Macquarie Group has braced itself for ongoing volatility, forecasting a 35 per cent drop year-on-year for the first half of the 2021 financial year.
On Monday morning the group warned that market conditions are likely to remain challenging, given the “significant and unprecedented” uncertainty caused by the worldwide impact of COVID-19 and the yet to be determined pace of the global economic recovery.
As a result, Macquarie stated the precarious environment made short-term forecasting “extremely difficult” and it was unable to provide meaningful earnings guidance for the coming financial year.
However, it is anticipating the first-half result to be down 35 per cent on the H1FY20 and 25 per cent lower than the prior half.
Among the duration and severity of the COVID pandemic and the recovery, other cited factors included levels of government support for economies, the completion rate of transactions and period-end review, geographic composition of income, the impact of foreign exchange, potential regulatory changes and tax uncertainties and geopolitical events.
Macquarie’s share price dropped following the news, from $126.39 on Friday afternoon, to a low of $119.54 on Monday morning.
The asset management business is facing a drop in operating income, with expected delays in the timing of asset sales while the deal-making arm, Macquarie Capital, is expected to cop lower investment income and longer timeframes for transaction completions.
But for the long-term, Macquarie has signalled it expects market conditions will improve to benefit its markets-facing businesses, Commodities and Global Markets and Macquarie Capital.
Annuities are also tipped to drive returns for the asset management and banking businesses, following a number of acquisitions.
The group recorded a $2.7 billion net profit for FY20, which was down 8 per cent on the year before.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
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