Despite strong performances in its home loan and business loan portfolios, Macquarie experienced a significant drop in profits in the 2024 financial year.
While Macquarie’s annual net profit of $3.5 billion was 32% below FY23, the investment bank ended the year on a relatively positive note, with the second half of the year up 49% on the first.
Still, the lower-than-forecast results hampered the final dividend for investors, reduced from $4.50 a share to $3.85.
Macquarie Group managing director and CEO, Shemara Wikramanayake (pictured above left), cited “ongoing economic uncertainty and “subdued market conditions in many parts of the world” as reasons for the decline.
However, she said the bank’s client franchises “remained resilient” over the last year, with “continued client growth, fundraising and new business origination across the Group” as it delivered its 55th consecutive year of profitability since inception.
Unlike other operating groups within the company, Macquarie’s banking and financial services arm had generally positive results.
Total home loans grew by $11.4 billion over the year, with the bank further establishing itself as the country’s fifth largest home loan lender.
Macquarie’s home loans to households increased significantly in the second half of the year, around the same time Commonwealth Bank experienced a slide in its home loan books.
Its business banking segment - a loan portfolio secured largely by working capital, business cash flows, and real property – also grew considerably from $12.9 billion in FY23 to $15.7 billion in FY24.
“(There was) 13% growth in average home loan balances this year, (and) really strong 20% growth in the business bank,” said Alex Harvey (pictured above right), CFO and head of the financial management group. “We're really pleased to see this given the focus the team has had there.”
This came after the bank doubled down on its mortgage channel in April after announcing it would stop new car loans through its channels to concentrate resources on its home loan business.
Car loans were not profitable for Macquarie with the portfolio falling from $6 billion to $4.5 billion over the year.
Elsewhere, Macquarie’s asset management and commodities slumped, with profits halving over the year.
Within the asset management division, which was down 48%, the result was “primarily driven by lower asset realisations in green investments and increased net expenditure in investments in green energy portfolio companies”, according to the company.
Macquarie’s commodity portfolio succumbed to “substantially lower inventory management and trading income” after global commodity prices fell throughout the year.
Macquarie continues to maintain a cautious stance, with a conservative approach to capital, funding and liquidity that positions it to respond to the current environment.
The range of factors that may influence our short-term outlook include:
Wikramanayake said: “Macquarie remains well-positioned to deliver superior performance in the medium term with its diverse business mix across annuity-style and markets-facing businesses; deep expertise across diverse sectors in major markets with structural growth tailwinds; patient adjacent growth across new products and new markets; ongoing investment in our operating platform; a strong and conservative balance sheet; and a proven risk management framework and culture.”
