Macquarie Group Ltd (ASX:MQG) has released their 2016 operational briefing. Showing a mixed short term outlook for the 2H16.
Macquarie expects their 2H16 results to be lower than their than 1H16 results, but higher than the PCP. However, Macquarie expects the overall FY16 results to be higher than FY15.
The group’s short term outlook is relatively blurred, due to a range of factors. Including current market conditions, the impact of foreign exchange, the cost of their conservative approach to funding and capital, along with potential regulatory and tax uncertainties.
Although, with respect to their balance sheet, Macquarie is in a rather sufficient state, with total customer deposits of $42.5 billion, as at Q415. In line with Q32015.
Macquarie provided brief overview of the performance of each of their operations, during Q42015.
Macquarie Asset Management (MAM): MAM had $A87.2 billion under management, as at the end of Q42015. It was down 3% to Q32015, due in part to unfavourable exchange rate movements. However, it was partly offset by positive market movements. Since the 1H16, Macquarie Infrastructure and Real Assets raised $A4.1 billion in new equity, predominately in Asian infrastructure. Moreover, Investment Management was awarded $A3.2 billion in new, funded institutional mandates across four strategies.
Corporate Asset Finances (CAS): Their Corporate Asset Finances asset and loan portfolio expanded to $A39.7 billion, as at the end of Q42015. This was up 23% to Q32015. Furthermore, their CAF Asset Finance Portfolio increased to $A29.6 billion, as at the end of Q42015, up 39% to Q32015. This growth was attributed to a series of acquisitions, which continue to progress. This includes the AWAS Aviation Capital and the Esanda dealer finance portfolio.
Banking and Financial Services (BFS): Macquarie’s Australian Mortgage Portfolio increased 1%, compared to Q32015, to $A27.8 billion. As at the end of Q42015, Macquarie’s platform assets under administration increased to $A59.8 billion, up 28% to Q32015. Similarly, Q42015 BFS deposits grew by 2%, to $A39.5 billion.
Macquarie Securities Group (MSG): General market activity within the Asia-Pacific region was relatively slower during Q42015. This was in response to ongoing concerns to China growth, along with the Federal Reserve raising interest rates. This coincided with lower client activity and trading volumes.
Macquarie Capital (MC): During the quarter, MC completed 98 transactions, valued overall at $A43 billion.
Commodities and Financial Markets (CFM): Due to the ongoing volatility in the commodities market, there was a surge in customer activity within the energy platform. Resulting in a growth in opportunities in Agriculture and Base Metals. However, the sell-off in the US Credit Markets coincided with reductions debt capital market fees and secondary market client trading revenues.
Investors have reacted rather negatively to the announcement, with MQG down over 6% (As at 11.49am AEDT), to $64.0.
Author: Ben Khouri
Feb 04, 2016
Ben Khouri is a financial editor for Wise-Owl with a particular focus on the top ASX 300 companies. Having a vast background in economics and finance, Ben provides financial commentary & analysis as well as global market updates, which guide investors in devising investment strategies. Ben specialises in analysing economic data and global events from around the world and examines the impacts they have on the major equity markets.