Australia's top investment bank Macquarie Group booked a 39 percent increase in first-half net profit on Friday, underpinned by a strong performance from its funds business and a swing to profitability in its securities arm.
Macquarie reiterated that full-year net profit would strengthen in 2014, without quantifying the rise, providing that market conditions were no worse than they had been in the year before.
The bank posted first-half net profit of A$501 million ($474.42 million), beating an average projection of A$475 million, its strongest result in four halves.
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Macquarie's shares have jumped 44 percent so far this year, outperforming a 17 percent gain for the broader market on hopes that a rebound in mergers and acquisitions as well as initial public offerings will drive earnings higher.
Chief Financial Officer Patrick Upfold said the bank continued to maintain well-diversified funding sources and pursue a strategy of diversifying its funding, including growth in its deposit base.
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The investment bank's funds division posted a surge in net profit, up 40 percent from the first half last year to A$500 million, bolstered by a rise in fees.
Macquarie has been diversifying away from investment banking into less riskier areas and pushing rapidly into home mortgages.
That threatens to disrupt a highly profitable segment of the banking industry long dominated by the country's top four lenders: Australia and New Zealand Banking Group, Commonwealth Bank of Australia, National Australia Bank and Westpac Banking.
Macquarie said its Australian mortgage portfolio had increased 26 percent since March 31, 2013, to A$14.6 billion, or 1 percent of the nation's mortgage market.
Analysts are forecasting the bank to report an annual net profit of A$1.1 billion for the 2014 financial year, about 30 percent higher than the year before.
Macquarie Securities, which contains the bank's equities arm, posted a net profit contribution of A$71 million, up from a loss of A$64 million in the first half the year before. That comes amid a resurgence in the Australian initial public offerings market, and it was partly underpinned by an increase in equity capital markets activity, Macquarie said.