Macquarie has reported a dip in profits and is still unable to provide “meaningful” earnings guidance as it continues to grapple with the COVID-19 disruption.
Macquarie saw uneven performance throughout its business, with Macquarie Asset Management stung by a 5 per cent fall in assets under management (AUM) and fee revenue down at Macquarie Capital off the back of lower fee revenue from M&A and debt capital markets. While that was offset by increased equity capital markets activity and strong performance of the equities platform, investment-related income was “down significantly” due to lower revenue from asset realisations.
Macquarie’s bank business has also continued provisioning, with 13 per cent of clients accessing assistance as at 30 June 2020.
“Macquarie remains well positioned to deliver superior performance in the medium term due to its deep expertise in major markets; strength in business and geographic diversity and ability to adapt its portfolio mix to changing market conditions; ongoing programs to identify [cost-saving] initiatives and efficiency; strong and conservative balance sheet; and proven risk management framework and culture,” said group managing director and chief executive Shemara Wikramanayake.
However, a number of factors – including concern over the speed of the global economic recovery, potential regulatory changes and tax uncertainties, and market conditions and the impact of geopolitical events – mean Macquarie’s crystal ball is still cloudy.
“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,” Macquarie said in a statement. “The extent to which these conditions will impact overall FY21 profitability is uncertain, making short-term forecasting extremely difficult.
“Accordingly, Macquarie is currently unable to provide meaningful earnings guidance on the [group’s] result for FY21.”
But Macquarie also noted that its financial position “comfortably exceeds” APRA’s Basel III regulatory requirements, with a group capital surplus of $8.1 billion as at 30 June 2020.
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