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On Friday (29 October), Macquarie Group released its financial results for the half-year ended 30 September 2021 (1H22), revealing that the banking and financial services arm of the group had delivered a net profit of $482 million, up 52 per cent from 1H21.
According to the group, the result reflected “strong home loan, business lending, platforms and deposits growth and lower credit impairment charges”, partially offset by increased headcount and investment in technology to support growth.
Its home loan portfolio grew to $76.4 billion in the half, up from $67 billion in the previous six months. It now represents approximately 4 per cent of the Australian mortgage market.
Indeed, its personal banking income ($125 million) was driven by 27 per cent growth in average home loans volumes, the group outlined.
Macquarie noted that its home loan growth was particularly driven by “strong demand in lower loan-to-value ratio and owner-occupier lending tiers”. The majority of its mortgage book is for “vanilla” PAYG loans.
It also reported lower credit and other impairment charges due to “improvement in expected macroeconomic conditions”.
Indeed, it has been the beneficiary of strong broker support this year, given its turnarounds have stayed consistently fast since the coronavirus pandemic hit, while other lenders – particularly the major banks – experienced (and continue to experience) long blowouts.
Its business banking portfolio also grew, rising 8 per cent on the previous six-month period to $11 billion. This was driven by an increase in client acquisition and “continued investment in digital solutions for enhanced client experience and to serve clients more efficiently”.
However, the vehicle finance portfolio continued to fall, dropping 5 per cent to $10.9 billion. Macquarie suggested that this was 16 per cent lower than average vehicle finance volumes.
It had announced the sale of its dealer finance business to Allied Credit over the half, which is expected to complete in December 2021.
Overall, the whole group recorded a net profit of just over $2 billion, up 107 per cent on 1H21 and in line with the $2,030 million net profit for the half-year ended 31 March 2021.
It said it intends to undertake a capital raising in the form of a non-underwritten $1.5 billion institutional placement and a non-underwritten share purchase plan, the size of which will depend on demand from eligible shareholders.
The capital raising will “provide additional flexibility to invest in new opportunities where the expected risk-adjusted returns are attractive, while maintaining an appropriate capital surplus”, according to the bank.
Macquarie Group managing director and chief executive, Shemara Wikramanayake, said: “This first half saw a significant increase in net profit contribution from all four operating groups compared with 1H21, a period which was affected by the COVID-19 pandemic. Today’s result is consistent with a strong 2H21 and reflects improved trading conditions across our diverse platform.”
In relation to the capital raising, Ms Wikramanayake said: “Macquarie has experienced a period of sustained and material growth in capital requirements across our annuity-style and markets-facing activities. Having deployed $A5.5 billion of capital over 2H21 and 1H22, we continue to see a strong pipeline of opportunities. Raising new capital provides us with additional flexibility to invest in new opportunities where the expected risk-adjusted returns are attractive to our shareholders, while maintaining an appropriate capital surplus.”