Former APRA chief and now Macquarie Bank director Wayne Byres
Macquarie Group’s banking and financial services division is having trouble doing enough new lending to soak up the inflow of funds from its strong deposit franchise.
At March 31, BFS had A$142.7 billion of deposits, an increase of 10 per cent over the year. The home loan book grew by 10 per cent to $119.3 billion, the business loan book grew 22 per cent to $13 billion and the car loan book fell 25 per cent to $4.6 billion.
Macquarie shut down its vehicle finance business last month, after several years of decline.
Home loan growth of 10 per cent is more than twice system growth and one of the highest in the industry but it is below Macquarie’s growth levels in previous years. The home loan book has grown at a compound annual growth rate of 24 per cent since 2013.
Like other mortgage lenders, in the past year Macquarie has tried to maintain margins by slowing lending growth in a highly competitive market.
Earlier this year, it signalled its intention to be a bigger force in the business lending market. But with a business loan portfolio of only $13 billion, it has some catching up to do.
The BFS division made a profit of $1.2 billion – up 3 per cent from the previous year. Net interest and trading income grew 5 per cent to $2.6 billion and net operating income grew 8 per cent to $3.2 billion.
The first half was stronger than the second, with income, and profit down in the six months to March. Second half performance was impacted by margin compression due to changes in portfolio mix, lending competition and higher funding costs.
Thanks to a more positive economic outlook and a reduction in its collective provision, BFS booked an impairment credit of $15 million, compared with a charge of $34 million in the previous year.
Meanwhile, Macquarie Bank, a Macquarie Group ADI subsidiary that is made up of its banking and financial services and commodities and global markets divisions, continues to work on an undertaking given to APRA to strengthen its governance, culture, corporate structure and remuneration to ensure full and ongoing compliance with prudential standards
Macquarie said that during the 2023/24 year, it closed a number of workstreams that strengthen the bank’s systems, framework, processes and risk culture. The work will continue in 2024/25, turning it into a multi-year program.
Changes included establishing separate board audit, governance and compliance, risk and remuneration committees for the group and the bank.
It completed the appointment of bank-only non-executive directors to the Macquarie Bank board. Former Standard Chartered executive David Whiteing joined the MBL board in September last year and former APRA chair Wayne Byres joined in February this year. They joined Ian Saines.
Two of these BONDS sit on the board’s remuneration committee, which has strengthened its focus on “the oversight, design and determination of remuneration outcomes for bank staff.”