Macquarie earnings fall
(28 October 2016 – Australia) Macquarie Group announced that its earnings for the half dropped by two percent.
The Group’s managing director Nicholas Moore, however, said the bank remained on course to match last years’ record profit of A$2.06 billion.
While other banks are struggling with lack of growth opportunities, Macquarie's biggest and star-performing division, asset management, helped underpin the result. Assets under management rose 3 percent to $493.1 billion. That rise helped the bank net $857 million in income from Macquarie Asset Management.
After a surge in fees in the previous half, this business remained the biggest contributor to earnings, and the bank said investors continued to flock to infrastructure, in which it is the world's biggest asset manager.
Returns were weaker in Macquarie's traditional investment banking and stockbroking arms, while profits from its corporate and asset finance business also dropped in the half.
Low-interest rates present a challenge for banks, but Macquarie is benefiting from a wave of money seeking to invest in the asset class, which has become increasingly attractive to big investors such as pension funds.
Shemara Wikramanayake, head of Macquarie Asset Management added that Bank’s funds management unit had raised A$7.4 billion in this half.
"We're in an environment where we're in a low-return world, and investors are really trying to chase superior returns for good risk, and alternatives is a place where they're allocating a lot of money, particularly real assets," she said.
"We're seeing, because of what's going on in the macroeconomic backdrop, a lot of money flowing into our asset class. And because we are the largest, and a well-performing manager in that class, we're seeing a lot of demand for our products," said Wikramanayake.
Wikramanayake added that the bank was targeting expansion in agriculture, some real estate assets, and the Asian region.
Macquarie’s banking and financial services unit produced a 54 percent increase in earnings, contributing A$261 million to the group.
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