Macquarie Group, Ltd. · ASX:MQG
Macquarie — Shareholder Meeting (July 2009)
60 slides from Macquarie's shareholder meeting presentation, Jul 29, 2009
Slide 1: Macquarie Group Limited 2009 Annual General Meeting
For personal use only Macquarie Group Limited 2009 Annual General Meeting 29 July 2009
Slide 2: Disclaimer
Disclaimer For personal use only This presentation has been prepared by Macquarie Group Limited (Macquarie) ABN 94 122 169 279. This presentation is general advice only and does not take account of your objectives, financial situation or needs. Before acting on general advice you should consider the
Slide 3: Kevin McCann AM, Acting Chairman
For personal use only Macquarie Group Limited 2009 Annual General Meeting 29 July 2009 Kevin McCann AM, Acting Chairman
Slide 4: Global financial market turmoil in 2008
Global financial market turmoil in 2008 – 09 For personal use only Market conditions in FY09 were exceptionally challenging — Significant volatility and market decline particularly in Nov 08 and Feb 09 Crisis of confidence followed the collapse of Lehman Bros In Sep 08, the financial crisis cr
Slide 5: Global financial market turmoil: US credit spreads
Global financial market turmoil in 2008 – 09 For personal use only % p.a. over 10 yr Treasuries US credit spreads 20% AAA spread BAA spread High yield spread 16% 12% Optimism Fear Panic 8% 4% 0% Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Weekly Data to 31 Dec 08 5
Slide 6: Level of fear highlighted by extreme volatility in financial markets
Level of fear highlighted by extreme volatility in financial markets For personal use only VIX Volatility “Fear” Index 90 90 80 80 70 70 60 60 Bear Stearns 50 sold 50 Lehman Bros collapse 40 40 30 30 20 20 10 10 0 0 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08
Slide 7: The crisis crossed over to the wider economy
The crisis crossed over to the wider economy For personal use only Meltdown: for housing, the World on the edge worst is yet to come The Economist 4 October 2008 BusinessWeek 11 February 2008 Recession fears fuel Credit on the edge worldwide asset sell-off BusinessWeek Financial Times 28 February 20
Slide 8: Global policy response: large scale injections of public funds and fiscal stimulus
Global policy response: Large scale injections of public funds and fiscal stimulus For personal use only Total fiscal stimulus announced/introduced 1 2 since the crisis began % of GDP 100% Support for the financial sector3 90% Other fiscal policy spending4 80% 70% 60% 50% 40% 30% 20% 10% 0% Australi
Slide 9: Macquarie's share price has largely tracked global financials
During this period, Macquarie’s share price has largely tracked global financials For personal use only MSCI World Diversified Financials Index Macquarie Group 130 Bear Stearns 120 sold to JP Morgan Lehman Bros 110 collapse 100 TARP approved, 90 introduction of global 80 fiscal stimulus 70 Index Cap
Slide 10: Despite this, Macquarie remained profitable
Despite this, Macquarie remained profitable For personal use only Macquarie Group remained profitable - $A871m, down 52% on pcp — Results marked by a significant number of one-off items including $A2.5b of write- downs which in most part relate to our co-investments alongside investors Total ope
Slide 11: Strong risk management remains at the core of Macquarie
Strong risk management remains at the core of Macquarie For personal use only Long-standing, stable approach to risk over 30 years The essence of risk lies in Macquarie Group business management culture This approach is embedded in business unit management and business ownership of risk Seek
Slide 12: Board matters
Board matters For personal use only David Clarke Chairs of Board sub-committees Nicholas Moore Laurie Cox 12
Slide 13: Macquarie remains well placed for continuing evolution
Macquarie remains well placed for continuing evolution For personal use only Too soon to call an end to the crisis but confidence appears to be returning to the market Opportunities to grow market share Capable, experienced team Proven track record of successfully strengthening the business
Slide 14: Macquarie Group Limited 2009 Annual General Meeting
For personal use only Macquarie Group Limited 2009 Annual General Meeting 29 July 2009
Slide 15: Overview of Result Announcement for the year ended 31 March 2009
For personal use only Macquarie Group Limited Overview of Result Announcement for the year ended 31 March 2009 Annual General Meeting 29 July 2009 Nicholas Moore, Managing Director and Chief Executive Officer
Slide 16: Financial performance
