The Macquarie Group Ltd (ASX: MQG) share price is headed downwards after the global investment bank announced an update.
Macquarie is a financial business with operations across the world. It has four divisions – Macquarie Asset Management (MAM), banking and financial services (BFS), commodities and global markets (CGM) and Macquarie Capital (which offers investment banking services).
Macquarie share price
FY24 update
The company gave a short update about the FY24 first half for each of its divisions, which appears to have disappointed the market. The main change about Macquarie’s outlook for investors was regarding Macquarie Asset Management, and it was negative.
MAM
MAM said that base fees are expected to be “broadly in line”.
However, the net ‘other operating income’ is expected to be “substantially down” mainly due to lower investment-related income from green energy investments, with asset realisations (sales) predominately expected in the second half of FY24. This could be what’s harming the Macquarie share price today.
BFS
In the BFS division, Macquarie said that it’s expecting growth in the loan portfolio, deposits and platform volumes.
The “market dynamics” are expected to continue to drive margins and it’s monitoring any need for provisioning.
Finally, in BFS there will be “higher expenses to support volume growth, technology investment, compliance and regulatory requirements.”
Macquarie Capital
For Macquarie Capital, transaction activity is expected to be “up” after a challenging FY23.
Investment-related income is expected to be “broadly in line” with FY23, with increased revenue from growth in the private credit portfolio , offset by lower revenue due to the timing of asset realisations.
It revealed an expectation of continued balance sheet deployment in both debt and equity investments.
CGM
Commodities income benefitted from “exceptionally strong” trading conditions in FY23 – that’s last year. The CGM income is expected to be broadly in line with FY22, though volatility “may create opportunities.”
It’s seeing a consistent contribution from client and trading activity across its financial markets platform.
The business is expecting a continued contribution from asset finance across sectors.
Final thoughts on the Macquarie share price
Macquarie shares are roughly where it was 12 months ago. It’s a bit cheaper than where it was in early 2022.
I believe that the weak economic conditions will improve at some point, so this could be a good time to think about it while the situation looks weak. I’d rather own Macquarie than Commonwealth Bank of Australia (ASX: CBA) shares because of the long-term (global) growth potential.
