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Australian Investment Bank shrugs off full-year profit slump

04-29-2011 16:42 BJT

SYDNEY, April 29 (Xinhua) -- Australia's leading investment bank has taken a hit with annual profits slumping on the back of turmoil in the global markets, however Macquarie Group continues to lead the way for many international investment banks burdened by the aftermath of the financial crisis.

While Macquarie reported a net profit of 956 million Australian dollars (1044.62 million U.S. dollars) for the year to end-March, Macquarie Group's full-year profit fell 9 percent, largely in step with overall expectations of 951 million Australian dollars ( 1039.16 U.S. dollars).

Tellingly, profits for the second-half of the year swelled 553 million Australian dollars (603.24 million U.S. dollars) , up 37 per cent on the first-half and ahead of the cusp of the company's own forecasting. Headline earnings falling just short of the 1 billion Australian dollars (1.092 billion U.S. dollars) target, mainly due to quieter action in global equity markets.

Costs also hit the result.

A flurry of aggressive acquisitions in the last 12 months saw operating expenses surge 19 percent on the previous year particularly in the first two quarters, allowing the powerhouse Australian group to issue a positive outlook for 2012.

Chief Financial Officer Greg Ward said in a statement that the Group's income statement reflects growth in interest income, fee and commissions income, trading income and other income.

"Interest income was up 18 per cent on FY10 to 1.28 billion Australian dollars (1.40 billion U.S. dollars). The Group experienced growth in lending and leasing volumes, including the acquisition of over 1.0 billion U.S. dollars GMAC portfolio in April 2010 and the full-year impact of the Ford Credit portfolio acquisition in October 2009. Fee and commissions income was up five percent on FY10 to 3.89 billion Australian dollars (4.25 billion U.S. dollars) with base fees up three percent on the prior year driven by the full-year effect of the Delaware Investments business, however overall ECM activity was down, particularly in Australia and Europe." Trading income was up five per cent on FY10 to 1.37 billion Australian dollars (1.50 billion U.S. dollars). Challenging market conditions impacted equities and commodities-related income, particularly in the first half.

At a press conference in Sydney Friday, Macquarie Group Managing Director and Chief Executive Officer Nicholas Moore said, "2H11 profit increased significantly on 1H11. Improved general market conditions in 2H11 led to higher activity levels for Fixed Income, Currencies and Commodities (FICC) and Macquarie Capital."

Mr. Moore said that the outlook was still wholly guided by market conditions in its traditional suits equity and investment banking divisions.

While Macquarie Bank has led the market in Australia offering commercial banking and retail financial services both locally and increasingly on an international platform, the group has been moving towards a traditional investment banking advisory and trading model in the wake of the global financial crisis.

A bullocking Australian dollar, heading, as Commbank's Currency Strategist Joseph Capurso is now predicting, towards 1.12 U.S. dollars has not impacted the Group as may have been expected - reflecting Macquarie's successful internationalization. Global income made up well over 55 percent of Macquarie's total operating income so that the swashbuckling Australian dollar only cut a total 5 per cent from full-year earnings.

Analysts had estimated the final dividend would stand at 87.6 cents, outgunned by a final un-franked dividend of 1.00 Australian dollar per share.

As a consequence, the bank remains defiantly robust, especially when compared with the earnings plunge and public battering taken by global rivals such as Morgan Stanley and Goldman Sachs.

CEO Nicholas Moore said improved general market conditions led to higher activity levels for Macquarie's fixed income, currencies and commodities business and as well as Macquarie Capital, its investment banking arm.

Founded in 1969 and headquartered in Sydney, Macquarie Bank Limited operates as a subsidiary of Macquarie Group Limited.

Editor:Yang Jie |Source: Xinhua

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