The Macquarie Group Ltd (ASX: MQG) share price is in the spotlight as it unveiled an increase in both profit and dividends this morning.
The investment bank even hinted of a potential capital return down the track as it announced a 10% uplift in FY21 net profit to $3.02 billion and boosted its final dividend by 86.1% to $3.35 a share.
What will also please supporters is the fact that the gains accelerated in the second half of the financial year.
Key highlights in Macquarie’s profit results
Macquarie reported that profit from the six months to end of March 2021 made up two thirds of the full year’s NPAT. This means the second half profit was up 106% over 1HFY21 and 59% over the same time last year.
The group’s market facing business was the standout. The FY21 profit it makes from trading and investments jumped 39% over the previous year to $2.78 billion.
Its steadier annuity-type businesses lagged. The combined net profit contribution from this business dipped 4% year-on-year to $3.31 billion.
Is Macquarie undertaking a capital return this year?
The results could also spark speculation of a capital return as management said its holding excess capital to regulatory requirements.
The group held a cash surplus of $8.8 billion at 31 March 2021, up from $7.1 billion at the same time in 2020.
Hints of a capital return could be enough to offset any potential disappointment that Macquarie was vague about its outlook.
Uncertain outlook to debt confidence
The group really didn’t provide much clues on what lies, ahead apart from pointing out that this is a difficult environment to be making forecasts.
Some of the highlighted uncertainties include the speed of recovery from COVID-19, volatile market conditions, possible tax and regulatory changes and exchange rate fluctuations.
I wish they would tell us something we didn’t already know!
Erring on side of caution?
Shareholders will be hoping that this is Wikramanayake attempt to follow Macquarie’s tradition of under promising and over delivering.
“Macquarie remains well-positioned to deliver superior performance in the medium term,” said Macquarie’s CEO Shemara Wikramanayake.
“This is due to our deep expertise in major markets; strength in business and geographic diversity and ability to adapt the portfolio mix to changing market conditions; an ongoing program to identify cost saving initiatives and efficiency; a strong and conservative balance sheet; and a proven risk management framework and culture.”
Macquarie is the last of the ASX banks to post its results during this bank reporting season. Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking GrpLtd (ASX: ANZ) and National Australia Bank Ltd. (ASX: NAB) also reported profit results this month.