Macquarie Group, Ltd. · ASX:MQG
Macquarie — Shareholder Meeting (July 2010)
57 slides from Macquarie's shareholder meeting presentation, Jul 30, 2010
Slide 1: Macquarie Group Limited 2010 Annual General Meeting
For personal use only Macquarie Group Limited 2010 Annual General Meeting 30 July 2010
Slide 2: Chairman's address: Kevin McCann AM
For personal use only Macquarie Group Limited 2010 Annual General Meeting 30 July 2010 Kevin McCann AM, Lead Independent Director
Slide 3: Global financial market conditions
For personal use only Global financial market conditions This time last year, we reflected on 12 months of extreme financial shocks All major financial markets were affected During FY10 there was a general improvement in market conditions and overall sentiment However, the markets have been
Slide 4: Overall improvement in market conditions
For personal use only Overall improvement in market conditions PURCHASING MANAGERS INDEX1 MUTUAL FUNDS FLOW2 Index Index $USb $USb Net cash flow into long term stock US mutual funds (3m average) LHS S&P 500 (RHS) 1. PMI: An index of monthly manufacturing activity. Source: --US: ISM, --EU/UK: Markit.
Slide 5: Overall improvement in market conditions
For personal use only Overall improvement in market conditions CONSUMER CONFIDENCE1 GDP3 Deviations from trend Deviations from trend GDP growth (%)2 GDP growth (%)2 1.Consumer confidence: An index based on a survey of households measuring optimism versus pessimism. Source: Aus: Westpac M.I. US: Conf
Slide 6: Confidence returned in FY10
For personal use only Confidence returned in FY10 Bps US Credit Spreads (over 10yr Treasuries) Bps 2,000 2,000 AAA spread 1,600 1,600 BAA spread High yield spread 1,200 1,200 800 800 400 400 0 0 Jan 02 02 Jan Feb 04 Fe 04 Mar06 Mar 06 AprApr 08 08 Mar 10 Source: Datastream March 2010 6
Slide 7: Our financial performance reflected improved FY10 market conditions
For personal use only Our financial performance reflected improved FY10 market conditions $Am FY10 operating income of $A6,638m $Am FY10 profit of $A1,050m 4,000 20% increase on FY09 800 21% increase on FY09 2,000 400 0 0 2H08 1H09 2H09 1H10 2H10 2H08 1H09 2H09 1H10 2H10 $A $A FY10 EPS of $A3.20 FY1
Slide 8: Dividends
For personal use only Dividends FY10 dividend $A1.86 consistent with historic payout ratio 2H10 dividend $A1.00, up from 1H10 dividend of $A0.86 Dividend remains unfranked Dividend reinvestment plan Discount removed Scheme rules have been amended to allow shares to be sourced on-market 8
Slide 9: Macquarie share price continues to track global financials
For personal use only Macquarie share price continues to track global financials 140.00 Macquarie Group MSCI World Diversified Financials 120.00 100.00 Index 80.00 x e d In 60.00 40.00 20.00 0.00 1-Aug-07 Aug -2007 1-Jan-08 Jan -2008 1-Jun-08 Jun -2008 1-Nov-08 Nov -2008 1-Apr-09 Apr -2009 1-Sep-09
Slide 10: Macquarie model – focus over the medium term
For personal use only Macquarie model – focus over the medium term 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 11: Board matters
For personal use only Board matters Appointments Michael Hawker Re-elections David Clarke Catherine Livingstone Peter Warne 11
Slide 12: Macquarie Group Foundation
For personal use only Macquarie Group Foundation $A120 million Total contributions – staff + Macquarie Group Foundation since 1985 1,000+ 19 Community Advisory Committees community organisations involving 350+ Macquarie staff in supported globally over last 25 years community activities around the g
Slide 13: 2010 Annual General Meeting
For personal use only Macquarie Group Limited 2010 Annual General Meeting 30 July 2010
Slide 14: Overview of Result Announcement for the year ended 31 March 2010
For personal use only Macquarie Group Limited Overview of Result Announcement for the year ended 31 March 2010 30 July 2010 Nicholas Moore, Managing Director and Chief Executive Officer
Slide 15: Result reflected improved FY10 market conditions
For personal use only Result reflected improved FY10 market conditions 20% Operating income $A6.64b 21% Net Profit After Tax $A1.05b 3% Earnings Per Share $A3.20 1% Dividend Per Share $A1.86 15
Slide 16: Improved results from all operating businesses
