Result Overview: For the full year ended 31 March 2016, the Macquarie group (ASX: MQG) announced a net profit after tax attributable to ordinary shareholders of $ 2.06 billion which is up by 29% over the previous year. The profit for the second half of the year was $ 993 million, up 7% over the same period of the previous year but down 7% over the first half results which were strong. Group CEO Nicholas Moore commented that the results highlighted the quality of the businesses and the ability of the group to adapt to changing conditions and five of the six operating groups reported increased net profit contributions.
Macquarie, Asset Management and Corporate and Asset Finance as well as Banking and Financial Services, the annuity style businesses of the group that contribute more than 70% of the performance, each showed record net profit of visions and the combined net profit on the vision for the year increased by 10% or $ 277 million over the previous year.
Macquarie Securities Group, Macquarie Capital and Commodities and Financial Markets, the capital market facing businesses of the group, showed a decrease of 3% for $ 34 million in combined net profit contribution for the year.
Annuity-style businesses (Source: Company Reports)
The six months to 31 March 2016 witnessed the annuity-style businesses continuing to perform well and benefiting from robust performance fees in asset management as well as increases in sales in corporate and asset finance. However, the combined net profit declined by 37% over the first half of 2016 and 17% over the same period of the previous year. The combined net profit contribution of the capital markets facing businesses declined by 13% over the first half and 34% over the second half of the previous year because of lower trading activity and a higher level of impairments.
The group continues to build on the strength of its domestic Australian business, while its international income accounted for 68% of total income for the year. Total international income was $ 6.7 billion, an increase of 4% over the previous year. Assets under management as at 31 March 23, were $ 478.6 billion, a decline of 2% over the previous year. The group continues to be in a strong position with a global platform which is robust and diverse with proven expertise across a range of products and assets. This is underpinned by a strong balance sheet, surplus capital, strong liquidity and funding and a conservative risk management approach.
Dividend: The group announced a final ordinary dividend of $ 2.40 per share (40% franked) compared to the previous year ordinary dividend of $ 1.60 per share (40% franked). The total ordinary dividend for the year works out to $ 4 per share, compared to $ 3.30 in the previous year and represents a payout ratio of 66%.
Outlook: As regards the outlook, the group indicated that the combined net profit contribution from the operating groups for FY 2017 will be in line with the performance reported for FY 2016. The tax rate is expected to be along the lines of FY 2016.
The short-term outlook is exposed to a number of challenges, including market conditions, foreign exchange rates, the cost of the conservative approach in managing funding and capital, and the potential changes in regulation and uncertainties in tax.
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