Canaccord Genuity Group Inc. reported net income of $16.9 million for its most recent quarter as its wealth management and capital markets divisions continued to exhibit better performance.
The Toronto-based firm reported revenue of $428.6 million for its second fiscal quarter, which ended Sept. 30 — an increase of 27.1% from a year earlier and 0.1% from the previous quarter.
Expenses were $411.8 million, up 21.8% on a year-over-year basis and 1.8% from the first quarter.
“Our second fiscal quarter was characterized by an improving backdrop for corporate finance and advisory activities in our core mid-market focused sectors and continued strong performance from our wealth management businesses,” said Dan Daviau, president and CEO of Canaccord, in a conference call with analysts on Friday.
Globally, the firm said its capital markets division earned $202.1 million in the quarter, up 39.5% from a year prior. This was “primarily driven by higher corporate financing and advisory revenues,” Daviau said.
The firm’s global wealth management business earned $216.5 million, an increase of 15.6% on a year-over-year basis.
Total client assets in Canaccord’s global wealth management business in the quarter grew to a new firm high of $110.4 billion, an increase of $17.1 billion or 18.3% from a year ago. In Canada, client assets grew to $39.9 billion, reflecting a year-over-year increase of 13.1%
“This growth was fuelled by enhanced market valuations, modest inflows, new assets from recent acquisitions in the U.K., as well as our recruitment of advisors in Canada and Australia,” Daviau said.
“We’re continuing to advance our organic and inorganic growth priorities in all regions, with an emphasis on growing contributions from fee-based revenue streams,” he added.
As of Sept. 30, Canaccord had 144 advisory teams in Canada and the average client assets per advisory team amounted to $277.3 million, the firm said, up 15.5% from the same period last year.
Daviau said the firm’s recruitment efforts in Canada remain strong: “In the past month, we’ve been pleased to welcome teams in Calgary and Vancouver with combined assets of $1.8 billion.”
Moreover, the firm completed the acquisition of U.K.-based Cantab Asset Management in the second quarter and has entered into a binding agreement with Brooks Macdonald Group plc to acquire its subsidiary, Brooks Macdonald Asset Management.
Brooks Macdonald Asset Management is a U.K.-based financial planning and fund management business with approximately £2.3 billion (CAD$4.1 billion) in assets under management, Daviau noted.
“This business will form a strong complement to our offshore business and introduce financial planning capabilities in the region. We anticipate completing this acquisition by the end of our fourth fiscal quarter,” he said.
At the same time, Daviau said Canaccord is striving to cut back on its spending.
“We are actively working to reduce non-compensation expenses against the backdrop of a potentially higher amortization expense in the next fiscal year, in connection with the important investments in our new flagship office in Vancouver, where half our Canadian wealth assets are based, and in New York, where we are consolidating three offices into one central location,” he said.
Overall, Daviau shared a positive outlook with the backdrop of lower interest rates.
“We are encouraged by the general positive momentum towards a more normalized interest rate environment, which bodes well for risk appetite and should support a gradual return to healthy market for corporate financing and advisory activities in our core mid-market sectors,” he said.
The firm’s board of directors approved a second-quarter common share dividend of $0.085 per share, consistent with previous quarters.