Macquarie Group, Ltd. · ASX:MQG
Macquarie — H1 2018 Earnings Presentation
75 slides from Macquarie's earnings presentation, Oct 27, 2017
Slide 1: Presentation to investors and analysts
For personal use only Presentation to investors and analysts Result announcement for the half-year ended 30 September 2017 27 October 2017
Slide 2: Disclaimer
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Disclaimer For personal use only The material in this presentation has been prepared by Macquarie Group Limited ABN 94 122 169 279 (MGL) and is general bac
Slide 3: Agenda
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Agenda For personal use only 1. Introduction – Karen Khadi 2. Overview of Result – Nicholas Moore 3. Result Analysis and Financial Management – Patrick Upf
Slide 4: Introduction
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Introduction 01 For personal use only Karen Khadi – Head of Investor Relations MACQUARIE 2017
Slide 5: Overview of Result
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Overview of Result 02 For personal use only Nicholas Moore – Managing Director and Chief Executive Officer MACQUARIE 2017
Slide 6: About Macquarie: Building for the long-term
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices ABOUT MACQUARIE Building for the long-term For personal use only Macquarie Asset Management (MAM) • Top 50 global asset manager with $A471.9b1 of assets un
Slide 7: 1H18 result: $A1,248m up 19% on 1H17
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 1H18 result: $A1,248m up 19% on 1H17; up 7% on 2H17 For personal use only 1H18 2H17 1H17 1H18 v 1H18 v $Am $Am $Am 1H17 2H17 Net operating income 5,397 5,1
Slide 8: 1H18 net profit contribution from operating groups
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 1H18 net profit contribution from operating groups $A2,662m up 14% on 1H17; up 12% on 2H17 For personal use only ANNUITY-STYLE BUSINESSES CAPITAL MARKETS F
Slide 9: Financial performance
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Financial performance For personal use only Operating income $A5,397m Profit $A1,248m 1H18 OPERATING INCOME 1H18 PROFIT $Am $Am 5,600 1,500 3% 19 % ON 1H17
Slide 10: Assets under management of $A473.6 billion
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Assets under management of $A473.6 billion1 For personal use only AUM decreased $A8.1b since 31 Mar 17, largely due to net asset realisations in MIRA2 and
Slide 11: Diversification by region
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversification by region For personal use only International income 62% of total income1 Americas Total staff 13,966; International staff 55% of total INC
Slide 12: Diversification by region
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversification by region For personal use only • 62% of total income1 in 1H18 was generated offshore • A 10% movement2 in AUD is estimated to have approx.
Slide 13: Macquarie Asset Management
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset Management For personal use only OPERATING INCOME MACQUARIE INFRASTRUCTURE MACQUARIE INVESTMENT MACQUARIE SPECIALISED 26 % AND REAL ASSETS
Slide 14: Corporate and Asset Finance
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Corporate and Asset Finance For personal use only OPERATING INCOME PRINCIPAL FINANCE1 11 % ASSET FINANCE $A931m ON 1H17 • Asset Finance portfolio of $A29.9
Slide 15: Banking and Financial Services
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Financial Services For personal use only OPERATING INCOME PERSONAL BANKING WEALTH MANAGEMENT BUSINESS BANKING 6% $A822m ON 1H17 Provides a full
Slide 16: Commodities and Global Markets
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and Global Markets For personal use only OPERATING INCOME Commodity Markets Financial Markets Futures 11 % (Physical & Financial) 42%1 (Primary
Slide 17: Macquarie Capital
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital For personal use only OPERATING INCOME AUSTRALIA AND 2% NEW ZEALAND ASIA AMERICAS EMEA $A582m ON 1H17 Activity • Maintained the leading m
Slide 18: Funded balance sheet remains strong
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funded balance sheet remains strong For personal use only Term liabilities exceed term assets $Ab 31 Mar 17 $Ab 30 Sep 17 TOTAL CUSTOMER DEPOSITS8 ST whole
Slide 19: Basel III capital position
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Basel III capital position For personal use only • APRA Basel III Group capital at Sep 17 of $A18.1b, Group capital surplus of $A4.2b1 $Ab Group regulatory
Slide 20: Strong regulatory ratios
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Strong regulatory ratios For personal use only Bank Group (Sep 17) 17.5% 7.5% 190% 115% 6.9% 14.0% 13.3% 6.0% 160% 110% 153% 109% 6.1% 10.5% 4.5% 130% 105%
Slide 21: Share buyback
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Share buyback For personal use only • The Group’s capital position is strong with $A4.2b1 surplus at 30 Sep 17 • To provide additional flexibility to manag
Slide 22: Interim dividend
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Interim dividend For personal use only 1H18 ORDINARY DIVIDEND from in 1H17 $A $A1.90 2.05 (45% franked) from in 2H17 (45% franked) $A2.80 (45% franked) 1H1
Slide 23: Board and management changes
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Board and management changes For personal use only • Effective 1 Nov 17, Glenn Stevens will be appointed to the Macquarie Group Limited and Macquarie Bank
Slide 24: Result Analysis and Financial Management
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Result Analysis and Financial Management 03 For personal use only Patrick Upfold – Chief Financial Officer MACQUARIE 2017
Slide 25: Income Statement key drivers
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Income Statement key drivers For personal use only 1H18 2H17 1H17 • Net interest and trading income of $A1,892m, up 1% on 1H17 was mainly driven by: $Am $A
