Morningstar expects the group to deliver another impressive result in fiscal 2019 after its global business model successfully navigated the headwinds that have slowed its rivals.
Although it is subscale compared with global peers, Morningstar analyst David Ellis says Macquarie Group has successfully replaced significant revenue streams previously sourced from the highly profitable satellite-fund business model.
“Long-held strengths of adaptability, variable costs, a solid balance sheet, and capable management offset volatile market conditions and place the group in a strong position to leverage the market rebound,” Mr Ellis said.
“Funds management, corporate lending, and asset financing are strong performers, delivering lower-risk income at the same time that Macquarie’s market-dependent businesses start to recover.”
However, Mr Ellis noted that further growth in global capital markets and increased transactional volumes are needed to increase earnings.
“Particularly in the market-facing investment banking businesses,” he added.
Morningstar has previously flagged that Macquarie is “underappreciated” by investors, who fail to see the strength of the group’s five synergistic business units: Macquarie Asset Management; Macquarie Corporate Asset and Finance; Macquarie Banking and Financial Services; Macquarie Commodities and Global Markets, and Macquarie Capital.
Macquarie Group posted a record full-year profit of $2.56 billion over the 12 months to 30 June 2018. The bank’s first-half fiscal 2019 results are due on 2 November. Morningstar has tipped the company to post a six-month net profit of $1.3 billion.