Macquarie profit beats estimates as market volatility spurs trading

MACQUARIE Group’s profit beat forecasts as market volatility buoyed its commodities and global markets business. The shares opened 2 per cent higher.

Net income for the six months to Sep 30 rose to A$2.31 billion (S$2.1 billion), up from A$2.04 billion in the prior year, according to a statement on Friday (Oct 28). That exceeded the A$2.15 billion average estimate of four analysts surveyed by Bloomberg.

“Macquarie’s businesses continued to perform well against a backdrop of more challenging market conditions,” chief executive officer Shemara Wikramanayake said in the statement.

Shares in the Sydney-based financial group have been under pressure this year despite record profits in May and Wikramanayake has cautioned investors on her firm’s outlook. Meanwhile, analysts have said the income surge won’t be sustained due to the unique combination of energy shocks that buoyed its commodities trading business and a spree of dealmaking that fed its investment banking arm.

The net profit contribution from the bank’s commodities trading arm to its total was up 15 per cent compared to the first half of the year it said Friday, “due to increased client hedging and financing activity”, as customers reacted to energy price volatility.

The firm said it will “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”.

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The shares rose 2.7 per cent as of 10.14 am in Sydney.

Infrastructure deals

The biggest jump across the firm’s divisions was a 28 per cent surge in profit at the infrastructure investing arm, Macquarie Asset Management. The bulk came from the sale of assets in the green energy sector, the bank said. That business will continue to look to redeploy capital on new projects, its chief told Bloomberg recently.

The bank also left its outlook unchanged from the guidance it gave investors at its full-year results in May. “Macquarie remains well-positioned to deliver superior performance in the medium term,” Wikramanayake said. BLOOMBERG