First quarter revenue at GMP Capital Trust tumbled nearly 30% from the same period last year, but showed a sharp improvement from the fourth quarter, the company announced on Friday.

The company reported revenue of $67.4 million in the three months ended March 31, a decrease of 28% compared with first quarter 2008, but an increase of 99% compared with fourth quarter 2008.

GMP generated net income of $7.1 million in first quarter 2009, down 66% from $21 million in the first quarter 2008. The annualized return on unitholders’ equity was 13.4% for the quarter, up from a negative ROE of 29.6% in the fourth quarter of 2008, but below the positive ROE of 29.2% in the year ago period.

“We saw improved performance across most of our businesses this quarter compared with the immediately preceding quarter and are pleased with our first quarter 2009 results given the ongoing continued challenging market conditions,” said Kevin Sullivan, CEO of GMP Capital Trust.

Revenue in GMP’s capital markets division fell 33% to $51 million. This included a 46% plunge in investment banking revenue to $28.2 million, thanks to challenging market conditions, and a 29% drop in sales and trading commission to $17.1 million.

In the wealth management unit, revenue fell 28% to $9.7 million from the first quarter of 2008, thanks to lower interest income on tightening spreads and reduced client activity in light of ongoing uncertain markets.

Alternative investments revenue was a bright spot during the quarter, jumping 47% to $8.2 million from the same quarter last year. This reflected unrealized gains in principal activities, fee revenue earned by GMP Investment Management, for which no comparable period exists in 2008, and higher management fee income earned by EdgeStone.

The second quarter has so far shown continued improvements from first quarter results, Sullivan said in a conference call on Friday.

“The positive momentum from Q1 has extended into Q2,” he said.

While the timing of a full market recovery remains uncertain, Sullivan said he’s optimistic that market conditions will continue to improve.

“We are off to a sold start in 2009,” he said. “This quarter’s results, coupled with a powerful market rally since early March, are encouraging signs for the remainder of 2009.”

At GMP’s annual general meeting, scheduled for Friday afternoon, shareholders will vote on a proposal to convert GMP from an income trust structure to a corporation.

IE