Macquarie expects weaker investment bank, securities earnings
Australia's biggest investment bank Macquarie Group Ltd (ASX; MQG) expects its advisory, securities, fixed income and commodities divisions to post lower earnings as global markets stumble and deals wane.
The forecast is in contrast to Macquarie's April outlook that all businesses were likely to report stronger results for the year to March 31, 2011. Earnings in the June quarter were marginally higher than the corresponding period a year earlier, the Sydney-based bank said in a statement to the stock exchange.
Global market slumps, Europe's debt crisis and fears on the strength of world economic recovery are weighing on advisory income. Macquarie shares have fallen three times as much as Australia's benchmark index this year.
"M&A activity has been low and it's difficult for businesses like Macquarie to excel," said Rob Patterson, who helps manage A$3.6 billion including Macquarie shares at Argo Investments in Adelaide.
"It's the deal flow. They're probably working on lots, but not much is happening."
Macquarie has shed 21 percent this year in Sydney trading compared with a 7.1 percent drop on the country's benchmark S&P/ASX 200 index. Its stock has declined for only three of the past 13 years, according to Bloomberg data.
Since the financial crisis, the 41-year-old investment bank has steered deeper into overseas markets, acquiring brokerages, advisory and asset management businesses in North America. It had earlier pioneered a scheme of buying and pooling assets, registering them on an exchange and imposing fees for managing them.