TORONTO, Feb. 7, 2024 /CNW/ – Canaccord Genuity Group Inc. (Canaccord Genuity Group, the Company) (TSX:CF) today announced its financial results for the third fiscal quarter and nine months ended December 31, 2023.
“We delivered our strongest quarterly result of the fiscal year, as our wealth management division continued to provide stable and growing earnings and our capital markets businesses returned to profitability, with a notable uptick in underwriting and advisory activities,” said Dan Daviau, President & CEO of Canaccord Genuity Group Inc. “While we are encouraged by improving stabilization in our operating environment, we anticipate a slow build towards normalized activity levels as markets await a clear inflection point.”
Third fiscal quarter and nine-month fiscal year-to-date highlights:
(All dollar amounts are stated in thousands of Canadian dollars unless otherwise indicated)
Third quarter revenue of $389.1 million, an increase of 1.8% compared to the same period in the prior year and 15.4% compared to Q2/24
Global wealth management revenue for the third fiscal quarter increased by 8.5% year-over-year to $195.0 million
Global capital markets revenue for the third fiscal quarter decreased by 3.6% year-over- year and increased by 31.1% sequentially to $189.8 million reflecting modest improvement in revenue from investment banking, advisory and principal trading
Nine-month fiscal year-to-date revenue of $1.1 billion, a decrease of 0.9% compared to the first nine months of fiscal 2023
Third quarter net income before taxes excluding significant items(1) of $44.7 million, an increase of 42.0% compared to Q3/23 and an increase of 171.1% compared to Q2/24 (on an IFRS basis Q3/24 net income before taxes of $37.1 million compared to a net loss before taxes of $80.8 million for Q3/23 and a net loss before taxes of $0.7 million for Q2/24)
Nine-month fiscal year-to-date net income before taxes excluding significant items(1) of $94.1 million, a decrease of 14.1% compared to the first nine months of fiscal 2023 (on an IFRS basis year-to-date net income before taxes of $42.7 million compared to a net loss before taxes of $39.9 million in the first nine months of fiscal 2023)
Diluted earnings per common share excluding significant items(1) for the third fiscal quarter of $0.20 per share (diluted earnings per common share of $0.14 on an IFRS basis)
Diluted earnings per common share excluding significant items (1) for the first nine months of fiscal 2024 of $0.27 (diluted loss per common share of $0.20 on an IFRS basis)
Excluding significant items(1), CG’s global wealth management businesses contributed net income before taxes of $37.8 million in the third quarter of fiscal 2024
Excluding significant items(1) CG’s global capital markets business contributed third quarter net income before taxes of $16.7 million, with all regions returning to profitability
Total client assets(1) in our global wealth management business were $99.2 billion at December 31, 2023, a year-over-year increase of 5.1%, reflecting year-over-year increases of 4.5% in Canada, 4.4% in the UK & Crown Dependencies and 16.6% in Australia
Third quarter common share dividend of $0.085 per share
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(1) See Non-IFRS Measures on page 5
Three months ended
December 31
Year-over-year
change
Three months
ended
September 30
Quarter-over-
quarter change
Q3/24
Q3/23
Q3/24
Third fiscal quarter highlights- adjusted1
Revenue excluding significant items1
$389,503
$382,349
1.9 %
$337,508
15.4 %
Expenses excluding significant items1
$344,803
$350,878
(1.7) %
$321,017
7.4 %
Diluted earnings per common share excluding significant items1,2
$0.20
$0.16
25.0 %
$0.00
n.m.
Net Income excluding significant items1
$33,304
$28,197
18.1 %
$10,717
210.8 %
Net income (loss) attributable to common shareholders excluding significant items1,3
$20,767
$16,561
25.4 %
$(299)
n.m.
Third fiscal quarter highlights-IFRS
Revenue
$389,143
$382,116
1.8 %
$337,290
15.4 %
Expenses
$352,045
$462,902
(23.9) %
$337,964
4.2 %
Diluted earnings (loss) per common share
$0.14
$(1.10)
112.7 %
$(0.20)
170.0 %
Net income (loss) 2
$28,005
$(82,065)
134.1 %
$(5,867)
n.m.
Net income (loss) attributable to common shareholders3
$14,346
$(95,166)
115.1 %
$(18,981)
175.6 %
1. Figures excluding significant items are non-IFRS measures. See Non-IFRS Measures on page 5
2. Before non-controlling interests and preferred share dividends paid on the Series A and Series C Preferred Shares
3. Net income (loss) attributable to common shareholders is calculated as the net income (loss) adjusted for non-controlling interests and preferred share dividends
Core business performance highlights:
Canaccord Genuity Wealth Management
The Company’s combined global wealth management operations earned revenue of $195.0 million for the third fiscal quarter, a year-over-year increase of 8.5%. On a year-to-date basis, revenue in this division amounted to $573.3 million, an increase of 12.1% compared to the first nine months of the prior fiscal year. Net income before taxes excluding significant items(1) for this segment increased by 3.7% and 19.8% year-over-year for the three and nine month periods ended December 31, 2023, respectively.
