Macquarie Group, Ltd. · ASX:MQG
Macquarie — H1 2020 Earnings Presentation
73 slides from Macquarie's earnings presentation, Nov 1, 2019
Slide 1: Presentation to investors and analysts
Presentation to investors and analysts Result announcement for the half-year ended 30 September 2019 1 November 2019 © MACQUARIE 2019
Slide 2: Disclaimer
Macquarie I 1H20 result announcement I macquarie.com 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 present
Slide 3: Agenda
Agenda 01 Introduction 02 Overview of Result 03 Result Analysis and Financial Management 04 Outlook 05 Appendices © MACQUARIE 2019
Slide 4: Introduction
01 Introduction Sam Dobson Head of Investor Relations © MACQUARIE 2019
Slide 5: Overview of Result
02 Overview of Result Shemara Wikramanayake Managing Director and Chief Executive Officer © MACQUARIE 2019
Slide 6: About Macquarie
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices About Macquarie Annuity-style activities Markets-facing activities Annuity-style Net Profit Contribution ~60% Markets-facing Net Profit Contribution ~40% M
Slide 7: 1H20 result: $A1,457m up 11% on 1H19; down 13% on 2H19
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 1H20 result: $A1,457m up 11% on 1H19; down 13% on 2H19 1H20 2H19 1H19 1H20 v 1H20 v $Am $Am $Am 1H19 2H19 Net operating income 6,320 6,924 5,830 8% 9% Tota
Slide 8: 1H20 net profit contribution from Operating Groups
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 1H20 net profit contribution from Operating Groups $A2,868m up 10% on 1H19; down 19% on 2H19 ANNUITY-STYLE ▲15% MARKETS-FACING ▲4% ACTIVITIES ON 1H19 ACTIV
Slide 9: Financial performance
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Financial performance Operating income Profit $Am $Am 8,000 1H20 OPERATING INCOME 1H20 PROFIT 2,000 $A6,320m $A1,457m 7,000 1,500 6,000 ▲8 % ▲11 % ON 1H19
Slide 10: Assets under management of $A563.4b
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Assets under management of $A563.4b1 AUM increased 2% from $A551.3b at 31 Mar 19 Increase largely due to foreign exchange impacts, investments made by MIRA
Slide 11: Diversification by region
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversification by region International income 69% of total income1 Total staff2 15,704; international staff 58% of total Americas EMEA Asia Australia3 30%
Slide 12: Diversification by region
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversification by region 69% of total income1 in 1H20 was generated offshore A 10% movement2 in AUD is estimated to have approximately a 7% impact on NPAT
Slide 13: Macquarie Asset Management
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset Management MACQUARIE INFRASTRUCTURE MACQUARIE INVESTMENT ▲22% AND REAL ASSETS (MIRA) MANAGEMENT (MIM) OPERATING INCOME ON 1H19 • $A134.4b i
Slide 14: Banking and Financial Services
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Financial Services PERSONAL BANKING BUSINESS BANKING WEALTH MANAGEMENT ▼3% OPERATING INCOME • Australian mortgage portfolio of $A43.6b, • Busin
Slide 15: Commodities and Global Markets
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and Global Markets SPECIALISED ▲15% AND ASSET COMMODITY MARKETS 62%1 FINANCIAL FUTURES 5%1 EQUITY OPERATING INCOME MARKETS 16%1 MARKETS 4%1 ON
Slide 16: Macquarie Capital
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital ADVISORY AND CAPITAL SOLUTIONS INFRASTRUCTURE AND ENERGY GROUP ▼20% OPERATING INCOME Summary Summary ON 1H19 • Lower debt capital markets
Slide 17: Funded balance sheet remains strong
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funded balance sheet remains strong Term liabilities exceed term assets 31 Mar 19 30 Sep 19 $Ab $Ab 150 150 ST wholesale issued paper 6% ST wholesale issue
Slide 18: Basel III capital position
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Basel III capital position • APRA Basel III Group capital at Sep 19 of $A23.8b; Group capital surplus of $A6.7b 1,2 • APRA Basel III CET1 ratio: 11.4%; Har
Slide 19: Business capital requirements
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Business capital requirements1 1H20 KEY DRIVERS MAM $A3.9b growth • Decreased requirements due to the $Ab sale of Macquarie AirFinance to a newly-formed jo
Slide 20: Strong regulatory ratios
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Strong regulatory ratios Bank Group (Sep 19) 17.5% 7.5% 190.0% 115.0% 14.0% 6.1% 172% 14.0% 6.0% 160.0% 110.0% 111% 5.5% 10.5% 11.4% 4.5% 130.0% 105.0% 7.0
Slide 21: Interim dividend
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Interim dividend 1H20 ORDINARY DIVIDEND FROM FROM $A2.50 (40% franked) ▲$A2.15 (45% franked) ▼$A3.60 (45% franked) IN 1H19 IN 2H19 1H20 RECORD DATE 1H20 PA
Slide 22: Result Analysis and Financial Management
03 Result Analysis and Financial Management Alex Harvey Chief Financial Officer © MACQUARIE 2019
Slide 23: Income statement key drivers
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Income statement key drivers 1H20 2H19 1H19 • Net interest and trading income of $A2,417m, up 8% on 1H19 primarily due to increased $Am $Am $Am contributio
Slide 24: Income statement by Operating Group NPC
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Income statement by Operating Group NPC KEY DRIVERS • MAM: Increased performance fees and base fees, partially offset by higher operating expenses • BFS: G
