Macquarie Group, Ltd. · ASX:MQG
Macquarie — 22nd CLSA Investors' Forum 2015
63 slides from Macquarie's conference presentation, Sep 14, 2015
Slide 1: Investor presentation and outlook update (ASX media release)
Macquarie Group Limited ABN 94 122 169 279 No.50 Martin Place Telephone (61 2) 8232 3333 Sydney NSW 2000 Facsimile (61 2) 8232 7780 GPO Box 4294 Internet http://www.macquarie.com Sydney NSW 1164 AUSTRALIA For personal use only ASX/Media Release Investor presentation and outlook update SYDNEY, 14 Sep
Slide 2: 22nd CLSA Investors' Forum
For personal use only 22nd CLSA Investors’ Forum Grand Hyatt, Hong Kong Presentation to Investors and Analysts 15-16 September 2015 Patrick Upfold Chief Financial Officer
Slide 3: Disclaimer
Disclaimer For personal use only This information has been prepared on a strictly confidential basis by Macquarie Group Limited ABN 94 122 169 279 (“Macquarie”) and may neither be reproduced in whole nor in part, nor may any of its contents be divulged, to any third party without the prior written c
Slide 4: Agenda
Agenda For personal use only 01 Overview of Macquarie 02 Macquarie’s Operating Groups 03 1Q16 Update 04 Outlook 05 Appendices PAGE 3
Slide 5: Overview of Macquarie
For personal use only 01 Overview of Macquarie
Slide 6: About Macquarie
About Macquarie For personal use only Macquarie has built a uniquely diversified business since its inception in 1969. It is a global business built upon a range of products and sectors in which it has world-leading expertise • Global provider of banking, financial, advisory, investment and funds ma
Slide 7: Why Macquarie?
Why Macquarie? For personal use only Strong earnings growth Predictable earnings 46 yrs of profitability over the last 4 years, >65% of income from profitable every year since inception expected to continue for FY16 annuity-style businesses1 Geographically Strong shareholder Long term ratings divers
Slide 8: Years of profitability
46 years of profitability For personal use only 2.0 Hill Samuel UK 1.6 opens branch office in Sydney 1.2 Recession Currency Crisis 0.8 100 0.4 Hills Motorway Mortgage 0.0 Global real securitisation 80 estate crash 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Recession Stock 60 US banks cap
Slide 9: Strong earnings growth
Strong earnings growth For personal use only FY15 EPS of $A5.02 FY15 Operating income of $A9,293m FY15 up 31% on FY14 FY15 up 14% on FY14 $A $A 6.00 10,000 5.00 8,000 4.00 6,000 3.00 4,000 2.00 1.00 2,000 0.00 0.00 FY12 FY13 FY14 FY15 FY12 FY13 FY14 FY15 1H 2H PAGE 8
Slide 10: Geographic footprint
Geographic footprint For personal use only 14,085 staff in over 28 countries Europe, Middle East & Africa Asia Americas Staff: 1,329 Staff: 3,524 Staff: 2,685 Europe Asia Amsterdam Bangkok Manila Canada USA Dublin Australia Beijing Mumbai Calgary Atlanta Miami Frankfurt Adelaide Gurgaon Seoul Montre
Slide 11: Predictable earnings and geographically diverse
Predictable earnings and geographically diverse For personal use only Annuity-style vs Capital Geographical split markets facing1 of income2 FY15 FY15 Capital markets facing Australia Americas 32% 30% 36% Annuity- style 68% EMEA Asia 22% 12% 1. Annuity-style based on FY15 net profit contribution (ca
Slide 12: Business mix
Business mix For personal use only Capital markets facing businesses Annuity-style businesses Net profit contribution ($Ab) 5.0 4.0 1.3 3.0 3.0 2.0 1.0 2.8 1.0 1.2 0.9 0.0 FY07 FY11 FY15 Note: Comparative figures have been restated to conform to changes in current year financial presentation and gro
Slide 13: Stable earnings
Stable earnings For personal use only Macquarie Group 10-year earnings CAGR: 7% 10 year earnings volatility1 10 year earnings volatility1 (MQG vs fund managers) (MQG vs investment banks) Brookfield AM AllianceBernstein Blackrock Schroders MGL Eaton Vance Nomura UBS Citi Jef CS DB Barc MS GS JPM MGL
