Macquarie chief Nicholas Moore is moving the bank away from riskier products. Photo: Wolter Peeters
Macquarie has reported a smaller-than-expected 18.4 per cent rise in first-half net profit as weak markets hurt, but Australia's top investment bank reiterated its full-year profits would top the year-ago figure, fuelling the stock.
The bank, which has $3.4 billion in surplus capital and is eager to grow its funds management business, did not mention any potential acquisitions in its stock exchange filing. Sources have said Macquarie is among bidders for Rabobank's asset management arm, Robeco.
Macquarie, which reported its lowest full-year net profit in eight years in April, said first half net was $361 million, up from $305 million a year ago but below the $375 million expected by analysts.
The bank's shares jumped 97 cents, or 3.25 per cent, to $30.80 in morning trade.
It reiterated it expected year-to-March 2013 earnings would be better than the year ago result, subject to market conditions, though its advisory and securities trading businesses were still bearing the brunt of turbulent financial markets.
Macquarie, which consistently beat estimates before the global financial crisis, is renewing its focus on stable businesses such as funds management to mitigate the cyclical nature of its advisory and trading units.
With weak markets, the bank has been cutting staff to control costs. It said total employees fell 5.2 per cent to 13,463 from 14,202 in March. This follows a 9 per cent cut in total employees for the year to March 2012.
Investment banks globally have also suffered and cut thousands of jobs. However Goldman Sachs and Morgan Stanley beat earnings estimates in their latest quarters as they reaped gains from trading.
"Macquarie's capital markets facing businesses, although continuing to face subdued market conditions, delivered a combined result that was up on (a year ago)," chief executive Nicholas Moore, who is leading Macquarie's move away from riskier products, said in a statement.
Analysts on average expect Macquarie to report a net profit of $858.6 million for the year ending March 2013 versus $730 million a year earlier.
Their estimates have dropped steadily, from more than $1 billion in April. Macquarie typically hands out profit warnings closer to full-year results.
The bank, which has flagged another full-year loss for its securities trading business, said the business lost $64 million compared with a loss of $194 million in 2011-12.
Shares in Macquarie, which is buying back $500 million worth of shares to lift its record low return on equity, have risen 25 per cent so far this year compared to a 11 per cent rise for the broader market.
It said it has bought back $251 million worth of shares under the buyback program.
The investment bank had no plans to sell its Asia cash equities business, and while it wants to invest its surplus capital, no acquisitions were imminent, deputy managing director Greg Ward said.
"We have been in the business (Asia cash equities) for a long, long time," Mr Ward said. "We have no plans to sell it."