Slide 1: Presentation to investors and analysts
Presentation to investors and analysts Result announcement for the full year ended 31 March 2021 7 May 2021 1
Slide 2: 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 subsidiaries) activities current as at the date of this presentation. This information is given in summary form and
Slide 3: Agenda
Agenda 01 02 03 Introduction Overview of Result Analysis Result and Financial Management 04 05 Outlook Appendices 3
Slide 4: Introduction
Introduction Sam Dobson Head of Investor Relations
Slide 5: Overview of Result
Overview of Result Shemara Wikramanayake Managing Director and Chief Executive Officer
Slide 6: About Macquarie
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices About Macquarie Annuity-style activities | Net Profit Contribution Markets-facing activities | Net Profit Contribution MAM BFS CGM MacCap Macquarie Asset Banking and Commodities and Global Markets Macquarie C
Slide 7: Macquarie's response to COVID-19
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie’s response to COVID-19 Employees Clients Portfolio Companies Community ● Gradual return to office commenced in 90% of ● Enhanced client support and lending relief ● Ongoing work with MIRA and Macqua
Slide 8: 2H21 result
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 2H21 result: $A2,030m up 106% on 1H21; up 59% on 2H20 FY21 result: $A3,015m up 10% on FY20 2H21 1H21 2H21 v FY21 FY20 FY21 v $Am $Am 1H21 $Am $Am FY20 Net operating income 7,255 5,519 31% 12,774 12,325 4% Tot
Slide 9: 2H21 net profit contribution from Operating Groups
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 2H21 net profit contribution from Operating Groups $A3,825m up 68% on 1H21; up 48% on 2H20 Annuity-style activities Markets-facing activities 7% 214% $A1,714m $A2,111m ON 1H21 ON 1H21 flat 146% ON 2H20 ON 2H2
Slide 10: FY21 net profit contribution from Operating Groups
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices FY21 net profit contribution from Operating Groups $A6,097m up 12% on FY20 Annuity-style activities Markets-facing activities $A3,314m $A2,783m 4% 39% ON FY20 ON FY20 Non-Banking Group Macquarie Asset Managem
Slide 11: Financial performance
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Financial performance Operating income FY21 Profit FY21 $A12,774m $A3,015m $Am $Am 14,000 4 % 3,000 10 % ON FY20 ON FY20 10,000 2,000 6,000 1,000 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 EPS FY21 DPS
Slide 12: Assets under management of $A563.5b
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Assets under management of $A563.5b1 AUM decreased 6% from $A598.9b1 at 31 Mar 20 Decrease due to impacts from foreign exchange and a reduction in contractual insurance assets, partially offset by MIM market
Slide 13: Diversification by region
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversification by region International income 68% of total income1 Total staff2 16,459, International staff 56% of total Americas EMEA Asia Australia3 34% of total income 23% of total income 11% of total inc
Slide 14: Diversification by region
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversification by region 68% of total income1 in FY21 was generated offshore A 10% movement2 in AUD is estimated to have approximately a 7% impact on NPAT Total income $Am 4,500 4,000 3,500 3,000 2,500 2,000
Slide 15: Macquarie Asset Management
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset Macquarie Infrastructure and Real Assets (MIRA) ● $A142.0b in equity under management, down 5% predominantly Macquarie Investment Management (MIM) ● $A367.1b in assets under management, down 4
Slide 16: Banking and Financial Services
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Personal Banking ● Home loan portfolio of $A67.0b, up 29% Business Banking ● Business banking loan portfolio of Wealth Management ● Funds on platform2 of $A101.4b, Financial Services on Mar 20, re
Slide 17: Commodities and Global Markets
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and Specialised and Asset Finance 13%1 Commodity Markets 66%1 Financial Markets 21%1 Global Markets ● Positive performance in UK energy meters business and Technology, ● Strong client activity acr
Slide 18: Macquarie Capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Advisory and Capital Solutions Summary Infrastructure and Energy Group Summary Capital ● Leading market position in ANZ for M&A2, ECM3 and IPOs4 ● Global collaboration between teams continues to cr
Slide 19: Funded balance sheet remains strong
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funded balance sheet remains strong Term liabilities exceed term assets 31 Mar 20 31 Mar 21 $Ab $Ab 180 180 Total customer deposits7 ST wholesale issued paper 7% Other debt maturing in the $A84.0b ST wholesal
Slide 20: Basel III capital position
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Basel III capital position ● APRA Basel III Group capital at Mar 21 of $A26.3b; Group capital surplus of $A8.8b1,2 ● APRA Basel III Level 2 CET1 ratio: 12.6%; Harmonised Basel III Level 2 CET1 ratio: 16.2% Gr
Slide 21: Business capital requirements
