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Macquarie moves into the sun

Macquarie Group (ASX: MQG) is one of the few global investment banks not to have made a hash of things prior to and during the Global Financial Crisis. Being well capitalised, MQG has been able to position itself for sustained economic recovery and this happy stance is now bearing fruit. The 2013 AGM was held Thursday and some highlights were:

  • Macquarie Funds Group – $379.3 billion in assets under management, up 9% from March 2013.
  • Corporate & Asset Finance – Loan portfolio is up 8% since March to $24.3 billion.
  • Banking & Finance – Retail cash deposits area\ at $32 billion. Wrap platform is at $33 billion.
  • Securities – Moved into profit during the first quarter of 2014.
  • Capital – Still subdued but improving.

Funds group

Headed by Shemara Wikramanayake, the funds group is the rising star, contributing well over 30% of profits – mostly derived from ongoing management and performance fees. Contained in this division are alternative assets, with Macquarie being the largest global alternative asset manager as evidenced by Towers Watson in their July 2013 report.

MQG

Total assets managed by Macquarie Funds Group are now in excess of $380 billion, and further strong growth can be expected.

Corporate & asset finance   

This area of the company is involved in aircraft leasing, rail stock leasing, a UK meters platform, equipment finance and real estate lending portfolios. Asset quality is good and the total portfolio amounts to approximately $24 billion. Residential mortgage financing is also covered. Steady growth in income can be expected.

Banking and finance

The Australian wrap platform now has $33 billion in funds under administration. In addition, the mortgage portfolio is now at $11.8 billion and retail deposits are $32 billion as of June 2013.

Securities group

This division made its first profit for some time in the 2014 first quarter. Conditions are improving and this group is building its reputation in Asia.

Capital

This division provides advisory and capital raising services to corporations involved in resources, communications, financials, infrastructure, and real estate, amongst others. Although the number of transactions is on the increase, conditions are still soft.

Foolish takeaway

Macquarie Group is bulking up a number of annuity streams and is reducing dependence on ‘market facing’ activities. Capital management remains strong and the scope for organic expansion looks very promising. With a current share price of $44.50, Macquarie is on a prospective 2014 PE of 14 and a partly franked dividend yield of 4.5%. With 63% of earnings derived offshore and a strong capital position, Macquarie has strong appeal for the medium and long term.

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Motley Fool contributor Peter Andersen owns shares in Macquarie Group.

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