Macquarie Group (AU:MQG), Australia’s largest investment bank and asset manager, announced a 14% year-over-year rise in its net profit of AU$1.61 billion for the first half of Fiscal 2025. However, shares fell about 4% today, as the company’s H1 net profit declined 23% on a sequential basis and missed analysts’ consensus estimate of AU$1.73 billion.
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What Impacted Macquarie’s H1 Performance?
Macquarie’s H1 FY25 performance was impacted by the softness in the Commodities and Global Markets (CGM) unit, which witnessed a 5% year-over-year decline in its net profit contribution to $AU1.32 billion.
The CGM unit saw a lower contribution from the Commodities business. Notably, the risk management business within Commodities was hit by the impact of subdued volatility in energy markets on client’s hedging activity. The Commodities trading business gains when clients hedge their positions to protect their investments from future volatility.
The first-half results were also impacted by slowing advisory business at Macquarie Capital, the company’s investment banking arm. Macquarie Capital’s H1 FY25 net profit contribution declined 14% year-over-year to $AU371 million.
In contrast, the company’s H1 bottom line gained from the 68% rise in Macquarie Asset Management’s (MAM) net profit contribution to $AU684 million compared to the first half of Fiscal 2024. MAM gained from higher performance fees.
Macquarie’s Shareholder Returns
Macquarie announced an interim ordinary dividend of $AU2.60 per share for H1 FY25, which reflected about a 2% year-over-year increase but was down compared to the dividend of $AU3.85 for H2 FY24. The company’s H1 FY25 dividend represented a payout ratio of 61%, which is in line with the company’s dividend policy of an annual payout ratio in the range of 50% to 70%.
Further, the company said that its board has approved an extension of its $AU2 billion buyback plan for another 12 months. This buyback plan was originally announced in November 2023.
Is Macquarie a Good Stock to Buy?
Macquarie scores a Moderate Buy consensus rating on TipRanks, based on three Buys, one Hold, and one Sell recommendation. The average MQG stock price target of AU$219.60 implies 1.8% possible downside from current levels. Shares have risen more than 24% year-to-date.