Slide 14: Strong shareholder returns
Strong shareholder returns For personal use only Macquarie’s total shareholder return has outperformed the ASX 200 for purchases since listing and held to date1 Quarterly purchases 2,820% Outperformance / (underperformance) vs ASX 200 500% 400% 300% 200% 100% 0% Since listing 2Q98 2Q00 2Q02 2Q04 2Q0
Slide 15: Long term ratings stability
Long term ratings stability Macquarie Bank Limited For personal use only Standard & Poor’s Ratings Movements from 2007 AA+ Rating movement (notches) AA 2007 AA- 3 4 5 4 A+ 2 4 5 2015 0 2 5 A Intra-period A- ratings movement BBB+ Macquarie JPMorgan Credit Barclays Bank of Deutsche Morgan Stanley Gold
Slide 16: Funded balance sheet remains strong
Funded balance sheet remains strong For personal use only $Ab 31 March 2014 $Ab 31 March 2015 $Ab 30 June 2015 120 14 120 120 110 ST wholesale issued paper 110 ST wholesale issued paper 110 (11% ) (11% ) 100 100 100 Other debt maturing in the next 12 Cash, liquids and self securitised Other debt mat
Slide 17: Basel III capital position
Basel III capital position For personal use only • APRA Basel III Group capital at Jun 15 of $A15.8b, Group surplus of $A2.4b (1 Jan 16 requirements1) • Bank Group APRA Basel III CET1 ratio: 9.9%; Tier 1 ratio: 11.2% • Bank Group Harmonised Basel III CET1 ratio: 11.5%; Tier 1 ratio: 12.7%2 $Ab 6.0 G
Slide 18: Regulatory update
Regulatory update For personal use only In Aug 14, APRA issued its final rules for Conglomerates with the implementation timing dependent on the outcomes of the Financial System Inquiry. We continue to work through the application of the rules with APRA and our current assessment remains that Macq
Slide 19: Long standing conservative risk management framework
Long standing conservative risk management framework For personal use only • Macquarie’s risk management principles have remained largely stable over 30 years and served the Group well over the past few years • The key aspects of Macquarie’s risk management approach are: Ownership of risk at Underst
Slide 20: Macquarie's Operating Groups
For personal use only 02 Macquarie’s Operating Groups
Slide 21: Macquarie overview
Macquarie overview Global provider of banking, financial advisory, investment and funds management services For personal use only Macquarie Group overview 1 Global locations Annuity-style businesses Capital markets facing businesses North America Europe Middle East Asia 20 locations 12 locations 2 l
Slide 22: Annuity-style businesses: Macquarie Asset Management
Annuity-style businesses For personal use only 1. Macquarie Asset Management Top 50 global asset manager with $A477.4b1 of assets under management Provides clients with access to a diverse range of Macquarie Infrastructure Macquarie capabilities and products, including: and Real Assets Investment
Slide 23: Macquarie Asset Management
Macquarie Asset Management Growth in base fees For personal use only Net Profit Contribution1 ($Am) Base Fees ($Am) AUM ($Ab) 1,450 1,372 500 484 1,500 1,400 1,262 425 1,250 1,200 400 1,051 989 344 1,000 905 324 1,000 874 305 300 755 800 750 645 600 200 482 500 400 100 250 200 0 0 0 FY11 FY12 FY13 F
Slide 24: Annuity-style businesses: Corporate and Asset Finance
Annuity-style businesses For personal use only 2. Corporate and Asset Finance $A29.2b1 of loans and assets under finance Delivers tailored finance and asset management Lending1,2 Aircraft1 solutions to clients through the cycles Portfolio $A11.4b Portfolio $A4.6b3 Specialists in corporate and re
Slide 25: Corporate and Asset Finance Group
Corporate and Asset Finance Group Leasing and lending portfolios continue to grow For personal use only Net Profit Contribution1 ($Am) Lending Portfolio ($Ab) Leasing Portfolio ($Ab) 20 1,200 1,112 12 11.2 17.5 18 16.6 1,000 10 16 14.5 9.0 826 8.0 8.0 14 12.6 7.8 800 698 8 12 694 9.5 574 10 600 6 8
Slide 26: Annuity-style businesses: Banking and Financial Services