Slide 26: Income Statement by Operating Group
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Income Statement by Operating Group For personal use only 1,600 Net profit contribution ($Am) 25 98 (112) (15) 1,400 (120) (10) 1,200 332 1,000 800 600 1,2
Slide 27: Macquarie Asset Management
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset Management For personal use only Strong result; 1H18 benefiting from strong performance fees $Am KEY DRIVERS 5 1,400 • Higher performance f
Slide 28: MAM AUM movement
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices MAM AUM movement For personal use only $Ab MAM $A480b MIM +$A5b MIRA ($A12b)2 MSIS ($A1b)3 MAM $A472b 600 MSIS $A6b 1 10 (6) (12) 500 (1) MSIS $A5b 400 MIM
Slide 29: MIRA EUM movement
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices MIRA EUM movement For personal use only $Ab 90 2.2 (0.3) 6.2 (6.7) 0.9 80 70 60 50 40 77.2 79.5 30 20 10 - 31 Mar 17 Capital raised Acquisition Acquisition
Slide 30: Corporate and Asset Finance
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Corporate and Asset Finance For personal use only Higher Asset Finance and Principal Finance income and lower impairments $Am $Am KEY DRIVERS 700 • Increas
Slide 31: Banking and Financial Services
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Financial Services For personal use only Strong business growth across the portfolio KEY DRIVERS $Am • 1H17 impacted by: 350 – net overall gain
Slide 32: Commodities and Global Markets
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and Global Markets For personal use only Lower result with 1H17 benefiting from strong investment-related income $Am KEY DRIVERS 600 • Lower in
Slide 33: Macquarie Capital
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital For personal use only Lower impairments and higher fees offset by lower investment-related income $Am $A18m KEY DRIVERS 250 • Increased f
Slide 34: Impairment expense
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Impairment expense For personal use only $Am 350 KEY DRIVERS 300 • Decrease in CAF reflecting net loan repayments 15 (reversal of collective provisions) an
Slide 35: Costs of compliance
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Costs of compliance For personal use only Regulatory project spend 1H18 $Am 2H17 $Am 1H17 $Am • The industry continues to see an increase in Basel III and
Slide 36: Balance sheet highlights
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Balance sheet highlights For personal use only • Balance sheet remains solid and conservative – Term assets covered by term funding, stable deposits and eq
Slide 37: Diversified issuance strategy
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversified issuance strategy For personal use only Term funding as at 30 Sep 17 – diversified by currency1, tenor2 and type Currency Tenor Type Securitisa
Slide 38: Continued customer deposit growth
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Continued customer deposit growth For personal use only • Macquarie has been successful in pursuing its strategy of diversifying its funding sources throug
Slide 39: Loan and lease portfolios – Funded Balance Sheet
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Loan and lease portfolios1 – Funded Balance Sheet For personal use only Operating Sep 17 Mar 17 Group Category $Ab $Ab Description Asset Finance2 23.5 22.2
Slide 40: Equity investments of $A7.6b
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Equity investments of $A7.6b1 For personal use only Carrying value2 Carrying value2 Sep 17 Mar 17 Category $Ab $Ab Description Macquarie Asset Management (
Slide 41: Regulatory update
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Regulatory update For personal use only • Finalisation of Basel III – The Basel Committee has delayed the finalisation of proposals to amend the calculatio
Slide 42: Bank Group Basel III
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Bank Group Basel III Common Equity Tier 1 (CET1) Ratio For personal use only • APRA Basel III CET1 ratio: 11.0%1 • Harmonised Basel III CET1 ratio: 13.3%2
Slide 43: Strong liquidity position maintained
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Strong liquidity position maintained For personal use only • 153% average LCR for Sep 17 quarter, based on daily observations – Maintained well above regul
Slide 44: Capital management update
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Capital management update For personal use only • Share purchases since 31 Mar 17 - FY17 MEREP $A373m was purchased – $A260m off-market under the staff sal
Slide 45: Outlook
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Outlook 04 For personal use only Nicholas Moore – Managing Director and Chief Executive Officer MACQUARIE 2017
Slide 46: Factors impacting short-term outlook
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Factors impacting short-term outlook For personal use only FY18 combined net profit contribution from operating groups expected to be slightly up on FY17 A
Slide 47: Short-term outlook
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Short-term outlook For personal use only • We currently expect the FY18 combined net profit contribution1 from operating groups to be slightly up on FY17 •
Slide 48: Medium-term
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Medium-term For personal use only • Macquarie remains well positioned to deliver superior performance in the medium-term • Deep expertise in major markets
Slide 49: Approximate business Basel III Capital & ROE
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Approximate business Basel III Capital & ROE For personal use only As at 30 Sep 17 1 APRA Basel III Capital Approx. 1H18 Return Approx. 11-Year Average Ope
Slide 50: Medium-term
