Macquarie Group saw its shares hit a three-month high on the ASX following its 3Q19 update, in which the bank upped its forecast for the full year, predicting that it will now be 15 per cent higher than FY18.
Previously, the group had forecasted its FY19 result would be around 10 per cent higher than the prior year.
Macquarie’s shares closed Tuesday afternoon at $121.92, increasing to a peak of $125.91 on Wednesday.
Macquarie said that its markets-facing business CGM and Macquarie Capital’s combined contribution for the quarter was significantly higher than in the December 2017 quarter, mainly due to higher principal revenue in Macquarie Capital and strong performance from the commodities platform in Commodities and Global Markets.
However, the firm said that its net profit contribution from annuity-style businesses would be slightly down on the prior year, due to lower performance fees in its asset management business.
Macquarie added that the decrease would be offset by timing of transactions in Corporate and Asset Finance Principal Finance and continued growth in its Banking and Financial Services segment.
Macquarie Asset Management (MAM) had assets under management (AUM) of $532.1 billion for the quarter ending 31 December, down by 2 per cent on the prior quarter ending 30 September.
During the quarter, Macquarie Infrastructure and Real Assets (MIRA) raised $8.7 billion in new equity, including $7.4 billion in Europe, invested equity of $1 billion and divested $1.2 billion of assets.
Corporate and Asset Finance’s (CAF) Asset Finance and Principal Finance portfolio of $21.6 billion was broadly in line with the prior quarter.
Banking and Financial Services had total deposits of $51 billion as of December 31, up by 3 per cent on the September quarter.
The Australian mortgage portfolio of $37.3 billion for the quarter, increasing by 3 per cent from the previous quarter, while funds on platform of $82.6 billion dropped by 6 per cent, which Macquarie attributed to market movements.
The business banking loan portfolio of $8.1 billion had increased by 4 per cent from the September quarter.
The Australian vehicle asset finance portfolio of $15.3 billion slipped by 1 per cent.
Macquarie Capital completed 78 transactions globally valued at $155 billion in the period, up on the prior quarter, which the firm said was driven by adviser activity in Europe, Australia and North and South America.
Among its notable transactions for the quarter, the group said, was acting as financial adviser to Wesfarmers in relation to the approximately $19 billion demerger of Coles Group.
The bank expects an increase of up to 15 per cent for the full year compared to the FY18 result.
Shemara Wikramanayake, CEO, Macquarie, said: “Trading conditions were satisfactory with significant realisations across the group in the December 2018 quarter.
“Macquarie remains well positioned to deliver superior performance in the medium term.
“This is due to our deep expertise in major markets, strength in diversity and ability to adapt the portfolio mix to changing market conditions, as well as the ongoing benefits of continued cost initiatives, a strong and conservative balance sheet [and] proven risk management framework and culture.”
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].