Macquarie Group Profit Falls to $900 Million

Macquarie Group (MQG) has revealed that the company’s profit for the fiscal year 2009 would be down to $900 million. Macquarie said in an operational update on Thursday that it saw an after-tax profit of about $900 million for the year to March 31, compared with $1.8 billion in its fiscal 2008.

Investment banks worldwide have suffered in the global credit crisis, leading them to raise capital and sell assets. So far Macquarie has said it would not need to raise equity to shore up its capital, as Australia's commercial banks have done. Instead Macquarie is trying to sell about $15 billion ($10.77 billion) of its assets under management, with $12 billion sold so far, to focus on more profitable parts of its business. That included the sale of its $1.5 billion margin lending portfolio to Australia's Bendigo and Adelaide Bank for $52 million worth of convertible preference shares in Bendigo and Adelaide, announced on Thursday.

Managing director and chief executive officer of MQG, Nicholas Moore said the current environment remained challenging. He also noted the importance of balance sheet strength for all financial institutions in the current environment. The investment bank said that since 30 September, it had completed around $21 billion (gross) of new funding initiatives.

Macquarie said, “The group's regulatory capital position remains strong with a $2.9 billion buffer of capital in excess of the group's minimum capital requirements”. It added that staffing levels have fallen from 13,898 at 30 September 2008 to 12,851 at 31January 2009. The Group declared a second half dividend of $2.00 per ordinary share, franked to 100% (and up just 10c a share), taking the total ordinary dividend for the year to $3.45 per share, an increase of 10% on last year’s total ordinary dividend of $3.15 per share. At the halfway mark interim dividend was up 16% (20c), so the more conservative approach in payout can be seen.