Macquarie Bank profits slip

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Macquarie Bank’s first half profit fell 2% to $1.05 billion but the group is still on track to a record full year.

Revenue fell on market uncertainty leading to fewer trading opportunities, a sharp drop in performance fees, lower commission income, and smaller mergers and acquisitions, advisory and underwriting fees.

The result in broadly in line with expectations and still enables the bank to reach a full year profit matching last year’s $2.06 billion record.

The bank says it still expects the year ending March 2017 to be broadly in line with last year.

The $1.05 million profit for the first six months of the bank’s 2017 financial year was down 2% on the same half in 2016 but up 6% on the second half of 2016, as this chart shows:

Source: Macquarie

Operating income was $5.218 billion, down 2% on the same six motnhs the year before but 8% higher than the second half of 2016.

Earnings per share were down 4% to $3.12.

CEO Nicholas Moore says the result highlights the strength of Macquarie’s global platform, the benefit of recent acquisitions and its ability to adapt to changing conditions.

Macquarie’s capital markets businesses benefited from lower impairments offset by lower trading activity. The combined net profit contribution from these business of $695 million was flat on the first half of the year before but up 15% on the second half of 2016.

The net profit contribution from annuity-style businesses was down down 15% to $1.64 billion.

Net interest and trading income fell 18% to $1.86 billion and fee and commission income dropped 21% to $2.20 billion.

Performance fees slumped 73% to $170 million, and fees for mergers and acquisitions, advisory and underwriting fees fell 12% to $471 million due to subdued equity capital markets activity in most key regions.

The bank declared an interim dividend of $1.90 per share, 45% franked, up from the $1.60 in the same period last year.

The first half 2017 results at a glance:

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