A gentle fudge from Macquarie Group yesterday with its latest operational update?
The bank told the market that it was looking at a 5% fall in second-half profit (to March 31) but maintained its forecast for 2011 full-year earnings to be broadly in line with last year as market conditions improve.
Mr Moore said that at the result announcement for the first half of the 2011 financial year, it was foreshadowed that subject to market conditions returning to more normal levels during the second half, it was anticipated that the 2011 full-year result would be broadly in line with the 2010 full-year result, Macquarie said in the statement.
"Our December quarter result reflected improved market conditions across all groups except Macquarie Securities Group MSG), where equity market volumes remain subdued," Mr Moore said in yesterday’s statement.
In a presentation he said that the December quarter "operating result for all Groups, except MSG, was up on the Dec 09 qtr, however the Group overall was down on stronger Dec 09 qtr".
Second-half earnings in 2011 were expected to be 35% higher than a subdued first-half and 5% down compared to the same period a year ago, he added.
"Subject to market conditions continuing to return to more normal levels, as well as other factors including the timing of completion on transactions and normal year end procedures, we currently anticipate the second half result to be approximately 35% up on the subdued first half and the second half result to be approximately 5% down on the previous corresponding period," he said in the statement.
"We expect FY11 trading will still be characterised by fewer one-off items, the compensation ratio being consistent with historical levels and the continued higher cost of funding, reflecting market conditions and high liquidity levels.
"Excess funding levels on the balance sheet are expected to continue to be deployed across the businesses," Mr Moore said.
The market spied a fudge and marked the company’s shares down 13c at $40.10, clipping this year’s 11% gain.
That was in a market up 0.4% on the day.
Macquarie said it had $3.2 billion in excess capital at December 31. It forecast 2011 annual earnings to be broadly in line with last year’s $1.05 billion.
Market forecasts at the moment have Macquarie’s 2011 earnings around $969 million.
That’s close to the 2010 outcome, so if the current buoyant trading conditions continue in most markets, Macquarie could reach last year’s earnings level by March 31.
At the moment the market is putting the shortfall at between $50 and $100 million, but it all depends on the level of activity in markets in the next six weeks.
Macquarie said it had about 15,400 employees down slightly from 15,533 it announced in October last year.
The bank’s Tier-1 capital ratio was 10.6%.
