* Record net operating income from fixed income, currencies and commodities unit
* Strong commodity earnings place bank among top peers in the sector
* Analysts caution similar growth may be hard to replicate (Rewrites throughout to add details and quotes)
By Cezary Podkul
NEW YORK/SYDNEY, May 2 (Reuters) - Macquarie Group earned A$1.1 billion ($1 billion) in net income from commodities trading in its financial year to March, propelling the Australian bank into the big leagues of much-larger American rivals who have long dominated the sector.
In its first results since losing the battle to buy JPMorgan Chase & Co's physical commodities business, the biggest on Wall Street, Macquarie said its net trading income from commodities surged nearly 60 percent as the coldest winter in three decades in the United States boosted power and gas prices.
Client hedging and trading in its metals and energy capital division were also up, Macquarie said.
Goldman Sachs and Morgan Stanley, and oil majors including BP Plc have also reported stronger trading results as the Polar Vortex slammed the United States.
The one-off weather impact may make it tough to repeat the growth in the cyclical commodities business, but the gains underscore Macquarie's ambitions in commodities as Wall Street and European rivals retreat due to regulatory scrutiny and weak margins.
A commodities business of that size would rank among the world's top five banks dealing in everything from oil, copper and wheat, said George Kuznetsov, head of research and analytics at Coalition, a UK consulting firm that tracks banks' trading income.
The top 10 banks tracked by Coalition together made $4.5 billion trading commodities in 2013, the firm said in a report earlier this year.
For Macquarie, commodities' share of the A$1.7 billion in net income from fixed income, currency and commodities (FICC) - the bank's trading arm - is now 67 percent, chief executive Nicholas Moore said during an analyst presentation.
That is up from about 55 percent last year. It is also well above any bank tracked by Coalition, Kuznetsov said.
The strong gains in U.S. energy markets helped lift Macquarie's overall net profit over the A$1 billion ($928 million) mark for the first time in four years.
Macquarie's commodities risk exposure, known as Value-at-Risk (VaR) averaged A$13 million ($12 million) in its full year, up from A$10 million a year earlier, still much smaller than its Wall Street rivals. Goldman Sachs reported an average commodity VaR of $19 million in 2013 and Morgan Stanley $21 million.
"There are a lot of competitors in the commodities businesses... Some are leaving, but I can assure you there's more than enough remaining in that space," Macquarie chief executive Moore told analysts.
Macquarie's U.S. physical natural gas marketing business is the fourth largest in North America and the firm is the biggest non-producer in the space.
Just months after losing out to Swiss trader Mercuria for JPMorgan's physical operations, Macquarie said it stands by plans to grow through self-funded growth initiatives and acquisitions. The past decade has seen it make a handful of bite-sized U.S. acquisitions.
It bought a natural gas trading desk, Cook Inlet Energy Supply, in 2005, and followed that with a larger deal for Constellation Energy Partners' downstream natural gas trading operations in 2009. It began trading physical power in 2007 and, eventually, physical oil in 2010.
Macquarie expects the segment to benefit from better market conditions in the medium term, but analysts say weather-related trading gains in natural gas markets may not be easily replicated in coming years.
"I'm sure they got some lift from this but the thing is, does it mean that it's a permanent change? I very much doubt that," said Al Troner, president of Asia Pacific Energy Consulting in Houston, Texas.
Macquarie's FICC division, which provides trading, research, sales and financial services across the globe, posted net profit of A$726 million for the year-ended March 2014 compared with A$563 million a year ago.
The combined annual net profit for the company rose nearly 50 percent from a year ago to A$1.27 billion ($1.17 billion).
$1 = 1.07715 Australian Dollars Additional reporting by Jacob Gronholt-Pedersen in Singapore and Swati Pandey and Melanie Burton in Sydney; Editing by Grant McCool