SYDNEY • Australia's top investment bank Macquarie Group yesterday posted a 29 per cent jump in annual profit to a record - helped by growth in its annuity-style businesses such as wealth management - and lifted its final dividend by 21 per cent.
Net profit rose to A$2.06 billion (S$2.06 billion) from A$1.6 billion a year ago, just beating analysts' average estimate of A$2.04 billion. It unveiled a final dividend of A$4 per share, its best ever.
The world's largest infrastructure fund manager is gaining from investor thirst for assets with stable yields amid low interest rates globally. Still, the bank faces challenges as its cyclical businesses such as trading and advisory may be impacted by market conditions, while a strengthening domestic currency could weigh on earnings, two- thirds of which are from overseas.
"The results show the strength and resilience of its asset management business," said Mr Evan Lucas, a Melbourne-based market strategist at IG Markets. "Profit growth may start to moderate" if markets slow down, he said.
Macquarie shares fell 0.3 per cent to A$65.10 as of 2.10pm in Sydney. The stock has slumped 21 per cent this year.
Macquarie said it expects net income in the year to March 2017 to be broadly in line with the previous fiscal year, while noting that its investment banking and securities, commodities and financial markets divisions are experiencing subdued conditions.
Macquarie's stellar results come at a time of dire earnings for three of Australia's four major banks, which this week posted slower earnings growth and steady or lower dividends.
"Macquarie remains well-positioned to deliver superior performance in the medium term," chief executive Nicholas Moore said in a statement. Earnings growth was led by its stable annuity-style businesses such as wealth management and retail banking, while the market-facing division was a drag with its combined net profit contribution down 3 per cent from a year ago. Earnings were also boosted by the acquisition of an aircraft portfolio from AWAS Capital during the year and a lower Australian dollar.