Macquarie share price sinks on ‘substantially’ lower profits

The Macquarie Group Ltd (ASX: MQG) share price is falling on Tuesday.

In morning trade, the investment bank’s shares are down over 4% to $180.01.

Why is the Macquarie share price falling?

Investors have been selling the company’s shares today after it released an operational briefing for the third quarter of FY 2024.

According to the release, financial year to date net profit after tax remains “substantially down” on the prior corresponding period.

Management notes that this was due to the company cycling an exceptional quarterly result in the third quarter of FY 2023.

How did its segments perform?

Macquarie’s annuity-style businesses, Macquarie Asset Management (MAM) and Banking and Financial Services (BFS), reported a combined third quarter net profit contribution that was “down” on the prior corresponding period.

This was mainly due to lower asset realisations in green investments in MAM and margin compression along with run off in the car loan portfolio, partially offset by volume growth across home loans and business lending in BFS.

Macquarie’s markets-facing businesses, Commodities and Global Markets (CGM) and Macquarie Capital, reported a combined quarterly net profit contribution that was “substantially down” on the prior corresponding period. This was primarily due to exceptionally strong results in CGM in the prior corresponding period and lower fee and commission income, partially offset by investment-related income in Macquarie Capital.

In other news, after 28 years with Macquarie and five years as Group Head, Nicholas O’Kane has decided to step down as Head of CGM and from Macquarie’s Executive Committee, effective 27 February 2024. O’Kane, the company’s highest earner, is pursuing opportunities outside Macquarie.

Management commentary

Macquarie Group’s Managing Director and Chief Executive Officer, Shemara Wikramanayake, was pleased with the company’s performance given the tough trading conditions. She 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.

Speaking about the company’s outlook, Wikramanayake adds:

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.

The Macquarie share price is now down 6% over the last 12 months.

The post Macquarie share price sinks on ‘substantially’ lower profits appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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