The Macquarie Group Ltd (ASX: MQG) share price is drifting lower in afternoon trade on Friday.
At the time of writing, shares in the investment bank are trading 4% lower at $153.25 apiece on no news. This marks a new 52-week low for the company, as seen in the chart below.
In broad sector moves, the S&P/ASX 200 Banks Index (ASX: XBK) is also trading 2% down on the day.
What’s up with the Macquarie share price?
ASX bank shares have copped a beating in the second half of 2022. Following a strong start to the year, the sector now trades at a low point.
Chief to the sharp downturn was the Reserve Bank of Australia’s (RBA) decision to lift policy interest rates in order to curb inflation.
Whilst ‘in theory’ the rise in rates is a net positive for the banking sector, the reality is that Australia’s lending market is tremendously concentrated, with razor thin net interest margins (NIMs) on offer.
In addition, Australia’s housing market has been on a near-vertical trajectory for years, meaning many borrowers may exceed their capacity with the rising rates.
And with inflation remaining stubbornly high, the path of interest rate hikes looks set for the time being.
Hence, company fundamentals are second-tier in the Macquarie investment debate at present, with the market sentiment dominating the numbers instead.
Brokers still rate it a buy too, with 9 out of 14 analysts recommending to buy Macquarie shares at these prices, unchanged from June, per Refinitiv Eikon data.
With the pullback to yearly lows, Macquarie now trades on a forward price-to-earnings (P/E) ratio of 15.9 times, above the GICS Industry median’s 14.5 times.
It also trades at a price-to-book ratio of 2.2 times and delivered a mammoth $12.30 in earnings per share (EPS) last year – well above the industry median’s 51 cents per share.
Despite these strengths, pressure continues to mount on the Macquarie share price, with today’s trading volume more than 130% of the 4-week average at more than 1.02 million shares.
As such the Macquarie share price is down almost 16% in the past 12 months, and down 25% this year to date.
