Market Reacts as Macquarie Announces Annual Profit Results

Submitted by Craig Strzelecki on 19 May, 2008 - 11:09

The Macquarie Group posted their annual profit results today reflecting a 23 percent rise in their full year profit. It admitted in its statement that it would be difficult to match these records next year owing to the current economic conditions.
Macquarie Group recorded an annual profit of $8 billion for its financial year 2008 which was 23% up from previous year $1.46 billion. The full operating income reflected a 15 percent increase to $8.2 billion while Earning per share (EPS) increased 13 percent to $6.71.

The real estate arm of the bank reported net losses which had been actually the strongest contributor to Group’s overall profits. Yet another strong arm of Macquarie Group, the banking and securitisation group also reported significantly lower earnings as compared to previous year. It was unable to generate any substantial income from cheap mortgages and re-package the debts. Both the key income-generating pillars of the group showed poor performance due to downturn in the world financial markets.

Nicholas Moore told investors that erstwhile global credit crisis is likely to hit the next year performance records. It shall be difficult for the group to give a repeat performance of the results in coming months. Mr Moore shall take over as Chief Executive Allan Moss this week on May 24 after latter being in charge of the bank for past 15 years. He also commented that there might be some acquisition opportunities owing to its strong capital position.

Macquarie witnessed a fall in its share prices following the annual report and comments from Moore. The share prices fell 7.3% to $61.25 which was its biggest single day fall since March 17. However, some of investors were still keen on buying its shares still believing Macquarie as “millionaire’s factory”.
The overall market is down by 20 points due to weakness reflected in major sectors like mining, banking and energy. Analysts predict that although there is enough investor appetite, the market could still witness a bout of weakness in coming days. The risk of slow economic growth rate and rising inflation could lead to decrease in market demands.