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The more subdued performance, expected by analysts, has set Australia's largest investment bank up for its first fall in annual profit for 16 years.
New chief executive Nicholas Moore today appeared to inject a little more pessimism into the investment bank's outlook, saying it was "becoming increasingly challenging" to repeat last year's $A1.8 billion ($US1.75 billion) recent net profit.
Back in May, Mr Moore said: "The current state of financial markets means that it will be challenging to repeat last year's record performance, but this may be achievable."
Mr Moore today shrugged off suggestions that his latest comments meant the bank was moving away from the consensus analysts' forecast for a fiscal 2009 profit of about $1.698 billion.
"We're not actually changing our position markedly from where we were last time we spoke to the market," he told journalists ahead of the bank's annual general meeting today.
Mr Moore was also asked about the poor market performance of Macquarie's listed specialist funds and whether any more privatisations like the recent buyout of Macquarie Capital Alliance was on the cards.
He said each of the funds had its own board and management and was looking at its own circumstances.
"We don't have an overall global Macquarie-central review of what's happening," he said.
"It is very much a case-by-case, fund-by-fund review that's going on."
On a more positive note, Mr Moore told the annual meeting the group had made a solid start to the year, with all of its businesses operating profitably.
"We have an expanded capital base which is providing us with good earnings and remuneration expenses are down in including estimate profit share," he said.
"So we are looking at a solid first quarter albeit down on the record performance of last year."
Merger and acquisition activity levels had fallen globally, although the deal pipeline remained "reasonable" with good levels of activity in Australia and, to a lesser extent, Asia, Mr Moore said.
Equity market volumes in Asia had fallen 13 per cent in the first six months of calendar 2008 compared to the last half of 2007, and dropped nine per cent in Australia.
Mr Moore said economic growth in Australia should also remain "reasonable", supported by several strong fundamental factors such as ongoing growth in China.
At 1104 AEST, Macquarie shares were up $4.22, or 9.06 per cent, to $50.81 against a 1.3 per cent rise in the benchmark S&P/ASX200 index. Macquarie shares were trading above $90.00 this time last year.
In a slide presentation at the AGM, Macquarie said its share price performance had largely reflected global financials stocks over the last 12 months, not withstanding its "good operating performance".
Macquarie has been criticised by some commentators and investors for supposedly taking on too much debt and many believe its debt-fuelled specialist fund model is flawed.
"We continue to see over many of our businesses opportunities to grow our business organically, and we see no change to long standing group strategy," Mr Moore said.
The bank today reiterated it was well capitalised, with about $3.6 billion of excess capital, with no problem trading exposures and no material problem credit exposures.
The bank said previously that it had an average weighted maturity for its term debt of just under three years.
Macquarie last year booked a $293 million write-down related to its real estate investment trusts (REIT).
Mr Moore said today that despite their poor market performance, Macquarie's REIT's had a solid underlying performance with high occupancy, positive rental growth.
Still, Mr Moore said the group was pursing strategies including "selective asset sales" and "debt reduction and term extension/renewal".
"Notwithstanding the short term, our forecasting being difficult, we continue to be confident over the medium to longer term, given where our businesses are placed," he told journalists.
"We are seeing across all our businesses the benefits of organic growth and initiatives that have taken place."
AAP
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