TORONTO (Reuters) - AGF Management (AGFb.TO) reported a higher first-quarter profit on Wednesday and raised its dividend by 25 percent, even though assets under management at Canada’s third-largest publicly traded fund manager dropped as equity markets remained volatile.
AGF reported net income from continuing operations of C$62.7 million ($62 million), or 70 Canadian cents a share, for the three months ended February 29, up from C$38.1 million, or 42 Canadian cents, in the same period a year earlier.
Included in net income is a reduction in future income tax of C$19.5 million related to the drop in the federal income tax rate to 15 percent from 18.5 percent by January 1, 2012.
Excluding the impact of this change, net income from continuing operations was up 13.4 percent to C$43.2 million, or 48 Canadian cents a share, AGF said.
AGF shares climbed on the news. By early afternoon, shares were up 71 Canadian cents, or 3.5 percent, at C$21.03 on the Toronto Stock Exchange.
The stock is down 27 percent this year as global equity markets have taken a beating.
Total assets under management at Toronto-based AGF fell 4.7 percent to C$49.3 billion at the end of the first quarter from C$51.7 billion a year earlier.
In a conference call with investors, Chief Executive Blake Goldring said that market volatility was to blame for reducing the overall value of total assets under management and caused investors to “sit by the sidelines for the most part with most of the new money being invested into money market funds.”
Goldring said that while market uncertainty will continue to be a problem for the whole financial industry, AGF’s diversified sources of revenue put it in a good position to weather a downturn.
Emphasizing AGF’s long-term focus, as well as the resiliency of the capital markets, Goldring said: “We will not let periodic noise stray us from our long-term vision and the commitment to our operating models.”
Total revenue increased 9.8 percent to C$194.3 million in the quarter. Expenses rose 8.5 percent to C$104.8 million.
Loan growth and higher average assets helped drive the earnings, as did ensuring that expenses grew at a slower rate than revenues, the company said.
AGF raised the dividend on its class A common voting shares and class B nonvoting shares to 25 Canadian cents from 20 Canadian cents.
Reporting by Frank Pingue, Nicole Mordant and Leah Schnurr; editing by Rob Wilson