By Manya Saini and Tatiana Bautzer
(Reuters) -Investment bank Lazard (NYSE:LAZ) reported a surge in third-quarter profit on Thursday, driven by an industry-wide recovery in dealmaking.
After a dry spell lasting more than two years due to elevated interest rates and market volatility, corporate clients are now once again looking to pursue large multi-billion dollar deals and raise funds through equity or debt offerings.
In a call with journalists, CEO Peter Orszag was optimistic about merger and acquisition (M&A) activity after the U.S. presidential election.
New York-based Lazard's financial advisory revenue climbed 39% in the third quarter to $371 million, driving a 50% jump in revenue to $785 million.
Lazard was the ninth most active investment bank in global M&A in the first nine months of the year, ranked by fees, according to data from Dealogic.
Orszag said that some deals have been delayed in the short term pending the result of the U.S. election, but he is optimistic about the outlook for M&A activity.
REGULATORY ENVIRONMENT
The "worst case scenario" for dealmaking in a new administration would be for the regulatory environment to remain as it is, Orszag said.
There is a chance for more deal-friendly regulation if Vice President Kamala Harris wins the election, with potentially new officials in charge of antitrust reviews and more deals having outcomes defined by the courts, he added.
The Lazard CEO sees the potential for a more accommodating regulatory scenario under an administration headed by former president Donald Trump. But dealmakers are also looking at other factors beyond regulatory matters, including changes in the tax system, potential tariffs and sectoral initiatives affecting industries, such as health care, energy and financial institutions.
Lazard's gains mirror trends seen at larger Wall Street rivals, where investment banking units helped all six top U.S. banks exceed analysts' profit expectations for the third quarter.
Larger rivals Goldman Sachs' investment banking fees increased 20%, while JPMorgan Chase (NYSE:JPM), the largest U.S. bank by assets, posted a jump of 31%.
Lazard's asset management business also posted a 3% rise in quarterly revenue, boosted by a rally in the equity markets that has propelled benchmark indexes to record highs.
"Asset Management delivered another solid quarter, providing a durable source of revenue for the firm," Orszag added.
The bank closed the quarter with $246 billion in assets under management, on average, versus $236 billion a year earlier.
Net income rose to $108 million, or $1.02 per share, in the third quarter, compared with $7 million, or 6 cents per share, a year earlier.
On an adjusted basis, the bank earned 38 cents per share, compared with 10 cents per share a year earlier.
Investor expectations of a broad recovery in Lazard's mainstay businesses have pushed the bank's stock 46% higher this year.