Macquarie warns on margin competition
The millionaire factory's trading update showed it will keep the pressure on margins, with the focus now shifting to Commonwealth Bank and Bendigo Bank results — and the ongoing strength of bank shares.
There had been a sense margin pressure was easing in the banking sector, particularly on the lending front, although competition for deposits was keeping the pressure on.
But Macquarie Group’s worse-than-expected first quarter trading update, delivered along with its AGM last week, may have dashed those hopes.
While most analysts left their ratings unchanged for Macquarie, noting non-bank profit drivers had more been delayed than missed, the banking business was more of a surprise. And that has implications for the major results looming from Commonwealth Bank and Bendigo and Adelaide Bank.
I asked Macquarie chief financial officer Alex Harvey what was behind the margin story. He noted the pressure was ongoing and, while not providing specific detail, left it clear Macquarie would continue to push hard to grow deposits — particularly on transaction accounts, which are especially valuable for banks (as they are the cheapest source of funding).
