Macquarie Group Ltd (ASX: MQG) is a global provider of banking, financial, advisory, investment and fund management services. Its four business units are Macquarie Asset Management, Banking and Financial Services, Commodities and Global Markets and Macquarie Capital. Macquarie has a market capitalisation of A$73.5 billion.
What is Macquarie’s first half 22 result?
Macquarie announced a net profit after tax of A$2,043 million for the half-year ended 30 September 2021 (1H22), up 107% on the half-year ended 30 September 2020 (1H21) and in line with the A$2,030 million net profit for the half-year ended 31 March 2021 (2H21). The 1H21 result was adversely impacted by the onset of the COVID 19 pandemic. The 1H22 results show that Macquarie’s profitability has fully recovered from the COVID-induced downturn experienced in 1H21. All four of Macquarie’s business units performed strongly in 1H22.
Macquarie’s interim dividend for 1H22 is A$2.72 per share (40% franked), up on the 1H21 interim ordinary dividend of A$1.35 per share (40% franked). This represents a payout ratio of 50%. Macquarie’s dividend policy remains a 50% to 70% annual payout ratio.
What is Macquarie Group’s capital position?
Macquarie reported a capital surplus of $A8.4 billion while its Tier 1 capital ratio was 11.7% at 30 September 2021. Macquarie noted that it has deployed A$5.5 billion of capital in 2H21 across its business units to fund new opportunities.
Macquarie continues to see a strong pipeline of opportunities. Consequently, Macquarie has decided to raise A$1.5 billion via an institutional placement, which will be followed by a non-underwritten share purchase plan. This capital raising will provide additional flexibility to invest in new opportunities where the expected risk-adjusted returns are attractive, while maintaining an appropriate capital surplus. The institutional placement is priced at $A190.00 per share, representing a 4% discount to the last closing price of A$197.83.
What is the outlook for Macquarie?
Macquarie did not provide specific forward guidance for profitability other than noting a number of short-term risk factors including uncertainty caused by the worldwide economic impact of COVID-19. However, Macquarie remains confident it can continue to generate superior returns over the medium to long term due to the competitive strengths of its businesses.
The market’s reaction to the 1H22 result and capital raise will be known on Monday 1 November 2021, following completion of the capital raise and the recommencement of trading on the ASX. That said, it can be expected that today’s result is broadly in line with expectations.
This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
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