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Macquarie reports 32% profit drop amid market volatility

By Maja Garaca Djurdjevic
3 minute read

The bank’s net profit plummeted by 32 per cent, primarily due to challenges in its commodities trading division.

Macquarie Group announced on Friday a net profit after tax attributable to ordinary shareholders of $3.52 billion for the year ended 31 March 2024, down 32 per cent on the year.

Macquarie’s managing director and chief executive officer, Shemara Wikramanayake, said: “Despite ongoing economic uncertainty and subdued market conditions in many parts of the world, Macquarie’s client franchises remained resilient over the last year, with continued client growth, fundraising and new business origination across the group as we delivered our 55th consecutive year of profitability since inception.”

Macquarie’s annuity-style activities, involving Macquarie Asset Management, Banking and Financial Services, and select Commodities and Global Markets (CGM) businesses, yielded a net profit contribution of $3.0 billion, down 27 per cent from FY2023 due to reduced asset sales in green investments and ongoing investments in green energy portfolio companies.

Moreover, markets-facing activities by Macquarie Capital and most CGM businesses generated a combined net profit of $3.7 billion, down 40 per cent from FY23, attributed to exceptional volatility in commodity markets impacting CGM’s record FY23 performance.

Within asset management alone, the profit slumped 48 per cent as a result of lower asset realisations in green investments and increased net expenditure in investments in green energy portfolio companies operating on a standalone basis with base and performance fees broadly in line.

Assets under management at 31 March 2024 were $938.3 billion, up 7 per cent from a year earlier, largely due to favourable market movements, investments made by MAM Private Markets-managed funds and favourable foreign exchange movements. They were partially offset by assets no longer managed as a result of a reduction of co-investment management rights.

Macquarie announced an FY24 final ordinary dividend of $3.85 per share which is 40 per cent franked, below the $4.50 announced last year.

Looking forward, it said it continues to maintain a cautious stance, with a conservative approach to capital, funding, and liquidity that positions it well to respond to the current environment.

Among the “range of factors” that may influence its short-term outlook, Macquarie cited market conditions including global economic conditions, inflation and interest rates, significant volatility events, and the impact of geopolitical events, and the completion of period-end reviews and the completion of transactions.

The geographic composition of income and the impact of foreign exchange, as well as potential tax or regulatory changes and tax uncertainties were also highlighted.

Wikramanayake said: “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 investment in our operating platform; a strong and conservative balance sheet; and a proven risk management framework and culture.”

Commenting on Macquarie’s results, Saxo Asia-Pacific senior sales trader Junvum Kim said: “Macquarie’s performance appears tepid, with both revenue and earnings retreating from the previous year’s levels. Despite an approximately 50 per cent uptick in net profit for the latter half of the period relative to the first, this did little to invigorate the overall results. Persistent macroeconomic instability persists as a major hurdle in reigniting growth, with the commodities arm facing a steep 47 per cent dive in profit contributions from one year prior.”