* H2 net profit A$425 mln vs A$417 mln consensus
* FY 2012 profit down 24 pct to lowest since 2004
* Securities unit records $194 mln loss
* Says fixed-income, fx and commodity business getting better
* Shares rally more than 3 pct in flat market (Recasts, adds details, comments)
By Amy Pyett
SYDNEY, April 27 Australia's Macquarie Group said annual profit fell nearly a quarter to an eight-year low on losses in securities trading, but its shares rose on Friday as it flagged an improvement in earnings and said it would start a share buyback.
Known as the "Millionaires' Factory" before the global financial crisis, Australia's top investment bank, like its global peers, is grappling with the worst period in its trading history after investment bets soured and investors shunned risky trading products.
Macquarie, which cut global staffing by nearly 9 percent in the 12 months to March 31, said fiscal 2013 should better than 2012 if markets remained stronger.
"Conditions have been soft over the past six months, and there have been some improvements though, relative to the price, so people can see there is a bit of upward momentum there," said Angus Gluskie, a portfolio manager at White Funds Management.
Shares in Macquarie, which gets 60 percent of its income from operations outside of Australia, were up 3.2 percent in afternoon trade, outperforming a broader index that was down slightly.
But the shares remain more than 60 percent below their record levels in the heyday of 2007, and Macquarie said it would begin a 10 percent share buyback, which it announced last October to appease investors and help support its share price.
Macqaurie will start with a buyback of A$500 million shares, representing 5 to 6 percent of shares, with an intention to do up to 10 percent should market conditions be supportive.
Macquarie reported a second-half net profit of A$425 million ($440.8 million) versus A$553 million a year ago, just ahead of the A$417 million expected by analysts, based on full-year estimates polled by Thomson Reuters I/B/E/S.
Full-year profit fell 24 percent to A$730 million from A$956 million a year ago, its lowest since 2004 and in line with a profit warning in February.
Macquarie, which before the 2008 crisis would consistently beat expectations and was lauded for its financial innovations, is not alone in being hit by tough market conditions.
Goldman Sachs and Morgan Stanley have undertaken heavy cost-cutting to cope with weaker income as investors remain wary, equity markets struggle and access to credit is tight. Morgan Stanley posted losses for the past two quarters, while last year was Goldman's weakest year since 2008.
Macquarie's securities and capital businesses were the worst performers, as they are most heavily exposed to the uncertainty in the global market. The company said it was aiming to cut costs in the units by up to a quarter by the end of 2013.
Macquarie Securities recorded a net loss of A$194 million.
"The year to 31 March 2012 saw substantially lower levels of client activity in many of our capital markets-facing businesses caused by global economic uncertainty," Chief Executive Nicholas Moore said in a statement.
Moore has shifted Macquarie's focus from riskier banking products to annuity style businesses such as unlisted funds, retail banking, leasing and lending businesses, but is still facing pressure to cut staff sharply to help manage costs.
Macquarie said it had 14,202 staff in March 2012, down more than 1,350 from a year earlier.
The annuity businesses were a stand out for the group, reporting a 22 percent rise in earnings in 2012, while it said the fixed-income, currency and commodity trading business improved in the second half.
Dividend per share was 75 cents compared with 100 cents a year ago.
($1 = 0.9642 Australian dollars) (Additional reporting by Narayanan Somasundaram; Editing by Lincoln Feast and John Mair)