Macquarie Group, Ltd. · ASX:MQG
Macquarie — Jefferies Asia Forum 2023 and Goldman Sachs Annual ANZ Investment Forum 2023
79 slides from Macquarie's conference presentation, Sep 6, 2023
Slide 1: ASX Media Release: Investor Presentation and First Half 2024 Outlook Update
Macquarie Group Limited ABN 94 122 169 279 50 Martin Place Telephone (61 2) 8232 3333 Sydney NSW 2000 Internet http://www.macquarie.com GPO Box 4294 Sydney NSW 1164 AUSTRALIA ASX/Media Release INVESTOR PRESENTATION AND FIRST HALF 2024 OUTLOOK UPDATE For personal use only SYDNEY, 6 September 2023 – A
Slide 2: September Conferences: Presentation to Investors and Analysts
For personal use only September Conferences Presentation to Investors and Analysts September 2023 1
Slide 3: Disclaimer
Disclaimer The material in this presentation has been prepared by Macquarie Group Limited ABN 94 122 169 279 (“MGL”) and is general background information about Macquarie’s (“MGL and its For personal use only subsidiaries”) activities current as at the date of this presentation. This information is
Slide 4: Agenda
Agenda For personal use only 01 02 03 Overview of Operating 1Q24 Update Macquarie Groups 04 05 Outlook Appendix 3
Slide 5: Overview of Macquarie
For personal use only Overview of Macquarie 4
Slide 6: About Macquarie
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix About Macquarie Annuity-style activities | Net Profit Contribution ~41% Markets-facing activities | Net Profit Contribution ~59% For personal use only BFS MAM CGM MacCap Banking and Financial Services Macquarie Asset Management Comm
Slide 7: Macquarie at a glance
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Macquarie at a glance Empowering people to innovate and invest for a better future For personal use only Global financial group Diverse business mix ● Headquartered and listed in Australia We conduct a mix of annuity-style and marke
Slide 8: Why Macquarie?
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Why Macquarie? Unbroken profitability Earnings growth Consistent dividend growth Average return on equity For personal use only FY23 net profit over last 17 years $A5,182m 12% 7% 14% up 10% on FY22 5yr EPS CAGR1 5yr DPS CAGR1 Divide
Slide 9: Macquarie's evolution is driven by our people
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Macquarie’s evolution is driven by our people Our people are closest to client needs and markets For personal use only We seek to identify From positions of deep We are accountable We act with integrity and We pursue opportunities o
Slide 10: Diversification by region
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Diversification by region Business mix London AUM Annuity-style activities1 For personal use only Hong Kong FY23 FY08 ~41% ~14% New York Americas $A369.9b MAM ~23% EMEA $A196.3b BFS ~12% CGM ~6% Asia $A47.2b Australia2 $A257.4b Sydn
Slide 11: Over 50 years of unbroken profitability
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Over 50 years of unbroken profitability FY23 Staff: $Ab 20.509 Performance Total shareholder Earnings per Dividends per ASX Diversified MSCI World MSCI World For personal use only (ASX: MQG) return2 share CAGR share CAGR 203 Financi
Slide 12: Strong earnings growth
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Strong earnings growth FY23 EPS of $A13.54 FY23 Operating income of $A19,122m For personal use only Up 6% on pcp Up 10% on pcp $A $Am 15.00 20,000 12.00 16,000 9.00 12,000 6.00 8,000 3.00 4,000 - - FY17 FY18 FY19 FY20 FY21 FY22 FY23
Slide 13: Stable earnings
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Stable earnings 5 year earnings volatility relative to Macquarie 15 year earnings volatility relative to Macquarie For personal use only (includes GFC) Multiple to Macquarie Multiple to Macquarie 4.5 4.2x 3.0 4.0 3.6x 2.5 3.5 3.3x 2
Slide 14: Strong shareholder returns
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Strong shareholder returns For purchases made and held to sale Macquarie has generally outperformed the ASX 200, Diversified For personal use only Financials and MSCI World Capital Markets Index % Outperformance / (underperformance)
Slide 15: Macquarie Bank Limited Long Term Ratings Stability
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Macquarie Bank Limited Long Term Ratings Stability Standard & Poor’s Ratings Movements from 2007 For personal use only AA+ AA Rating movement (notches) 5 6 5 AA- 3 6 5 A+ 1 1 A 8 A- BBB+ BBB Macquarie JPMorgan Chase UBS AG Bank of A
Slide 16: Macquarie's approach to risk management
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Macquarie’s approach to risk management Strong focus on business accountability and risk ownership For personal use only Stable and robust core risk management principles Our approach is consistent with the ‘three lines of defence’
