By Alice Uribe
SYDNEY--Macquarie Group Ltd., Australia's biggest investment bank and asset manager, said trading conditions improved in the first quarter of the 2022 fiscal year.
In comments released ahead of its annual shareholder meeting on Thursday, Macquarie said its operating group net profit contribution for the three months through June--a measure of earnings before some corporate costs, profit share and income tax--was significantly higher than a year earlier.
"We continue to maintain a cautious stance, with a conservative approach to capital, funding and liquidity that positions us well to respond to the current environment," the company said. "Macquarie remains well-positioned to deliver superior performance in the medium term."
Macquarie said the combined contribution of its annuity style businesses to net profit was slightly ahead of a year ago, primarily due to higher average volumes and lower provisions in Banking and Financial Services.
This was partly offset by a reduced contribution from Macquarie Asset Management, given there was no repeat of the gain on sale of the rail operating lease business in the first quarter a year earlier.
For Macquarie's markets-facing businesses, the combined contribution was significantly higher.
The company attributed this to the sale of the U.K. commercial and industrial smart meter portfolio, partly offset by the timing of income recognition on storage and transport contracts in Commodities and Global Markets. Macquarie Capital also recorded significantly higher investment-related income," it said.
The group's financial position comfortably exceeds regulatory minimum requirements, said Macquarie.
It had a capital surplus of 7.4 billion Australian dollars (US$5.5 billion) at June 30, down from A$8.8 billion at March 31 as the group continued to invest. The Bank CET1 level 2 ratio was 12.1%.
Macquarie said it had seen A$3.8 billion growth in capital requirements across all four operating groups since the end of September.
"Operating groups are continuing to seek opportunities to deploy additional capital, provided the projected risk-adjusted returns are attractive for shareholders," said the company.
In order to allow additional flexibility to support business growth, the board said it has lowered the annual dividend payout policy range to 50-70%, from 60-80% before.
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(END) Dow Jones Newswires