc.
business events. In addition, we must make estimates about the
amount, timing and geographic mix of future taxable income,
which includes various tax planning strategies to utilize tax
attributes and deferred tax assets before they expire.
We record a valuation allowance to reduce our net deferred tax
asset to the amount that is more likely than not to be realized. We
are required to consider all available evidence, both positive and
negative, and to weigh the evidence when determining whether a
valuation allowance is required and the amount of such valuation
allowance. Generally, greater weight is required to be placed on
objectively verifiable evidence when making this assessment, in
particular on recent historical operating results.
We also record reserves for unrecognized tax benefits based on
our assessment of the probability of successfully sustaining tax
filing positions. Management exercises significant judgment
when assessing the probability of successfully sustaining tax
filing positions, and in determining whether a contingent tax
liability should be recorded and if so, estimating the amount. If
our tax filing positions are successfully challenged, payments
could be required that are in excess of reserved amounts or we
may be required to reduce the carrying amount of our net
deferred tax asset, either of which could be significant to our
financial condition or results of operations.
Impairment of Equity Method Investments
We evaluate equity method investments for impairment when
operating losses or other factors may indicate a decrease in
value which is other than temporary. We consider a variety of
factors including economic conditions nationally and in an
investment's geographic area of operation, adverse changes in
the industry in which an investment operates, declines in
business prospects, deterioration in earnings, increasing costs of
operations and other relevant factors specific to the
investee. Whenever we believe conditions or events indicate that
one of these investments might be significantly impaired, we
generally obtain from such investee updated cash flow
projections and obtain other relevant information related to
assessing the overall valuation of the investee. Utilizing this
information, we assess whether the investment is considered to
be other-than-temporarily impaired. To the extent an investment
is deemed to be other-than-temporarily impaired, an impairment
charge is recognized for the amount, if any, by which the
investment's book value exceeds our estimate of the
investment's fair value.
Goodwill
At August 31, 2025, goodwill of $1.84 billionrepresents 2.7%of
total assets. The nature and accounting for goodwill is discussed
in Note 2, Summary of Significant Accounting Policiesin our
consolidated financial statements included in Part II, Item 8 of
our Annual Report on Form 10-K for the year ended November 30,
2024 and Note 13, Goodwill and Intangible Assetsin our
consolidated financial statements included in this Quarterly
Report on Form 10-Q. Goodwill must be allocated to reporting
units and tested for impairment at least annually, or when
circumstances or events make it more likely than not that an
impairment occurred. Goodwill is tested by comparing the
estimated fair value of each reporting unit with its carrying value.
Our annual goodwill impairment testing date for a substantial
portion of our reporting units is August 1 and November 30 for
other identified reporting units. The results of our annual tests
did not indicate any goodwill impairment.
We use allocated tangible equity plus allocated goodwill and
intangible assets for the carrying amount of each reporting unit.
The amount of tangible equity allocated to a reporting unit is
based on our cash capital model deployed in managing our
businesses, which seeks to approximate the capital a business
would require if it were operating independently. For further
information on our Cash Capital Policy, refer to the Liquidity,
Financial Condition and Capital Resources section herein.
Intangible assets are allocated to a reporting unit based on either
specifically identifying a particular intangible asset as pertaining
to a reporting unit or, if shared among reporting units, based on
an assessment of the reporting unit's benefit from the intangible
asset in order to generate results.
Estimating the fair value of a reporting unit requires management
judgment and often involves the use of estimates and
assumptions that could have a significant effect on whether or
not an impairment charge is recorded and the magnitude of such
a charge. Estimated fair values for our reporting units utilize
market valuation methods that incorporate price-to-earnings and
price-to-book multiples of comparable public companies and/or
projected cash flows. Under the market valuation approach, the
key assumptions are the selected multiples and our internally
developed projections of future profitability, growth and return on
equity for each reporting unit. The weight assigned to the
multiples requires judgment in qualitatively and quantitatively
evaluating the size, profitability and the nature of the business
activities of the reporting units as compared to the comparable
publicly-traded companies. The valuation methodology for our
reporting units is sensitive to management's forecasts of future
profitability, which are a significant component of the valuation
and come with a level of uncertainty regarding trading volumes
and capital market transaction levels. In addition, as the fair
values determined under the market valuation approach
represent a noncontrolling interest, we apply a control premium
to arrive at the estimate fair value of each reporting unit on a
controlling basis.
Carrying values of goodwill by reporting unit:
$ in millions
August 31,
2025
November 30,
2024
Investment banking ..........................................................
$702.9
$700.7
Equities and wealth management ..................................
256.2
255.4
Fixed income .....................................................................
578.7
576.9
Asset management ..........................................................
143.0
143.0
Other investments ............................................................
159.6
151.9
Total ....................................................................................
$1,840.4
$1,827.9
August 2025Form 10-Q
Liquidity, Financial Condition and Capital Resources
Our CFO and Global Treasurer are responsible for developing and
implementing our liquidity, funding and capital management
strategies. These policies are determined by the nature and
needs of our day-to-day business operations, business
opportunities, regulatory obligations, and liquidity requirements.
Our actual levels of capital, total assets and financial leverage are
a function of a number of factors, including asset composition,
business initiatives and opportunities, regulatory requirements
and cost and availability of both long term and short-term
funding. We have historically maintained a balance sheet
consisting of a large portion of our total assets in cash and liquid
marketable securities. The liquid nature of these assets provides
us with flexibility in financing and managing our business.
We also own a legacy portfolio of businesses and investments
that are reflected as consolidated subsidiaries, equity
investments or securities. Over the most recent years, we
completed several critical steps to substantially liquidate our
legacy Other investments portfolio of businesses, including the
sales of Foursight in April 2024 and the wholesale operations of
OpNet in August 2024.
In keeping with our strategy of returning excess liquidity to
shareholders, during the nine months ended August 31, 2025, we
returned an aggregate of $339.2 millionto shareholders primarily
in the form of $280.6 millionin cash dividends and the
repurchases of 734,957common shares for a total of $58.5
millionat a weighted average price of $79.58per share in
connection with the net share settlement for tax purposes of
stock awards under our equity compensation plans.
We maintain modest leverage to support our investment grade
ratings. The growth of our balance sheet is supported by our
equity and we have quantitative metrics in place to monitor
leverage and double leverage. Our capital plan is robust, in order
to sustain our operating model through stressed conditions. We
maintain adequate financial resources to support business
activities in both normal and stressed market conditions,
including a buffer in excess of our regulatory, or other internal or
external, requirements. Our access to funding and liquidity is
stable and efficient to ensure that there is sufficient liquidity to
meet our financial obligations in normal and stressed market
conditions.
Our Balance Sheet
A business unit level balance sheet and cash capital analysis are
prepared and reviewed with senior management on a weekly
basis. As a part of this balance sheet review process, capital is
allocated to all assets and gross balance sheet limits are
adjusted, as necessary. This process ensures that the allocation
of capital and costs of capital are incorporated into business
decisions. The goals of this process are to protect the firm's
platform, enable our businesses to remain competitive, maintain
the ability to manage capital proactively and hold businesses
accountable for both balance sheet and capital usage.
We actively monitor and evaluate our financial condition and the
composition of our assets and liabilities. We continually monitor
our overall securities inventory, including the inventory turnover
rate, which confirms the liquidity of our overall assets. A
significant portion of our financial instruments are valued on a
daily basis and we monitor and employ balance sheet limits for
our various businesses.
$ in millions
August 31,
2025
November 30,
2024
% Change
Total assets ...........................................
$69,319.7
$64,360.3
7.7%
Cash and cash equivalents ..................
11,458.5
12,153.4
(5.7)
Cash and securities segregated and
on deposit for regulatory
purposes or deposited with
clearing and depository
organizations ....................................
1,111.6
1,132.6
(1.9)
Financial instruments owned ..............
26,117.1
24,138.3
8.2
Financial instruments sold, not yet
purchased .........................................
12,356.9
11,007.3
12.3
Total Level 3 assets ..............................
802.9
734.2
9.4
Securities borrowed ..............................
$8,175.1
$7,213.4
13.3%
Securities purchased under
agreements to resell ........................
7,917.5
6,179.7
28.1
Total securities borrowed and
securities purchased under
agreements to resell .......................
$16,092.6
$13,393.1
20.2%
Securities loaned ...................................
$2,498.0
$2,540.9
(1.7)%
Securities sold under agreements to
repurchase ........................................
12,090.6
12,337.9
(2.0)
Total securities loaned and
securities sold under agreements
to repurchase ...................................
$14,588.6
$14,878.8
(2.0)%
Total assets at August 31, 2025and November 30, 2024were
$69.32 billionand $64.36 billion, respectively, an increaseof
7.7%. During the three and nine months ended August 31, 2025,
average total assets were higherby 13.5%and 13.0%,
respectively, than total assets at August 31, 2025.
Our total Financial instruments owned inventory was $26.12
billionand $24.14 billionat August 31, 2025and November 30,
2024, respectively. During the nine months ended August 31,
2025, our total Financial instruments owned increasedprimarily
due to increases in corporate equity securities, loans at fair value
and derivative contracts, partially offset by a decrease in
mortgage and asset backed securities. Financial instruments
sold, not yet purchased inventory was $12.36 billionat August 31,
2025, an increaseof 12.3%from $11.01 billionat November 30,
2024, with the increaseprimarily driven by increases in sovereign
obligations, derivative contracts and corporate equity securities,
partially offset by a decrease in U.S. government and agency
securities. Our overall net inventory position was $13.76 billion
and $13.13 billionat August 31, 2025and November 30, 2024,
respectively, with the increase primarily due to increases in loans
at fair value, U.S. government and agency securities, and
derivative contracts, partially offset by reductions in mortgage
and asset backed securities and corporate equity securities.
