The Macquarie Group Ltd (ASX: MQG) share price is on watch after the investment bank reported a $4.7 billion net profit in FY22.
Macquarie is one of the largest businesses on the ASX. It has operations across the world and it has four different segments, the ‘annuity-style’ businesses Macquarie Asset Management (MAM) and banking and financial services (BFS). It also has ‘market-facing’ businesses Macquarie Capital and commodities and global markets (CGM).
Macquarie FY22 result
These are some of the highlights from the report:
- Net operating income up 36% to $17.3 billion
- Operating expenses up 22% to $10.8 billion
- International income accounted for 75% of Macquarie’s total income
- FY22 net profit up 56% to $4.7 billion
- Assets under management (AUM) up 37% to $774.8 billion
MAM’s net profit rose 4% to $2.15 billion. There was growth in base fees.
BFS grew its net profit by 30% to $1 billion, thanks to strong growth in the loan portfolio, funds on the platform and total deposits, as well as releases in net credit impairments.
CGM saw profits soar by 50% to $3.9 billion thanks to increased client hedging activity and trading activity with the elevated volatility and commodity price movements.
Macquarie Capital net profit rose 269% to $2.4 billion thanks to significantly higher fee and commission income due to mergers and acquisitions, and debt capital markets activities.
Profit growth is an important driver for the Macquarie share price.
Macquarie dividend
As part of the FY22 result, the investment bank announced a FY22 final dividend of $3.50 per share, 40% franked. This is an increase of 4.5%.
That brings the FY22 dividend to $6.22 per share, 40% franked. This represents a 32% increase compared to FY21.
Management comments
The Macquarie Managing Director and CEO Shemara Wikramanayake said:
Macquarie remains well-positioned to deliver superior performance in the medium term. This is due to our deep expertise in major markets, strength in business and geographic diversity and ability to adapt the portfolio mix to changing market conditions, an ongoing program to identify cost-saving initiatives and efficiency, a strong and conservative balance sheet, and a proven risk management framework and culture.
Outlook for Macquarie and share price
Macquarie says that it’s continuing to maintain a cautious stance, with a conservative approach to capital, funding and liquidity that positions it well to respond to the current environment.
I think that Macquarie is one of the best large businesses on the ASX. The business has made effective choices to achieve growth. I’m not sure whether the current level of profit is sustainable or not, so I’m not sure if it’s worth buying at around $200. However, it’s a solid pick during share market downturns.
