Macquarie Group’s earnings tracking steady on last year, amid subdued commodities income

The banking major has shrugged off the impact of the US pulling back from green energy and flagged scaling up its private credit operations.

Macquarie Group CEO Shemara Wikramanayake fronted a quarterly investor and analyst briefing on Tuesday. Picture: Christian Gilles/NCA NewsWire

Macquarie Group has flagged the potential for a significant scaling up in its private credit operations and shrugged off any impact from the US pulling back from green energy, as it reported broadly flat net profit for the first nine months of its financial year.

Macquarie’s chief executive Shemara Wikramanayake was quizzed by analysts about how a second Donald Trump presidency would play out for Macquarie’s green energy exposures in the United States.

She said “the opportunity” in renewable energy had been pursued largely in Europe followed by Asia, with the US accounting for about 10 per cent of Macquarie’s portfolio.

“To the extent we have (US) assets, we’ve had a look through them, some of them benefit from tax credits. That hasn’t been changed, so we’re still getting the tax credits on that,” Ms Wikramanayake said. “Some of them benefit from disbursements and there’s a review of disbursements going on, but ours have all been committed and legally obligated to be made. And I think the ones being reviewed are the ones that have not reached that stage.”

President Trump has withdrawn the US from the Paris climate agreement and enacted a range of measures to freeze green energy spending, including halting the disbursement of funds allocated through the Inflation Reduction Act.

Ms Wikramanayake said despite a more challenging external environment Macquarie had sold investments in its portfolio including offshore wind assets in Taiwan “in line” with the company’s expectations.

Despite analysts questioning Macquarie’s ability to keep making lucrative divestments this year, she said the company would not rush to exit at any cost.

“We don’t feel pressure to exit them at any particular time, so we will look to exit when we can get the best return for the investment we’ve made,” Ms Wikramanayake added.

Among those earmarked for sale are solar ­energy company Cero and offshore wind firm Corio.

Ms Wikramanayake also signalled a concerted push by Macquarie into the private credit sector where more capital would be deployed, as the group believed it could participate in “multiples of” what it was lending now.

“We still in our non-bank find that it’s a very good place to invest, so through Macquarie Capital on our balance sheet, and we have about $25bn of investments at the moment,” she said, noting that more than $3.2bn in private credit was deployed in the December quarter.

“Our team feel they have the capacity to identify much greater volume of investment than that at the sort of returns they’ve been generating, since spreads are not compressing and at the sort of loss ratios they’ve been able to deliver, which are very, very low.”

Ms Wikramanayake identified opportunities in Europe as the most compelling, given the sheer quantum of funds being raised in the space in the US. Within other parts of Macquarie’s business it also has exposure to aircraft finance and shipping finance.

Ms Wikramanayake’s comments come after a decision by Macquarie to close its US debt capital markets arm and divert its focus to areas including private credit.

Macquarie’s ASX update on Tuesday reflected the nine months ended December 31, with the company reporting that improved income in asset management and banking was offset by softer results in commodity markets.

Macquarie said the net profit contribution from its asset management unit and banking and financial services arm was “substantially up” in the period, compared to a year earlier. That was buoyed by higher performance fees and investment income in asset management and continued loan growth in the banking unit.

But profit contribution through the nine months from the commodities and global markets division and investment banking arm Macquarie Capital was “significantly down” on the same period a year earlier. Macquarie cited subdued conditions in “certain commodity markets” and the negative impact of income recognition, largely linked to North American gas and power contracts, for the weaker result. There was also a reduced contribution to profit from risk management income, primarily from European gas, power emissions and global oil.

Ms Wikramanayake didn’t provide specific earnings guidance for Macquarie’s full-year, although reiterated the prior short-term outlook by business division provided with the first-half results. She also said a decline in the Australia dollar had not had a notable impact on Macquarie’s earnings so far.

Macquarie Group CEO Shemara Wikramanayake.

Despite the flat profit result Macquarie’s shares rallied 1.6 per cent to $231.54 on Tuesday, outpacing a marginal increase in the S&P/ASX200.

“With consensus having been downgraded with each of the last seven quarterly updates, Macquarie retaining its short term FY25 (estimated) outlook came as a relief to the market,” said Jon Mott, a Barrenjoey analyst. “We believe this reflects confidence in its ability to dispose of its Cero (solar) business prior to March year-end and improving outlook for the commodities business.”

Macquarie rules off its financial year on March 31.

Tuesday’s update will likely have implications for analysts’ expectations on Macquarie’s annual earnings, considering consensus estimates have the company reporting annual profit of $3.82bn for 2025, up from $3.52bn in 2024. Last year’s result was well down on a peak of almost $5.2bn in 2023.

UBS analyst John Storey estimated Macquarie would need to deliver a $1.2bn result in the fourth quarter to meet consensus estimates for the year. The second half of 2024 “was a strong half for the group and Macquarie appears confident in its ability to land this number”, he said.

Asked about Macquarie’s return-on-equity hovering at 9.9 per cent versus an 18-year average of 14 per cent, Ms Wikramanayake expressed confidence the metric would move back toward the average levels. “Over the medium term we are aiming for a mid-teens ROE,” she said. “In terms of the underlying businesses, we would be aiming for a mid-teens ROE, now that can vary from time to time.”

Macquarie’s assets under management rose to $942.7bn as at December 31, reflecting a 3 per cent increase on the prior three months.

About $12.7bn of equity was returned to clients in the December quarter from divestments, including stemming from Macquarie’s stake in the bumper $24bn sale of AirTrunk.

Macquarie’s banking and financial services unit had deposits of $163.8bn at December 31, up 7 per cent from three months earlier, while its home loan book rose 5 per cent to $136.2bn. The business banking loan portfolio fell, however, by one per cent to $16.5bn.

Macquarie’s capital surplus stood at $8.5bn as at December 31, lower than the $9.8bn reported three months earlier, as it deployed more capital within its business units and paid out an interim dividend. Macquarie has acquired about $1bn of shares relating to a $2bn slated buyback program.

Macquarie had 19,795 employees as at December 31, down from 20,053 three months earlier.

Macquarie is preparing to take investors and analysts on a whistlestop tour of the UK and France next month, in an attempt to boost investor and analyst knowledge of the firm’s presence in Europe, the Middle East and Africa.

Originally published as Macquarie Group’s earnings tracking steady on last year, amid subdued commodities income