Macquarie Group, Ltd. · ASX:MQG
Macquarie — Shareholder Meeting (July 2013)
55 slides from Macquarie's shareholder meeting presentation, Jul 25, 2013
Slide 1: Macquarie Group Limited 2013 Annual General Meeting
For personal use only Macquarie Group Limited 2013 Annual General Meeting 25 July 2013
Slide 2: Disclaimer
Disclaimer For personal use only The material in this presentation has been prepared by Macquarie Group Limited ABN 94 122 169 279 (Macquarie) and is general background information about Macquarie’s activities current as at the date of this presentation. This information is given in summary form and
Slide 3: Kevin McCann AM, Chairman
For personal use only 2013 Annual General Meeting Kevin McCann AM Chairman Macquarie Group Limited 2013 Annual General Meeting 25 July 2013
Slide 4: Global financial market conditions
Global financial market conditions For personal use only • This time last year we reflected on increased global uncertainty with concerns over the US debt ceiling, the European debt crisis and slowing growth in China further eroding confidence and severely impacting client activity • FY13 saw a gene
Slide 5: Market conditions in FY13 showed signs of improvement
Market conditions in FY13 showed signs of improvement For personal use only GLOBAL INDICES1 VIX1 Movement since Mar 12 50 130 Macquarie (+27.8%) MSCI World Capital Markets Index (+12.7%) 45 ASX200 (+14.6%) 120 S&P500 (+11.4%) 40 Hang Seng (+8.5%) 110 35 100 30 25 90 20 80 15 70 10 60 5 50 0 Mar 11 J
Slide 6: Market conditions in FY13 showed signs of improvement
Market conditions in FY13 showed signs of improvement For personal use only OECD LEADING INDICATORS1 US CREDIT SPREADS 6 mth annualised % Bps over 10 yr Treasuries Bps over 10 yr Treasuries change 2.5 800 AAA spread BAA spread High yield spread 800 Australia United States Europe China OECD - Total 1
Slide 7: Financial performance
Financial performance For personal use only Profit in 1H13 and 2H13 both up on pcp $Am FY13 Operating income of $A6,700m FY13 Profit of $A851m $Am FY13 down 4% on FY12 FY13 up 17% on FY12 800 2H13 up 18% on 1H13 2H13 up 36% on 1H13 4,000 400 2,000 0 0 1H12 2H12 1H13 2H13 1H12 2H12 1H13 2H13 $A FY13
Slide 8: Dividends
Dividends For personal use only • FY13 dividend set at $A2.00, 79% payout ratio, up on FY12 dividend of $A1.40 – 2H13 dividend $A1.25 up on 1H13 dividend of $A0.75 – 2H13 dividend is 40% franked • The Board has resolved that the annual dividend payout ratio policy will be in the range of 60-80% PAGE
Slide 9: Years of profitability
44 years of profitability For personal use only $Ab 2.0 Macquarie 1.8 Full Year Profit 1.6 1.4 1.2 $A851m 1.0 0.8 17% 0.6 0.4 0.2 0 PAGE 9
Slide 10: Total shareholder return continues to outperform international investment banks
Macquarie total shareholder return continues to outperform international investment banks For personal use only • Macquarie’s 10 year average Return on Equity: 17.3% compares to industry average1: 10.0% % 600 Macquarie Group International investment banks2 500 400 300 200 100 - Jun 03 Jun 04 Jun 05
Slide 11: Total shareholder return continues to track global capital markets firms
Macquarie’s total shareholder return continues to track global capital markets firms For personal use only • Since the GFC, Macquarie has outperformed the MSCI World Capital Markets Index by 30%1 % Macquarie (-6.7%) MSCI World Capital Markets Index (-36.9%) 140 120 100 80 60 40 20 0 Aug 07 Feb 08 Au
Slide 12: Key board and management changes
Key board and management changes For personal use only • Catherine Livingstone will be retiring as a director of Macquarie Group Limited and Macquarie Bank Limited • Peter Maher announced his intention to retire from Macquarie. Peter has been Group Head of Banking and Financial Services (formerly Fi
Slide 13: Macquarie Group Foundation
MACQUARIE GROUP FOUNDATION For personal use only $A190m DONATED SINCE INCEPTION 1,300+ ORGANISATIONS 5,000+ DAYS CONTRIBUTED Named the leading Australian corporate donor by Philanthropy Australia
Slide 14: Hospicio de San Jose, Manila
HOSPICIO DE SAN JOSE, MANILA For personal use only