Level 3 assets:
$ in millions
August 31,
2025
Percent
November 30,
2024
Percent
Investment Banking ............
$129.7
16.2%
$146.7
20.0%
Equities and Fixed Income .
404.2
50.3
312.2
42.5
Asset Management (1) .......
229.4
28.6
256.2
34.9
Other ......................................
39.6
4.9
19.1
2.6
Total ......................................
$802.9
100.0%
$734.2
100.0%
(1)At August 31, 2025and November 30, 2024, $194.4 millionand $218.3 million,
respectively, are attributed to Other investments within our Asset Management
reportable segment.
Securities financing assets and liabilities include financing for
our financial instruments trading activity, matched book
transactions and mortgage finance transactions. Matched book
transactions accommodate customers, as well as obtain
securities for the settlement and financing of inventory positions.
Our average month end balance of total reverse repos and stock
Jefferies Financial Group Inc.
borrows during three and nine months ended August 31, 2025
was 30.6%and 27.0% higher, respectively, than the balance at
August 31, 2025. Our average month end balance of total repos
and stock loans during three and nine months ended August 31,
2025was 31.9%and 35.2% higher, respectively, than the balance
at August 31, 2025.
Select information related to repurchase agreements:
$ in millions
Nine Months
Ended
August 31, 2025
Year Ended
November 30,
2024
Securities Purchased Under Agreements to
Resell:
Period end ...........................................................
$7,917
$6,180
Month end average ............................................
10,426
8,910
Maximum month end ........................................
14,927
10,978
Securities Sold Under Agreements to
Repurchase:
Period end ...........................................................
$12,091
$12,338
Month end average ............................................
16,699
15,197
Maximum month end ........................................
19,785
20,971
Fluctuations in the balance of our repurchase agreements from
period to period and intraperiod are dependent on business
activity in those periods. Additionally, the fluctuations in the
balances of our securities purchased under agreements to resell
are influenced in any given period by our clients' balances and
our clients' desires to execute collateralized financing
arrangements via the repurchase market or via other financing
products. Average balances and period end balances will
fluctuate based on market and liquidity conditions and we
consider the fluctuations intraperiod to be typical for the
repurchase market.
Leverage Ratios:
$ in millions
August 31,
2025
November 30,
2024
Total assets ..................................................................
$69,320
$64,360
Total equity ...................................................................
$10,501
$10,225
Total shareholders' equity ..........................................
$10,439
$10,157
Deduct: Goodwill and intangible assets, net ............
(2,053)
(2,054)
Tangible shareholders' equity ...................................
$8,386
$8,103
Leverage ratio (1) .........................................................
6.6
6.3
Tangible gross leverage ratio (2) ...............................
8.0
7.7
(1)Leverage ratio equals total assets divided by total equity.
(2)Tangible gross leverage ratio (a non-GAAP financial measure) equals total
assets less goodwill and identifiable intangible assets, net divided by tangible
shareholders' equity. The tangible gross leverage ratio is used by rating
agencies in assessing our leverage ratio.
Liquidity Management
The key objectives of the liquidity management framework are to
support the successful execution of our business strategies
while ensuring sufficient liquidity through the business cycle and
during periods of financial and idiosyncratic distress. Our liquidity
management policies are designed to mitigate the potential risk
that we may be unable to access adequate financing to service
our financial obligations without material franchise or business
impact.
The principal elements of our liquidity management framework
are our Cash Capital Policy, our assessment of Modeled Liquidity
Outflow ("MLO") and our Contingency Funding Plan ("CFP").
Liquidity Management Framework. Our Liquidity Management
Framework is based on a model of a potential liquidity
contraction over a one-year time period. This incorporates
potential cash outflows during a market or our idiosyncratic
liquidity stress event, including, but not limited to, the following:
•Repayment of all unsecured debt maturing within one year and
no incremental unsecured debt issuance;
•Maturity rolloff of outstanding letters of credit with no further
issuance and replacement with cash collateral;
•Higher margin requirements than currently exist on assets on
securities financing activity, including repurchase agreements
and other secured funding including central counterparty
clearinghouses;
•Liquidity outflows related to possible credit downgrade;
•Lower availability of secured funding;
•Client cash withdrawals;
•The anticipated funding of outstanding investment and loan
commitments; and
•Certain accrued expenses and other liabilities and fixed costs.
Cash Capital Policy. We maintain a cash capital model that
measures long-term funding sources against requirements.
Sources of cash capital include our equity, mezzanine equity and
the noncurrent portion of long-term borrowings. Uses of cash
capital include the following:
•Illiquid assets such as equipment, goodwill, net intangible
assets, exchange memberships, deferred tax assets and
certain investments;
•A portion of securities inventory and other assets not expected
to be financed on a secured basis in a credit stressed
environment (i.e., margin requirements); and
•Drawdowns of unfunded commitments.
To ensure that we do not need to liquidate inventory in the event
of a funding stress, we seek to maintain surplus cash capital. Our
total long-term capital of $22.51 billionat August 31, 2025
exceeded our cash capital requirements.
MLO. Our businesses are diverse, and our liquidity needs are
determined by many factors, including market movements,
collateral requirements and client commitments, all of which can
change dramatically in a difficult funding environment. During a
liquidity stress, credit-sensitive funding, including unsecured debt
and some types of secured financing agreements, may be
unavailable, and the terms (e.g., interest rates, collateral
provisions and tenor) or availability of other types of secured
financing may change. As a result of our policy to ensure we have
sufficient funds to cover what we estimate may be needed in a
liquidity stress, we hold more cash and unencumbered securities
and have greater long-term debt balances than our businesses
would otherwise require. As part of this estimation process, we
calculate an MLO that could be experienced in a liquidity stress.
MLO is based on a scenario that includes both a market-wide
stress and firm-specific stress, characterized by some or all of
the following elements:
•Global recession, default by a medium-sized sovereign, low
consumer and corporate confidence, and general financial
instability.
•Severely challenged market environment with material declines
in equity markets and widening of credit spreads.
August 2025Form 10-Q
•Damaging follow-on impacts to financial institutions leading to
the failure of a large bank.
•A firm-specific crisis potentially triggered by material losses,
reputational damage, litigation, executive departure, and/or a
ratings downgrade.
The following are the critical modeling parameters of the MLO:
•Liquidity needs over a 30-day scenario.
•A two-notch downgrade of our long-term senior unsecured
credit ratings.
•No support from government funding facilities.
•A combination of contractual outflows, such as upcoming
maturities of unsecured debt, and contingent outflows (e.g.,
actions though not contractually required, we may deem
necessary in a crisis). We assume that most contingent
outflows will occur within the initial days and weeks of a
stress.
•No diversification benefit across liquidity risks. We assume
that liquidity risks are additive.
The calculation of our MLO under the above stresses and
modeling parameters considers the following potential
contractual and contingent cash and collateral outflows:
•All upcoming maturities of unsecured long-term debt,
promissory notes and other unsecured funding products
assuming we will be unable to issue new unsecured debt or
rollover any maturing debt.
•Repurchases of our outstanding long-term debt in the ordinary
course of business as a market maker.
•A portion of upcoming contractual maturities of secured
funding activity due to either the inability to refinance or the
ability to refinance only at wider haircuts (i.e., on terms which
require us to post additional collateral). Our assumptions
reflect, among other factors, the quality of the underlying
collateral and counterparty concentration.
•Collateral postings to counterparties due to adverse changes in
the value of our over-the-counter ("OTC") derivatives and other
outflows due to trade terminations, collateral substitutions,
collateral disputes, collateral calls or termination payments
required by a two-notch downgrade in our credit ratings.
•Variation margin postings required due to adverse changes in
the value of our outstanding exchange-traded derivatives and
any increase in initial margin and guarantee fund requirements
by derivative clearing houses.
•Liquidity outflows associated with our prime services business,
including withdrawals of customer credit balances, and a
reduction in customer short positions.
•Liquidity outflows to clearing banks to ensure timely
settlements of cash and securities transactions.
•Draws on our unfunded commitments considering, among
other things, the type of commitment and counterparty.
•Other upcoming large cash outflows, such as employee
compensation, tax and dividend payments, with no expectation
of future dividends from any subsidiaries.
Based on the sources and uses of liquidity calculated under the
MLO scenarios, we determine, based on a calculated surplus or
deficit, additional long-term funding that may be needed versus
funding through the repurchase financing market and consider
any adjustments that may be necessary to our inventory balances
and cash holdings. At August 31, 2025, we had sufficient excess
liquidity to meet all contingent cash outflows detailed in the MLO
for at least 30 days without balance sheet reduction. We regularly
refine our model to reflect changes in market or economic
conditions and our business mix.
CFP. Our CFP ensures the ability to access adequate liquid
financial resources to meet liquidity shortfalls that may arise in
emergency situations. The CFP triggers the following actions:
•Sets out the governance for managing liquidity during a
liquidity crisis;
•Identifies key liquidity and capital early warning indicators that
will help guide the response to the liquidity crisis;
•Identifies the actions and escalation procedures should we
experience a liquidity crisis including coordination amongst
senior management and the Board of Directors;
•Sets out the sources of funding available during a liquidity
crisis;
•Sets out the communication plan during a liquidity crisis for
key external stakeholders including regulators, relationship
banks, rating agencies and funding counterparties; and
•Sets out an action plan to source additional funding.
Sources of Liquidity
Financial instruments that are cash and cash equivalents or are
deemed by management to be generally readily convertible into
cash, marginable or accessible for liquidity purposes within a
relatively short period of time:
$ in thousands
August 31,
2025
Average
Balance
Quarter Ended
August 31, 2025
(1)
November 30,
2024
Cash and cash equivalents:
Cash in banks .............................................
$3,587,781
$4,948,501
$3,925,535
Money market investments (2) ...............
