GMP Capital Trust today reported sharp drops in net income and revenue as the wealth management firm grappled with persistently challenging markets.

Net income for the second quarter ended June 30 was $15.7 million, down 59% from the same period in 2007. Basic earnings per unit for the quarter was 25¢, down 59% from a year-ago.

Revenue for the quarter was $89.2 million a decrease of 30% compared with second quarter of 2007 due primarily to lower investment banking and commission revenue.

Annualized return on equity for the quarter was 22.4% compared with 51.9% in the year ago period.

Distributable cash for the quarter was $22.5 million, or 35¢ per basic unit, down 52% from $47.3 million, or 75¢ per basic unit, in the year ago period.

Commencing with the August 2008 distribution, GMP Capital will reduce its monthly distribution rate to 10.42¢ per fund unit, reduced from 14¢ per unit.

“Given the market turbulence that we and other financial services participants, are experiencing, we remain satisfied with our performance and our return on unitholders’ equity,” stated Kevin Sullivan, CEO, in a news release.

“As we considered the fund’s financial performance and the current capital market activity levels, we felt it prudent to reduce our monthly cash distribution rate at this time. While this was a difficult decision, we believe it represents the best course of action for the fund and our unitholders over the long term,” Sullivan added.

Revenue from GMP’s capital markets segment was $69.8 million during the quarter, down 35% from the second quarter of 2007.

Investment banking revenue was $36.4 million, down 43% from second quarter 2007 primarily as a result of weaker equity underwriting results in the mining and oil and gas sectors compared with record equity underwriting revenue in the same period in 2007.

Sales and trading commission income was $28.9 million, down 21% from the second quarter of 2007, primarily due to persistent equity market volatility.

In the wealth management segment, revenue was $13.2 million, down 6% from second quarter of 2007. Assets under administration rose 18% to $4.8 billion.

In the alternative investments segment, revenue was $7.3 million, up 18% from the second quarter of 2007, primarily reflecting incremental investment management fees earned by GMP Investment Management arising from the management of the GMP Diversified Alpha Fund and unrealized gains on the fund’s investment in the GMP Diversified Alpha Fund.

Toronto-based GMP Capital Trust carries on business through GMP Securities L.P., Griffiths McBurney Corp., GMP Securities Europe LLP, GMP Private Client L.P., EdgeStone Capital Partners, L.P. and GMP Investment Management L.P.