The Macquarie Group Ltd (ASX: MQG) share price is down 4% after holding its AGM and giving the FY25 first quarter update.
Macquarie is a major ASX financial institution, it’s one of the largest banks in Australia, and also has an investment bank division, an asset management division and a commodities and global markets (CGM) division.
FY25 first quarter
The ASX financial share reported that its total operating profit in the first quarter of FY25 was “broadly in line” with the prior corresponding period, being the first quarter of FY24. Profit generation is a key factor for Macquarie shares.
Macquarie Asset Management (MAM) saw its assets under management (AUM) reach $915 billion at 30 June 2024, down 2% from 31 March 2024. A negative factor was unfavourable foreign exchange movements, offset by an increase in asset valuations and net flows.
Banking and financial services (BFS – Macquarie Bank) saw deposits increase 2% to A$145.3 billion compared to March 2024, while home loans increased 4% from 31 March 2024. The business banking portfolio grew 5% over the three months to $16.6 billion.
CGM saw its commodities performance improve compared to the prior corresponding period, largely driven by improved trading activity in its North American gas, power and emissions markets, while there were “strong results” in the agriculture and resources sectors. Its financial market activities benefited from “continued strong client activities”.
Macquarie Capital’s fee and commission income increased year over year, while investment-related income was down largely due to higher funding costs and the timing of realisations.
Profitability
MAM and BFS’ combined FY25 first quarter net profit was largely in line with the FY24 first quarter. There were both lower credit impairment charges and a lower lending profit margin in BFS.
CGM and Macquarie Capital’s net profit was down year over year, largely due to the timing of asset sales in Macquarie Capital.
Final thoughts on the Macquarie share price
The share price had rallied 13% in 2024 before today, and today was the day it had to show an improvement in profit to justify that increase. It seems flat profit did not inspire investors.
I’d call Macquarie one of the leading ASX financial shares, but I wouldn’t want to overpay for it. I’d rather own Macquarie than the other big ASX bank shares, but I’d rather buy a financial business when there are market fears about the economy – not after a rally.
