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Macquarie's uneven results

02 November 2015 4:46PM
Several of Macquarie Group's divisions, including its corporate and asset finance business, suffered half-on-half falls in income and net profit during the six months to September.Macquarie's headline number was a net profit of A$1.07 billion for the half - up 58 per cent on the previous corresponding period.However, the profit contributions of corporate and asset finance, Macquarie Capital and the commodities and financial markets division were down, compared with the March half.Corporate and asset finance division contributed $611 million to group earnings - an increase of 31 per cent over the previous corresponding period but down five per cent on the March half.Macquarie Group chief financial officer Patrick Upfold said the division sold rail assets in the United States in the 2015 financial year and sold assets from its US equipment leasing business in the March half.The impact of these one-off gains was reflected in the lower half-on-half performance of the division in the latest half.The corporate and asset finance division had $1.7 billion of portfolio additions in the half, including $900 million of new corporate and real estate primary financings, $700 million of corporate loans acquired in the secondary market and $100 million of commercial real estate loans acquired in the secondary market.Higher interest income in the lending portfolio was mainly due to the performance of loans acquired at a discount, the favourable impact of the depreciation of the Australian dollar and income from the sale of loan assets.The asset finance portfolio was boosted by the acquisition of Advantage Funding in July.One reason for the weaker half-on-half performance of Macquarie Capital was the big increase in impairments and provisions - up from $41 million in the March half to $129 million in the September half. The increase related to underperforming principal investments.In the banking and financial services division, the mortgage portfolio grew by 13 per cent over the half and the business loan portfolio grew by 13 per cent. Deposits were up four per cent on the March half.Banking and financial services contributed net profit of $170 million to group earnings for the half - up 21 per cent on the previous corresponding period and up 18 per cent on the March half.Overall, with more than 70 per cent of its income now coming from overseas markets, foreign exchange movements have a big impact on Macquarie's earnings. Chief executive Nicholas Moore said about a quarter of the increase in earnings in the half could be attributed to currency movements.

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