Macquarie’s strength in global commodities trading has led to the business unit’s head earning 75 per cent more than the Australian bank’s chief executive after the division helped the company to a record annual profit in its financial year to the end of March.
A 54 per cent rise in net profit for the commodities business — which trades oil, gas and electricity, predominantly in North America — to A$6bn ($4bn) meant its boss Nick O’Kane saw his share of the profit soar to A $58mn from A$36mn a year earlier. His pay exceeded that of chief executive Shemara Wikramanayake — who earned A$33mn — for a second consecutive year.
Macquarie, whose business encompasses asset management, retail and investment banking and commodities, reported a 10 per cent rise in net income for the year to A$5.2bn as the performance in commodities offset a softer result at the core asset management business.
The bank maintained a cautious outlook despite a second year of record profit.
Glenn Stevens, chair of Macquarie, said the payment to O’Kane was due to the “time-honoured” profit-share model at the Australian business and reflected the executive’s work in establishing the commodities business over the past two decades. an exceptional year, so it is not a surprise that it is an exceptional number,” he said.
Macquarie, which drew 71 per cent of its profit from outside Australia during the period, derived 51 per cent of overall profit from commodities compared with 23 per cent for the better-known asset management operation, which specializes in infrastructure investment.
Assets under management increased 10 per cent to A$871bn, but the division’s profit over the year dropped 23 per cent to A$2.3bn, with the unfavorable comparison due to deal activity in the year before.
John Storey, an analyst at UBS, said the commodities business was the “standout performer” with a “vivid” outlook for further growth. The key question, he said, was the sustainability of the performance.
Macquarie raised its full-year dividend to A$7.50 from A$6.22 a share but lowered the ratio of profit it paid out during the year to 56 per cent from 60 per cent.
Wikramanayake said this was due to a more cautious outlook and the need to invest in its organic growth rather than building a war chest for deals.
“It behoves us to hold the capital for defensive reasons,” she said of the decision to increase its surplus capital to A$12.6bn.
The chief executive declined to comment on reports linking the company with an acquisition of British asset manager M&G.