Macquarie has slashed its full-year profits guidance, underlining the tough conditions currently facing the investment banking industry.
On Tuesday, the Australian bank lowered its predictions for its 2012 net income, citing a 25% drop in profits until March due to current weak market conditions.
CEO Nicholas Moore said Macquarie had been severely affected by the macro economic backdrop in the final three months of 2011.
“Global economic uncertainty has deepened [and] resulted in substantially lower levels of client activity in many markets,” he said.
However, shares in Macquarie pared earlier losses as investors focused on cost-cutting initiatives, as well as plans for a substantial share buy-back. The bank also flagged a recovery in fixed income, commodities and currencies divisions by the end of 2012.
In addition, and in response to weak market conditions, Macquarie reduced its headcount by 460 in the final three months of 2011 and pulled out of several businesses, including institutional derivatives in the U.S., U.K., Asia and South Africa.
The bank is targeting a 15% reduction in costs by 2013, according to deputy chief executive Greg Ward. A range of initiatives is planned, including off shoring and consolidating back office functions across its businesses.
Read more about Macquarie’s future plans and possible acquisitions.