Macquarie set to follow forecast

SYDNEY - Macquarie Group is set to post its first annual profit decline in 17 years tomorrow, reflecting the impact of asset devaluations and a soft investments market on the back of the global economic downturn.

But the result may also signal the worst is over for Australia's biggest investment bank in the current cycle, with Macquarie expected to perform more strongly in the new year, analysts say.

Macquarie in February forecast net profit for the 12 months to March 31 was likely to halve to about A$900 million ($1.13 billion), after allowing for writedowns, from A$1.8 billion the year before. Operating income is expected to fall by 15 per cent. That suggests its second-half net profit slumped to about A$300 million, falling more than 60 per cent from the prior corresponding period's figure of about A$800 million. The full year result is set to be the first annual decline since 1992. Analysts estimate that it will be slightly lower, at about A$880 million.

"We expect that the 2009 full year is likely to be Macquarie's most challenging year in this investment market cycle," Credit Suisse analysts said. Credit Suisse expects the bank's earnings to grow again in fiscal 2010.

Analysts at Bank of America Merrill Lynch agree that its profits are likely to increase in 2010.

Macquarie also said its regulatory capital position remained strong with a A$2.9 billion buffer of capital in excess of its minimum requirements.

Still, investors are expected to keep an eye on asset values and its capital position, which has so far held up well during the global financial crisis.

- AAP