Macquarie Group Ltd (ASX: MQG) is Australia's fifth largest publicly listed financial institution and our biggest investment bank. Unlike a majority of the other banks it has a significant global presence.
From Europe, the Middle East, Africa, Asia and America to your city, Macquarie's businesses are kicking goals for shareholders. From 1 April 2013 to 31 March 2014 (Macquarie's 2014 financial year), the bank took advantage of rising confidence levels in global markets and grew net profit to $1.265 billion, up 49% on the prior period.
The major driver of earnings was its Macquarie Funds business which notched up 39% profit growth and grew assets under management (AUM) by a whopping 30% to $424.8 billion. However, with all divisions except Banking and Financial Services notching up double digit income and profit growth, the group's smaller Macquarie Capital division was the standout performer, growing earnings by 87%.
In addition to a batch of stellar earnings results, it also paid out an increased dividend and a special distribution from the sale of its stake in Sydney Airport Holdings Ltd (ASX: SYD). In total, eligible shareholders received $3.76 per share for the full year.
What about next year?
Since Macquarie has a presence in the most important markets throughout the world, continued confidence will play a big part in their earnings growth in the short term. Management also reaffirmed the dividend policy of a payout ratio between 60% and 80% of earnings per share.
In the medium term, it has a number of niche market specialities which it can pursue including asset finance, increasing annuity-style investments throughout Asia, facilitating M&A and increased ECM activity.
Compared to Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and most of the other top blue-chip stocks in the S&P/ASX 200 (ASX: XJO) (^AXJO), I believe Macquarie Group has the most to offer long-term shareholders. With around 68% of income derived from global markets, a forecast dividend of 5%, growing exposure in Asia and increasing investment in its already superior technology platforms, long-term buyers are likely to realise value from here. However, I think it would be foolish to expect its share price to grow at the same pace it did in 2013 every year.