Macquarie Talks Down Expectations After Record Result

By Glenn Dyer | More Articles by Glenn Dyer

Macquarie Group has boosted annual dividends to $5.75 a share after reporting a 17% rise in net earnings for the year to March 31 of a record $2.988 billion, thanks to a surge in second half earnings, especially from its markets and commodities business and Macquarie Capital.

But the surge won’t be continued this financial year, at least at this stage of the period. Macquarie warned in the Friday outlook “Overall, the Group’s result for FY20 is currently expected to be slightly down on FY19.” How slight the bank didn’t say.

Net profit after tax attributable to ordinary shareholders was $2,982 million.

The final dividend was lifted to $3.60 a share from $3.20 a share and with the higher interim of $2.15 cents a share (up 10 cents), total payout for the year will be $5.75 a share.

Macquarie said on Friday morning that it enjoyed a 28% jump in March half net profit to $1,672 million. The rise was 28% for both the September half year and the second half of 2017-18.

Macquarie Group Managing Director and Chief Executive Officer Shemara Wikramanayake said in Friday’s statement: “FY19 demonstrated the continued benefits of our diverse business mix. Our annuity-style businesses had a solid, steady year while our markets-facing businesses delivered strong performance in favourable market conditions.”

The bank said the result was helped by Macquarie’s annuity-style businesses (Macquarie Asset Management (MAM), Corporate and Asset Finance (CAF) and Banking and Financial Services (BFS), represented approximately 53% of the Group’s FY19 performance3 and generated a combined net profit contribution of $3,287 million, down four percent on 2017-18.

Macquarie’s Commodities and Global Markets (CGM) and Macquarie Capital represented approximately 47% of group profit and lifted their contribution by a massive 76% to $2,858 million

“In addition to business diversity, geographic diversity once again produced strong results,” Macquarie said.

“International income represented approximately 66 percent of total income or $A8,317 million in FY19, up 17 percent on FY18. The strength of Macquarie’s Australian franchise continued with an increase of 20 percent on FY18 to $A4,235 million in FY19 which represented a 34 percent contribution to total income,” the bank said in Friday’s release.

Net operating income rose 17% $12,754 million while operating expenses jumped 19% to $8,887 million. Staff numbers also rose to 15,715 at the end of March 2019, up from 14,810 at March 2018.

Macquarie’s assets under management rose 11% from $496.7 billion in 2018 to $551.3 billion at year’s end.

“This was largely due to investments made by Macquarie Infrastructure and Real Assets (MIRA) managed funds, foreign exchange impacts, contributions from businesses acquired during the period, and market movements, partially offset by asset realisations by MIRA-managed funds and net flows in Macquarie Investment Management,’ the bank explained.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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