Skip to main content
fund watch

Bill Holland, CEO of CI Financial

It's a good news/bad news day for CI Financial Corp.

The wealth management firm reported Tuesday that third-quarter profit sank 86 per cent to $17.4-million, or 6 cents a share, from $118.1-million, or 42 cents a share, in the year-earlier period. It blamed the drop to declining assets amid the market volatility, and lower revenue from managment fees.

But the firm, which sells the CI-branded mutual funds and owns the Assante financial planning group, raised its monthly cash dividend by 20 per cent to 6 cents a share payable on Dec. 15, 2009; Jan. 15, 2010 and Feb. 12, 2010 to shareholders of record on Nov. 30, 2009.

CI reported net sales of $246-million in the third quarter, bringing the year-to-date total to $1.1-billion. While CI's average retail assets under management climbed 7.9 per cent from the average level for the second quarter, it is still 7.8 per cent below the average for the third quarter of last year.

"Average management fee rates decreased from the prior year as a result of bond and money market funds - for which CI receives a lower management fee - forming a greater proportion of assets relative to equity funds," the company said in its management discussion and analysis.

"This change in asset mix is a result of the greater market depreciation in equity funds and a shift in investor preference to lower-risk investment products...

"The decline in management fees from the prior year was also due to CI's initiative to cut the management fees on money market funds as a result of the decrease in interest rates. As well, there is a continuing trend towards a higher proportion of CI assets being Class F and Class I funds, which have a lower management fees."

The Toronto-based firm'rs recent profit was also affected by the fact that it paid $24.4-million in income taxes compared with a year ago when it was not doing so because of its income trust structure.

CI, meanwhile, has also been busy pruning its debt. It shaved long-term debt down to $781-millon by Sept. 30. It paid down a further $26-million by Nov. 9, and plans to reduced it by $110-millon more once its gets proceeds from the sale of its Blackmont Capital arm to Macquarie Group. That transaction is expected to close by Dec. 31.

While CI only sold the retail brokerage division of Blackmont, it said it expects to sell the remaining capital markets division in the next 12 months.

CI's third-quarter profit from continuing operations fell 43 per cent to $74-million, or 25 cents a share, from $130-million, or 47 cents a share, a year earlier. It reported a charge of $49-million, or 16 cents a share, related to Blackmont in the latest quarter.

Read the management discussion and analysis.

Interact with The Globe