The Macquarie Group Ltd (ASX: MQG) share price is down 3% after the global investment bank reported its FY25 half-year result.
Macquarie has four segments – a retail banking and financial services segment (BFS), an asset management division (Macquarie Asset Management), an investment bank (Macquarie Capital) and a ‘commodities and global markets’ (CGM) division.
Macquarie FY25 half-year result
The ASX financial share has reported how it performed for the six months to September 2024. Here are some of the main highlights:
- Assets under management (AUM) of A$916.8 billion, up 3% year on year
- International income 65% of total income
- Net profit of A$1.6 billion, up 14% year on year and down 23% half-on-half
- Interim dividend of A$2.60 per share, up 2%
Macquarie said that its defensive/annuity-style activities, which include the operations of Macquarie Asset Management (MAM), BFS and certain CGM businesses, saw a combined operating net profit of $1.6 billion, up 25% year on year and down 6% compared to the second half of FY24.
Market-facing activities, which is work done by Macquarie Capital and most businesses in CGM, saw a combined operating net profit contribution of A$1.4 billion – down 10% year on year and down 34% half-on-half.
MAM profit jumped 68% year on year to A$407 million thanks to higher performance fees.
BFS profit increased 2% year on year to A$638 million thanks to growth of its loan portfolio and BFS deposits, offset by a margin decline and run-off of the car loan portfolio.
CGM profit declined 5% year on year to A$1.3 billion, due to a decreased contribution from commodities, particularly in “risk management due to the impact of subdued volatility on client hedging activity, partially offset by an increased contribution from resources.”
Macquarie Capital’s profit declined 14% year on year to A$371 million because of lower investment-related income due to reduced credit and other impairment reversals, as well as higher funding costs for a growing equity investment portfolio.
Outlook for the Macquarie share price
Macquarie said it continues to maintain a cautious stance, approach to capital, funding and liquidity that positions it well to respond to the current environment.
I believe Macquarie is one of the highest quality ASX financial shares Aussies can buy. However, it has risen close to 40% over the past year – I don’t think it’s good value today considering there are still large uncertainties about inflation, interest rates and other factors. The global picture doesn’t seem to me as exciting as the Macquarie share price is implying at this high valuation.
However, over the long-term I think Macquarie can keep excelling. But, there are other ASX dividend shares I’d rather buy first.
