Macquarie Group just walked all over the big four banks.
The bank posted a 58% rise in half year profit to $1.070 billion, putting it on track for a record full year of about $2 billion.
The result was better than the bank’s own expectations of around $1.05 billion. And in percentage terms, Macquarie’s six month performance overshadows the latest results from the big four banks.
Macquarie’s result for the six months to the end of September was largely driven by improved performance fees, foreign exchange gains and better trading conditions.
One big advantage, in the current economic climate, which the domestic banks don’t have is that a bigger share of Macquarie’s revenue comes from its overseas operations that from its domestic business.
This means the falling Australian dollar is working hard for the bank.
“While Macquarie continued to build on the strength of its Australian franchise, its international income accounted for 71% of the group’s total income,” says CEO Nicholas Moore.
“This reflects the growth of our international operations, as well as the favourable impact of foreign exchange movements.”
Operating income was up 24% to $5.3 billion compared to expenses up 17% to $3.7 billion.
A 10% fall in the Australian dollar is estimated to have about a 7% benefit to profit.
Here’s the key results:
An interim dividend of $1.60 per share, 40% franked, was declared.
The bank posted a 27% rise in net profit to $1.604 billion for the 12 months to the end of March, its second best result on record.
Macquarie today said it expected the full 2016 result to be better than 2015.
“Macquarie remains well positioned to deliver superior performance in the medium term due to its deep expertise in major markets, strength in diversity and ability to adapt our portfolio mix to changing market conditions, the ongoing benefits of continued cost initiatives, a strong and conservative balance sheet, and a proven risk management framework and culture,” Moore says.