Macquarie Group, Ltd. · ASX:MQG
Macquarie — Debt Investor Presentation (November 2022)
67 slides from Macquarie's debt investor presentation, November 2022
Slide 1: Macquarie Group Limited: Presentation to debt investors
Macquarie Group Limited Presentation to debt investors November 2022 11
Slide 2: Disclaimer
Disclaimer This information has been prepared on a strictly confidential basis by Macquarie Group Limited ABN 94 122 169 279 (“Macquarie”) and is general background information about Macquarie’s (MGL and its subsidiaries) activities current as at the date of this presentation. This information is gi
Slide 3: Agenda
Agenda 01 Overview 02 MGL results for 03 Outlook the half year ended 30 September 2022 04 Funding and 05 Appendices Capital 33
Slide 4: Overview
01 Overview Presentation to debt investors November 2022 4
Slide 5: Introduction to Macquarie
Overview Result Analysis Outlook Capital and Funding Appendices Introduction to Macquarie Global diversified financial group providing clients with asset management and finance, banking, advisory and risk and capital solutions across debt, equity and commodities Macquarie Group Overview Global prese
Slide 6: About Macquarie
Overview Result Analysis Outlook Capital and Funding Appendices About Macquarie Annuity-style activities | Net Profit Contribution ~50% Markets-facing activities | Net Profit Contribution ~50% BFS MAM CGM MacCap Banking and Financial Services Macquarie Asset Management Commodities and Global Markets
Slide 7: Macquarie funding structure
Overview Result Analysis Outlook Capital and Funding 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 to the Bank Group1 • MGL prov
Slide 8: Diversification by region
Overview Result Analysis Outlook Capital and Funding Appendices Diversification by region International income 72% of total income1 Total staff2 19,266 of which 53% international. A further ~238,000 people employed across managed fund assets and investments3 Americas EMEA Asia Australia4 38% 24% 10%
Slide 9: 50+ years of profitability
Overview Result Analysis Outlook Capital and Funding Appendices 50+ years of profitability 2.0 $Am Hill Samuel UK opens 1.6 branch office in Sydney 1.2 Currency Recession Crisis 0.8 0.4 - 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Global real Hills Motorway Mortgage securitisation 100 $A
Slide 10: Macquarie's approach to risk management
Overview Result Analysis Outlook Capital and Funding Appendices Macquarie’s approach to risk management Strong focus on business accountability and risk ownership Stable and robust core risk management principles Our approach is consistent with the ‘three lines of defence’ model with clear accountab
Slide 11: Stable earnings: earnings volatility relative to Macquarie
Overview Result Analysis Outlook Capital and Funding Appendices Stable earnings 5 year earnings volatility relative to Macquarie 15 year earnings volatility relative to Macquarie (includes GFC) Multiple to Macquarie Multiple to Macquarie 4.0 3.9 x 4.0 3.5 3.0 2.5 x 2.5 2.1 x 2.1 x 2.0 1.8 x 2.0 1.7
Slide 12: Environmental, Social and Governance (ESG)
Overview Result Analysis Outlook Capital and Funding Appendices Environmental, Social and Governance (ESG) Macquarie’s ESG commitment reflects our responsibility to clients, shareholders, communities, our people and the environment in which we operate Environmental Social Governance ● Aligning activ
Slide 13: Overview Result Analysis Outlook
Overview Result Analysis Outlook Capital and Funding Appendices 13
Slide 14: Our commitment to net zero
Overview Result Analysis Outlook Capital and Funding Appendices Our commitment to net zero Macquarie committed to align our financing activities with the global goal of net zero by 2050 and we are on track to release our first Net Zero Plan by the end of 2022 01 We have been working on understanding
Slide 15: We are supporting climate solutions across the world
Overview Result Analysis Outlook Capital and Funding Appendices We are supporting climate solutions across the world Highlights of recent activities Confirmed plans to support £12+ billion of sustainable Secured leasing rights to develop a infrastructure investment across the UK 2 GW Scottish offsho
