Macquarie Group has warned its earnings will take a major first-half hit thanks to the coronavirus

Macquarie Group has warned its earnings will take a hefty first-half hit because of calm March-September trading after the steepest bear market on record and delayed mergers and acquisitions activity.

First-half financial results will fall about 35 per cent for the six months ending September 30 compared with the year-earlier period, Macquarie said on Monday.

The group is also anticipating earnings to fall 25 per cent compared with the six months ended March 31.

Half-yearly profit would fall to about $955 million from $1.275 billion. Macquarie shares slipped 5 per cent at the start of trading on Monday; the stock is about 20 per cent lower than its pre-coronavirus peak.

Delays in the timing of asset sales, increased provisions for souring loans, a reduction in transaction volumes and lower investment income would dampen the company’s results, chief financial officer Alex Harvey, and Sam Dobson, head of investor relations, said in a presentation to investors at the Jefferies Asia Forum.

Macquarie, which generates revenue from helping clients trade and strike deals when the markets are stressed, said the strong client activity earlier in the year “did not continue” into the latter half and was “not expected to continue” in the near future.

“Market conditions are likely to remain challenging, especially given the significant and unprecedented uncertainty caused by the worldwide impact of COVID-19 and the uncertain speed of the global economic recovery,” the investment bank said.

“The extent to which these conditions will adversely impact our overall FY21 profitability is uncertain, making short term forecasting extremely difficult.”

Macquarie has been unable to provide earnings guidance for the first time since the 2008 global financial crisis because of the current pandemic.

As the government shutdown has resulted in a number of Macquarie assets being significantly affected, the company has moved to repurpose some of its airport carparks to be used for COVID-19 testing, while offering free parking for some Spanish health workers, and deploying its Dovel Technologies unit to review antiviral clinical trials.

Macquarie’s banking and financial services arm is hiring furloughed workers from other industries to help meet greater customer service demand.

The company said 13 per cent of Macquarie clients were accessing some form of hardship assistance.

Macquarie said there was a “gradual, voluntary” return to the office where it was safe to do so. More than 98 per cent of staff had been working remotely at the peak of the pandemic.

Macquarie recently posted an 8.4 per cent drop in full-year profit to $2.7 billion and a final dividend reduced by half and warned the economic recovery was unlikely to be a “V-shaped” bounce-back but a more drawn-out affair.

This story originally appeared in the Australian Financial Review. Read the original story here.