The Macquarie Group Ltd (ASX: MQG) share price is falling in sympathy with the market today, but the sentiment could turn this Friday when it hands in its earnings report.
Shares in the investment bank tumbled 2.3% to $202.33 during lunchtime trade when the S&P/ASX 200 Index (ASX: XJO) shed 1.7%.
The market is under pressure following large falls on Wall Street on Friday, although JPMorgan is tipping a good profit result from Macquarie on 6 May.
What to expect from Macquarie's profit results
That is when the bank is scheduled to report its full-year result. The broker is highlighting a few key areas to watch.
"While [Macquarie] hasn't provided full-year guidance, divisional outlook commentary implies very strong earnings growth," said JPMorgan.
"We forecast FY22 NPAT of $4.496b (in line with consensus), +49% y/y, with a final div of 360cps (56% payout)."
Earnings growth drivers
The final dividend estimate represents a 7.5% increase over this time last year when management paid $3.35 a share.
The strong result is driven by a few factors. The group's Commodities and Global Markets (CGM) division is tipped to benefit from very high commodity prices and price volatility.
The broker reckons this business will deliver a 27% uplift in income in FY22. That's above the implied growth rate of 15% to 25%.
Macquarie's revenue will also be boosted by the Macquarie Capital division. This business is set to benefit from higher asset sale gains, especially in green energy assets.
Additionally, the group's Banking and Financial Services (BFS) arm is also forecast to deliver ongoing growth, according to JPMorgan.
Key risk areas with Macquarie's earnings report
But it isn't all good news. Uncertainty and weakness in the Macquarie Asset Management (MAM) business could weigh.
"The only division where we see lower earnings hoh [half-on-half] is MAM, due to non-recurrence of one-off income," said the broker.
"Given macro uncertainty, we think it is unlikely MQG will give FY23 guidance at this result (a repeat of last year)."
What is the Macquarie share price worth?
The broker pencilled in a 6% drop in Macquarie's FY23 net profit to $4.2 billion, which is close to consensus estimates.
Despite this, JPMorgan recommends the Macquarie share price as "overweight". Its 12-month price target is $227 a share.
