Macquarie Guidance Disappoints Market

Post by NeilMc on February 9, 2010 · Under Business News, Capital Markets, Company News, Equities, banking · Comment 

Nicholas Moore, chief executive of Australian investment banking major Macquarie Group says that proposed changes to regulatory framework had created an environment of uncertainty in the banking industry, whilst the investment bank announced a profit forecast that was below market expectations.

Macquarie revised it second half profit forecast upwards by 10 per cent, and the revision failed to impress investors, with shares trading down by as much as 6.5 per cent immediately after the announcement.

Most market participants believed that Macquarie would deliver a full year profit of $10.4 billion, with guidance now driving expectations of roughly $10.1 billion.

During the investment banking group’s briefing, Macquarie chief Nicholas Moore said market conditions continued to be volatile, but the company had benefited from a stronger balance sheet in the aftermath of the global financial crisis.

“Despite improved trends in a number of major markets we continue to maintain a conservative approach to funding and capital. Our strong balance sheet, strong team, and encouraging market conditions continue to provide opportunities for medium term growth.” Mr. Moore said.

Mr. Moore stressed that Australian lenders including Macquarie still faced uncertainty when it came to the extent of changes to the regulatory framework that would be imposed on the Australian banking system.

“We are saying watch this space in terms of what is happening in Australia and globally with Basel. We don’t know what we are going to end up with but it’s a sure bet that there will be the requirement to have more regulatory capital. The impact on us is uncertain until we know more about it.” Mr. Moore said.

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