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Business capital requirements1 2H21 Key drivers MAM ● Includes Waddell & Reed and other FY21 underlying business capital requirement growth of $A1.6b2 balance sheet commitments $Ab BFS 18.0 0.3 ● Growth in ho
Slide 22: Strong regulatory ratios
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Strong regulatory ratios Bank Group Level 2 Ratios (Mar 21) 17.5% 7.5% 190.0% 130.0% 16.2% Pro forma 151%1 6.3% 174% 14.0% 6.0% 160.0% 120.0% Pro forma 114%1 12.6% 5.5% 115% 10.5% 4.5% 130.0% 110.0% 7.0% 3.0%
Slide 23: Final dividend
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Final dividend 2H21 Ordinary Dividend FY21 Ordinary Dividend $A3.35 $A4.70 FROM FROM $A1.80 $A4.30 (40% franked) (40% franked) (40% franked) IN 2H20 (40% franked) IN FY20 2H21 Record Date Payout Ratio 18 May
Slide 24: Board and Management Update
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Board and Management Update Board At the request of the Macquarie Group Limited and Macquarie Bank Limited’s Boards, Peter Warne intends to stand for re-election as Chair at the 2021 AGM for one additional ye
Slide 25: Result Analysis and Financial Management
Result Analysis and Financial Management Alex Harvey Chief Financial Officer
Slide 26: Income statement key drivers
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Income statement key drivers Net interest and trading income of $A5,677m, up 20% on FY20 2H21 1H21 FY21 FY20 ● Higher income in CGM mainly driven by Inventory management and trading in North American Gas and
Slide 27: Macquarie Asset Management
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset Management Key drivers ● Base fees down due to: − Foreign exchange movements, asset realisations in MIRA-managed funds and the full year impact of FY20 net flows in MIM Strong performance desp
Slide 28: MAM AUM movement
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices MAM AUM movement Decrease due to impacts from foreign exchange and a reduction in contractual insurance assets, partially offset by MIM market movements and investment by MIRA-managed funds $Ab 700 MIM (31.7)
Slide 29: MIRA EUM movement
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices MIRA EUM movement Decrease of 5% due to impacts from foreign exchange and equity returned, partially offset by continued capital raisings $Ab 170 160 8.9 0.7 12.9 1.0 150 (4.4) (6.2) 140 (5.5) (14.7) 130 120
Slide 30: Banking and Financial Services
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Financial Services Key drivers ● Higher Personal Banking income driven by 27% growth in average home loan volumes, Strong home loan and deposits growth and lower credit partially offset by lower v
Slide 31: Banking and Financial Services
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Financial Services Record 2H21 result - driven by growth in home loan portfolio, growth in deposits and lower credit impairment charges $Am 500 1H21 ($A68m) 2H21 $A137m 41 6 450 14 72 4 400 28 350
Slide 32: Banking and Financial Services
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Financial Services Strong growth across home loans, deposits and funds on platform $Ab $Ab 120 18 16.0 101.4 16 15.2 100 13.7 86.0 14 80.7 82.5 79.1 11.5 80 12 67.0 10.2 63.9 10 9.0 60 52.1 53.4 8
Slide 33: Commodities and Global Markets
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and Global Markets Key drivers ● Commodities − Increased Risk Management revenue across the commodities platform driven by increased contributions from Resources, North American Strong underlying
Slide 34: Strong underlying client business
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Strong underlying client business Majority of income derived from underlying client business Operating Income (excl. credit and other impairment charges) Client numbers2 (excl. SAF) +6% CAGR +11% CAGR Underly
Slide 35: Underlying client activity driving regulatory capital and trading revenues
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Underlying client activity driving regulatory capital and trading revenues Regulatory capital (normalised)1 Group Daily trading profit and loss2 FY18 – FY21 ($Am) Days 90 +5% CAGR 80 70 60 50 40 30 20 10 0 $A
Slide 36: Macquarie Capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital Key drivers ● Lower net income on investments predominantly due to fewer material asset realisations compared to prior year ● Lower fee and commission income due to lower Result reflects low
Slide 37: Macquarie Capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital Movement in regulatory capital $Ab 6.0 ($A1.2b) $A1.3b 5.0 $A4.3b ($A0.5b) 4.0 $A3.9b 3.0 2.0 1.0 0.0 31 Mar 20 Investments Realisations FX 31 Mar 21 Debt Conventional Energy Infrastructure
Slide 38: Costs of compliance
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Costs of compliance Total compliance spend1 $A646m in FY21, up 19% on FY20 FY21 FY20 ● The industry continues to see an increase in regulatory initiatives, resulting in increased compliance requirements acros
Slide 39: Balance sheet highlights
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Balance sheet highlights ● Balance sheet remains solid and conservative − Term assets covered by term funding, stable deposits and equity − Minimal reliance on short-term wholesale funding markets ● Total cus
