Australia's leading investment bank, Macquarie Group (OTC:MQBKY), has announced plans to initiate a share buyback worth up to A$2 billion ($1.29 billion), despite reporting a 39% year-on-year drop in first-half net profit. The move comes on the back of a strong capital position, even as the bank's net profit fell to A$1.42 billion ($910 million) from A$2.31 billion the previous year.
The decrease in profit is attributed to growth in loan books, deposits, and assets managed by annuity-style entities such as Macquarie Asset Management and Banking and Financial Services, coupled with lower market activity. However, Macquarie Capital and segments of Commodities and Global Markets have delivered solid performances, according to CEO Shemara Wikramanayake.
Despite the significant decrease in H1 earnings due to a previous period of strong realizations, Wikramanayake highlighted the resilience of their client franchises. Their annuity-style businesses have recorded growth, which has been mitigated by an expansion in their commodities and global markets (CGM) client base and Macquarie Capital’s private credit book.
The company also declared an interim dividend of A$2.55 per share, surpassing FactSet's forecast. Additionally, Macquarie Group predicts an uptick in green energy realizations for H2, indicating potential growth areas amidst uncertain market conditions.
InvestingPro Insights
InvestingPro real-time data unveils that Macquarie Group has a market capitalization of $38.13 billion and a P/E ratio of 11.83. The revenue over the last twelve months as of Q4 2023 stands at $12,796.5 million, with a growth of 9.99%. Interestingly, the dividend yield for 2023 is 3.67%.
InvestingPro Tips suggest that while the company has been consistently increasing earnings per share and has maintained dividend payments for 16 consecutive years, it is currently trading at a high P/E ratio relative to near-term earnings growth. Moreover, the company's revenue growth has been slowing down recently.
These insights indicate that while Macquarie Group has been a stable investment over the years, potential investors should be mindful of the recent slowdown in revenue growth and the high P/E ratio. For more detailed insights, consider exploring the additional 10 InvestingPro Tips available with their premium service.
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