For personal use only Improved results from all operating businesses Group/Division FY10 Operating income FY10 Net Profit contribution (% change on FY09) (% change on FY09) Macquarie Securities Up 10% Up 111% Macquarie Capital Up 11% Up 156% Fixed Income, Currencies Up 43% Up 62% and Commodities Mac
Slide 17: Lower one-off costs, equity losses and provisions
For personal use only Lower one-off costs, equity losses and provisions reflecting improved market conditions 2H10 1H10 FY09 $Am $Am $Am Gains from listed fund initiatives1 125 414 - (MCG, MLE, MAp, MMG, MIG, A-REITs) Liability Management (MIPS, Sub debt) - 182 197 Net Fair Value Adjustment on own d
Slide 18: Diversified by region
For personal use only Diversified by region International income1 52% of total Total staff over 14,6002; international staff 50% of total EUROPE, MIDDLE EAST ASIA AMERICAS & AFRICA3 Income: $A863m (13% of total) Income: $A1,139m (18% of total) Income: $A1,349m (21% of total) Staff: 1,473 Staff: 2,41
Slide 19: Diversification of operating income driven by evolution of the business
For personal use only Diversification of operating income driven by evolution of the business over the last 3 yrs Operating income before writedowns, impairments, equity accounted gains/(losses) and one-off items Institutional and retail 12 months to 31 Mar 07 12 months to 31 Mar 10 cash equities $A
Slide 20: Macquarie Securities
For personal use only Macquarie Securities FY10 Net profit contribution up 111% on FY09 OVER 2,400 STOCKS UNDER RESEARCH COVERAGE 9TH LARGEST GLOBALLY #1 Cash equities Australia, Australian ECM, listed warrants: Australia; Singapore and Korea $A40b1+ Equity capital market raisings Increased market s
Slide 21: Macquarie Capital
For personal use only Macquarie Capital FY10 Net profit contribution up 156% on FY09 448 ADVISORY DEALS, UP 50% DEAL VALUE $121B, DOWN 40% $A40b1+ No.1 for Australian ECM2, Top 3 for HK IPO’s3 ECM Australia ($A24b up 17%); Asia ($US10.2b up 362%); EMEA (€2.7b up 2,716%); US ($US0.4b up from zero); C
Slide 22: Fixed Income, Currencies and Commodities
For personal use only Fixed Income, Currencies and Commodities FY10 Net profit contribution up 62% on FY09 ORGANIC GROWTH CONTINUES US credit Client sales and trading activity established in 2H10 Energy Top 5 North American gas marketer; physical oil; coal Futures Volumes recovering in line with bro
Slide 23: Macquarie Funds
For personal use only Macquarie Funds FY10 Net profit contribution up 111% on FY09 ASSETS UNDER MANAGEMENT $A210B UP 322% ON PRIOR YEAR Fund Performance First quartile for Australian Shares, Listed Property and Australian Cash1, recently voted Australian Fixed Income Manager of the Year2, in the US,
Slide 24: Corporate and Asset Finance
For personal use only Corporate and Asset Finance FY10 Net profit contribution up 300% on FY09 200,000+ CLIENTS UP 30% ON PRIOR YEAR 61% Increase in loan and asset portfolio (60% Australian) $A13.6b Funded assets (loan and lease book) $A1b Ford Credit auto finance portfolio acquired Building for the
Slide 25: Banking and Financial Services
For personal use only Banking and Financial Services FY10 Net profit contribution up 364%1 on FY09 1 MILLION+ CLIENTS GLOBALLY #1 Retail full-service broking Australia 16% Increase in retail deposits $A9.2b CMT/CMA initiative, conversion scheduled to take place on 31 July 2010 Record Canadian mortga
Slide 26: Funded balance sheet remained strong
For personal use only Funded balance sheet remained strong $ Ab 31 March 2009 $ Ab 30 September 2009 $ Ab 31 March 2010 90 90 90 80 80 80 Cash and liquid ST wholesale Short term paper CashCash and liquid Short term paper 70 assets 70 Short term paper CashCash and liquid 70 assets assets Debt Debt ma
Slide 27: Consistently strong capital base
For personal use only Consistently strong capital base Well capitalised: surplus over Group’s minimum regulatory capital requirement of $A4.0b Core equity represents 91% of the Group’s capital base $Ab 12 $A11.8b CPS $A10.2b MIS $A9.3b 10 MIPS Core equity 8 $A7.2b 6 $A4.8b 4 2 0 Mar-06 Mar-07 Ma
Slide 28: 1Q11 Update July 2010
For personal use only Macquarie Group Limited 1Q11 Update 30 July 2010 Nicholas Moore, Managing Director and Chief Executive Officer
Slide 29: Confidence declining in 1Q11
