Macquarie Faces Margin Pressure and Rising Expenses Despite Profit Growth

Robust Financial Performance

Macquarie Group Limited has delivered a solid financial performance for the half year ended 30 September 2025, with net profit attributable to ordinary equity holders rising 3% to A$1.655 billion. This growth was supported by a 6% increase in net operating income to A$8.691 billion, reflecting higher fee and commission income alongside net interest and trading income.

The Group’s operating expenses rose 5% to A$6.239 billion, driven primarily by increased employment costs and technology investments aimed at supporting business growth and operational scalability.

Segment Highlights – Asset Management and Capital

Macquarie Asset Management (MAM) recorded a 43% jump in net profit contribution to A$1.175 billion, buoyed by higher performance fees from Private Markets-managed funds and co-investors. Assets under management remained robust at A$959 billion, with Private Markets AUM increasing 7% to A$417 billion.

Macquarie Capital also posted a strong result, with net profit contribution up 92% to A$711 million. This was driven by increased mergers and acquisitions fee income, particularly in the Americas and Australia-New Zealand regions, alongside growth in the private credit portfolio which expanded by more than A$3.9 billion in average drawn loan assets.

Banking and Financial Services and Commodities

The Banking and Financial Services (BFS) segment saw a 22% increase in net profit contribution to A$793 million, supported by growth in loan and deposit portfolios despite margin compression due to competitive pressures. BFS deposits grew to A$198.8 billion, reflecting the Group’s focus on stable and diversified funding sources.

Conversely, Commodities and Global Markets (CGM) experienced a 15% decline in net profit contribution to A$1.113 billion, impacted by higher operating expenses and credit impairment charges, although net interest and trading income improved across key markets including foreign exchange and equities.

Balance Sheet and Capital Strength

Macquarie’s total assets increased 9% to A$484.2 billion, with loan assets rising 9% to A$224 billion, primarily driven by BFS home loans. The Group’s funding profile remains diversified and stable, with deposits representing 50% of total funding and a weighted average term to maturity of term funding exceeding four years.

Capital adequacy remains a cornerstone of Macquarie’s strategy, with a regulatory capital surplus of A$7.6 billion as at 30 September 2025. The Bank Group’s Common Equity Tier 1 capital ratio stood at a healthy 12.4%, supported by a strong Tier 1 capital base including hybrid instruments.

Strategic Initiatives and Outlook

Macquarie continues to demonstrate its ability to mobilise capital at scale for critical initiatives, exemplified by the successful US$405 million raise for Vertelo, a platform supporting India’s electric vehicle transition anchored by the Green Climate Fund. Additionally, Macquarie Capital’s advisory role in CoStar Group’s A$3 billion acquisition of Domain highlights its cross-border transaction expertise.

Liquidity and funding strategies are robust, with comprehensive governance frameworks, stress testing, and contingency plans ensuring resilience across market conditions. The Group’s focus on technology and operational efficiency is reflected in a slight reduction in headcount, offset by increased investment in digital capabilities.