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.
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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.
