Sydney, 12 March 2012
Macquarie Group Limited (ASX:MQG; ADR:MQBKY) today noted that Fitch Ratings (Fitch) had updated ratings for Macquarie Bank Limited (MBL) and other Macquarie entities. The ratings changes are in line with guidance provided by Fitch on 8 February 2012.
Macquarie noted Fitch's statement that the ratings update "stemmed from Fitch's broad review of the largest banking institutions in the world" and was "prompted by challenges facing financial institutions globally".
Macquarie Group's Chief Financial Officer, Patrick Upfold, said, "The new Fitch ‘A' rating of MBL, the entity which funds the vast majority of the Group's activities, is in line with S&P's ‘A' rating, which was reaffirmed on 1 December 2011." Mr Upfold noted that Fitch stated these rating actions do not reflect any developments specific to Macquarie, but result from a broad global review.
Fitch noted: "(Macquarie) has also been proactive in addressing the changing operating environment and regulatory issues, exiting a number of businesses, reducing costs and undertaking capital efficiency initiatives. In addition, a number of non-market oriented businesses with a more stable earnings profile provide some offset to earnings volatility. (Macquarie's) financial profile, including asset quality, capital and exposure to market risk continue to compare favourably with larger global trading and universal banks and support a Stable Outlook." Commenting on funding, Fitch stated that Macquarie: "manages this exposure well, with a conservative liquidity policy and limited use of short-term wholesale funding".
Fitch's one notch rating change for MBL and its other rated entities compares favourably with global peers which, since August 2007, have been downgraded by an average 2.2 notches.
Following the update, Fitch’s ratings of Macquarie entities are:
The Outlook for both the long term and short term rating for Macquarie Bank Limited and Macquarie Group Limited is Stable.