MQC) shareholder returns fall in slower financial markets

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MQC) shareholder returns fall in slower financial markets

Addressing the company’s shareholders in Sydney on Thursday, Macquarie chair and former Reserve Bank governor Glenn Stevens said the banking group has delivered a return on their investment of 10.8 per cent “a bit below the level Macquarie typically seeks to achieve”, as quieter financial conditions presented fewer opportunities and weighed on demand for its services.

Over the past five years, Macquarie has earned around 15 per cent for shareholders on average.

On interest rates, Stevens said central banks everywhere were faced with “quite a delicate situation”, noting that while inflation had come down, there were still questions about whether it had cooled enough. “Economies have probably been a bit more resilient than most would have expected. [But] there are signs of slowing, certainly in the US and here,” he said.

Jefferies equity analyst Matthew Wilson said it had been a “soft start” to Macquarie’s new financial year compared with market expectations, though it was consistent with Macquarie’s expectations.

Wikramanayake said Macquarie Asset Management, which accounted for 18 per cent of the group’s net profits, held $915 billion in assets under management as of the end of June – down 2 per cent from March.

However, she noted Macquarie’s banking and financial services unit – which has been pushing into the market share of the big four banks – saw deposits grow 2 per cent to $145.3 billion from March to June, with its home loan portfolio up 4 per cent to $123.7 billion. Its business bank loan portfolio grew 5 per cent to $16.6 billion.

Shares in Macquarie were down 3.9 per cent to $200.66 in afternoon trading amid a wider market sell-off.

While Macquarie’s commodities and global markets business fell short of its previous stellar performance amid lower volatility in markets, its performance improved from the same time last year. Wikramanayake said this was largely driven by improved trading in the North American gas, power and emissions markets and strong results in the agriculture and resources sectors.

Macquarie Capital, meanwhile, saw higher fee and commission income compared to the same period a year ago, but reported lower investment-related income due to higher funding costs and the timing of asset sales. “We’re expecting transaction activity to be significantly up on what was a challenging year last year across the market,” Wikramanayake said.

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