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. Picture: Christian Gilles/NCA NewsWire

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

In an ASX update reflecting the nine months ended December 31, Macquarie said 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 “substantially 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.

Macquarie’s chief executive Shemara Wikramanayake didn’t provide specific earnings guidance for the company’s full-year, although she addressed investors and analysts regarding the update on Tuesday.

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 Group CEO Shemara Wikramanayake.

Ms Wikramanayake also signalled a concerted push by Macquarie into the private credit sector where more capital would be deployed, and 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.

“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’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 shares rallied 1.5 per cent to $231.40 in mid-morning trading on Tuesday, as the S&P/ASX200 edged up.

Macquarie rules off its financial year on March 31.

Tuesday’s update will likely have implications for analysts’ expectations on Macquarie’s 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.

Ms Wikramanayake was also questioned about the impact of a second Donald Trump presidency on Macquarie’s green energy exposures in the US. She said Macquarie didn’t expect a notable impact on its operations, particularly given funds disbursement had already occurred across many areas.

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

The group’s capital surplus stood at $8.5bn as at December 31, lower than the $9.8bn reported three months earlier.

Analysts have highlighted a number of headwinds for Macquarie’s business units. The company’s ability to offload assets within its portfolio and investment funds is being increasingly questioned this year, with JPMorgan analyst Andrew Triggs placing the stock on “negative catalyst watch” ahead of the trading update.

Morgan Stanley analysts, led by Andrei Stadnik, have cut their Macquarie earnings-per-share targets for 2025 and 2026, citing tougher realisation conditions for renewable assets.

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, assets and strategy in Europe, the Middle East and Africa.

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