Macquarie Group presented its third-quarter update on Tuesday, emanating a more upbeat tone than its troubled and uncertain outlook given with its results for the first half of the year.
“Trading conditions across the group improved in the quarter ended 31 December 2020,” Macquarie managing director and chief executive Shemara Wikramanayake said.
Macquarie has maintained its previous expectation that market conditions will remain “challenging”, given the uncertainty caused by the pandemic and the uncertain speed of economic recovery.
The group anticipates its result for the full year to be “slightly down” on FY20.
But Ms Wikramanayake has expressed optimism for the company’s course ahead.
“Macquarie remains well-positioned to deliver superior performance in the medium term due to our deep expertise in major markets; strength in business and geographic diversity and ability to adapt our portfolio mix to changing market conditions; an ongoing program to identify cost saving initiatives and efficiency; our strong and conservative balance sheet; and a proven risk management framework and culture,” she said.
During the update, the company also declared the resignations of Macquarie Bank CEO Mary Reemst, group and bank board director Gordon Cairns and Macquarie Asset Management group head Martin Stanley.
Looking at segments, the annuity-style businesses’ combined profit for the third quarter (the three months to December) was reported to be up on year before, with base and performance fees in the asset management business being broadly in line with its previous performance.
Macquarie Asset Management had seen its managed assets drop by 1 per cent from the previous quarter, to $550.9 billion.
The infrastructure and real assets business recorded its equity under management falling by 2 per cent to $137.1 billion, while Macquarie Investment Management’s assets under management (AUM) rose by 3 per cent to $360.6 billion.
During the December quarter, the investment management arm entered into a deal to acquire Waddell & Reed Financial, Inc, planning to retain the group’s asset management segment and sell its wealth management platform to LPL Financial.
The platform sale is expected to result in a US$68 billion ($87.9 billion) boost to Macquarie Investment Management’s AUM.
Meanwhile the banking and financial services segment saw margin pressure, increased credit impairment charges and higher costs incurred from COVID customer support.
The markets-facing businesses, which entail the commodities and global markets (CGM) division and Macquarie Capital, produced a net profit contribution for Q3 that was significantly higher than the year before.
The rise was partially fuelled by Macquarie selling its partial interest in technology vendor Nuix, as well as stronger client hedging and trading activity across the CGM businesses, particularly from the oil, gas and precious metals markets arms.
