Macquarie Group Ltd
(ASX: MQG) is holding its annual general meeting (AGM) for FY19 today
and has also updated the market about its first quarter performance.
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 2018, Macquarie had reported a profit for 49 years in a row.
Macquarie’s FY20 First Quarter Trading Update
Macquarie Group said that its operating groups were performing in line with expectations.
What that translates to is that in the first quarter of FY20 the operating group net profit contribution is broadly in line with the first quarter of FY19 (the prior corresponding period), although slightly down on the fourth quarter of FY19.
Macquarie also reported on its financial position. The investment bank said it comfortably exceeded minimum requirements with group capital surplus of $5 billion and a bank CET1 ratio of 12%, a ‘leverage ratio’ of 5.4%, a liquidity coverage ratio (LCR) of 166% and a net stable funding ratio (NSFR) of 111%. Having even more capital than required is a good position.
However, despite the solid update, Macquarie still expects the FY20 result to be down slightly on the FY19 result.
Macquarie Group CEO and Managing Director Shemara Wikramanayake said before the AGM:
“Macquarie’s annuity-style businesses were down on the prior corresponding period. Specifically, and compared with the prior corresponding period, Macquarie Asset Management (MAM) was down mainly due to the timing of performance fees and higher operating expenses following recent platform acquisitions; Corporate and Asset Finance (CAF) was down to reduced loan volumes and realisations in CAF Principal Finance; and Banking & Financial Services (BFS) was broadly in line.”
Is Macquarie A Buy?
I think Macquarie is the best bank to own on the ASX, however I don’t think there’s a rush to buy its shares if the profit isn’t expected to grow this year.
It might be better to wait for the next economic dip to buy Macquarie shares and instead look at the reliable businesses in the free report below instead.
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