As predicted, investment banking and funds management giant Macquarie Bank has raked in another bumper profit of close to half a billion dollars, largely underpinned by a spike in performance fees from its specialist listed funds and an outperforming stockbroking business.
The $482 million profit after tax for the half year ended September 30 was 88 per cent higher than for the corresponding period last year.
And the bank’s much publicised crusade to expand itself to the four corners of the globe has also paid dividends, according to chairman David Clarke, who said international income had contributed 46 per cent of the Sydney-based company’s total income.
But Clarke warned shareholders, who were today awarded a franked dividend of 90 cents per share, that predictions by more bullish analysts of a full year profit of around $1 billion weren’t an outright certainty.
“Although it was an outstanding first half result, shareholders should be cautious about extrapolating from that result to the full year because the first half profit benefited from large performance fees from listed funds which are unlikely to be repeated in the second half,” he said.
Chief executive Allan Moss also predicted a possible decline in listed fund performance fees, but was nevertheless optimistic about the bank’s ability to beat its record profit result for last financial year.
“Subject to the continuation of current market conditions, we expect that we will at least match the record FY05 result of $823 million, despite the fact that FY05 included a one-off gain from the formation of the Macquarie Goodman Group,” he said.
As usual, the bank’s massive investment banking division, which makes up the majority of its operations, contributed a hefty chunk of revenue.
The relatively smaller funds management division, which contains the bank’s private equity funds, hedge funds and global REIT funds, reported a 13 per cent increase in funds under management from $42 million to $47.3 million.
This growth was driven by a booming Australian equities market and significant inflows from external master trusts and platforms, a Macquarie spokesperson said.
As for the financial services group, which contains all of the bank’s platform and financial planning operations, profitability was “at the same rate as the rest of the bank”, group head Peter Maher said.
He said Macquarie Wrap Solutions had grown by 18 per cent from $14 billion to $16.6 billion.
Maher said the Macquarie Professional Series, the funds management business launched in March to form alliances with external fund mangers such as Morgan Stanley, had already pulled in $320 million.
As for Macquarie’s new financial planning dealer group, Lachlan Wealth Management, Maher confirmed reports late last week that the bank was currently in discussions with “a number of financial planning businesses with a view to bringing them on board”.
