David Fickling is a Bloomberg Gadfly columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.

Macquarie Group Ltd.'s share-price roller coaster has finally made it out of the dip.

Stock in Australia's largest investment bank rose from less than A$20 to almost A$100 over the five years to 2007, before plummeting back below A$20 in 2009 as the financial crisis hit. With the stock surging to A$94.89 on better-than-expected annual results Friday, the millionaires' factory is just a few inches below the A$95.49 peak it hit 10 years ago.

Macquarie Group has finally recovered the share price it lost in the financial crisis
Source: Bloomberg

That's the sort of milestone that should induce vertigo in a circumspect manager, but there's no magic about the A$100 mark that should prevent the stock going higher.

Chief Executive Officer Nicholas Moore has rebuilt the company on the basis of a split between annuity-style businesses such as infrastructure, auto and aviation fleet leasing, and mortgages. In contrast to its racier and riskier investment banking advisory and capital markets businesses, these provide a steady if unspectacular return year-in, year-out. Net income from those units has held steady at about 70 percent of the total for three consecutive years now, compared to 57 percent in 2011 when Macquarie's recovery was in its infancy.

Power Houses
Macquarie's asset management and leasing businesses have been its growth engines
Source: Company reports
Note: Macquarie Securities was incorporated into the Commodities & Global Markets in 2017. Both divisions have been amalgamated through the period for ease of comparison.

The trouble with steady if unspectacular businesses is that the market inevitably wants something to set the share price on fire, so Macquarie has had to build scale to deliver the desired returns.

Total funded assets have risen by 40 percent over the past five years to A$121 billion ($89 billion), driven by a headlong pace of loan growth. Of the A$34.6 billion of funded assets added to the balance sheet between 2012 and 2017, A$30.1 billion -- 87 percent of the total -- came from loans and mortgage-based self-securitizations.

A Lender Be
Almost all of the increase in Macquarie's funded assets between 2012 and 2017 has come from loans and mortgage-backed securities
Source: Company presentations
Note: Self-securitizations are based on pools of mortgages held on the bank's balance sheet as collateral for central bank repo operations.

That show can keep going as long as demand for new lending holds up. The prospects for that are mixed.

After 20 months of mostly double-digit growth, finance commitments for new cars in Australia fell in February for the first time since 2015 -- but that could be a one-time blip. The pace of home loan growth may be dealt a more lasting blow after the country's prudential financial regulator in March started cracking down on issuance of interest-only mortgages.

Turning to the skies, Australia's two full-service carriers Qantas Airways Ltd. and Virgin Australia Holdings Ltd. are deferring some deliveries of aircraft, suggesting a weak spot in regional aviation finance -- but such deferrals are historically low on a global basis, according to Boeing. And revenue growth from a Bloomberg index of Asian infrastructure businesses slowed last year to its weakest pace since 2009.

The Best and the Rest
Macquarie's shares have sharply outperformed Australia's big four retail banks
Source: Bloomberg
Note: Rebased. May 5, 2012 = 100.

There are certainly pockets of worry in that picture, but Macquarie has enough growth engines turning to ride out any turbulence in individual markets -- especially given that global debt costs remain close to the lowest they've ever been. The price-book valuation of 1.93 still trails Commonwealth Bank of Australia on 2.37, but its diverse array of assets looks stronger these days than the mortgage-heavy books of the country's retail banks.

Moore has led Macquarie out of a very deep hole over the past five years. There's little reason to think he's hit the peak.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Macquarie provides a separate breakdown of its balance sheet alongside the raw numbers to show which portion of its assets require funding. The measure mostly excludes hedged trading positions, where the two sides net out but might technically be counted as separate assets.

  2. Self-securitizations are mortgage-backed securities which are held as collateral for repo operations with the country's central bank.

To contact the author of this story:
David Fickling in Sydney at

To contact the editor responsible for this story:
Matthew Brooker at