In its second and final stability review for 2019, the RBA has warned on a combination of factors that will depress bank earnings, starting with the continuing rise in customer remediation over abuses exposed by the Hayne Royal Commission.
The banking regulator APRA has given three major banks, including the high profile Macquarie a whack by threatening to impose tougher funding rules on them after a review found that the trio misstated the stability of their funding that could have seen them forced to the brink of collapse in the events of another GFC-like event.
Macquarie surprised friend and foe yesterday by announcing a fresh $1bn capital raising plus a share purchase plan which Citi estimates has the magnitude of $150m. Estimates have been sliced to incorporate the immediate dilution.
FY19 results were strong and net profit up 17%. FY20 guidance was softer than expected, with Macquarie Group suggesting net profit may be slightly down on FY19. Morgans reduces estimates for earnings per share by -5-7%.
Broker Call Report already reported on Friday Morgan Stanley analysts have increased their confidence regarding Macquarie's growth outlook, and the result has been a shift in their price target to $140 from $133.
Management has reiterated expectations for FY19 net profit to be broadly in line with FY18 but the outlook does not include the recent Quadrant Energy sale. Morgans upgrades FY19 and FY20 estimates for earnings per share by 4-8%.