The Macquarie Group Ltd (ASX: MQG) share price rose by around 9% during October 2021.
Macquarie is one of the largest financial businesses on the ASX, with four different segments.
The global investment bank recently reported its FY22 first half result, which included a large profit increase year on year.
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Macquarie's major HY22 profit result
Macquarie reported that in the first six months of its 2022 financial year, net profit more than doubled, rising by 107%, to $2.04 billion. This was essentially in line with the profit that was generated in the second half of FY21.
The business continues to grow globally, with international income making up 72% of total income in the first half of FY22.
Assets under management (AUM) had reached A$737 billion at 30 September 2021, which was up 31% from 31 March 2021.
Macquarie said that its financial position comfortably exceeded regulatory minimum requirements, with surplus capital of $8.4 billion. The bank CET1 capital ratio was 11.7%.
The board decided to declare an interim dividend of $2.72 per share, which represented a payout ratio of 50%. At the current Macquarie share price, the last two declared dividends amounts to a partially franked dividend yield of 3%.
Individual segment performance
Macquarie Asset Management (MAM) contributed $1.3 billion of net profit, an increase of 23% year on year. This was driven by the divestment of Macquarie Infrastructure Corporation assets, partially offset by a gain on the sale of Macquarie European Rail in the first half of FY21 and lower performance fees.
The banking and financial services division saw net profit grow 52% year on year to $482 million. This reflected growth in home loan, business lending, platforms and deposits, as well as lower credit impairment charges, partially offset by a higher headcount and investment in technology to support growth.
Commodities and global markets (CGM) saw profit increase 60% year on year to $1.73 billion. There was higher revenue from 'commodities', with strong risk management income from gas and power, resources and agriculture.
Finally, Macquarie Capital delivered a net profit of $468 million, which was up "significantly" from a loss of $189 million in the first half of FY21. This came about due to higher fee and commission income thanks to mergers and acquisitions, and debt, income.
Investing for growth and increasing green exposure
From 1 April 2022, the Green Investment Group (GIG) will operate as part of MAM, to bring together Macquarie's specialist capabilities to provide clients with greater access to green investment opportunities.
Macquarie noted that the need for investment has grown substantially in GIG's area of focus, and this move will enable long-term investment across the asset lifecycle, from development to operations. GIG will retain its brand and continue its mission to accelerate the green transition, providing greater scale of decarbonisation solutions for clients, portfolio companies, communities and the environment.
The global investment bank recently completed its $1.5 billion institutional placement to invest further in the business and find new opportunities.
Is the Macquarie share price a buy?
Opinions are mixed on the business. Credit Suisse rates it as 'neutral' with a price target of $195. But Citi calls it a buy with a price target of $226 after continuing high levels of profitability from the business.
On Citi's numbers, Macquarie shares are valued at 18x FY22's estimated earnings.
