Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

* Poor Result:Macquarie Group (MQG.AU)[Macquarie] reported FY 2H20 results of AUD 1,274 mn, declining AUD 183 mn (12.6%) linked period. The results were generally mixed but overall the result was a disappointment and led largely by three factors: a) loss provisions increased AUD 762 mn or 548%; b) volatile trading revenues declined AUD 393 mn or 24.2%; and c)operating lease revenues were weaker by AUD 177 mn or 38.4%;* Lender Of Last Resort:Credit quality was weaker during FY 2H20. Strangely, and despite years of warning signs in Australia, Macquarie in its infinite wisdom decided to grow home loans AUD 8,261 mn (17.1%) linked period. Further, it added AUD 1,798 mn (10.5%) in riskier corporate loans over the same six month period. As COVID-19, rips though the local Aussie economy higher bankruptcies and a record level of unemployment do not bode well for this top of the market lending strategy; and*No Guidance – But FY 2021 Will Be Ugly: We expect Macquarie’s earnings in FY 2021 to be adversely impacted by COVID-19. Given the unfortunate macroeconomic uncertainty, however, Macquarie refused to provide FY 2021 guidance, although it did offer that: MAM’s base fees will be broadly in line, while its other operating income will be down significantly due to a delay in asset sales and redemptions; Banking &amp; Financial Services (BFS) volume/deposit growth will be offset by margin pressures; CGM expects subdued customer activity in commodities; and that MacCap investment related income will be down YOY due to lower asset realization.

* Poor Result:Macquarie Group (MQG.AU)[Macquarie] reported FY 2H20 results of AUD 1,274 mn, declining AUD 183 mn (12.6%) linked period. The results were generally mixed but overall the result was a disappointment and led largely by three factors: a) loss provisions increased AUD 762 mn or 548%; b) volatile trading revenues declined AUD 393 mn or 24.2%; and c)operating lease revenues were weaker by AUD 177 mn or 38.4%;* Lender Of Last Resort:Credit quality was weaker during FY 2H20. Strangely, and despite years of warning signs in Australia, Macquarie in its infinite wisdom decided to grow home loans AUD 8,261 mn (17.1%) linked period. Further, it added AUD 1,798 mn (10.5%) in riskier corporate loans over the same six month period. As COVID-19, rips though the local Aussie economy higher bankruptcies and a record level of unemployment do not bode well for this top of the market lending strategy; and*No Guidance – But FY 2021 Will Be Ugly: We expect Macquarie’s earnings in FY 2021 to be adversely impacted by COVID-19. Given the unfortunate macroeconomic uncertainty, however, Macquarie refused to provide FY 2021 guidance, although it did offer that: MAM’s base fees will be broadly in line, while its other operating income will be down significantly due to a delay in asset sales and redemptions; Banking &amp; Financial Services (BFS) volume/deposit growth will be offset by margin pressures; CGM expects subdued customer activity in commodities; and that MacCap investment related income will be down YOY due to lower asset realization. 

Macquarie Group – Big Mac Becoming A Junior Whopper

Mexico

Macquarie Mexico Real Estate Management SA de CV is a real estate investment trust (fideicomiso de inversion en bienes raices) targeting industrial, office and retail real estate opportunities in Mexico with a primary focus on stabilized income-producing properties. MMREIT has issued real estate trust certificates (certificados bursatiles fiduciarios inmobiliarios).

Macquarie Mexico Real Estate (FIBRAMQ MM)

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Macquarie Group – Big Mac Becoming A Junior Whopper

* Poor Result:Macquarie Group (MQG.AU)[Macquarie] reported FY 2H20 results of AUD 1,274 mn, declining AUD 183 mn (12.6%) linked period. The results...

Thomas J. Monaco