Macquarie Group Ltd (ASX:MQG) is edging closer to its 52-week high, with shares closing at A$256.73 on Thursday, just below the session peak of A$260.57. The stock has risen 1.8% over the past five sessions, outperforming the S&P/ASX 200 (INDEXASX:XJO), which gained approximately 0.9% during the same period. This upward momentum comes as the financial conglomerate experiments with a digital term deposit product designed to bolster retail funding amid tightening margins.
Digital Deposit Strategy
Macquarie Bank has introduced a 12-month term deposit offering an interest rate of 5.20% per annum, which is 5 to 10 basis points below the headline rates from leading competitors. For instance, ANZ Group Holdings Ltd (ASX:ANZ) offers 5.30% p.a., while Commonwealth Bank of Australia (ASX:CBA), National Australia Bank Ltd (ASX:NAB), and Westpac Banking Corp (ASX:WBC) each provide up to 5.25% p.a. Macquarie's product requires a minimum deposit of A$25,000, five times higher than the A$5,000 minimum set by its peers. The rate applies to deposits up to A$1 million, with interest paid at maturity.
This pricing strategy reflects Macquarie's focus on product-led acquisition rather than competing solely on rate. By offering a slightly lower rate but leveraging digital convenience, the bank aims to attract customers who value ease of use. Customers must also maintain a linked Macquarie transaction or savings account, which could deepen ongoing relationships. However, the product does not auto-renew, posing a retention challenge once the term ends.
Margin Pressure and Funding Dynamics
The deposit initiative is a key test for Macquarie as it seeks to broaden its funding sources and manage margin pressures. According to a report by the Australian Financial Review, Macquarie holds approximately A$4 billion in term deposits, representing about 3.5% of its household deposits. This relatively small balance provides flexibility to adjust its funding mix. Applying a 10-basis-point differential to that amount translates to roughly A$4 million annually, underscoring the pricing sensitivity but not reflecting company guidance.
In its fiscal 2026 results, Macquarie's Banking and Financial Services division contributed A$1.61 billion to earnings, a 17% increase year-over-year. However, the company noted that tighter margins from intense competition in both deposits and lending partially offset these gains. The stock trades at about 20.1 times its reported fiscal 2026 earnings per share of A$12.77, a valuation that leaves limited room for disappointment if deposit inflows slow or margins erode further.
Upcoming AGM and Market Context
Macquarie is set to hold its annual general meeting on July 23 at 10:30 AEST, with proxy voting closing on July 21. Investors are expected to focus on updates regarding deposit trends, margin outlook, and trading conditions. The company has highlighted global factors, market volatility, geopolitical risks, and tax and regulatory issues as near-term uncertainties.
"Our goal is to bring that same offering to the term deposit sector," said Olivia McArdle, Macquarie Bank's head of deposits and payments, emphasizing the bank's commitment to digital innovation. As the ASX cash market remained in pre-open on Friday, all eyes are on whether Macquarie can sustain its momentum and address the challenges of a competitive banking environment.
