SYDNEY - Macquarie Bank, Australia's largest investment bank, will earn no performance fees from investment funds it manages for the first time in 5 years, after their shares fell and they under-performed benchmarks.
The bank, whose profit quadrupled in the past four years, earned A$245 million ($266 million) of such
fees a year earlier.
It earned "nothing of substance" in the six months ended December 31, chief financial officer Greg Ward said yesterday.
Sydney-based Macquarie had A$63.9 billion of property and infrastructure assets in its funds at September 30. It is paid bonuses and fees based on asset values for funds such as Macquarie Infrastructure Group and Macquarie Airports, which will pay no performance fees in the second half after their shares fell.
"It's clearly an issue," said Rob Patterson, who holds A$258 million of Macquarie Bank shares at Argo Investments. "Performance fees will come and go, but the assets they manage have also grown so base management fees will increase."
Shares in Macquarie Infrastructure, the world's largest toll-road developer, fell 14 per cent in the six months, compared with an 11 per cent gain in the S&P/ASX 300 Industrials Accumulation Index. Macquarie Airports, the No 2 publicly traded airport owner, fell 11 per cent, against a 6 per cent rise in the MSCI World Transportation Infrastructure Index.
The absence of performance fees won't affect a forecast by chief executive Allan Moss in November that full-year profit will "at least match" a record A$823 million in 2005.
Macquarie last month made a hostile bid for London Stock Exchange.
Macquarie Bank fell 68Ac, or 1 per cent, to A$70.32.
- BLOOMBERG
