Macquarie Group's bumper dividend and profit performance raises a key question: is the home-grown investment bank on the path back to its former glory?
Despite Friday's share price surge of nearly 10 per cent, analysts are cautioning the result does not mean boom times have returned for the country's biggest investment bank.
Joining Westpac and ANZ Bank in returning capital to shareholders, Macquarie has unveiled a forecast-busting final dividend of $1.25, underpinned by a 17 per cent jump in full-year profits.
Its shares surged above $43, their highest level since mid 2010, as investors welcomed the profit growth and dividend surprise. But the share price is well off the $90-plus levels reached in the heady days before the financial crisis.
It's also worth remembering the high dividend may be an admission that the board sees relatively few growth options in which to invest.
Analysts quizzed chief executive Nicholas Moore on whether the high payout ratio of nearly 80 per cent of earnings was a sign Macquarie could not find good assets to acquire.
UBS analyst Jonathan Mott described the payout ratio of 60 to 80 per cent as "remarkably high" for an investment bank, and asked if this signalled growth opportunities were not as strong as thought.
Moore made it clear Macquarie thought it had surplus capital, and it was becoming "harder and harder" to make transformative acquisitions, such as its purchase of Delaware Funds Management.