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Australia's Macquarie Raises Profit Outlook

Macquarie Bank, Australia's top investment bank, upgraded its full-year profit forecast for the second time in a month, saying its second-half result would exceed the first-half, pushing up its shares.

Macquarie's deputy managing director, Richard Sheppard, said in a statement on Friday the bank was experiencing continued good market conditions and transaction levels.

The bank last upgraded its profit outlook on Feb. 6, saying its second-half profit would probably be slightly down on its first-half profit of A$638 million (US$502 million), excluding a one-off gain of A$92 million.

"The important thing about Macquarie, given the nature of its business, is not the things that are going to happen in the next six months," said Guy Hutchings, chief investment officer at MFS Investment Management Ltd. "Being an investment bank, demand for their listed and managed funds will depend on the strength of the economy and financial markets."

"So the decision investors need to make about Macquarie Bank right now is whether they are at a peak earnings stage. Things for the next six months may be good but I'll be looking further out."

Sheppard said that Macquarie now expected the second-half to exceed the first half, indicating a full-year profit before one-off items above A$1.276 billion. "If this is achieved it means the full-year result for the year ended March 31, 2007 would be at least 50% up on the prior corresponding period," Sheppard said.

Macquarie, which will record a 15th straight year of profit growth, posted a net profit of A$916 million in fiscal 2006.

The bank, which is leading a consortium for a US$8.7 billion buyout of Qantas Airways, 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.

"The swing factors that could still affect the final result include trading conditions and volumes during March, and the outcome of transactions across the bank's business," Sheppard cautioned.