SYDNEY (Reuters) - Australia's top investment bank Macquarie Group (AX:MQG) said on Thursday its net profit for the year to end-March 2016 will top the A$1.6 billion (769.6 million pounds) recorded in the previous year, its best annual profit since the 2008 global financial crisis.
The bank's annuity-style businesses and capital markets facing businesses improved "significantly" in the first quarter-ended June from the year-ago period, the bank said in a statement ahead of its annual general meeting.
"We are seeing the ongoing benefits of continued cost initiatives, our balance sheet is strong and conservative, and we have a proven risk management framework and culture," it added.
Macquarie, with its strong earnings growth and stable returns, has become a favourite with investors who are shunning Australia's "big four" lenders after a downbeat earnings season earlier this year.
Macquarie's shares have surged nearly 45 percent so far this year compared with a 3.8 percent rise in the benchmark index (AXJO) and gains of less than 5 percent for Australia's four big lenders, including Commonwealth Bank of Australia (AX:CBA) and ANZ Banking Group (AX:ANZ).
Business lending at its banking and financial services division jumped by a tenth to A$5.7 billion during the first quarter while its Australian mortgage portfolio - a staple business for Australian banks - rose by a similar level to A$27 billion.
Macquarie's capital market facing businesses were helped by higher volatility in energy markets which led to increased customer business during the quarter. Volumes were stable in foreign exchange and interest rate markets, while U.S. credit markets remained mixed due to global geopolitical uncertainty.
The quarterly result and firm guidance follow Macquarie's strategy to "de-risk" from its traditional investment banking operations and focus on more stable returns from activities such as retail banking and annuity-style businesses.
Under Chief Executive Nicholas Moore, the commodities business has also become an increasingly important part of Macquarie, which has grown its commodities trading through a handful of small-sized U.S. acquisitions.
Its tier-I ratio stood at 9.9 percent at end-June. It will need A$150 million additional capital to comply with new regulations that come into effect from July 2016.