Profit up sharply for Macquarie Group

Macquarie Group, Australia’s biggest investment bank, reported its largest full-year profit since 2008 as trading and fund-management revenue increased.

Net income for the year ended March 31 rose 49 percent to $1.27 billion Australian dollars ($1.17 billion), the Sydney-based company said yesterday. That beat the gain of as much as 45 percent it forecast on March 24 and compared with profit of $851 million a year earlier.

“It is a pretty solid result from Macquarie,” said Christopher Hall, who helps manage about $4.4 billion including Macquarie shares as the senior investment officer at Adelaide-based Argo Investments. “The key is the guidance. While Macquarie says it’d be broadly in line, the market is expecting it to be higher.”

Macquarie is benefiting from a revival in financial market activity and a return of risk appetite. Chief Executive Officer Nicholas Moore also has focused on less volatile businesses such as lending and fund management to offset the cyclical nature of its investment banking and trading businesses. Funds under management at Macquarie climbed 23 percent from a year ago to A$427 billion.

Macquarie’s profit in the six months ended March 31 climbed 52 percent to A$764 million, led by a 97 percent gain at its advisory and trading businesses.

The bank said improved profit contributions from its units in fiscal 2015 will be offset by the lack of a one-time gain in fiscal 2014 from the disposal of its stake in Sydney Airport. Macquarie booked a gain of A$228 million in the second half of fiscal 2014 from the sale.

The bank expects its securities and investment-banking unit to report higher earnings in fiscal 2015 along with its banking and financial services unit. Profit at its funds unit, corporate and leasing business and fixed-income, currencies and commodities division will be “broadly in line” with 2014, it said.

“Global market conditions continued to improve in fiscal 2014, contributing to a significant increase in Macquarie Group’s operating income and profit, with all of Macquarie’s operating groups delivering increased net profit contributions,” Moore said in today’s statement.

The bank declared a dividend of A$1.60 compared with A$1.25 a year earlier.

Profit from fund management contributed the most to Macquarie Group’s earnings, rising 39 percent to A$1.05 billion from a year earlier. Macquarie is seeing investor interest in infrastructure with governments looking to sell assets while clients in Japan, China, and Korea are examining cross- border opportunities, Moore said in an interview yesterday.

Bloomberg