Slide 17: Environmental, Social and Governance
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Environmental, Social and Governance Macquarie’s ESG approach is structured around eight focus areas considered to be material to our business and stakeholders For personal use only Environmental Climate Environmental and Sustainabi
Slide 18: Net Zero and Climate Risk Report
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Net Zero and Climate Risk Report Macquarie has been driving practical climate solutions for almost 20 years, with our first investments in renewables dating back to 2005. Since then, we have evolved our approach year by year, buildi
Slide 19: Approximate business Basel III Capital and ROE
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Approximate business Basel III Capital and ROE 31 Mar 23 For personal use only APRA Basel III Capital Approx. FY23 Return on Approx. 17-year Average Operating Group @ 10.25% ($Ab) Ordinary Equity1 Return on Ordinary Equity2 Annuity-
Slide 20: Operating Groups
For personal use only Groups Operating 19
Slide 21: Macquarie Asset Management
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Macquarie Asset FY23 Private Public Management rankings & awards Markets Investments Investing to deliver positive impact for everyone For personal use only No. 1 Infrastructure $A336.3b 30% on Mar 22 $A534.5b slightly on Mar 22 FY2
Slide 22: Macquarie Asset Management
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Macquarie Asset Management Macquarie purpose MAM vision Empowering people to innovate and Investing to deliver positive invest for a better future impact for everyone For personal use only AUM People1 2040 commitment2 to $A870.8b ~2
Slide 23: Macquarie Asset Management: actively manages funds
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Macquarie Asset Management Actively manages funds for investors across multiple asset classes For personal use only Net Profit Contribution1 ($Am) Base Fees ($Am) AUM ($Ab) 3,200 3,029 2,800 2,771 2,782 900 870.8 864.2 2,800 850 2,4
Slide 24: Private Markets Historical Income
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Private Markets Historical Income $Am % of EUM For personal use only Private Markets base fees (LHS) 206 2,500 Closing Private Markets EUM $Ab 2.00% Private Markets performance fees and other income (LHS) 1.80% 2,000 158 1.60% 149 1
Slide 25: Market opportunity
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Market opportunity The Americas is the largest asset management market and underpenetrated Global assets under management1 Americas capital landscape Americas investment landscape For personal use only Funding announced in recent US
Slide 26: Banking and Financial Services
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Banking and FY23 Financial Services awards A technology-driven Australian retail $A108.1b 21% on Mar 22 $A129.4b 32% on Mar 22 Home loan portfolio For personal use only bank and wealth manager Total BFS deposits1 FY23 Net profit con
Slide 27: Banking and Financial Services
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Banking and Financial Services A technology-driven Australian retail bank and wealth manager For personal use only Net Profit Contribution1 ($Am) BFS Deposits2 ($Ab) Loan Portfolio3 ($Ab) 1,201 140 127.7 1,200 129.4 120 1,001 110.2
Slide 28: Home loan portfolio composition
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Home loan portfolio composition NT 0.2% 1% 1% 0% QLD 100% 3% 3% 3% 3% 90% WA 18.5% For personal use only 23% 20% 80% 28% 5.6% 70% 19% 60% 22% NSW 50% 24% 40.6% 24% 40% 22% 30% ACT 2.6% 20% 42% 33% 10% 29% SA 0% 2.6% VIC Mar-23 (Sett
Slide 29: Commodities and Global Markets
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Commodities and FY23 Strong underlying client business Global Markets rankings & awards Commodity Financial Global business offering capital and financing, risk management, market access, ~9.0 billion Markets Markets For personal us
Slide 30: What we do
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix What we do CGM is a global business offering capital and financing, risk management, market access, physical execution and logistics solutions to its diverse client base For personal use only Commodities Financial Markets Asset Fina
Slide 31: Commodities and Global Markets
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Commodities and Global Markets Provides clients with access to markets, financing, financial hedging, research and market analysis and physical execution For personal use only Net Profit Contribution1 ($Am) Net Operating Income2 6,0
Slide 32: Strong underlying client business
