Macquarie Profit Rises to Record, Steady New Year Flagged

By Robb M. Stewart Features Dow Jones Newswires

MELBOURNE, Australia--Macquarie Group Ltd. (MQG.AU) expects steady earnings in the 2018 fiscal year after its annual profit rose to a record high.

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Macquarie benefited in the just-ended year from higher operating lease income, as well as lower charges for provisions and impairments across most of its operations. Those countered what it said were limited opportunities in equity markets and a fall in fees and commission income.

Still, the Australian investment bank and asset manager said Friday its profit in fiscal 2018 would only be "broadly in line" with the previous year as its leasing book, asset-management fees and other drivers likely hold steady.

Net profit rose by 7.5% to 2.22 billion Australian dollars (US$1.64 billion) in the year through March from A$2.06 billion the year before, Macquarie said. The result was ahead of the A$2.11 billion median of seven broker forecasts compiled by The Wall Street Journal. As recently as February, the bank had flagged that its profit would be broadly in line with the year before.

Profit in the second-half of the financial year was A$1.17 billion, up 18% on the same period the year before and an improvement over the first six months when profit was held back by lower performance fees and a drop in on-year trading income.

Macquarie, which began as a subsidiary of London merchant bank Hill Samuel & Co. and opened its first office in Sydney in 1970, has in recent years shifted toward more reliable asset-management, financing and commercial-banking operations to cushion volatility in investment banking and trading.

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Last month, a Macquarie-led consortium struck a 2.3 billion British pounds (US$2.9 billion) deal to buy the U.K. government's Green Investment Bank PLC, which oversees more than GBP4 billion in "green" infrastructure and assets such as wind farms. The month before it agreed to buy the petroleum-trading business of Cargill Inc.

For the year, the profit contributed by Macquarie's annuity-style businesses picked up by 4% to A$3.25 billion, while the contribution from the capital markets facing operations , including its capital arm and commodities operations, climbed 12% to A$1.45 billion. The asset management, finance, banking and financial services businesses together accounted for about 70% of Macquarie's performance.

Assets under management at the end of March stood at A$481 billion, which it said was steady on a year earlier.

Macquarie plans to pay a final dividend of A$2.80 a share, for a full-year payout of A$4.70, an 18% rise on last year.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

May 04, 2017 18:54 ET (22:54 GMT)