The Macquarie Group Ltd (ASX: MQG) share price is under the spotlight today after reporting its FY24 result.
Macquarie is a global investment bank with four segments. It has Macquarie Asset Management (MAM), banking and financial services (BFS), Macquarie Capital (investment banking) and commodities and global markets (CGM).
Macquarie FY24 result
Here are some of the financial highlights for the 12 months to 31 March 2024:
- Assets under management (AUM) of A$938.3 billion at March 2024, up 7% year on year and up 5% over six months
- FY24 second half net profit of $2.1 billion, up 49% compared to HY24 and down 27% compared to the second half of FY23
- FY24 net profit after tax (NPAT) sank 32% to $3.5 billion
- Final dividend of $3.85 per share, down 15%
- Full-year dividend of $6.40 per share, down 15%
What happened?
Let’s look at the individual operating segments to see what impacted Macquarie shares.
Macquarie reported that MAM delivered a net profit contribution of $1.2 billion, down 48%. That was because of lower asset sales on green investments and increased net expenditure in investments in green energy companies operating on a standalone basis, while management fees and performance fees were “broadly in line”.
BFS managed to grow net profit by 3% to $1.24 billion thanks to growth of its loan portfolio and BFS deposits, and credit impairment reversals because the economic outlook has improved, offset by a reduction of lending profit margins, higher wage costs and increased technology investment to support growth, compliance and regulatory requirements.
CGM saw a net profit contribution of $3.2 billion, down 47%. This was due to “substantially lower inventory management and trading income from a strong prior year in North American Gas and Power and a decreased contribution from commodities risk management”.
Macquarie Capital saw net profit rise by 31% to $1.05 billion thanks to higher investment-related income driven by growth in the private credit portfolio, lower credit provisions and net impairment reversals.
Share buyback progress
On 3 November 2023, it announced a share buyback up to $2 billion of Macquarie’s shares. At 31 March 2024, a total of $644 million had been used, at an average Macquarie share price of $183.26.
Final thoughts on Macquarie shares
Macquarie says 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.”
The Macquarie CEO thinks the business is well-positioned to deliver “superior performance” in the medium-term.
I think Macquarie is a great business, it’s one of the best, if not the best, financial share on the ASX. It has rallied in the last six months, so I wouldn’t call it cheap. But, over the long term, I’d rather own it than one of the big ASX bank shares. There are other ASX dividend shares I think are more appealing.