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Strong underlying client business Majority of income derived from underlying client business For personal use only Operating Income Client numbers2 (excl. credit and other impairment charges) (excl. Asset Finance) Underlying client
Slide 33: Underlying client activity driving regulatory capital and trading revenues
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Underlying client activity driving regulatory capital and trading revenues For personal use only Regulatory capital (normalised)1 Group Daily trading profit and loss2 FY19 - FY23 ($Am) Days $Am ● Majority of capital relates to credi
Slide 34: Macquarie Capital
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Macquarie Capital FY23 rankings & Well-positioned around long-term trends such as tech-enabled innovation, the growth in private capital, and addressing communities’ unmet needs awards Focus on areas of expertise Advises and invests
Slide 35: Macquarie Capital
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Macquarie Capital Macquarie Capital combines specialist expertise, innovative advice and flexible capital solutions to help our clients and partners make opportunity reality For personal use only Strategic advice at significant mome
Slide 36: Macquarie Capital
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Macquarie Capital Advises and invests alongside clients and partners to realise opportunity; develops and invests in For personal use only infrastructure and energy projects Net Profit Contribution1 ($Am) Income by region2 Regulator
Slide 37: Consistently strong principal investment performance
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Private Credit Equity Consistently strong principal investment <0.3% 8%+ ~24% 2-3 years Average annual Aggregate lifetime Aggregate lifetime Average hold period on performance realised loss rate since portfolio inception2 asset IRR
Slide 38: 1Q24 Update
For personal use only 1Q24 Update 37
Slide 39: 1Q24 Overview
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix 1Q24 For personal use only Overview Weaker trading conditions with 1Q24 Operating Group contribution substantially down on the prior corresponding period (pcp) (1Q23) ● Macquarie’s annuity-style businesses (MAM and BFS) combined 1Q2
Slide 40: 1Q24 Overview: Annuity-style businesses
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix 1Q24 Overview Annuity-style businesses Macquarie Asset Management Banking and Financial Services For personal use only ~23% FY23 contribution1 ~12% FY23 contribution1 ● AUM2 of $A864.2b at 30 Jun 23, broadly in line with Mar 23 ● Ho
Slide 41: 1Q24 Overview: Markets-facing businesses
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix 1Q24 Overview Markets-facing businesses Commodities and Global Markets Macquarie Capital For personal use only ~57% FY23 contribution1 ~8% FY23 contribution1 ● Commodities: performance significantly down on prior corresponding ● 67
Slide 42: Funded balance sheet remains strong
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Funded balance sheet remains strong Term liabilities exceed term assets For personal use only 31 Mar 23 30 Jun 23 $Ab $Ab 330 330 300 300 ST wholesale issued paper 10% ST wholesale issued paper 10% Total customer deposits5 270 Other
Slide 43: Capital management update
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Capital management update Group capital position at Jun 23 For personal use only ● APRA Basel III Group capital surplus of $A10.8b1,2. Reduction in surplus of $A1.8b from Mar 23 predominantly driven by the 2H23 dividend and FY23 MER
Slide 44: Business capital requirements
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Business capital requirements1 1Q24 business capital requirements excluding FX remain 1Q24 Key drivers For personal use only largely unchanged BFS 29.0 ● Growth in home loans and business banking 0.1 $A26.5b 27.0 2.4 $A26.4b 0.0 0.1
Slide 45: Strong regulatory ratios
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Strong regulatory ratios Bank Group Level 2 Ratios (Jun 23) For personal use only 250% 250% 8.0% 20.0% 18.1% 1 200% 211% 200% 16.0% 6.0% 5.9% 150% 150% 13.6% 5.2% 12.0% 4.0% 115% 100% 100% 8.0% 2.0% 50% 50% 4.0% 0.0% 0.0% 0% 0% CET1
Slide 46: Regulatory update
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Regulatory update Australia APRA has finalised or is in the process of implementing changes to a number of prudential standards. Macquarie notes the following key updates: ● APRA’s revised bank capital framework (UQS), came into eff
Slide 47: Outlook
For personal use only Outlook 46
Slide 48: Short-term outlook
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Short-term outlook Factors impacting short-term outlook For personal use only Annuity-style businesses Markets-facing businesses Non-Banking Group Macquarie Asset Management (MAM) Macquarie Capital (MacCap) ● Base fees expected to b
