Canaccord Capital posts profit in Q2, turns around year-ago net loss

By The Canadian Press

VANCOUVER, B.C. - Increased revenues and aggressive cost control allowed Canaccord Capital Inc. (TSX: CCI.TO) to turn a year-ago loss into a profit during its second quarter of fiscal 2010.

The Vancouver-based investment firm reported net income of $6.7 million or 12 cents per share for the quarter ended Sept. 30. This was an improvement from a year-ago net loss of $5.4 million or 11 cents per share.

The company, one of Canada's largest independent investment dealers, posted quarterly revenues of $123.7 million, up 11.6 per cent from $110.8 million last year.

A compilation of three analyst estimates had predicted revenue of $121 million and 12 cents per share of earnings, according to Thomson Reuters.

Canaccord said its net profit was largely due to rising revenues during the quarter.

The company attributed its increased revenue to aggressive cost containment. It said ongoing cost control held expenses at a flat $116 million.

"We achieved this good result despite decreased market activity during the summer months, and finished the second quarter of fiscal 2010 with growing momentum in both our businesses," said Paul Reynolds, Canaccord's president and chief executive officer in a letter to shareholders.

The company said its annualized return on equity sits at 6.9 per cent for the quarter, a figure still below its business-cycle target of 20 per cent. Still, Canaccord said the quarter's figure was a significant improvement from the negative five per cent return on equity it posted a year ago.

Canaccord said it would be reinstating its dividend given the positive results of the quarter. The dividend had been suspended last year to protect the company's capital in harsh market conditions.

"We will remain committed to putting our clients first, controlling our costs and delivering superior value for all our shareholders," said Reynolds.

The company' shares closed at $11.22 Wednesday on the Toronto Stock Exchange.