Third quarter volatility hurt more than your client statements; it took a bite out of the earnings of the brokerage industry.
GMP Capital is the first major brokerage to report its earnings for the quarter, posting a net loss of $4.6 million. In the same quarter of 2010, the brokerage posted a net profit of $23.1 million.
“Global economic uncertainty intensified this quarter resulting in a significant contraction in overall business activity in our capital markets segment,” said CEO Harris Fricker.
“Heightened equity market volatility together with declining global equity market valuations and lower investor confidence resulted in weaker investment banking revenue, unrealized losses in principal activities and reduced trading volumes.”
Revenues fell 55% to $46.3 million from $102.8 million, reflecting a tough business and capital market environment.
The company also booked a one-time, $5 million pre-tax charge related to the previously announced retirement of Michael Wekerle, vice-chairman, GMP Securities.
Stock markets tumbled in the third quarter as investors worried about the European debt crisis, and the weakening U.S. and Chinese economies.
For GMP, that cut demand by companies to list their shares on the stock market and affected demand for other services the company provides.