July 25, 2012 / 1:16 AM / 5 years ago

UPDATE 1-Macquarie says markets business hurting, profit recovery ahead

* Sees improved FY 13 results

* Says Q1 better than year ago but lower than Q4 2012

* Advisory and trading business subdued; securities unit may post full-yr loss

* No comment on Dexia asset management bid

* Macquarie shares down 1 pct in early trade, in line with broad mkt (Adds details of performance, shares, investor comment)

SYDNEY, July 25 (Reuters) - Australia's top investment bank Macquarie Group said its June quarter earnings were down compared with the preceding three months as markets slumped, but reiterated it expected this year's net profit to recover from 2012's eight-year low.

Macquarie, which is renewing a focus on stable businesses such as funds management to mitigate the cyclical nature of its advisory and trading units, said it had the capital for making acquisitions, though Chief Executive Nicholas Moore declined to comment on bidding for Dexia's asset management arm.

The bank, which has A$3.5 billion ($3.6 billion) in surplus capital, said its securities trading unit could post a loss for the year. Its lending, leasing and funds unit were flat for the quarter.

The forecast was similar to what it made same time last year, although Macquarie cut estimates later in 2011, blaming weak markets.

"There isn't any surprise. Going ahead a lot depends on markets," said Angus Gluskie, chief investment officer at White Funds Management, which owns more than 200,000 Macquarie shares, according to Thomson Reuters data.

"Markets are already poor and if corporate activity continues to pick up their profits are likely to benefit."

Known as the "Millionaires' Factory" before the global financial crisis, Macquarie, like its global peers, is grappling with the worst period in its trading history after investment bets soured and investors shunned risky trading products.

Analysts on average expect Macquarie to report a net profit of A$913 million ($937.5 million) for the year ending March 2013 versus A$730 million a year earlier, according to Thomson Reuters I/B/E/S.

Their estimates have dropped steadily, from more than A$1 billion in April. Macquarie gives broad guidance about its operations but does not disclose financial results on a quarterly basis.

READY FOR ACQUISITIONS

Chief Executive Moore, in a teleconference, said Macquarie had the funds and capital for acquisitions though potential deals were few.

"We do like the funds management industry. If we do see funds management opportunities or opportunities in other sectors that will enhance what we have, we do have the capital and we do have the funding," he said while declining to comment specifically on the Dexia asset-management buy.

Last month, Franco-Belgian group Dexia said three buyers remained for its asset management arm that it wants to sell for about 750 million euros ($906.38 million), sources told Reuters.

Macquarie is linked to potentially all mid-sized asset management deals globally. Its last big acquisition in the sector was U.S.-based Delaware Investments for $428 million in 2010. The deal added $125 billion to its funds under management.

WEAK MARKETS

Macquarie said in a statement on Wednesday markets businesses such as advisory and trading were subdued as it flagged another loss for its securities-trading business that lost A$194 million in 2011/12.

"The securities unit is a cyclical business. When you are in the downcycle, it feels like a drought. We know the drought will turn but we don't know when it will turn," said Moore who has shifted Macquarie's focus from riskier banking products to annuity-style businesses such as unlisted funds and retail banking.

Macquarie's advisory and trading businesses have borne the brunt of weak markets that have pushed the bank, which constantly beat estimates before the global financial crisis, to cut staff.

Macquarie did not reveal staff numbers in the statement though it said operating expenses were down nearly a tenth. It cut global staffing by nearly 9 percent in the 12 months to March 31 to 14,202.

Global rivals, including Goldman Sachs Group Inc, Morgan Stanley, Bank of America Corp and Deutsche Bank AG, are all embarking on fresh rounds of staff cuts in their trading and underwriting businesses.

Shares in Macquarie were down 1 percent in early trade, in line with the broader market. They were up 2.1 percent for the year based on Tuesday's close, supported by A$120 million in share buybacks out of its A$500 million buyback plan.

The shares, however, are down nearly three-quarters from their peak in 2007. ($1 = 0.9739 Australian dollars) ($1 = 0.8275 euros) (Reporting by Narayanan Somasundaram; Editing by Paul Tait and Muralikumar Anantharaman)

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