Macquarie Group (MQG) shares jumped more than 5% yesterday after a surprise boost to its full year profit forecast.
The country’s biggest investment bank said in a very brief statement that profit for the year to March 31 could rise between 10% to 20%, thanks to “improved trading conditions as well as a lower Australian dollar”.
That could be more than double the 8% rise forecast by analysts, according to Bloomberg data.
The news saw the shares jump sharply and trade higher all day.
They ended up 5.3% or nearly $3 at $58.25.
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In 2013-14, the bank boosted net profits 49% to $1.27 billion. Macquarie said 2014-15 profit should be in a range from $1.4 billion and A$1.52 billion – a seven-year high, but still short of the high earned in 2008 of $1.89 billion.
Macquarie issued a trading update on October 31, and since then the Aussie dollar has tumbled 6.5% to around 82.10 USc yesterday – but all of that occurred up to the end of December.
In that update Macquarie said it expected the 2014-15 profit to be slightly above the 2013-14 figure of $1.27 billion.
This month has seen a slight firming in the currency against the greenback, particularly against the weakening euro and yen, and especially since the Swiss franc was unpegged last Thursday night.
Macquarie’s statement didn’t say which businesses would outperform, but three months ago its funds unit was the main driver, on the back of increased fee income.
Macquarie said it will hold an operational briefing on February 17 (right in the middle of when many banks will be issuing December 31 half year or first quarter trading updates).
Macquarie reported a 35% increase in net profit to $678 million for the six months ended September 30.
Macquarie’s performance contrasts with larger peers such as Goldman Sachs and JP MorganChase, which last week revealed in their 4th quarter reports that they have struggled with falling revenues and earnings across the board because of lower fixed income trading activity.
Macquarie’s securities unit has struggled with weak trading volumes as well.