Slide 49: Short-term outlook: influencing factors
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Short-term outlook The range of factors that may influence our short-term outlook include: ● Market conditions including: global economic conditions, inflation and For personal use only interest rates, significant volatility events,
Slide 50: Medium-term outlook
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Medium-term outlook Macquarie remains well-positioned to deliver superior performance in the medium term with its diverse business mix across annuity-style and markets-facing businesses For personal use only Deep expertise across di
Slide 51: Medium term
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Medium term For personal use only Annuity-style businesses Markets-facing businesses Non-Banking Group Macquarie Asset Management (MAM) Macquarie Capital (MacCap) ● Well-positioned to respond to current market conditions and grow as
Slide 52: Appendix A: Select slides from FY23 result announcement
For personal use only Appendix A Select slides from Macquarie’s result announcement for the full year ended 31 March 2023 51
Slide 53: Income statement key drivers
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Income statement key drivers Net interest and trading income of $A10,523m, up 53% on FY22 2H23 1H23 FY23 FY22 ● Increased inventory management and trading income driven by trading gains from regional supply and $Am $Am $Am $Am deman
Slide 54: Key drivers: Macquarie Asset Management
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Key drivers Macquarie Asset Management ● Higher Private Markets base fees due to fund raising and investments made by Decrease driven by income related to the disposition of MIC assets in prior Private Markets-managed funds and mand
Slide 55: MAM AUM movement
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix MAM AUM movement Increase due to investments made by Private Markets-managed funds and foreign exchange movements, partially offset by market movements in Public Investments For personal use only Private Markets 78.4 Public Investme
Slide 56: Banking and Financial Services Key drivers
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Banking and Financial Services Key drivers ● Higher Personal Banking income driven by above Growth in the loan portfolio and BFS deposits, together with system growth of 31% in average home loan volumes, albeit volumes slowing over
Slide 57: Banking and Financial Services growth
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Banking and Financial Services Strong growth across home loans, deposits, funds on platform and business banking loans For personal use only $Ab $Ab 31 Mar 20 31 Mar 21 31 Mar 22 31 Mar 23 Note: Data based on spot volumes at period
Slide 58: Commodities and Global Markets Key drivers
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Commodities and Global Markets Key drivers ● Commodities up substantially on FY22 Strong underlying client business which benefitted from – Strong Risk Management revenue across the platform particularly in Gas and Power, Global Oil
Slide 59: Gas market movements
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Gas market movements Elevated volatility levels experienced in global gas markets since 2H22 have largely abated in 4Q23 European Gas Prices1 For personal use only Dutch TTF US Gas Prices1 Henry Hub 1. 20 Day Simple Moving Average o
Slide 60: Strong underlying client business
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Strong underlying client business Majority of income derived from underlying client business For personal use only Operating Income Client numbers2 (excl. credit and other impairment charges) (excl. Asset Finance) Underlying client
Slide 61: Underlying client activity driving regulatory capital and trading revenues
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Underlying client activity driving regulatory capital and trading revenues For personal use only Regulatory capital (normalised)1 Group Daily trading profit and loss2 FY19 - FY23 ($Am) Days $Am ● Majority of capital relates to credi
Slide 62: Macquarie Capital Key drivers
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Macquarie Capital Key drivers ● Lower fee and commission income driven by: Result reflects lower fee and commission and investment- – Lower mergers and acquisitions fee income, which decreased 24% on a strong prior year, across all
Slide 63: Macquarie Capital capital movement
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Macquarie Capital Movement in capital Private Credit capital For personal use only sector exposures1 $Ab 1.4 (0.9) 0.1 4.2 3.6 1. Exposures shown follow the economic capital adequacy methodology which is inclusive of off-balance she
