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Macquarie Expects Strong Full-Year Profits, Lower Second-Half Earnings

Macquarie Bank, Australia's top investment bank, said it expects a strong increase in full-year profit, but warned second-half earnings would be slightly below the first-half result.

"The Bank has benefited from continuing good conditions across most markets, especially from good equity markets in Australia and internationally," Chief Executive Allan Moss said in the bank's operational update on Tuesday.

Macquarie, which is leading a consortium to buyout Qantas Airways, beat forecasts with a 51% rise in first-half profit in November and had flagged better second-half earnings compared to the previous corresponding period.

The bank targets steady revenue generating assets such as toll roads and infrastructure assets, often shifting them into investment funds, from which it also charges management fees.

Macquarie's assets under management jumped 16% in the December quarter to A$177 billion (US$137 billion), helped by acquisition of UK utility Thames Water and additions to other specialist funds, which buy into utility assets.

It had disposed of about A$1.3 billion worth of assets held for sale since Sept. 30, and bought non-financial assets worth A$990 million. "The majority of currently held non-financial assets and businesses held for re-sale are either subject to contract or are subject to active confidential negotiations with respect to their disposal," Moss said.

The bank expected to continue to benefit from staff growth, with staff numbers having risen 15% to 9,400 from March 2006. Its international staff strength has risen 28% to 3,200. "As is usual at this part of the market cycle, there is also increased competition for staff, especially in international markets," Moss said.

Macquarie reported a net profit of A$730 million in the six months ended Sept. 2006, and Reuters Estimates forecasts its full year to March net profit to be about A$1.31 billion.

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