(December 2) – The Investment Dealers Association is reporting disappointing third quarter statistics for the Canadian securities industry. The IDA says that equity market uncertainty hit virtually every business line.
Net profit fell 28% from the previous quarter to $103 million. Operating profits were down 13% to $425 million for the quarter. The IDA says that the industry suffered “a sharp drop in commission earnings and a fall in principal equity trading revenue. Proprietary business collapsed sharply in the third quarter.” The IDA says it believes commission revenue could slip further as equity market performance continues to disappoint.
Commission revenues were down 9% in the quarter to $955 million, and down 12% from the first half. Equity mutual fund sales hit their lowest levels in four years, with money market funds accounting for 43% of new sales.
Nevertheless the IDA says the industry is still on track to record its second best year in terms of profitability, thanks to a strong first half. It expects the industry to book $1.8 billion in operating profits, up from $500 million in 1998. Return on equity should come in at just 10% to 12% for the year.
The IDA says that stock trading activity fell 7% in the quarter, which not only hurt trading revenues but also underwriting activity. Fixed-income trading was in line with last year.
-IE Staff
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