Financial performance Full year ended 31 March 2009 For personal use only $Am Operating income of $A5,526m $Am Profit of $A871m 10,000 33% decrease on FY08 1H09 2,000 52% decrease on FY08 8,000 2H09 1,600 6,000 1,200 4,000 800 2,000 400 0 0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 $A EPS of
Slide 17: Diversified by region
Diversified by region International income1 52% of total For personal use only International staff 43%2 of total EUROPE, MIDDLE EAST ASIA PACIFIC AMERICAS & AFRICA3 Income: $A916m Income: $A1,072m Income: $A359m5 (20% of total) (24% of total) (8% of total) Beijing Seoul Tianjin Tokyo Shanghai Calgar
Slide 18: Diversified income
Diversified income Operating income by source For personal use only Operating income (before loan provisions, impairment charges, equity accounted losses and one-off items of income) down 14% on pcp 6 mths to 30 Sep 08 12 mths to 31 Mar 09 $A4.1b $A7.6b 17% 15% 18% 15% 5% 12% 12% 13% 13% 12% 15% 10%
Slide 19: Extreme conditions resulted in one-off costs, equity losses and provisions of $A2.5b
Extreme conditions resulted in one-off costs, equity losses & provisions of $A2.5b For personal use only Over half stem from longstanding philosophy of co-investment $Ab Mortgages Italy 0.2 Co-investments 1.5 Loans 0.5 Trading assets 0.3 Total 2.5 19
Slide 20: Assets under management of $A243b
Assets under management of $A243b For personal use only Inflows affected by financial market disruption, particularly during Sep qtr Movement in $A exchange rate had a positive effect while impact of declining equity values was negative 250 1 $A243b Banking and Financial Services $A232b $Ab Macq
Slide 21: Funded balance sheet continued to strengthen
Funded balance sheet continued to strengthen For personal use only Macquarie Group Limited $Ab 31 March 2008 $Ab 30 September 2008 $Ab 31 March 2009 80 80 80 ST wholesale 70 1.1x 70 1.4x 70 issued paper 3.9x ST wholesale excess Cash and liquid (10%) ST wholesale excess excess issued paper assets (28
Slide 22: Consistently strong capital base
Consistently strong capital base For personal use only Well capitalised – surplus over minimum regulatory requirements of $A3.1b1 Increased regulatory capital by approx $A5.4b over the past three years $Ab — Majority of capital raised before global financial crisis - $A3.6b2 12 $A10.2b 10 $A9.3b
Slide 23: Successes achieved in a testing year
Successes achieved in a testing year For personal use only Macquarie Macquarie Macquarie Treasury and Banking and Securities Capital Funds Commodities Financial Services Cash equities – 299 deals, worth First quartile Operating Retail deposits: Retained No.1 in $A203b: performance: income
Slide 24: Macquarie model – focus over the medium term
Macquarie model – focus over the medium term For personal use only Client driven business Alignment of interests with shareholders, investors, staff Conservative approach to risk management Incremental growth and evolution Diversified by business and geography An ability to adapt to chan
Slide 25: Macquarie model – focus over the medium term: 2004-2009
Macquarie model – focus over the medium term 2004-2009 For personal use only Operating income Organic growth Original (23%) businesses (37%) 2004 2009 New businesses (40%) $A2.8b $A7.6b1 40% of FY09 operating income1 comes from businesses that did not exist 5 years ago 1. Represents operating income
Slide 26: Macquarie model: businesses entered 2004-2009
Macquarie model – focus over the medium term 2004-2009 For personal use only Banking and Macquarie Macquarie Macquarie Treasury and Corporate and Financial Securities Capital Funds Commodities Asset Finance Services % of income1 derived from businesses that did not exist 5 years ago: 73% 41% 43% 30%
Slide 27: Macquarie model: 2009+ initiatives
Macquarie model – focus over the medium term 2009+ For personal use only Banking and Macquarie Macquarie Macquarie Treasury and Corporate and Financial Securities Capital Funds Commodities Asset Finance Services 2009+ initiatives Continue to grow market share around the world as competitors reduce/e
Slide 28: Growth through the cycle
Growth through the cycle For personal use only Hill Samuel 2 UK opens branch office Hills Motorway 1.6 100 in Sydney Mortgage 1.2 securitisation Recession 80 0.8 Currency Global real crisis estate crash 0.4 Recession 60 0 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 London office opens 40
Slide 29: We're making a difference to communities
