Macquarie Group: Depressed Transaction Activity Weighing on Earnings, but a Pick Up Is Likely

Narrow-moat-rated Macquarie’s third-quarter trading update largely met our expectations, albeit commentary on the short-term outlook is slightly more downbeat given less transaction activity. Profit for the first nine months of fiscal 2024 is down substantially on the same fiscal 2023 period, but given that the first half profit was down almost 40%, we don’t see cause for alarm. The decline in earnings is broadly a result of lower asset sales in the asset management division, which we view as largely timing-related rather than reflecting diminished future earnings potential, and a step down in commodities and global markets earnings following an exceptionally strong fiscal 2023.