By any measure the image of Macquarie Bank in the market is of an entrepreneurial financial services company with ambitious plans and a fairly adventurous approach to doing business.
Some investors would say that as a bank it pushes the envelope, others that it is an investment bank and a money making machine, all rolled into one and justifies a higher ranking than its peers.
The results in recent years certainly justify the latter description.
But in terms of the way the market values the bank, it's not much different to the Big 5 conventional banks, NAB, CBA, Westpac, ANZ and St George.
If you look at the Price Earnings ratios of the banks up to when MBL shares were halted Monday ahead of a capital raising ($89.50), then there's not much difference in market values between the five.
Macquarie (MBL) was on a PE of 16.47, the Commonwealth (CBA) was on 16.04, Westpac was on 15.59, the ANZ, 14.7, the NAB, 13.34 and St George was on 17.75 times earnings.
The market is trading on a PE of 17.6, so all the banks, with the exception of St George, are being valued fairly conservatively.
(Banks usually trade under the market PE because they have a more highly geared and therefore more risky balance sheet.)
For a bank like MBL,with a thirst for rapid growth and using its balance sheet aggressively, that's not too out of line with the more conservatively run majors.
Macquarie's PE might rise a little after the fund raising and yesterday's very good profit announcement but its overall market cap is $22.73 billion.
But in these days of private equity bids and similar deals in which Macquarie is a player (Qantas for example), MBL is capitalised at just over two Qantas bids.
That I know is a funny way of valuing the bank but there have been bigger private equity deals around the world.
Just as Qantas was bid for by Macquarie and others, even though the airline wasn't floundering, Macquarie is going very well with prospects of doing better in the new financial year. These days no one stock is off of the private equity radar, so what about MBL?
Macquarie knows as much about what private equity can and can't do, so there wouldn't be any point in a KKR or similarly aggressive foreign investment bank having a go at MBL.
But as I said, its market valuation is not too far away from the more staid (and bigger) peers, so the local investment community seems comfortable with the prospects for MBL.
A dividend yield (before this result) of 2.9 per cent is well under the 4 per cent on offer from the big banks and that is the only giveaway for Macquarie's different style of banking.
But then Woolworths is supposed to be a 'defensive' investment, not a growth stock with a dividend yield of 2.3 per cent and a PE of almost 27 times. That makes Macquarie look almost respectable.
MBL yesterday reported a 60 per cent lift in full year profit to a record $1.463 billion for the year ended March 31, up from $916 million last year.
Income grew 49 per cent to $7.2 billion. Its rapidly growing international business which boosted income 70 per cent to $3.46 billion is now the single biggest contributor to the bank's revenue base.
Macquarie said its net fee and commission income rose by 25 per cent to $3.54 billion in fiscal 2007, with trading income up 20 per cent to $1.047 billion and net interest income up 23 per cent to $728 million.
Income from "asset and equity investment realisations and other" rose 257 per cent to $1.866 billion, which represented the bank cashing out of a number of investments during the year.
MBL said its expense to income ratio fell slightly to 73.2 per cent as revenues grew faster than costs.
Macquarie said its assets under management rose 41 per cent to $197.2 billion.
CEO Allan Mr Moss said all divisions lifted earnings with the investment banking group up 78 per cent, treasury and commodities up 56 per cent, equity markets up 39 per cent, banking and property up 179 per cent, financial services up 32 per cent and funds management up 45 per cent.
"Subject to prevailing market conditions continuing, we expect strong IPO and mergers and acquisitions activity and good growth in the specialist funds,'' Mr Moss said in a statement accompanying the result.
"We expect the trading businesses to benefit from geographic and product expansion and from continued good equity broking volumes.''
The bank declared a final dividend of $1.90, taking the total dividend for the year to $3.15, up from last year's $2.15 a share.
Macquarie said it expects future dividends will be fully franked for the next two years and from then on franking would be at least 80 per cent.
