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VANCOUVER - The chief executive of investment dealer Canaccord Capital Inc. (TSX:CCI) said volatile markets caused revenues to fall nearly a third in its most recent quarter and he warned Friday that the tough business environment will likely continue for at least the rest of the year.

"We do not see a return to confident, robust markets any time soon," Paul Reynolds, president and CEO of Canaccord, told a conference call Friday after the Vancouver company reported weaker quarterly results.

"The April to June period was among the most volatile that I can remember," Reynolds added, citing rising oil prices, stock market swings and the credit crisis that has squeezed corporate financings, a normally lucrative capital markets business.

"It was not a friendly environment for investors."

Vancouver-based Canaccord, which was caught up in the Canadian credit crunch, reported a profit of $16.5 million or 31 cents per share for the first quarter ended June 30.

That compared to a profit of $39 million or 80 cents per share for the same period last year, which Canaccord said was the best quarter in its history.

Revenue dropped nearly 30 per cent to $172.7 million in the most recent quarter, compared to revenues of $245.9 million for the same period last year.

Reynolds said while the recent earnings are not as attractive, "it should not overshadow the progress we are making in creating a Canaccord that is stronger, more efficient and more competitive in our chosen markets."

Canaccord has been hurt by a weak capital market for corporate financings and has set aside more than $58 million to repay investors who bought asset-backed commercial paper (ABCP) from the company, a class of investment that has been frozen since last summer because it was linked to risky assets such as U.S. subprime housing loans.

Early in the quarter, the company announced it would take a $58.2 million charge on its books for its so-called Canaccord Relief Program that will provide its customers who hold $1 million or less of asset backed commercial paper investments with full recovery of principal, interest and costs on their investment.

"We believe we are very near the end of this long process, during which protecting our clients' interests has been our principal concern," Canaccord said in its earnings release Friday.

The company is awaiting court approval of its relief program, which ties in with the ABCP restructuring plan proposed by the Pan-Canadian investors committee, headed by Bay Street lawyer Purdy Crawford

Canaccord said it will take about six weeks after the plan is approved for clients to receive their funds.

The company has also said it is about half way through its "120-day plan," which is an overall review of the operation, including cost cuts and finding new revenue sources, to help it increase margins and profitability.

"There is a deep and personal desire to realize substantial gains in value from our shareholders from this plan," Reynolds said Friday.

Canaccord, with nearly 1,600 employees, is a full-service investment dealer which operates in the two main areas of the securities industry - private client services and global capital markets.

On the Toronto Stock Exchange Friday, Canaccord shares were up seven cents to $8, with a 52-week range of $6.68 to $22.05.