The Macquarie Group Ltd (ASX: MQG) share price is under the spotlight today after releasing its FY24 half-year result.
Macquarie is Australia’s biggest investment bank and has operations across domestic banking (loans and deposits), asset management, commodities and global markets (CGM) and investment banking services.
Macquarie Group share price
FY24 half-year result
These are the numbers the business reported for the six months to 30 September 2023 compared to the six months to 30 September 2022:
- Macquarie Asset Management (MAM) net profit sank 71% to $1.4 billion
- Banking and financial services (BFS) net profit rose 10% to $580 million
- CGM net profit sank 31% to $2 billion
- Macquarie Capital’s net profit declined 28% to $430 million
- Total net profit fell 39% to $1.4 billion
- Assets under management rose 7% to $892 billion
- Interim dividend of $2.55 per share, down 15%
MAM’s profit decrease reflected the timing of asset sales in green investments and an increase in operating expenses, while base fees and performance fees were broadly in line with the prior corresponding period.
BFS’ profit increased thanks to growth in the loan portfolio and BFS deposits, as well as a rise in the average profit margin. However, its operating profit growth was offset by higher credit impairment charges and higher costs because of a bigger headcount and technology investment to support business growth and regulatory requirements, as well as inflation.
CGM’s net profit drop reflected a decreased contribution from its commodities risk management segment. This was “primarily from resources and EMEA gas, power and emissions as volatility and price movements stabilised across commodity markets following record highs in the prior corresponding period.”
Macquarie Capital, the investment bank, saw broadly flat fee and commission income, though investment-related income was lower because large profits on asset sales were not repeated in this year like last year. But, it did benefit from higher net interest income and made gains on a small number of investments. Operating expenses were also higher.
Macquarie share buyback
The business said that it has a strong capital position, with surplus capital of A$10.5 billion at 30 September 2023.
The board has approved an on-market share buyback of up to A$2 billion, which may be helpful for the Macquarie share price.
Final thoughts on the Macquarie share price
Before today’s movements, the Macquarie share price was down 10% in the last six months.
I think the business could be a long-term buy during this period with the market seeming uncertain – it’s down 24% from January 2022.
I like the operations diversification that Macquarie has compared to a business like ANZ Group Holdings Ltd (ASX: ANZ) which is largely focused on just loans in Australia and New Zealand. When economic conditions improve, I believe that Macquarie will be able to recover.