Macquarie Group Ltd (ASX: MQG) has released its FY19 result, is the share price a buy?
Macquarie Group is Australia’s largest investment bank with operations spread throughout North America, Europe, Middle East, Asia and Australia. Unlike a traditional ‘retail’ bank, like most investment banks Macquarie makes a large chunk of its profit by operating in the investment markets and managing ‘assets’ for individuals and organisations. As of 2019, Macquarie had reported a profit for 50 years in a row.
Macquarie’s 2019 Financial Year Report
Macquarie reported that its FY19 net profit grew by 17% to $2.98 billion with profit/earnings per share (EPS) up by 17% to $8.83.
The second half was particularly strong with growth of 28% to $1.67 billion.
Macquarie is particularly known for its reputation as an asset manager. During its FY19, Macquarie grew its assets under management (AUM) by another 11% to $551.3 billion at 31 March 2019.
The investment bank said that its financial position comfortably exceeds regulatory minimum requirements with a group capital surplus of $6.1 billion and a bank CET1 ratio of 11.4%, above the 10.5% requirement.
Macquarie’s ‘annuity-style’ businesses (asset management, corporate & asset finance and banking & financial services) made up 53% of the earnings but profit fell 4% there.
The market-facing businesses (commodities & global markets and Macquarie Capital) represented 47% of earnings and profit was up 76% here.
Macquarie Dividend
Macquarie declared a final dividend of $3.60 per share, meaning the full year dividend per share was $5.75 – an increase of 9.5% compared to FY18.
Macquarie Management Comments
Macquarie Managing Director and CEO Shemara Wikramanayake said: “FY19 demonstrated the continued benefits of our diverse business mix.
Our annuity-style businesses had a solid, steady year while our markets-facing businesses delivered strong performance in favourable market conditions.”
Is Macquarie A Buy?
I think Ms Wikramanayake spoke of exactly why Macquarie is a better long term share compared to domestic banks like Commonwealth Bank of Australia (ASX: CBA) or Westpac Banking Corp (ASX: WBC). Macquarie can grow anywhere in the world where the opportunity is and it can invest where the best opportunities are at the right time.
With the share price so elevated at the moment and Macquarie warning that the FY20 is likely to be a little lower than FY19 I would want to wait until there’s a bit of global uncertainty again, like we saw in December 2018, before thinking of buying shares. For now I prefer to invest in one of the leading and reliable ASX shares in the free report below.
3 Proven ASX Shares That Are Better Than Macquarie?
[ls_content_block id=”14945″ para=”paragraphs”]
[ls_content_block id=”18380″ para=”paragraphs”]
