Macquarie profits take a hit on weaker commodities trading

afr.com:

Macquarie Group’s shares tumbled 4.3 per cent to $175 a share at the open on Thursday after the company reported its net profit took a hit for the first quarter of 2024, compared with the same period a year earlier, due to weaker trading conditions.

The group’s asset management arm – with about $864 billion in assets – was hit by less income from its investments in green energy projects, while its commodities and global markets (CGM) business saw less trading activity across power and gas.

Macquarie Group CEO Shemara Wikramanayake said the bank’s market-facing activities would spike after a weak 2023. Dominic Lorrimer

Macquarie’s CGM business contributed roughly 57 per cent to the company’s group profit in the 2023 financial year, but market stability across the energy and commodities trading spaces left fewer opportunities to cash in on clients’ trading and hedging activities in 2024 this first quarter as commodity prices somewhat stabilised.

“We had much weaker trading conditions and that meant our net profit contribution was substantially down on the first quarter of 2023,” chief executive, Shemara Wikramanayake, said.

Looking ahead, Ms Wikramanayake said the bank expected fees to be largely in line with last year in asset management, and tempered expectations for Macquarie’s CGM group in 2024.

After a massive 2023, where CGM head Nicholas O’Kane pocketed a $57 million salary, Ms Wikramanayake said the group expected commodities and markets revenue to be in line with the more subdued 2022 financial year.

“Markets and asset finance are expected to contribute consistently to what they did last year, but commodities, which benefitted from strong trading conditions in 2023… We expect that to be in line with the 2022