UPDATE 1-Australia's Macquarie on track for profit rise; tax rate weighs
* Macquarie reiterates guidance for FY 2014 profit gain
* Sees tax rate near last year's 38.5 pct
* Shares underperform, down 2.7 pct (Adds company comments, details, share price)
By Jackie Range
SYDNEY, July 25 (Reuters) - Macquarie Group Ltd, Australia's top investment bank, indicated it was on track to increase its full-year net profit but said its tax rate would remain near last year's high level, pushing its shares down almost 3 percent.
Macquarie, which has been increasing its position in lower risk businesses such as unlisted funds, retail banking and leasing, said those annuity style businesses were up on the first quarter of last year and the prior quarter.
The bank's capital markets facing businesses, such as its securities group, were also up significantly on a subdued first quarter last year, Macquarie said in a statement on Thursday to accompany its annual general meeting.
"The FY14 (full year 2014) result for the Group is expected to be an improvement on FY13 provided market conditions for FY14 are not worse than those experienced over the past 12 months," the company said, reiterating earlier guidance.
However, Macquarie said it expected its tax rate to be in line with last year's 38.5 percent, which was up 10 percentage points from a year earlier, weighing on its share price.
The stock traded down 2.7 percent, underperforming a 0.3 percent fall in the benchmark S&P/ASX 200 Index.
In the financial year that ended in March, the Sydney-based bank made a net profit of A$851 million ($783 million). Analysts expect, on average, a net profit of A$1.1 billion this year.
Asked about the outlook for global capital markets, Macquarie Chief Executive Nicholas Moore said that "overall I think we feel more confident on the market position today than we did this time last year."
He pointed to the strength of the recovery in the U.S. economy and said the bank feels more confident about Europe compared with a year ago.
"The negative of course out there is ... the perceived weakness in China and here in our local market," he added.
More than 60 percent of Macquarie's operating income last year, once impairment charges had been subtracted, came from beyond Australia. That means the bank's earnings are sensitive to movements in the Australian dollar, with an average 10 percent movement impacting earnings by some 6 percent, Moore said. In the past three months, the Australian dollar has sunk about 10 percent against the U.S. dollar.
($1 = 1.0863 Australian dollars) (Reporting by Jackie Range; Editing by Eric Beech and Chris Gallagher)