Annuity-style businesses For personal use only 3. Banking and Financial Services $A38.0b1 total retail deposits 1.1 million Australian clients Mortgages and Deposits Provides a diverse range of personal banking, credit cards wealth management and business banking Financial advice products and se
Slide 27: Banking and Financial Services group
Banking and Financial Services group Growth in retail deposits and mortgages For personal use only Net Profit Contribution1($Am) Retail Deposits ($Ab) Australian Mortgage Book ($Ab) 300 285 40 37.3 30 260 243 35 33.3 24.5 250 31.0 25 29.0 30 195 196 26.6 200 20 25 17.0 150 20 15 11.6 11.8 10.8 15 10
Slide 28: Capital markets facing businesses: Macquarie Securities Group
Capital markets facing businesses For personal use only 1. Macquarie Securities Group Innovative specialists leveraging Asia-Pacific insights to the world Global institutional securities house with strong Asia-Pacific foundations covering sales, research, ECM, execution and Research Corporate Acce
Slide 29: Macquarie Securities Group
Macquarie Securities Group Strong franchise – ECM and Cash equities For personal use only Net Profit Contribution1 ($Am) No.1 IPO advisor in Australia2 20 250 18.8 Macquarie has successfully led more >$A100 million Amount raised via ASX IPOs since 2013-2014 18 200 184 IPOs than any other house in Au
Slide 30: Capital markets facing businesses: Macquarie Capital
Capital markets facing businesses For personal use only 2. Macquarie Capital Global corporate finance capability, Financial Institutions including M&A, debt and equity capital PRIVATE CAPITAL MARKETS MERGERS & ACQUISITIONS EQUITY CAPITAL MARKETS PRINCIPAL INVESTMENTS DEBT CAPITAL MARKETS markets,
Slide 31: Macquarie Capital
Macquarie Capital Geographically diversified and market leading position For personal use only Geographical split Australian M&A Completed Net Profit Contribution1 ($Am) of Income2 ($Am) Deal Volume 20143 500 50 450 430 45 400 40 350 35 Australia 300 280 Americas 33% 30 250 214 42% 25 200 20 150 150
Slide 32: Commodities and Financial Markets
Capital markets facing businesses For personal use only 3. Commodities and Financial Markets Provides clients with risk and capital solutions across physical and financial markets • Diverse platform covering more than 25 market Energy markets Metals markets segments, with more than 140 products • Ex
Slide 33: Commodities and Financial Markets
Commodities and Financial Markets Stable earnings through diverse platform For personal use only CFM Net Profit Contribution1 $A835m $A827m $A726m $A575m $A563m FY09–FY15 $A509m $A539m average: $A653m Colours reflect the mix of divisions within CFM and FY09 FY10 FY11 FY12 FY13 FY14 FY15 their indivi
Slide 34: 1Q16 Update
For personal use only 03 1Q16 Update
Slide 35: 1Q16 Macquarie Update
1Q16 Macquarie Update For personal use only • Both Annuity-style businesses’ and Capital markets facing businesses’ contributions1 up significantly on pcp and broadly in line with the prior quarter (4Q15): – Annuity-style businesses2 – driven by the underlying growth of the businesses, a weaker Aust
Slide 36: Annuity-Style Businesses 1Q16 Update
Annuity-Style Businesses For personal use only 1Q16 Update Macquarie • AUM of $A477.4b, broadly in line with Mar 15 - positive net flows in MIM offset by FX, market movements and net Asset divestments in MIRA Management • Performance fees of $A208m, predominantly from Macquarie Infrastructure Compan
Slide 37: Capital Markets Facing Businesses 1Q16 Update
Capital Markets Facing Businesses For personal use only 1Q16 Update Macquarie • Market conditions characterised by increased volumes and volatility, particularly in Asia where the liberalisation of Securities China’s capital markets and credit easing resulted in significant increases in client activ
Slide 38: Outlook
For personal use only 04 Outlook
