The Macquarie (ASX: MQG) share price is up more 1% after giving investors its first quarter update for FY21.
Macquarie is a global investment bank which is listed on the ASX. It has four divisions including Macquarie Asset Management (MAM) – it’s one of the world’s largest infrastructure managers.
Macquarie FY21 Q1 update
Macquarie has given an update ahead of its annual general meeting (AGM).
The investment bank said that its operating groups have been impacted by mixed trading conditions. Its FY20 first quarter operating net profit contribution is “slightly down” on the first quarter of FY20.
MAM assets under management (AUM) at 30 June 2020 was down 5% over the quarter. Adverse foreign currency movements was the main reason for the decline. But this was offset by market appreciation of other assets.
The banking and financial services saw total deposits rise by 8% to $69 billion over the quarter and the home loan portfolio rose 4% to $54.3 billion.
The commodities and global markets (CGM) division benefited from increased activity as clients sought to rebalance their portfolios to manage risk. Trading was reduced near the end of the quarter.
Macquarie capital fee revenue was down due to lower mergers & acquisitions as well as less activity in the debt capital market. However, capital raisings provided a boost and the strong performance of the equities platform also helped.
Macquarie Managing Director and CEO Shemara Wikramanayake said: “Macquarie’s annuity style businesses were up 1Q20 with MAM up primarily due to the sale of its rail operating lease business, partially offset by lower income in banking and financial services (BFS) which included higher provisions. Macquarie’s market-facing businesses were down on 1Q20 primarily due to significantly lower investment-related income in Macquarie Capital partially offset by stronger contributions from certain divisions in CGM.”
Macquarie capital position
Macquarie said it had surplus group capital of $8.1 billion with a bank CET1 ratio of 13.2%.
Summary
Macquarie is a high quality business which has global growth prospects, better than the big four ASX banks in my opinion. However, it has recovered strongly since the March 2020 crash so I don’t think today’s price represents great value. I believe there are other ASX growth shares out there, like Bubs (ASX: BUB), which have much better growth prospects – partly because Macquarie is just simply so big.
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