Macquarie Group, Ltd. · ASX:MQG
Macquarie — Shareholder Meeting (July 2014)
56 slides from Macquarie's shareholder meeting presentation, Jul 24, 2014
Slide 1: Macquarie Group Limited 2014 Annual General Meeting
For personal use only Macquarie Group Limited 2014 Annual General Meeting 24 July 2014
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: FY14 Overview
For personal use only FY14 Overview Kevin McCann AM Chairman
Slide 4: Global financial market conditions
Global financial market conditions For personal use only • This time last year we saw a general improvement in market conditions. The US was showing increasing signs of confidence and growth, however client activity remained subdued, particularly for Macquarie’s capital markets facing businesses, re
Slide 5: Market conditions in FY14 continued to improve
Market conditions in FY14 continued to improve For personal use only Indexed Global indices1 VIX (market volatility index)2 120 Movements since Mar 13 90 MQG (+59%) 100 MSCI World Capital Markets Index (+23%) 80 ASX 200 (+9%) Hang Seng (-1%) 70 80 S&P 500 (+19%) 60 60 50 40 40 20 30 0 20 -20 10 -40
Slide 6: Market conditions in FY14 continued to improve
Market conditions in FY14 continued to improve For personal use only Bps over 10 yr OECD business confidence indicator1 Treasuries US credit spreads 1.5 800 AAA spread BAA spread 1.0 UK High yield spread 600 0.5 US 0.0 400 Australia -0.5 200 -1.0 China -1.5 0 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Mar 1
Slide 7: Financial Performance
Financial Performance For personal use only 1H14 and 2H14 profit both up on pcp FY14 Operating income of $A8,132m FY14 Profit of $A1,265m $Am FY14 up 22% on FY13 $Am FY14 up 49% on FY13 5,000 2H14 up 21% on 1H14 1,000 2H14 up 52% on 1H14 750 4,000 500 3,000 250 2,000 0 1H13 2H13 1H14 2H14 1H13 2H13
Slide 8: FY14 Dividend
FY14 Dividend For personal use only • FY14 ordinary dividend of $A2.60, 67% payout ratio, up on FY13 ordinary dividend of $A2.00 − 2H14 ordinary dividend of $A1.60, 40% franked − 1H14 ordinary dividend of $A1.00, 40% franked • In addition, eligible shareholders benefited from the SYD distribution in
Slide 9: Years of profitability
45 years of profitability For personal use only $Ab 2.0 1.8 1.6 $A1,265m 1.4 49% 1.2 1.0 0.8 0.6 0.4 0.2 0 PAGE 9
Slide 10: Total shareholder return continues to outperform international investment banks
Macquarie’s total shareholder return continues to outperform international investment banks For personal use only • Macquarie’s 10 year average Return on Equity: 16.2% compares to industry average: 9.5%1 Rebased to 30 Jun 04 Macquarie Average international investment banks2 400 300 200 100 0 Jun-04
Slide 11: Total shareholder return outperforms global capital markets firms
Macquarie’s total shareholder return outperforms global capital markets firms For personal use only • Since the GFC, Macquarie has outperformed the MSCI World Capital Markets Index by 64%1 Rebased to 1 Aug 07 Macquarie (+32%) MSCI World Capital Markets Index (-32%) 140 120 100 80 60 40 20 - Aug-07 F
Slide 12: Board changes
Board changes For personal use only • Kevin McCann will seek re-election as a Director of Macquarie Group Limited (MGL) and Macquarie Bank Limited (MBL) and if re-elected will continue as Chairman Board retirements • Catherine Livingstone and John Niland retired as directors from the Boards of MGL a
Slide 13: Key management changes
Key management changes For personal use only Mary Reemst was appointed Patrick Upfold joined Ben Brazil joined Macquarie’s Managing Director and Chief Macquarie’s Executive Executive Committee on Executive Officer of MBL on Committee on 1 July 2014. 1 July 2014. Ben is Co-Head of 1 July 2014 and als
Slide 14: Macquarie Group Foundation
Macquarie Group Foundation For personal use only 32,000+ HOURS VOLUNTEERED $A200+ MILLION CONTRIBUTED SINCE INCEPTION $A24.7M DONATED BY STAFF AND FOUNDATION IN FY14 1,500+ ORGANISATIONS SUPPORTED GLOBALLY PAGE 14