Slide 64: Regulatory compliance and technology spend
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Regulatory compliance and technology spend Total compliance spend1 $A1,043m up 33% on FY22 and total technology spend2 up 26% on FY22 FY23 FY22 Regulatory compliance spend For personal use only $Am $Am $Am Regulatory compliance spen
Slide 65: Balance sheet highlights
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Balance sheet highlights • Balance sheet remains solid and conservative For personal use only – Term assets covered by term funding, stable deposits, hybrids and equity – Short-term wholesale funding covered by cash, liquids and oth
Slide 66: Diversified issuance strategy
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Diversified issuance strategy Term funding as at 31 Mar 23 – diversified by currency1, tenor2 and type For personal use only Currency Tenor Type 4.9 years WAM6 of Term funding excluding TFF (4.4 years including TFF) 4 Term Issuance
Slide 67: Continued customer deposit growth
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Continued customer deposit growth Macquarie has seen continued success in its long-term strategy of diversifying funding sources by growing its deposit base For personal use only ● Of approximately 1.8 million BFS clients, ~1.2 mill
Slide 68: Loan and lease portfolios – funded balance sheet
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Loan and lease portfolios1 – funded balance sheet Operating Mar 23 Mar 22 Group Category $Ab $Ab Description For personal use only Home loans 109.0 89.9 Secured by residential property Business banking 12.9 11.4 Loan portfolio secur
Slide 69: Equity investments of $A9.6b
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Equity investments of $A9.6b1 Carrying value Carrying value Category Mar 23 $Ab Mar 22 $Ab Description For personal use only Macquarie Asset Management Private Includes investments in new core infrastructure and new 1.8 1.5 Markets-
Slide 70: Approximate business Basel III Capital and ROE
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Approximate business Basel III Capital and ROE 31 Mar 23 For personal use only APRA Basel III Capital Approx. FY23 Return on Approx. 17-year Average Operating Group @ 10.25% ($Ab) Ordinary Equity1 Return on Ordinary Equity2 Annuity-
Slide 71: Appendix B: Detail result commentary
For personal use only Appendix B Detail result commentary 70
Slide 72: Macquarie Asset Management Result
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Macquarie Asset Management Result For personal use only ● Base fees of $A2,782m, broadly in line with FY22 with offsetting impacts across MAM FY23 FY22 – Fund raising and investments by Private Markets-managed funds and mandates, Pu
Slide 73: Banking and Financial Services Result
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Banking and Financial Services Result For personal use only ● Net interest and trading income of $A2,520m, up 28% on FY22 FY23 FY22 – 22% growth in the average loan portfolio and 31% growth in average BFS $Am $Am deposit volumes Net
Slide 74: Commodities and Global Markets Result
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Commodities and Global Markets Result For personal use only ● Commodities income of $A6,043m, up 82% on FY22; FY23 FY22 – Risk management up 50% on a strong prior period with gains across the platform, particularly in Gas and Power,
Slide 75: Macquarie Capital Result
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Macquarie Capital Result For personal use only ● Net interest and trading income of $A410m, broadly in line with the prior year. Net interest FY23 FY22 income from the private credit portfolio was up 37% on prior year, and benefitte
Slide 76: Appendix C: Glossary
For personal use only Glossary Appendix C 75
Slide 77: Glossary
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Glossary $A / AUD Australian Dollar CCB Capital Conservation Buffer $US / USD United States Dollar CCyB Countercyclical Capital Buffer For personal use only £ / GBP Pound Sterling CET1 Common Equity Tier 1 € / EUR Euro CGM Commoditi
Slide 78: Glossary
Overview of Macquarie Operating Groups 1Q24 Update Outlook Appendix Glossary IRRBB Interest Rate Risk in the Banking Book MSCI Morgan Stanley Capital International IFRS International Financial Reporting Standards MWh Mega Watt hour For personal use only LAC Loss-Absorbing Capacity No. Number LCR Liq
Slide 79: September Conferences: Presentation to Investors and Analysts
For personal use only September September Conferences Conferences Presentation to Investors and Analysts Presentation to Investors and Analysts September 2023 September 2023 78