Volatility drives Macquarie profits to record $5.2 billion

Macquarie Group notched up a record $5.2 billion in profits for the year, helped by a bumper performance in its commodities and global markets business, which benefited from the volatility on energy and financial markets.

The investment giant on Friday reported its full-year results, delivering 10 per cent growth in net profit to $5.2 billion and declaring a higher dividend for shareholders. The result is ahead of market expectations for profits of about $5 billion.

Among its divisions, the standout was the commodities and global markets business, which reported a 54 per cent rise in net profit contribution. Macquarie said there had been a jump in trading and inventory management because of the volatility on commodity markets, and its gas, power and oil businesses.

There was a 23 per cent decline in profit contribution from its flagship asset management business, which had enjoyed a surge in income in the prior year after selling assets.

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In its banking and financial services division, which houses its Australian retail bank, profit contribution jumped 20 per cent, as it made market share gains in deposits, loans, and benefited from wider margins.

The investment banking business Macquarie Capital, meanwhile, reported a 47 per cent slump in net profit contribution, as fee income from merger and acquisitions fell after a strong prior year.

Chief executive Shemara Wikramanayake highlighted the company’s diversification, and said this would continue to support its performance over the medium term.

“Macquarie remains well-positioned to deliver superior performance in the medium term due to its diverse business mix across annuity-style and markets-facing businesses; deep expertise across diverse sectors in major markets with structural growth tailwinds; patient adjacent growth across new products and new markets; ongoing technology and regulatory spend to support the Group; a strong and conservative balance sheet; and a proven risk management framework and culture,” Wikramanayake said in her outlook commentary.