March 13, 2008 / 4:54 PM / in 10 years

UPDATE 1-Power Financial quarterly profit rises 12 pct

(Adds details on operating earnings, revenues, expenses)

TORONTO, March 13 (Reuters) - Power Financial Corp (PWF.TO) posted a 12 percent rise in fourth-quarter earnings on Thursday as a result of higher operating earnings and one-time items.

The Canadian financial services company, which owns the country’s second biggest life insurer and largest mutual fund company, reported net income of C$532 million ($543 million), or 72 Canadian cents a diluted share, for the three months ended Dec. 31.

That compared with C$474 million, or 64 Canadian cents a share, in the same period a year ago.

Operating earnings rose a more modest 6 percent to C$500 million, or 68 Canadian cents a share, the company said.

Analysts had expected Montreal-based Power Financial, which owns majority stakes in insurer Great West Lifeco Inc (GWO.TO) and mutual fund firm IGM Financial Inc (IGM.TO), to earn 70 Canadian cents a share in the quarter, according to Reuters Estimates. Power Financial also owns half of Parjointco N.V., which in turn controls Swiss holding company Pargesa (PARG.S).

Total revenues at Power Financial rose to C$9.4 billion in the quarter from C$8.6 billion a year earlier, helped by an increase in the fair value of held-for-trading assets. Expenses rose to C$8.5 billion from C$7.8 billion.

RBC Capital Markets analyst Andre-Philippe Hardy this week upgraded Power Financial’s stock to “outperform” from “sector perform” after a 13 percent drop in its share price in the past five weeks.

Hardy said the stock’s discount to the net asset value of its underlying assets had widened considerably.

The company, which is controlled by Power Corp of Canada (POW.TO), kept its quarterly dividend at 31.25 Canadian cents per share.

On the Toronto Stock Exchange early on Thursday afternoon, Power Financial stock was down 50 Canadian cents, or 1.5 percent, at C$33.00 per share. It touched a 52-week low of C$32.06 on Wednesday.

$1=$0.98 Canadian Reporting by Lynne Olver; editing by Renato Andrade

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