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Macquarie reports $2.2bn full-year profit

Nicholas Grove  |  05 May 2017Text size  Decrease  Increase  |  

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Macquarie's full-year dividend surprises on the upside after the investment bank records a better-than-expected annual net profit of $2.2 billion.


Macquarie Group (ASX: MQG) on Friday announced a net profit of $2.2 billion for fiscal 2017, up 7.5 per cent on the previous year and just a touch above both Morningstar and consensus expectations for a figure of around $2.1 billion.

The investment bank's full-year dividend of $4.70 a share, franked to 45 per cent, was above Morningstar's forecast for a payment of $4.30, and above the prior year's dividend of $4.00 a share.

Macquarie said the final ordinary dividend of $2.80 per share will be paid on 3 July 2017 to shareholders on the register as of 17 May 2017.

Earnings per share for the year to 31 March 2017 stood at $6.58, up 6 per cent on the previous year, the bank said in a statement to the ASX.

Net operating income of $10,364 million for the year was up 2 per cent, while operating costs of $7,260 million were also up 2 per cent.

Annualised return on equity reached 15.2 per cent, up from 14.7 per cent in fiscal 2016.

Macquarie CEO Nicholas Moore attributed the results to "the strength of Macquarie's global platform, the benefit of recent acquisitions, and its ability to adapt to changing conditions".

He also noted that Macquarie's annuity-style businesses--Macquarie Asset Management, Corporate and Asset Finance, and Banking and Financial Services--"performed well," lifting their combined net profit contribution 4 per cent to $3.2 billion.

"Macquarie's capital markets facing businesses--Commodities and Global Markets, and Macquarie Capital--also performed well with a combined net profit contribution of $1,454 million, up 12 per cent on fiscal 2016," Moore said.

Assets under management at 31 March 2017 were $481.7 billion, broadly in line with $478.6 billion at 31 March 2016, Macquarie said.

Morningstar head of Australian banking research, David Ellis, described Macquarie's results as "impressive," with the bank building on the growth in net profit achieved in fiscal 2016.

"We like Macquarie's earnings outlook and business momentum, but at current prices the stock represents fair value," Ellis said.

"We maintain our positive view on the internationally focused asset manager and advisory business.

"Longer term, Macquarie is well placed to leverage the surge in demand for global infrastructure as it is a world leader in sourcing, investing in, and/or managing major critical infrastructure and real assets."

Looking to fiscal 2018, Macquarie said it expects its group results to be broadly in line with fiscal 2017, subject to market conditions, the impact of foreign exchange, and potential regulatory changes and tax uncertainties.

Ellis said he is confident Macquarie can achieve further solid earnings growth, underpinned by its strong balance sheet, surplus capital, a robust liquidity and funding profile, and conservative risk management.

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Nicholas Grove is a Morningstar journalist.

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