Australia's dominant investment bank, Macquarie Group, has powered to a record full-year profit of $3 billion, buoyed by its global market and commodity trading businesses.
The so-called "Millionaires Factory" reported a 17 per cent increase in its full-year net profit for the 12 months to the end of March of $2,982 million, up from $2,557 million last year.
While the retail banking sector is struggling — weighed down by mounting costs from the banking royal commission, sluggish lending and flatlining revenues — Macquarie's global diversity delivered a strong 17 per cent growth in net income to $12.7 billion, partially offset by a 19 per cent increase in costs.
While the retail banks' remediation costs are now counted in billions, Macquarie said it faced just a $3 million bill to compensate clients after its "fee for no service" review.
The international businesses now account for two-thirds of Macquarie's income, while the remainder, or $4.3 billion, was generated at home.
Funds under management broke through the half-a-trillion-dollar-mark at $551.3 billion, up 11 per cent on last year, largely due to global infrastructure investments and the managed funds business.
Macquarie's capital base also strengthened allowing it increase its dividend by 10 per cent to $5.75 a share — also a record.
However, investors were more focussed on the guidance for 2020 that profits may be "slightly down".
Shares tumbled almost 6 per cent $128.20 in early trade, by 10:15am (AEST).
But Macquarie chief executive officer Shemara Wikramanyake said the results were evidence of the success of a diverse business mix.
"Overall, the group's result for FY20 is currently expected to be slightly down on FY19," she said.
"Macquarie remains well positioned to deliver superior performance in the medium due to our deep expertise in major markets, strength in diversity and ability to adapt the portfolio mix to changing market conditions."
Volatility drives profit
Ms Wikramanyake said the strong showing in the commodities businesses was driven by high levels in volatility across the sector last year.
Along with commodities, another "markets facing" business, Macquarie Capital, delivered a 76 per cent increase in profit to $2.9 billion profit, after a particularly strong second half.
Macquarie enjoyed a profitable year in deal making, with its advisory and capital raising wing reporting a 53 per cent jump in profit to $2.3 billion.
Macquarie Capital advised Wesfamers on its $1.9 billion demerger of Coles and was central in the $3.3 billion merger between Nine Entertainment and Fairfax Media.
However, Macquarie's most valuable deal was in the US, with its exclusive role in the $9.4 billion takeover of BMC Software by private equity outfit KKR.
UBS analyst Jonathan Mott said there were strong gains in sale and performance fees, but there was a large level of volatility across most revenue items.
"[The] strong result was driven by more volatile line items such as gains on sale and performance fees," Mr Mott said.
Mr Mott said Macquarie's forward looking guidance is generally conservative, however the results point to an around 7 per cent cut in consensus forecasts from the analyst community.
