Canaccord Genuity Group Inc. reported a net loss of $11.6 million for its fiscal third quarter, despite record revenue generated by its wealth management division.
The results, released after market close on Tuesday, compared to a net profit of $28 million a year earlier, and net income of $16.9 million in the previous quarter.
“During our third fiscal quarter, our wealth management division set new records for revenue and client assets and we also benefited from improved corporate financing activity in most of our geographies,” Dan Daviau, Canaccord’s chairman and CEO, said in a release.
“Despite solid revenue growth, our profitability for the three-month period was affected by certain elevated non-compensation expenses which are not expected to continue at the same levels.”
The company attributed the results to increased general and administrative and premises and equipment costs, higher interest expense, and development costs in connection with its growth initiatives.
Daviau said the company expects to see stronger financial performance going forward for its capital markets activities and continued growth in wealth management.
The company’s combined global wealth management operations posted revenue of $233.4 million during the quarter and $665.9 million fiscal year-to-date, representing year-over-year increases of 19.7% and 16.1%, respectively. It said the growth largely came from higher commissions and fees revenue.
On an adjusted basis, the company posted diluted earnings of $29.3 million or 17 cents per common share. The board approved a dividend of 8.5 cents per common share.
The higher expenses were related to the company’s new offices in Vancouver and New York, investments in the company’s wealth management business, certain client-related provisions, and increased fees and provisions related to regulatory matters the company disclosed last year. The firm added $19.8 million to its legal provisions fund, which totalled $35.4 million at the end of 2024.
Last June, the company disclosed it was involved in an enforcement matter and potential enforcement matters related to its wholesale market making activities in the United States. It said it had no updates on the regulatory matters.
Canaccord also completed the acquisition of U.K.-based Cantab Asset Management Ltd. during the quarter, and expects to close its acquisition of another U.K. firm, Brooks Macdonald Asset Management (International) Ltd. in the current quarter.
On the people front, Nadine Ahn, who was brought on as deputy CFO in October, has taken the reins as chief financial officer. Ahn, the former CFO of Royal Bank of Canada, has succeeded Donald MacFayden. He will continue in a senior leadership role with Canaccord’s U.S. broker-dealer subsidiary.