Slide 16: Macquarie Asset Management
Overview Result Analysis Outlook Capital and Funding Appendices Macquarie Asset Awards & Private Markets Management rankings $A274.9b 16% on Mar 22 $A22.5b $A30.1b Assets under management1 Equity raised9 Equity to deploy9 Actively manages funds for investors across multiple asset classes #1 Infrastr
Slide 17: MAM AUM movement
Overview Result Analysis Outlook Capital and Funding Appendices MAM AUM movement Increase due to investments made by Private Markets-managed funds and foreign exchange movements, partially offset by market movements in Public Investments $Ab Private Markets 36.9 Public Investments (14.4) 22.8 7.9 12
Slide 18: Banking and Financial Services
Overview Result Analysis Outlook Capital and Funding Appendices Banking and Awards Financial Services Personal Banking Wealth management Macquarie’s retail banking and $A101.0b 13% on Mar 22 $A111.4b on Mar 6% 22 financial services business Home loan portfolio Funds on platform Home loan growth driv
Slide 19: Banking and Financial Services
Overview Result Analysis Outlook Capital and Funding Appendices Banking and Financial Services Strong growth in Home loans and Deposits, Funds on Platform impacted by market movements $Ab $Ab 31 Mar 20 31 Mar 21 31 Mar 22 30 Sep 22 Note: Data based on spot volumes at period end. © Macquarie Group Li
Slide 20: Home loan portfolio composition
Overview Result Analysis Outlook Capital and Funding Appendices Home loan portfolio composition 0% NT 0.2% 1% 1% 3% 100% 2% 3% 90% 3% QLD 20% 20% WA 18.0% 80% 28% 5.3% 70% 16% 18% 60% 24% NSW 50% 23% 25% 40.9% 40% 30% ACT 20% 38% 42% 2.6% 33% 10% SA 0% Sep-22 (Settlement Flow) Sep-22 (Portfolio Orig
Slide 21: Commodities and Global Markets
Overview Result Analysis Outlook Capital and Funding Appendices Commodities and Awards & Asset Finance Financial Markets Global Markets rankings $A5.7b portfolio down 5% from Foreign exchange, interest rates and $A6.0b at 31 Mar 22 credit CGM is a global business offering capital and • Increased cli
Slide 22: CGM strong underlying client business
Overview Result Analysis Outlook Capital and Funding Appendices CGM strong underlying client business Majority of income derived from underlying Client numbers2 client business (excl. Asset Finance) Operating Income (excl. credit and other impairment charges) Regulatory capital (normalised)3 Underly
Slide 23: Macquarie Capital
Overview Result Analysis Outlook Capital and Funding Appendices Summary Macquarie Capital Awards & Notable deals included: rankings Maintained a leading market position Joint lead manager, underwriter and Advises and invests alongside clients and in ANZ across M&A in 20226 No. 1 in ANZ bookrunner on
Slide 24: Macquarie Capital: Movement in capital
Overview Result Analysis Outlook Capital and Funding Appendices Macquarie Capital Movement in capital $Ab $A0.9b ($A0.6b) $A0.2b $A4.1b $A3.6b Note: All sectors excluding Debt are substantially equity investments. © Macquarie Group Limited 24
Slide 25: MGL results for the half year ended 30 September 2022
MGL results for the half year ended 30 September 2022 Presentation to debt investors November 2022 25
Slide 26: 1H23 net profit contribution from Operating Groups up 15% on 1H22
Overview Result Analysis Outlook Capital and Funding Appendices 1H23 net profit contribution from Operating Groups $A4,573m up 15% on 1H22 Annuity-style activities Markets-facing activities $A2,281m flat 35% ON 1H22 $A2,292m ON 1H22 Non-Banking Group Macquarie Asset Management (MAM) Macquarie Capi
Slide 27: 1H23 net profit contribution from Operating Groups down 17% on 2H22
Overview Result Analysis Outlook Capital and Funding Appendices 1H23 net profit contribution from Operating Groups $A4,573m down 17% on 2H22 Annuity-style activities Markets-facing activities $A2,281m 15% 18% ON 2H22 $A2,292m ON 2H22 Non-Banking Group Macquarie Asset Management (MAM) Macquarie Cap
Slide 28: 1H23 result: $A2,305m up 13% on 1H22
Overview Result Analysis Outlook Capital and Funding Appendices 1H23 result: $A2,305m up 13% on 1H22; down 13% on 2H22 1H23 2H22 1H22 1H23 v 1H23 v $Am $Am $Am 1H22 2H22 Net operating income 8,641 9,520 7,804 11% 9% Total operating expenses (5,613) (5,716) (5,069) 11% 2% Operating profit bef
