Higher loan-loss provisions at it trust division and declining stock markets sent first-quarter profit sharply lower, AGF Management Ltd. said Wednesday.

The investment management firm said net income fell to $12.2 million, or 14 cents a share, for the three months ended Feb. 28, down from $62.7 million, or 70¢ a share for the same period in 2008.

AGF said the most recent quarter included lower revenue from investment management operations and increased provisions for loan losses at the trust company operations.

The first quarter of 2008 also included an income tax reduction of $19.5 million related to a change in federal tax policy and without that the company would have earned 48¢ a share.

Consolidated revenue was $138 million for the company, compared with $194.3 million in the first quarter of the prior year.

Total assets under management at Feb. 28 were $32.6 billion at the end of the first quarter of fiscal 2009, down 33.9% from February 2008 levels, as global stock market volatility prevailed, the company said.

“Declining stock markets and investor reluctance to commit new money to long-term equity funds have led to a substantial reduction in revenue on a year-over-year basis,” said Blake Goldring, chairman and CEO, in a release.

“Our number one priority to mitigate the revenue reduction is cost control. We have taken and will continue to take action to reduce costs in a manner that enhances our future operating capabilities while remaining well positioned for long-term growth,” Goldring said.

In the trust division, the company increased provision for loan losses to $11.5 million from $3.1 million. Actual loan writeoffs net of recoveries were $4.3 million, compared with $1.5 million for the three-month period ended Feb. 29, 2008.

IE