Macquarie (MQG.AX) boss Shemara Wikramanayake knows how to time the market. Two years ago, the investment bank raised around A$2.8 billion ($1.8 billion) in equity to funnel into new opportunities while earnings were soaring and the stock was trading at over 3 times book value. Now, with shares 16% lower and net income for the six months to the end of September plummeting by two-fifths from the same period last year, Macquarie is returning to the market, this time to buy back up to A$2 billion of stock.
The board also increased to 70% the share of earnings allocated to dividends, the highest ratio since the 2021 capital raise. The two moves seem designed to calm any shareholders nervous about the bank’s dip in fortunes. Much of the profit drop stemmed from lower payouts from private equity-style investments, an inherently lumpy business. And while costs rose 6% from last year, much of that is for a digital overhaul of the bank that ought to pay off in the future.
For now, both remain a drag, along with lower volatility crimping commodities and trading revenue. Hitting its historical average return on equity of around 15% may be a stretch for a while, making Macquarie’s current multiple of almost 2 times book value look overly generous. (By Antony Currie)
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