Macquarie says bank levy hits it hardest
Townsville MACQUARIE Group expects to make another annual profit of around $ 2.2 billion despite the impact of the Federal Government’s new bank levy.
The banking and financial services group said its performance in the first quarter of its 2017- 18 fiscal year, which ends in March, was in line with expectations – stronger than a year ago but weaker than the final quarter of its 2016- 17 year.
Macquarie said it benefited from improved trading conditions in its commodities and global markets operations, and growth continued in its banking and financial services operations, particularly in mortgages, deposits and business banking. The company has forecast an annual profit broadly in line with the previous year’s record $ 2.2 billion.
Chairman Peter Warne told the annual meeting the bank levy would have an estimated pre- tax annual cost of $ 66 million, effectively raising the bank’s tax rate from 34 per cent to 41 per cent.
The levy applies to non- retail deposit liabilities held by Australia’s big four banks and Macquarie Bank.
“The new tax will have a disproportionately higher impact on Mac- quarie Bank compared to the major Australian banks given our business mix is more heavily weighted to wholesale and international business,” Mr Warne said. Approximately one third of Macquarie Bank’s earnings in 2016- 17 were generated by its Australian operations, Mr Warne said, and the bank had a market share of about 2 per cent on most Australian banking products.
“Given the relatively small size of our Australian banking business we were surprised by our inclusion in the group to pay this levy,” he said. “We have also expressed our concern to the Government given the benefit we bring to domestic competition and innovation, the role we play in bringing offshore income into the Australian economy, and the potential for unintended consequences resulting from the levy.”
There was a sizeable 15 per cent vote against Macquarie’s executive remuneration at yesterday’s AGM, though that is well below the 25 per cent level required to register a socalled ‘ first strike’. Mr Moore’s remuneration rose to $ 18.7 million in 2016- 17, including $ 12.6 million in share- based pay, while the total pay for Macquarie’s top executives rose to more than $ 126 million.