Credit Herald

AGF Management Ltd. does not foresee "a disastrous economic scenario" and expects to continue making solid profits amid ongoing volatility, its chief executive says.

"I'm not offering anything too special by noting that market turbulence continues," Blake Goldring, chairman, CEO and controlling shareholder of Canada's ninth-largest mutual fund operator, (TSX: AGF.B) said. He was on conference call discussing first-quarter results which included a 9.8 per cent year-over-year revenue increase despite an erosion of mutual fund assets.

"We believe economic news will continue to be negative for some time to come as financial institutions continue to clean up their balance sheets," Goldring predicted.

However, he said corporate profits outside the financial sector remain solid and emerging economies are still growing, which will attenuate the impact of the U.S. downturn.

"We continue to believe that markets have a good chance of recovering in the latter part of 2008 in anticipation of an economic recovery in 2009 as a result of concerted global central bank intervention."

AGF reported revenue of $194.3 million in its first quarter ended Feb. 29, up from $177 million a year earlier "in spite of the ongoing economic and market turmoil," Goldring said payday loan.

Net income was $62.7 million, 70 cents per share, up from $36.3 million, 42 cents per share.

Analysts surveyed by Thomson Financial were on average expecting earnings per share of 55 cents on revenue of $203 million.

The improved bottom line was "due in part to improved operating results," Goldring said, while AGF also benefited from reductions in future tax rates.

Earnings before interest, taxes, depreciation and amortization rose to $89.5 million from $80.4 million, although investors made net redemptions of $221 million from AGF long-term funds during the quarter.

AGF will continue to be affected by general market unease but “the diversity of our business model will prove to be one of our greatest assets," said Goldring.

He noted that the company's institutional management portfolio has grown in four years to $17.9 billion, and its trust business – focused on real estate and investment loans – also is expanding strongly and provided 22 per cent of pre-tax profit in the first quarter.

AGF Trust loan originations remain strong and loans in arrears are lower than a year ago, he said.

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