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Macquarie unfazed by threat of broking reform

by Charbel Kadib5 minute read
Macquarie

The non-major bank has said that it is “well positioned” in the broking space, stating that potential regulatory changes would not undermine its mortgage proposition.

Following the release of its half-year 2019 (1H19) financial results, the head of Macquarie Group’s banking and financial services (BFS) division, Greg Ward, said that the bank is well placed to withstand regulatory changes in the broking industry if proposed by the financial services royal commission, despite its high exposure to the third-party channel, which originates approximately 90 per cent of its home loans.

Mr Ward said that the bank has moved to ensure that remuneration of mortgage brokers “doesn’t lead to any perceived conflicts”.

“We’re very focused on the role of intermediaries or mortgage brokers; we think they play a very important role and we want to make sure that role is recognised,” Mr Ward said.

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“Importantly, [we want to ensure] that the remuneration of mortgage brokers doesn’t lead to any perceived conflicts in terms of the important services they provide to customers.

“Weve already positioned our business in terms of all the call-outs in terms of referral payments or volume-based [incentives].”

Amid concerns raised by the Australian Greens in their submission to the financial services royal commission regarding ownership in the broking industry, Mr Ward said: “We think we are well placed in terms of the way we operate. We dont have an ownership interest in a big mortgage broking network, so we dont think we have any conflicts in our business.”

He concluded: “We feel well positioned in that space.”

Further, speaking to The Adviser, outgoing Macquarie CEO Nicholas Moore reiterated the bank’s commitment to the third-party channel and noted that Macquarie has worked to improve standards in the broker network.

“Brokers are very important to us. We have a strong focus on brokers in terms of their accreditation and in terms of the standards that they maintain, and they are an important part of our business,” Mr Moore said.  

Macquarie reports $6.2 billion loan book growth

According to Macquarie Group’s HY19 results, its home loan portfolio increased by 10 per cent half-on-half to $36.1 billion.

When compared to the previous corresponding period (1H18), Macquarie’s loan book has increased by $6.2 billion, from $29.9 billion.  

Macquarie added that its share of the mortgage market remained stable at 2 per cent.

The group reported an overall net profit of $1.31 billion, up 5 per cent from 1H18, with its banking and financial services (BFS) division delivering a net profit contribution of $296 million, up by 3 per cent from $286 million in 1H18.

Macquarie has attributed growth in its BFS division to increased income from growth in deposits, which rose by 8 per cent from 2H18 to $49.4 billion, with funds on platform also increasing, rising by 7 per cent to $88.1 billion.

However, the Australian loan portfolio and funds on platform was partly offset by the “entire period effect of the Australian government Major Bank Levy relative to the prior corresponding period, and increased costs associated with investment in technology projects and headcount”.

Macquarie said that the result was also partially offset by expenses associated with the merger of its private bank and private wealth businesses.

Incoming group CEO Shemara Wikramanayake, who is set to replace Nicholas Moore on 30 November, said that she expects further improvement in the group’s overall performance, predicting Macquarie’s FY19 result to be up by 10 per cent from FY18.

“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,” Ms Wikramanayake said.

[Related: Brokers, wholesale funder spur major bank lending rise]

macquarie ta

Charbel Kadib

Charbel Kadib

AUTHOR

Charbel Kadib is the news editor on The Adviser and Mortgage Business.

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