Macquarie backs 2019 profit growth guidance amid ‘satisfactory’ conditions

Macquarie’s new CEO backs 15 per cent profit growth forecast, amid what the bank says are ‘satisfactory’ trading conditions.

Macquarie's new chief executive Shemara Wikramanayake. Picture: James Croucher

Macquarie Group has highlighted solid trading conditions and significant levels of asset divestments in the December quarter, as the asset manager and investment bank stuck to earnings guidance for profit to rise 15 per cent in 2019.

Ahead of its annual operational briefing in Sydney on Tuesday, Macquarie told the ASX the profit contribution from its asset management, corporate and asset finance and banking and financial services divisions was “slightly up” in the December quarter compared to a year earlier.

Its business units that are leveraged to financial markets — Macquarie Capital and Commodities and Global Markets — had a combined profit contribution that was “significantly up” in the December quarter.

The three months ended December 31 is Macquarie’s third quarter as it rules off its financial year on March 31.

New chief Shemara Wikramanayake, who took the helm from Nicholas Moore on December 1, reiterated guidance for annual profit to print up to 15 per cent higher.

“While the impact of future market conditions makes forecasting difficult, Macquarie currently expects an increase of up to 15 per cent in the FY19 result compared with the FY18 result,” she said.

“Trading conditions were satisfactory with significant asset realisations across the group in the December 2018 quarter.”

In November, Macquarie flagged a second earnings guidance upgrade in the same month almost ensuring Ms Wikramanayake will hand down a $3 billion-plus record annual profit, buoyed by asset sales including gains on the divestment of Quadrant Energy.

The profit result for the 12 months ended March 31, 2018 came in $2.56bn.

Today’s ASX announcement said Macquarie’s group capital surplus over regulatory requirements was $4bn.

Macquarie said it’s total assets under management dipped 2 per cent to $532.1 billion, weighed on by financial market movements in the quarter.

The company said, though, that dry power across its stable of investment funds stood at a bumper $24.3 billion as at December 31, after it raised capital for a number of global funds.

On the Hayne royal commission, Macquarie said it was “closely monitoring” developments and would participate in industry and public consultations “as appropriate”.

Total staff numbers edged up to 15,110, with 56 per cent based outside Australia.

In mid-morning trade on Tuesday Macquarie shares were up slightly, trading $1.01 or 0.83 per cent higher at $122.99.