After first flagging challenges in September,Wikramanayake said Macquarie’s flagship asset management business posted a net profit of $407 million – a 71 per cent drop – as it faced a tougher environment for asset sales.
The sale of its green assets would mostly happen in the second half,she said.
“We have a lot of green energy assets to realise,and I know the market,justifiably would have questions seeing some of the write-offs that have been happening recently,” she said. “I think the important point to note is that our portfolio,we feel comfortable,is very different to the situations where these large write-offs have been announced recently.”
While she remained tight-lipped about the details,Wikramanayake said a bulk of Macquarie’s green assets would be held for a core renewable fund to be launched under Macquarie’s asset management business.
“It’s strategically a big opportunity for Macquarie Asset Management to go into adjacent real asset businesses,so it’s important that we have this seed portfolio demonstrating our expertise to launch that well,” she said.
After revealing a capital surplus of $10.5 billion,Wikramanayake said it was “the responsible thing to do” to return some of it to shareholders. Macquarie’s board approved an on-market share buyback of up to $2 billion.
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Macquarie chief financial officer Alex Harvey said the business’s increased costs were mostly driven by increased revenue,investments in technology and compliance including ESG reporting and cyber risk management.
“Since the 2022 financial year,our headcount and costs have been going up a lot,” he said. “A chunk of that is revenue-driven,and a lot of what we’re doing is investing in our digital platform because we’re trying to upgrade our platform to be more competitive. And then,obviously,regulatory compliance is the third big area we’ve been investing a lot in.”
UBS analyst John Storey said Macquarie had a “sizeable earnings miss” with its net profit numbers about 20 per cent below his expectations.
“The overall guidance for the year suggests some stabilisation in second-half earnings,but overall,we would expect the market to continue to cut earnings expectations for Macquarie,” he said. “The only silver lining,in our view,is the buyback,which might indicate Macquarie views the stock as undervalued.”
Macquarie said it “continued to maintain a cautious stance,with a conservative approach to capital,funding and liquidity” as it monitors global economic conditions,inflation,interest rates and geopolitical events.
The company announced an interim ordinary dividend of $2.55 a share,down from a final dividend of $4.50 last year.
Shares in Macquarie increased 1.3 per cent to $162.50 each at the close.
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