7,870,691
5,892,255
8,227,879
Total cash and cash equivalents ............
11,458,472
10,840,756
12,153,414
Other sources of liquidity:
Debt securities owned and securities
purchased under agreements to
resell (3) ................................................
1,925,337
1,854,917
1,287,564
Other (4) ......................................................
780,180
812,470
573,042
Total other sources ...................................
2,705,517
2,667,387
1,860,606
Total cash and cash equivalents and
other liquidity sources .......................
$14,163,989
$13,508,143
$14,014,020
Total cash and cash equivalents and
other liquidity sources as % of Total
assets ....................................................
20.4%
21.8%
Total cash and cash equivalents and
other liquidity sources as % of Total
assets less goodwill and intangible
assets ....................................................
21.1%
22.5%
(1)Average balances are calculated based on weekly balances.
(2)At August 31, 2025and November 30, 2024, $7.85 billionand $8.21 billion,
respectively, was invested in U.S. government money funds that invest
primarily in cash, securities issued by the U.S. government and U.S.
government-sponsored entities, and repurchase agreements that are fully
collateralized by cash or government securities. The remaining balances at
August 31, 2025and November 30, 2024are primarily invested in AAA-rated
prime money funds. The average balance of U.S. government money funds for
the quarter ended August 31, 2025was $5.88 billion.
(3)Consists of high-quality sovereign government securities and reverse
repurchase agreements collateralized by U.S. government securities and other
high quality sovereign government securities; deposits with a central bank
within the European Economic Area, United Kingdom, Canada, Australia,
Japan, Switzerland or the U.S.; and securities issued by a designated
multilateral development bank and reverse repurchase agreements with
underlying collateral composed of these securities.
Jefferies Financial Group Inc.
(4)Other includes unencumbered inventory representing an estimate of the
amount of additional secured financing that could be reasonably expected to
be obtained from our Financial instruments owned that are currently not
pledged after considering reasonable financing haircuts.
In addition to the cash balances and liquidity pool presented
above, the majority of financial instruments (both long and short)
in our trading accounts are actively traded and readily
marketable. At August 31, 2025, we had the ability to readily
obtain repurchase financing for 71.8%of our inventory at haircuts
of 10% or less, which reflects the liquidity of our inventory. In
addition, as a matter of our policy, all of these assets have
internal capital assessed, which is in addition to the funding
haircuts provided in the securities finance markets. Additionally,
certain of our Financial instruments owned primarily consisting
of loans and investments are predominantly funded by long term
capital. Under our cash capital policy, we model capital allocation
levels that are more stringent than the haircuts used in the
market for secured funding; and we maintain surplus capital at
these more stringent levels. We continually assess the liquidity of
our inventory based on the level at which we could obtain
financing in the marketplace for a given asset. Assets are
considered to be liquid if financing can be obtained in the
repurchase market or the securities lending market at collateral
haircut levels of 10% or less.
Financial instruments by asset class that we consider to be of a
liquid nature and the amount of such assets that have not been
pledged as collateral:
August 31, 2025
November 30, 2024
$ in thousands
Liquid Financial
Instruments
Unencumbered
Liquid Financial
Instruments (1)
Liquid Financial
Instruments
Unencumbered
Liquid Financial
Instruments (1)
Corporate equity
securities .............
$5,622,725
$965,125
$5,280,920
$781,490
Corporate debt
securities .............
5,418,081
252,094
5,179,229
339,500
U.S. government,
agency and
municipal
securities .............
3,929,278
165,432
4,061,773
75,911
Other sovereign
obligations ..........
1,656,706
1,744,260
1,361,762
1,044,630
Agency mortgage-
backed
securities (2) .......
2,008,389
-
2,695,282
-
Loans and other
receivables ..........
129,589
-
-
Total ...........................
$18,764,768
$3,126,911
$18,579,944
$2,241,531
(1)Unencumbered liquid balances represent assets that can be sold or used as
collateral for a loan but have not been.
(2)Consists solely of agency mortgage-backed securities issued by the Federal
Home Loan Mortgage Corporation ("Freddie Mac"), the Federal National
Mortgage Association ("Fannie Mae") and the Government National Mortgage
Association ("Ginnie Mae").
In addition to being able to be readily financed at reasonable
haircut levels, we estimate that each of the individual securities
within each asset class above could be sold into the market and
converted into cash within three business days under normal
market conditions, assuming that the entire portfolio of a given
asset class was not simultaneously liquidated. There are no
restrictions on the unencumbered liquid securities, nor have they
been pledged as collateral.
Sources of Funding and Capital Resources
Our assets are funded by equity capital, senior debt, securities
loaned, securities sold under agreements to repurchase,
customer free credit balances, bank loans and other payables.
Secured Financing
We rely principally on readily available secured funding to finance
our inventory of financial instruments owned and financial
instruments sold. Our ability to support increases in total assets
is largely a function of our ability to obtain short- and
intermediate-term secured funding, primarily through securities
financing transactions. We finance a portion of our long inventory
and cover some of our short inventory by pledging and borrowing
securities in the form of repurchase or reverse repurchase
agreements (collectively "repos"), respectively. During the nine
months ended August 31, 2025, an average of approximately
55.4%of our cash and noncash repurchase financing activities
used collateral that was considered eligible collateral by central
clearing corporations. Central clearing corporations are situated
between participating members who borrow cash and lend
securities (or vice versa); accordingly, repo participants contract
with the central clearing corporation and not one another
individually. Therefore, counterparty credit risk is borne by the
central clearing corporation which mitigates the risk through
initial margin demands and variation margin calls from repo
participants. The comparatively large proportion of our total repo
activity that is eligible for central clearing reflects the high quality
and liquid composition of the inventory we carry in our trading
books. For those asset classes not eligible for central clearing
house financing, we seek to execute our bi-lateral financings on
an extended term basis and the tenor of our repurchase and
reverse repurchase agreements generally exceeds the expected
holding period of the assets we are financing. The weighted
average maturity of cash and noncash repurchase agreements
for non-clearing corporation eligible funded inventory is
approximately eightmonths at August 31, 2025.
Our ability to finance our inventory via central clearinghouses and
bi-lateral arrangements is augmented by our ability to draw bank
loans on an uncommitted basis under our various banking
arrangements. At August 31, 2025, short-term borrowings, which
must be repaid within one year or less include bank loans,
overdrafts and borrowings under revolving credit facilities.
Letters of credit are used in the normal course of business
mostly to satisfy various collateral requirements in favor of
exchanges in lieu of depositing cash or securities. Average daily
short-term borrowings outstanding were $1.32 billionand
$1.13 billionfor the three and nine months ended August 31,
2025, respectively.
At August 31, 2025and November 30, 2024, our borrowings
under bank loans in Short-term borrowings were $525.6 million
and $414.5 million, respectively. Our borrowings include credit
facilities that contain certain covenants that, among other things,
require us to maintain a specified level of tangible net worth,
require a minimum regulatory net capital requirement for our U.S.
broker-dealer, Jefferies LLC, and impose certain restrictions on
the future indebtedness of certain of our subsidiaries that are
borrowers. Interest is based on rates at spreads over the federal
funds rate or other adjusted rates, as defined in the various credit
agreements, or at a rate as agreed between the bank and us in
reference to the bank's cost of funding. At August 31, 2025, we
were in compliance with all covenants under these credit
facilities.
August 2025Form 10-Q
In addition to the above financing arrangements, we issue notes
backed by eligible collateral under master repurchase
agreements, which provide an additional financing source for our
inventory (our "repurchase agreement financing program"). The
notes issued under the program are presented within Other
secured financings. At August 31, 2025, the outstanding notes
totaled $2.49 billion, bear interest at a spread over the Secured
Overnight Funding Rate ("SOFR") or the Euro Short-Term Rate
("ESTER") and mature from September 2025to October 2028.
Total Long-Term Capital
At August 31, 2025and November 30, 2024, we had total long-
term capital of $22.51 billionand $21.66 billion, respectively,
resulting in a long-term debt to equity capital ratio of 1.14:1and
1.12:1, respectively.
$ in thousands
August 31,
2025
November 30,
2024
Unsecured Long-Term Debt (1) ..................................
$12,008,375
$11,430,610
Total Mezzanine Equity ...............................................
Total Equity ...................................................................
10,500,910
10,224,987
Total Long-Term Capital ............................................
$22,509,691
$21,656,003
(1)The amounts at August 31, 2025and November 30, 2024exclude our secured
long-term debt. The amount at November 30, 2024excludes $8.5 million of
our 5.500% Callable Note as the note matured on February 22, 2025,
$5.4 millionof our 6.000% Callable Note as the note matured on June 16,
2025, $6.2 millionof our 4.500% Callable Note as the note matured on July 22,
2025, and $500.0 millionof our 5.100% Callable Note as the note matures on
September 15, 2025. The amount at August 31, 2025excludes $449.7 million
and $876.3 millionof our Callable Notes as the notes mature on March 16,
2026 and April 16, 2026, respectively, and $45.6 millionof our Floating Senior
Notes as the note matures on June 19, 2026. The amounts at August 31, 2025
and November 30, 2024also exclude $147.5 millionand $157.6 million,
respectively, of structured notes as the notes mature within one year.
Long-Term Debt
During the nine months ended August 31, 2025, long-term debt
increasedby $2.48 billionto $16.01 billionat August 31, 2025, as
presented in our Consolidated Statements of Financial Condition.
This increaseis primarily due to proceeds of $350.0 millionfrom
the drawdown of an unsecured credit facility, $1.00 billionfrom
the issuances of unsecured senior notes, $527.2 millionfrom net
issuances of structured notes, $1.01 billionfrom increased
subsidiaries' borrowings, and $326.4 millionfrom currency
losses on foreign currency borrowings. These increases were
partially offset by repayments of $775.4 millionon our unsecured
senior notes.
