Macquarie’s residence mortgage e-book grows, earnings down 32% total

Regardless of sturdy performances in its residence mortgage and enterprise mortgage portfolios, Macquarie skilled a big drop in earnings within the 2024 monetary 12 months.

Whereas Macquarie’s annual web revenue of $3.5 billion was 32% beneath FY23, the funding financial institution ended the 12 months on a comparatively constructive notice, with the second half of the 12 months up 49% on the primary.

Nonetheless, the lower-than-forecast outcomes hampered the ultimate dividend for traders, lowered from $4.50 a share to $3.85.

Macquarie Group managing director and CEO, Shemara Wikramanayake (pictured above left), cited “ongoing financial uncertainty and “subdued market circumstances in lots of elements of the world” as causes for the decline.

Nevertheless, she mentioned the financial institution’s shopper franchises “remained resilient” during the last 12 months, with “continued shopper development, fundraising and new enterprise origination throughout the Group” because it delivered its fifty fifth consecutive 12 months of profitability since inception. 

Macquarie’s banking and monetary companies

In contrast to different working teams throughout the firm, Macquarie’s banking and monetary companies arm had usually constructive outcomes.

Complete residence loans grew by $11.4 billion over the 12 months, with the financial institution additional establishing itself because the nation’s fifth largest residence mortgage lender.

Its enterprise banking phase – a mortgage portfolio secured largely by working capital, enterprise money flows, and actual property – additionally grew significantly from $12.9 billion in FY23 to $15.7 billion in FY24.

“(There was) 13% development in common residence mortgage balances this 12 months, (and) actually sturdy 20% development within the enterprise financial institution,” mentioned Alex Harvey (pictured above proper), CFO and head of the monetary administration group.  “We’re actually happy to see this given the main focus the group has had there.”

Automobile loans weren’t worthwhile for Macquarie with the portfolio falling from $6 billion to $4.5 billion over the 12 months.

Elsewhere, Macquarie’s asset administration and commodities slumped, with earnings halving over the 12 months.

Inside the asset administration division, which was down 48%, the consequence was “primarily pushed by decrease asset realisations in inexperienced investments and elevated web expenditure in investments in inexperienced vitality portfolio corporations”, in keeping with the corporate.

Macquarie’s commodity portfolio succumbed to “considerably decrease stock administration and buying and selling earnings” after international commodity costs fell all year long.

Macquarie’s outlook

Macquarie continues to take care of a cautious stance, with a conservative strategy to capital, funding and liquidity that positions it to answer the present setting.

The vary of things which will affect our short-term outlook embody:

• Market circumstances together with international financial circumstances, inflation and rates of interest, vital volatility occasions, and the impression of geopolitical occasions
• Completion of period-end evaluations and the completion of transactions
• The geographic composition of earnings and the impression of international alternate
• Potential tax or regulatory modifications and tax uncertainties

Wikramanayake mentioned: “Macquarie stays well-positioned to ship superior efficiency within the medium time period with its various enterprise combine throughout annuity-style and markets-facing companies; deep experience throughout various sectors in main markets with structural development tailwinds; affected person adjoining development throughout new merchandise and new markets; ongoing funding in our working platform; a robust and conservative steadiness sheet; and a confirmed danger administration framework and tradition.”