Global financial services group Macquarie [ASX:MQG] has followed many financial corporations and posted sharp results for FY2023.
The group reported a 10% increase on the previous year’s profit, a new record of $5.2 billion.
Operating income had risen by the same degree, with $19.1 billion, and earnings per share were also pushed up by 6% to $13.54 each.
Dividends per share also went up by a huge 21% to $7.50 each.
Macquarie believes its improved performance was linked to interest rate volatility and unpredictable workings of the commodities industry.
An MQG share was worth $177.82 at the time of writing, the finance stock up by 6.5% so far in 2023, yet down by 10.5% versus the S&P 200:
Source: TradingView
Macquarie strikes $5.2 billion in new profit record
It was time for Macquarie to unleash its results for the public today, and in doing so, it appeared to delight investors with what it had to reveal about its performance over the past financial year.
The financial group said its international business had generated 71% of the group’s profit with the highest region being the US (38% of total income) followed by Australia (29% of total income), with 25% received from the EMEA (Europe, Middle East and Africa) and 8% in Asia.
Operating income had also risen by 10%, coming out at the total of $19.1 billion, and earnings per share were also pushed up by 6% to $13.54 each.
Macquarie had calculated dividends per share rose a massive 21% to $7.50 each.
Interestingly, this payout sits at the lower end of the group’s existing return-to-shareholders commitment, a 50%-70% dividend payout ratio, as it delivers around the 56% mark.
Macquarie said that its improved performance was supported by certain volatility in interest rate movement and good changes to activity in commodities.
Assets under management had also gone up by 10% from $793 billion to $870.8 billion, which the company said was due to investments made by private market managed funds and boosted by foreign exchange movements.
There were some elements that may not have been quite as pleasing for investors, such as its assets management division, banking and financial services, and some of the other commodities and global markets.
Collectively, these divisions earned a net profit contribution of $4.14 billion, down 17% from FY2022.
Thankfully, the group’s trading business offset that decline with its CGM businesses contributing $6.21 billion of net profit, an increase of 38%.
Return on equity had tracked at 16.9% in comparison with the 18.7% in FY2022 with $12 billion counted in additional capital.
Outlook for Macquarie
According to the company’s chief executive Shemara Wikramanayake, Macquarie will be remaining cautious going ahead. The group will remain mindful of the ever-shifting economic environment and overall volatility across industries and business.
Wikramanayake says that despite a ‘less certain market and economic backdrop’, she holds confidence in the group’s abilities.
She asserted they have managed to maintain a strong performance in the year, backed by diverse activities and an experienced team.
Wikramanayake also hinted that the group will move to capitalise on opportunities it deems appropriate for its growth.
As most weight in results was carried by the CGM business, some market analysts are uncertain if that will be enough to support them next time around.
A drilling boom
Macquarie spoke of market volatility and shifting commodities. And guess what? Another drilling boom has been forecast.
In fact, several booms are marked to happen for every single metal you can name.
It’s been described as a ‘new golden age’ for junior explorers, and for investors who get in early.
Small caps primed to grow into mid-to-large caps, but how do you tell which ones?
You may need a little help from our commodities expert James Cooper.
He’s found six ASX mining stocks that are heading to top the charts.
Regards,
Mahlia Stewart
For The Daily Reckoning Australia