At August 31, 2025, our unsecured long-term debt has a weighted
average maturity of approximately 7.2years.
At August 31, 2025and November 30, 2024, our borrowings
under several credit facilities classified within Long-term debt in
our Consolidated Statements of Financial Condition amounted to
$1.20 billionand $775.3 million, respectively. Interest on these
credit facilities is based on an adjusted SOFR plus a spread or
other adjusted rates, as defined in the various credit agreements.
The credit facility agreements contain certain covenants that,
among other things, require us to maintain specified levels of
tangible net worth and liquidity amounts, certain credit and rating
levels and impose certain restrictions on future indebtedness of
and require specified levels of regulated capital and cash
reserves for certain of our subsidiaries. At August 31, 2025, we
were in compliance with all covenants under theses credit
facilities.
Long-term debt ratings:
Rating
Outlook
Moody's Investors Service .........................................
Baa2
Stable
Standard & Poor's ........................................................
BBB
Stable
Fitch Ratings .................................................................
BBB+
Stable
Jefferies LLC
Jefferies
International
Limited
Jefferies GmbH
Rating
Outlook
Rating
Outlook
Rating
Outlook
Moody's
Investors
Service ..........
Baa1
Stable
Baa1
Stable
Baa1
Stable
Standard &
Poor's ............
BBB+
Stable
BBB+
Stable
BBB+
Stable
Access to external financing to finance our day-to-day operations,
as well as the cost of that financing, is dependent upon various
factors, including our debt ratings. Our current debt ratings are
dependent upon many factors, including industry dynamics,
operating and economic environment, operating results,
operating margins, earnings trend and volatility, balance sheet
composition, liquidity and liquidity management, our capital
structure, our overall risk management, business diversification
and our market share and competitive position in the markets in
which we operate. Deterioration in any of these factors could
impact our credit ratings. While certain aspects of a credit rating
downgrade are quantifiable pursuant to contractual provisions,
the impact on our business and trading results in future periods
is inherently uncertain and depends on a number of factors,
including the magnitude of the downgrade, the behavior of
individual clients and future mitigating action taken by us.
In connection with certain over-the-counter derivative contract
arrangements and certain other trading arrangements, we may be
required to provide additional collateral to counterparties,
exchanges and clearing organizations in the event of a credit
rating downgrade. At August 31, 2025, the amount of additional
collateral that could be called by counterparties, exchanges and
clearing organizations under the terms of such agreements in the
event of a downgrade of our long-term credit rating below
investment grade was $288.3 million. For certain foreign clearing
organizations, credit rating is only one of several factors
employed in determining collateral that could be called. The
above represents management's best estimate for additional
collateral to be called in the event of a credit rating downgrade.
The impact of additional collateral requirements is considered in
our CFP and calculation of MLO, as described above.
On September 19, 2025, the SMBC Group announced its
commitment to provide approximately $2.5 billion in new credit
facilities.
Equity Capital
Common Stock
At August 31, 2025and November 30, 2024, we had 565,000,000
authorized shares of voting common stock with a par value of
$1.00per share and had 206,280,296 and 205,504,272common
shares outstanding, respectively. At August 31, 2025, we had
14,213,680share-based awards that do not require the holder to
pay any exercise price and 5,064,740stock options that require
the holder to pay a weighted average exercise price of $22.69per
share.
Jefferies Financial Group Inc.
The Board of Directors has authorized the repurchase of
common stock up to $250.0 millionunder a share repurchase
program. We did not purchase any shares under our share
repurchase program during the nine months ended August 31,
2025. Treasury stock repurchases during the nine months ended
August 31, 2025represent repurchases of common stock for net-
share tax withholding under our equity compensation plan.
Dividends
Nine Months Ended August 31, 2025
Declaration Date
Record Date
Payment Date
Per Common
Share Amount
January 8, 2025
February 14, 2025
February 27, 2025
$0.40
March 26, 2025
May 19, 2025
May 29, 2025
$0.40
June 25, 2025
August 18, 2025
August 29, 2025
$0.40
On January 8, 2025, the Board of Directors increased our
quarterly dividend from $0.35to $0.40per common share. On
September 29, 2025, the Board of Directors declared a dividend
of $0.40per common share to be paid on November 26, 2025to
common shareholders of record at November 17, 2025.
The payment of dividends is subject to the discretion of our
Board of Directors and depends upon general business
conditions and other factors that our Board of Directors may
deem to be relevant.
Non-Voting Common Stock
On June 28, 2023, shareholders approved an Amended and
Restated Certificate of Incorporation, which authorized the
issuance of 35,000,000shares of non-voting common stock with
a par value of $1.00per share (the "Non-Voting Common
Shares"). The Non-Voting Common Shares are entitled to share
equally, on a per share basis, with the voting common stock, in
dividends and distributions. Upon the effectiveness of the
Amended and Restated Certificate of Corporation on June 30,
2023, the number of authorized shares of common stock
remains at 600,000,000 shares, composed of 565,000,000shares
of voting common stock and 35,000,000shares of Non-Voting
Common Shares.
Preferred Stock
On April 27, 2023, we established Series B Non-Voting
Convertible Preferred Shares with a par value of $1.00per share
("Series B Preferred Stock") and designated 70,000shares as
Series B Preferred Stock. The Series B Preferred Stock has a
liquidation preference of $17,500per share and rank senior to our
voting common stock upon dissolution, liquidation or winding up
of Jefferies Financial Group Inc. Each share of Series B Preferred
Stock is automatically convertible into 500shares of non-voting
common stock, subject to certain anti-dilution adjustments, three
years after issuance. The Series B Preferred Stock participates in
cash dividends and distributions alongside our voting common
stock on an as-converted basis.
Additionally, on April 27, 2023, we entered into an Exchange
Agreement with Sumitomo Mitsui Banking Corporation ("SMBC"),
which entitles SMBC to exchange shares of our voting common
stock for shares of the Series B Preferred Stock at a rate of 500
shares of voting common stock for one share of Series B
Preferred Stock. The Exchange Agreement is limited to 55,125
shares of Preferred Stock and SMBC is required to pay $1.50per
share of voting common stock so exchanged. As of November
30, 2024, SMBC had cumulatively exchanged approximately 27.6
million shares of voting common stock for 55,125 shares of
Series B Preferred Stock. Following this exchange, SMBC
increased its ownership of our common stock on an as-converted
basis and fully-diluted, as-converted basis. As a result, the CEO of
Sumitomo Mitsui Financial Group, Inc. was elected and now
serves on our Board of Directors. On September 19, 2024, SMBC
purchased 9.2 millionshares of our common stock. At August 31,
2025, SMBC owns approximately 15.7%of our common stock on
an as-converted basis and 14.5%on a fully-diluted, as-converted
basis. Refer to Note 22, Related Party Transactionsfor further
information regarding transactions with SMBC.
On September 19, 2025, our Board of Directors established Series
B-1 Non-Voting Convertible Preferred Shares with a par value of
$1.00 per share ("Series B-1 Preferred Stock") and designated
17,500 shares as Series B-1 Preferred Stock. The Series B-1
Preferred Stock has a liquidation preference of $500 per share
and ranks senior to our voting common stock and equal to the
Series B Preferred Stock upon dissolution, liquidation or winding
up of Jefferies Financial Group Inc. Each share of Series B-1
Preferred Stock is automatically convertible into 500 shares of
non-voting common stock as soon as such non-voting common
stock exists, subject to certain anti-dilution adjustments. The
Series B-1 Preferred Stock also participates in cash dividends
and distributions alongside our voting common stock on an as-
converted basis.
Additionally, on September 19, 2025, we entered into an amended
and restated Exchange Agreement (the "Amended and Restated
Exchange Agreement") with SMBC, which entitles SMBC to
exchange shares of our voting common stock for shares of the
Series B-1 Preferred Stock at a rate of 500 shares of voting
common stock for one share of Series B-1 Preferred Stock. The
Amended and Restated Exchange Agreement is limited to 17,500
shares of Series B-1 Preferred Stock. Under the Amended and
Restated Exchange Agreement, SMBC is permitted to increase its
economic ownership in the Company to up to 20% on an as-
converted and fully diluted basis, while continuing to own less
than 5% of a voting interest in the Company.
During the three and nine months ended August 31, 2025, we
paid cash dividends of $11.0 millionand $33.1 million,
respectively, compared to $9.6 millionand $22.2 millionfor the
three and nine months ended August 31, 2024, respectively, to
the Series B Preferred stockholder.
Net Capital
Jefferies LLC is a broker-dealer registered with the SEC and a
member firm of the Financial Industry Regulatory Authority
("FINRA") and is subject to the SEC Uniform Net Capital Rule
("Rule 15c3-1"), which requires the maintenance of minimum net
capital, and has elected to calculate minimum capital
requirements using the alternative method permitted by Rule
15c3-1 in calculating net capital. Jefferies LLC, as a dually-
registered U.S. broker-dealer and futures commission merchant
("FCM"), is also subject to Regulation 1.17 of the Commodity
Futures Trading Commission ("CFTC") under the Commodity
Exchange Act ("CEA"), which sets forth minimum financial
requirements. The minimum net capital requirement in
determining excess net capital for a dually registered U.S. broker-
dealer and FCM is equal to the greater of the requirement under
SEA Rule 15c3-1 or CFTC Regulation 1.17. Accordingly, FINRA is
the designated examining authority for Jefferies LLC and the
National Futures Association ("NFA") is the designated self-
regulatory organization ("DSRO") for Jefferies LLC as an FCM
Jefferies Financial Services, Inc. ("JFSI") is registered with the
SEC as a Security-Based Swap Dealer ("SBS Dealer") and an OTC
Derivatives Dealer ("OTCDD") subject to the SEC's SBS dealer
regulatory rules and the SEC's net capital requirements pursuant
to Rule 18a-1. JFSI is also registered as a swap dealer with the
August 2025Form 10-Q
CFTC and is subject to the CFTC's regulatory capital
requirements pursuant to the minimum financial requirements for
swap dealers under CFTC Regulation 23.101. Additionally, as a
registered member firm, JFSI is subject to the net capital
requirements of the NFA. Accordingly, the SEC is the designated
examining authority for JFSI in its capacity as an SBS Dealer and
OTCDD, while the NFA is the DSRO for JFSI, as a CFTC registered
swap dealer.
