Moody's highlights concern on Macquarie's leasing, mortgage growth
Moody's has announced that it is anxious Macquarie Group's balance sheet might become stretched if it carries on increasing its leasing and mortgage assets. &nbsp;Due to pressure, Macquarie has recently diversified its business to protect itself against volatile financial markets by pushing towards areas such as fund management and leasing. Moody's says "such growth could, over time, erode Macquarie's traditionally strong capitalisation profile and place pressure on its funding profile', and should therefore be scrutinised more closely. &nbsp;However, the ratings agency did go on to say that the firm had demonstrated a pro-active commitment to stabilise its capital levels and expects it "will continue to maintain conservative balance sheet settings".
Macquarie Group has diversified its business well to protect against volatile financial markets but the firm's balance sheet might become stretched if it continues to increase its leasing and mortgage assets, Moody's Investors Service says.

Macquarie has pushed more into areas such as funds management and leasing since the depths of the global financial crisis, when its investment banking and listed funds model came under intense pressure. However, the firm has had a rebound of income since its asset management business became the biggest contributor to earnings.

Macquarie Bank is causing alarm in Britain over its proposed takeover of the Green Investment Bank. Credit: Grant Turner

In a new report, Moody's noted that while Macquarie had made "significant progress" in moving its operations towards more stable lines of business, increases in long-dated capital-intensive assets such as mortgages and leases would need to be watched closely.

"While such growth could, over time, erode Macquarie's traditionally strong capitalisation profile and place pressure on its funding profile, Moody's expects that Macquarie will continue to maintain conservative balance sheet settings," said Ilya Serov, a Moody's vice-president and senior credit officer. He wrote the report, Macquarie Group: Business Model Evolution Places Balance Sheet Strength in Focus.