Regulatory Scrutiny and Market Pressures Test Macquarie Bank’s Growth Momentum

Strong Financial Performance Despite Market Headwinds

Macquarie Bank Limited (MBL) delivered a robust financial performance for the year ended 31 March 2025, reporting a consolidated net profit attributable to ordinary equity holders of AUD 3.445 billion, an 18% increase from the prior year. This growth was primarily driven by the Banking and Financial Services (BFS) segment, which benefited from loan portfolio expansion, deposit growth, and increased platform volumes, despite ongoing margin compression due to competitive lending and deposit markets.

Conversely, the Commodities and Global Markets (CGM) segment experienced an 8% decline in net profit contribution, reflecting subdued conditions in key commodity markets, particularly in EMEA Gas, Power, Emissions, and Global Oil. However, increased contributions from the metals and agriculture sectors partially offset these declines.

Capital Strength and Risk Management

MBL maintained a strong and conservative balance sheet, with total assets rising 10% to AUD 375.2 billion and total equity increasing 7% to AUD 23 billion. The bank’s Common Equity Tier 1 (CET1) capital ratio stood at a healthy 12.8%, comfortably above APRA’s minimum requirement of 9%. This capital strength underpins the bank’s capacity to support clients and pursue growth opportunities.

Significant investments in technology and innovation were highlighted, with BFS focusing on digitalisation, automation, and advanced analytics such as machine learning to enhance scalability and customer experience. CGM established a new Data, Digital, Design and Engineering function to simplify systems and leverage disruptive technologies, including pre-trade analytics to improve competitive positioning.

Regulatory Compliance and Remuneration Adjustments

MBL continued to implement remediation plans agreed with APRA to strengthen governance, risk culture, and compliance frameworks. The bank acknowledged additional conditions imposed by ASIC on its Australian financial services licence due to compliance failures in futures dealing and over-the-counter derivatives trade reporting. These regulatory developments influenced remuneration outcomes, with reductions in profit share and Performance Share Unit (PSU) allocations for Executive Key Management Personnel (KMP), including the CEO.

The Board Remuneration Committee emphasized its commitment to aligning remuneration with prudent risk management and regulatory expectations, incorporating malus and clawback provisions to adjust or recover variable remuneration in cases of misconduct or compliance breaches.

Robust Funding and Liquidity Position

Macquarie Bank’s liquidity risk management framework ensures the bank can meet its obligations under various market conditions. The bank’s funding strategy maintains diversity across tenors, currencies, and products, with a weighted average term to maturity of 3.5 years for term funding beyond one year. Deposits grew 20% to AUD 177.7 billion, reflecting strong retail and business client engagement.

Macquarie Bank’s risk management framework remains comprehensive, covering credit, market, operational, and non-financial risks, supported by independent oversight from the Risk Management Group (RMG) and internal audit functions.

Outlook and Strategic Focus

Looking ahead, MBL aims to leverage its strong capital base, diversified business model, and technology investments to capture growth opportunities. BFS plans to expand intermediary and direct retail client distribution while enhancing digital platforms. CGM will focus on broadening client reach, entering new markets, and investing in emerging opportunities across commodities, financial markets, and asset finance.

Despite the challenging macroeconomic environment, the bank’s disciplined risk management and ongoing remediation efforts position it well for sustainable growth.