Macquarie takes hit

Health crisis impacts on bank’s profit

MACQUARIE Group has warned of an “uncertain speed” for a global economic recovery from COVID-19, as it shied away from providing annual earnings guidance and reported a 32.4 per cent slump in first-half profit.

Net profit dropped to $985m for the six months ended September 30, from $1.46bn in the same period a year earlier, the company said.

But the result was better than expected, spurring Macquarie’s shares to climb 2.3 per cent on Friday to close at $135.45.

However, Macquarie chief executive Shemara Wikramanayake provided a cautious outlook for the remainder of its financial year, which it rules off on March 31.

“Recent months have been overshadowed by the profound human impact of the COVID-19 global health crisis and its economic consequences,” Ms Wikramanayake said.

“Those impacts are reflected in our result, notably in credit and other impairment charges in relation to the ongoing impact of COVID-19 on our clients and customers and in delays to realising assets from our balance sheet and our funds.”

Ms Wikramanayake said the investment outlook was likely to remain challenging, “especially given the significant and unprecedented uncertainty caused by the worldwide impact of

COVID-19 and the uncertain speed of the global economic recovery”.

“The extent to which these conditions will adversely impact our overall financial year 2021 profitability is uncertain, making short-term forecasting extremely difficult.”

Macquarie’s net operating income declined 12.7 per cent to $5.52bn, excluding credit and other impairment charges it fell 8 per cent to $5.97bn. The profit contribution from the group’s asset management and banking businesses fell, as did the contribution from its investment banking and commodities and global markets divisions.

Macquarie declared a $1.35 interim dividend, reflecting a 50 per cent payout ratio, which is in line with guidance from the banking regulator during COVID-19.

That compares to a firsthalf dividend of $2.50 per share a year ago, and a $1.80 payment declared in the second half of Macquarie’s 2020 year.