SYDNEY, January 8 – Australia\’s largest investment bank Macquarie Group warned investors on Thursday that exceptionally challenging market conditions in the December quarter would hit profits.
"During the quarter to 31 December market conditions were exceptionally challenging for almost all Macquarie\’s businesses, adversely impacting levels of business activity and profitability," the bank said in a statement to the Australian Stock Exchange.
The warning accompanied Macquarie\’s announcement that the sale of its 1.5 billion dollar (1.1 billion US dollar) margin lending portfolio to Adelaide and Bendigo Bank — announced last September — would be completed on Thursday.
Macquarie said the sale would boost its profits by 43 million. It is part of a plan to sell 15 billion in funded assets to allow Macquarie to focus on more profitable parts of its business.
"This (sale) brings the total of initiatives completed to 12 billion, with the other three billion currently under way and expected to be completed by 31 March 2009," Macquarie said.
Macquarie\’s shares slumped 5.4 percent following the news, and were fetching 31.92 dollars around mid-session on the Australian stock exchange.
The global financial crisis sent Macquarie\’s net profit for the half year to September 30 plunging 43 percent to 604 million dollars, with the bank reporting significant restructuring costs, provisions and writedowns as a result of the credit turmoil.
At that time it predicted a similar second half, assuming 400 million dollars of writedowns, 130 million of which would hit the bottom line.
Since then, Macquarie said it had strengthened its strong funding and liquidity position, including a 27 percent increase in retail deposits to 11.9 billion and a 14 percent improvement in term funding to 36.5 billion.
The group manages assets such as airports and toll roads globally, and is one of the best-known of Australian financial institutions.