The Macquarie Group Ltd (ASX: MQG) share price keeps falling after it recently delivered its FY19 result to the market.
President Trump's promise to hike the tariffs on China is the likely cause for today's 2% decline, but the rest of the 8% decline since last Thursday can be attributed to the negative outlook for FY20 that management gave.
The actual numbers released in the FY19 report were pleasing with full year net profit up 17% to almost $3 billion, a large amount of excess capital, an 18% return on equity (ROE), double digit growth of assets under management (AUM) and a full year dividend of $5.75 per share.
Macquarie's market-facing business really impressed with that half of the investment bank growing profit by 76%.
However, FY20 isn't expected to be as impressive.
Base fees from Macquarie Asset Management are expected to be similar to what was generated in FY19 because of the negative impacts of divestments and the internalisation of Atlas Arteria. But, the market-facing business isn't likely to repeat its exceptional performance again with markets slowing down, therefore profit is "currently expected to be slightly down".
Time to buy Macquarie shares?
It's always more attractive to buy shares of a business when it's priced lower rather than when it's more expensive.
However, if Macquarie's profit is going to fall in this financial year then a decline of the share price is justifiable.
Since the GFC, Macquarie has proven to be the best ASX bank to own in my opinion, certainly better than its big domestic peers like National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ).
I think over the next decade it will continue to be the better choice because of the ability to expand any of its financial services (or create new ones) in any region in the world at a pretty high rate of return. Optionality of operations is very important these days for market-beating returns.
With a partially franked dividend yield of 4.6% and global operations I wouldn't detest buying Macquarie shares at this price, but I think there will be a better time to buy shares the next time the international share market has a sizeable wobble.
