Macquarie share price rises on another teflon quarter

The Macquarie Group Ltd (ASX: MQG) share price is up 1.3% to $123.60 in trade today and up 20% over just the last year plus dividends after the asset manager and investment bank reconfirmed guidance for profit growth up to 15% in fiscal 2019 at a quarterly operational update today.

For the quarter ending December 31 2018 Macquarie confirmed its asset management and other annuity income businesses net profit would be slightly up on the contribution from the same businesses in the prior corresponding quarter.

This is a strong result given the plunge in equity markets over the quarter and shows the diversification of its asset management operations across infrastructure and diverse debt products in particular.

Macquarie’s teflon reputation in avoiding trouble is reaffirmed by its dodging of any adverse fallouts from the Royal Commission into Banking and Financial services.

Its market-facing businesses that only represent less than one third of net profit also posted a profit “significantly up” on the prior corresponding quarter and this is an outcome I regularly flagged as likely over 2018 given the increased capital market volatility.

After all capital markets facing businesses earn more fees from increased activity, with its commodity trading operations reportedly enjoying a strong quarter.

Its traditional investment banking advisory and deal structuring business, Macquarie Capital, also posted a strong quarter with it also generally being leveraged to the buoyancy of capital markets and associated global economic confidence.

In my opinion Macquarie and Magellan Financial Group Ltd (ASX: MFG) remain the only two investment grade financials on the ASX.

For disclosure I must admit to also owning Challenger Ltd (ASX: CGF) shares, although I wouldn’t rate them a buy today after another disappointing profit report.

However, the strongest big banks like Commonwealth Bank of Australia (ASX: CBA) will also understandably attract conservative investors focused on dividends.

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Motley Fool contributor Tom Richardson owns shares of Macquarie Group Limited, Challenger and Magellan Financial Group.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares in Challenger. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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