Slide 39: Short term outlook
Short term outlook For personal use only • Summarised below are the outlook statements for each Operating Group • FY16 results will vary with market conditions, particularly the capital markets facing businesses Net profit contribution FY08–FY15 FY08–FY15 FY16 outlook as announced Update to Operatin
Slide 40: Short term outlook
Short term outlook For personal use only While the impact of future market conditions makes forecasting difficult, Macquarie currently expects the FY16 combined net profit contribution1 from operating groups to be up on FY15 The FY16 tax rate is currently expected to be broadly in line with 2H15
Slide 41: Medium term
Medium term For personal use only Macquarie remains well positioned to deliver superior performance in the medium term Deep expertise in major markets Build on our strength in diversity and continue to adapt our portfolio mix to changing market conditions – Annuity-style income is provided by
Slide 42: Medium term
Medium term For personal use only • Annuity-style business that is diversified across regions, products, asset classes and investor types • Diversification of capabilities allows for the business to be well placed to grow assets under management in different market MAM conditions • Well positioned f
Slide 43: Approximate business Basel III capital & ROE
Approximate business Basel III Capital & ROE For personal use only As at 31 Mar 15 1 APRA Basel III Capital Approx. FY15 Return Approx. 9-Year average Return 2 Operating Group @ 8.5% ($Ab) on Ordinary Equity2 on Ordinary Equity Annuity-style businesses 7.5 Macquarie Asset Management 2.0 Corporate an
Slide 44: Select slides from FY15 Results Presentation
For personal use only A Select slides from FY15 Results Presentation
Slide 45: Income Statement key drivers
Income Statement key drivers For personal use only 2H15 1H15 FY15 FY14 Net interest and trading income of $A3,819m, up 17% on FY14 $Am $Am $Am $Am – Increased lending activity in CAF and BFS – Improved trading results for CFM and MSG Net interest and trading income 2,176 1,643 3,819 3,275 Fee an
Slide 46: Macquarie Asset Management Result
Macquarie Asset Management For personal use only Result FY15 FY14 Base fees of $A1,372m, up 9% on FY14 (AUM up 14%) $Am $Am – MIM – net inflows into higher fee earning products and positive market Base fees 1,372 1,262 movements, partially offset by impact of Jackson Square Partners (JSP) Performa
Slide 47: Corporate and Asset Finance Result
Corporate and Asset Finance For personal use only Result FY15 FY14 Net interest and trading income of $A737m, up 11% on FY14 $Am $Am – Strong performance in Lending driven by underlying portfolio growth and Net interest and trading income1 737 663 realisations Net operating lease income 561 520 –
Slide 48: Banking and Financial Services Result
Banking and Financial Services For personal use only Result FY15 FY14 Net interest and trading income of $A825m, up 12% on FY14 $Am $Am – Continued growth in Australian mortgages partially offset by Canadian Net interest and trading income1 825 738 and US mortgage portfolios running off Platform a
Slide 49: Macquarie Securities Result
Macquarie Securities For personal use only Result FY15 FY14 Brokerage and commissions of $A542m, broadly in line with FY14 $Am $Am – Higher brokerage and commissions in Australia and Europe and Brokerage and commissions 542 547 favourable foreign exchange movements offset by lower brokerage in Net
Slide 50: Macquarie Capital Result
Macquarie Capital For personal use only Result FY15 FY14 Fee and commission income of $A860m, up 18% on FY14 $Am $Am – Increased fee income across all product classes (M&A, ECM, DCM) Fee and commission income 860 727 – US largest contributor with strong growth in M&A and DCM Investment and other i
Slide 51: Commodities and Financial Markets Result
