GMP Capital Corp.’s CEO Kevin Sullivan says that its outlook for the second half of 2004 remains “positive” despite a slow start to the third quarter.

In a conference call with analysts Thursday, Sullivan said that the early Q3 results, while “satisfactory,” suggest that it will be challenging to maintain its revenue and profitability growth. The firm reported a second-quarter profit of $14.3 million, driven by strong revenue growth. Investment banking revenue jumped 146%, and sales and trading revenue increased 25%. Overall revenue almost doubled.

These trends aren’t expected to hold in the third quarter, as interest rates head higher and markets grapple with uncertainty. However, Sullivan noted that there are positive signs, including a strong M&A deal pipeline, a strong dollar and low interest rates.

That said, there is a great deal of uncertainty about the industry’s prospects for the rest of the year. Sullivan allowed that while the M&A deal pipeline looks good, fees are paid on the completion of transactions, and it is hard to predict how many deals will be closed. It is similarly hard to predict the performance of the equity market, or the equity issuance pipeline he noted.

Looking longer term, Sullivan suggested that the industry expects to see strong growth in the high net worth retail sector, and that smaller firms are expected to benefit disproportionately from this trend. GMP is in the midst of building a private client arm.

So far it has focused on building its infrastructure for the private-client business, a project that has a $2.5-million budget. It has currently spent $360,000 establishing its platform, and expects to start bringing advisors into the fold in the next quarter. It maintains that it expects to bring on 100 advisors within the next five years, although it is focused on finding high quality advisors, rather than in meeting any short-term target for either bodies or assets under administration.

As for other business lines, Sullivan said that the firm doesn’t intend to follow the US trend to relying more heavily on proprietary trading. He said that strong returns are available from running an agency business, and that it doesn’t anticipate pro trading becoming a big part of its business in the next five years. However, it is looking at devoting some capital to a private equity venture.