Macquarie 2H10 profit up to 10% higher than 1H10
Macquarie Group Limited (MQG) said at its Operational Briefing today that it estimates second half profit to be broadly in line with its first half profit of $479 million. The investment bank said strong market conditions experienced in 1H10 have moderated in certain areas, however said there potential for 2H10 profit to be approximately 10% higher than 1H10 profit but 2H10 profit outlook remains subject to market conditions and other factors.
The company said FY10 trading is likely to be characterised by, for the income statement, fewer one off items, a higher compensation ratio to be consistent with historic levels, an increased effective tax rate consistent with historic levels, lower earnings on capital reflecting lower global interest rates, and higher cost of funding.
”For the balance sheet, FY10 is likely to show a decrease in cash balances as funds are deployed across the businesses, maintaining equity investments at or below existing levels, and lower investment levels in listed funds,” Macquarie said.
Managing director and CEO, Nicholas Moore, said the company continued to maintain a conservative approach to funding and capital.
”Our strong balance sheet, strong team and encouraging market conditions provide opportunities for medium term growth,” Mr Moore said.
Macquarie said its total retail deposits increased to $14.5 billion at December 2009 from $13.9 billion at September 2009, while it had capital of $11.9 billion at December 2009, $A4.5 billion in excess of the group’s minimum regulatory capital requirement.
Meanwhile tier 1 capital ratio decreased from 11.7% in September to 10.4% in December.
Mr Moore said the December quarter operating results for Macquarie Securities Group, Macquarie Capital, Fixed Income, Currencies and Commodities (FICC) and Corporate and Asset Finance were down on the strong September quarter but up on the June quarter.
”The December quarter operating results for Banking and Financial Services and Macquarie Funds Group were broadly consistent with prior quarters, with growth in funds under management and client numbers,” he said.
The company said the internalisation of MAp and the strengthening of the Australian dollar during the December quarter were the main reasons for assets under management decreasing by $18 billion in December 2009.
However, Macquarie said pro-forma assets under management increased to $342 billion in December due to the completion of the acquisition of Delaware Investments by Macquarie Funds Group.
Mr Moore said the removal of the Australian Government guarantee was anticipated and is not expected to impact Macquarie’s funding position.
At the close of trade yesterday, Macquarie shares were trading at $50.35.
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