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Macquarie has warned global trade is under “the most intense pressure for decades”, with the Australian financial services giant predicting tariffs and a rethink of decarbonisation strategies in some countries could hit economic growth.
The asset manager on Friday reported a 5 per cent increase in annual profit, slightly higher than market expectations, crystallising further bumper payouts for top executives.
The Sydney-based company, known colloquially as “the Millionaires’ Factory” and with A$941bn (US$602bn) in assets under management, said net profit in the year to March rose to A$3.72bn, ahead of analyst expectations collated by Bloomberg of A$3.69bn.
Revenue increased 2 per cent to A$17.2bn against an “increasingly complex global backdrop”. Macquarie’s shares opened 4 per cent higher in Sydney on the news.
The performance drove big payouts for Macquarie executives. Shemara Wikramanayake, chief executive, recorded a dip in overall pay to A$24mn from A$25.3mn in the previous year, due to a reduced profit share.
Simon Wright, who last year took over the commodities and trading division that has produced stellar pay for its leaders — outstripping some of Wall Street’s best-known executives — earned A$22.7mn. Asset management head Ben Way earned A$12.7mn, compared with A$11.3mn a year earlier.
Yet the company sounded a note of caution for its new financial year with US President Donald Trump’s imposition of tariffs and a pushback against renewable energy — a key investment area for Macquarie — taking place in markets such as the US.
Glenn Stevens, the former Australian central bank governor who is now Macquarie’s chair, said: “Not only are several jurisdictions recalibrating their decarbonisation plans, but freedom of trade in goods and services is under the most intense pressure for decades.”
In the year to March, Macquarie’s asset management and financial services divisions drove profit growth, as its commodities and global trading division, a powerhouse in recent years, recorded a more subdued performance due to lower levels of oil and gas trading.
Macquarie has been positioning its operations to deal with market turbulence in recent months and agreed to sell its international asset management arm to Japan’s Nomura in April, as it continues to focus on private markets outside Australia.
However, the company has come under increased regulatory scrutiny in its home market. The corporate regulator has told it to appoint an independent expert to oversee its compliance structures due to continued concerns about its derivative trading in recent years.
The Australian Securities and Investments Commission said this week it did not want a “Band-Aid fix” to the problems it had identified at Macquarie.
The annual report, issued on Friday, said Macquarie was reviewing its risk framework. “Where shortcomings are identified, the board insists on accountability,” it said.
Wikramanayake said that Macquarie remained “well positioned to deliver superior performance” in the medium term but that it retained a “cautious stance” in the short term, given market volatility, foreign exchange movements and the uncertain timing of asset sales.
Thomas Strong, an analyst at Citi, said that the company’s outlook looked “slightly soft relative to market expectations”, but that investors were likely to have factored that in already.
https://www.ft.com/content/4d8caeee-b74f-4264-bc0c-54b5be9bb963
