The Macquarie Group Ltd (ASX: MQG) share price is up after the global investment bank announced a profit upgrade for its expected FY21 result.
What did Macquarie say?
The big investment bank has updated its short term profit outlook for FY21. Macquarie only just gave a profit update to the market at its operational briefing on 9 February 2021.
Macquarie now expects its overall profit for the year to 31 March 2021 to be up approximately 5% to 10% compared to FY20.
How did this happen?
Extreme winter weather conditions affecting North America, specifically in Texas, have significantly increased short-term client demand for Macquarie’s capabilities in maintaining critical physical supply across the commodity complex and particularly in relation to gas and power.
Macquarie’s commodities and global markets (CGM) business physically ships gas on the majority of major pipelines across the US and over time has built capacity to support clients by delivering power and physical commodities to help them meet the unexpected needs of their customers.
Outlook
Macquarie said that it continues to maintain a cautious stance, with a conservative approach to capital, funding and liquidity that positions the business well to respond to the current environment.
However, there are many factors that can impact the profit.
Macquarie is monitoring: the duration and severity of the COVID-19 pandemic, the uncertain speed of the global economic recovery, global levels of government support for economies, completion of period-end reviews including asset impairment and expected credit loss allowances, the completion rate of transactions, geographic composition of income, the impact of foreign exchange, potential tax or regulatory changes and tax uncertainties.
Summary thoughts
Macquarie is a really good business and it’s useful how different segments can step up to generate more profit when things are tough in certain areas of the business or economy.
When thinking of ASX dividend shares, I think Macquarie is a good option to consider for the long term.
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