Slide 15: Overview of the Result for the year ended March 2013
For personal use only Overview of the Result for the year ended 31 March 2013 Nicholas Moore Managing Director and Chief Executive Officer Macquarie Group Limited 2013 Annual General Meeting 25 July 2013
Slide 16: Result reflected improved 2H13 market conditions
Result reflected improved 2H13 market conditions For personal use only FY13 vs FY12 2H13 vs 1H13 Operating income $A6.7b 4% $A3.6b 18% Operating expenses $A5.3b 10% $A2.7b 7% Operating profit before tax $A1.4b 34% $A888m 72% Tax expense $A533m 86% $A377m 142% Profit $A851m 17% $A490m 36% Earnings pe
Slide 17: Diversified by region
Diversified by region International income1 63% of total For personal use only Total staff 13,663; International staff 55% of total EUROPE, MIDDLE EAST ASIA AMERICAS & AFRICA2 Income: $A1,221m (19% of total) Income: $A743m (11% of total) Income: $A2,199m (33% of total) Staff: 1,193 Staff: 3,093 Staf
Slide 18: Macquarie Funds: strong product performance, record AUM
MACQUARIE FUNDS Strong product performance. Record AUM For personal use only PERFORMANCE FUND GROWTH RESULT MIRA AWARDS1 $A343.5b AUM 6% PROFIT 1 $A755m • No.1 in “Top 30” investors • 2012 “Asian Infrastructure Fund Manager Macquarie of the Year” "Best Infrastructure" & "Best Real Estate" Fund Manag
Slide 19: Corporate and Asset Finance: record asset finance books
CORPORATE AND ASSET FINANCE Record asset finance books For personal use only PERFORMANCE FY13 FY13 PORTFOLIO GROWTH Portfolio growth RESULT Acquired: Rail portfolio PROFIT $A22.4b 9% Established: Motor vehicle $A694m Asset and Loan Portfolio business in the UK LENDING Broadly in line Expanded: Meter
Slide 20: Banking and Financial Services: record profit
BANKING AND FINANCIAL SERVICES Record profit For personal use only PERFORMANCE INITIATIVES RESULT PROFIT $A31b 7% Completed Perpetual platform transfer to Macquarie Wrap Total Retail Deposits Mortgages distribution $A335m $A25.1b 14 % $A11.8b 9% Wrap FUA Australian Mortgages Acquired Pacific Premium
Slide 21: Macquarie Securities: weak markets, profitable second half
MACQUARIE SECURITIES Weak markets. Profitable second half For personal use only PERFORMANCE INITIATIVES RESULT LOSS ETF market making – Europe, Asia Top Australian ranked Institutional sales & research1 Growth – North America $A(50)m vs. FY12 $A(194)m Top Asian China QFII quota Institutional 10 sale
Slide 22: Macquarie Capital: weak markets, profit up 76%
MACQUARIE CAPITAL Weak markets. Profit up 76% For personal use only PERFORMANCE INITIATIVES RESULT PROFIT 447 $A85b1 Continued focus on key sector specialities Deals Value One of the Cost management $A150m # 1 Australian M&A transactions2 # 1 Global real estate private placements3 largest infrastruc
Slide 23: Fixed Income, Currencies & Commodities
FIXED INCOME, CURRENCIES & COMMODITIES General improvement in market conditions across most businesses, offset by weak resource equity markets For personal use only PERFORMANCE INITIATIVES RESULT PROFIT 4 Commodity Investor Products # Physical gas marketer business established in North America1 Cred
Slide 24: Business backed by strong funding and capital
Business backed by strong funding and capital For personal use only MGL FUNDED BALANCE SHEET APRA BASEL III SURPLUS CAPITAL2 CREDIT RATINGS 31 March 2013 31 March 2013 31 March 2013 $Ab 90 80 Short-term1 Cash 70 60 $A3.1b Retail deposits Trading & 50 short-term 40 30 22 years 16 years 21 years 20 Te
Slide 25: 1Q14 Update
For personal use only 1Q14 Update Nicholas Moore Managing Director and Chief Executive Officer Macquarie Group Limited 2013 Annual General Meeting 25 July 2013
Slide 26: 1Q14 Macquarie Update
1Q14 Macquarie Update For personal use only • 1Q14 operating groups’ contribution1 ahead of subdued pcp (1Q13) and prior quarter (4Q13) • Annuity-style businesses2 up on pcp and prior quarter, with a strong performance from MFG • Capital markets facing businesses3 up significantly on a subdued pcp,
Slide 27: Annuity-Style Businesses 1Q14 Update
