08 February 2011
Macquarie Group (Macquarie) (ASX: MQG; ADR: MQBKY) today provided an update on market conditions, business activities and the outlook for the second half of the financial year ending 31 March 2011.
In a presentation at Macquarie’s Operational Briefing in Sydney today, Macquarie Managing Director and Chief Executive Officer, Nicholas Moore said: “market conditions continue to trend back to more normal levels, with the exception of equity markets where volumes remain subdued.”
The December quarter operating result for the group was significantly up on the subdued September and June quarters, consistent with improved market conditions.
Mr Moore said Macquarie had maintained its strong market positions and provided an overview of organic growth initiatives that continue across the Group:
Strong funding and balance sheet position
Mr Moore said Macquarie’s balance sheet position remained strong with Group capital of $A12 billion at 31 December 2010, a $A3.2 billion buffer of capital in excess of the Group’s minimum regulatory capital requirements.
The Banking Group’s capital ratios remained strong with Tier-1 capital of 10.6 per cent and total capital of 12.2 per cent.
Noting that the final form of Basel III in Australia is subject to implementation by APRA, Mr Moore said: “Macquarie continues to monitor regulator and other market developments and remains well-capitalised and well-funded.”
Mr Moore said that at the result announcement for the first half of the 2011 financial year, it was foreshadowed that subject to market conditions returning to more normal levels during the second half, it was anticipated that the 2011 full-year result would be broadly in line with the 2010 full-year result.
“Our December quarter result reflected improved market conditions across all groups except Macquarie Securities Group, where equity market volumes remain subdued.
“Subject to market conditions continuing to return to more normal levels, as well as other factors including the timing of completion on transactions and normal year end procedures, we currently anticipate the second half result to be approximately 35% up on the subdued first half and the second half result to be approximately 5% down on the previous corresponding period,” he said.
“We expect FY11 trading will still be characterised by fewer one-off items, the compensation ratio being consistent with historical levels and the continued higher cost of funding, reflecting market conditions and high liquidity levels.
“Excess funding levels on the balance sheet are expected to continue to be deployed across the businesses,” Mr Moore said.
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