The Macquarie Group Ltd (ASX: MQG) share price is down after the investment bank announced its FY23 result.
It has global operations, with four key divisions: Macquarie Asset Management (MAM), banking and financial services (BFS), commodities and global markets (CGM) and Macquarie Capital (the investment banking division).
FY23 result
Here are some of the highlights from the report for the 12 months to 31 March 2022.:
- Total net profit after tax (NPAT) grew by 10% to $5.18 billion
- FY23 second-half profit of $2.88 billion, up 25% year over year, and up 8% on the second half from the FY23 first half
- Assets under management of $870.8 billion at 31 March 2023, up from 5% on 30 September 2022
- Final dividend of $4.50 per share, bringing the FY23 total dividend to $7.50 per share
Divisional performance
The MAM net profit was $2.3 billion, down 23% because last year included stronger asset sales, partially offset by higher performance fees. During the year, MAM raised a record A$38.2 billion in new equity from clients.
BFS saw net profit rise 20% to $1.2 billion. It saw loan and deposit growth, together with improved margins, partially offset by higher credit impairment charges (meaning charges relating to bad or concerning loans), increased technology investment, more staff to support growth, and compliance and regulatory initiatives. The Macquarie Bank home loan portfolio was $108.1 billion, up 21% year on year, while BFS deposits increased 32% to $129.4 billion.
CGM’s net profit soared 54% to $6 billion. The profit was helped by commodities, primarily from inventory management, and trading and risk management activities. There was regional supply an demand imbalances primarily in the North American gas and power markets. This division is really helping Macquarie shares at the moment.
Macquarie Capital’s net profit sank 47% to $801 million, with there being a significant decrease of merger and acquisition fee income, as well as lower capital market fee income due to weaker market activity.
Outlook for the Macquarie share price
The investment bank said that it continues to maintain a “conservative approach to capital funding and liquidity” that positions it well to respond to the current environment.
The Macquarie leader Shemara Wikramanayake, said:
Against a less certain market and economic backdrop, the diversity of Macquarie’s activities and the expertise of our teams ensured we maintained strong performance during the year.
Macquarie remains well-positioned to deliver superior performance in the medium term due to its diverse business mix across annuity-style and markets-facing businesses; deep expertise across diverse sectors in major markets with structural growth tailwinds; patient adjacent growth across new products and new markets; ongoing technology and regulatory spend to support the Group; a strong and conservative balance sheet; and a proven risk management framework and culture.
I’m not sure if Macquarie’s strong profitability levels will be able to continue in the CGM division, so FY24’s net profit may fall. But, I think it’s one of the best ASX financial shares with global earnings growth and good management. I’d be happy to own Macquarie shares in my portfolio for the long-term.
