Australia investment bank Macquarie affirms outlook for year

[SYDNEY] Australia's top investment bank Macquarie Group on Thursday affirmed earnings expectations for the current financial year, saying they would match the record performance of 2016.

The Sydney-based bank, which earns 70 per cent of its income overseas, said its operating group's performance in the first quarter to end-June was up on the previous quarter, but down on the strong results seen a year earlier. "Macquarie's annuity-style businesses, which represent more than 70 per cent of the Groups' performance, continued to perform well," said the bank's managing director and chief executive officer, Nicholas Moore.

The capital markets business had mixed fortunes given subdued market conditions, though its commodities and financial markets unit saw stronger activity.

Macquarie lifted annual net profit and dividends to a record in the year-ended March 2016 to A$2.06 billion (S$2.09 billion).

The commodities and financial markets unit, part of its market-facing division contributes less then 30 per cent of group's net profit and had been a bright spot for the bank.

Macquarie is known for its consistently strong earnings and focus on annuity-style businesses which have been replaced by investment banking to contribute the lion's share of earnings.

But analysts see risks of increasing impairments in its commodities portfolio over the next one to two years following a plunge in oil and metals prices globally.

Macquarie shares are down nearly 11 per cent so far this year, underperforming a 4.6 per cent gain in the benchmark S&P/ASX200 index.

AFP