AGF Management profit rises, but revenue down

TORONTO (Reuters) - Third-quarter profit rose 4 percent at money management firm AGF Management (AGFb.TO: Quote) 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.