We’re making a difference to communities For personal use only Volunteering An important part of life for many of our people More than $A26m 900 Total contributions – staff + Macquarie Group Foundation Community organisations Staff contributions up 35% supported globally The Macquarie Group Foundati
Slide 30: Quarter FY10 update
For personal use only Macquarie Group Limited Quarter 1 FY10 update Annual General Meeting 29 July 2009 Nicholas Moore, Managing Director and Chief Executive Officer
Slide 31: Global government response beginning to restore calm to financial markets
Global government response beginning to restore calm to financial markets For personal use only Interbank spreads are falling Commercial paper spreads starting to tighten B ps LIB OR to 3m OIS spread B ps Bps USCP to OIS spread AA Non-financial 31 Mar 09 400 400 700 700 A us US EU UK AA Financial 35
Slide 32: Level of fear is starting to subside
Level of fear is starting to subside For personal use only VIX Volatility “Fear” Index 31 Mar 09 90 90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Daily Source: Markit, Macquarie Research, data to 27 Jul 09 32
Slide 33: Particularly strong equity capital market activity in Australia
Particularly strong equity capital market activity in Australia For personal use only Approx $A90b of new equity issued in the Australian market since 1 Nov 08 10% Equity raisings since 1 Nov 08 as percentage of market capitalisation1 9% 8% % total market capitalisation 7% 6% 5% 4% 3% 2% 1% 0% Aus
Slide 34: Global financials continued to rebound
Global financials continued to rebound For personal use only MSCI World Diversified Financials Index Macquarie Group 60 50 Index 40 30 20 Apr-09 May-09 Jun-09 Jul-09 Source: Bloomberg, data current to 27 Jul 09 34
Slide 35: 1Q10 update
1Q10 update For personal use only Improved operational performance from all major businesses except Macquarie Capital compared to 4Q09 — Macquarie Capital significantly impacted by timing and size of transactions Good contributions from: — Macquarie Securities — Treasury and Commodities — Bankin
Slide 36: 1Q10 Activities across the Group
1Q10 Activities across the Group For personal use only Macquarie Macquarie Treasury and Macquarie Funds Corporate and Banking and Capital Securities Commodities Asset Finance Financial Services Advisory & ECM Cash Energy Wholesale Loan and asset Private Wealth / IPOs: China Market volumes up
Slide 37: 1Q10 Balance sheet remains very strong
1Q10 Balance sheet remains very strong For personal use only Macquarie Group Limited $Ab 31 March 2008 31 March 2009 30 June 2009 $Ab $Ab 80 80 80 ST wholesale 70 1.1x 70 issued paper 3.9x 70 Cash and liquid excess ST wholesale 4.0x ST wholesale excess (10%) issued paper assets (28%) Cash and liquid
Slide 38: Further strengthened capital base
Qtr 1 FY10 Further strengthened capital base For personal use only Surplus over minimum regulatory requirements of $A4.3b strengthened by $A1.2b of new ordinary share capital $Ab 5 + $A1.2b + $A4.3b 4 + $A3.1b 3 2 1 0 1 Opening at 31 Mar 09 Capital raisings Closing at 30 Jun 09 1. Includes other c
Slide 39: Update on Specialist Listed Funds
Update on Specialist Listed Funds For personal use only As outlined in our ASX release on 2 Mar 09, steps are being developed and implemented by a number of the Macquarie Specialist Listed Funds to enhance securityholder value These steps are focussed on: — Closing the gap between the current se
Slide 40: Outlook
For personal use only Macquarie Group Limited Outlook Annual General Meeting 29 July 2009 Nicholas Moore, Managing Director and Chief Executive Officer
Slide 41: Outlook
Outlook For personal use only We continue to maintain a cautious stance with a conservative approach to funding and capital, notwithstanding some improvement in market conditions Market conditions continue to be volatile, making short-term forecasting extremely difficult 1H10 profit currently
Slide 42: 2009 Annual General Meeting
For personal use only Macquarie Group Limited 2009 Annual General Meeting 29 July 2009
Slide 43: Item 2: Remuneration Report
For personal use only Macquarie Group Limited Item 2: Remuneration Report Annual General Meeting 29 July 2009 Kevin McCann AM, Acting Chairman
Slide 44: Remuneration Policy
Remuneration Policy For personal use only Aligning the interests of staff and shareholders Driving long-term shareholder returns Attracting and retaining high quality people 44
Slide 45: Outperforming peers on NPAT
Success in aligning interests – while overall performance declined, Macquarie is For personal use only outperforming its peers on NPAT Despite decline on previous years, strong NPAT growth, and NPAT growth remains higher than peers Net Profit After Tax Attributable to Net Profit After Tax 10 Year
