Macquarie Says First-Half Profit to Slump 35%; Shares Fall
Macquarie Says First-Half Profit to Slump 35% as Covid Hits
(Bloomberg) -- Macquarie Group Ltd., the Australian investment bank and infrastructure manager, said first-half profit will slump 35% amid the “uncertain” speed of recovery from the coronavirus pandemic.
“Market conditions are likely to remain challenging, especially given the significant and unprecedented uncertainty caused by the worldwide impact of Covid-19 and the uncertain speed of the global economic recovery,” the Sydney-based bank said in a statement Monday. It said it’s unable to provide “meaningful” earnings guidance for the full year.
The forecast suggests net income in the six months ending Sept. 30 will fall to about A$950 million, from A$1.46 billion a year earlier. That’s less than analyst estimates of A$1.1 billion, according to data compiled by Bloomberg.
Macquarie shares fell 4.9% in early Sydney trading, paring their rebound from March’s low to 67%.
In its markets-facing businesses, challenging market conditions are expected to continue to reduce the number of successful transactions for Macquarie Capital and increase the time to completion. Strong equity capital markets activity in Australia, where companies raised cash to bolster balance sheets through the pandemic, aren’t expected to continue, the bank said.
At the Commodities & Global Markets division, “strong” client activity in first quarter didn’t continue in the second quarter and isn’t expected to continue in second half, Macquarie said.
In it’s annuity-style businesses, while base fees at the asset management unit are expected to be broadly in line with last year, other income is expected to be significantly lower due to expected delays in timing of asset sales, and increased support for some airline clients of Macquarie AirFinance. The banking arm will also face increased provisioning to support customers through the pandemic.
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