The Macquarie Group Ltd (ASX: MQG) share price is falling on Thursday morning.
In early trade, the investment bank's shares are down over 3% to $202.02.
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Why is the Macquarie share price tumbling?
Investors have been selling the company's shares this morning after the bank released a first quarter trading update ahead of its annual general meeting.
According to the release, Macquarie's operating performance was consistent with its own expectations during the first quarter.
Management notes that its operating group contribution from the first quarter of the 2025 financial year was broadly in line with the first quarter of the FY 2024.
The release reveals that Macquarie's annuity-style businesses, Macquarie Asset Management (MAM) and Banking and Financial Services (BFS), delivered a combined first quarter net profit contribution broadly in line with the prior corresponding period.
This was driven by volume growth, lower operating expenses, and lower credit impairment charges in BFS. This was offset by margin compression in BFS and the timing of performance fees in MAM.
However, Macquarie's markets-facing businesses, Commodities and Global Markets (CGM) and Macquarie Capital, acted as a drag on its overall performance. These businesses reported a combined first quarter net profit contribution that was down on the prior corresponding period.
This was primarily due to the timing of asset realisations in Macquarie Capital, which was partially offset by a continued contribution across the platform in CGM.
Strong balance sheet
Management notes that the company's financial position continues to comfortably exceed the Australian Prudential Regulation Authority (APRA) Basel III regulatory requirements.
Its group capital surplus was $8.2 billion at the end of June, which was down from $10.7 billion at 31 March 2024. This was predominantly driven by the payment of the second half dividend, FY24 MEREP awards, business capital requirement growth, and the on-market share buyback.
The bank's Common Equity Tier 1 capital ratio was 12.8% at the end of the period.
Outlook
The company remains cautiously optimistic on the remainder of FY 2025. It stated:
Macquarie continues to maintain a cautious stance, with a conservative approach to capital, funding and liquidity that positions it well to respond to the current environment.
However, management notes that there are a number of factors that may influence its short-term outlook.
This includes market conditions, completion of period-end reviews and the completion of transactions, the geographic composition of income and the impact of foreign exchange, and potential tax or regulatory changes and tax uncertainties.
Nevertheless, it remains upbeat about its medium term outlook. It concludes:
Macquarie remains well-positioned to deliver superior performance in the medium term due to its diverse business mix across annuity-style and markets-facing businesses. This is due to its deep expertise across diverse sectors in major markets with structural growth tailwinds; patient adjacent growth across new products and new markets; ongoing investment in the operating platform; a strong and conservative balance sheet; and a proven risk management framework and culture.
The Macquarie share price is up 10% over the past 12 months.