Wealth management operations in the UK & Crown Dependencies generated third quarter revenue of $101.8 million, an increase of 18.8% compared to the same period last year, primarily driven by higher quarterly interest income offset by a small decrease in commissions and fees revenue. Measured in local currency (GBP), revenue was £60.2 million in Q3/24 compared to £53.7 million in Q3/23, an increase of 12.1% compared to the same quarter last year. Excluding significant items(1), pre-tax net income for this business was $25.5 million in Q3/24 and $74.9 million fiscal year-to-date, year-over-year increases of 11.3% and 25.3%, respectively.
Canaccord Genuity Wealth Management (North America) generated $77.0 million in third quarter revenue, a year-over-year decrease of 0.4% compared to Q3/23 and an increase of 8.8% compared to Q2/24. Fee-related revenue for the third fiscal quarter grew by 5.4 p.p. year-over-year to 50.9%. Excluding significant items(1) net income before taxes for this business was $10.8 million in Q3/24 and $29.0 million for the first nine months of fiscal 2024, which represents a year-over-year decrease of 12.6% and an increase of 1.5% respectively.
Wealth management operations in Australia generated $16.2 million in third quarter revenue, a decrease of 2.7% compared to the third quarter of last year and an increase of 5.0% compared to Q2/24. Excluding significant items(1) net income before taxes for this business was $1.5 million in Q3/24 compared to net income of $1.2 million in Q3/23, and net income before taxes of $2.6 million for the first nine months of fiscal 2024 compared to net income of $0.5 million for the same period a year ago.
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(1) See Non-IFRS Measures on page 5
Total client assets in the Company’s global wealth management businesses at the end of the third fiscal quarter amounted to $99.2 billion, an increase of $4.8 billion or 5.1% from Q3/23.
Client assets(1) in the UK & Crown Dependencies were $56.8 billion (£33.7 billion) as at December 31, 2023, an increase of 4.4% (increase of 1.4% in local currency) from $54.4 billion (£33.2 billion) at December 31, 2022. On a sequential basis, client assets increased by 8.0% (increase of 6.0% in local currency) from $52.6 billion (£31.7 billion) at the end of the previous quarter primarily due to improvements in market values and foreign exchange movement.
Client assets(1) in North America were $36.3 billion as at December 31, 2023, an increase of 4.5% from $34.7 billion at December 31, 2022 and an increase of 2.8% compared to the previous fiscal quarter due to increases in market values and net new assets.
Client assets(1) in Australia were $6.1 billion (AUD 6.8 billion) at December 31, 2023, an increase of 12.0% from $5.5 billion (AUD 6.3 billion) at the end of the previous quarter and an increase of 16.6% from $5.3 billion (AUD 5.7 billion) at December 31, 2022. In addition, client assets(1) totalling $14.5 billion (AUD 16.0 billion) are also held on record in less active and transactional accounts through our Australian platform.
Canaccord Genuity Capital Markets
Globally, Canaccord Genuity Capital Markets earned revenue of $189.8 million for the third fiscal quarter, a decrease of 3.6% compared to Q3/23 and an increase of 31.1% sequentially, reflecting improving levels of investment banking, advisory and principal trading activities when compared to the second quarter of this fiscal year. For the nine months ended December 31, 2023, revenue decreased by 15.2% to $480.3 million, driven by lower advisory fees and principal trading revenue and partially offset by higher interest, commissions and fees and investment banking revenue.
Canaccord Genuity Capital Markets participated in 241 investment banking transactions globally, including led and co-led deals, raising total proceeds of $12.4 billion for the fiscal year-to-date.
Advisory revenue for the three-month period was $74.6 million, a slight year-over-year decrease of 0.8% and an increase of 62.1% sequentially, which reflects improving contributions from our Canadian, US and UK businesses. Investment banking revenue increased by 5.8% compared to Q3/23 and by 29.2% sequentially, reflecting a modest increase in new issue activity in Canada, the US and UK, offset by a slight decrease in Australia. Commissions and fees revenue decreased by 4.9% year-over-year for the three-month period due to lower contributions from the US, partially offset by higher contributions from our Canadian and UK operations. Principal trading revenue decreased by 14.7% year-over-year as a result of reduced market-wide trading activity but increased by 47.0% compared to Q2/24 reflecting traditionally higher trading volumes at the end of the calendar year. Interest revenue decreased by 16.2% and increased by 58.4%, respectively, for the three- and nine- month periods ended December 31, 2023 due to the higher interest rate environment compared to last year, offset by reduced stock lending activity on a quarter-over-quarter basis.
All CG capital markets businesses achieved profitability in the third fiscal quarter. Excluding significant items(1), our global capital markets division recorded net income before taxes of $16.7 million for the third fiscal quarter, which compares favourably to the $5.9 million recorded in Q3/23 and primarily reflects the impact of lower compensation and fixed costs when compared to the same period a year ago. Net income excluding significant items(1) for the nine-month period ended December 31, 2023 was $2.7 million compared to $36.3 million for the same period …
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