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Highlights
- Macquarie Group shares fell 0.1% to AU$227.60 despite a positive ASX 200 performance.
- The company reported flat net profit after tax (NPAT) for the nine months ending 31 December.
- An AU$2 billion share buyback extension was approved, with a strong capital position maintained.
Macquarie Group Ltd (ASX:MQG) shares saw a slight dip in early trading on Tuesday, slipping 0.1% to AU$227.60 per share, following the release of its third-quarter trading update. This came despite the broader S&P/ASX 200 Index (ASX:XJO) rising 0.3% at the same time.
Flat Profit Growth Weighs on Share Price
The decline in Macquarie's stock price follows its latest financial update, which revealed that net profit after tax (NPAT) for the nine months ending 31 December remained unchanged compared to the previous year.
Macquarie's annuity-style businesses—Macquarie Asset Management (MAM) and Banking and Financial Services (BFS)—delivered strong results. These segments saw "substantial" profit growth, driven by volume expansion and reduced operating expenses in BFS, despite some pressure from margin compression. Additionally, MAM benefited from increased performance fees and higher investment income.
However, this strong performance was counterbalanced by a significant downturn in Macquarie’s markets-facing businesses. The Commodities and Global Markets (CGM) and Macquarie Capital segments reported a "substantially down" profit contribution compared to the prior corresponding period.
Management attributed this decline to weak conditions in specific commodity markets and unfavorable timing in income recognition, particularly in North American Gas and Power contracts within CGM. While this was partly offset by higher fee and commission income from Macquarie Capital, it was not enough to prevent the overall profit stagnation.
Capital Strength and Share Buyback Extension
In a move that underscores confidence in its financial position, Macquarie’s board approved a 12-month extension of its on-market share buyback program of up to AU$2 billion. As of 10 February, the company had already repurchased AU$1.01 billion worth of shares at an average price of AU$189.80 per share.
Additionally, the company reported a robust capital position, exceeding regulatory requirements, with a group capital surplus of AU$8.5 billion and a bank common equity tier 1 (CET1) ratio of 12.6%.
Outlook: A Cautious Yet Optimistic Approach
Looking ahead, Macquarie plans to maintain a conservative stance on capital, funding, and liquidity, adapting to the current market environment. CEO Shemara Wikramanayake expressed confidence in the company’s long-term prospects, citing its diverse business mix, expertise in key sectors, and ongoing investments in its operational infrastructure.
