The Macquarie Group Ltd (ASX: MQG) share price is edging lower today.
Shares in the S&P/ASX 200 Index (ASX: XJO) diversified financial stock closed yesterday trading for $227.89. In morning trade on Tuesday, shares are changing hands for $227.60 apiece, down 0.1%.
For some context, the ASX 200 is up 0.3% at this same time.
This follows the release of Macquarie's third-quarter trading update.
Read on for the highlights.
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Macquarie share price slips on flat profits
The Macquarie share price has dipped lower after the company reported that its net profit after tax (NPAT) for the nine months to 31 December was flat year on year.
The profit contribution from Macquarie Asset Management (MAM) and Banking and Financial Services (BFS) – Macquarie's annuity-style businesses – was up "substantially" compared to the same nine months last year.
Continued volume growth and lower operating expenses, which were reported to be partially offset by margin compression, drove the increased contribution in BFS. Higher performance fees and investment income boosted the profit contribution from MAM.
Likely not helping the Macquarie share price today, the nine-month profit contribution from the company's Commodities and Global Markets (CGM) and Macquarie Capital – its markets-facing businesses –was "substantially down" on the prior corresponding period.
Management said the decline in profits from this segment was mainly due to subdued conditions in certain commodity markets. Profits also took a bit of a hit from the unfavourable impact of the timing of income recognition, primarily on North American Gas and Power contracts in CGM. This was said to be partially offset by higher fee and commission income in Macquarie Capital
The third quarter also saw Macquarie's board approve an extension of the on-market share buyback of up to $2 billion for a further 12 months as of November. On 10 February, Macquarie had acquired $1.01 billion of shares on-market at an average price of $189.80 per share.
Macquarie noted its financial position "comfortably exceeds regulatory requirements", with a group capital surplus of $8.5 billion and a bank common equity tier 1 (CET1) ratio of 12.6%.
Now what?
Looking at what could impact the Macquarie share price in the months ahead, Macquarie said it would continue to maintain a cautious stance, with a conservative approach to capital, funding, and liquidity in response to the current environment.
Commenting on the outlook, Macquarie CEO Shemara Wikramanayake said:
Macquarie remains well-positioned to deliver superior performance in the medium term with its diverse business mix across annuity-style and markets-facing businesses; deep expertise across diverse sectors in major markets with structural growth tailwinds; patient adjacent growth across new products and new markets; ongoing investment in our operating platform; a strong and conservative balance sheet; and a proven risk management framework and culture.
The Macquarie share price is up 21% in a year.
