Home Commodities Macquarie Profit Misses Estimates as Commodities Unit Weighs

Macquarie Profit Misses Estimates as Commodities Unit Weighs

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(Bloomberg) — Macquarie Group Ltd.’s earnings missed estimates as a plunge in profit from its commodities and global markets business dragged on the Australian firm’s performance.

Net income declined 32% to A$3.52 billion ($2.31 billion) in the year to March 31, according to a statement Friday. That fell short of the A$3.6 billion average projection from analysts surveyed by Bloomberg.

The firm’s shares have been underperforming their global peers over the past year amid expectations for a soft result as volatility in energy markets subsided and a sluggish environment for mergers endured. Wall Street peers have posted a recent improvement in profitability and optimism has grown for a boost in capital markets activity. 

Macquarie’s commodities trading and hedging had become a major profit engine in recent years as companies across the world sought to protect against energy shocks from wars in Ukraine and the Middle East to wild weather. Profit contribution from that business fell 47% on the prior year, the bank said. 

The profit contribution from the firm’s asset management business posted a 48% slump, largely due to a relative drop in the number of asset sales. The firm’s assets under management stood at A$938 billion. 

“Macquarie remains well-positioned to deliver superior performance in the medium term with its diverse business mix across annuity-style and markets-facing businesses,” Chief Executive Officer Shemara Wikramanayake said in the statement. 

One of the firm’s bright spots was Macquarie Capital, where income grew from the expansion of its private credit portfolio, which offset lower advisory fee income in the investment banking arm. That business posted a profit contribution of A$1.05 billion, up 31%.

Meanwhile, Macquarie is making inroads in the domestic mortgage market. Its home-loan portfolio grew 10% to A$119 billion, representing 5.3% of the Australian market. 

(Adds detail from seventh paragraph on Macquarie Capital performance)

©2024 Bloomberg L.P.

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