Macquarie Group issues profit warning

by Gill Montia

Story link: Macquarie Group issues profit warning

Macquarie Group has issued a profit warning.

The Australian investment bank said that exceptionally challenging market conditions at the end of last year have adversely affected all areas of operations, ending a 17-year stretch of increased earnings.

In a statement to the Australian Stock Exchange, the bank described the last quarter of 2008 as exceptionally challenging for almost all Macquarie’s businesses.

The group is undertaking a programme of disposals and also announced that it has sold its margin lending portfolio to Leveraged Equities, a subsidiary of Bendigo & Adelaide Bank, for A$52 million in convertible preference shares.

The sale will reduced the value of loans on Macquarie’s balance sheet by A$12 billion but will not have a significant impact of full-year results for 2008 as anticipated profit from the transaction has already been included in interim results.

The group has plans to offload around A$15 billion in assets in a move that should allow it to refocus on its more profitable businesses and expects to complete the disposals and reach the target by the end of March.

Analysts do not consider Macquarie to have the kind of exposure to toxic debt seen by its Wall Street rivals and despite a 7% drop in its share price on the stock market statement, the group is expected to weather the credit crisis in tact.