Slide 46: Outperforming peers on ROE
Success in aligning interests – while overall performance declined, Macquarie is For personal use only outperforming its peers on ROE Despite decline on previous years, ROE remains higher than peers and generally less volatile than competitors over the same period 10 Year Return on Ordinary Equity
Slide 47: Success in attracting and retaining high quality people
Success in attracting and retaining high quality people For personal use only The global financial crisis has had an impact on staffing levels Macquarie has not experienced the same level of reductions as other global financial players Many of our global operations have been recruiting strong
Slide 48: Macquarie's remuneration approach
Macquarie’s remuneration approach For personal use only Overall remuneration approach: — Use shareholder return drivers (NPAT and ROE) — Employee performance-based remuneration — Use equity — Use retention mechanisms — Provide competitive remuneration and consistency to create staff confidence 48
Slide 49: Macquarie's remuneration approach
Macquarie’s remuneration approach For personal use only Overall remuneration approach: — Use shareholder return drivers (NPAT and ROE) — Employee performance-based remuneration — Use equity — Use retention mechanisms — Provide competitive remuneration and consistency to create staff confidence 49
Slide 50: Macquarie's remuneration approach
Macquarie’s remuneration approach For personal use only Overall remuneration approach: — Use shareholder return drivers (NPAT and ROE) — Employee performance-based remuneration — Use equity — Use retention mechanisms — Provide competitive remuneration and consistency to create staff confidence 50
Slide 51: Macquarie's Proposed Remuneration Changes
Macquarie’s Proposed Remuneration Changes For personal use only Macquarie’s proposed remuneration changes build upon existing retention and equity alignment arrangements The changes are as follows: — Executive Directors will receive less cash with more profit share being retained as equity — Whe
Slide 52: Interim remuneration arrangements
Interim remuneration arrangements For personal use only Interim remuneration arrangements have been made — 50% of all Executive Directors profit share for 2009, is held in cash — In the case of the Managing Director and Chief Executive Officer it is 55% — No change has been made to prior year reta
Slide 53: Macquarie's remuneration approach
Macquarie’s remuneration approach For personal use only Overall remuneration approach: — Use shareholder return drivers (NPAT and ROE) — Employee performance-based remuneration — Use equity — Use retention mechanisms — Provide competitive remuneration and consistency to create staff confidence 53
Slide 54: Remuneration approach managed through strong governance processes
Remuneration approach managed through strong governance processes For personal use only Board Remuneration Committee (BRC) is involved with critical remuneration decisions throughout the year Key remuneration policies considered by the Non-Executive members of the Board The Board pays serious,
Slide 55: 2009 Annual General Meeting
For personal use only Macquarie Group Limited 2009 Annual General Meeting 29 July 2009
Slide 56: Glossary
For personal use only Macquarie Group Limited Glossary Annual General Meeting 29 July 2009
Slide 57: Glossary
Glossary For personal use only $A Australian dollar $US US dollar 1H09 First Half ended 30 September 2009 1H10 First Half ending 30 September 2010 2H09 Second Half ended 31 March 2009 4Q09 Fourth Quarter ended 31 March 2009 1Q10 First Quarter ended 31 March 2010 ASX Australian Securities Exchange AU
Slide 58: Glossary
Glossary For personal use only FY09 Full year ended 31 March 2009 FY10 Full year ending 31 March 2010 GDP Gross Domestic Product IMF International Monetary Fund IPO Initial Public Offering JV Joint Venture LIBOR London Interbank Offered Rate M&A Mergers and Acquisitions MAp Macquarie Airports MBL Ma
Slide 59: Glossary
Glossary For personal use only NPAT Net Profit After Tax OIS Overnight Indexed Swap P.a Per annum Pcp Prior corresponding period Q1 First Quarter Qtr Quarter Quant Quantitative REIT Real Estate Investment Trust ROE Return on Equity S&P Standard and Poor ST Short Term TARP Troubled Asset Relief Progr
Slide 60: Macquarie Group Limited 2009 Annual General Meeting
For personal use only Macquarie Group Limited 2009 Annual General Meeting 29 July 2009