The chief executive of Macquarie has reaffirmed the bank’s commitment to the broker channel, which has helped deliver 18 per cent growth in the lender’s mortgage book.
Speaking to The Adviser following the release of Macquarie group’s full-year results for the 2019 financial year, Macquarie Group CEO Shemara Wikramanayake reiterated the bank’s support for the broker channel and highlighted the importance of maintaining the viability of the channel amid continued uncertainty over potential reforms off the back of the banking royal commission.
“We think mortgage brokers have a very important part to play in the Australian market because the great majority of borrowers are using them for evaluation of the options they have and getting the best terms,” she said.
“The customers are finding them useful, so we think they have a big role to play and remain supportive of having a role for them in this market.”
Ms Wikramanayake said Macquarie is prepared for changes to the broking model but will wait for the outcome of the federal election before making changes to its business, with both major parties proposing contrasting remuneration policies.
“We are definitely waiting to see what sort of changes will come out of the royal commission and any other changes in the industry, and we’ll be ready to respond to those if there are changes,” she added.
Macquarie’s mortgage book resilient to market downturn
In its FY19 results, Macquarie reported that its Banking and Financial Services (BFS) division recorded 18 per cent mortgage growth, with its portfolio rising from $32.7 billion to $38.6 billion.
The rate of growth in Macquarie’s book exceeded the previous corresponding period (14 per cent), bucking a general market trend of weakening or flat home lending growth reported by other lenders, including ANZ and NAB.
Ms Wikramanayake told The Adviser that the bank has reaped the benefits of a bespoke home lending strategy while maintaining tighter credit practices.
“We really focus on our offering to customers,” she said.
“Our credit standards remain right, and if anything, we’ve been improving the loan-to-value ratios in our book, but it’s really through engagement with our customers, understanding their needs, and being there to be responsive to them that we have managed to grow our book.”
Ms Wikramanayake added: “I think being small and nimble, we’re able to provide a very tailored and valuable offering to our customers and grow our business that way.”
Macquarie’s BFS division reported a net profit of $756 million, up 3 per cent on FY18, driven by mortgage growth and business lending growth (up 12.6 per cent to $8.7 billion) – partially offset by a contraction in its vehicle finance business, with its book dropping from $11.6 billion to $11.5 billion.
The net profit contribution of Macquarie’s BFS to the group’s performance also improved in FY19, rising from 11 per cent to 12 per cent.
In total, Macquarie Group posted a net profit of $3 billion, up 17 per cent from $2.5 billion in FY18, which the CEO largely attributed to growth in Macquarie’s markets-facing businesses and commodities business.
Reflecting on the overall performance, Ms Wikramanayake said: “Macquarie remains well positioned to deliver superior performance in the medium term due to our deep expertise in major markets, strength in diversity and ability to adapt the portfolio mix to changing market conditions, the ongoing benefits of continued cost initiatives, a strong and conservative balance sheet and a proven risk management framework and culture.
“Macquarie’s 50th anniversary provides an opportunity to reflect on the group’s long-term success, which has always been based on the expertise and integrity of our people, working in-market to identify untapped opportunities and be accountable for delivering positive outcomes for our clients and the local community.”
Macquarie has also announced changes to its managerial team, following the resignation of group head of Macquarie Capital, Tim Bishop, effective 31 May.
Mr Bishop has been with Macquarie for 20 years, serving on the executive committee for nine years and head of Macquarie Capital for seven years.
Effective 1 June 2019, Daniel Wong, currently global co-head of the infrastructure and energy group based in London, and Michael Silverton, currently head of the Americas, Europe and Asia group based in New York, will become group co-heads of Macquarie Capital and join the executive committee.
Mr Wong and Mr Silverton have held roles with Macquarie for 20 years, the majority of which involved developing Macquarie Capital business in international markets.