MFG -14.03%: The FY26 result exposed some uncomfortable weakness in the underlying funds-management business, with operating profit falling and fee margins disappointing despite average FUM edging higher.
Key results:
- Revenue and other income of A$195.6m, down 39% and below A$242.3m expected.
- Operating profit of A$144.9m, down 9.3% and broadly in line with A$145.0m expected.
- Net profit (NPAT) of A$87.9m, down 47% and well below A$137.4m expected.
- Average FUM of A$39.1bn, up 1.9%.
- Final dividend of 25.5cps.
Management is positioning the Barrenjoey combination as the beginning of a new growth phase, including additional US capabilities and expansion into New Zealand, but those initiatives now need to demonstrate they can offset pressure in the legacy funds-management operation.
MM’s view: MFG has come a long way from the existential concerns that surrounded the business a few years ago, but this result is a reminder that stabilising the franchise and rebuilding its earnings power are two different things. FUM actually grew, yet investment-management profits and fee margins went backwards — not the operating leverage investors want to see from an asset manager. The Barrenjoey deal gives MFG a much broader and potentially more valuable platform, but it also makes the investment case more complicated and pushes some of the upside further into the future. Today’s sell-off is harsh, but understandable.
MM is cautiously bullish toward MFG
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