Macquarie Lifts Profit Guidance, Flags 10% Growth for Financial Year
By Robb M. Stewart
MELBOURNE, Australia--Macquarie Group Ltd. (MQG.AU) flagged an about 10% rise in its annual profit after what it said were "satisfactory" trading conditions across its operations in the latest quarter.
The Australian investment bank and asset manager, which has a reputation for providing conservative guidance to investors, on Tuesday said contributions to profit from its annuity-style businesses were up slightly in the three months through December and higher over the first nine months of its financial year. That was mainly due to stronger performance fees, the timing of transactions in its corporate and asset-finance arm and continued growth in financial services, it said.
It countered a weaker contribution from its capital markets-facing businesses for its third quarter and year-to-date.
As recently as late October, Macquarie forecast its full-year profit would be slightly up on the year before, when it posted a record 2.22 billion Australian dollars (US$1.76 billion) net profit after benefiting from higher income from lease portfolios.
Macquarie, which began as a subsidiary of London merchant bank Hill Samuel & Co. and opened its first office in Sydney in 1970, has shifted since the global financial crisis toward more reliable asset-management, financing and commercial-banking operations to cushion volatility in investment banking and trading. Its annuity-style operations now contribute the bulk of earnings. Last year it hired former Reserve Bank of Australia Gov. Glenn Stevens as a board director.
The bank in late October launched plans to return excess capital to shareholders through an A$1 billion buyback of its own shares. No shares were purchased over the last quarter, but Macquarie said the program remained active.
At the end of December, Macquarie Asset Management had assets under management of A$483.5 billion, up 2% on the prior quarter thanks largely to market and foreign-exchange movements. The bank's asset financial and principal finance portfolio was steady at A$34.6 billion, while the banking and financial services division had total deposits in line with the previous quarter at A$46.3 billion and a 4% rise in its Australian mortgage portfolio to A$31.2 billion.
Still, Macquarie said the profit contribution from its commodities global markets businesses and Macquarie Capital arm were lower due to the timing of income associated with transportation and storage agreements.
Macquarie said its financial position comfortably exceeded regulatory requirements, and it had a capital surplus of A$4.1 billion.
Write to Robb M. Stewart at email@example.com
(END) Dow Jones Newswires
February 05, 2018 17:41 ET (22:41 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.