Macquarie shares drop 5% following profit warning

Published:  7 Feb at 12 PM

Australia’s largest investment bank Macquarie Group has said it anticipates that full year profits will fall by 25 per cent because a weak market is affecting its business, reports the BBC.

Its investment and trading banking operations were the most severely hit, said the company in a statement. The bank’s shares dropped five per cent in Sydney on the back of the news. Macquarie, like other investment banks, has been forced to cut costs and reduce staff in an attempt to combat slowing income growth.

The company’s chief executive Nicholas Moore said that global economic uncertainty has worsened since October last year, with considerably lower client activity levels in a number of markets. The outlook was bleaker than expected as the majority of analysts had forecast a 12 per cent fall in full year profits.

In 2011, Macquarie reported that its net profit was $956m Australian dollars ($1bn; £653.8m). The bank also said that 928 jobs had been cut since March last year. Analysts said that the cuts were on a similar level to what has been seen at other global investment banks.

In January, rival Goldman Sachs revealed that it had suffered a fall of 47 per cent in earnings in 2011 and had cut 2,400 jobs. The firm added that it plans to carry out a buy-back of as much as 10 per cent of its shares, subject to regulatory approval.