Annuity-Style Businesses For personal use only 1Q14 Update • AUM increased 10% to $A379.3b1 in 1Q14, mainly driven by FX movements and investment of MIRA funds, partially offset by negative market Macquarie movements and MIRA asset disposals • Strong 1Q14 performance fees of $A65m, predominantly fro
Slide 28: Market Facing Businesses 1Q14 Update
Market Facing Businesses For personal use only 1Q14 Update Macquarie • Modest improvement in global market volumes however ECM markets, whilst improved on pcp, remain subdued • No.1 ranking in US and UK/European client surveys for Australian equities 1, No.1 market share in Singapore warrants2 and S
Slide 29: Funded balance sheet remains strong
Funded balance sheet remains strong For personal use only $Ab 31 March 2012 $Ab 31 March 2013 $Ab 30 June 2013 100 100 100 90 90 90 ST wholesale issued paper ST wholesale issued paper (11%) ST wholesale issued paper (6%) Cash and liquid (7%) assets (22%) Other debt maturing1 in the 80 Other debt mat
Slide 30: Stable Basel III surplus
Stable Basel III surplus For personal use only • APRA Basel III Group capital of $A13.4b1, Group surplus of $A2.8b2 at Jun 13 • In May 2013, APRA issued its draft rules for Conglomerates. Whilst the rules are yet to be finalised, our current assessment is that Macquarie has sufficient capital to mee
Slide 31: Impact of movements in AUD
Impact of movements in AUD For personal use only Income statement Balance sheet & capital ratios Foreign currency denominated assets and 63% of operating income is generated offshore1 liabilities are appropriately hedged to minimise the impact of foreign exchange movements on income and capital rati
Slide 32: Outlook
For personal use only Outlook Nicholas Moore Managing Director and Chief Executive Officer Macquarie Group Limited 2013 Annual General Meeting 25 July 2013
Slide 33: Short term outlook
Short term outlook For personal use only • Summarised below are the outlook statements for each Operating Group • FY14 results will vary with market conditions, particularly the capital markets facing businesses which continue to experience subdued market conditions Net profit contribution FY07- FY1
Slide 34: Short term outlook
Short term outlook For personal use only • Since our FY13 result announcement on 3 May 2013, there have been changes to the short term outlook for some of the operating groups: – MFG: FY14 to be up on FY13 due to base and performance fees and impact of FX – FICC: FY14 to be broadly in line with FY13
Slide 35: Medium term
Medium term For personal use only Macquarie remains well positioned to deliver superior performance in the medium term • Deep expertise in major markets • Build on our strength in diversity and continue to adapt our portfolio mix to changing market conditions – Annuity-style income is provided by th
Slide 36: Approximate business Basel III & ROE
Approximate business Basel III & ROE For personal use only APRA Basel III Capital Approx. FY13 Return Operating Group @ 8.5% ($Ab) on Ordinary Equity1 Annuity-style businesses Approx. 7-Year Average Return on Ordinary Equity1 Macquarie Funds Group 1.8 Corporate and Asset Finance 2.1 20% 20%2 Banking
Slide 37: Macquarie Group Limited 2013 Annual General Meeting
For personal use only Macquarie Group Limited 2013 Annual General Meeting 25 July 2013
Slide 38: Formal Business
For personal use only Formal Business Kevin McCann AM Chairman Macquarie Group Limited 2013 Annual General Meeting 25 July 2013
Slide 39: Item 1: Financial Statements
For personal use only Item 1: Financial Statements • To consider and receive the Financial Report, the Directors’ Report and the Auditor’s Report of Macquarie for the financial year ended 31 March 2013 PAGE 39
Slide 40: Item 2: Re-election of Mr MJ Hawker as a Voting Director
For personal use only Item 2: Re-election of Mr MJ Hawker as a Voting Director • To consider and, if thought fit, pass the following as an ordinary resolution: – That Mr MJ Hawker be re-elected as a Voting Director of Macquarie PAGE 40
Slide 41: Item 3: Election of Mr MJ Coleman as a Voting Director
