Shares in Macquarie Bank rocketed $1.13 to $49.13 this morning after the Millionaire Factory reported a better than expected 68% increase in net profit to a record $881 million for the year to March 30. Macquarie Bank is now Australia’s fifth most profitable bank, and the most profitable based on return on equity. The investment bank and specialist fund manager has easily surpassed St George Bank’s $717 million for 2004 and the rate indicated in its interim of $416 million revealed earlier this month.
Macquarie has also rewritten the executive remuneration record books, with its top seven execs taking home a massive $57 million between them. Executive chairman David Clarke earned a total of $6.35 million whilst CEO Alan Moss pocketed a record $12.662 million. Among the five senior managers, Nick Moore made $11.36 million, treasury boss Andrew Downe $7 million, Otto Weiss $10.13 million, Bill Moss $5.23 million and Richard Sheppard $4.23 million.
This is salary, super, retirement, incentives and value of options. It doesn’t count income on their shareholdings or from holdings of units and investments in Macquarie’s other vehicles, such as Macquarie Infrastructure and Macquarie Airports.
Despite a one-off $300 million boost from the restructure of the Macquarie-Goodman property group, the bank said it was aiming to repeat this lofty profit in the current year. Operating income surged by 55% to $3.6 billion meaning the bank’s 6,556 staff are costing an average $250,000-plus for the year ended March 30. Return on equity jumped to 30% from 22%. That’s well ahead of the ANZ, St George and Westpac. In fact it was a cascade of money. Total dividend up to a massive $2.01 with a higher final and a special of 40c a share. That will please staff and management with their shares. We’ll have to watch how many of the in-the-money options are converted shortly.
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The conversion of Macquarie into an international specialist funds manager continued as 37% of earnings came from offshore where the bank now has more than 1,700 staff. Performance fees of more than $300 million were paid by the likes of Macquarie Airports and Macquarie Infrastructure Group. Money just poured out of virtually every deal in performance fees, higher profits, extra interest income. The only businesses that didn’t do all that well were regular funds management and share broking.