Macquarie (ASX:MQG) share price on watch after posting $3bn profit and 86% dividend increase

The Macquarie Group Ltd (ASX: MQG) share price is in the spotlight as it unveiled an increase in both profit and dividends this morning.

| More on:
Macquarie profit results asx banks represented by banker imagining rising profits

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Macquarie Group Limited, National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Shot of a young businesswoman looking stressed out while working in an office.
Industrials Shares

This ASX share is tumbling 13% on reduced earnings forecast

Earnings are expected to fall in the first half, much to the dismay of the market.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Mergers & Acquisitions

Guess which ASX All Ords stock just rocketed 23% on a $1.2 billion offer

Investors are piling into the ASX All Ords stock amid a $1.2 billion takeover bid.

Read more »

Excited group of friends sitting on sofa watching sports on TV and celebrating.
Technology Shares

Why today is a big day for Pro Medicus shares

Records are being broken by this share on Monday. What's going on?

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Opinions

3 reasons the GQG share price looks like a buy to me

Here’s why the fund manager could be good value.

Read more »

Young man looking afraid representing ASX shares investor scared of market crash
Share Market News

These are the 10 most shorted ASX shares

Let's see which shares short sellers are targeting this week.

Read more »

Happy man working on his laptop.
Share Market News

5 things to watch on the ASX 200 on Monday

A good start to the week is expected for Aussie investors. Here's what is happening.

Read more »

Woman in celebratory fist move looking at phone
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Broker Notes

These ASX 200 shares could rise 20% to almost 30%

Analysts are tipping these shares to deliver big returns over the next 12 months.

Read more »