This was published 2 years ago
‘Big mountain to climb’: Macquarie chief says Australia behind on EV transition
By Charlotte Grieve
Macquarie Group chief executive Shemara Wikramanayake says Australia is trailing the world on electric vehicles after the investment powerhouse reported a record full-year profit and outlined a bold plan to accelerate its push into green financing.
Ms Wikramanayake said Australia was at an earlier stage than other markets on the transition to electric vehicles and called on industries with large transportation fleets, such as the mining sector, to convert.
Macquarie has used its full year results to launch a new climate policy. Credit: Lisa Thompson.
“That might help to give scale to underwrite the transition,” Ms Wikramanayake said. “The whole world has a big mountain to climb there in electrification of transport but yes we need to do a lot in Australia.”
Macquarie reported full-year profits reached record highs after growing by 10 per cent over the year to $3 billion and committed to paying shareholders a franked final dividend of $3.35 per share – up from $1.80 a year ago.
The group used its results to launch a revamped climate policy that includes exiting coal by 2024 and using its multibillion-dollar clout to pressure heavy emitters into accelerating plans to reach net zero targets.
The ASX-listed investment bank is already a leading investor in the renewable energy sector but has pledged to expand its investments in electric transportation, energy efficiency and carbon offsetting.
Macquarie’s exposure to coal is small and shrinking but it said any remaining exposure will be fully divested within three years, joining a growing number of financial institutions closing the door on coal. ANZ’s 2020 decision to stop funding new coal mines prompted a backlash from federal politicians, including Deputy Nationals leader David Littleproud.
Ms Wikramanayake said coal had never been a large focus for the group and she was not concerned about public criticism. “I can’t even remember when we had large coal investments. I don’t think anyone in the government or otherwise will notice whether we’re involved in coal or not.”
She said the switch to a net zero emissions future could not happen overnight and the group will remain committed to the oil and gas sector until new technologies are developed.
The leading contributor to Macquarie’s result was its commodities and global markets business, contributing $2.6 billion to overall profits with operations rooted in the oil and gas industry.
Another lucrative arm is Macquarie Asset Management (MAM), the $562 billion global investment giant that has raised $21.8 billion in new equity and ploughed $14.8 billion into 62 new investments in infrastructure and real estate. MAM’s total assets shrunk by 6 per cent largely due to foreign exchange movements.
Macquarie’s banking arm had flat profits, despite its mortgage book growing to $67 billion, up 29 per cent over the year, and the majority of customers (99.8 per cent) restarting payments after deferring loans during COVID-19. Its business bank also reported loan growth of 13 per cent to $10.2 billion, with all customers now back on loan payments.
Another Macquarie strong suit is its leading position on mergers and acquisitions, initial public offerings and infrastructure advice in Australia. It reported 417 transactions in this space worth $364 billion, including becoming the sole adviser to Snowy 2.0 expansion, which was higher than last year’s transaction volumes but the profit contribution was down by 15 per cent.
Macquarie is a global company with 11 per cent of its earnings coming from Asia and almost 2000 staff employed in India. Ms Wikramanayake extended her sympathies to these employees as the country faces a gruelling health crisis and reiterated her appreciation for their work. “It’s phenomenal the contribution they have made,” she said. “But we know they’re going through a super challenging period.”
The group’s shares bounced on open but dipped in late afternoon trade by 0.58 per cent to $158. Morningstar analyst Nathan Zaia said there were no negatives hidden in the results and the market reaction could be due to the company’s vague outlook.
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