If you own Macquarie Group Ltd (ASX: MQG) shares then you have a big day coming on Friday.
That's because the investment bank will be releasing its half-year results before the market open tomorrow.
But what is the market expecting from the company? Let's find out.
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Macquarie half-year results preview
According to a note out of Goldman Sachs, its analysts are expecting the company to report a reasonably sharp decline in earnings for the half.
It is forecasting a cash net profit after tax of $1,632 million for the six months, which will be down 29% on the prior corresponding period.
Goldman is a little more bearish than the market, with the consensus estimate of $1,774 million implying a 23% reduction on last year's numbers.
What's driving this?
There are two key reasons for this weakness according to Goldman Sachs. These are asset realisations and Macquarie's commodities and global markets (CGM) business. It explains:
Since the FY23 result, MQG has provided two updates that have suggested the FY24 environment for realisations has deteriorated over the half, and become increasingly skewed to 2H. These difficult conditions for realisations have been compounded by the market's view on interest rates, which have become more hawkish over the half.
As for the CGM business, the broker said:
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 cut
In light of this profit decline, the broker believes that the company will declare an interim dividend of $2.10 per share, which will be down 30% on the prior corresponding period. This compares to the consensus estimate for a $2.52 per share interim dividend.
Macquarie shares are down 5% over the last 12 months.
