Macquarie Forecasts Bumper 10% Profit Growth on Markets Income

(Bloomberg) -- Macquarie Group Ltd. is headed for another year of earnings growth after the Australian investment bank and asset manager upgraded its profit forecast on the back of a surge in income from its commodities and capital markets businesses.

• Net income rose 5 percent to A$1.31 billion ($944 million) in the six months ended Sept. 30., the Sydney-based company said Friday.

Key Insights

• The bank forecast full-year income will rise 10 percent, a big upgrade from its previous guidance that earnings would be “broadly in line” with last year’s record profit.
• Income from the capital markets facing businesses, which includes commodities trading and M&A advisory, surged 95 percent from a year earlier.
• The weaker Australian dollar is a notable tailwind to Macquarie earnings, as the bank generated 67 percent of its income outside its home market.
• U.S. President Donald Trump’s corporate tax cuts have also been a boon -- the firm’s effective tax rate fell to 22.2 percent in the half, from 26.5 percent a year earlier
• Macquarie is also preparing for a post-Brexit world, confirming it’s applying for additional banking licenses in Ireland and Luxembourg

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• For more details on the results, click here

Market Reaction

• Macquarie shares rose as much as 2.8 percent in early Sydney trading, and were up 1.7 percent at 10:20 a.m. That continues a stellar run for the investment bank, which has outperformed the big four commercial banks as they contend with the fallout from an inquiry into misconduct in the financial industry, a slowing property market and declining earnings.

To contact the reporter on this story: Emily Cadman in Sydney at ecadman2@bloomberg.net

To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Peter Vercoe, Edward Johnson

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