Slide 25: Macquarie Asset Management
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset Management Increased base and performance fees, partially offset by higher operating expenses KEY DRIVERS $Am 1,400 • Base fees up due to:
Slide 26: MAM AUM movement
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices MAM AUM movement Increase due to net investment by MIRA-managed funds; and positive impacts from FX and market movements offset mainly by a reduction in co
Slide 27: MIRA EUM movement
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices MIRA EUM movement Increase of 5% primarily due to new equity raised $Ab 140 0.5 (2.6) 3.0 130 5.6 120 110 134.4 100 127.9 90 80 70 31-Mar-19 Equity Listed
Slide 28: Banking and Financial Services
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Financial Services Growth in BFS deposits, Australian loan portfolio and funds on platform KEY DRIVERS $Am • Higher Personal Banking income dri
Slide 29: Banking and Financial Services
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Financial Services Strong growth across the portfolio $Ab $Ab 100 18 90 16 91.5 16.3 16.0 80 86.0 15.2 82.5 14.7 14 70 72.2 12 60 10 50 56.2 53
Slide 30: Commodities and Global Markets
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and Global Markets Results driven by strong performance in commodities $Am KEY DRIVERS • Increased net interest and trading income: 1,400 Commo
Slide 31: Commodities and Global Markets
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and Global Markets Growing client base Specialised & Asset Client numbers1 Finance portfolio $Ab 1,200 1,500 10.0 1,185 1,476 1,150 1,166 1,168
Slide 32: Macquarie Capital
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital Results driven by lower investment-related income, lower fee and commission income, higher operating expenses and higher credit and other
Slide 33: Macquarie Capital
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital Movement in regulatory capital $Ab 5.0 4.5 1.4 (0.7) 4.0 3.7 3.5 3.0 3.0 2.5 2.0 1.5 1.0 0.5 0.0 31-Mar-19 Investments Realisations 30-Se
Slide 34: Costs of compliance
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Costs of compliance Total compliance spend1 approximately $A270m in 1H20, up 15% on 1H19 1H20 2H19 1H19 • The finance industry continues to see an increase
Slide 35: Balance sheet highlights
Macquarie I 1H20 result announcement I macquarie.com 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 relianc
Slide 36: Diversified issuance strategy
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversified issuance strategy Term funding as at 30 Sep 19 – diversified by currency1, tenor2 and type Currency Tenor Type EUR 7% GBP 6% Securitisations >1
Slide 37: Continued customer deposit growth
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Continued customer deposit growth Macquarie has been successful in pursuing its strategy of diversifying its funding sources by growing its deposit base •
Slide 38: Loan and lease portfolios – funded balance sheet
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Loan and lease portfolios1 – funded balance sheet Sep 19 Mar 19 Operating Group Category $Ab $Ab Description Retail mortgages2 38.8 35.6 Secured by Austral
Slide 39: Equity investments of $A8.5b
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Equity investments of $A8.5b1 Carrying value2 Carrying value2 Sep 19 Mar 19 Category $Ab $Ab Description Macquarie Asset Management 1.9 1.9 Includes Macqua
Slide 40: Regulatory update
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Regulatory update Australia • APRA is currently undertaking regulatory reviews in a number of areas, including: – In Oct 19, APRA released a discussion pap
Slide 41: Regulatory update
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Regulatory update United Kingdom • As previously stated, Macquarie does not believe that the UK’s withdrawal from the European Union (EU) will be a materia
Slide 42: Bank Group Basel III Common Equity Tier 1 (CET1) Ratio
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Bank Group Basel III Common Equity Tier 1 (CET1) Ratio • APRA Basel III CET1 ratio: 11.4%1 • Harmonised Basel III CET1 ratio: 14.0%2 Bank Group Common Equi
Slide 43: Strong liquidity position maintained
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Strong liquidity position maintained • 172% average LCR for Sep 19 quarter, based on daily observations – Maintained well above regulatory minimum – Includ
Slide 44: Capital management update
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Capital management update Capital Issuance • On 28 August 2019 Macquarie announced a $A1.0b non-underwritten institutional placement, in addition to an ass
Slide 45: Outlook
04 Outlook Shemara Wikramanayake Managing Director and Chief Executive Officer © MACQUARIE 2019
Slide 46: Factors impacting short-term outlook
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Factors impacting short-term outlook Annuity-style businesses Markets-facing businesses Non-Banking Group Non-Banking Group Macquarie Asset Management (MAM
Slide 47: Short-term outlook
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Short-term outlook • While the impact of future market conditions makes forecasting difficult, we continue to expect the Group’s result for FY20 to be slig
Slide 48: Medium term
