Macquarie Bank’s half-year profit fell 61% to A$1.42 billion after a prior-period A$2.448 billion asset-transfer gain dropped out of the comparison. Its core banking and markets divisions still grew, but credit charges rose and margins remained under pressure.
- A$1.42 billion half-year profit, down 61% year on year
- BFS profit contribution rises 6% to A$841 million
- CGM profit contribution rises 51% to A$1.624 billion
- Deposits increase 10% to A$244.2 billion
- CET1 capital ratio remains strong at 12.9%
Prior-period gain drives 61% profit decline
Macquarie Bank Limited (ASX:MBL) reported a 61% fall in profit attributable to ordinary equity holders to A$1.42 billion for the six months ended 30 September 2026. The headline decline is severe, but the comparison is distorted by a A$2.448 billion non-recurring gain recorded in the previous corresponding period when Macquarie’s North American Power, Gas and Emissions business moved to its non-bank group.
That gain had also dominated the bank’s North American asset transfer reported a year earlier. Even after stripping away that unusual item, the latest numbers show a softer income mix: net operating income fell 24% to A$6.055 billion, while operating profit before tax declined 52% to A$2.008 billion.
BFS and CGM provide the underlying support
Macquarie’s two main operating divisions moved in the opposite direction to the group headline. Banking and Financial Services lifted its net profit contribution 6% to A$841 million, helped by higher net interest income as average loan and deposit portfolios expanded. The benefit was partly offset by lower margins, ongoing competition for lending and deposits, and higher credit provisions.
Commodities and Global Markets delivered the stronger result, with profit contribution rising 51% to A$1.624 billion. Higher net interest and trading income across equities, asset finance and foreign exchange, interest rates and credit helped, as did material gains on asset sales in asset finance. Specific impairments affecting a small number of counterparties and higher technology and employment costs tempered that performance.
The division’s progress builds on the FY2026 growth result, which reported strong expansion in both BFS and CGM. But the latest filing also makes clear that growth has not translated into a clean group-wide earnings increase: net investment income fell 93% from the prior corresponding period to A$180 million, and net credit and other impairment charges rose to A$194 million from A$70 million.
Balance sheet expands as credit provisions rise
The bank continued to grow its balance sheet. Total assets increased 8% from 31 March 2026 to A$500.5 billion, with loan assets up 8% to A$245.1 billion, driven by home-loan growth. Deposits increased 10% to A$244.2 billion, while issued debt securities and other borrowings rose 6% to A$100.1 billion.
That expansion comes with a more watchful credit backdrop. The expected credit loss allowance on loan assets increased to A$696 million from A$613 million at 31 March, while total expected credit loss allowances reached A$916 million. Macquarie said its economic scenarios incorporate uncertainty around geopolitical events, energy prices, trade, inflation and monetary policy; its severe-downside scenario would imply a total on-balance-sheet provision of about A$1.7 billion if applied in full, compared with about A$750 million under the baseline.
Capital remains above prudential minimums
Despite the earnings decline, the Bank Group remained well capitalised. Its Common Equity Tier 1 ratio was 12.9%, against a stated minimum requirement of 9%, while the Tier 1 and total capital ratios were 14.3% and 22.8% respectively. The leverage ratio stood at 4.4%, above APRA’s 3.5% minimum.
Macquarie raised A$13.7 billion of term funding during the half year, including A$6.4 billion of senior unsecured debt, A$3.3 billion of secured funding and A$3.2 billion of Tier 2 capital. Its weighted average term to maturity for term funding beyond one year was 3.8 years, giving the balance sheet a substantial funding base as lending and market activity expand.
Leadership handover arrives alongside softer earnings
The report was signed on 6 November, the day Shemara Wikramanayake was due to retire from the Macquarie Bank and Macquarie Group boards. Greg Ward is scheduled to become Macquarie Group’s managing director and chief executive officer on 7 November, while Macquarie Bank’s Stuart Green remains its managing director and chief executive officer. Independent director J.R. Broadbent is also scheduled to leave the bank and group boards in December.
The immediate question is less whether Macquarie can keep growing its loan book or trading franchises than whether that growth can produce steadier earnings without another large asset-sale gain. The next reporting period will provide the cleaner test: credit costs, deposit pricing and the durability of CGM’s trading and asset-finance contribution will matter more than the distorted year-on-year headline.
Bottom Line?
The earnings comparison is burdened by last year’s exceptional gain, but rising credit costs and lower margins make the next period’s underlying performance more important than the headline rebound from that base.
Questions in the middle?
- Can BFS sustain loan and deposit growth without further margin compression?
- Will higher credit provisions remain contained as Macquarie’s downside economic scenarios evolve?
- Can CGM maintain its stronger contribution without relying on gains from asset sales?