Commodities and Financial Markets For personal use only Result FY15 FY14 Commodities income of $A1,125m, broadly in line with FY14 $Am $Am – Risk management products – increased client activity across the platform Commodities1 1,125 1,124 primarily driven by increased price volatility and continue
Slide 52: Provisions for impairment
Provisions for impairment For personal use only $Am 400 Collective allowance for credit losses Individually assessed provisions and write-offs Non-financial assets Investments (AVS and associates) 350 300 250 200 150 100 50 0- FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY15 MAM
Slide 53: Costs of compliance increase in response to ongoing regulatory changes
Costs of compliance increase in response to ongoing regulatory changes For personal use only The industry is seeing a continuing increase in regulatory initiatives, resulting in increased compliance requirements across all levels of the organisation Macquarie is regulated by approx. 190 authorit
Slide 54: Balance sheet highlights
Balance sheet highlights For personal use only Balance sheet remains solid and conservative ‒ Term assets covered by term funding, stable deposits and equity ‒ Minimal reliance on short term wholesale funding markets ‒ Cash and liquid assets exceed all forecast requirements throughout a twelve mon
Slide 55: Well diversified funding sources
Well diversified funding sources For personal use only Diversity of MGL funding sources MGL term funding beyond one year Equity and Wholesale (including equity and hybrids) hybrids issued paper 13% 11% Deposits - $Ab Loan capital corporate 4% 25 and As at 31 Mar 15. wholesale 2% 20 15 Bonds Deposits
Slide 56: Continued retail deposit growth
Continued retail deposit1 growth For personal use only Macquarie has been successful in pursuing its strategy of diversifying its funding sources through growing its deposit base – In excess of 1.1 million retail clients, of which approx. 600,000 are depositors – Focus on the composition and quali
Slide 57: Loan portfolio growth – Funded Balance Sheet
Loan portfolio1 growth – Funded Balance Sheet For personal use only Mar 15 Mar 14 Balance predominately relates to the financing of Predominately financing oil Category $Ab $Ab gold producers. Positions well secured and producers. Positions well secured; counterparties generally hedge their commodit
Slide 58: Equity investments of $A4.4b
Equity investments of $A4.4b1 For personal use only Carrying value2 Carrying value2 Mar 15 Mar 14 Category $Am $Am Description Macquarie Asset Management (MIRA) 1,479 1,528 Includes Macquarie Infrastructure Company, MPF Holdings Limited, managed funds Macquarie Atlas Roads, Macquarie SBI Infrastruct
Slide 59: Glossary
For personal use only B Glossary
Slide 60: Glossary
Glossary For personal use only $A Australian Dollar BCN Bank Capital Notes AVS Available for Sale BFS Banking and Financial Services 1H15 Half Year ended 30 September 2014 BIS Bank for International Settlements 1H16 Half Year ended 30 September 2015 CAF Corporate and Asset Finance 1Q16 Quarter ended
Slide 61: Glossary
Glossary For personal use only EPS Earnings Per Share MEC Metals and Energy Capital EUM Equity Under Management MEIF1 Macquarie European Infrastructure Fund 1 FATCA Foreign Account Tax Compliance Act MEREP Macquarie Group Employee Retained Equity Plan FOFA Future of Financial Advice MGL / MQG Macqua
Slide 62: Glossary
Glossary For personal use only PCP Prior Corresponding Period P&L Profit and Loss Statement PPE Property, Plant and Equipment REIT Real Estate Investment Trust RMG Risk Management Group ROE Return on Equity RWA Risk Weighted Assets SME Small and Medium Enterprise ST Short Term SYD Sydney Airport TME
Slide 63: 22nd CLSA Investors' Forum
For personal use only 22nd CLSA Investors’ Forum Grand Hyatt, Hong Kong Presentation to Investors and Analysts 15-16 September 2015 Patrick Upfold Chief Financial Officer