Slide 40: Diversified issuance strategy
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversified issuance strategy Term funding as at 31 Mar 21 – diversified by currency1, tenor2 and type Currency Tenor Type EUR 5% GBP 2% Securitisations >1yr 10% 1–2yrs 9% Subordinated debt 5% Syndicated loan
Slide 41: Continued customer deposit growth
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Continued customer deposit growth Macquarie has seen continued success in its long-term strategy of diversifying funding sources by growing its deposit base ● Of approximately 1.7 million BFS clients, circa 7
Slide 42: Loan and lease portfolios
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Loan and lease portfolios1 – funded balance sheet Operating Mar 21 Mar 20 Group Category $Ab $Ab Description Home loans2 59.1 43.2 Secured by Australian residential property Business banking 10.5 9.4 Loan por
Slide 43: Equity investments of $A5.9b
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Equity investments of $A5.9b1 Carrying value Carrying value Category Mar 21 $Ab Mar 20 $Ab Description Macquarie Asset Management (MIRA) managed funds 1.5 1.8 Includes Macquarie Infrastructure Corporation, Ma
Slide 44: Regulatory update
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Regulatory update Australia ● APRA is in the process of implementing changes to a number of regulatory standards1. ● Based on current information available, it remains Macquarie’s expectation that it will hav
Slide 45: Bank Group Basel III Common Equity Tier 1 (CET1) Ratio
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Bank Group Basel III Common Equity Tier 1 (CET1) Ratio ● APRA Basel III Level 2 CET1 ratio: 12.6%1 ● Harmonised Basel III Level 2 CET1 ratio: 16.2%2 Bank Group Level 2 Common Equity Tier 1 Ratio: Basel III (M
Slide 46: Strong liquidity position maintained
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Strong liquidity position maintained ● 174%1 average LCR for Mar 21 quarter, based on daily observations − Maintained well above regulatory minimum − Includes CLF and TFF allocations2 ● Reflects longstanding
Slide 47: Capital management update
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Capital management update Additional Tier 1 Capital On 17 Mar 21, MGL issued 7,254,400 Macquarie Group Capital Notes 5 (MCN5) at an issue price of $A100 each, raising $A725m Loss-Absorbing Capital (LAC) - Tie
Slide 48: Outlook
Outlook Shemara Wikramanayake Managing Director and Chief Executive Officer
Slide 49: Short-term outlook
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Short-term outlook Factors impacting short-term outlook Annuity-style businesses Markets-facing businesses Non-Banking Group Macquarie Asset Management (MAM) Macquarie Capital (MacCap) ● Excluding Waddell & R
Slide 50: Short-term outlook
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Short-term outlook The range of factors that may influence our short-term outlook include: ● The duration of COVID-19, speed of the global economic recovery and extent of government support for economies ● Ma
Slide 51: Medium-term outlook
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Medium-term outlook Macquarie remains well-positioned to deliver superior performance in the medium term Deep expertise in major markets Build on our strength in business and geographic diversity and continue
Slide 52: Medium term
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Medium term Annuity-style businesses Markets-facing businesses Non-Banking Group Macquarie Asset Management (MAM) Macquarie Capital (MacCap) ● Leading specialist global asset manager, well-positioned to respo
Slide 53: Approximate business Basel III Capital and ROE
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Approximate business Basel III Capital and ROE 31 Mar 21 APRA Basel III Capital1 Approx. FY21 Return on Approx. 15-year Average Operating Group @ 8.5% ($Ab) Ordinary Equity2 Return on Ordinary Equity3 Annuity
Slide 54: Presentation to investors and analysts
Presentation to investors and analysts Result announcement for the full year ended 31 March 2021 7 May 2021 54
Slide 55: Appendix A: Detailed Result Commentary
Appendix A Detailed Result Commentary
Slide 56: Macquarie Asset Management
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset Management Result ● Base fees of $A1,985m, down on FY20 primarily driven by FY21 FY20 − Foreign exchange movements, asset realisations in MIRA-managed funds and the full year impact $Am $Am of
Slide 57: Banking and Financial Services
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Financial Services Result ● Net interest and trading income of $A1,746m, up 1% on FY20 FY21 FY20 $Am $Am − 24% growth in average loan portfolio volumes and a 23% growth in the average BFS deposit
Slide 58: Commodities and Global Markets
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and Global Markets Result ● Commodities income of $A2,671m, up 54% on FY20; FY21 FY20 − Risk management products up 13% on FY20 reflecting strong results across the commodities platform $Am $Am in