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Medium-term For personal use only Macquarie Asset Management (MAM) • Annuity-style business that is diversified across regions, products, asset classes and
Slide 51: Presentation to investors and analysts
For personal use only Presentation to investors and analysts Result announcement for the half-year ended 30 September 2017 27 October 2017
Slide 52: Appendix A: Detailed result commentary
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices APPENDIX A Detailed result commentary For personal use only MACQUARIE 2017
Slide 53: Macquarie Asset Management: Result
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset Management For personal use only Result 1H18 2H17 1H17 • Base fees of $A795m, broadly in line with 1H17 $Am $Am $Am – Underlying base fees
Slide 54: Corporate and Asset Finance: Result
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Corporate and Asset Finance For personal use only Result 1H18 2H17 1H17 • Net interest and trading income of $A336m, down 5% on 1H17 $Am $Am $Am – Reductio
Slide 55: Banking and Financial Services: Result
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Financial Services For personal use only Result 1H18 2H17 1H17 • Net interest and trading income of $A584m, up 17% on 1H17 $Am $Am $Am – Increa
Slide 56: Commodities and Global Markets: Result
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and Global Markets For personal use only Result 1H18 2H17 1H17 • Commodities income of $A435m, down 14% on 1H17 $Am $Am $Am – Risk management p
Slide 57: Macquarie Capital: Result
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital For personal use only Result 1H18 2H17 1H17 • Increased fee income: $Am $Am $Am – M&A: lower fee income in the US and Asia, partially off
Slide 58: Appendix B: Additional information – Funding
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices APPENDIX B Additional information – Funding For personal use only MACQUARIE 2017
Slide 59: Macquarie funding structure
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie funding structure For personal use only • MGL and MBL are Macquarie’s two primary external funding vehicles which have separate and distinct fund
Slide 60: Funded balance sheet reconciliation
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funded balance sheet reconciliation For personal use only • Macquarie’s statement of financial position is prepared based on generally accepted accounting
Slide 61: Funding for Macquarie
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funding for Macquarie For personal use only Sep 17 $Ab Mar 17 $Ab Sep 16 $Ab • Well diversified funding sources Funding sources • Minimal reliance on short
Slide 62: Funding for the Bank Group
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funding for the Bank Group For personal use only Sep 17 $Ab Mar 17 $Ab Sep 16 $Ab • Bank balance sheet remains liquid, well capitalised and with a diversit
Slide 63: Funding for the Non-Bank Group
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funding for the Non-Bank Group For personal use only Sep 17 $Ab Mar 17 $Ab Sep 16 $Ab • Non-Bank Group is predominately term funded Funding sources • Term
Slide 64: Explanation of Funded Balance Sheet reconciling items
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Explanation of Funded Balance Sheet reconciling items For personal use only • Self-funded trading assets: Macquarie enters into stock borrowing and lending
Slide 65: Conservative long standing liquidity risk management framework
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Conservative long standing liquidity risk management framework For personal use only Liquidity Policy • The key requirement of MGL and MBL’s liquidity poli
Slide 66: Appendix C: Additional information – Capital
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices APPENDIX C Additional information – Capital For personal use only MACQUARIE 2017
Slide 67: Macquarie Basel III regulatory capital
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Basel III regulatory capital For personal use only Surplus calculation Harmonised APRA Basel III Basel III 30 Sep 17 $Am $Am Macquarie eligible c
Slide 68: Macquarie APRA Basel III regulatory capital
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie APRA Basel III regulatory capital For personal use only Bank Group contribution Risk-weighted assets Tier 1 Deductions Capital Requirement1 30 Se
Slide 69: Macquarie regulatory capital: Non-Bank Group contribution
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie regulatory capital For personal use only Non-Bank Group contribution • APRA has specified a regulatory capital framework for Macquarie • A dollar
Slide 70: Macquarie regulatory capital: Non-Bank Group contribution
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie regulatory capital For personal use only Non-Bank Group contribution Capital Assets Requirement Equivalent 30 Sep 17 $Ab $Am Risk Weight Funded a
Slide 71: Appendix C: Glossary
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices APPENDIX C Glossary For personal use only MACQUARIE 2017
Slide 72: Glossary
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Glossary For personal use only $A / AUD Australian Dollar BCBS Basel Committee on Banking Supervision $C / CAD Canadian Dollar BFS Banking and Financial Se
Slide 73: Glossary
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Glossary For personal use only ECAM Economic Capital Adequacy Model HK Hong Kong Dollar ECM Equity Capital Markets HQLA Highly Quality Liquid Assets ECS Ex
Slide 74: Glossary
Macquarie 1H18 result announcement macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Glossary For personal use only MGL / MQG Macquarie Group Limited PPE Property, Plant and Equipment MIC Macquarie Infrastructure Corporation PPP Public Priv
Slide 75: Presentation to investors and analysts
For personal use only Presentation to investors and analysts Result announcement for the half-year ended 30 September 2017 27 October 2017