The Macquarie Group Ltd (ASX: MQG) share price is on watch today after reporting its FY21 third quarter.
Macquarie is Australia’s biggest investment bank. It has four segments – Macquarie Asset Management (MAM), Banking and Financial Services (BFS), Commodities and Global Markets (CGM) and Macquarie Capital.
Macquarie FY21 third quarter
The investment bank reported that trading conditions across the group have improved in the December 2020 quarter, being Macquarie’s FY21 third quarter.
Macquarie said that its ‘annuity-style’ businesses, being Macquarie Asset Management and Financial Services, saw combined quarterly net profit contribution up compared to the December 2019 quarter.
The net profit contribution of these two businesses (MAM and BFS) for the nine months to 31 December 2020 was broadly in line with the prior corresponding period. Base fees and performance fees in MAM are broadly in line, partially offset by BFS profit margin pressure, increased credit impairment charges and higher costs to support clients as a result of COVID-19, although it has had continued volume growth.
The other two segments – commodities and global markets, and Macquarie Capital – saw combined third quarter net profit up significantly compared to last year.
For the nine months to December 2020, CGM and Macquarie Capital net profit was in line with last year thanks to stronger activity across the majority of the businesses in CGM, but this was offset by lower fee revenue and principal income in Macquarie Capital, although there was a reduction of expenses too.
Balance sheet
Macquarie said that its financial position comfortably exceeds regularly requirements, it has $8.1 billion of surplus capital. It had a bank CET1 ratio of 12.1%.
Macquarie outlook
The global investment bank said that while the impact of future market conditions makes forecasting extremely difficult, Macquarie expects the FY21 result to be slightly down on FY20.
Macquarie is one of the best ASX blue chip shares in my opinion. Since the last decade it has shown it’s adaptable and versatile. The growth in infrastructure and green investments is a very good long term move. Cost savings and efficiency improvements is good too.
However, there are other ASX dividend shares in the financial space that I believe can deliver better long term total shareholder returns such as Magellan Financial Group Ltd (ASX: MFG).
Instead of Macquarie, I suggest getting a free Rask account and accessing our full stock reports. Click this link to join for free and access our analyst reports.
