Lender reports rejuvenated mortgage growth

by Miklos Bolza28 Jul 2017
Macquarie Bank has experienced a resurgence in its mortgage portfolio after lacklustre results in the 2017 financial year.

At its annual general meeting yesterday (27 July), the bank reported a total Australian mortgage portfolio of $29.4bn in the first quarter of FY18 (April to June since Macquarie measures its financial years from March to March).

These latest results represent an increase of 2% from the March quarter of 2017, a substantial improvement from the mere 1% growth in mortgage portfolio to $28.7bn that the bank reported for the entirety of FY17.

In the medium term, the bank has predicted strong growth opportunities through intermediary and direct retail client distribution, white labelling, platforms and client service.

In its last Operational Briefing in February earlier this year, Macquarie Bank did a deep dive into its mortgage portfolio, reporting the following figures for the third quarter of FY17:

•    Around 90% of loans with LVRs under 90%
•    Around 70% owner occupier loans
•    Around 30% interest-only loans

In its latest results, the bank reported $513m of profits for the full year up to 31 March 2017. This was a 47% increase from the year before. Profits for the entire Macquarie Group came to just over $2.22bn for FY17 (a 7.5% increase from the year before).

During the AGM, chairman of Macquarie Group Peter Warne also provided some comments on the Federal Government’s recently passed bank levy.

“Macquarie Bank’s Australian operations represent approximately one third of Macquarie Bank’s earnings based on the result for the full year ended 31 March 2017,” he said.

“The annualised cost of the new tax is estimated to be $A66m pre-tax based on earnings for the full year ended 31 March 2017, which has the same effect as increasing the Australian effective tax rate for Macquarie Bank from 34% to 41%.”

The impact of the levy will be greater if the bank’s profitability declines, he added.

“The new tax will have a disproportionately higher impact on Macquarie Bank compared to the major Australian banks given our business mix is more heavily weighted to wholesale and international business.

“Given the relatively small size of our Australian banking business we were surprised by our inclusion in the group to pay this levy. We have also expressed our concern to the government given the benefit we bring to domestic competition and innovation, the role we play in bringing offshore income into the Australian economy, and the potential for unintended consequences resulting from the levy.”

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