Macquarie Group has reported a continued downward trend in net profits for the third quarter of financial year 2024.
This followed the bank’s half-year results in November 2023, reporting a net profit of $1.42 billion for the six months to 30 September. This was 39 per cent lower than the same period a year earlier (1H23) and down 51 per cent versus the six months to March (2H23).
In an ASX statement on Tuesday, Macquarie said its FY24 year-to-date (YTD) net profit after tax is “substantially lower” on FY23 YTD, which included an “exceptional” quarterly result in 3Q23.
However, underlying client franchises were resilient, it said.
Focusing on growth expectations, managing director and chief executive Shemara Wikramanayake said: “Underlying client franchises were resilient in ongoing uncertain conditions with continued customer growth, fundraising, and new business origination a feature across all of our businesses.”
Macquarie’s annuity-style business’ combined net profit contribution for 3Q24 was down on the prior corresponding period, attributed to lower asset realisations in green investments and continued investment in the development of green energy portfolio companies in Macquarie Asset Management (MAM).
As at 31 Dec 2023, assets under management (AUM) at MAM stood at $882.5 billion, a decline of 1 per cent from the previous quarter.
Private markets AUM was up 1 per cent, primarily driven by fund investments and increase in asset valuations, and partially offset by unfavourable foreign exchange movements. After raising $6.7 billion new equity, private markets’ equity under management was $210.6 billion with $35.4 billion to deploy.
Public investments fell 2 per cent from the September quarter, with AUM at $535.1 billion at the end of December 2023. While alternatives and multi-asset (AUM $24.4 billion) and equities (AUM $215.8 billion) rose 2 per cent and 1 per cent, respectively, fixed income (AUM $294.9 billion) declined 5 per cent.
Looking ahead, the group expects MAM base fees to be broadly in line and for net operating income for 2H24 to be substantially down on 2H23, subject to the completion of a number of transactions in 4Q24 and market conditions.
Macquarie noted its FY24 net profit contributions from market-facing businesses (Macquarie Capital and Commodities and Global Markets (CGM)) were substantially down on FY23 YTD.
CGM was down due to decreased inventory management and trading revenues in North American gas, power, and emissions, and reduced contribution from risk management revenue as movements in price stabilised across the commodity market from record highs.
Meanwhile, Macquarie Capital’s fee revenue was down on both the prior corresponding period and prior period, driven by lower M&A fees. It completed 59 transactions globally in 3Q24, valued at $65 billion, while investment-related income was down on the prior period but significantly up on the prior corresponding period.
In its short-term outlook, Macquarie suggested investment-related income for 2H24 as expected to be significantly up on 1H24, drawing increased revenue from growth in the private credit portfolio and gains on a small number of investments partially offset by lower investment due to the timing of asset realisations.
Total deposits in banking and financial services (BFS) was up 3 per cent on 30 September at $135.6 billion. During the third quarter of 2024, the business banking loan portfolio grew 6 per cent to $15.5 billion while the car loans portfolios decreased 8 per cent to $4.8 billion.
According to Ms Wikramanayake, the group continues to hold promise in the medium term.
“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 conservative balance sheet; and a proven risk management framework and culture,” she said.
In its update, the group also announced the departure of its head of commodities and global markets, Nicholas O’Kane, after more than three decades with Macquarie to pursue opportunities outside the group.
“Simon Wright, currently global head of CGM’s financial markets division, would become group head of CGM and following the completion of necessary procedures will join the executive committee from 1 April 2024,” the ASX statement read.