Slide 15: Overview of the Result for the year ended 31 March 2014
For personal use only Overview of the Result for the year ended 31 March 2014 Nicholas Moore Managing Director and Chief Executive Officer
Slide 16: FY14 result
FY14 result For personal use only FY14 vs FY13 2H14 vs 1H14 Operating income $A8.1b 22% $A4.5b 21% Operating expenses $A6.0b 15% $A3.2b 10% Operating profit before tax $A2.1b 50% $A1.3b 60% Profit $A1,265m 49% $A764m 52% Earnings per share $A3.84 53% $A2.35 57% Dividends per share1 $A2.60 30% $A1.60
Slide 17: FY14 result reflected improved operating performance across the Group
FY14 result reflected improved operating performance across the Group For personal use only • Macquarie's annuity-style businesses (Macquarie Funds, Corporate and Asset Finance, and Banking and Financial Services) continued to perform well with FY14 combined net profit contribution1 up $445m (or 26%
Slide 18: Diversified by region
Diversified by region International income 68% of total income1 For personal use only Total staff 13,913; International staff 53% of total Europe, Middle East Asia Americas & Africa2 Income: $A1,574m (20% of total) Income: $A1,043m (13% of total) Income: $A2,709m (35% of total) Staff: 1,248 Staff: 3
Slide 19: Macquarie Funds: Record assets under management
Macquarie Funds Record assets under management For personal use only Infrastructure & Real Assets Investment Management Spec. Investment Solutions Real Estate Energy Equities Hedge US/Euro Infra. Funds wholesale debt Infrastructure Agriculture Fixed Income Multi-Asset Delaware Aust. retail mgmt Perf
Slide 20: Corporate and Asset Finance
Corporate and Asset Finance Increased asset and loan portfolio For personal use only Asset Finance Lending Motor vehicle Healthcare Industrial Rail Corporate Aircraft Technology Manufacturing Energy Mining Real Estate Performance ASSET FY14 PROFIT1 FINANCE LENDING Continued Securitisation $A826m $A1
Slide 21: Banking and Financial Services
Banking and Financial Services Positioned for growth For personal use only Personal Banking Wealth Management Business Banking Deposits Cards Wrap Insurance Loans Transaction & business services Mortgages Private Banking Stockbroking & Deposits Financial advice Performance AUSTRALIAN LIFE AWARDS # M
Slide 22: Macquarie Securities
Macquarie Securities Return to profitability For personal use only Cash Equities Trading Research Execution Delta One Sales ECM1 Corporate Derivatives Equity Finance Access Performance AWARDS # for # FY14 PROFIT2 # $A107m From ($A50m) Loss 1 IPOs in Australia 3 1Australian Equities in Australia, Asi
Slide 23: Macquarie Capital
Macquarie Capital Improved profit For personal use only M&A Capital Markets Principal Infrastructure, utilities Resources TMET Financials & renewables Real Estate Industrials Performance M&A AWARDS # FY14 PROFIT1 $A280m 450 TRANSACTIONS $A89b 1 AUSTRALIA AND ASIA2 3 Nth American Infrastructure DEAL
Slide 24: Fixed Income, Currencies and Commodities
Fixed Income, Currencies and Commodities Improved market conditions For personal use only Commodity Markets (Physical & Financial) Financial Markets (Primary & Secondary) Futures Metals & Ag. Sales & Trading Fixed Income Metals & Energy Capital Energy & Currencies Credit Trading Markets Performance
Slide 25: 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 2014 31 March 2014 $Ab 100 90 Short 80 Cash Term1 70 $A2.7b 60 Retail Trading Deposits & Short 50 Term 40 23 years 18 years 22 years 30 ‘A’ RATED 20 Te
Slide 26: 1Q15 Update
For personal use only 1Q15 Update Nicholas Moore Managing Director and Chief Executive Officer
Slide 27: 1Q15 Macquarie Update
1Q15 Macquarie Update For personal use only • 1Q15 operating groups’ contribution1 down on pcp (1Q14) and prior quarter (4Q14) • Annuity-style businesses2 broadly in line with both the pcp and prior quarter • Capital markets facing businesses3 down on pcp and prior quarter due to the timing of trans
