Trust exercise. It's a good thing Macquarie CEO Shemara Wikramanayake has built up a lot of goodwill with shareholders. On Friday she handed them a 10.8% return on equity for the year to the end of March, the Australian investment bank's worst annual performance in more than a decade. Yet she kept pay and other expenses flat, passing all the pain to shareholders.

Granted, Macquarie churned out A$3.5 billion ($2.3 billion) in earnings - its third-highest on record. But since March 2021 its equity capital base has shot up by 55%, meaning the bank has to bring in more money just to generate the same returns. Over the same period total headcount increased by a quarter.

Combined, that compounds the impact of any fall in revenue: last year's 12% drop slashed a third off the bottom line - the steepest fall in 15 years. In tough times, U.S. peers like Goldman Sachs and Morgan Stanley tend to keep their compensation costs as a percentage of revenue steady, if not lower the ratio, to show that well-paid traders and M&A bankers are taking a hit too.

By contrast, Macquarie's jumped from 40% to 46%. Wikramanayake points out that bonuses were lower, but higher fixed salaries and previous years' deferred compensation kept the overall number sticky. Had the ratio stayed at the previous year's level, earnings would have been almost A$700 million higher, boosting return on equity above 13%.

That would still have been lower than the mid-teens or more that Wikramanayake has cranked out every other year since taking the helm in 2018. Her track record, though, is working in her favour. Even after falling more than 2% on Friday, the $47 billion bank's shares trade just above 2 times trailing book value, roughly double what a bank earning a sub-11% return might expect.

That implies shareholders are taking Wikramanayake's bet that last year's disappointing performance was a blip. If the stock drops in the coming months, it's a sign that they have changed their tune - and that it's time for her to start cutting costs.

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Macquarie on May 3 reported net income for its financial year to the end of March of A$3.5 billion ($2.30 billion), 32% lower than the previous 12-month period. Return on equity for the year was 10.8%. Revenue decreased 12% to A$16.9 billion.