Certain non-U.S. subsidiaries are subject to capital adequacy
requirements as prescribed by the regulatory authorities in their
respective jurisdictions. This includes Jefferies International
Limited which is subject to the regulatory supervision and
requirements of the Financial Conduct Authority ("FCA") in the
U.K. Jefferies International Limited's' own funds requirement
represents the highest of the permanent minimum capital
requirement, fixed overheads requirement and k-factor
requirements set out in the Investment Firms Prudential Regime
("IFPR") under the FCA's MIFIDPRU sourcebook.
At August 31, 2025, Jefferies LLC's and JFSI's net capital and
excess net capital were as follows:
$ in thousands
Net
Capital
Excess Net
Capital
Jefferies LLC .................................................................
$2,204,515
$2,061,318
JFSI - SEC ......................................................................
310,701
290,345
JFSI - CFTC ...................................................................
310,701
283,646
In addition, the equivalent capital requirements for Jefferies
International Limited, on a consolidated basis, is a total capital of
$2.02 billionand an excess capital of $1.15 billionat August 31,
2025.
At August 31, 2025, Jefferies LLC, JFSI and JIL are in compliance
with their applicable requirements.
The regulatory capital requirements referred to above may
restrict our ability to withdraw capital from our regulated
subsidiaries.
Customer Protection and Segregation Requirement
As a registered broker dealer that clears and carries customer
accounts, Jefferies LLC is subject to the customer protection
provisions under SEC Rule 15c3-3 and is required to compute a
reserve formula requirement for customer accounts and deposit
cash or qualified securities into a special reserve bank account
for the exclusive benefit of customers. At August 31, 2025,
Jefferies LLC had $875.6 millionin cash and qualified U.S.
Government securities on deposit in special reserve bank
accounts for the exclusive benefit of customers.
As a registered broker dealer that clears and carries proprietary
accounts of brokers or dealers (commonly referred to as "PAB"),
Jefferies LLC is also required to compute a reserve requirement
for PABs pursuant to SEC Rule 15c3-3. At August 31, 2025,
Jefferies LLC had $437.8 millionin cash and qualified U.S.
Government securities in special reserve bank accounts for the
exclusive benefit of PABs.
Other Developments
In February 2022, Russia invaded Ukraine. Following Russia's
invasion, the U.S., the U.K., and the European Union governments,
among others, developed coordinated financial and economic
sanctions targeting Russia that, in various ways, constrain
transactions with numerous Russian entities, including major
Russian banks and individuals; transactions in Russian sovereign
debt; and investment, trade and financing to, from, or in Ukraine.
We do not have any operations in Russia or any clients with
significant Russian operations and we have minimal market risk
related to securities of companies either domiciled or operating
in Russia. We continue to closely monitor the status of global
sanctions and restrictions, trading conditions related to Russian
securities and the credit risk and nature of our counterparties.
In October 2023, Hamas attacked Israel, leading to a multifront
military conflict in the Middle East that has most recently
involved actions by Iran, Israel and the United States. Our
investments and assets in our growing business in the Persian
Gulf, Saudi Arabia and Israel, as well as the global
macroeconomic climate, could be negatively affected by
consequences from this geopolitical and military conflict in the
region. We continue to closely monitor the status of global
sanctions, restrictions and other impacts arising from the
conflict.
Throughout 2025, the United States introduced actions to
increase import tariffs at various rates, including on certain
products imported from almost all countries. Other countries
have responded with retaliatory actions or plans for retaliatory
actions. Some of these tariff announcements have since been
followed by announcements of limited exemptions and
temporary pauses, and wholly new arrangements with key trading
partners of the United States. These actions have led to
increased economic uncertainty, and could negatively impact
global supply chains and trade flow. The potential impact of
tariffs on corporate earnings remains uncertain. We continue to
closely monitor the impact of these matters on our business.
On September 29, 2025, First Brands Group, LLC and certain of its
affiliates ("First Brands") filed voluntary petitions for Chapter 11
bankruptcy protection. First Brands is an aftermarket auto parts
manufacturer that sells its products to major auto-parts retailers
(the "Obligors"). Point Bonita Capital, a division of Leucadia Asset
Management ("LAM"), manages on behalf of third-party
institutional and other investors an approximately $3 billion
portfolio of trade-finance assets, which is supported by total
invested equity of $1.9 billion, of which $113 million, or 5.9%, is
owned by LAM. Since 2019, the portfolio has included accounts
receivables purchased from First Brands and arising from the
sale of First Brands' products to Obligors. The purchase of
receivables in this fashion is called factoring, and the Point
Bonita portfolio has approximately $715 million invested in
receivables that are almost entirely due from Walmart, Autozone,
NAPA, O'Reilly Auto Parts, and Advanced Auto Parts, with First
Brands, as the servicer, responsible for directing the Obligors'
payments to Point Bonita. For almost six years until September
15, 2025, Point Bonita always had been paid by the Obligors on
time and in full. On September 15, 2025, First Brands stopped
directing timely transfers of funds from the Obligors on Point
Bonita's behalf. In its bankruptcy filings, First Brands indicated
that its special advisors were investigating whether receivables
had been turned over to third-party factors upon receipt and
whether receivables may have been factored more than once. We
have not yet received any information regarding the results of
that investigation. We are in communication with First Brands'
advisors and are working diligently to determine what the impact
on Point Bonita might be.
Separately, Apex Credit Partners LLC ("Apex"), a wholly owned
subsidiary of Jefferies Finance, 50%-owned by us, manages on
behalf of third-party institutional and other investors certain CLOs
that invest in broadly syndicated loans with approximately $4.2
billion in assets under management. 12 CLOs and 1 CLO
warehouse managed by Apex own approximately $48 million in
the aggregate of First Brands' term loans, which is approximately
1% of the CLO assets managed by Apex. Apex owns between 5%
Jefferies Financial Group Inc.
and 9.9% of the equity tranche of each of its managed CLOs plus
a portion of the other senior tranches in an amount to comply
with applicable securitization risk-retention rules.
Off-Balance Sheet Arrangements
We have contractual commitments arising in the ordinary course
of business for securities loaned or purchased under agreements
to resell, repurchase agreements, future purchases and sales of
foreign currencies, securities transactions on a when-issued
basis, purchases and sales of corporate loans in the secondary
market and underwriting. Each of these financial instruments and
activities contains varying degrees of off-balance sheet risk
whereby the fair values of the securities underlying the financial
instruments may be in excess of, or less than, the contract
amount. The settlement of these transactions is not expected to
have a material effect upon our consolidated financial
statements.
In the normal course of business, we engage in other off balance-
sheet arrangements, including derivative contracts. Neither
derivatives' notional amounts nor underlying instrument values
are reflected as assets or liabilities in our Consolidated
Statements of Financial Condition. Rather, the fair values of
derivative contracts are reported in our Consolidated Statements
of Financial Condition as Financial instruments owned or
Financial instruments sold, not yet purchased as applicable.
Derivative contracts are reflected net of cash paid or received
pursuant to credit support agreements and are reported on a net
by counterparty basis when a legal right of offset exists under an
enforceable master netting agreement. For additional information
about our accounting policies and our derivative activities, refer
to Note 2, Summary of Significant Accounting Policies, in our
consolidated financial statements included in Part II, Item 8 of
our Annual Report on Form 10-K for the year ended November 30,
2024and Note 6, Fair Value Disclosuresand Note 7, Derivative
Financial Instrumentsin our consolidated financial statements
included in this Quarterly Report on Form 10-Q.
Risk Management
Overview
Risk is an inherent part of our business and activities. The extent
to which we properly and effectively identify, assess, monitor and
manage each of the various types of risk involved in our activities
is critical to our financial soundness, viability and profitability.
Accordingly, we have a comprehensive risk management
approach, with a formal governance structure and policies and
procedures outlining frameworks and processes to identify,
assess, monitor and manage risk. Principal risks involved in our
business activities include market, credit, liquidity and capital,
operational, model and strategic risk. Legal and compliance, new
business and reputational risk are also included within our
principal risks.
Risk management is a multifaceted process that requires
communication, judgment and knowledge of financial products
and markets. Our risk management process encompasses the
active involvement of executive and senior management, and
also many departments independent of the revenue-producing
business units, including Risk Management, Operations,
Information Technology, Compliance, Legal and Finance. Our risk
management policies, procedures and methodologies are flexible
in nature and are subject to ongoing review and modification.
In achieving our strategic business objectives, our risk appetite
incorporates keeping our clients' interests as top priority and
ensuring we are in compliance with applicable laws, rules and
regulations, as well as adhering to the highest ethical standards.
We undertake prudent risk-taking that protects the capital base
and franchise, utilizing risk limits and tolerances that avoid
outsized risk-taking. We maintain a diversified business mix and
avoid significant concentrations to any sector, product,
geography or activity and set quantitative concentration limits to
manage this risk. We consider contagion, second order effects
and correlation in our risk assessment process and actively seek
out value opportunities of all sizes. We manage the risk of
opportunities larger than our approved risk levels through risk
sharing and risk distribution, sell-down and hedging as
appropriate. We have a limited appetite for illiquid assets and
complex derivative financial instruments. We maintain the asset
quality of our balance sheet through conducting trading activity in
liquid markets and generally ensure high turnover of our
inventory. We subject less liquid positions and derivative financial
instruments to particular scrutiny and use a wide variety of
specific metrics, limits and constraints to manage these risks.