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Medium term • Macquarie remains well-positioned to deliver superior performance in the medium term • Deep expertise in major markets • Build on our strengt
Slide 49: Approximate business Basel III Capital and ROE
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Approximate business Basel III Capital and ROE 30 Sep 19 APRA Basel III Capital1 Approx. 1H20 Return on Approx. 13-year Average @ 8.5% ($Ab) Ordinary Equit
Slide 50: Medium term
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Medium term Annuity-style businesses Markets-facing businesses Non-Banking Group Non-Banking Group Macquarie Asset Management (MAM) Macquarie Capital (MacC
Slide 51: Presentation to investors and analysts
Presentation to investors and analysts Result announcement for the half-year ended 30 September 2019 1 November 2019 © MACQUARIE 2019
Slide 52: A Appendix: Detailed Result Commentary
A Appendix Detailed Result Commentary © MACQUARIE 2019
Slide 53: Macquarie Asset Management
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset Management Result 1H20 2H19 1H19 • Base fees of $A950m, up on 1H19 $Am $Am $Am – Foreign exchange movements and investments made by MIRA-ma
Slide 54: Banking and Financial Services
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Financial Services Result 1H20 2H19 1H19 • Net interest and trading income of $A838m, in line with 1H19 $Am $Am $Am – 14% growth in the average
Slide 55: Commodities and Global Markets
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and Global Markets Result 1H20 2H19 1H19 • Net interest and trading income of $A1,688m, up 24% on 1H19 $Am $Am $Am – Commodities income of $A1,
Slide 56: Macquarie Capital
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital Result 1H20 2H19 1H19 • Fee and commission income of $A415m, down 21% on 1H19 due to lower debt capital markets fee $Am $Am $Am income, d
Slide 57: B Appendix: Additional information – Funding
B Appendix Additional information – Funding © MACQUARIE 2019
Slide 58: Macquarie funding structure
Macquarie I 1H20 result announcement I macquarie.com 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 liqui
Slide 59: Funded balance sheet reconciliation
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funded balance sheet reconciliation • Macquarie’s statement of financial position is prepared based on generally accepted accounting principles which do no
Slide 60: Funding for Macquarie
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funding for Macquarie Sep 19 Mar 19 Sep 18 • Well diversified funding sources $Ab $Ab $Ab Funding sources • Minimal reliance on short-term wholesale fundin
Slide 61: Funding for the Bank Group
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funding for the Bank Group Sep 19 Mar 19 Sep 18 $Ab $Ab $Ab • Bank balance sheet remains liquid and well capitalised, with a diverse Funding sources range
Slide 62: Funding for the Non-Bank Group
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funding for the Non-Bank Group Sep 19 Mar 19 Sep 18 $Ab $Ab $Ab • Non-Bank Group is predominantly term funded Funding sources Net trade (debtors)/creditors
Slide 63: Explanation of funded balance sheet reconciling items
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Explanation of funded balance sheet reconciling items • Self-funded trading assets: Macquarie enters into stock borrowing and lending as well as repurchase
Slide 64: Conservative long standing liquidity risk management framework
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Conservative long standing liquidity risk management framework Liquidity Policy • The key requirement of MGL and MBL’s liquidity policy is that the entitie
Slide 65: C Appendix: Additional information – Capital
C Appendix Additional information – Capital © MACQUARIE 2019
Slide 66: Macquarie Basel III regulatory capital
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Basel III regulatory capital Surplus calculation Harmonised APRA Basel III Basel III 30 Sep 19 $Am $Am Macquarie eligible capital Bank Group Gros
Slide 67: Macquarie APRA Basel III regulatory capital
Macquarie I 1H20 result announcement I macquarie.com 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 30 Sep 19 $Am $Am $Am Credi
Slide 68: Macquarie regulatory capital
Macquarie I 1H20 result announcement I macquarie.com 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 pr
Slide 69: Macquarie regulatory capital
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie regulatory capital Non-Bank Group contribution Capital Assets Requirement Equivalent Risk 30 Sep 19 $Ab $Am Weight Funded assets Cash and liquid
Slide 70: D Appendix: Glossary
D Appendix Glossary © MACQUARIE 2019
Slide 71: Glossary
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Glossary $A / AUD Australian Dollar CGM Commodities and Global Markets $US / USD United States Dollar CLF Committed Liquid Facility £ / GBP Pound Sterling
Slide 72: Glossary
Macquarie I 1H20 result announcement I macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Glossary GIG Green Investment Group MIRA Macquarie Infrastructure and Real Assets GLL GLL Real Estate Partners MREI Macquarie Real Estate Investments IPO I
Slide 73: Presentation to investors and analysts
Presentation to investors and analysts Result announcement for the half-year ended 30 September 2019 1 November 2019 © MACQUARIE 2019