Macquarie (ASX: MQG) has announced its half year result to 30 September 2019, revealing more profit growth.
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 HY20 Result
Macquarie reported that its net operating income increased by 8% to $6.32 billion. International income continues to grow in importance, with international income now representing 69% of total income.
The ‘annuity style’ business activities profit contribution grew by 15% and the ‘market facing’ business activities profit contribution rose by 4%.
This led to total net profit rising by 11% to $1.46 billion compared to the first half of FY19, although the profit was down 13% on the second half of FY19. Profit per share (EPS) grew by 11% too.
Macquarie continues to increase its assets under management (AUM), which is an important source of management fees. AUM grew by 2% (compared to March 2019) to $563.4 billion.
In terms of the capital position, Macquarie is well capitalised for its regulatory requirements, it had a bank CET1 ratio of 11.4% – a surplus of $6.7 billion.
Macquarie Dividend
The global investment bank declared an interim dividend of $2.50 per share, which was an increase of 16%. The franking level of the dividend was reduced from 45% to 40%.
Macquarie Management Comments
Managing Director and CEO of Macquarie, Shemara Wikramanayake said: “Our first half result highlights the benefits of the business and geographic diversity of the Group, with increased client activity across many of our business lines and favourable market conditions across the Commodities and Global Markets platform in particular.”
Macquarie Outlook
Macquarie still expects the FY20 result to be “slightly down” on FY19 with market conditions going to be an important factor. But Ms Wikramanayake is confident about the medium term.
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