We protect our reputation and franchise, as well as our standing
within the market. We operate a federated approach to risk
management and assign risk oversight responsibilities to a
number of functions with specific areas of focus.
For discussion of liquidity and capital risk management, refer to
the "Liquidity, Financial Condition and Capital Resources" section
herein.
Governance and Risk Management Structure
For a discussion of our governance and risk management
structure and our risk management framework, see
"Management's Discussion and Analysis of Financial Condition
and Results of Operations-Risk Management" in Part II, Item 7 of
our Annual Report on Form 10-K for the year ended November 30,
2024.
Risk Considerations
We apply a comprehensive framework of limits on a variety of
key metrics to constrain the risk profile of our business activities.
The size of the limits reflects our risk appetite for a certain
activity under normal business conditions. Key metrics included
in our risk management framework include inventory position
and exposure limits on a gross and net basis, scenario analysis
and stress tests, Value-at-Risk ("VaR"), sensitivities, exposure
concentrations, aged inventory, Level 3 assets, counterparty
exposure, leverage and cash capital.
Market Risk
Market risk is defined as the risk of loss due to fluctuations in the
market value of financial assets and liabilities attributable to
changes in market variables.
Our market risk principally arises from interest rate risk, from
exposure to changes in the yield curve, the volatility of interest
rates, and credit spreads, and from equity price risks from
exposure to changes in prices and volatilities of individual
equities, equity baskets and equity indices. In addition,
commodity price risk results from exposure to the changes in
prices and volatilities of individual commodities, commodity
baskets and commodity indices, and foreign exchange risk
results from changes in foreign currency rates.
Market risk is present in our capital markets business through
market making, proprietary trading, underwriting and investing
activities and is present in our asset management business
through investments in separately managed accounts and direct
investments in funds. Given our involvement in a broad set of
financial products and markets, market risk exposures are
diversified and economic hedges are established as appropriate.
August 2025Form 10-Q
Market risk is monitored and managed through a set of key risk
metrics such as VaR, stress scenarios, risk sensitivities and
position exposures. Limits are set on the key risk metrics to
monitor and control the risk exposure ensuring that it is in line
with our risk appetite. Our risk appetite, including the market risk
limits, is periodically reviewed to reflect business strategy and
market environment. Material risk changes, top/emerging risks
and limit utilizations/breaches are highlighted through risk
reporting and escalated as necessary.
Trading is principally managed through front office trader
mandates, where each trader is provided a specific mandate in
line with our product registry. Mandates set out the activities,
currencies, countries and products that a desk is permitted to
trade in and set the limits applicable to a desk. Traders are
responsible for knowing their trading limits and trading in a
manner consistent with their mandate.
VaR
VaR is a statistical estimate of the potential loss from adverse
market movements over a specified time horizon within a
specified probability (confidence level). It provides a common
risk measure across financial instruments, markets and asset
classes. We estimate VaR using a model that simulates revenue
and loss distributions by applying historical market changes to
the current portfolio. We calculate a one-day VaR using a one-
year look-back period measured at a 95% confidence level.
VaR at
August 31,
2025
Daily Firmwide VaR
$ in millions
Daily VaR for the Three Months
Ended August 31, 2025
Risk Categories
Average
High
Low
Interest Rates and Credit
Spreads .....................................
$4.91
$5.98
$7.80
$3.91
Equity Prices ................................
9.55
9.51
11.37
7.22
Currency Rates ............................
1.66
1.71
2.24
1.24
Commodity Prices ......................
0.72
0.34
0.78
0.14
Diversification Effect (1) ............
(6.27)
(7.09)
N/A
N/A
Firmwide VaR (2) ........................
$10.57
$10.45
$12.24
$8.51
VaR at
May 31,
2025
Daily Firmwide VaR
$ in millions
Daily VaR for the Three Months
Ended May 31, 2025
Risk Categories
Average
High
Low
Interest Rates and Credit
Spreads ..................................
$6.51
$6.47
$9.31
$3.36
Equity Prices ............................
10.27
9.71
13.93
7.14
Currency Rates ........................
1.56
2.01
2.61
1.42
Commodity Prices ...................
0.44
0.35
0.71
0.17
Diversification Effect (1) ........
(7.10)
(6.65)
N/A
N/A
Firmwide VaR (2) ....................
$11.68
$11.89
$15.39
$8.96
(1)The diversification effect is not applicable for the maximum and minimum
VaR values as the firmwide VaR and the VaR values for the four risk categories
might have occurred on different days during the period.
(2)The aggregated VaR presented here is less than the sum of the individual
components (i.e., interest rate risk, foreign exchange rate risk, equity risk and
commodity price risk) due to the benefit of diversification among the four risk
categories. Diversification benefit equals the difference between aggregated
VaR and the sum of VaRs for the four risk categories and arises because the
market risk categories are not perfectly correlated.
VaR for our capital markets trading activities, which excludes the
impact on VaR for each component of market risk from our asset
management activities, by interest rate and credit spreads, equity,
currency and commodity products:
VaR at
August 31,
2025
Daily Capital Markets VaR
$ in millions
Daily VaR for the Three Months
Ended August 31, 2025
Risk Categories
Average
High
Low
Interest Rates and Credit
Spreads .....................................
$4.82
$5.94
$7.74
$3.84
Equity Prices ................................
4.41
4.15
6.15
3.06
Currency Rates ............................
1.18
1.12
1.18
1.03
Commodity Prices ......................
0.08
0.05
0.18
-
Diversification Effect (1) ............
(4.00)
(4.59)
N/A
N/A
Capital Markets VaR (2) ............
$6.49
$6.67
$9.81
$5.22
VaR at
May 31,
2025
Daily Capital Markets VaR
$ in millions
Daily VaR for the Three Months
Ended May 31, 2025
Risk Categories
Average
High
Low
Interest Rates and Credit
Spreads ..................................
$6.22
$6.19
$9.10
$1.05
Equity Prices ............................
4.40
3.99
5.81
2.85
Currency Rates ........................
1.05
1.16
1.50
0.64
Commodity Prices ...................
0.10
0.08
0.25
-
Diversification Effect (1) ........
(4.63)
(3.10)
N/A
N/A
Capital Markets VaR (2) .........
$7.14
$8.32
$13.08
$6.13
(1)The diversification effect is not applicable for the maximum and minimum
VaR values as the capital markets VaR and the VaR values for the four risk
categories might have occurred on different days during the period.
(2)The aggregated VaR presented here is less than the sum of the individual
components (i.e., interest rate risk, foreign exchange rate risk, equity risk and
commodity price risk) due to the benefit of diversification among the four risk
categories. Diversification benefit equals the difference between aggregated
VaR and the sum of VaRs for the four risk categories and arises because the
market risk categories are not perfectly correlated.
Jefferies Financial Group Inc.
Our average daily firmwide VaR decreasedto $10.45 millionfor the three months ended August 31, 2025from $11.89 millionfor the
three months ended May 31, 2025, primarily driven by a higher diversification effect and decreases in exposures to movements in
interest rates, credit spreads and currency rates. The average daily capital markets VaR decreasedto $6.67 millionfor the three months
ended August 31, 2025, from $8.32 millionfor the three months ended May 31, 2025, primarily driven by a higher diversification effect
and decreases in exposures to movements in interest rates and credit spreads.
The efficacy of the VaR model is tested by comparing our actual daily net revenues for those positions included in the calculation of
VaR with the daily VaR estimate. This evaluation is performed at various levels, from the overall level down to specific business lines.
For the VaR model, revenue is defined as principal transactions revenues, trading related commissions, revenue from securitization
activities and net interest income. VaR backtesting methodologies differ for regulated entities with approved capital models.
For a 95% confidence one day VaR model (i.e., no intra-day trading), assuming current changes in market value are consistent with the
historical changes used in the calculation, losses would not be expected to exceed the VaR estimates more than twelve times on an
annual basis (i.e., once in every 20 days). During the three months ended August 31, 2025, there were zerodays when the aggregate net
trading loss exceeded the 95% one day VaR.
The chart below presents our daily firmwide and capital markets VaR over the last four quarters. The fluctuations in VaR during the first,
second and third quarters of 2025 were primarily driven by volatility in the equity markets.
Daily Net Trading Revenue
There were 3days with firmwide trading losses out of a total of 63trading days during the three months ended August 31, 2025. The
histogram below presents the distribution of our actual daily net trading revenue for substantially all of our trading activities:
August 2025Form 10-Q
Other Risk Measures
The VaR model does not include certain positions that are best measured and monitored using sensitivity analysis. Risk Management
has additional procedures in place to assure that the level of potential loss driven by those positions not in the VaR model arising from
market movements are within acceptable levels. Such procedures include performing stress tests and profit and loss analysis. The
table below presents the potential reduction in earnings associated with a 10% stress of the fair value of the positions that are not
included in the VaR model at August 31, 2025:
$ in thousands
10% Sensitivity
Investment in funds and other (1) ..........................................................................................................................................................................
$195,416
Private investments ..................................................................................................................................................................................................
68,185
Corporate debt securities in default .......................................................................................................................................................................
21,450
Trade claims ..............................................................................................................................................................................................................
2,423
(1)Primarily includes investments in hedge funds, fund of funds and private equity funds classified within Level 3 of the fair value hierarchy and
excluded from the fair value hierarchy based on net asset value.
