Macquarie Group’s 5.5% Profit Growth Highlights Resilience in Asset Management and Banking

Australia’s Macquarie Group (ASX: MQG) reported a 5.5% rise in annual net profit to A$3.72 billion for fiscal year 2025 (FY2025), driven by robust performances in its asset management and banking divisions. The results, released in April 2025, underscore the firm’s ability to navigate volatile markets while capitalizing on structural growth opportunities in global infrastructure and financial services.

Key Highlights of FY2025 Results

• Net Profit Growth: The 5.5% increase to A$3.72 billion follows a challenging FY2024, during which profit fell 32% due to one-off market swings.
• Dividend Boost: A final dividend of A$3.90 per share (35% franked) raised the full-year payout to A$6.50 per share, a 4% increase from FY2024.
• Strong Capital Metrics: The CET1 ratio rose to 12.8%, and the capital surplus reached A$9.5 billion, reflecting disciplined risk management.

Divisional Performance: Winners and Losers

Macquarie’s diversified business model shone through its divisional results, with growth in annuity-style businesses offsetting weaker performance in markets-facing divisions.

1. Macquarie Asset Management (MAM) – Star Performer

• Profit Jumped 33% to A$1.61 billion, fueled by higher performance fees and gains from asset sales in private markets.
• Assets Under Management (AUM) grew to A$942.7 billion, with strong inflows into infrastructure and real estate funds.
• Key Driver: Institutional demand for long-term, inflation-resistant assets, such as renewable energy and logistics infrastructure.

2. Banking and Financial Services (BFS) – Steady Growth

• Profit rose 11% to A$1.38 billion, driven by A$136.2 billion in home loans and cost efficiencies.
• Deposit Growth: BFS’s retail deposits hit A$163.8 billion, a 7% increase, reflecting strong client retention in Australia’s stable banking sector.

3. Commodities and Global Markets (CGM) – Under Pressure

• Profit fell 12% to A$2.83 billion, as subdued commodity hedging activity and weaker energy trading offset gains in shipping and tech finance.
• Market Challenges: Reduced volatility in commodity prices and delayed North American gas contracts hurt CGM’s trading margins.

4. Macquarie Capital – Stable Performance

• Profit held steady at A$1.04 billion, with strong advisory fees in M&A activity balancing weaker investment gains.

Strategic Priorities and Risks

CEO Shemara Wikramanayake emphasized Macquarie’s focus on diversification, capital efficiency, and global expansion. Key initiatives include:
- Infrastructure Dominance: Scaling up investments in green energy, transport, and regulated utilities, where long-term returns are resilient to economic cycles.
- Tech and Data: Enhancing digital capabilities to streamline BFS operations and improve client analytics.

However, risks remain:
- CGM Volatility: Commodity markets could stay subdued if global growth slows further.
- Regulatory Headwinds: Stricter capital rules in Europe and Australia may constrain returns.

Why Investors Should Pay Attention

Macquarie’s FY2025 results highlight its balanced business model, with annuity-style divisions providing steady cash flow while markets-facing units offer upside in volatile periods. The 5.5% profit growth and 11.2% return on equity (ROE) signal improved profitability after FY2024’s slump.

Moreover, the A$9.5 billion capital surplus provides a buffer for acquisitions and shareholder returns. With the dividend yield at 3.8% (based on a share price of A$171), income-oriented investors may find value in MQG’s stable payouts.

Conclusion: A Solid Bet on Long-Term Trends

Macquarie’s FY2025 results demonstrate its ability to thrive in a mixed economic environment. The asset management and banking divisions, which now account for 64% of total profit, are well-positioned to benefit from rising demand for infrastructure and wealth management services. While CGM’s struggles remind investors of the risks in markets-facing businesses, Macquarie’s strong capital position and diversified earnings base make it a compelling long-term play.

With a forward price-to-book ratio of 1.1x, Macquarie trades at a discount to its five-year average, offering upside if global infrastructure spending accelerates. For investors seeking exposure to global growth themes and reliable dividends, Macquarie remains a top-tier financial services firm to watch.

Data as of April 2025. Past performance is not indicative of future results.