Financial services provider Macquarie Group Limited (ASX: MQG) has delivered a record net profit of $A2,982 million for the year ended 31 March 2019 (FY19), up 17% on the previous corresponding period. The company’s both annuity-style businesses and markets-facing businesses performed strongly during the year.
The company’s annuity-style businesses which include Macquarie Asset Management, Corporate and Asset Finance and Banking and Financial Services generated a combined net profit of $A3,287 million during the year. At the same time, the group’s markets-facing businesses generated a combined net profit contribution of $A2,858 million, up 76 per cent on pcp.
During FY19, Macquarie Asset Management experienced increased base fees offset by higher operating expenses and lower combined performance fees and investment-related income. Further, the group’s Banking and Financial Services experienced growth in its Australian loan portfolio, BFS deposits and funds on platform. This growth was partially offset by a decline in the Australian vehicle finance portfolio and increased costs associated with investment in technology.
While the group’s Australian franchise maintained its strong position, the offshore businesses continued to perform well, with international income accounting for 66% of Macquarie’s total income for FY19. During the period, the group’s total customer deposits increased by 16% to $A56.0 Bn.
The groups’ Commodities and Global Markets (CGM) and Macquarie Capital delivered a combined net profit contribution of $A2,858 million in FY19, up 76% on pcp. The strong results across the commodities platform were driven by client hedging activity and besides that, the group also witnessed an increased contribution from client structured foreign exchange deals across all regions.
Macquarie Capital reported a net profit of $A1,353 million, up 89% on pcp. Macquarie Capital witnessed higher net income on equity and debt investments due to asset realisations in ANZ, Europe and the US, particularly in the technology, green energy and conventional energy sectors.
The Company Board has declared a final ordinary dividend of $A3.60 per share (45% franked), up from $A2.15 per share (45% franked) in the first half and up from $A3.20 per share (45% franked) in the second half of last year. This is representing a total ordinary dividend payment for the year ended 31 March 2019 of $A5.75 per share, up from $A5.25 in the prior year.
For FY 2020, the group is expecting its results to be slightly down on FY19. In FY20, the base fees in Macquarie Asset Management are expected to be broadly in line with FY19, gaining benefits from the deployment of capital and full-year effect of platform acquisitions, offset by divestments and the internalization of Atlas Arteria.
During FY19, the company announced various leadership changes which includes the appointment of three directors to Macquarie Group Limited and Macquarie Bank Limited Boards.
The company believes that it is well positioned to deliver superior performance in the medium-term on the back of its deep expertise in major markets, ability to adapt its portfolio mix to changing market conditions, strength in diversity, the ongoing program to identify cost-saving initiatives and efficiency, a strong and conservative balance sheet and a proven risk management framework and culture.
At the time of writing, i.e., on 3 May 2019 AEST 1:04 PM, the stock of the company was trading at a price of A$128.520, down 5.639% during the day’s trade with the market capitalisation of ~A$46.36 Bn.
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