Macquarie Group is on track to post its biggest profit in eight years as the lower Australian dollar and improved market activity bolsters its earnings.
The investment group has lifted its full year guidance, flagging a profit increase of between 10 and 20 per cent for the year to March 31.
Previously, Macquarie had expected net profit to be "slightly higher" than the $1.27 billion profit recorded in 2013/14.
The new guidance indicates a profit of up to $1.52 billion, its best performance since its record $1.8 billion profit in 2006/07, before the global financial crisis.
Macquarie shares bounded higher on the news, adding $2.96, or more than five per cent, to $58.25.
The group attributed its strengthened outlook to the lower Australian dollar and improved market conditions.
That would not be a surprise to most Macquarie watchers, CMC Markets chief market strategist Michael McCarthy said.
"We know that M&A pipeline has been building, we know market activity has picked up substantially and Macquarie is well known to be very well leveraged to the market cycle," he said.
While the Australian share market ended 2014 relatively flat, global markets had fared much better.
Mr McCarthy said Macquarie would have also benefited from an increase in trading volumes.
The lower Australian dollar would also have boosted earnings from overseas investments, he said.
Macquarie suffered through several years of weakness after the global financial crisis but has rebounded in the past two years, with its share price more than doubling since mid-2012.
Annual profit jumped 49 per cent in 2013/14 as markets lifted and the group enjoyed a one-off gain from the disposal of its remaining stake in Sydney Airport.
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