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GMP Capital turns to profit in the first quarter, increases dividend

Published: 10:33 06 May 2011 EDT

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GMP Capital (TSE:GMP) said Friday it swung to a profit in the first quarter, a result of impairment charges seen a year earlier and strength in its capital markets segment.

For the first three months of 2011, the Canadian investment bank reported a net income attributable to common shareholders of $22.5 million, or 29 cents per share, up from a loss of $62.6 million, or 89 cents per share, in the year-ago period, when the company recorded an impairment charge relating to its EdgeStone private equity business.

Excluding one-time debt redemption costs incurred this quarter, adjusted earnings were 38 cents per share, up from 19 cents in the first quarter of 2010. Analysts expected profits of 33 cents per share.

Revenue increased a whopping 41% year-over-year to $115.3 million, as capital market revenue grew 48%, primarily driven by broad-based increases in investment banking, and commissions, the company said.

GMP led or co-led 37 underwriting transactions completed in Canada, helping to raise $1.8 billion for its clients.

"Our results this quarter benefitted from improving business and economic conditions and reflect our continued focus on our clients and a leading position in the Canadian capital markets," said CEO Harris Fricker in a statement.

The wealth management division, comprised of Richardson GMP, recorded its second consecutive quarterly profit during the period, and saw revenues rise by 29% on increased client trading activity.

Conversely, alternative investment revenue dropped by 2%, due to lower investment management and fee income, partly offset by performance fees recognized following distributions of its Genesis Partners Fund this quarter. Assets under management across various funds increased by $217.7 million to $529.5 million in the quarter.

GMP said that its board has approved a 25% increase in its quarterly cash dividend to $0.10 per common share, payable on June 30.

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