Macquarie posts 58% profit drop

Friday 1st May 2009

Macquarie Group, Australia’s biggest investment bank, posted a 52% drop in full-year earnings after taking A$2.5 billion of writedowns.

The group shares were halted for a capital raising, which may entail selling shares in a placement at a 20% discount A$27 apiece to raise A$540 million, Reuters reported. The total could reach A$1.24 billion, including funds raised to cover staff bonuses and share purchase plan for ordinary shareholders, Bloomberg said. The stock last traded at A$33.48 and are up 11% this year.

Net income fell to A$871 million in the 12 months ended March 31, from a record A$1.8 billion a year earlier, the company said in a statement. Total assets fell 11% to A$149.1 billion.

“Macquarie has remained profitable despite a year of challenging global market conditions,” said chief executive Nicholas Moore. “While there were some early signs of markets stabilizing in March and April, significant uncertainties remain and it is still too early to make any judgments on sustained market improvements.”

The profit drop snaps almost a decade of earnings growth as Macquarie followed a model of acquiring assets, pooling them into funds, taking them public and reaping management fees. A slump in asset prices spurred the write-downs.

Operating income, before the write-downs and other one-time items, fell 14% to A$7.6 billion. Fee and commission income declined 13% to A$4 billion, and trading come dropped 35% to A$1.2 billion. Its share of profits from associates jumped 200% to A$468 million. Net interest income gained 15% to A$938 million, while equity investment income fell 50% to A$550 million.

Moore said he expects fewer write-downs and provisions in the 2010 year, lower earnings on capital and higher costs of funding.

Businesswire.co.nz

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