The Macquarie Group Ltd (ASX: MQG) share price has come under pressure on Monday following the release of an update.
At the time of writing the investment bank’s shares are down 4.5% to $120.60.
What did Macquarie announce?
Ahead of its appearance at the virtual Jefferies Asia Forum this week, Macquarie released an update on its short term outlook.
According to the release, Macquarie expects market conditions to remain challenging in the near term. Especially given the significant and unprecedented uncertainty caused by the COVID-19 pandemic and the uncertain speed of the global economic recovery.
And while the company acknowledges that these trading conditions make short-term forecasting extremely difficult, it is providing guidance for FY 2021 this morning.
Macquarie currently anticipates its first half result to be down approximately 35% on the prior corresponding period. And although it expects an improvement in the second half of FY 2021, it is still guiding to a second half decline of 25% over the second half of FY 2020.
However, this remains subject to a large number of factors. These predominantly include the duration and severity of the COVID-19 pandemic, the speed of the global economic recovery, and global levels of government economic support.
In addition, other more traditional factors include the completion rate of transactions and period-end reviews, the impact of foreign exchange, potential regulatory changes and tax uncertainties, market conditions, and the impact of geopolitical events.
What does this mean for the full year?
In the first half of FY 2020 Macquarie posted net profit after tax of $1,457 million. For the full year it recorded a net profit after tax of $2,731 million, which implies a second half profit of $1,274 million.
Based on this, in FY 2021 Macquarie looks set to deliver a first half profit of $948 million and a second half profit of $955 million. This will bring its full year profit to $1,903 million, down 30.3% year on year.
One positive is that its capital position appears strong. Management advised that it continues “to maintain a cautious stance, with a conservative approach to capital, funding and liquidity that positions us well to respond to the current environment.”
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