Macquarie Group's push into mortgages has caused its home loan book to more than double to $9 billion in the past year, as it seeks to exploit the fat profit margins in residential property lending.
The value of Macquarie's home loan book increased by 123 per cent from $4.04 billion to $9 billion in the year to July, figures from the Australian Prudential Regulation Authority show.
This year it has expanded by 60 per cent.
While its total market share remains small at 0.7 per cent, the rapid pace of expansion compares with industry-wide growth of 6.2 per cent a year in the value of all outstanding home loans.
The rise comes after Macquarie last year teamed up with Mark Bouris-backed mortgage broker Yellow Brick Road, supplying its white-label loans and taking a 10.5 per cent stake in the business.
Other brokers also report a sharp rise in customers taking out Macquarie-branded home loans.
Mortgage Choice says Macquarie's share of new loans being written has jumped to 4.6 per cent, from 1 per cent a year ago.
Macquarie chief executive Nicholas Moore has played down the expansion into home loans. And its $9 billion portfolio is indeed tiny compared with the loans held by Westpac, Commonwealth Bank, NAB or ANZ.
However, it now has a larger Australian home loan portfolio than several foreign-owned banks including Citigroup and HSBC.
Bell Potter analyst T. S. Lim said mortgages were likely to provide Macquarie with reliable earnings. "It's an annuity stream - it provides stable income," he said.
The investment bank also had access to low-cost funding through cash management accounts - and many of its clients tended to be wealthy and relatively low-risk, Mr Lim said.
Last month's record profit result from Commonwealth Bank, driven by a surge in its retail bank, underlined that home loans remained highly profitable.
Among the big four banks, ANZ and National Australia Bank have grown fastest in the past year, while Westpac has been losing market share.
At Macquarie's full year's results in May, Mr Moore played down the mortgage push but said it was a "good business," highlighting that it had been involved in writing home loans since a partnership with Aussie Home Loans in the 1990s.