Macquarie stumbles with credit card play

Macquarie Group is in the process of turning its personal banking unit into a full-service retail bank, as it seeks to take advantage of its runaway success in the mortgage market, as well as strong growth in retail deposits and business lending over the past few years.

Macquarie is building a core banking system and is trialling transaction and savings accounts with a view to launching them in the next few months. It is also expanding its range of third party deals.

However, not everything the group touches has turned to gold. Last year it took over from HSBC as Woolworths' credit card partner. The deal doubled the size of Macquarie credit card book but the money has been flowing out ever since.

According to Australia Prudential Regulation Authority figures, Macquarie's credit card book jumped from A$305 million in April last year to $665 in June; since then it has fallen 6.2 per cent to $624 million at the end of March.

The credit card market has been difficult but most providers have managed to grow over that period.

On the positive side, Macquarie's Australian mortgage portfolio has recovered the ground it lost during the financial crisis when the closure of the securitisation market forced it to stop lending.

Macquarie's banking and financial services division finished its financial year on March 31 with a mortgage book of $24.5 billion and growth of 44 per cent for the year.

The banking and financial services division increased its net profit contribution by ten per cent on the previous corresponding period to $285 million.

The division also reported 27 per cent growth in business loans to $5.2 billion.

Retail deposits rose 12 per cent to $37.4 billion and business deposits rose 19 per cent.