Macquarie Bank loan book rises 8% in 1Q23

On Thursday (28 July), Macquarie Group provided an update on the first quarter of its 2023 financial year (1Q23) ahead of its 2022 annual general meeting (AGM). 

According to Macquarie, as at 30 June 2022, the banking and financial services arm of the group saw its mortgage book grow to $96.9 billion – up 8 per cent from $89.5 billion at the end of FY22 (ended 31 March 2022).

Its business banking loan portfolio also grew over the first quarter of the group’s new financial year, rising 3 per cent to $11.9 billion.

The bank told investors that it expects continued “momentum” in its banking business – particularly for mortgages and savings accounts – but acknowledged that market dynamics were changing.

Noting the rising interest rate environment – with the bank having passed on rate hikes to customers following the RBA’s recent increases to the cash rate – it outlined that it will be “monitoring” its provisioning for expected credit losses.

The growth in the loan portfolios was offset by a drop in Macquarie Bank’s car loan performance – which fell 10 per cent on 31 March to $7.9 billion.

Macquarie Bank also saw its deposit base rise, growing 9 per cent on March to $106.4 billion by the end of 1Q23.

Macquarie Group’s managing director and chief executive officer, Shemara Wikramanayake, said that favourable trading conditions saw Macquarie’s operating groups deliver net profit contribution that was up on the first quarter of FY22 (1Q22), although trading conditions did soften during the quarter.

“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,” she said, outlining that a range of factors that may influence its short-term outlook include:

• Market conditions including “significant volatility events, global inflation and interest rates, and the impact of geopolitical events”
• Completion of period-end reviews and the completion rate of transactions
• The geographic composition of income and the impact of foreign exchange
• Potential tax or regulatory changes and tax uncertainties

“Macquarie remains well-positioned to deliver superior performance in the medium term. This is due to our deep expertise in major markets; strength in business and geographic diversity and ability to adapt the portfolio mix to changing market conditions; an ongoing program to identify cost saving initiatives and efficiency; a strong and conservative balance sheet; and a proven risk management framework and culture,” she said.

In 2021, Macquarie committed to align its financing activities with the global goal of net zero by 2050. The group told investors that its Macquarie Net Zero Plan, which will be published this year, will reportedly initially focus on fossil fuels and motor vehicles, and “understanding the emissions associated with these sectors to determine 2030 goals that set Macquarie on the right path to its 2050 commitment”.

Macquarie’s growth in mortgages and deposits

While the banking arm only delivers a small percentage to its net profit contribution (around 11 per cent in the last financial year), it has helped the group reach record profits in the past year.

The group had delivered a record profit of $4.7 billion in the last financial year – an increase of 56 per cent on FY21, which itself had been a record year.

The success of Macquarie Bank’s mortgage book comes after a strong few years of lending performance – with its book having been bolstered by more than a third in the last financial year alone.

The bank’s consistent and speedy performance in turnarounds has made it a darling of the broker channel, which writes around 90 per cent of its mortgages.

The deposits side of the banking business is also expected to increase moving forward, after Macquarie announced in June that it would increase interest rates on standard transaction account deposits from 1.00 per cent to 1.50 per cent (on balances up to $250,000) from 17 June.

According to the bank, this takes its savings rate to around 145 bps higher than the industry average for transaction accounts.

New Macquarie customers will also receive a “welcome rate” bonus, bringing the interest rate to 1.80 per cent p.a. on their first savings account for four months (on balances up to $250,000). 

This means that customers will earn the same interest rate on their transaction accounts as Macquarie’s ongoing, high-interest savings account rate. 

The bank also has accelerated its onboarding process to help ensure customers can apply for an account, verify their identity, load their new debit card into their digital wallet and start saving or spending in less than a minute.

[Related: Macquarie grows mortgage book by a third]