Bridge sustains Puma in medium term

One corner of Macquarie Group's business where the outlook is more subdued is the lending business, which has an Australian focus and in which mortgages, funded through the Puma program, are a key contributor.

Macquarie had an okay, but not stellar half in its mortgage business, with a growth rate of seven per cent (or 14 per cent annualised, and down from more than 20 per cent in recent years).

Managing director Allan Moss said Macquarie was organising more bridging loans to continue Puma's lending program, but noted (and was somewhat chuffed about) the bank's status (according to him) as the first lender anywhere in the world to sell mortgage-backed securities (in the third week of September) and thus reopening that market.

It wasn't made clear whether the Puma bridge would be funded by Macquarie on balance sheet or be sourced from another bank.

 "Puma was able to carry out that mortgage securitisation despite the credit market disruption because investors, not only in Australia but globally, recognised that our mortgages are very high quality and that it is a very good security," Moss said.

"The other factor that is helpful to the Australian market is that as well as the fact that Australian mortgages are really high quality, the Reserve Bank of Australia now accepts some mortgage paper, most mortgage paper as being eligible for repo."

Moss expects the market for mortgage securitisation in Australia will continue to improve, but as insurance, said the bank had put in place some bridging alternatives so it can continue to maintain services to clients.

The bank's profit analysis noted that there was an eight basis point reduction in the net interest margin on the lending book to 45 basis points, mainly due to a reduction in the net interest margin in the Australian portfolio.