The Macquarie Group Ltd (ASX: MQG) share price will be one to watch on Thursday following the release of its annual general meeting update.
As well as providing investors with a breakdown on its performance in FY 2020, its presentation included an update on its first quarter performance.
How is Macquarie performing in FY 2021?
According to the release, Macquarie has been impacted by mixed trading conditions during the first quarter. As a result, the investment bank's operating profit during the quarter was slightly down on the prior corresponding period.
While some of its businesses are performing very positively during the pandemic, others are acting as a drag on proceedings.
Macquarie's Managing Director and Chief Executive Officer, Shemara Wikramanayake, explained: "Macquarie's annuity-style businesses were up on 1Q20 with Macquarie Asset Management (MAM) up primarily due to the sale of its rail operating lease business, partially offset by lower income in Banking and Financial Services (BFS) which included higher provisions."
"Macquarie's markets-facing businesses were down on 1Q20 primarily due to significantly lower investment-related income in Macquarie Capital (MacCap), partially offset by stronger contributions from certain divisions in Commodities and Global Markets (CGM)," she added.
One big positive is the company's balance sheet strength. The bank's financial position comfortably exceeds APRA's requirements, with a group capital surplus of $8.1 billion at the end of the quarter. This means it has a CET1 capital ratio of 13.2%, up from 12.2% at the end of March.
Outlook.
Macquarie expects conditions to remain challenging due to "the significant and unprecedented uncertainty caused by the worldwide impact of COVID-19 and the uncertain speed of the global economic recovery."
It also warned that the impact that these conditions will have on its overall FY 2021 profitability is uncertain. This is making short-term forecasting extremely difficult.
As a result, Macquarie advised that it is currently unable to provide meaningful earnings guidance for FY 2021.
Ms Wikramanayake concluded: "Macquarie remains well positioned to deliver superior performance in the medium term due to its deep expertise in major markets; strength in business and geographic diversity and ability to adapt its portfolio mix to changing market conditions; ongoing programs to identify cost saving initiatives and efficiency; strong and conservative balance sheet; and proven risk management framework and culture."
