Australia’s Macquarie Group reported a better-than-expected 5.5% rise in annual profit on Friday, driven by strong performances from its asset management and banking sectors. The company’s shares surged nearly 4% following the announcement.
For the year ending March 31, Macquarie posted a profit of A$3.72 billion ($2.38 billion), slightly exceeding analysts’ expectations, which had pegged the figure at A$3.70 billion. As a result, its stock was set to hit its highest level since March 28, while the broader market remained flat.
Macquarie’s asset management division saw a notable 33% jump in net profit, reaching A$1.61 billion ($1.03 billion). This was mainly fueled by increased performance fees and the sale of its Rotorcraft helicopter leasing business.
In its banking and financial services division, profit rose 11% to A$1.38 billion, bolstered by cost savings from a more efficient, digital workforce. Higher net interest income from growth in loans and deposits partially offset margin pressures caused by tough lending competition and a shift in the company’s portfolio.
The results come amid challenging conditions for Australian banks, which are grappling with increased competition in the mortgage market and a shift toward lower-margin deposit products. The broader global economic uncertainties, including the effects of the U.S.-China trade war, have also put pressure on profit margins.
Shemara Wikramanayake, Macquarie’s CEO, said, “Despite the ongoing market and economic uncertainty, our client franchises have remained resilient.”
Looking ahead, Macquarie anticipates a modest increase in short-term commodities income, although analysts at Citi noted that its guidance is slightly weaker than expected.
The company’s assets under management stood at A$941 billion at the end of the year, a small increase from A$938.3 billion a year earlier. However, Macquarie’s commodities and global markets division saw a 12% drop in annual profit to A$2.83 billion, largely due to lower client hedging activity amid subdued conditions in key commodity markets.
Macquarie declared a final dividend of A$3.90 per share, slightly higher than last year’s A$3.85 per share.
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