Should I Buy Macquarie Bank Shares? Highlights

MQG Share Price

Much like the rest of the market MQG shares have now fully recovered from the COVID Crash, and are now pushing all-time highs. At the time of writing MQG is priced at $153.71. Their share price is up 10.72% over the last 6-months and up 22.79% over the last 12 months. These results are largely in line with the market average being up 21.73% in the last year.

MQG has dropped off slightly from its all-time high in May, their 52-week range is 118.36-162.06. Its current market capitalization is $56.6 Billion.

Over the past 10-years, MQG has made excellent returns for investors with their share price increasing 466.92%. Each year the share price has made an average gain of 41.66%, while also averaging a dividend yield of 15.04% over a ten-year period. Investors have enjoyed a 56.70% return averaged over the long term.

About

Macquarie Group is an international company in the financial services space. They operate in 32 markets in asset management, retail and business banking, wealth management, leasing and asset financing, market access, commodity trading, renewables development, specialist advisory, capital raising, and principal investment.

Macquaries Businesses:

Macquarie Asset Management – A top 50 global asset manager, managing over $495 billion of assets on behalf of superannuation funds and other institutional investors Macquarie Asset Management oversees three stand-alone businesses:

• Macquarie Infrastructure and Real Assets (MIRA)
• Macquarie Investment Management (MIM)
• Macquarie Specialised Investment Solutions (MSIS)

Banking and Financial Services – This is Macquarie’s retail banking business that provides personal banking, wealth management, and business banking products.

There are two capital markets facing businesses:

Commodities and Global Markets – Conducts market research on behalf of clients covering equities, derivatives, fixed income, foreign exchange, and commodities.

Macquarie Capital – Advisers and facilitates the listing of companies on the share market, and provides other Investment banking services.

Macquarie Asset Management (MAM) and Commodities and Global Markets (CGM) are by far the most profitable ventures for Macquarie, each generating over $2 Billion in profits over the FY21.

Dividend History

MQG shares typically announce a dividend with the release of its half-yearly results in November and full-year results in May as seen in their financial calendar. Dividends are typically paid twice a year, in July (Final Dividend) and December (Interim Dividend).

The current average yearly dividend for MQG shares is $4.70 giving them a solid net yield of 3.07% or a gross yield of 3.59% at the current share price.

Financials

In May MQG released its Full Year FY21 report. The group lists the following highlights:

• FY21 net profit of $A3,015 million, up 10% on FY20; 2H21 net profit of $A2,030 million, up 106% on 1H21, up 59% on 2H20
• International income representing 68% of total income
• AUM of $A563.5 billion, down 6%
• Financial position comfortably exceeds regulatory minimum requirements
  • Group capital surplus of $A8.8 billion
  • Bank CET1 Level 2 ratio 12.6% (Harmonised: 16.2%)
• Annualised return on equity of 14.3%, compared with 14.5% in FY20

Macquarie Group’s profit of $3 Billion, represents their largest profit to date.

Current Broker Views

Citi: Sell, Target Price: $140

Macquarie’s acquisition of AMP Capital’s global equities and fixed income business (GEFI) adds a further $60bn of funds under management (FUM), lifting Macquarie Asset Management’s (MAM) total FUM to $720bn.

Citi expects no earnings contribution in FY22 with a minor benefit in FY23/24.

Forecast:

• Citi forecasts a full year FY22 dividend of 520.00 cents and EPS of 797.40 cents.
• Citi forecasts a full year FY23 dividend of 540.00 cents and EPS of 808.60 cents.

Morgan Stanley: Overweight, Target Price: $175

The acquisition of GEFI will add further diversity, scale, and relationships in the A&NZ market.

Forecast:

• Morgan Stanley forecasts a full year FY22 dividend of 550.00 cents and EPS of 845.00 cents.
• Morgan Stanley forecasts a full year FY23 dividend of 605.00 cents and EPS of 908.00 cents.

Morgans: Add, Target Price: $171

MQG’s full-year profit beat Morgans estimates. Morgans are expecting a flattish result for FY22, with positive results from the Macquarie Capital (MC) and bank. 

Forecast:

• Morgans forecasts a full year FY22 dividend of 526.00 cents and EPS of 832.40 cents.
• Morgans forecasts a full year FY23 dividend of 590.00 cents and EPS of 918.00 cents.

Prophet’s Take

Macquarie Group has performed very strongly during the economic downturn. Their strong balance sheet has allowed them to act in this time and grow their portfolio by acquiring AMP Capital’s global equities and fixed income business (GEFI), this has added $60 Billion of funds under management (FUM).

Their ability to respond and grow profits to all-time highs has proven the long-term ability of MQG. We are bullish on MQG.

Full Analysis: https://prophet-invest.com/should-i-buy-macquarie-bank-shares