Australia's Macquarie Earnings Beat, Shares Soar
Macquarie, Australia's top investment bank, beat forecasts with a 17 percent rise in full-year profit as cost cutting and strength in its annuity-style businesses offset lingering weakness in capital markets.
Macquarie also said profits for the next financial year would likely improve, helping its shares rise as much as 12 percent, hitting a three-year high of A$43.64. They last traded up 9.8 percent at A$42.70 at 0013 GMT.
"The FY14 result for the Group is expected to be an improvement on FY13 provided market conditions for FY14 are not worse than those experienced over the past 12 months," the company said in a statement.
Macquarie, which has been shifting its focus from its traditional but riskier banking products to businesses such as unlisted funds, retail banking and leasing, posted a full-year net profit of A$851 million ($872.15 million) on Friday versus A$730 million a year ago.
The average forecast was for a net profit of about A$818 million, according to Thomson Reuters, about A$20 million lower made analysts forecasts than in February.
Analysts had scaled back forecasts since February, when Macquarie said its full-year net profit would rise about 10 percent, due to subdued client activity in areas such as equity capital markets, mergers and acquisitions and derivatives.
"They (numbers) do look quite impressive. It does show that investment banking, and obviously wealth management, is obviously increasing," said Evan Lucas, an analyst with IG in Melbourne.
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Macquarie said it would pay a final dividend of A$1.25 per share, taking full-year payouts to A$2 per share, and resolved to pay out 60 to 80 percent of earnings in dividends.
"Global market conditions generally improved during the year to 31 March 2013 which, together with strong cost control across the group, led to the improved result," Macquarie's managing director and chief executive Nicholas Moore said in a statement.
Client activity remained subdued for Macquarie's capital markets facing businesses, but its annuity-style businesses continued to perform well, Moore said.
The hike in dividend would make the market happy, with investors keen to chase yield, Lucas added.
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"Their full year dividend is going to be A$2, which is a 43 percent jump on last year. Again good numbers for what the market wants particularly," he said.
The stock has risen by almost a third in the past year, double the gains in the benchmark S&P/ASX 200 Index, but have underperformed a recent rally in commercial banks that drove the market to a six-year high this week.