Macquarie Group’s banking and financial services division was the only one of the group’s divisions to increase earnings during the six months to September 2023, with strong growth in the loan portfolio driving higher interest income and margin. BFS net interest and trading income of A$1.4 billion was up 14 per cent, compared with the previous corresponding period. Net operating expenses rose 15 per cent to $971 million. The impairment charge rose from $9 million in the September half last year to $23 million in the latest half. The division’s net profit contribution was $638 million – an increase of 10 per cent over the previous corresponding period. BFS has a loan portfolio of $134.4 billion, including $114.2 billion of home loans. The mortgage portfolio grew 6 per cent from $108.1 billion in March. Macquarie has maintained growth in mortgages that is well above system but not as high as in previous years. Deposit growth was much more subdued  - up 1 per cent from $129.4 billion in March to $131.2 at the end of September. Like a lot of banks, Macquarie has struggled to achieve the right balance of lending and deposits in a highly competitive market.  Macquarie said the higher interest rate environment contributed to higher margins, but this was partially offset by changes in the product mix and more competitive conditions in the market. It said the increase in operating expenses was the result of higher staff headcount, technology investment and inflationary impacts. Overall, Macquarie’s September half net profit was down 39 per cent on the previous corresponding period to $1.4 billion. It put this down to weaker economic conditions affecting deal flow in a number of its businesses.