Macquarie Bank expects strong increase in first half profit

19 September 2006

Macquarie Bank Deputy Managing Director, Mr Richard Sheppard, said today the Bank expects net profit for the six months ending 30 September 2006 to be strongly up on the prior corresponding period.

Speaking ahead of investor meetings beginning later this week in the USA, Canada and Scotland, Mr Sheppard said the final result for the six months ending 30 September 2006 is still uncertain and will be dependent on market conditions and the extent of the successful completion of major transactions on, or before, 30 September 2006.

“Given those qualifying statements, however, we expect at least a 20% increase in net profit on the prior corresponding period, excluding the realisation of the Bank’s holding in the Macquarie Goodman Group (MGQ). Including the MGQ realisation, the net profit increase is expected to be at least 40%,” he said.

“While it is too early to provide further guidance on the net profit for the 2^nd half, we expect that, as previously indicated, the full year profit for the twelve months ending 31 March 2007 will be up on the prior year, subject to market conditions,” added Mr Sheppard.

In the Bank’s previous guidance provided to the Annual General Meeting in July 2006, Mr Sheppard said the Bank had advised that equity market sentiment had deteriorated globally and had the potential to negatively impact many of the Bank’s businesses, if sustained. Mr Sheppard noted, however, that market conditions have held up well during the period.

Mr Sheppard today reiterated the Bank’s AGM guidance for the full year ending 31 March 2007; namely, that subject to market conditions, the Bank expects:

• An increase in transaction levels
• Most trading businesses will benefit from geographic and product expansion but Asian market conditions may continue to negatively impact equity derivatives
• Substantial raisings – unlisted international specialist funds
• Performance fees at current relative prices will not be material
• Asset disposals may be a swing factor

Expected highlights of the half-year result

Mr Sheppard said the contribution to profit from all of the Bank’s operating Groups for the first half is expected to be up on the prior corresponding period.

“The first half result will benefit from previously announced realisations – Dyno Nobel, oil and gas assets and the Macquarie Goodman Group (MGQ),” he said.

Mr Sheppard noted that the Bank expected the tax rate to be lower than the prior corresponding period due to offshore tax rate differentials.

He said the Bank expected to continue to benefit from staff growth and increases in market share.

Update on the proposed Non-Operating Holding Company (NOHC) structure

At the Annual General Meeting in July the Bank announced it was outgrowing the conventional banking regulatory model.

Mr Sheppard said the Bank’s diverse international businesses were now growing faster than its domestic banking business, and a significant portion of the Bank’s businesses were not strictly banking in nature.  Existing commercial banking regulations do not readily accommodate this growth in the non-banking businesses.

“We have announced that we are examining the establishment of a NOHC, which would own both banking and non-banking businesses. Other Australian banks are also examining such structures,” said Mr Sheppard.

“We are in ongoing discussions with the Australian Prudential Regulation Authority and propose to make a formal submission by the end of September 2006. We expect to provide further information about the restructure in November 2006,” he said.

For further information, please contact:

Matthew Russell
Public Relations
Macquarie Bank Limited
Tel: (612) 8232 4102
Mobile: (614) 1069 9532

Erica Sibree
Investor Relations
Macquarie Bank Limited
Tel: (612) 8232 5008
Mobile: (614) 1302 6309