The Macquarie Group expects to post strong performance at the close of its 2022 first half – March to September – amid “favourable market conditions”, catalysing a bumper year for the group.
In an update of the group’s short-term outlook given at the Jefferies Asia forum on Wednesday, Macquarie conceded that despite expecting a strong year, it does foresee a slight drop in net profit in 1H22 compared to the $2,030 million it clocked in the six months to March 2021.
Despite this dip, the group does forecast a significantly higher profit than it recorded in the same period last year, when it posted $985 million.
Macquarie’s financial year 2021 ended on 31 March, with FY22 beginning on 1 April.
Closing in on the group’s forecasted results, high expectations largely owe themselves to improved transaction activity experienced by Macquarie Capital, through FY22 so far, alongside ongoing momentum in loan portfolios and platform volumes within its Banking and Financial Services business.
Furthermore, the group’s Commodities and Global Markets business is set to take advantage of an improving landscape.
“Favourable market conditions (are) contributing to a stronger 1H22 Commodities and Global Markets result than anticipated together with the sale of the UK commercial and industrial smart meter portfolio,” the bank stated.
Despite this, it was not expected the business would be able to match its FY21 result by 1H22, a theme suggested across a number of the group’s entities.
“Commodities income is expected to be down following a strong FY21, albeit volatility may create opportunities.”
Macquarie noted that its tempered optimism in the short-term was influenced by the group’s need to be prepared for a number of uncertainties, such as the unknown duration of COVID-19, the tapering of government support and the potential for tax or regulatory changes.
“We continue to maintain a cautious stance, with a conservative approach to capital, funding and liquidity that positions us well to respond to the current environment,” the bank said.
Assuming some of these hurdles are overcome by 2H22, the medium-term outlook presented gave cause for further confidence in higher returns.
“Macquarie remains well-positioned to deliver superior performance in the medium term,” the statement highlighted.
“Annuity-style income is primarily provided by two operating groups’ businesses [Macquarie Asset Management and Banking and Financial Services] which are delivering superior returns following years of investment and acquisitions.
“Two markets-facing businesses [Commodities and Global Markets and Macquarie Capital] (are) well positioned to benefit from improvements in market conditions with strong platforms and franchise positions.”
The group promised to build on these strengths offered by its business and geographic diversity.
Furthermore, it was said the group would continue to adapt its portfolio to best take advantage of current market conditions.