Slide 59: Macquarie Capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital Result ● Fee and commission income of $A1,387m, down 13% on FY20 due to lower mergers and FY21 FY20 acquisitions fee income and debt capital markets fee income, partially offset by higher eq
Slide 60: Appendix B: Additional information - Funding
Appendix B Additional information Funding
Slide 61: Macquarie funding structure
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie funding structure ● MGL and MBL are Macquarie’s two primary external funding vehicles which have separate and distinct funding, capital and liquidity management arrangements ● MBL provides funding t
Slide 62: Funded balance sheet reconciliation
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funded balance sheet reconciliation ● The funded balance sheet is a simple representation of Macquarie’s funding requirements once accounting related gross-ups and self-funded assets have been netted down fro
Slide 63: Funding for Macquarie
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funding for Macquarie Mar 21 Mar 20 ● Well diversified funding sources $Ab $Ab ● Minimal reliance on short-term wholesale funding markets Funding sources Certificates of deposit 0.4 0.6 ● Deposit base represe
Slide 64: Funding for the Bank Group
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funding for the Bank Group Mar 21 Mar 20 ● Bank balance sheet remains liquid and well capitalised, with a $Ab $Ab diverse range of funding sources Funding sources ● Term funding beyond one year (including dra
Slide 65: Funding for the Non-Bank Group
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funding for the Non-Bank Group Mar 21 Mar 20 ● Non-Bank Group is predominantly term funded $Ab $Ab ● Term funding beyond one year (excluding equity) has a Funding sources Net trade creditors 0.1 0.9 weighted
Slide 66: Explanation of funded balance sheet reconciling items
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Explanation of funded balance sheet reconciling items Derivative revaluation Outstanding trade accounting gross-ups Segregated funds settlement balances Working capital assets Macquarie’s derivative activitie
Slide 67: Conservative long standing liquidity risk management framework
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Conservative long standing liquidity risk management framework Liquidity Policy Liquidity Framework The liquidity risk appetite is intended to ensure that Macquarie is able to A robust liquidity risk manageme
Slide 68: Appendix C: Additional information - Capital
Appendix C Additional information Capital
Slide 69: Macquarie Basel III regulatory capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Basel III regulatory capital Surplus calculation Harmonised APRA Basel III1 Basel III1 31 Mar 21 $Am $Am Macquarie eligible capital Bank Group Gross Tier 1 capital 15,707 15,707 Non-Bank Group eligi
Slide 70: Macquarie APRA Basel III regulatory capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie APRA Basel III regulatory capital Bank Group contribution Risk-weighted assets Tier 1 Deductions Capital Requirement1 31 Mar 21 $Am $Am $Am Credit risk On balance sheet 49,092 4,173 Off balance shee
Slide 71: Macquarie regulatory capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie regulatory capital Non-Bank Group contribution ● APRA has specified a regulatory capital framework for Macquarie ● A dollar capital surplus is produced; no capital ratio calculation is specified ● A
Slide 72: Macquarie regulatory capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie regulatory capital Non-Bank Group contribution Assets Capital Requirement Equivalent Risk 31 Mar 21 $Ab $Am Weight Funded assets Cash and liquid assets 4.6 80 22% Loan assets1 6.9 695 126% Debt inve
Slide 73: Appendix D: ECL Provision inputs
Appendix D Additional information ECL Provision inputs
Slide 74: Credit impairment charge considerations
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Credit impairment charge considerations In assessing Macquarie’s expected credit loss provisioning on the loan portfolio, current and expected macroeconomic conditions are taken into account The total ECL pro
Slide 75: Expected Credit Loss – key indicators
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Expected Credit Loss – key indicators ● Under the AASB 9 credit impairment model, losses are recognised on an Expected Credit Loss (ECL) basis. ECLs are required to incorporate Forward-Looking Information (FL
Slide 76: Appendix E: Glossary
© macauaric OS Appendix E Glossary
Slide 77: Glossary
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Glossary $A / AUD Australian Dollar CLF Committed Liquid Facility $US / USD United States Dollar CMA Cash Management Account £ / GBP Pound Sterling CRM Customer Relationship Management € Euro CY19 Calendar Ye
Slide 78: Glossary
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Glossary IPO Initial Public Offering MIRA Macquarie Infrastructure and Real Assets IRB Internal Ratings-Based MW Mega Watt IFRS International Financial Reporting Standards MWDC Mega Watt direct current IMTT I
Slide 79: Presentation to investors and analysts
Presentation to investors and analysts Result announcement for the full year ended 31 March 2021 7 May 2021 79