Australia’s Macquarie to buy back shares, half-year profit slips

SYDNEY: Australia’s Macquarie Group on Friday (Nov 3) reported its lowest half-year profit in three years, with first-half earnings down 39% to pre-pandemic levels due to rising costs and weakness in its asset management and commodity trading segments.

Macquarie had already trimmed its earnings forecasts twice since its record fiscal 2023 results announced in May, but the A$1.42 billion (RM4.33 billion) profit for the half ended Sept 30 was well below a consensus estimate of A$1.77 billion compiled by Citi.

It was biggest percentage profit decline in more than a decade amid a tough environment for corporate dealmaking and less volatility in commodity prices than a year ago.

Macquarie said in a statement the financial conglomerate maintained a cautious stance and was conservatively positioned.

Despite the weaker result, the company’s board approved a share buyback of up to A$2 billion and declared an interim dividend of A$2.55 per share.

“We feel we have capital above our needs and the prudent thing to do is to return that to shareholders,” Macquarie CEO Shemara Wikramanayake said in a video message on the company’s website.

The company’s A$A892 billion asset management division led the earnings decline, with profits down 71% to A$407 million, roughly half the level tipped by analysts. Macquarie pinned the fall on the timing of green asset sales and rising expenses.

Profits in the heavyweight commodities and global markets segment fell 31% to A$1,4 billion as a degree of normalcy returned to energy markets after the chaos last year unleashed by Russia’s invasion of Ukraine.

The company said fees and commissions at investment banking arm Macquarie Capital were in line with the previous comparable period. Profit fell 28% to A$430 million.

Earnings in the banking and financial services division, home to Australia’s fifth-largest retail mortgage business, were a rare bright spot and rose 10% to A$638 million on the back of loan growth and stronger margins.

Macquarie reported higher operating costs across all four divisions. – Reuters