Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IGM Financial Inc (IGIFF, Financial) reported a 12% year-over-year increase in adjusted earnings per share, marking their second-best adjusted Q3 EPS on record.
- Total client assets increased by 23% year-over-year to $462 billion, with all-time record high asset levels across the company.
- The company successfully pivoted to delivering financial planning and investment management services to high net worth Canadians, with significant growth in this segment.
- Wealth management and asset management segments both showed strong earnings growth of 10% and 16% respectively.
- The company returned $160 million of capital to shareholders through dividends and share buybacks, maintaining an active capital return program.
Negative Points
- Mackenzie Investments' mutual fund sales lagged behind industry trends, with some boutiques experiencing short-term underperformance.
- The company faced a challenging operating environment over the past two years, with gradual improvement expected only if financial markets remain steady.
- Despite strong overall performance, the company is still working to improve its net sales rate to match or exceed the industry average.
- The fair value adjustment in the mortgage business resulted in a negative impact due to the downward movement of swap rates.
- The dividend payout ratio remains high at 68%, with a focus on reducing it to 60% or below, indicating limited room for dividend increases in the near term.
Q & A Highlights
Q: Can you provide any indication about the expense guidance for 2025? Will it be similar to the 4% guided for 2024, and how might market conditions affect this?
A: Keith Potter, CFO, stated that while they are still working on the 2025 plan, they expect to continue investing in the business as they have this year. The 4% guidance for 2024 is a reasonable assumption for 2025, assuming market conditions remain stable. They are committed to growing and strengthening their businesses, with investments focused on technology, advisor-client platforms, and mortgage banking and insurance platforms.
Q: What can you share about the secondary transaction related to the increase in value for the Wealthsimple stake? Which factors had the biggest impact on the fair value increase?
A: Keith Potter, CFO, explained that the fair value increase is primarily aligned with a meaningful third-party transaction. They also consider the performance of the company, revenue expectations, and market multiples, but the valuation is largely in line with the third-party transaction.
Q: Has there been much change in the client mix or AUA mix at IG Wealth year over year, particularly regarding households with over $1 million in assets?
A: Luke Gould, CEO of Mackenzie Investments, confirmed that there has been significant progress over the last 12 months, with an increase in assets held by households with over $1 million. The focus on mass affluent and high net worth clients has accelerated, and they are also successfully recruiting advisers.
Q: Mackenzie Mutual Fund sales seem to be lagging the industry. What needs to happen to improve these flows? Is it dependent on the performance of specific boutiques?
A: Luke Gould, CEO of Mackenzie Investments, acknowledged that while there is some softness in certain boutiques like Bluewater and Greenchip, they are seeing strong performance in other areas. The focus is on leveraging compelling performance in relevant categories and improving industry conditions to drive sales.
Q: How has the net promoter score for IG Wealth compared to the big six banks over the last few years?
A: Damon Murchison, CEO of IG Wealth Management, noted that IG Wealth has maintained strong net promoter scores relative to the banks' full-service brokerage arms since 2022. This reflects the improvements in their platform, advice capabilities, and overall organizational efforts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
