Macquarie Likely To Cut Staff As Profits Plunge By 25 Per Cent

Post by Sharat on September 6, 2010 · Under Business News, Company News, Equities, banking · Comment 
Macquarie Likely To Cut Staff As Profits Plunge By 25 Per Cent

Australian investment banking major, Macquarie, which today revealed a 25 per cent drop in first half profit estimates, now faces the difficult task of cutting costs as the groups seeks to return to its former level of profitability.

Macquarie estimates first half profits of approximately$360 million, compared with $479 million in the same time period in the previous year.

Macquarie’s profits warning should not have surprised the market, given they had earlier warned that first half profits would not meet estimates, however the stock dropped as much 8 per cent.

CLSA and Citigroup had both already cut their ratings last week, but based on consensus full year profit estimates of $1.3 billion, , compared to the $1.1billion indicated by the bank today.

The profit downgrade by Macquarie was its third in the last three months, and the investment bank does not expect that this is the last of them.

In order for the investment banking group to return to previous levels of profitability, its chief executive Nicholas Moore will have to depend on a dramatic change in financial market sentiment, which looks unlikely at this stage.

Failure of trading conditions to return to normal will mean Mr. Moore will have to aggressively wring out costs, and staff cuts look increasingly likely.

In 2008 and the 14,600 Macquarie employees generated $137,000 each in profits. Flash forward to 2009 and each employee on average now generates just half that at around $72,000 in profits.

Compare Australian Credit Card Deals

Bookmark and Share

Related posts

Tags: , , , ,

Comments

Leave a Reply







Sponsored Ads