For personal use only Item 3: Election of Mr MJ Coleman as a Voting Director • To consider and, if thought fit, pass the following as an ordinary resolution: – That Mr MJ Coleman, having been appointed as a Voting Director since the last general meeting, be elected as a Voting Director of Macquarie
Slide 42: Item 4: Remuneration Report
For personal use only Item 4: Remuneration Report • To consider and, if thought fit, pass the following as an ordinary resolution: – To adopt the Remuneration Report of Macquarie for the year ended 31 March 2013 PAGE 42
Slide 43: Macquarie's remuneration approach
Macquarie’s remuneration approach For personal use only • Macquarie’s remuneration system is designed to balance risk and return • Key elements of Macquarie’s remuneration framework: Align interests of staff and shareholders Drive long-term shareholder returns while prudently Attract and retain mana
Slide 44: Improved business results while appropriately managing remuneration
Improved business results while appropriately managing remuneration For personal use only 2013 2012 % CHANGE Performance measures NPAT $Am 851 730 17 Basic EPS Cents per share 251.2 210.1 20 Dividends Cents per share 200.0 140.0 43 Annual TSR Per cent 34.4 (16.0) Executive remuneration measures Tota
Slide 45: Key features of Macquarie's remuneration system
Key features of Macquarie’s remuneration system For personal use only Executive Committee and Designated Executive Other Staff below Key Area Directors Executive Directors Executive Director 50-70% Amount of profit 25% to 70% dependent on 70% for the Managing Director 40-70% share deferred certain t
Slide 46: Item 5: Approval of termination benefits
For personal use only Item 5: Approval of termination benefits • To consider and, if thought fit, pass the following as an ordinary resolution: – That approval be given for all purposes (including for the purposes of sections 200B and 200E of the Corporations Act 2001) for the giving of all benefits
Slide 47: Item 6: Executive Voting Director's participation in MEREP
Item 6: Approval of Executive Voting Director’s participation in For personal use only the Macquarie Group Employee Retained Equity Plan (MEREP) • To consider and, if thought fit, pass the following as an ordinary resolution: – That the following be approved for all purposes: a) participation in the
Slide 48: Item 7: Approval of the issue of Macquarie Group Capital Notes
For personal use only Item 7: Approval of the issue of Macquarie Group Capital Notes • To consider and, if thought fit, pass the following as an ordinary resolution: – That the issue of up to 6,000,000 Macquarie Group Capital Notes by the Company, on the terms and conditions as summarised in the Exp
Slide 49: Macquarie Group Limited 2013 Annual General Meeting
For personal use only Macquarie Group Limited 2013 Annual General Meeting 25 July 2013
Slide 50: Appendix
For personal use only Appendix Macquarie Group Limited 2013 Annual General Meeting 25 July 2013
Slide 51: Funded balance sheet reconciliation
Funded balance sheet reconciliation For personal use only • The Group’s statutory balance sheet is prepared based on generally accepted accounting principles which do not represent actual funding requirements • A funded balance sheet reconciliation has been prepared to reconcile the reported assets
Slide 52: Glossary
For personal use only Glossary Macquarie Group Limited 2013 Annual General Meeting 25 July 2013
Slide 53: Glossary
Glossary For personal use only $A Australian Dollar CAF Corporate and Asset Finance $US United States Dollar CCB Capital Conservation Buffer € Euro CEO Chief Executive Officer 1H First Half CET1 Common Equity Tier 1 1H13 Half Year ended 30 September 2012 Cth Commonwealth 1Q13 First Quarter ended 30
Slide 54: Glossary
Glossary For personal use only FY12 Financial Year ended 31 March 2012 Mth Month FY13 Financial Year ended 31 March 2013 No. Number FY14 Financial Year ended 31 March 2014 NPAT Net Profit After Tax FX Foreign Exchange OECD Organisation for Economic Co-operation and Development GFC Global Financial C
Slide 55: Macquarie Group Limited 2013 Annual General Meeting
For personal use only Macquarie Group Limited 2013 Annual General Meeting 25 July 2013