Net redemptions slow as CI reports Q1 profit

Toronto-based CI Financial Corp. reported a $124.2-million profit for the first quarter, with assets under management growing despite another period of net redemptions.

The asset manager’s $124.2-million net income attributable to shareholders was 3% higher than the same period last year, and 18% higher than the previous quarter.

Adjusted earnings per share of $0.73 in Q1, a 30% year-over-year increase, beat analyst expectations. So did record adjusted revenue of $603.2 million, a 22% improvement from the same period in 2020.

Assets under management on March 31 totalled $138.5 billion, an increase of 3% from Dec. 31 and 25% higher than a year ago. Canadian wealth management assets totalled $71.1 billion at the end of Q1, a 6% increase from the previous quarter and 61% higher than a year ago. Much of that increase can be attributed to CI’s acquisition of Aligned Capital Partners Inc. in October 2020.

Net redemptions of $0.9 billion were lower than $2.1 billion in the previous quarter and $2.7 billion in Q1 2020. CI said the lower redemptions made for the best quarterly net flows since Q3 2017. Net redemptions for the Canadian retail business totalled $0.6 billion for the quarter, a slight improvement from the previous quarter and from a year ago.

Edward Jones analyst James Shanahan wrote in a research note Thursday that Q1 marked the 14th consecutive quarter that redemptions at CI exceeded investment sales, with net outflows totalling $28.5 billion over that period.

Though commentary on the earnings conference call pointed to outflows continuing in April, “the pace of net redemption activity appears to be slowing, driven by strong gross sales activity,” Shanahan wrote.

CI CEO Kurt MacAlpine pointed to recent acquisitions of U.S. wealth management firms as a core part of the firm’s strategy. “As CI has grown, it has become more balanced between regions and between asset management and wealth management,” he said in a statement.

The firm has also modernized its asset management business with cryptocurrency ETFs and a private equity fund, MacAlpine said.

Shanahan said that while CI has yet to provide “substantial disclosures” for its wealth management business, the segment was unprofitable for the quarter. “We believe that this business will require more significant scale to drive a strong contribution to overall reported results,” he wrote.

CI’s wealth management segment reported a loss of $3.4 million in income before taxes and non-segmented items for the quarter, compared to a $3.6-million profit a year ago.

On an adjusted basis, CI reported income for the segment of $24 million compared to $4.9 million in the first quarter of 2020.

Mark Burgess

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Mark was the managing editor of Advisor.ca from 2017 to 2024.