I can't say enough how much I like these guys retail banking division.

In 2021 I purchased a property and after dealing with my previous bank ANZ who were trying to take advantage and make me pay a 'loyalty tax', my broker went to Macquarie. I wasn't an edge case and they were fantastic to deal with. They approved my application within 2 days and their rate was sharper than all the others too.

The mantra of Uncle Warren of buying what you know was echoing around the cavernous space in my nut and I started a small allocation to MQG which I have since grown to near 10%.

4 things I keep an eye on:

1. I really have no opinion or expertise on the majority of their business. It's outside my circle of competence yet I know a fair few of my peers that work there. They are incredibly sharp and work their guts out so I have faith they have the right people.
2. Their massive share compensation program. It's very top heavy, but also the lower level staff are also in there too. One of their staff members was telling me about the cyclical nature of their share price and that being largely attributed to the employee share scheme. They were telling me they buy them on market to give to their staff, thus essentially having similar characteristics of a buy back. Not the same, but similar in nature.
3. Their local Banking and Financial Services is just going up and up. They don't have physical banks, have a ripper LVR and are killing it in growing market share. It's hard to see the Big 4 or anyone else getting anywhere near this.
4. Average LVR 51% - sensational security
5. P&I 80% - LVR (in theory) improving
6. Home loan portfolio growing 28% YOY now making up 7.1% of the Australian market.
7. brokers love them as they have quick turnarounds, easy to deal with and have good tech.
8. They self fund a lot by offering high interest transaction accounts. Deposits are up 25% in the last 12 months
9. I think the Big 4 are losing out to the younger generations. As a real estate agent, I see this firsthand. For buyers under 40, I’d estimate close to half the finance clauses I write are now with Macquarie. The older generations still lean heavily toward the legacy Big 4, but younger buyers seem far more willing to bank digitally.

At the basic level, the thesis is pretty straight forwards on the BFS side of things:

• increasing market share by offering quick, simple, easy home loans
• keep cost of funding low by offering strong high interest no-lock-in savings accounts

It's like a pie, they're getting a bigger slice, reducing the cost of the ingredients, and the pie is growing considerably.

On the housing pie growth side, I also think a lot of the media commentary around falling Melbourne and Sydney prices lacks nuance. Most headlines focus on median prices, but median data can be heavily distorted by sales mix. If more apartments sell in one quarter and more houses sell in another, the “median” can move materially without individual properties actually changing much in value. That’s why hedonic data matters far more than simplistic median price reporting.

I'll keep trying to get a better read and understanding of the other parts of their business, but for me it's hard not to get excited about their retail banking.