Macquarie Group (MQG) shares fell 3% yesterday after the company surprised with a weak trading update at the company’s AGM in Sydney.
The shares lost $1.83, or 3% to end at $59.44 after shareholders were told of a fall in trading revenues and profits in the three months to June 30.
That was contrary to the small upturn in trading revenues reported last week by big Wall Street banks such as Goldman Sachs and Citigroup. That upturn limited what had been expected to be another quarter of sharp falls in revenues in their FICC groups, (Fixed Income, Commodities and Currencies).
The big Wall Street banks have suffered from weak revenues in this area since the start of the year, whereas Macquarie didn’t as the solid $1.27 billion profit for 2013-14 confirmed.
But the AGM was told that the soft first-quarter results were weighed on by units such as Macquarie Securities, which again suffered from weak equity trading volumes and lower volatility.
The group’s capital markets divisions, including advisory division Macquarie Capital and Fixed Income Currencies and Commodities, had lower combined earnings in the quarter compared to the same period a year earlier.
The bank said its annuity style businesses (which generate revenues and returns with low volatility), including Macquarie Funds and Corporate and Asset Finance, were tracking broadly in line with the same quarter last year.
MQG 1Y – Macquarie posts softer first quarter
Macquarie CEO Nicholas Moore however said the company was continuing with its previous guidance for the 2015 financial year.
“Macquarie’s capital markets facing businesses for the first quarter were down on the first quarter of 2014 and the second quarter 2014 due to the timing of transactions and lower volatility and volumes impacting Macquarie Securities and certain Fixed Income, Currencies and Commodities businesses,” Mr Moore said in the statement and told the meeting.
“The financial year 2015 result for the group is currently expected to be broadly in line with financial year 2014, with the potential for a better result if markets improve,” Mr Moore added. “In line with previous years, it is currently expected that the second half 2015 result will be stronger than the first half.”
Macquarie said the 2015 combined profit contribution from its operating groups would be up on the 2014 year, but after excluding the $288 million gain from the distribution of a holding in Sydney Airport to shareholders the result would be “broadly in line”.
It again noted its standby qualification that there was the potential for a better result if market conditions improve.
