Macquarie share price on watch following strong Q1 update

Macquarie had a strong first quarter…

| More on:
Happy man at an ATM.

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 has started FY 2023 in a very positive fashion
  • This has been driven by its annuity-style businesses
  • They delivered strong net profit growth during the first quarter

The Macquarie Group Ltd (ASX: MQG) share price will be one to watch on Thursday.

This follows the release of the investment bank's quarterly update this morning ahead of its annual general meeting.

Macquarie share price on watch following strong Q1 update

All eyes will be on the Macquarie share price this morning after the investment bank revealed that it started FY 2023 in fine form.

According to the release, favourable trading conditions saw Macquarie's operating groups deliver net profit contributions that were up on the first quarter of FY 2022.

And while no actual figures were provided, management advised that its annuity-style businesses, Macquarie Asset Management (MAM) and Banking and Financial Services (BFS), delivered a combined first quarter net profit contribution that was "significantly" up on the prior corresponding period.

This was due largely to income from Green Investment Group (GIG) asset realisations in MAM, which was partially offset by the Macquarie Infrastructure Corporation disposition fee from last year.

The contribution from the BFS business was broadly in line with the prior corresponding period.

What about its other businesses?

Elsewhere, Macquarie's markets-facing businesses, Commodities and Global Markets (CGM) and Macquarie Capital, delivered a combined first quarter net profit contribution that was "slightly up" on the prior corresponding period.

This was due to strong results across the Commodities platform in CGM including the impact of timing of income recognition on gas transport and storage contracts and higher investment–related income in Macquarie Capital. Partially offsetting this was the sale of the CGM UK commercial and industrial smart meters portfolio a year earlier.

Finally, Macquarie advised that its financial position continues to comfortably exceed the Australian Prudential Regulation Authority's (APRA) Basel III regulatory requirements. At the end of June, the company had a group capital surplus of $10.1 billion and Common Equity Tier 1 capital ratio of 12.3%.

Outlook

In the near term, management advised that it continues to maintain a cautious stance, with a conservative approach to capital, funding and liquidity that it believes positions the company well to respond to the current environment.

The company sounds much more positive with its medium term outlook. It concluded:

Macquarie remains well-positioned to deliver superior performance in the medium term. This is due to our deep expertise in major markets; strength in business and geographic diversity and ability to adapt the portfolio mix to changing market conditions; 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 Scott Phillips.

More on Bank Shares

A corporate female wearing glasses looks intently at a virtual reality screen with shapes and lights representing Block shares going up today
Bank Shares

Are Westpac shares a buy following the bank's big tech update?

Is now a good time to buy the banking giant's shares? Let's find out.

Read more »

Different Australian dollar notes in the palm of two hands, symbolising dividends.
Bank Shares

Own CBA shares? It's payday for you!

A dividend is heading to CBA shareholders’ bank accounts.

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Bank Shares

Are CBA shares really worth $120?

It has been a good year for ASX bank shareholders.

Read more »

a group of people sit around a computer in an office environment.
Bank Shares

Westpac shares push higher on $9.8b technology simplification plan

Westpac plans to spend big on technology to close the gap on its rivals.

Read more »

A worried woman looks at her phone and laptop, seeking ways to tighten her belt against inflation.
Economy

NAB boss issues dire prediction for Aussie economy

NAB’s CEO has issued a stark warning on the outlook for Australia’s economic growth.

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Bank Shares

Own CBA shares? Here's the tech stock the banking giant just invested in

CBA has made an interesting investment. Here's what you need to know.

Read more »

A woman gives two fist pumps with a big smile as she learns of her windfall, sitting at her desk.
Bank Shares

ANZ shares charge higher on $57.5 million class action settlement news

ANZ shares have continued their positive run on Monday.

Read more »

Two people comparing and analysing material.
Bank Shares

Better buy: CBA or Westpac stock?

Which ASX bank share is a better buy?

Read more »