Macquarie Group's Second-Half Profit Now Likely To Jump As Trading Conditions Improve

Macquarie Group’s third-quarter trading update was better than expected across the board. Importantly, it reinforces our view that the slump in first-half 2021 earnings was more to do with the timing of divestments and crystalisation of gains, rather than reflecting any structural challenges or degradation of the longer-term earnings potential of the group. On a stronger third-quarter update we upgrade our fiscal 2021 cash profit forecast to AUD 2.6 billion. This implies an extremely strong second-half result and only a 5% fall in full-year profit. Macquarie’s guidance is for profit to be slightly down on fiscal 2020. We had expected a 28% drop in profit in fiscal 2021, with a recovery to follow in fiscal 2022.