Macquarie share price: Everything you need to know about the H1 Report

We look at the highlights from Macquarie’s first-half FY21 results, released to the market last Friday.

The macro environment remains challenging for banks and financial institutions more broadly. Diversified financials company Macquarie Group (ASX: MGQ) proved as much during its first-half release: reporting starkly lower profits, high credit and impairment charges and a lower annualised return on equity.

Despite those weak results and a challenging operating environment, investors continue to flock to Macquarie – with the stock up about 6% in the last five sessions and a more impressive 22% in the last six months.

Commenting on the company's interim results, Macquarie's MD and CEO Shemara Wikramanakake said:

'Recent months have been overshadowed by the profound human impact of the COVID-19 global health crisis and its economic consequences. Those impacts are reflected in our result, notably in credit and other impairment charges in relation to the ongoing impact of COVID-19 on our clients and customers and in delays to realising assets from our balance sheet and our funds.'

First-half results at a glance

Looking at the highlights from Macquarie Group’s first-half, H1 FY21 results – for the half ending September 30 and on a year-over-year basis, the group reported:

  • Net profits of AUD$985 million, down 32%
  • Credit and impairment charges of AUD$447 million, up from AUD$139 million in H1 FY20
  • A CET1 ratio of 13.5%
  • Assets under management came in at AUD$556.3 billion, down 7%

Looking at these results on a more granular level, while Macquarie Asset Management (MAM), Macquarie Banking and Financial Services (BFS) and Macquarie Commodities and Global Markets (CGM) divisions all recognised solid profits, albeit lower on a year-over-year basis; Macquarie Capital, by comparison, posted a net loss of AUD$189 million, a wild reversal from a gain of AUD$221 million from the year prior.

The group said the lacklustre performance of Macquarie Capital was driven by 'significantly lower investment-related income, lower fee and commission income and higher credit and other impairment charges.'

Elsewhere, MGQ also announced a H1 FY21 interim dividend of AUD$1.35 per share – 40% franked. In H1 FY20 MGQ paid an interim dividend of AUD$2.50 per share.

The payment date for the FY21 interim dividend is December 22.

An outlook dominated by uncertainty

Looking ahead, while it was noted that 'market conditions are likely to remain challenging', given the uncertainty of the current operating environment, according to management how these conditions may specifically impact Macquarie's FY21 result remains difficult to quantify. As such, MGQ has decided not to provide FY21 profit guidance.

'While the economic impacts of the COVID-19 pandemic continue to be felt in the short term, Macquarie remains well-position to deliver superior performance in the medium term,' Ms Wikramanayake said.

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