The impact of changes in our own credit spreads on our structured notes for which the fair value option was elected is not included in
VaR. The estimated credit spread risk sensitivity for each one basis point widening in our own credit spreads on financial liabilities for
which the fair value option was elected was an increase in value of approximately $2.0 millionat August 31, 2025, which is included in
other comprehensive income.
Other Risk
We are also subject to interest rate risk on our long-term fixed interest rate debt. Generally, the fair market value of debt securities with
a fixed interest rate will increase as interest rates fall, and the fair market value will decrease as interest rates rise. The following table
represents principal cash flows by expected maturity dates and the related weighted-average interest rate on those maturities for our
consolidated long-term debt obligations, inclusive of any related interest rate hedges. For the variable rate borrowings, the weighted-
average interest rates are based on the rates in effect at the reporting date. Our market risk with respect to foreign currency exposure
on our long-term debt is also presented in the table below.
Expected Maturity Date (Fiscal Years)
$ in thousands
2025
2026
2027
2028
2029
Thereafter
Total
Fair Value
Rate Sensitive Liabilities:
Fixed Interest Rate Borrowings ...............................
$139,461
$543,532
$614,806
$1,381,296
$304,880
$6,158,171
$9,142,146
$9,171,145
Weighted-Average Interest Rate .............................
1.29%
5.12%
5.24%
5.33%
5.46%
5.60%
Variable Interest Rate Borrowings ..........................
$23,266
$576,797
$1,290,503
$22,413
$117,464
$1,382,103
$3,412,546
$3,331,198
Weighted-Average Interest Rate .............................
5.60%
6.65%
6.56%
5.94%
5.52%
6.17%
Borrowings with Foreign Currency Exposure ........
$55,018
$926,423
$638,515
$584,950
$588,998
$1,032,087
$3,825,991
$3,718,122
Weighted-Average Interest Rate .............................
5.24%
6.30%
3.02%
3.37%
6.47%
6.28%
Stress Tests and Scenario Analysis
Stress tests are used to analyze the potential impact of specific
events or extreme market moves on the current portfolio both
firm-wide and within business segments. Stress testing is an
important part of our risk management approach because it
allows us to quantify our exposure to tail risks, highlight potential
loss concentrations, undertake risk/reward analysis, set risk
controls and overall assess and mitigate our risk.
We employ a range of stress scenarios, which comprise both
historical market price and rate changes and hypothetical market
environments, and generally involve simultaneous changes of
many risk factors. Indicative market changes in the scenarios
include, but are not limited to, a large widening of credit spreads,
a substantial decline in equities markets, significant moves in
selected emerging markets, large moves in interest rates and
changes in the shape of the yield curve.
Unlike our VaR, which measures potential losses within a given
confidence interval, stress scenarios do not have an associated
implied probability. Rather, stress testing is used to estimate the
potential loss from market moves that tend to be larger than
those embedded in the VaR calculation. Stress testing
complements VaR to cover for potential limitations of VaR such
as the breakdown in correlations, non-linear risks, tail risk and
extreme events and capturing market moves beyond the
confidence levels assumed in the VaR calculations.
Stress testing is performed and reported at least weekly as part
of our risk management process and on an ad hoc basis in
response to market events or concerns. Current stress tests
provide estimated revenue and loss of the current portfolio
through a range of both historical and hypothetical events. The
stress scenarios are reviewed and assessed at least annually so
that they remain relevant and up to date with market
developments. Additional hypothetical scenarios are also
conducted on a sub-portfolio basis to assess the impact of any
relevant idiosyncratic stress events as needed.
Jefferies Financial Group Inc.
Counterparty Credit Risk
Credit risk is the risk of loss due to adverse changes in a
counterparty's credit worthiness or its ability or willingness to
meet its financial obligations in accordance with the terms and
conditions of a financial contract.
We are exposed to credit risk as a trading counterparty to other
broker-dealers and customers, as a counterparty to derivative
contracts, as a direct lender and through extending loan
commitments and providing securities-based lending and as a
member of exchanges and clearing organizations. Credit
exposure exists across a wide range of products, including cash
and cash equivalents, loans, securities finance transactions and
over-the-counter derivative contracts. The main sources of credit
risk are:
•Loans and lending arising in connection with our investment
banking and capital markets activities, which reflects our
exposure at risk on a default event with no recovery of loans.
Current exposure represents loans that have been drawn by the
borrower and lending commitments that are outstanding. In
addition, credit exposures on forward settling traded loans are
included within our loans and lending exposures for
consistency with the balance sheet categorization of these
items. Loans and lending also arise in connection with our
portion of a Secured Revolving Credit Facility that is with us
and Massachusetts Mutual Life Insurance Company, to be
funded equally, to support loan underwritings by Jefferies
Finance. For further information on this facility, refer to Note
11, Investmentsin our consolidated financial statements
included in this Quarterly Report on Form 10-Q. In addition, we
have loans outstanding to certain of our officers and
employees (none of whom are executive officers or directors).
For further information on these employee loans, refer to Note
22, Related Party Transactionsin our consolidated financial
statements included in this Quarterly Report on Form 10-Q.
•Securities and margin financing transactions, which reflect our
credit exposure arising from reverse repurchase agreements,
repurchase agreements and securities lending agreements to
the extent the fair value of the underlying collateral differs from
the contractual agreement amount and from margin provided
to customers.
•OTC derivatives, which are reported net by counterparty when a
legal right of setoff exists under an enforceable master netting
agreement. OTC derivative exposure is based on a contract at
fair value, net of cash collateral received or posted under credit
support agreements. In addition, credit exposures on forward
settling trades are included within our derivative credit
exposures.
•Cash and cash equivalents, which includes both interest-
bearing and non-interest-bearing deposits at banks.
Credit is extended to counterparties in a controlled manner and in
order to generate acceptable returns, whether such credit is
granted directly or is incidental to a transaction. All extensions of
credit are monitored and managed as a whole to limit exposure
to loss related to credit risk. Credit risk is managed according to
the Credit Risk Management Policy, which sets out the process
for identifying counterparty credit risk, establishing counterparty
limits, and managing and monitoring credit limits. The policy
includes our approach for:
•Client on-boarding and approving counterparty credit limits;
•Negotiating, approving and monitoring credit terms in legal and
master documentation;
•Determining the analytical standards and risk parameters for
ongoing management and monitoring credit risk books;
•Actively managing daily exposure, exceptions and breaches;
and
•Monitoring daily margin call activity and counterparty
performance.
Counterparty credit exposure limits are granted within our credit
ratings framework, as detailed in the Credit Risk Management
Policy. The Credit Risk Department assesses counterparty credit
risk and sets credit limits at the counterparty master agreement
level. Limits must be approved by appropriate credit officers and
initiated in our credit and trading systems before trading
commences. All credit exposures are reviewed against approved
limits on a daily basis.
Our Secured Revolving Credit Facility, which supports loan
underwritings by Jefferies Finance, is governed under separate
policies other than the Credit Risk Management Policy and is
approved by our Board. The loans outstanding to certain of our
officers and employees are extended pursuant to a review by our
most senior management.
Current counterparty credit exposures at August 31, 2025and
November 30, 2024are summarized in the tables below and
provided by credit quality, region and industry. Credit exposures
presented take netting and collateral into consideration by
counterparty and master agreement. Collateral taken into
consideration includes both collateral received as cash as well as
collateral received in the form of securities or other
arrangements. Current exposure is the loss that would be
incurred on a particular set of positions in the event of default by
the counterparty, assuming no recovery. Current exposure equals
the fair value of the positions less collateral. Issuer risk is the
credit risk arising from inventory positions (for example,
corporate debt securities and secondary bank loans). Issuer risk
is included in our country risk exposure within the following
tables.
August 2025Form 10-Q
Counterparty Credit Exposure by Credit Rating
Loans and Lending
Securities and Margin
Finance
OTC Derivatives
Total
Cash and
Cash Equivalents
Total with Cash and
Cash Equivalents
At
At
At
At
At
At
$ in millions
August
31,
2025
November
30,
2024
August
31,
2025
November
30,
2024
August
31,
2025
November
30,
2024
August
31,
2025
November
30,
2024
August
31,
2025
November
30,
2024
August
31,
2025
November
30,
2024
AAA Range
$-
$-
$7.3
$12.0
$-
$-
$7.3
$12.0
$7,870.7
$8,227.9
$7,878.0
$8,239.9
AA Range
85.3
80.0
253.6
190.3
2.1
5.6
341.0
275.9
15.0
63.8
356.0
339.7
A Range
1.1
0.2
1,203.1
1,145.1
416.2
415.0
1,620.4
1,560.3
3,462.5
3,691.8
5,082.9
5,252.1
BBB Range
250.0
253.5
86.7
31.2
62.7
40.0
399.4
324.7
110.3
169.4
509.7
494.1
BB or Lower
15.8
37.2
32.5
31.2
173.3
78.7
221.6
147.1
-
0.5
221.6
147.6
Unrated
223.9
322.6
-
-
5.7
5.3
229.6
327.9
-
-
229.6
327.9
Total
$576.1
$693.5
$1,583.2
$1,409.8
$660.0
$544.6
$2,819.3
$2,647.9
$11,458.5
$12,153.4
$14,277.8
$14,801.3
Counterparty Credit Exposure by Region
Loans and Lending
Securities and Margin
Finance
OTC Derivatives
Total
Cash and
Cash Equivalents
Total with Cash and
Cash Equivalents
At
At
At
At
At
At
$ in millions
August
31,
2025
November
30,
2024
August
31,
2025
November
30,
2024
August
31,
2025
November
30,
2024
August
31,
2025
November
30,
2024
August
31,
2025
November
30,
2024
August
31,
2025
November
30,
2024
Asia-Pacific/Latin
America/Other
$15.8
$15.8
$192.2
$130.4
$0.5
$0.2
$208.5
$146.4
$652.7
$520.3
$861.2
$666.7
Europe and the Middle
East
1.1
0.2
488.5
523.2
108.7
88.7
598.3
612.1
63.2
70.8
661.5
682.9
North America
559.2
677.5
902.5
756.2
550.8
455.7
2,012.5
1,889.4
10,742.6
11,562.3
12,755.1
13,451.7
Total
$576.1
$693.5
$1,583.2
$1,409.8
$660.0
$544.6
$2,819.3
$2,647.9
$11,458.5
$12,153.4
$14,277.8
$14,801.3
Counterparty Credit Exposure by Industry
Loans and Lending
Securities and Margin
Finance
OTC Derivatives
Total
Cash and
Cash Equivalents
Total with Cash and
Cash Equivalents
At
At
At
At
At
At
$ in millions
August
31,
2025
November
30,
2024
August
31,
2025
November
30,
2024
August
31,
2025
November
30,
2024
August
31,
2025
November
30,
2024
August
31,
2025
November
30,
2024
August
31,
2025
November
30,
2024
Asset Managers
$-
$6.4
$-
$0.8
$-
$-
$-
$7.2
$7,870.7
$8,227.9
$7,870.7
$8,235.1
Banks, Broker-Dealers
251.3
253.7
893.2
849.0
435.8
466.6
1,580.3
1,569.3
3,587.8
3,925.5
5,168.1
5,494.8
Corporates
145.0
187.1
-
-
163.6
69.5
308.6
256.6
-
-
308.6
256.6
As Agent Banks
-
-
572.5
474.8
-
-
572.5
474.8
-
-
572.5
474.8
Other
179.8
246.3
117.5
85.2
60.6
8.5
357.9
340.0
-
-
357.9
340.0
Total
$576.1
$693.5
$1,583.2
$1,409.8
$660.0
$544.6
$2,819.3
$2,647.9
$11,458.5
$12,153.4
$14,277.8
$14,801.3
Jefferies Financial Group Inc.