Slide 28: Annuity-Style Businesses 1Q15 Update
Annuity-Style Businesses For personal use only 1Q15 Update Macquarie • AUM decreased 4.6% to $A405.1b in 1Q15, predominantly driven by the partial transfer of Delaware Equities Focus Global Growth Funds Group assets on completion of the Jackson Square Partners joint venture • 1Q15 performance fees o
Slide 29: Macquarie Private Wealth Enforceable Undertaking update
Macquarie Private Wealth Enforceable Undertaking update For personal use only Background • MPW is primarily a retail broking and equities advice business within Banking and Financial Services − 87,000 clients1 of whom a significant number are high net worth − Over 85% of assets under advice relate t
Slide 30: Macquarie Private Wealth Enforceable Undertaking update
Macquarie Private Wealth Enforceable Undertaking update For personal use only Implementation to date • Implementation on track with three out of four phases now complete • New management team • Together with implementation of FoFA regulatory changes, significant investment being made in new processe
Slide 31: Capital Markets Facing Businesses 1Q15 Update
Capital Markets Facing Businesses For personal use only 1Q15 Update Macquarie • Market conditions were characterised by low volatility and reduced secondary market volumes and client activity, particularly in Asia Securities • Strong Australian ECM activity; No.1 for completed ECM deals in ANZ1 Grou
Slide 32: Funded balance sheet remains strong
Funded balance sheet remains strong For personal use only $Ab 31 March 2013 $Ab 31 March 2014 $Ab 30 June 2014 100 100 100 ST wholesale issued paper 90 90 ST wholesale issued paper 90 (10%) ST wholesale issued paper (6%) (9%) Other debt maturing in the Cash, liquids and self 80 Other debt maturing i
Slide 33: Basel III capital position
Basel III capital position For personal use only • APRA Basel III Group capital of $A12.4b, Group surplus of $A2.0b1 down on Mar 14 surplus of $A2.7b • Strong Bank Group APRA Basel III CET1 ratio – Common Equity Tier 1: 9.5%; Tier 1: 10.5%2 $Ab 5.0 Group regulatory surplus: Basel III (Jun 14) 4.0 (0
Slide 34: FY15 Outlook
For personal use only FY15 Outlook Nicholas Moore Managing Director and Chief Executive Officer
Slide 35: Short term outlook
Short term outlook For personal use only • Summarised below are the outlook statements for each Operating Group • FY15 results will vary with market conditions, particularly the capital markets facing businesses Net profit contribution FY07–FY14 FY07–FY14 FY15 outlook as announced Update to Operatin
Slide 36: Short term outlook
Short term outlook For personal use only • While the impact of future market conditions makes forecasting difficult, we continue to expect that the FY15 combined net profit contribution1 from operating groups will be up on FY14, broadly offsetting the FY14 realised gain relating to the SYD distribut
Slide 37: Medium term
Medium term For personal use only • Macquarie remains well positioned to deliver superior performance in the medium term • Deep expertise in major markets • Build on our strength in diversity and continue to adapt our portfolio mix to changing market conditions – Annuity-style income is provided by
Slide 38: Approximate business Basel III Capital & RoE
Approximate business Basel III Capital & RoE For personal use only 1 APRA Basel III Capital Approx. FY14 Return Operating Group @ 8.5% ($Ab) on Ordinary Equity2 Approx. 8-Year Average Annuity-style businesses 5.8 Return on Ordinary Equity2 Macquarie Funds Group 1.9 Corporate and Asset Finance 2.6 20
Slide 39: Formal business
For personal use only Formal business Kevin McCann AM Chairman
Slide 40: Item 1: Financial Statements
