Mac­quarie says bank levy hits it hard­est

Townsville Bulletin - - NEWS - SIMONE ZIAZIARIS

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.

SUR­PRISED: Mac­quarie chair­man Peter Warne, chief ex­ec­u­tive of­fi­cer Ni­cholas Moore and chief fi­nan­cial of­fi­cer Pa­trick Up­fold. Pic­ture: HOL­LIE ADAMS

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