The Macquarie Group Ltd (ASX: MQG) share price is up 3% after the business reported more profit growth in its HY23 result.
Macquarie is a diversified financial business with different segments including Macquarie Asset Management (MAM), banking and financial services (BFS), Macquarie Capital (an investment bank) and the commodities and global markets (CGM) division.
Macquarie FY23 half-year highlights
The business reported some of the following interesting statistics for the half-year to 30 September 2022:
- Net profit after tax (NPAT) of $2.3 billion, up 13% year on year (but down 13% on the second half of FY22)
- International income was 72% of the total income
- Assets under management (AUM) grew to A$795.6 billion, up 8% year on year, or up 3% from March 2022
- The Australian bank had a CET1 ratio of 12.8%
- It achieved an annualised return on equity (ROE) of 15.6% (down from 18.7% in FY22), which is still strong
- Interim dividend of A$3 per share, up 10% year on year
Macquarie explained that its businesses have continued to perform “well” against a backdrop of more challenging market conditions, reflecting the “diversity” of its activities and “ongoing focus on prudent risk management”.
The defensive side of the business, being MAM, BFS and some businesses in CGM, generated a combined net profit contribution of $2.28 billion, which Macquarie said was in line with the first half of FY22. Positive performances recorded in MAM and BFS were primarily offset by the partial sale of the UK meters business in CGM in the prior corresponding period.
Macquarie’s market-facing businesses, done by Macquarie Capital and most businesses in CGM, made a combined net profit of $2.29 billion, up 35% year on year. This was mostly driven by performances of CGM’s businesses.
The increase in AUM was primarily due to investments made by MAM’s private markets-managed funds and foreign exchange movements, partially offset by market movements in MAM’s public investments.
Outlook
Macquarie said that it continues to maintain a “cautious stance” with a “conservative approach” to capital, funding and liquidity that positions it well to respond to the current environment.
Macquarie Group Managing Director and Chief Executive Officer, Shemara Wikramanayake, said:
Macquarie remains well-positioned to deliver superior performance in the medium term. This is due to our deep expertise in major markets; strength in business and geographic diversity and ability to adapt the portfolio mix to changing market conditions; an ongoing program to identify cost saving initiatives and efficiency; ongoing technology spend across the group; a strong and conservative balance sheet; and a proven risk management framework and culture.
Final thoughts on the Macquarie share price
Considering the company’s shares are down around 20% in 2022, I’m not surprised to see that it’s up in response to more profit growth, year on year.
I think Macquarie is the most impressive large financial business on the ASX. There is likely to be an economic lull in the short-term, so this could be peak earnings for a while. But, I’d be happy to have it in my portfolio for the long-term.
