Does Macquarie Group (ASX:MQG) deserve its reputation as the ‘millionaires factory’? And will it continue into FY26?

Macquarie Group (ASX:MQG) has a reputation as the ‘millionaire’s factory’, and it did not just develop it by accident.

Despite it being a relatively young bank compared to the Big Four, it has grown into a company worth over $80bn. It oversees investments in over 30 countries, worth more than $900bn and is even challenging the Big Four in the Australian home loan markets (being the next largest lender). It has grown by over 70% in 5 years, and this did not happen by accident.

 

Who is Macquarie Group (ASX:MQG)?

Macquarie is a diversified financial services company. It is commonly called ‘Macquarie Bank’ and does indeed have banking services, although there is more to it than that. It offers Asset Management, Banking and Financial Services, Commodities and Global Markets Trading and money management (through Macquarie Capital). These are all four of its segments.

It is a relatively young bank compared to the Big Four (Westpac traces its origins over 2 centuries ago), although it has had a stellar run since its founding in 1969, when it was just a subsidiary of UK merchant bank Hills Samuel and just had 3 employees.

The company is truly global, having made 32% of its FY25 revenue from the Americas, 24% from EMEA, 10% from Asia and 34% from Australia – making 66% of income as being internationally derived.

 

Why has it been successful?

We don’t have space to go into the full details that Joyce Moullakis’ and Chris Wright’s fantastic book The Millionaires Factory did, although in a nutshell it is because Macquarie has gone where no other Australian bank has gone. Namely, into offshore investments to the extent few other Australian companies have.

For 30 years under successive CEOs Allan Moss, Nicholas Moore and Shamara Wikramanayake, the Martin Place headquartered bank has done so and been very successful. This is largely due to its focus on disciplined and bold investing strategies, which have enabled Macquarie to identify attractive investments in markets where other players may not be able to do so.

 

 

In FY25, which is the 12 months to March 31 2025, Macquarie made a net profit of $3.7bn, a figure that up from the year before, and a return on equity of 11.2%. Being so exposed to industrial assets around the world, Macquarie Group is overly sensitive to rising interest rates and slowing economic activity, so after seeing a drop from over $5bn to $3.5bn in FY24, it saw a rebound as interest rates began to decline. This was enough to make up for a flat performance in its advisoty business and a decreased contribution from its commodities business.

Macquarie closed the period with $941bn in Assets Under Management, up 3% from 12 months earlier (but up over $300bn from 4 years ago), and paid a full-year dividend of $6.50 per share. It has over 21,000 employees and over 200,000 people employed across its various investments.

 

More than an investment bank

Macquarie is also making strides the mortgage market with a $160bn+ loan book, a figure has grown from $29bn just a decade ago and has given it a >5% market share. Macquarie has the best of both worlds being a digital-first lender but with a legacy in the financial services industry. It has a high-quality book with just over 50% of settlements with a LVR of 70% or less and only 2% of loans over 80%. The bank has a big deposit base of $177.7bn, a figure that has more than doubled in 4 years.

ESG investors are covered here. Macquarie has over 100GQ green energy assets on its balance sheet or under management – including those under construction and development. Net Zero in so-called Scope 1 and Scope 2 was achieved in FY25, representing a 98% reduction since FY20, although Scope 3 remains a work in progress. It generated 100% of global electricity consumption from renewable sources. From a community standpoint, its employees contributed $57m towards the Macquarie Foundation which supports over 3,000 community organisations worldwide which support causes including humanitarian efforts, environmental initiatives, human rights, food relief, mental health, medical research, and more.

 

What does the next 12 months hold?

Macquarie Bank will report 1HY26 results during November and full year results next May. Obviously it is vulnerable to the macroeconomic outlook. Issues with potential to impact include the situation in the Middle East and Trump’s tariffs. Macquarie told investors that,’ We continue to maintain a cautious stance, with a conservative approach to capital, funding and liquidity that positions us well to respond to the current environment’.

In the medium-term, the bank has told investors it is,’ well-positioned to deliver superior performance in the medium term with established, diverse income streams’.

12 analysts cover Macquarie and their mean target price is $211.99, which is actually a slight discount to the current share price. Consensus estimates for FY26 expect $18.4bn in revenue (up 7%) and $10.86 EPS (up 11%). Then in FY27, $19.2bn in revenue (up 4%) and $11.75 EPS (up 8%).

Its P/E multiple appears cheap at 19.5x for FY26 when you consider it is below the ASX 200 average and the Big Four Banks, while its PEG is 2.4x. You could argue Macquarie is undervalued just because it is only A$81bn, a figure behind all of the Big Four banks despite all of the Big Four being predominantly focused on mortgages as a profit source and having (for the most part) failed in their offshore expansion strategies.

It has been somewhat tarnished by some negative headlines around compliance standards. The company has had additional oversight imposed to its division by ASIC (which found significant supervision and compliance failures in its derivatives trading arm) and Macquarie vowed to act. We’ll all be watching.

 

Time to buy Macquarie Group?

In our view, yes. Macquarie Group is a solid business without a shadow of a doubt and will bounce back in the years ahead. But in good and bad times alike, the “millionaires’ factory” is always one stock to keep an eye on.

 

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