Macquarie share price sinks 5% on 'substantially down' profits

The Macquarie Group Ltd (ASX: MQG) share price is trading lower on Thursday morning.

At the time of writing, the investment bank's shares are down 5% to $174.34.

Why is the Macquarie share price falling?

Investors have been selling down the Macquarie share price this morning after the company released a first-quarter update ahead of its annual general meeting.

According to the release, weaker trading conditions saw Macquarie's operating groups deliver a quarterly net profit contribution that was substantially down on the prior corresponding period.

Macquarie's annuity-style businesses, Macquarie Asset Management (MAM) and Banking and Financial Services (BFS), combined profits were "substantially down" due to lower investment-related income from green energy investments in MAM. BFS' contribution was actually significantly up on the prior corresponding period thanks to growth in the loan portfolio and deposits, together with improved margins.

It was the same story for Macquarie's markets-facing businesses, Commodities and Global Markets (CGM) and Macquarie Capital. They reported a combined net profit contribution that was substantially down. Management blamed this on tough comparables for CGM and lower investment-related income for Macquarie Capital.

Outlook

For the short term, management advised that it continues to maintain a "cautious stance", with a conservative approach to capital, funding, and liquidity. It feels this positions the bank well to respond to the current environment.

Looking further ahead, management believes Macquarie is well-positioned to deliver superior performance in the medium term due to its diverse business mix across annuity-style and markets-facing businesses.

This will be supported by its "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."