Both Macquarie Group Ltd (ASX: MQG) shares and Westpac Banking Corp (ASX: WBC) shares have gone on impressive rises in the past year, as shown in the chart below. After such big gains, it's worth asking the question: which ASX financial share is a better choice?

These two banking giants both recently reported results that I thought were intriguing.

While one result doesn't dictate how the long term will play out, I think it's a useful barometer of performance and can help us decide which stock to buy.

Profitability

In the Westpac annual result, we saw the ASX bank share report its net profit after tax (NPAT) fell by 3% year over year to $7 billion.

The Macquarie half-year result showed a 14% year-over-year rise in net profit to $1.6 billion.

A key reason for Westpac's profit decline was the 17% drop in net profit for the consumer division due to revenue falling by 6%, reflecting "intense mortgage competition."

Macquarie benefited from the performance of its Macquarie Asset Management (MAM) division, with a net profit contribution of A$684 million, up 68%. Macquarie reported its banking and financial services (BFS) segment delivered a net profit rise of 2% to A$650 million, though it was also impacted by profit margin compression.

Loan growth

For most ASX bank shares, loan growth is a key factor driving profit growth, assuming the net interest margin (NIM) – meaning loan profitability – doesn't change.

Westpac reported that its loans increased by 4% to $807 billion, which included growth in Australian housing loans (excluding RAMS) of 5% or 1.2 times the system, according to APRA banking statistics. Meanwhile, deposits grew by 5% to $674 million.

Macquarie reported that its home loan portfolio increased 9% compared to 31 March 2024 to $129.9 billion, representing 5.6% of the Australian market. The business banking loan portfolio increased by 5%, compared to 31 March 2024, to $16.6 billion.

Macquarie is definitely growing faster than Westpac, but it's growing from a smaller number.

One of the most appealing elements about Macquarie shares is that it has many other growth levers, not just its BFS division. For example, if interest rates fall, this could spur more transactions for its Macquarie Capital division and help the MAM segment grow funds under management (FUM).

Shareholder payments

Westpac's board wanted to reward owners of Westpac shares with larger payments in its annual result.

Westpac declared a final dividend per share of 76 cents (up 5.6%) and an annual dividend per share of $1.51 per share (up 6.3%). That payout translates into a current dividend yield of 4.7%, excluding franking credits. Westpac also declared a $1 billion increase in its share buyback program.

In Macquarie's half-year result, it declared an interim ordinary dividend of A$2.60 per share, representing an increase of 2%. The last two dividends the business has declared amount to $6.45, which translates into a current dividend yield of 2.9%, excluding franking credits.

However, Westpac has a higher dividend payout ratio. If both ASX bank shares had the same dividend payout ratio, the yields would be much closer.

Valuation

The two businesses operate on different financial calendars, so their earnings are not exactly comparable.

However, in FY24, Westpac generated $2.01 of earnings per share (EPS), which puts the bank at 16 times FY24's earnings.

If we add Macquarie's EPS in the first half of FY25 and the second half of FY24, it comes to $9.74, it's valued at 23 times the last 12 months of reported earnings.

Both of these ASX financial shares are priced much higher than they were a year ago. When valuations go higher, I want to see profit growth to help justify the valuation.

Macquarie is currently growing profit at a significantly faster pace. Thanks to its global operations, I believe Macquarie has more room to grow in the future, as opposed to Westpac's focus on just Australia and New Zealand. For that reason, Macquarie shares are my pick over Westpac shares because of the long-term earnings growth potential.