Canaccord Genuity Group Inc.'s revenue sank in the latest quarter as market turmoil and economic uncertainty put a chill on investment banking activity.
The Bay Street firm said its adjusted fiscal first-quarter revenue sank 37.2 per cent to $328.8 million. While revenue slipped in the company's wealth management unit, the erosion was far more profound in Canaccord's capital markets business.
Across that business line, revenue tumbled 49.4 per cent to $164.1 million. Canaccord blamed that on "substantially lower" investment banking revenues due to a sharp drop in new issue volumes.
The slowdown was even more pronounced in Canaccord's home market: it said Canadian capital markets revenue collapsed 87.7 per cent year-over-year to just $14.3 million.
Given the breadth of the downturn in activity, Canaccord president and chief executive Dan Daviau said there’s no quick fix to be found by pivoting beyond sectors like tech, health care (ie, cannabis), and mining where his company has historically excelled.
“There's not a lot of sectors where there's huge investor appetite, you know, you can't sell something to people that don't want to buy it. … This isn't the first market decline I've witnessed. So you stay close to your clients and when times get better, you execute for them and you kind of return to that preeminent spot,” he said in an interview.
Canaccord said it swung to a net loss of $3 million in its most recent quarter, from a profit of $73 million a year earlier. It noted there were a number of extraordinary costs and other items that weighed on its performance in the quarter — most notably, $11.4 million in accounting markdowns on certain securities.
On an adjusted basis, it earned $0.11 per share; analysts, on average, expected $0.31 in per-share profit.
“I'm taking very much a long-term vision,” Daviau said, referring to Canaccord’s stock price as it tumbled Friday.
“We're growing our wealth business, it’s a phenomenal business in Canada, the U.K, Australia; we've invested significant proceeds in that, I continue to believe in it. There's going to be volatility in capital markets. I can't help that, it's the industry. And you see it right now, but I'm not going to get too wound up about any particular quarter, including this quarter.
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