Transcription of interview with Macquarie Group Limited (ASX:MQG) CEO Nicholas Moore
Macquarie Group has just released its full year results. What was the most pleasing aspect?
Nicholas Moore: We’re very pleased to announce a profit result for this year of more than $1.6 billion. Our 46th year of unbroken profitability of the Group. And it comes from a wide variety of businesses we’ve been investing in, over that period of time.
How do the results compare to 12 months ago?
Nicholas Moore: For shareholders, it meant earnings per share are up to $5.02. That was a step up of 31 per cent on where we were last year. In terms of dividends, we declared a dividend of $2.00 for the second half, bringing the total dividend for the year to $3.30. We saw the ongoing increase of our international income. This year it was 70 per cent of the total Group income.
As well as that we divide our business groups into two different components. We have the annuity style businesses and they continue to perform very strongly, up 33 per cent on where they were last year. The capital markets facing businesses also showed an improved result, up 19 per cent on where they were last year.
How have the different businesses within the group performed?
Nicholas Moore: Our largest group, Macquarie Asset Management increased its contribution to the Group by 38 per cent, on a very strong performance last year. Pleasingly the Funds Under Management also stepped up by 14 per cent to $484 billion. Corporate and Asset Finance also had a strong year, quite similar to our Asset Management business. The profit was up 35 per cent and the Book of Business was up 13 per cent.
Banking and Financial Services also saw an increase in profitability, an increase of 10 per cent on where we were last year. And we saw good growth in all the underlying businesses. So the Book of Mortgages, the Book of Business Banking, our Wrap platform, all increased during the year as well.
Turning now to the capital markets facing businesses. Macquarie Securities saw its top line revenue grow during the year by 6 per cent, but unfortunately the bottom line income shrunk as a result of increased costs. Notwithstanding that it was able to successfully conclude a number of very important transactions globally. And, here in Australia it completed two of the largest IPOs that took place during the year.
Macquarie Capital saw it complete a similar number of transactions to last year but fortunately the value of those transactions was significantly more. This resulted in the profit actually stepping up during the year by 54 per cent. It led significant transactions here in Australia and as well as that in the United States, continued to grow its business with a very significant transaction being completed for Freeport.
Finally, or commodities and financial markets business had a record year. Profitability increased 15 per cent on where we were last year. And, a particularly notable performance for our energy markets group.
How is Macquarie different to how it was five years ago?
Nicholas Moore: Macquarie is different than it was five years ago. We actually calculate that at any point in time, 30 per cent of our income is from businesses we didn’t do five years ago. And it’s the same over the last five years. But this constant sense of developing our business, finding areas to develop in, moving into adjacencies, organic growth and inorganic growth, it’s very much a part of the Macquarie DNA.
When you look at our different business, you can see our Asset Management business has grown substantially over the last five years. It’s grown in its traditional infrastructure area, but it’s also grown into areas such as real estate. And as well as that, we’ve had a huge growth in the US with the acquisition of the Delaware business.
If you look at our Corporate and Asset Finance business, we’re still doing a lot of the things we were five years ago. But as well as that, we’re doing them on a more global scale. Our aircraft financing business is very much a global business and we announced, towards the end of last year, that we just acquired another portfolio of $4 billion worth of aircraft.
Our Banking and Financial Services business these days is very much a domestic business. But, a very focussed domestic business actually growing our Mortgage business, utilising the deposits that we’re able to bring on to the balance sheet. At the same time focussing on our Wrap platform and simultaneously growing our business banking area.
Today we also provide an outlook for the year ahead, where we said we would be slightly up on where we were last year. Now that outlook of course is subject to market conditions, which we can’t predict.
Ends
