Australian global financial services group Macquarie Group...

Australian global financial services group Macquarie Group [ASX:MQG] was moving up 2% in share value earlier on Tuesday morning after the company released a report on third-quarter trade for 2023.

The group noted ‘varied conditions’ manifested a ‘good’ quarter for the group.

NPAT had moved subtly up for the nine months through to the end of December 2022 — compared with a record period the year before — yet the company also flagged green energy realisations, lower fees, and commissioning income.

The bank was trading around $190.86 a share earlier today, having moved up a little in morning trade, and boosted more than 14% so far in the last month and a week.

Having said that, its now in its sector by more than 9% over the 12-month averaging period.

Source: TradingView

Macquarie explains its third quarter

The financial services conglomerate revealed its third quarter FY23 results had sidled up subtlety compared with a record corresponding quarter that ended December 2021.

This was primarily due to a continuation of strong commodities performance, as well as positive trends in the group’s global markets segment.

NPAT tallied for the nine months for Macquarie asset management and banking services went slightly up compared with third quarter FY22.

However, year-to-date net profit contribution significantly fell in the same period due to green energy asset realisations that offset the prior period.

Year-to-date net profit contributions for commodities, global markets, and capital increased on strong results in commodities that included gas and power contributions across all regions.

Again, these results were offset by lower realisations from 2021, as well as lower fees, commissioning, and income for Macquarie capital.

The group reported capital surplus at $12.5 billion and an APRA Basel III Common Equity Tier 1 capital ratio of 13.3% at 31 December 2022, up from 12.8% at 30 September 2022.

Liquidity Coverage Ratio (LCR) was 203%, and the Net Stable Funding Ratio (NSFR) was 117% by December 2022.

Macquarie had assets under management (AUM) of $797.8 billion at 31 December 2022, broadly in line with 30 September 2022.

MQG cautious on year ahead

Energy market volatility boosted the group’s net profit contributions, especially as the bank managed to mitigate some of the volatility and rising interest rates, considering deals with caution.

If commodities and global markets continue to perform well, the bank could be looking at a bumper year ahead.

Macquarie stated:

‘Commodities income, which has benefitted from strong trading conditions in financial year 2023 are expected to be substantially up on FY22, including the impact of timing of income recognition on gas and power transport and storage contracts.’

Having said that, unreliable market conditions have prevented the group from releasing a forecast, merely stating it will remain cautious and monitor for signs of bad loans.

MCG admitted it’s not immune to cost pressures faced by the Big Four banks, and warned of upcoming higher expenses for volume growth, technology investment, and regulatory requirements.

Regards,

Mahlia Stewart,

For The Daily Reckoning Australia

Original post dte 07/02/23. All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.