UPDATE 2-CI profit rises on markets; raises dividend

Tue Nov 9, 2010 5:18pm EST

* Adj EPS C$0.27 vs est C$0.28

* Dividend rises 7.7 pct

* Shares flat versus weak markets

(Adds details, CEO comment)

By Cameron French

TORONTO, Nov 9 (Reuters) - CI Financial (CIX.TO) said on Tuesday its third-quarter profit rose 13.7 percent as rebounding equity markets boosted sales and assets, prompting Canada's No.3 fund dealer to boost its dividend.

The result was roughly in line with market expectations, and the company's shares finished flat on an otherwise weak day for Canadian financials.

CI earned a net C$75.5 million ($75.5 million), or 26 Canadian cents a share, up from C$66.4 million, or 23 Canadian cents, in the year-before period.

On an adjusted basis, the profit was 27 Canadian cents a share, missing analysts' expectations by one penny.

The results benefited from strong equity markets during the period, as the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE rose 9.5 percent between June and September, reversing second-quarter weakness.

"CI's third quarter is the start of what looks to be a great second half of 2010. The downturn experienced in the second quarter reversed itself," Stephen MacPhail, the company's chief executive, said on a conference call.

The company recently agreed to buy the Canadian mutual fund business of U.S. insurer Hartford Financial (HIG.N) as part of a push to increase its footprint in what has become an increasingly competitive Canadian mutual fund space.

MacPhail, who replaced longtime CI CEO Bill Holland in September, said the company is eyeing more acquisitions, and said the number of potential targets has recently increased.

"We've been presented with more situations. We're actively having conversations," he said.

Total revenue rose 6 percent to C$336.3 million, helped by stronger management fees and sales of managed funds.

Fee-earning assets rose 6 percent to C$91.5 billion year-over-year, helped by rising equity markets. Retail assets under management climbed 8 percent year-over-year to C$65.6 billion.

The company raised its monthly dividend by 7.7 percent to 7 Canadian cents a share from 6.5 Canadian cents a share, citing the increase in assets.

Its stock rose 4 Canadian cents at C$22.82 on the Toronto Stock Exchange, while the TSX financials sector fell 1 percent.

($1=$1.00 Canadian) (Reporting by Cameron French; Editing by Frank McGurty)