Made in Australia with local and imported ingredients, investment bank Macquarie Bank will again fill the stomach of investors this year with a whopping net profit of $916 million, an increase of 13% over the prior year.
Macquarie Bank’s net profit was $972 million for the full year to March 31, 2006, excluding the impact of AIFRS and last year’s one off $91 million profit from the formation of the Macquarie Goodman Group.
During the year, the overall income increase by 17% to $4.4 billion, of which 48% is now derived from international markets. International income growth increased 59% to $2 billion.
The group’s risk weighted assets were $2.8 billion – an increased 45% over last year.
Macquarie Bank chairman David Clarke said significant international growth across all groups was particularly pleasing.
During the year, the Investment Banking Group grew 30%, Treasury and Commodities Group was up 36%, Equity Markets Group up 50%, Banking and Property Group up 11%, Financial Services Group, up 33% and Funds Management Group up 35%.
He added that activity in the specialist funds remained strong, with the assets in these funds performing well.
A significant portion of these assets are now international: 72% of the property assets and 73% of the infrastructure assets are now located outside Australia.
“Over the last ten years (since the Bank listed in 1996), total shareholder returns have been 1,343% compared with to 246% for the S&P/ASX All Ordinaries Index over the same period.
“In addition, the specialist funds continue to provide strong returns to investors. The aggregate total shareholder return for the Macquarie family of listed funds has been 455% compared with the Morgan Stanley Capital Index World Index return of 126% over the same period,” he added.
The Bank has declared a second half dividend of $1.25 per ordinary share, taking total ordinary dividends for the year to $2.15 per share, an increase of 34% from last year’s ordinary dividend of $1.61 per share.
Earnings per share increased from $3.70 to $4.00.
Macquarie Bank’s managing director Allan Moss the business climate for investment banking was generally good, with no major changes in key economic factors.
“Strong Australian and international equity markets contributed to the result with significant advisory and equity capital markets deal flow and a very strong performance by Australian and Asian institutional broking and Australian retail broking businesses,” he added.
The Bank’s assets under management increased by 45% from $96.7 billion to $140.3 billion along with associated base fee growth.
“This year we reported our 14th consecutive year of record profit.
“We have expanded the Bank’s operations, geographic footprint and capabilities to develop a portfolio of focused financial services.
"We have experienced unprecedented international growth.
“Our willingness to selectively enter new markets and to invest alongside our clients delivers excellent results for our shareholders, business partners and clients,” he added.
The Bank’s businesses in Asia consolidated their positions across the region, with a number of major transactions, including Macquarie MEAG Prime REIT’s $S990 million listing on the Singapore Stock Exchange, the $S803 million IPO of Macquarie International Infrastructure Fund on the SGX, and the KRW1,026 billion IPO and dual listing of Macquarie Korea Infrastructure Fund on the Korean Stock Exchange and London Stock Exchange.
The Bank’s joint venture company Macquarie Goodman Asia also established the Macquarie Goodman Hong Kong Wholesale Fund, a $HK4.8 billion unlisted property fund.
In the United Kingdom and Europe, the Bank established a joint venture with UK-based office park developer Akeler and treasury and commodities and investment banking joint ventures with Abu Dhabi Commercial Bank. The Bank also expanded its Italian mortgages business to include a new office in Rome.
In Australia and New Zealand, the Bank has established a retail financial products distribution alliance with Virgin Money Australia.
Looking ahead, Moss said the Bank has had a very good start to the 2007 financial year.
“Subject to prevailing market conditions continuing, we expect a strong IPO and M&A pipeline and good growth in the specialist funds. We expect the trading businesses to benefit from geographic and product expansion and from continued good equity broking volumes,” he concluded.
By Nelson Yap
