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Power Financial profit rises despite drop in revenue

Jeffrey Orr, president and chief executive officer of Power Financial Corp.

Fernando Morales/The Globe and Mail

Power Financial Corp. improved its profits in the third quarter as lower charges on its books helped boost the bottom line despite a $600-million drop in revenue.

Power Financial, owner of some of Canada's largest financial services companies, said Friday that third-quarter net earnings attributable to shareholders were $312-million, or 44 cents a diluted share, in the quarter ended Sept. 30.

That compared with a profit of $294-million, or 41 cents a share, last year.

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Revenue dropped to $9.1-billion from $9.7-billion.

In the latest quarter, Power Financial took $28-million less in charges on its books – $116-million compared with $144-million a year earlier.

In addition, operating units Great-West Lifeco Inc. and Power's Pargesa investment company in Europe produced lower earnings.

For Power Financial, operating profit was $454-million, or 60 cents per share, compared with $465-million, or 62 cents, in the third quarter of 2010.

On a segmented basis, the contribution of subsidiary Great-West to Power's operating earnings dropped to $312-million from $323-million.

The contribution by mutual fund giant IGM Financial Inc. – which owns Investors Group and Mackenzie Financial – was $121-million compared with $104-million.

Meanwhile, Pargesa, which reports its results in Swiss francs but has European investments, contributed $36-million, down from $59-million. That reflected the weakening of the euro against the Swiss franc.

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Power Financial is part of the Power Corp. of Canada group of companies controlled by the Montreal-based Desmarais family.

The holding company earned $190-million, or 41 cents per share, compared to $169-million, or 37 cents, a year earlier.

Total revenue fell 5.8 per cent to $9.2-billion, including $4.4-billion from net premiums. The decrease was attributable to a 9.8 per cent drop to $1.36-billion in regular net investment income.

Operating earnings increased nearly 28 per cent to $348-million from $275-million in the year-ago period.

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