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Dec 31, 2022
Oppenheimer Q4 2022 Earnings Report
Oppenheimer's Q4 2022 earnings decreased due to lower transaction levels and valuations, partially offset by rising interest rates.
Key Takeaways
Oppenheimer Holdings Inc. reported a decrease in net income to $22.4 million, or $2.04 basic earnings per share, for Q4 2022, compared to $62.9 million, or $4.99 basic earnings per share, for Q4 2021. Revenue also decreased to $313.6 million from $365.1 million in the same period last year.
Revenue, net income, and earnings per share decreased due to lower transaction levels and valuations in client portfolios, and fewer investment banking transactions.
Bank deposit sweep income reached a record for the fourth quarter, driven by higher short-term interest rates.
Client assets under administration and under management were at reduced levels at the end of the year.
The company repurchased 1,684,287 shares of Class A non-voting common stock during the year.
Oppenheimer
Oppenheimer
Oppenheimer Revenue by Segment
Revenue by Segment
Capital Markets Revenue
CapyFin.com Forward Guidance
Company maintains a strong balance sheet with a significant excess in regulatory capital.
Positive Outlook
- Bank deposit sweep income and interest income on margin loans increased significantly throughout the year, as both received a benefit from the short-term interest rate increases enacted by the Federal Reserve.
- Company purchased 1,684,287 shares (15%) of its Class A non-voting common stock at an average price of $36.00 per share in the open market under its share repurchase program.
- Company continues to maintain a strong balance sheet with a significant excess in regulatory capital.
- Benefits from the short-term interest rate increases enacted by the Federal Reserve.
- Focused on managing controllable costs and maintaining discipline on overall expense levels.
Challenges Ahead
- Challenging macroeconomic conditions as well as an adverse arbitration decision in 2022.
- Concerns around whether inflation, rising interest rates and other geopolitical tensions could induce a recession weighed negatively on market sentiment during the year.
- Significant declines in transaction volumes and in the valuations of the equity and fixed income markets, which drove a meaningful reduction in both our transaction based revenues and advisory fee revenues.
- The volatile markets also led to a cooling of equity IPOs, secondary offerings and M&A transaction activity, which negatively impacted our capital markets income.
- Experienced higher legal expenses during the year.