For personal use only Confidence declining in 1Q11 VIX Volatility “Fear” Index Major World Market Indices 1-Apr-10 1-May-10 1-Jun-10 30-Jun-10 1-Apr-10 1-May-10 1-Jun-10 30-Jun-10 Source: Markit, Bloomberg, Macquarie Research, data to 30 Jun 10 29
Slide 30: Lower confidence impacting M&A
For personal use only Lower confidence impacting M&A 1Q11 global investment banking fee pool1 down 32% on pcp, lowest 1Q2 global investment banking fee pool1 since 2004 $USb $USb 160 Australian M&A Activity 400 Asia (ex-Japan) M&A Activity 140 120 300 100 80 200 60 40 100 20 FY07 FY08 FY09 FY10 1Q11
Slide 31: Lower confidence impacting ECM
For personal use only Lower confidence impacting ECM 1Q11 global investment banking fee pool1 down 32% on pcp, lowest 1Q2 global investment banking fee pool1 since 2004 US$b US$b 70 Australian IPO’s and Secondary issues 700 Hong Kong IPO’s and Secondary issues 60 600 50 500 40 400 30 300 20 200 10 1
Slide 32: Lower confidence impacting credit markets
For personal use only Lower confidence impacting credit markets 1Q11 global investment banking fee pool1 down 32% on pcp, lowest 1Q2 global investment banking fee pool1 since 2004 US Corporate Bond Credit Spreads US Investment Grade Corporate (over 10yr Treasuries) Bond Issuance3 bps bps $USb 1200 F
Slide 33: Lower confidence impacting retail broking
For personal use only Lower confidence impacting retail broking Jun-10 retail broking value down 21% on Jun-09 and down 51% from peak in Jun-07, Jun-10 lowest June broking value since 2005 Annual Australian retail broking value1 Value Traded June Australian retail broking value1 Value Traded $Ab $Ab
Slide 34: 1Q11 Macquarie update
For personal use only 1Q11 Macquarie update Despite a significant reduction in the levels of market activity and increased client uncertainty during the quarter, 1Q11 earnings ahead of subdued 1Q10 1Q11 Group Contributions – Macquarie Securities; – Corporate and Asset Finance; – Macquarie Capital;
Slide 35: 1Q11 Maintaining market share in a difficult environment
For personal use only 1Q11 Maintaining market share in a difficult environment Macquarie Securities Macquarie Capital Fixed Income, Macquarie Funds Corporate & Asset Banking and Financial Currencies Finance Services and Commodities Cash Advisory & ECM Energy Volumes Australia Loan and asset portfoli
Slide 36: Assets under management of $A343b
For personal use only Assets under management of $A343b Increase in AUM since 31 March 10 driven by FX impact Pro-forma AUM includes impact of CMT/CMA transfer ($A9.8b at June 10) $Ab 400 Banking and Financial Services 2 350 Macquarie Funds Group $A343b $A333b1 $A326b Real Estate 300 Macquarie C
Slide 37: Funded balance sheet remains strong
For personal use only Funded balance sheet remains strong $Ab 31 March 2010 $Ab 30 June 2010 $Ab 30 June 10 Pro-forma1 90 90 90 Impact of CMT/CMA initiative Short Term Paper Cash and liquid Debt maturing Debt maturing assets 80 80 80 << 11 year year Short Term Paper Short Term Paper Cash and liquid
Slide 38: Group capital surplus of $A3.1b
For personal use only Group capital surplus of $A3.1b Group capital of $A11.8b as at 30 June 10, a $A3.1b buffer of capital in excess of the Group’s minimum regulatory capital requirements. Capital has been deployed across the Group to support business growth. Strong Banking Group capital rati
Slide 39: Outlook July 2010
For personal use only Macquarie Group Limited Outlook 30 July 2010 Nicholas Moore, Managing Director and Chief Executive Officer
Slide 40: Global Markets: some reasons why confidence may return
For personal use only Global Markets Some reasons why confidence may return World GDP growth forecasts1 of 4 to 4.5%, most growth coming from Asia-Pacific region Most recent corporate earnings beat market expectations Global investors have reverted to a very conservative risk profile Substan
Slide 41: Short term outlook update
For personal use only Short term outlook update As foreshadowed, uncertain market conditions make short-term forecasting very difficult Market conditions are significantly impacting activity levels in Macquarie Securities, Macquarie Capital and Fixed Income, Currencies and Commodities. According
Slide 42: Medium Term Outlook
