It’s a good thing that Macquarie Group shares are suspended while it tries to raise $700 million — otherwise the market and the shorts might have had a nice fat target to attack, judging by the bank’s 2009 full year result released this morning.

In fact, it’s also a good thing that the Federal Government introduced the guarantee for Australia’s banks during the dark days of October, when the world seemed on its way to collapse.

Without the guarantee, and the ban on shorting, Macquarie would have had a tough time surviving.

If the bank had not been in the process of raising capital now, this result would have seen its shares attacked by the shorts. The figures in the report make for gloomy reading.

It’s a long way from the last capital raising, two years ago, when Macquarie tapped the market for $750 million and the shares traded as high at $97.

The loss in value since then has shattering for the bank dubbed the Millionaires’ Factory.

The 2009 result was unremittingly bad, despite the spin put on it by some analysts and others. This presentation gives enough flavour, especially the first page of the Overview. It covers MacBank management’s discussion and analysis.

The first page says it all: the second half to March and the full year figures are bad: down, down, down.

Earnings are down 52% with a $2.5 billion in writedowns on assets — most of them the company’s satellites like Macquarie Media and Macquarie Airports.

The net profit for the 12 months to March 31 was $871 million, compared with $1.8 billion a year earlier.

It may have been close to Macquarie’s guidance for full year profit to halve to about $900 million, but the figure was the worst for the bank since 2005 when $732 million was earned.

Full year operating income slumped 33% to $5.53 billion, but that’s a bit worse than what the market had been led to expect. Many analysts were thinking around 15% to 20%.

Revenue is the lifeblood for any business, more so from an investment bank like Macquarie. It’s an indication deal flow is dead or dying, that the bank can’t get trading profits and that other forms of income, such as management fees, are depressed. No revenue, no earnings, no bonuses.

Costs were down 25%, so Mr Moore and his bean counters couldn’t chop costs as quickly as revenue was falling, which is not a sustainable situation. More costs are going to have to come out this year if the bank is to trade at current levels with a degree of comfort.

Macquarie declared a final dividend of 40 cents a share, down from $2 in the same period in fiscal 2008, taking the total for the fiscal 2009 year to $1.85.

That small cut is clearly not enough, if the 24% and 25% cuts by the NAB and the ANZ this week are any guide.

Many of Macquarie’s remaining 12,716 employees at March 31 (down 1,172 in the year) are shareholders in the bank, and with bonuses chopped savagely because of the earnings drop and underperformance, a nice healthy dividend check will go down nicely and make up for the shortfall in the envelope today.

“Macquarie has remained profitable despite a year of challenging global market conditions,” CEO Nicholas Moore said in a statement (He succeeded Allan Moss as CEO and has to preside over the bank’s first and most terrible profit downturn and the worst trading year in history for all the bank’s employees).

Mr Moore said “The year’s result was marked by a significant number of one-off items resulting from these market conditions.”

They were, but many of these one -offs were write-downs in the value of the Macquarie funds listed on exchanges: it was the much admired and discussed Macquarie model finally catching up with the bank and partly eating it as easy credit vanished, cash became king and silly market values became a memory.

Mr Moore said market conditions remained challenging and making short-term forecasts was difficult.

“While there were some early signs of markets stabilising in March and April, significant uncertainties remain and it is still too early to make any judgments on sustained market improvements,” he said in a statement.

The bank’s shares have run up nicely during the rebound, adding a nice $1.60 yesterday ahead of the fund raising halt which was announced late Thursday, after trading had ended.

That drove the price up to $33.84, the highest they have been since early January. And it was a nice gain to try and get the issue price up to the rumoured $28-$30 that Macquarie would like to see and a long way away from the $23 to $25 that hard-nosed fund managers want to pay.

It’s not that they don’t expect Macquarie to be around — they do. It’s just that they reckon the boot is on the other foot now with Macquarie having a track record of playing it tough in the market and in capital raisings for other companies. There’s some small element of making the bank pay by giving up some value to would-be buyers.

After all, Macquarie is no longer in a position of strength: it’s a supplicant.

It pays to remember the string of Macquarie deals where it has mined the market at the expense of someone else: BrisConnections is only the latest and most current example.

Peter Fray

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