The Canadian securities industry enjoyed its third consecutive year of record profits in 2005, according to the Investment Dealers Association of Canada.

Total adjusted operating profit stood at a record $4.3 billion last year, breaking the previous high of $3.6 billion in 2004 by 21%.

The year finished on a banner note thanks in part to the robust finale: operating profit in the fourth quarter totalled a lofty $1.21 billion, up 10% quarter-over-quarter.

Integrated firm adjusted operating profit was $794 million in the fourth quarter, unchanged from Q3. For 2005, integrated adjusted operating profit was $2.9 billion, up 20% from 2004.

Retail firm adjusted operating profit in fourth quater totalled $116 million, up 20% from Q#. For 2005, retail adjusted operating profit was $352 million, up 19% over 2004.

Institutional adjusted operating profit in the fourth quarter stood at $305 million, up 41% from Q3. For 2005, institutional adjusted operating profit was $811 million, up 8% over 2004.

Commission revenue was $1.3 billion in the fourth quarter, a quarterly decline of 2%. For the year, commissions totaled $5.3 billion, up 10% from 2004.

Investment banking revenue reached $892 million in the fourth quarter, unchanged from Q3. For 2005, investment banking was $3.6 billion, up 16% from 2004.

Fee income stood at $491 million in the fourth quarter, a quarterly increase of 16%. For the whole of 2005, total fee-based revenue totaled $1.7 billion, up 21% from 2004.

Fixed income trading was $203 million in the fourth quarter, up 15% from Q3 05. Fixed income trading in 2005 totaled $706 million, up 19% from 2004.

The IDA said “major business segments continued to benefit from Canada’s red-hot M&A market, surging energy prices, low interest rates, and strong financial markets.”

However, it added that cost control was key to the improved profit performance.

“The industry’s focus on the bottom line – spearheaded by the bank-owned dealers – drove costs down significantly in the fourth quarter,” producing a 3% decline in October-December expenses and holding the year’s cost increase to 2%.

“In the end, the industry’s flourishing businesses and effective handle on costs enabled the Canadian securities industry to deliver a handsome return on equity of 20% to investors last year.”

Industry employment expanded 1% in the fourth quarter to a total head count of 39,174. In 2005, total employment was up 4% compared to 2004 levels.