If you own Macquarie Group Ltd (ASX: MQG) shares, you have an important day approaching this Friday. The investment bank is set to release its half-year results before the market opens tomorrow. But what can shareholders expect from the company's performance? Let's delve into the details.
Macquarie Half-Year Results Preview
According to insights from Goldman Sachs, the investment bank is anticipated to report a notable decline in earnings for the first half of the fiscal year. Analysts from Goldman Sachs project a cash net profit after tax of $1,632 million for the six-month period, representing a 29% decrease compared to the previous corresponding period.
This outlook is especially important for investors in ASX financial stocks. It offers a glimpse into the sector's performance and the broader economic landscape.
Goldman Sachs holds a slightly more cautious outlook than the market consensus, where the average estimate stands at $1,774 million, indicating a 23% reduction in comparison to the previous year's figures.
Drivers of This Decline
Two key factors are contributing to this anticipated earnings weakness, as explained by Goldman Sachs. The first is asset realizations, and the second pertains to Macquarie's commodities and global markets (CGM) business.
Regarding asset realizations, Goldman Sachs notes:
"Since the FY23 result, MQG has provided two updates that have suggested the FY24 environment for realizations has deteriorated over the half, and become increasingly skewed to 2H. These difficult conditions for realizations have been compounded by the market's view on interest rates, which have become more hawkish over the half."
In terms of the CGM business, the brokerage firm points out:
"MQG's 1Q24 update was characterized by the capital markets facing businesses being substantially down on pcp partly due to the strong results across the Commodities platform in CGM in the pcp. […] we forecast Commodities income to fall 25% on pcp in 1H24E and will be interested to hear management commentary on their comfort around the aforementioned full-year guidance [broadly in line with FY22], and relevant moving parts."
Potential Dividend Adjustment
In light of the anticipated profit decline, Goldman Sachs suggests that Macquarie Group may declare an interim dividend of $2.10 per share, representing a 30% decrease compared to the prior corresponding period. This stands in contrast to the consensus estimate of a $2.52 per share interim dividend.
Macquarie shares have experienced a 5% decrease over the last 12 months. Shareholders will be closely watching the upcoming half-year results to gain insights into the bank's performance and future outlook