Macquarie’s big misses on profit estimates on markets unit, plans $2b buyback

Macquarie Group’s first-half profit was dragged down by fewer asset sales and weakness in its commodities and global markets business.

The firm announced a buyback of as much as $2 billion.

Net income came in at $1.42b in the six months to September 30, down from $2.31b a year earlier, according to a statement Friday. That was lower than the average $1.69b estimate of three analysts surveyed by Bloomberg.

Investors were primed for a soft result after the Sydney-based Australian bank and asset manager twice in recent months dialled down expectations for profitability.

As chief executive Shemara Wikramanayake prepares shareholders for more challenging times, Macquarie shares are still outperforming global bank stocks this year as its diverse set of businesses provide a cushion to investment-banking focused rivals.

Profit contribution from Macquarie Asset Management was down 71 per cent due to the timing of asset realisations in green investments and higher expenses. The commodities and global markets unit’s contribution was 31 per cent lower as volatility subsided.

“Our annuity-style businesses saw growth in loan books, deposits and assets under management, but the first-half result was substantially down compared to a strong period of realizations in the prior corresponding period,” Ms Wikramanayake said in the statement.

There’s an “expectation that green energy realisations will be predominately in the second half”.

Bloomberg