Macquarie Group has reported a net profit of $1.42 billion for the six months to 30 September, 39 per cent lower than the same period a year earlier (1H23) and down 51 per cent versus the six months to March (2H23).
The firm indicated that it is maintaining a “cautious stance” as part of its first-half results released on Friday with a “conservative approach” to capital, funding and liquidity.
This approach, Macquarie said, positions it well to respond to the current environment, with the firm raising concerns about the impact of global economic conditions, inflation and interest rates, significant volatility events and geopolitical events in the short term.
“Macquarie’s underlying client franchises were resilient in less certain market conditions,” Ms Wikramanayake said on the firm’s half year results.
“Our annuity-style businesses saw growth in loan books, deposits and assets under management, but the first-half result was substantially down compared to a strong period of realisations in the prior corresponding period, with an expectation that green energy realisations will be predominately in the second half.”
Annuity-style activities generated a combined net profit contribution of $1.30 billion, 43 per cent lower than 1H23 and 30 per cent lower than 2H23.
Macquarie said that a positive result in its Banking and Financial Services (BFS) division was “more than offset” by the timing of asset realisation in green investments in Macquarie Asset Management (MAM).
Meanwhile, market-facing activities generated a combined net profit contribution of $1.56 billion, down 32 per cent on 1H23 and down 60 per cent on 2H23.
On this result, Macquarie noted that the prior corresponding period had featured strong performance from commodities within its Commodities and Global Markets (CGM) division as well as material asset realisation in Macquarie Capital.
“Our markets-facing businesses delivered solid performances despite lower market activity and volatility levels, with growth in the CGM client base and Macquarie Capital’s private credit book partially offsetting lower equity realisations,” Ms Wikramanayake said.
Breaking down its operating group performance, Macquarie reported that MAM delivered a net profit contribution of $407 million, 71 per cent lower than 1H23, while BFS had a net profit contribution of $638 million, up 10 per cent.
CGM’s net profit contribution was down 31 per cent to $1.38 billion, and Macquarie Capital’s net profit contribution was 28 per cent lower at $430 million.
Macquarie’s assets under management sat at $892 billion as at 30 September, 2 per cent higher than at the end of March and 7 per cent higher than a year earlier.
The growth was mostly attributed to investments made by MAM Private Markets managed funds and favourable foreign exchange movements, while being partially offset by a reduction of co-investment management rights in MAM Private Markets.
Alongside its half-year results, Macquarie also announced the appointment of Wayne Byres as a non-executive director of Macquarie Bank, effective from 1 February 2024.
The firm said that Mr Byres will bring significant experience in bank regulation and governance, having served as chair of the Australian Prudential Regulation Authority (APRA) and secretary general of the Basel Committee on Banking Supervision.
He also previously served as APRA’s representative on the Reserve Bank of Australia’s payments system board and most recently has been working in an advisory capacity with the International Monetary Fund.
An interim ordinary dividend of $2.55 per share, representing a payout ratio of 70 per cent, has been announced by the Macquarie board, down from the $3 interim ordinary dividend in 1H23 and the $4.50 final ordinary dividend in 2H23.
Macquarie’s board has also approved an on-market share buyback of up to $2 billion.
“Macquarie remains well-positioned to deliver superior performance in the medium term with its diverse business mix across annuity-style and markets-facing businesses; deep expertise across diverse sectors in major markets with structural growth tailwinds; patient adjacent growth across new products and new markets; ongoing technology and regulatory spend to support the group; a strong and conservative balance sheet; and a proven risk management framework and culture,” Ms Wikramanayake concluded.
