Raymond James Q1'25 Earnings
Raymond James Financial released its Q1 2025 Earnings last week (see the call transcript here). CEO Paul Reilly comments, "Total clients domestic cash sweep and enhanced savings program balances at the end of the quarter were $59.7 billion, reflecting a 3% increase over September 2024. Of note, sweep balances grew 5% in the quarter." CFO Butch Oorlog tells us, "So far in the fiscal second quarter, domestic cash sweep balances have decreased by approximately $1.8 billion primarily due to quarterly fee billings of nearly $1.6 billion." Asked about deposit betas staying the same during the Q&A, Reilly answers, "I think that's a reasonable assumption going forward, and we'll, of course, next quarter, have the full impact of the two rate cuts in this quarter. And so, I think the deposit beta has been averaging around 35% on the sweep balances, but much higher than that on the highest yielding products like ESP, closer to 100%. That's what we anticipated was sort of that the deposit beta would look similar for the various products on the way down as it did as on the way up for rates." Asked about cash growth, Shoukry replies, "We look at quarter-to-quarter trends. But if you look at year-over-year trends, I think you’ll see different trends there. So our cash balances and our cash programs, we always put clients first in the offering. And we have a very competitive offering, both in the suite program, the enhanced savings program, some of the special rates we offer for new money and also the purchase money market fund platform. First and foremost, when we make decisions around any of those cash programs, we're thinking about what's best for clients. That served us very well over a long period of time, and the sorting dynamic has certainly gotten into the later innings, especially as rates have started to come down. And outside of quarter-to-quarter blips that you're highlighting, [this] may have some noise in it." He adds, "If you look over a long period of time, we've been very consistent ... about providing transparent and sort of consistent guidance around what we thought was going to happen to cash balances. And we have performed just as well, if not better, than the rest of the industry since the start, despite what maybe some others were saying about what would happen."
