Macquarie profit jumps but outlook wary

Macquarie Group has cautioned it would be tough to maintain current growth levels in view of market volatility and rising interest rates after the diversified financial giant delivered a record profit for fiscal 2022.

Net profit for the 12 months to March 31 jumped 56 per cent to $4.71 billion on the back of record earnings at three of its four divisions, with gains led by the group's market facing businesses, which reported a near doubling of profit from the previous year.

But chief executive Shemara Wikramanayake warned of lower income from its commodities trading unit and estimates transaction activity at its capital markets business will ease in the near term as central banks ramp up rates in an effort to curb persistent inflation across the world.

"We continue to maintain a cautious stance, with a conservative approach to capital, funding, and liquidity that positions us well to respond to the current environment," she told an investor briefing on Friday.

The subdued outlook dragged Macquarie shares down more than 8.0 per cent in a weaker Australian market already affected by an overnight sell-off on Wall Street. By 1400 AEST, the stock price was down 7.7 per cent at $187.

Profit for the second half was up 31 per cent over the previous corresponding period to $2.66 billion. By comparison, profit in the first six months ended September 30 had more than doubled.

Still, the more recent volatility in global markets has been beneficial to the group, with a rally in commodities prices amid the Russia-Ukraine conflict and higher fees and income at its investment banking unit amid record deal making activity in recent months.

Full-year net profit from its Macquarie Capital unit more than tripled to $2.4 billion, with the group advising on some of the biggest deals in Australia, including the $24 billion takeover of Sydney Airport and Santos' $8.4 billion purchase of rival Oil Search.

Profit from its commodities and global markets unit jumped 50 per cent to $3.91 billion, driven by increased client hedging and trading activity.

Its banking and financial services unit, which competes with major banks in the home loan market, saw profit rise 30 per cent to $1.0 billion, while the asset management business was a relative underperformer, with net profit up just 4 per cent to $2.15 billion.

Overall, the group's market facing businesses delivered a near doubling of profit from the previous year to $5.33 billion, but this will likely be hard to replicate amid the current market turmoil.

The annuity-style businesses generated more modest growth, with their net profit contribution up 25 per cent to $4.1 billion.

International income accounted for 75 per cent of the group's total income for the fiscal year, and assets under management rose 37 per cent to $774.8 billion as at March 31.

Despite the cautious outlook, Ms Wikramanayake said Macquarie group remained well positioned to deliver superior performance in the medium term.

The group lifted its partially franked final dividend to $3.50 a share, taking full-year dividend to a combined $6.22 a share.

MACQUARIE'S STRONG FY RESULTS

* Net profit up 56pct to $4.71b

* Income up 36pct to $17.3b

* Final dividend up 15 cents to $3.50, partially franked.

Austrlaian Associated PressBack to Breaking News

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