GMP Capital Misses Estimates on Slump in Investment Banking

GMP Capital Inc. (GMP), Canada’s second-biggest non-bank brokerage, missed analysts’ estimates for second-quarter results after a slowdown in investment banking.

The net loss attributable to GMP shareholders, excluding non-controlling interests, narrowed to C$1.91 million ($1.85 million) from C$2.51 million a year earlier, the Toronto-based firm said today in financial statements. Revenue fell 3.8 percent to C$60.3 million.

“Revenue generation in the current environment of Canadian capital markets continues to be a challenge, and we do not expect that to change in the interim,” Sumit Malhotra, an analyst with Macquarie Capital Markets in Toronto. said in a note.

GMP said it lost 2 cents a share in the quarter after excluding some items, missing the break-even average estimate of four analysts surveyed by Bloomberg.

GMP fell 0.3 percent to C$6.27 at 4 p.m. in Toronto, paring gains this year to 7.2 percent.

“Market conditions remained challenging for the quarter, driven by very low levels of activity in the resource sectors,” Chief Executive Officer Harris Fricker said in the statement.

The brokerage’s capital markets business was hurt by a 20 percent decline in revenue to C$45.4 million, largely due to lower investment-banking fees “amid ongoing challenging market conditions in the Canadian mid-market resource sectors,” the firm said. GMP also posted C$7.1 million in pretax restructuring charges in the unit.

“We have completed the bulk of the top personnel and operational decisions necessary to properly position our firm in the current market, but perhaps more importantly to excel for the long-term in more normalized market conditions,” Fricker said in a conference call after earnings were released.

GMP’s wealth-management business benefited from proceeds from the sale of funds including GMP Diversified Alpha Fund and the Canadian ABCP Fund to Fiera Capital Corp. (FSZ) for about C$10.8 million in May.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; Christine Harper at charper@bloomberg.net

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