SYDNEY (Reuters) – Australia’s Macquarie Group on Tuesday outlined the global ambitions of its new chief executive as it tracks toward a record annual profit thanks to its diversified business model, which helped offset losses from recent global market volatility.
FILE PHOTO: The logo of Australia’s biggest investment bank Macquarie Group Ltd adorns the main entrance to their Sydney office headquarters in Australia, October 28, 2016. REUTERS/David Gray/File Photo
Shares in Australia’s largest investment bank hit a five-month high as CEO Shemara Wikramanayake stuck to a 15 percent profit growth forecast for the year to March and sketched growth plans for the bank in Asia, Europe and the American continent.
In her first results announcement since becoming chief executive in December, Wikramanayake said the 50-year-old company’s future lay offshore.
“Apart from Business and Financial Services, all other four of our operating groups have found … that they’ve reached a point of maturity in Australia, where they’ve really needed to expand offshore to grow their businesses,” she said.
“We are still tiny in the Americas,” Wikramanayake said, referring to the A$50 billion ($35.4 billion) of assets it manages in the continent.
Macquarie shares rose 2.5 percent, reaching their highest intraday level since September, while the broader Australian market was flat.
Wikramanayake said the bank planned to invest its A$4 billion in surplus capital to strengthen Macquarie’s position in key geographies across the world, even as the global economy slows and Australia’s other banks, beset by governance scandals, turn inward.
The bank’s operations – spanning funds management, commodities trading, principal investment, and commercial and investment banking – would continue to prioritize investment in the real estate, infrastructure, technology and energy industries.
CLSA banking analyst Brian Johnson cautioned investors not to expect immediate returns from Macquarie’s offshore strategy.
“One of the dangers of this is that as you see all these amazing opportunities, sometimes they take a long time to coalesce,” he said.
The bank said that during the three months to December, corporate finance deals and commodities trading made up for weaker earnings in asset management.
Profit from its core “annuity-style businesses” – including its banking and finance, funds management and leasing units – in the third quarter was slightly higher than a year ago, but was down for the nine months to December because of lower performance fees in its asset management business.
Assets under management for the bank’s biggest-earning unit shrank 2 percent to A$551 billion as at Dec. 31, from three months earlier, “predominately driven by market movements”, the company said.
Reporting by Byron Kaye and Paulina Duran in Sydney and Nikhil Kurian Nainan in Bengaluru; Editing by Stephen Coates