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

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

3 small-cap ASX healthcare shares 'with strong prospects'

Fund manager IML discusses why these 3 ASX healthcare shares are likely to rise in value.

Read more »

Magnifying glass on a rising interest rate graph.
Share Market News

Will the RBA finally cut interest rates next week?

Let's see what economists are saying about the central bank's meeting.

Read more »

A couple sits on a sofa, each clutching their heads in horror and disbelief, while looking at a laptop screen.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors endured a rough Friday to close the trading week today.

Read more »

a man wearing old fashioned aviator cap and goggles emerges from the top of a cannon pointed towards the sky. He is holding a phone and taking a selfie.
Broker Notes

7 ASX All Ords shares elevated to 'strong buy' status in October

The brokers turned bullish on these ASX companies last month.

Read more »

A businessman compares the growth trajectory of property versus shares.
Share Market News

How ASX shares vs. property performed in October

The national home value rose for the 21st consecutive month while the ASX 200 dipped.

Read more »

Person with thumbs down and a red sad face poster covering the face.
Share Fallers

The worst 3 ASX 200 stocks to buy and hold in October unmasked

You would have done well to avoid these three ASX 200 stocks in October.

Read more »

A female Woolworths customer leans on her shopping trolley as she rests her chin in her hand thinking about what to buy for dinner while also wondering why the Woolworths share price isn't doing as well as Coles recently
52-Week Lows

Why is the Woolworths share price at its lowest point since 2020?

We haven't seen Woolies shares this low since COVID.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why AFT, Amcor, Corporate Travel, and Macquarie shares are falling today

These shares are ending the week in the red. But why?

Read more »