Macquarie Shares Surge on Profit Outlook as Markets Rebound

(Bloomberg) -- Macquarie Group Ltd. surged the most in 10 months after raising its profit outlook as markets rebound from the coronavirus pandemic.

“We are now expecting fiscal 2021 to be slightly down as opposed to significantly down, which is where we saw it at the end of the first half,” Chief Executive Officer Shemara Wikramanayake told analysts at a briefing on Tuesday.

The stock climbed 6.8% in early Sydney trading, and has almost doubled from its lows in March 2020.

Wikramanayake said market conditions are likely to remain challenging and a range of factors, including the duration and severity of the Covid-19 pandemic, the level of government support for economies, and the uncertain speed of global recovery could affect the result.

Macquarie is expected to post profit of A$2.19 billion ($1.7 billion) in the 12 months to March 31, according to analyst estimates compiled by Bloomberg. Last year, net income fell 8% to A$2.73 billion, ending a seven-year run of earnings growth.

Roughly one-third of the profits are coming from the Sydney-based bank and asset manager’s market-facing businesses, including commodities, lending, and investment-banking advisory services, with the rest attributed to its annuity-style businesses.

The investment-banking business, Macquarie Capital, is expected to be “significantly down” for the year, as tough market conditions continue to delay the completion of mergers and acquisitions despite deal activity improving.

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