Investment bank Macquarie Group is set to post its largest profit in six years, as financial market conditions continue to improve.
One week before its fiscal year ends on March 31, Macquarie said it expects its net profit to rise by 40 to 45 per cent from $851 million in the 2012/13 year.
That indicates a profit of up to $1.23 billion, its first profit above $1 billion since 2009/10, and its largest profit since 2007/08.
Macquarie shares gained $1.59, or 2.9 per cent, to $56.42 on the new guidance.
The company had previously forecast a rise in its net profit for the year to March 31, but had not provided specific guidance.
Macquarie said market conditions had most notably improved for its fixed income, currencies and commodities (FICC) business.
Among its activities, FICC is involved in marketing and transporting agricultural, metals, energy and energy-related products globally.
It also carries out credit trading; foreign exchange and fixed income trading; futures; and the provision of finance for producers in the mining and upstream oil and gas sectors.
In February, Macquarie said it expected profit from the FICC business to be down on, or broadly in line with, the previous year’s result.
But Macquarie now says FICC’s profit will be broadly in line with or up on the previous year.
The company has not altered its forecast for its other five business areas, which are all expected to contribute profits in line with, or higher than, the prior year.
“Accordingly, we expect Macquarie’s result for FY14 to be up approximately 40-45 per cent on FY13, subject to the completion rate of transactions and period-end reviews,” Macquarie said in a statement.
The company provided its usual conditions on the forecast, saying it remained subject to market conditions, the cost of funding and capital, and potential regulatory changes.