For personal use only Medium Term Outlook Our businesses are increasingly well positioned to benefit from future growth Deep expertise in major markets – We have significant expertise in key products in all major markets – Continued investment in our people and our businesses enables us to expan
Slide 43: 2010 Annual General Meeting
For personal use only Macquarie Group Limited 2010 Annual General Meeting 30 July 2010
Slide 44: Item 6: Remuneration Report
For personal use only Macquarie Group Limited 2010 Annual General Meeting 30 July 2010 Item 6: Remuneration Report
Slide 45: Remuneration policy
For personal use only Remuneration policy Key elements of Macquarie’s remuneration framework: Aligning the interests of staff and shareholders Driving long-term shareholder returns Attracting and retaining high quality people 45
Slide 46: Remuneration approach: shareholder return drivers
For personal use only MacquarieÛs remuneration approach Ó shareholder return drivers NPAT and ROE are known to be drivers of shareholder returns over the long-term The size of the annual profit share pool is determined by reference to Macquarie’s NPAT and its earnings over and above the estimate
Slide 47: Remuneration approach: performance based
For personal use only MacquarieÛs remuneration approach Ó performance based Individual employee remuneration is based on performance: – Performance is primarily, but not exclusively, assessed based on relative contributions to profits (not revenue) while taking into account capital usage – Other q
Slide 48: Remuneration approach: equity and retention
For personal use only MacquarieÛs remuneration approach Ó equity and retention Current performance based remuneration arrangements from 2010: Key Area Executive Committee Members Other Executive Directors and Designated Executive Directors Amount of profit 50% (55% for the Managing 40% of annual p
Slide 49: Remuneration approach: Performance Share Units (PSUs)
For personal use only MacquarieÛs remuneration approach Ó Performance Share Units (PSUs) In place of options grants, Executive Committee members now receive share units to which performance hurdles are attached PSUs will vest in 3 tranches after 2, 3 and 4 years PSUs will become exercisable up
Slide 50: Remuneration approach is delivering results: long-term performance
For personal use only Remuneration approach is delivering results Ó long-term performance Macquarie’s 10 year NPAT Macquarie’s 10 year average ROE of 21.4% is higher CAGR is equal to or better than its international peers 1 than our peers: 10 year ROE Macquarie versus peers: 1 1. Peers compris
Slide 51: Remuneration approach managed through strong governance processes
For personal use only Remuneration approach managed through strong governance processes The Board provides careful oversight of Macquarie’s remuneration approach, supported by the Board Remuneration Committee (BRC) 2010 remuneration decisions reflect the Board’s evaluation of performance during
Slide 52: 2010 Annual General Meeting
For personal use only Macquarie Group Limited 2010 Annual General Meeting 30 July 2010
Slide 53: Glossary July 2010
For personal use only Macquarie Group Limited Glossary 30 July 2010
Slide 54: Glossary
For personal use only Glossary $A Australian Dollar approx Approximately $C Canadian Dollar A-REIT Australian Real Estate Investment Trusts $US United States Dollar ASX Australian Securities Exchange € Euro AUD Australian Dollar 1H First Half AUM Assets Under Management 1H09 Half Year ended 30 Septe
Slide 55: Glossary
For personal use only Glossary CY09 Calendar Year 2009 FY09 Financial Year ended 31 March 2009 CY10 Calendar Year 2010 FY10 Financial Year ended 31 March 2010 DCM Debt Capital Markets GDP Gross Domestic Profit DPS Dividend Per Share GMAC General Motors Acceptance Corporation ECM Equity Capital Marke
Slide 56: Glossary
For personal use only Glossary MIS Macquarie Income Securities ST Short Term MPW Macquarie Private Wealth UK United Kingdom MSCI Morgan Stanley Capital International US United States of America MSG Macquarie Securities Group USD United States Dollar No. Number VIX Chicago Board Options Exchange Vola
Slide 57: Macquarie Group Limited 2010 Annual General Meeting
For personal use only Macquarie Group Limited 2010 Annual General Meeting 30 July 2010