Macquarie Group has posted an 11% increase to $1.46 billion in net profit after tax for the half-year ended 30 September, 2019.
While this was an increase from the prior corresponding period, it was a decrease of 13% from $1.67 billion from the period before that.
In its interim financial report, Macquarie cited 60% of its net profit came from annuity-style activities and 40% from markets-facing activities.
Within its annuity-style activities, its asset management arm accounted for 39%, followed by banking and financial services at 13% and 8% from commodities and global markets.
On the markets-facing side, 32% came from commodities and global markets and 8% form Macquarie capital.
It’s asset management side net profit was up 32% on the prior corresponding period to $1.12 billion thanks to increased performance fees from Macquarie infrastructure and real assets (MIRA) managed funds and co-investors, and increased base fees primarily driven by favourable foreign exchange movements and investments made by MIRA-managed funds and mandates.
The report said assets under management increased 2% to $562 billion at 30 September, 2019.
The banking and financial services side was up 2% to $385 million due to growth in deposits, Australian loan portfolio and funds on platform average volumes. Macquarie noted a reduced headcount contributing to the net profit due to the realignment of the wealth advice business to focus on the high net worth segment.
However, the banking and financial services profit was partially offset by lower wealth management fee income associated with the wealth advice realignment, increased costs associated with investment in technology to support business growth and to meet regulatory requirements, and higher credit provisions in business banking loans and leasing.
Macquarie said the impact of further market conditions made forecasting difficult and expected the group’s result for the financial year ended 31 March, 2020, to be slightly down on the previous year.
“Macquarie’s short-term outlook remains subject to a range of factors including: the completion rate of transactions and period-end reviews; market conditions; the impact of foreign exchange; potential regulatory changes and tax uncertainties; and the geographic composition of income,” the report said.