Macquarie (MQG) Shares Fall on Dismal Trading Update, Executive Exit

Shares of ASX-listed Macquarie Group Ltd (AU:MQG) fell 4.3% in early morning trade following a dismal trading update and the news of the exit of a key executive. Macquarie said that its net profit after tax for the nine months ending December 31, 2023, fell “substantially” owing to weakness in the Commodities and Global Markets (CGM) segment.

Macquarie Group is a global financial services company operating in 34 markets and offering various services, including asset management, banking, and financial and investment advisory.

Details of Trading Update

Macquarie’s CGM segment performed poorly compared to the prior year’s solid numbers. In Fiscal 2023, the commodities market saw a boom in prices, backed by geopolitical and macro factors.

The financial conglomerate said that its Macquarie Asset Management (MAM) and Macquarie Capital segments witnessed lower transaction and deal volumes in Fiscal 2024, dragging down their net other operating income in the second half. As of December 31, 2023, MAM had AU$882.5 billion worth of assets under management (AUM), down 1% from September end. Macquarie’s Banking and Financial Services (BFS) segment also suffered due to the runoff in the car loan portfolio.

In an unexpected move, MQG said that Nicholas O’Kane, head of the CGM segment, will step down from his current role as well as from Macquarie’s executive committee, effective February 27, 2024. The commodities veteran worked at MQG for 28 long years and was responsible for the stellar growth of the CGM division. The current global head of CGM’s financial markets division, Simon Wright, will take up the position.

Is MQG a Good Stock?

With three Buys versus two Hold recommendations, MQG stock has a Moderate Buy consensus rating on TipRanks. The Macquarie Group Ltd share price target of AU$193.36 implies 4.1% upside potential from current levels.

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