Macquarie Group Posts Mixed 3Q25 Results Amid Commodity Market Headwinds

Macquarie's 3Q25 Performance Overview

Macquarie Group Limited (ASX: MQG) has released its trading update for the third quarter of the 2025 financial year, reporting a broadly stable net profit after tax (NPAT) for the nine months ended 31 December 2024 compared to the prior year. While the group's annuity-style businesses delivered robust growth, the markets-facing segments faced notable challenges, reflecting the complex dynamics shaping global financial markets.

Macquarie Asset Management (MAM) and Banking and Financial Services (BFS), the group's annuity-style pillars, recorded a substantial increase in net profit contribution for 3Q25 compared to 3Q24. This was driven by higher performance fees and investment income in MAM, alongside continued volume growth and lower operating expenses in BFS, despite some margin compression. These businesses underpin Macquarie's steady revenue streams and highlight the group's strength in fee-based and deposit-driven activities.

Markets-Facing Businesses Under Pressure

Conversely, Macquarie's markets-facing businesses, comprising Commodities and Global Markets (CGM) and Macquarie Capital, experienced a significant decline in net profit contribution during the quarter. The subdued conditions in certain commodity markets, particularly impacting North American Gas and Power contracts, were the primary drivers of this downturn. Although Macquarie Capital saw an uplift in fee and commission income, especially from mergers and acquisitions activity, this was insufficient to offset the broader headwinds faced by CGM.

These results underscore the volatility and cyclical nature of commodity markets, which continue to challenge earnings predictability for Macquarie's trading and capital markets operations. The timing of income recognition also played a role in the uneven performance, highlighting the sensitivity of these segments to market fluctuations and contract structures.

Strong Capital Position and Regulatory Compliance

Despite the mixed earnings performance, Macquarie's financial position remains robust. The group reported a capital surplus of $A8.5 billion above Australian Prudential Regulation Authority (APRA) requirements as of 31 December 2024, down slightly from $A9.8 billion at the previous quarter-end. The Bank Group's Common Equity Tier 1 (CET1) ratio stood at 12.6%, with a leverage ratio of 5.0%, both comfortably exceeding regulatory minimums. Liquidity metrics were also strong, with a Liquidity Coverage Ratio (LCR) of 196% and a Net Stable Funding Ratio (NSFR) of 113%.

Business Highlights and Strategic Positioning

Macquarie's assets under management (AUM) reached $A942.7 billion at quarter-end, reflecting a 3% increase since September 2024. Public Investments AUM grew 5%, buoyed by favorable foreign exchange movements, while Private Markets AUM remained resilient despite fund divestments. The BFS division saw a 7% rise in total deposits and a 5% increase in the home loan portfolio, signaling ongoing customer engagement and balance sheet growth.

In the markets-facing segment, while commodity contributions declined, Financial Markets activities improved, driven by client risk management and financing across foreign exchange, fixed income, and credit sectors. Macquarie Capital's private credit portfolio surpassed $A25 billion, with significant deployment in bespoke financing solutions during the quarter.

Outlook and Market Context

CEO Shemara Wikramanayake emphasized a cautious stance moving forward, highlighting the group's conservative approach to capital, funding, and liquidity management. The outlook remains sensitive to global economic conditions, inflation, interest rates, geopolitical events, and regulatory developments. Macquarie's diversified business model, strong balance sheet, and risk management framework position it well to navigate ongoing market uncertainties and pursue medium-term growth opportunities.