Item 1: Financial Statements For personal use only • To consider and receive the Financial Report, the Directors’ Report and the Auditor’s Report of Macquarie for the financial year ended 31 March 2014 PAGE 40
Slide 41: Item 2: Re-election of Mr HK McCann as a Voting Director
Item 2: Re-election of Mr HK McCann as a Voting Director For personal use only • To consider and, if thought fit, pass the following as an ordinary resolution: – That Mr HK McCann be re-elected as a Voting Director of Macquarie PAGE 41
Slide 42: Item 3: Re-election of Ms DJ Grady as a Voting Director
Item 3: Re-election of Ms DJ Grady as a Voting Director For personal use only • To consider and, if thought fit, pass the following as an ordinary resolution: – That Ms DJ Grady be re-elected as a Voting Director of Macquarie PAGE 42
Slide 43: Item 4: Election of Mr GR Banks as a Voting Director
Item 4: Election of Mr GR Banks as a Voting Director For personal use only • To consider and, if thought fit, pass the following as an ordinary resolution: – That Mr GR Banks, having been appointed as a Voting Director since the last general meeting, be elected as a Voting Director of Macquarie PAGE
Slide 44: Item 5: Election of Mrs PA Cross as a Voting Director
Item 5: Election of Mrs PA Cross as a Voting Director For personal use only • To consider and, if thought fit, pass the following as an ordinary resolution: – That Mrs PA Cross, having been appointed as a Voting Director since the last general meeting, be elected as a Voting Director of Macquarie PA
Slide 45: Item 6: Election of Ms NM Wakefield Evans as a Voting Director
Item 6: Election of Ms NM Wakefield Evans as a Voting Director For personal use only • To consider and, if thought fit, pass the following as an ordinary resolution: – That Ms NM Wakefield Evans, having been appointed as a Voting Director since the last general meeting, be elected as a Voting Direct
Slide 46: Item 7: Remuneration Report
Item 7: Remuneration Report For personal use only • 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 2014 PAGE 46
Slide 47: 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 managing risk Attract a
Slide 48: Strong business results while appropriately managing remuneration
Strong business results while appropriately managing remuneration For personal use only FY14 FY13 % Change Performance measures NPAT $Am 1,265 851 49 Basic EPS Cents per share 383.6 251.2 53 Ordinary dividends Cents per share 260.0 200.0 30 Total dividends(1) Cents per share 376.0 200.0 88 Annual TS
Slide 49: Key features of Macquarie's remuneration system
Key features of Macquarie’s remuneration system1 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 60% dependent on 70% for the Managing Director 40-70% share deferred certain
Slide 50: Item 8: Approval of Executive Voting Director's participation in MEREP
Item 8: Approval of Executive Voting Director’s participation in the Macquarie Group Employee Retained Equity Plan (MEREP) For personal use only • 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 51: Appendix
For personal use only Appendix
Slide 52: 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 53: Glossary
For personal use only Glossary
Slide 54: Glossary
Glossary For personal use only $A Australian Dollar CAF Corporate and Asset Finance 1H14 Half Year ended 30 September 2013 CCB Capital Conservation Buffer 1Q14 First Quarter ended 30 June 2013 CEO Chief Executive Officer 1Q15 First Quarter ended 30 June 2014 CET1 Common Equity Tier 1 2H14 Half Year
Slide 55: Glossary
Glossary For personal use only FY07 Financial Year ended 31 March 2007 OECD Organisation for Economic Co-operation and Development FY09 Financial Year ended 31 March 2009 P&L Profit and Loss Statement FY13 Financial Year ended 31 March 2013 Pcp Prior Corresponding Period FY14 Financial Year ended 31
Slide 56: Macquarie Group Limited 2014 Annual General Meeting
For personal use only Macquarie Group Limited 2014 Annual General Meeting 24 July 2014