Macquarie profits down 13% for 2H20

Macquarie Group has posted its net profit after tax of $1.27 billion for the half-year ended 31 March, 2020, down 13% on the previous half, and down 24% on the half-year ended 31 March, 2019, due to economic impacts of the COVID-19 pandemic.

The group’s full-year report announced to the Australian Securities Exchange (ASX), said profit for the full-year ended 31 March, 2020 was $2.73 billion, 8% down from the previous year

Macquarie Group’s managing director and chief executive officer, Shemara Wikramanayake, said the final months of the financial year were overshadowed by the impact of the pandemic and its economic consequences.

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“Macquarie’s full-year result has also been subject to the effects of the crisis and a strong underlying financial performance in FY20 was impacted by a material increase in credit and other impairment charges, primarily reflecting the deterioration in current and expected macroeconomic conditions as a result of COVID-19,” she said.

The report also said the credit and other impairment charges of $1.04 billion in FY20 were up from $552 million in FY19, as the impact of the pandemic was reflected in credit and other impairment charges for 2H20 of $901 million, up from $139 million at 1H20, and $476 million at 2H19.

The report noted that annuity-style activities undertaken by Macquarie Asset Management (MAM), banking and financial services (BFS), and certain businesses of commodities and global markets, accounted by 63% of the FY20 performance, and generated a combined net profit of $3.44 billion, up 13% on FY19.

The bank’s assets under managed increased 10% to $606.9 billion at 31 March, 2020, up from $551.3 billion for the previous year. It said the increase was due to “investments by managed funds, an acquisition by MAM and foreign exchange movements, partially offset by recent market movements, a reduction in contractual insurance assets and divestments by managed funds”.

MAM delivered a net profit of $2.18 billion for FY20, up 16% from the previous year.

The group’s BFS businesses delivered a net profit of $770million for FY20, up 2% from the previous year.

It said: “Growth in average volumes for BFS deposits, the loan portfolio and funds on platform, along with the impact of realigning the wealth advice business to focus on the high net-worth segment, was offset by margin compression on deposits and higher credit provisions”.

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