Macquarie's new CEO has some hills to climb
Macquarie reported record first-half earnings of A$2.48 billion, up 50%, as Shemara Wikramanayake retired and Greg Ward took over as CEO. Annualised return on equity was 13.8%, while the Australian regulator said it would oversee an assessment of the group’s capital calculations.
1. Record earnings, lower returns
Macquarie reported earnings of A$2.48 billion for the six months to the end of September, up 50% from almost A$1.7 billion a year earlier. Annualised return on equity was 13.8%, below the 15% to 18% the group generated annually at its peak a couple of years ago.
2. Several boosts may not recur
Trading gains, helped by volatility related to the Iran war, drove more than A$1.4 billion in net profit contribution from Commodities and Global Markets, more than 80% higher than a year earlier. A lower tax rate of 22.5%, down from 31.4%, boosted annualised return on equity by almost 2 percentage points, while A$626 million in asset-sale gains helped offset a decline in asset-management earnings. Investment-banking earnings fell 61%.
3. Regulatory scrutiny and succession
Shemara Wikramanayake retired after eight years as CEO, handing the role to Greg Ward. Australia’s prudential regulator said it would oversee an assessment of how Macquarie determines capital requirements for its non-bank businesses after identifying a miscalculation dating to 2019; a $100 million governance overlay has been put in place.
