AGF Management profit rises, but revenue down

TORONTO (Reuters) - Third-quarter profit rose 4 percent at money management firm AGF Management AGFb.TO as expenses declined, but global market volatility dragged down the value of assets and associated revenue.

AGF said on Wednesday that net income was C$41.1 million ($39.9 million), or 46 Canadian cents a share, in the quarter ended August 31, up from C$39.4 million, or 43 Canadian cents a share, in the year-earlier period.

Analysts had expected the company, which manages retail mutual funds as well as portfolios for institutional and high net worth investors, to earn 47 Canadian cents a share before items, according to Reuters Estimates.

Earnings before interest, taxes, depreciation and amortization from continuing operations fell 10.7 percent to C$81.5 million from C$91.3 million.

Total AGF revenue fell 7.3 percent to C$184.7 million in the quarter, while expenses declined 4.4 percent to C$103.2 million, led by cost-cutting in investment management operations.

AGF said total assets in its key investment management segment dropped to C$48.7 billion at the end of the quarter, from C$53.8 billion a year earlier, as stock markets and gross fund sales declined.

In its AGF Trust Co operations, real estate and investment loans jumped 31 percent year over year to C$4.4 billion. The provision for loan losses increased 42 percent to C$3.4 million, due partly to growth in the loan portfolio and the mix of loan types, it said.

Executives told a conference call that the credit quality of the loan portfolio has remained consistent, with impaired loans as a percentage of total loans at 0.5 percent.

Its investment loans are secured by a client's underlying mutual funds, and they are demand loans -- not margin loans -- that can be called any time the borrower stops making payments, said Mario Causarano, president of AGF Trust Co.