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Business Description: Macquarie Group (MQG) is Australia's leading listed investment bank. It is a provider of banking, financial, advisory, investment and funds management services.
Strategy Analysis: MQG's strategy revolves around the provision of a full service investment banking operation in Australia and focusing on selected niche activities in international markets. In recent years strategic initiatives have concentrated on the growth of its annuity related businesses. It acquired fund manager Delaware Investments in the United States and has grown the corporate and asset finance business through both organic means and purchases of leasing portfolios. In order to improve capital efficiency and return on equity it is seeking to dispose or shut down less profitable businesses. MQG is well placed despite the current uncertainty and low confidence levels in global investment markets. Sound risk management minimised the impact of the global financial crisis, but it is not immune to the impact of weak global markets and is currently reducing staff numbers to match weaker revenue streams. MQG has developed a strong position and capability in global investment and asset markets and services diversified markets and geographies. Earnings are leveraged to a market recovery.
Macquarie Group reported NPAT up 18% to $361m for the half-year ended 30 September 2012. Revenues from ordinary activities were $3.08bn, down 5% from the same period last year. Diluted EPS was 99.7 cents compared to 85.3 cents last year. Net operating cash flow was $2.02bn compared to $4.37bn last year. The interim dividend declared was 75 cents compared with 65 cents last year. Looking ahead, the FY13 results will vary with market conditions, particularly for capital markets facing businesses which continue to experience subdued market conditions. Macquarie remains well positioned to deliver superior performance in the medium term, due to its deep expertise in major markets, strength in diversity, the ongoing benefits of continued cost initiatives, and a proven risk management framework and culture.
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