subscribe to our newsletter

Credit impairments hit Macquarie’s profits

Macquarie’s credit impairments have surged 152 per cent, resulting in an 8 per cent decline in its earnings.

Macquarie Group has released its full-year results for the 2020 financial year (FY20), posting a net profit of $2.7 billion, down 8 per cent from $2.9 billion in FY19.

Like many of its peers, Macquarie’s earnings were hit by a spike in credit impairment charges in anticipation of a rise in defaults off the back of the COVID-19 crisis.

The group’s credit impairments increased 152 per cent in FY20, from $320 million to $805 million.

Commenting on the group’s performance, Macquarie’s managing director and CEO, Shemara Wikramanayake, said: “The final months of the financial year were overshadowed by the profound human impact of the COVID-19 global health crisis and its economic consequences.


“Macquarie’s full-year result has also been subject to the effects of this crisis, and a strong underlying financial performance in FY20 was impacted by a material increase in credit and other impairment charges, primarily reflecting the deterioration in current and expected macroeconomic conditions as a result of COVID-19.”

This was offset by an improvement in Macquarie’s annuity-style activities, which generated a combined net profit contribution of $3.4 billion, up 13 per cent on FY19.

This includes Macquarie’s Banking and Financial Services (BFS) division, which reported a net profit contribution of $770 million for FY20, up 2 per cent from $756 million in FY19.

Growth in Macquarie’s BFS division was driven by an increase in both deposit and loan volumes.

Deposit volumes increased by 19.6 per cent to $63.4 billion, while its mortgage book grew 35 per cent to $52.1 billion.


Business loan volumes also increased, up 10 per cent from $8.2 billion to $9 billion.

Ms Wikramanayake claimed the group’s operating position and its “conservative approach to capital, funding and liquidity” would help it manage emerging headwinds from the COVID-19 crisis.

“The longstanding fundamentals that have resulted in Macquarie being profitable every year since inception are unchanged, including deep expertise in major markets, business and geographic diversity, and a proven risk management framework and culture,” she concluded.

[Related: Genworth earnings dragged into negative territory]

Credit impairments hit Macquarie’s profits

Latest News

The total value of residential dwellings rose by almost $450.0 billion in the March quarter to surpass $8.0 trillion for the first time, acc...

Consumers signalled stronger intentions towards home buying in May, as the big four bank has predicted house prices are set to increase by m...

Westpac Group has announced that it is creating more than 300 new roles (including lending and credit assessor roles) in Adelaide. ...

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.