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Region: Australia
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Fundamental View
AS OF 19 Dec 2025Macquarie was tested during the global financial crisis, but managed to steer through the crisis without reporting losses. A strong balance sheet mitigated liquidity problems, but its banking unit had to turn to Australia’s central bank at that time for support.
The group has an impressive track record of managing risks and achieving good returns, and has built capabilities in a number of areas. Divestments are controlled based on market conditions. It was a beneficiary of market volatility in the commodity space in FY23-24. Its Australian mortgage book has also shown strong but sensible growth.
Business Description
AS OF 19 Dec 2025- Macquarie grew out of the Australian business of Hill Samuel, which commenced operations in 1969. Macquarie Group Ltd (MGL) is the holding company and listed entity, under which there is the banking group Macquarie Bank Ltd (MBL) which consists of the Banking & Financial Services (BFS) and Commodities & Global Markets (CGM) businesses, and a non-banking group which consists of the Macquarie Asset Management (MAM) and Macquarie Capital (MC) businesses.
- From the 1990s, the group has been associated with the "Macquarie Model" which focused on identifying cash-generating infrastructure assets & packaging them into funds that could be sold, with Macquarie taking fees as banker, arranger and asset manager.
- It acquired asset managers including Delaware Investments in the US and Blackmont Capital in Canada, boutique investment bank Fox-Pitt Kelton and specialists such as Tristone Energy (Canada). It acquired US asset manager, Waddell & Reed in April 2021, which added around US$76 bn of assets under management. It has recently sold its public AM business in the US and Europe to Nomura. Adjusting for the Nomura transaction, MAM has AUM of A$720 bn.
Risk & Catalysts
AS OF 19 Dec 2025Macquarie Group has sizable exposure to credit and equity risk, and so could be adversely impacted by falls in asset prices. In addition, volatile/weak markets could and has impeded its ability to exit some of its investments.
Its earnings profile partially depends on exits and therefore is lumpy in nature. It has till recently managed this risk well, but we are now cautious about its declining group capital surplus (it does not commit to a minimum level).
It is a global leader in infra investments and is well positioned for the green transition (though recently selling down these assets has proved difficult). It has been a strong beneficiary of volatility in commodity markets, a testament to its risk management capabilities.
Its banking unit was subject to enforcement action in Apr-21 by APRA over the incorrect treatment of intra-group funding arrangements resulting in an A$500 mn operational risk overlay as well as LCR and NSFR add-ons. The CGM unit also saw higher regulatory remediation-related spend more recently.
Key Metric
AS OF 19 Dec 2025| AUD mn | FY23 | FY24 | FY25 | 1H26 |
|---|---|---|---|---|
| Operating Income | 19,576 | 17,071 | 17,569 | 8,720 |
| Cost/Income | 62.0% | 71.4% | 70.5% | 71.8% |
| Net Profit | 5,182 | 3,522 | 3,715 | 1,655 |
| Return on Equity | 16.9% | 10.8% | 11.2% | 9.6% |
| Total Impairments/Op Profit | 6.1% | (7.4%) | 6.6% | 1.2% |
| Annuity Business Profit Contribution | 34.2% | 36.5% | 43.6% | 51.9% |
| MBL CET1 Ratio (APRA) | 13.7% | 13.6% | 12.8% | 12.4% |
| MBL Liquidity Coverage Ratio | 214% | 191% | 175% | 173% |
| MBL Net Stable Funding Ratio | 124% | 115% | 113% | 113% |
CreditSight View Comment
AS OF 07 Nov 2025Macquarie has a strong record of profitability since its inception. Its AM business focused on infrastructure, including green assets, is a global leader. It manages risks and returns effectively, and in FY22+23 was a large beneficiary of O&G and power price volatility. The Aus banking business has steadily gained mortgage marketshare. Large investment disposals from AM and Macquarie Capital led to a record year in FY22; strong commodities outperformance led to another record in FY23. FY24 income was affected by asset realisations and gas & power income. FY25 was helped by asset sales, 1H26 was just 3% up YoY. The group capital surplus is falling but is comfortable at the bank level. ALM is conservative. Senior spreads at both bank and group are tight. Fines from ASIC are imminent.
Recommendation Reviewed: November 07, 2025
Recommendation Changed: August 04, 2025
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Search topics about wealth insights and investments.Commonwealth Bank of Australia
- Sector: Financial Services
- Sub Sector: Banks
- Region: Australia
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Fundamental View
AS OF 21 Oct 2025CBA has a very strong franchise in Australia; it is the leader in the retail market and is making good progress in challenging NAB in business banking.
It has been the best managed of the Australian banks for many years, and has outperformed peers. It lost some of its luster in the latter part of the 2010s due to regulatory and compliance lapses amid charges of complacency, but has since improved into a better institution.
Its capital and liquidity position is robust, and asset quality is strong.
Business Description
AS OF 21 Oct 2025- Originally established by the Australian government in 1911, CBA functioned for some time as Australia's central bank until the establishment of the Reserve Bank of Australia in 1959. It remained under government ownership until the early 1990s, after which it underwent a transformation from a bureaucratic public sector bank into a widely respected commercial organisation.
- Over the past couple of decades, CBA consolidated its position as the leading bank in Australia with a 24-28% share in household deposits and lending, helped by its acquisition of Bank of Western Australia during the 2008 crisis.
- In New Zealand it owns ASB Bank, but otherwise has been selling non-core assets, including its life insurance business.
Risk & Catalysts
AS OF 21 Oct 2025CBA’s financial health is closely linked to the Australian economy, in particular retail credit quality, mainly housing loans. Household confidence is improving, but they continue to be stretched; discretionary consumer spend is improving though on growth in real disposable incomes. Unemployment continues to be comfortable.
Earnings/NIMs are under pressure from strong mortgage market and deposit competition. Business banking growth however has been stellar and highly profitable.
The interest rate cuts coming through from the RBA will improve borrowers’ ability to make interest payments.
Key Metric
AS OF 21 Oct 2025| AUD mn | Y22 | Y23 | Y24 | Y25 |
|---|---|---|---|---|
| Return on Equity | 12.7% | 14.0% | 13.6% | 13.5% |
| Total Revenues Margin | 2.1% | 2.2% | 2.2% | 2.2% |
| Cost/Income | 46.3% | 43.7% | 45.0% | 45.7% |
| APRA CET1 Ratio | 11.5% | 12.2% | 12.3% | 12.3% |
| International CET1 Ratio | 18.6% | 19.1% | 19.1% | 20.9% |
| APRA Leverage Ratio | 5.2% | 5.1% | 5.0% | 4.7% |
| Impairment Charge/Avg Loans | (0.0%) | 0.1% | 0.1% | 0.1% |
| Gross Impaired Loans/Total Loans | n/m | 0.8% | 1.0% | 1.1% |
| Liquidity Coverage Ratio | 130% | 131% | 136% | 130% |
| Net Stable Funding Ratio | 130% | 124% | 116% | 115% |
CreditSight View Comment
AS OF 11 Nov 2025CBA operates as a well-oiled machine in the Australian banking market. It has the leading position in mortgages and deposits, and is challenging NAB in business banking. An AUSTRAC penalty in 2018 damaged its reputation and remediation costs impacted earnings for a couple of years. The bank sold a number of its non-bank business and equity investments to simplify and focus on its core domestic businesses. It has the highest NIM amongst the Aussie banks. Business banking growth has been stellar and highly profitable. Asset quality is comfortable. Its seniors trade marginally tight but at an acceptable level, while its Tier 2s trade fair.
Recommendation Reviewed: November 11, 2025
Recommendation Changed: October 05, 2016
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