Macquarie Falls on Lower Profit From Capital Markets, Annuities

  • Shares slide most in almost three months in Sydney trading
  • Full-year profit still seen ‘broadly in line’ with last year

Macquarie Group on Track to Match Last Year's Earnings

Macquarie Group Ltd. fell the most in almost three months in Sydney trading after Australia’s biggest investment bank reported a lower profit contribution from its capital markets and annuities operations.

The performance of the two businesses was “slightly down” in the three months to Dec. 31 from a year earlier, the Sydney-based company said in a stock exchange filing Tuesday. Macquarie also reported a hit to some asset-finance portfolios from the weaker pound, which has plunged since the U.K. voted to leave the European Union. The shares fell as much as 3.4 percent and traded 2.8 percent lower at A$81.57 at 12:36 p.m. local time.

At the same time, Macquarie said that trading conditions across the group were “satisfactory” during the quarter and full-year profit will be “broadly in line” with last year’s record earnings. Some investors were expecting more, according to fund manager Angus Gluskie.

The stock price drop “represents a minor bit of disappointment that there wasn’t any upgrade to the outlook,” said Gluskie, chief investment officer at White Funds Management, which oversees about A$600 million ($459 million) including shares of Macquarie.

The results come a day after National Australia Bank Ltd., the country’s largest business lender, reported a slight drop in first-quarter earnings. That result set a “subdued tone for bank reporting season,” Jarrod Martin, an analyst at Credit Suisse Group AG, wrote in a note to clients.

Chief Executive Officer Nicholas Moore has been focusing on expanding Macquarie’s lending and leasing businesses to shield earnings from the cyclical nature of investment-banking fees. That has helped deliver four consecutive years of earnings growth at the world’s largest manager of infrastructure assets, culminating in a record profit in the year ended March 2016.

Before Tuesday’s trading update, the mean estimate of 13 analysts surveyed by Bloomberg was that the firm will post profit of A$2.13 billion for the year to March 31, more than last year’s A$2.06 billion. Full-year results will be released May 5.

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