Macquarie Group Forecasts ‘Slight’ Profit Drop After Record Year

(Bloomberg) -- Macquarie Group Ltd. shares fell the most in 2 1/2 years after the Australian investment bank and asset manager forecast earnings will drop “slightly” this year after posting record profit last year.

• The stock slumped as much as 7 percent in early Sydney trading Friday, the biggest intraday decline since Nov. 9, 2016.

Key Insights

• Shemara Wikramanayake, who took over as CEO five months ago, has started on a cautious note, saying this year's result is currently expected to be slightly down on last year's. That said, the bank tends to start conservatively before updating its profit targets throughout the year. A year ago it said 2019 would be broadly in line with 2018, then subsequently raised its forecast twice.
• Nevertheless, the outlook implies about a 7 percent cut to consensus forecasts, UBS Group AG analysts said in a note to clients.
• The subdued outlook took the gloss off another record year. Net income rose 17 percent to A$2.98 billion ($2.1 billion) in the 12 months ended March 31, the Sydney-based company said Friday. That was broadly in line with both the bank's forecast of up to 15 percent growth, and analyst estimates of A$2.97 billion.
• The biggest boost last year came from the commodities and global markets division, where net income surged 65 percent, and Macquarie Capital, where profit jumped 89 percent, helped by the sale of Quadrant Energy.
• Even given the subdued outlook and today's slide, Macquarie is leaving Australia's big four commercial banks in its dust. Profit at the retail banks is taking a hit as they confront slowing credit growth and deal with the mounting cost of years of wrongdoing.

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• For more details on the results, click here

To contact the reporter on this story: Peter Vercoe in Sydney at pvercoe@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Angus Whitley, Adam Haigh

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