Macquarie (ASX:MQG) share price on watch following 'record quarter'

Macquarie shares will be in focus today after a record quarter…

| More on:
a man raises his fists to the air in joyous celebration while learning some exciting good news via his computer screen in an office setting.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Macquarie had a record quarter during the three months ended 31 December
  • The investment bank's market-facing business were the key drivers of its growth
  • Management is cautiously optimistic on the future

The Macquarie Group Ltd (ASX: MQG) share price will be on watch this morning.

This follows the release of the investment bank's third quarter operational update.

Macquarie share price on watch following solid quarter

Macquarie had a strong quarter with positive performances being reported across the board.

The Macquarie Asset Management (MAM) business had assets under management (AUM) of $750.1 billion at 31 December 2021, up 2% since the end of September. The release notes that that Public Investments AUM rose 2% to $522.5 million and Private Markets AUM rose 3% to $227.6 billion. This was driven by a combination of positive market movements and fund investments.

The Banking and Financial Services (BFS) was on form and reported total deposits of $91.6 billion at the end of the quarter, which is up 4% since the end of September. In addition, its home loan portfolio increased 8% to $82.8 billion and its business banking loan portfolio increased 4% to $11.4 billion.

Macquarie's Commodities and Global Markets (CGM) business was a highlight for the quarter, delivering strong results across the commodities platform. This was particularly the case in global Gas & Power and Resources, driven by increased client hedging and trading opportunities from unusually challenging market conditions.

Finally, the Macquarie Capital business completed 126 transactions valued at $105 billion globally during the quarter. This meant that fee revenue was significantly up across Advisory, DCM and ECM, and investment-related income was also up substantially following exceptionally strong investment realisations. The release notes that Macquarie Capital is the number one global financial adviser for infrastructure/project finance.

What about its profits?

Macquarie hasn't provided the market with any financials with its update. However, it notes that the sum of the above is "a record quarter" for the company.

This is despite its MAM and BFS businesses reporting a combined net profit contribution down on the prior corresponding period due to the timing of performance fees and investment-related income. Their net profit contribution remains up on a year to date basis.

The key drivers of its growth during the third quarter were its market-facing businesses, CGM and Macquarie Capital. Their combined profit contribution was up "substantially" on the prior corresponding period. This is also the case on a year to date basis.

In light of the above, Macquarie finished the period in a very strong financial position, with a CET1 ratio of 12.2% and group capital surplus of $11.5 billion.

Outlook

Macquarie's Group Managing Director and Chief Executive Officer, Shemara Wikramanayake, was cautiously optimistic on the future.

She said: "We continue to maintain a cautious stance, with a conservative approach to capital, funding and liquidity that positions us well to respond to the current environment. More broadly, we remain well positioned over the medium term, based on our deep expertise in major markets, a diversified and adaptable mix of strong businesses, an ongoing program to identify cost saving initiatives and efficiency, a strong and conservative balance sheet and a proven risk management framework and culture."

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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Earnings Results

A woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surges
Earnings Results

Web Travel share price rockets 13% on market leading full-year growth

Investors are sending Web Travel shares soaring today. Here’s why.

Read more »

Happy shopper at a clothes shop.
Earnings Results

Why did Myer shares just rocket 9%?

Investors are piling into Myer shares on Friday. But why?

Read more »

A woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surges
Earnings Results

Up 78% since April, why is the Webjet share price taking off again today?

Webjet shares have soared 78% since 4 April and are lifting off again today. But why?

Read more »

a woman holds her hands to her temples as she sits in front of a computer screen with a concerned look on her face.
Industrials Shares

Guess which ASX 200 stock is crashing 24% on results day

Investors were not impressed with this result. But why?

Read more »

A man in full American NFL playing kit crouches over with his arms across his chest in a defensive stance against a dark background.
Technology Shares

ASX 300 tech stock charges 7% higher to record high on stellar results

This tech stock delivered another impressive result this morning.

Read more »

a group of people sit around a computer in an office environment.
Earnings Results

Guess which ASX 200 tech stock is rocketing 12% on record results

Another half, another record result from this high-quality company.

Read more »

A young man sitting at an outside table uses a card to pay for his online shopping.
Consumer Staples & Discretionary Shares

Why is the Kogan share price crashing 12%?

Profits are down at this ecommerce company during the second half.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Resources Shares

Guess which ASX 200 mining stock is sinking 7% following its quarterly update

Let's see how this miner performed during the third quarter.

Read more »