DundeeWealth reports net profit in third quarter, recovers from year-ago loss

By The Canadian Press

TORONTO - DundeeWealth Inc. (TSX: DW.TO) says a healthy balance sheet helped it turn to turn a profit in its most recent quarter and put the company in a position to consider acquisitions.

The Toronto-based wealth management firm said Tuesday its $12.9 million profit in the three months ended Sept. 30 amounted to nine cents per share, up from a year-ago net loss of $26.6 million or 19 cents per share.

The third-quarter net earnings included a fair value adjustment of $2.9 million related to DundeeWealth's holdings of asset-backed commercial paper, which had been devalued and written down after the Canadian ABCP market collapsed.

Quarterly revenues totalled $191 million, down from $200.7 million last year.

The company's figures met analysts expectations, according to estimates compiled by Thomson Reuters.

DundeeWealth, a publicly traded subsidiary of Dundee Corp. (TSX: DC-A.TO) provides investment management, securities brokerage, financial planning and investment advisory services.

The Dundee companies are controlled by the Goodman family through multiple vote shares, although Bank of Nova Scotia (TSX: BNS.TO) bought a significant minority stake in DundeeWealth about two years ago.

Since then, the global financial services industry has been coping with the downturn that began sweeping through the world's banking system about a year ago after several U.S. firms collapsed or came close to collapsing.

"Although revenues are not yet back to the levels we reached pre-market collapse, we have reported an upward trend quarter over quarter this year while at the same time seeing our cost containment initiatives deliver on expectations," said David Goodman, DundeeWealth's president and chief executive officer.

Goodman added that the company had paid off all amounts outstanding under its credit facility, using proceeds from a $200-million debt offering.

He said the company was now in a position to consider acquisition opportunities.

DundeeWealth said revenues from its capital market activities grew to $20.7 million in the quarter compared to $9.9 million last year.

Meanwhile its retail financial services saw revenues slide to $62.7 million compared to $75.8 million a year ago.

Management fee revenues were $114.3 million in the third quarter compared with $123.8 million a year ago.

Its shares closed at $12.25 Monday on the Toronto Stock Exchange.