MBL macquarie bank limited

record result (the Age)

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    Macquarie on track to a record result
    November 15 2002
    By Sharon Kemp

    Macquarie Bank partly redeemed itself in market eyes yesterday with a better-than-expected half-year net profit of $183 million setting up the bank for a record full year.

    A doubling of fees from advisory work in the six months to September 30 answered months of criticism that Macquarie was too reliant on its strategy of starting and managing specialist funds to generate income.

    Shares in the Sydney bank rose 91 cents to $22.35 from a session high of $23.00 yesterday, but remain 41 per cent below a 52-week high of $37.88.

    Yesterday, Macquarie chief executive Allan Moss reassured investors about the bank's specialist infrastructure fund Macquarie Airports, predicting MAp's major asset, Sydney Airport, would exceed prospectus forecasts this financial year.

    Nevertheless, he admitted MAp's securities had been disappointing and would require further executive attention.

    Macquarie also moved to silence critics of its corporate governance practices, particularly the bank's relatively high proportion of executive directors and its habit of appointing directors to specialist funds from which it extracts fees.

    Chairman David Clarke promised that the bank would appoint two new independent directors to Macquarie's board by June 30 next year.

    He also announced the creation of a corporate governance committee, stepped down as chair of the remuneration committee and retired four directors from the boards of companies Macquarie has listed or spun off.

    Helen Nugent will leave the MAp board, Kevin McCann will retire from the board of Macquarie Communications Infrastructure Group and John Allpass and Barrie Martin will depart the Macquarie Life board.

    Net fees and commissions contributed operating income of $662 million in the first half of 2002-03, a jump of 28 per cent.

    From specialist funds, Macquarie made $235 million, including fees earned by advising on acquisitions.

    Macquarie also underwrote a $644 million share sale by MAp but wrote down its stake in the fund by $59 million.

    The increase in the bank's fee income reflects the rise in Macquarie's involvement in corporate deal activity, income from which Mr Moss said would taper off in the second half.

    Mr Moss said Macquarie's second half would beat the previous corresponding period, but be lower than the first half.

    Macquarie will pay a first-half dividend of 41 cents, unchanged from last year but franked at 85 per cent compared with 70 per cent, payable on December 20.
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