Country Risk Exposure
Country risk is the risk that events or developments that occur in the general environment of a country or countries due to economic,
political, social, regulatory, legal or other factors, will affect the ability of obligors of the country to honor their obligations. We define the
country of risk as the country of jurisdiction or domicile of the obligor and monitor country risk resulting from both trading positions and
counterparty exposure, which may not include the offsetting benefit of any financial instruments utilized to manage market risk. The
following tables reflect our top exposures at August 31, 2025and November 30, 2024to the sovereign governments, corporations and
financial institutions in those non- U.S. countries in which we have net long issuer and counterparty exposure:
August 31, 2025
Issuer Risk
Counterparty Risk
Issuer and Counterparty Risk
$ in millions
Fair Value of
Long Debt
Securities
Fair Value of
Short Debt
Securities
Net Derivative
Notional
Exposure
Loans and
Lending
Securities and
Margin
Finance
OTC
Derivatives
Cash and
Cash
Equivalents
Excluding
Cash and
Cash
Equivalents
Including
Cash and
Cash
Equivalents
Canada
$192.8
$(175.9)
$48.3
$-
$62.1
$371.7
$-
$499.0
$499.0
United Kingdom
1,602.6
(916.5)
(317.6)
1.0
62.3
50.8
4.5
482.6
487.1
Hong Kong
63.6
(69.5)
(4.7)
-
21.4
-
296.3
10.8
307.1
Japan
2,856.3
(2,821.7)
14.7
-
93.3
-
83.4
142.6
226.0
France
585.3
(600.1)
21.2
0.1
178.6
0.3
-
185.4
185.4
India
16.3
(20.6)
4.1
-
-
-
175.7
(0.2)
175.5
South Korea
796.7
(679.0)
(1.0)
-
9.7
0.1
-
126.5
126.5
Netherlands
535.0
(520.5)
102.2
-
8.5
-
0.6
125.2
125.8
Sweden
205.0
(106.4)
10.2
-
-
-
10.5
108.8
119.3
Spain
443.8
(328.0)
(70.3)
-
72.2
-
1.1
117.7
118.8
Total
$7,297.4
$(6,238.2)
$(192.9)
$1.1
$508.1
$422.9
$572.1
$1,798.4
$2,370.5
November 30, 2024
Issuer Risk
Counterparty Risk
Issuer and Counterparty Risk
$ in millions
Fair Value of
Long Debt
Securities
Fair Value of
Short Debt
Securities
Net Derivative
Notional
Exposure
Loans and
Lending
Securities and
Margin
Finance
OTC
Derivatives
Cash and
Cash
Equivalents
Excluding
Cash and
Cash
Equivalents
Including
Cash and
Cash
Equivalents
Canada
$259.2
$(280.1)
$109.7
$-
$46.6
$360.1
$59.3
$495.5
$554.8
United Kingdom
1,332.5
(680.8)
(364.3)
0.1
95.8
76.5
37.9
459.8
497.7
France
592.2
(495.0)
7.7
0.1
184.9
1.6
-
291.5
291.5
Hong Kong
73.5
(36.5)
(6.0)
-
2.4
-
250.0
33.4
283.4
Spain
403.1
(263.6)
(6.0)
-
63.1
1.2
0.5
197.8
198.3
Netherlands
484.1
(450.4)
125.4
-
5.7
1.7
0.1
166.5
166.6
Japan
2,146.0
(2,093.5)
0.4
-
63.2
-
37.4
116.1
153.5
Australia
523.8
(426.8)
(16.8)
-
26.5
-
44.6
106.7
151.3
India
27.4
(29.7)
-
-
-
-
142.9
(2.3)
140.6
Italy
1,070.9
(569.3)
(402.9)
-
0.4
-
1.1
99.1
100.2
Total
$6,912.7
$(5,325.7)
$(552.8)
$0.2
$488.6
$441.1
$573.8
$1,964.1
$2,537.9
Operational Risk
Operational risk is the risk of financial or non-financial impact,
resulting from inadequate or failed internal processes, people
and systems or from external events. We interpret this definition
as including not only financial loss or gain but also other negative
impacts to our objectives such as reputational impact, legal/
regulatory impact and impact on our clients. Third-party risk is
also included as a subset of operational risk and is defined as the
potential threat presented to us, our employees or clients from
our supply chain and other third parties used to perform a
process, service or activity on our behalf.
Our Operational Risk framework includes governance as well as
operational risk processes, comprises operational risk event
capture and analysis, risk and control self-assessments,
operational risk key indicators, action tracking, risk monitoring
and reporting, deep dive risk assessments, new business
approvals and vendor risk management. Each revenue producing
and support department is responsible for the management and
reporting of operational risks and the implementation of the
Operational Risk Management Policy and processes within the
department with regular operational risk training provided to our
employees.
Operational risk events are mapped to risk categories used for
the consistent classification of risk data to support root cause
and trend analysis, which includes:
•Fraud and Theft
•Clients and Business Practices
•Market Conduct / Regulatory Compliance
•Business Disruption
•Technology
•Data Protection and Privacy
•Trading
•Transaction and Process Management
•People
•Cybersecurity
•Vendor Risk
Our Operational Risk Management Policy and operational risk
management framework, infrastructure, methodology, processes,
guidance and oversight of the operational risk processes are
centralized and consistent firmwide and, additionally, subject to
regional and legal entity operational risk governance, as required.
August 2025Form 10-Q
We also maintain a Third-Party ("Vendor") Risk Management
Policy and Framework to ensure adequate control and monitoring
over our critical third parties, which includes processes for
conducting periodic reviews covering areas of risk including
financial health, information security, privacy, business continuity
management, disaster recovery and operational risk of our
vendors.
Model Risk
Model risk refers to the risk of loss resulting from decisions that
are based on the output of models, due to errors or weaknesses
in the design and development, implementation or improper use
of models. We use quantitative models primarily to value certain
financial assets and liabilities and to monitor and manage our
risk. Model risk is a function of the model materiality, frequency
of use, complexity and uncertainty around inputs and
assumptions used in a given model. Robust model risk
management is a core part of our risk management approach
and is overseen through our risk governance structure and risk
management controls.
Legal and Compliance Risk
Legal and compliance risk includes the risk of noncompliance
with applicable legal and regulatory requirements. We are subject
to extensive regulation in the different jurisdictions in which we
conduct our business. We have various procedures addressing
issues such as regulatory capital requirements, sales and trading
practices, use of and safekeeping of customer funds, credit
granting, collection activities, anti-money laundering and record
keeping. These risks also reflect the potential impact that
changes in local and international laws and tax statutes have on
the economics and viability of current or future transactions. In
an effort to mitigate these risks, we continuously review new and
pending regulations and legislation and participate in various
industry interest groups. We also maintain an anonymous hotline
for employees or others to report suspected inappropriate
actions by us or by our employees or agents.
New Business Risk
New business risk refers to the risks of entering into a new line of
business or offering a new product. By entering a new line of
business or offering a new product, we may face risks that we are
unaccustomed to dealing with and may increase the magnitude
of the risks we currently face. The New Business Committee
reviews proposals for new businesses and new products to
determine if we are prepared to handle the additional or
increased risks associated with entering into such activities.
Reputational Risk
We recognize that maintaining our reputation among clients,
investors, regulators and the general public is an important
aspect of minimizing legal and operational risks. Maintaining our
reputation depends on a large number of factors, including the
selection of our clients and the conduct of our business
activities. We seek to maintain our reputation by screening
potential clients and by conducting our business activities in
accordance with high ethical standards. Our reputation and
business activity can be affected by statements and actions of
third parties, even false or misleading statements by them. We
actively monitor public comment concerning us and are vigilant
in seeking to assure accurate information and perception
prevails.
Jefferies Financial Group Inc. published this content on October 09, 2025, and is solely responsible for the information contained herein. Distributed via SEC EDGAR on October 09, 2025 at 20:22 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]