Macquarie Group Ltd has forecast full year profit to rise by about 10 per cent, but Australia's biggest investment bank remains cautious and has signalled any expansion will come in small steps.
Macquarie said on Friday its fiscal 2010 second half profit was likely to be in line with the first half's $479 million, which was a 21 per cent decline from a year earlier, taking the full year figure to about $958 million. The fiscal 2009 full year profit was $871 million.
Macquarie chief executive Nicholas Moore said in a statement that short-term forecasting was difficult because markets remain volatile, despite the recent improvements.
"We currently expect the profit for the second half of 2010 to be broadly in line with the first half, but this remains subject to market conditions and significant swing factors and excludes the impact of one-off items," he said.
"While there have been some improving trends in a number of major markets, overall we continue to maintain a cautious stance with a conservative approach to funding and capital."
Macquarie made four takeovers during the first half ended September 30, spending about $824 million to buy a wealth manager, fund manager, investment bank and energy adviser in North America. The deal is part of Mr Moore's plan to expand into geographic and business areas where Macquarie hasn't had a strong presence.
But that didn't mean the Sydney-based bank was aggressively expanding, as it maintained capital of $11.5 billion, $4.5 billion more than its minimum regulatory requirement, in the half.
"While we have deployed funding during the period, we have continued to maintain conservative and appropriate levels of capital and liquidity, which has had an impact on our earnings," Mr Moore said.
"Our strong balance sheet, strong team and market conditions provide opportunities for medium term growth, building upon the strength, diversification and global reach of our businesses."
Shares in Macquarie gained $1.30, or 2.64 per cent, to $50.55 by 1046 AEDT, trailing the financials as a whole. The S&P/ASX200 Financials index rose 2.88 per cent.
The $479 million first half net profit declined from $604 million a year earlier, but was better than the bank's own forecast of about $435.5 million.
The bank took write downs of $414 million for the first half. Still, all its divisions except the real estate banking division were profitable.
"Our first half result reflects improved market conditions and the diversification and global reach of our businesses," Mr Moore said.
"However, the result was impacted by a number of one-off items and equity accounted gains and losses."
Earnings per share slumped 31 per cent from a year earlier to $1.45, following a $1.21 billion capital raising first announced in May. Capital raisings reduce the earnings per share figure as they increase the number of shares the profit is shared between.
Assets under management declined by $27 billion to $217 billion, mainly because of the gain in the Australian dollar since March.
Retail deposits increased slightly to $13.9 billion.
Net operating income gained five per cent to $3.1 billion.
Macquarie's fixed income, currencies and commodities division contributed the biggest share of profit, adding $368 million to the overall figure as market conditions improved.
Macquarie Capital contributed $331 million while the securities group added $319 million.
The real estate division reported a loss of $56 million as losses were realised on the sale of investments and asset impairments were recognised.
Macquarie declared a first half dividend of 86 cents per share unfranked, compared with the $1.45 payment the year before.
© 2009 AAP
