Shares in Macquarie Group managed to remain in the black after a fairly hectic day’s trading in the wake of the AGM in Sydney.
The shares traded down to a day’s low of $42.10 and up to a high of $44.85, before closing up 35 cents at $43.28.
The $44.85 intra day high was the highest the bank’s shares have been since the days of the Lehman Brothers crash last September when the securities were on the way down.
That tells us much about the change in attitude to the bank in recent months.
The swings yesterday came from the update delivered to the AGM for the first quarter and first half and from comments from CEO, Nicholas Moore than the much criticised "Macquarie model" of listed and managed funds was not broken, merely in a state of transformation.
Macquarie (MQG) said its operational performance improved in the first quarter of, but short-term forecasting remains extremely difficult.
Macquarie said it is expecting to see a drop in first-half profits for the 2010 year compared to the corresponding period 12 months ago but the performance will be better than its most recent second half.
Mr Moore said before the AGM that the group’s next six month profit is likely to come in halfway between the results recorded for the two halves of the 2009 financial year.
That suggests an interim profit for the September 30 half of around $430 million: MQG made a net profit of $604 million for first half of 2009, and $267 million for the May, 2009 second half.
That means earnings will be down on the previous corresponding half, put up on the preceding half.
But the fact that it will be up on the second half figure does indicate some improvement in recent month.
"Improved operational performance from all major businesses except Macquarie Capital compared to 4Q09, Macquarie said in the update.
"Macquarie Capital significantly impacted by timing and size of transactions (with) good contributions from: Macquarie Securities; Treasury and Commodities; Banking and Financial Services."
The group said there would be "a number of one-off items including: a gain of approx $A180m on financing acquisition of MIPS and buyback of subordinated debt; unrealised loss of $A200m relating to fair value adjustments of issued fixed rate subordinated debt (and) as previously foreshadowed, high levels of cash continue to be a drag on current earnings."
2009’s earnings halved from the record $1.8 billion earned in 2008.
However, the bank warned its outlook remained subject to the impact of market conditions and significant "swing" factors, such as the completion rate of transactions, asset realisations and asset prices.
The forecast excludes one-off items.
"Macquarie’s surplus capital and high cash levels, strong team and market conditions provide opportunities for medium term growth," chief executive Nicholas Moore said on Wednesday in a statement.
"We expect to continue to build on the strength, diversification and global reach of our businesses.
"Ongoing organic growth initiatives and incremental acquisitions remain underpinned by effective risk management."
Mr Moore added that the bank continued to be cautious and was maintaining a conservative approach to funding and capital.
At June 30, it had $4.3 billion in capital in excess of the group’s minimum regulatory capital requirements, after raising $1.2 billion from a new share issue during the first quarter.
