Macquarie Group (MQG) | SNAPSHOT
Profile: Macquarie Group (MQG) is a global investment bank and diversified financial services group based in Australia. Its services and product offering range from investment banking solutions, such as mergers and acquisitions, debt and equity capital markets, to asset management solutions across various asset classes, from equities and infrastructure to personal banking products such as mortgages.
History: Hill Samuel Australia Limited was established as a subsidiary of UK merchant bank Hill Samuel & Co Limited in 1969. In 1985, MQG obtained an Australian banking license as Macquarie Bank Limited. In 1996, Macquarie Bank Ltd was listed on the ASX. Macquarie Group Limited was established as a non-operating holding company in 2007. In 2010, it acquired Delaware investments and in 2017, led a consortium which acquired the UK Green Investment Bank plc.
Earnings composition (see figures 5 & 6): In 1H20, MQG’s ‘annuity-style’ businesses generated $1,717m (60%) of net profit after tax (NPAT) excluding corporate costs – Macquarie Asset Management (MAM) generated $1,122m and Banking and Financial Services (BFS) reported $385m. Commodities and Global Markets (CGM), which has both ‘market-facing’ and ‘annuity-style’ earnings, generated $1,138 (40%), of which 32% is classified by MQG as market-facing and 8% as annuity-style. In total, MQG’s market-facing businesses generated $1,151m (40%) of NPAT, with Macquarie Capital (MacCap) contributing $223m (8%) to net profit. Corporate overheads resulted in costs of $1,411m.
Most recent result – 1H20: MQG’s NPAT was up 11% on the prior corresponding period (pcp) to $1,457m (down 13% on 2H19). MQG’s annuity-style businesses delivered strong performances, up 15% on 1H19 to $1,717m. This was largely driven by MAM which was up 32% to $1,122m, in turn driven by increased fee revenue. NPAT contribution from MQG’s market-facing businesses declined 42% on the pcp to A$1,151m, largely driven by MacCap (down 56% on the pcp). During the half, MacCap generated lower fee income and investment-related income – with lower interest income from the debt portfolio. Earnings per share (EPS) was $4.30, up 11% on the pcp. A dividend of $2.50 cents was declared, up 16% from $2.15 in the pcp.
Company outlook: MQG reaffirmed guidance provided at its FY19 result (ie. FY20 NPAT is “expected to be slightly down on FY19”).
Important dates: MQG will trade ex-dividend on 11 November 2019. Payment date is 18 December 2019.
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