Slide 29: Financial performance
Overview Result Analysis Outlook Capital and Funding Appendices Financial performance Operating income 1H23 Profit 1H23 $Am $A8,641m $Am $A2,305m 11% 13% ON 1H22 ON 1H22 9% 13% ON 2H22 ON 2H22 EPS 1H23 DPS 1H23 $A $A6.03 $A $A3.00 7% 10% ON 1H22 ON 1H22 15% 14% ON 2H22 ON 2H22 © Macq
Slide 30: Outlook
Outlook Presentation to debt investors November 2022 30
Slide 31: Short-term outlook
Overview Result Analysis Outlook Capital and Funding 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) • Base fees expected to be broadly in line, with ra
Slide 32: Short-term outlook
Overview Result Analysis Outlook Capital and Funding Appendices Short-term outlook The range of factors that may influence our short-term outlook include: • Market conditions including: global economic conditions, inflation and interest rates, significant volatility events, and the impact of geopoli
Slide 33: Medium-term outlook
Overview Result Analysis Outlook Capital and Funding Appendices Medium-term outlook Annuity-style businesses Markets-facing businesses Non-Banking Group Macquarie Asset Management (MAM) Macquarie Capital (MacCap) ▪ Global specialist asset manager, well-positioned to respond to current market conditi
Slide 34: Medium-term outlook
Overview Result Analysis Outlook Capital and Funding 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 to adapt our portfolio mix
Slide 35: Capital and Funding
Capital and Funding Presentation to debt investors November 2022 35
Slide 36: Strong regulatory ratios
Overview Result Analysis Outlook Capital and Funding Appendices Strong regulatory ratios Bank Group Level 2 Ratios (Sep 22) 2 1 Bank Group Bank Group (Harmonised4) (APRA) Basel lll minimum5 1. Average LCR for Sep 22 quarter is based on an average of daily observations and excludes CLF allocation (18
Slide 37: Basel III capital position
Overview Result Analysis Outlook Capital and Funding Appendices Basel III capital position • APRA Basel III Group capital at Sep 22 of $A37.2b; Group capital surplus of $A12.2b1,2 • APRA Basel III Level 2 CET1 ratio at Sep 22: 12.8%; Harmonised Basel III Level 2 CET1 ratio: 15.9% Group regulatory su
Slide 38: Business capital requirements
Overview Result Analysis Outlook Capital and Funding Appendices 1H23 Key drivers Business capital requirements1 MAM 1H23 business capital requirement growth of $A0.6b excluding FX movements • Growth in MAM balance sheet usage from new fund co-investments and $Ab underwrites to seed core and adjacent
Slide 39: Funded balance sheet remains strong
Overview Result Analysis Outlook Capital and Funding Appendices Funded balance sheet remains strong Term liabilities exceed term assets 31 Mar 22 30 Sep 22 $Ab $Ab ST wholesale issued paper 13% Total customer deposits7 Other debt maturing in the next 12 months1 6% Cash and liquid assets3 33% $A122.0
Slide 40: Diversified issuance strategy
Overview Result Analysis Outlook Capital and Funding Appendices Diversified issuance strategy Term funding as at 30 Sep 22 – diversified by currency1, tenor2 and type Currency Tenor Type 5.0 years WAM6 of Term funding excluding TFF (4.7 years including TFF) 4 Term Issuance and Maturity Profile 6 $Ab
Slide 41: Balance sheet highlights
Overview Result Analysis Outlook Capital and Funding Appendices Balance sheet highlights • Balance sheet remains solid and conservative – Term assets covered by term funding, stable deposits, hybrids and equity – Short-term wholesale funding covered by cash, liquids and other short-term assets • Tot
Slide 42: Continued customer deposit growth
Overview Result Analysis Outlook Capital and Funding 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 more than 1.7 million BFS clients, ~986,000 are depositors • Further diver
Slide 43: Current credit ratings
Overview Result Analysis Outlook Capital and Funding Appendices Current credit ratings Macquarie Bank Limited Macquarie Group Limited Long- Long-term Short- Long- Long- Short- term rating term term term term rating outlook rating rating rating rating outlook S&P A+ Stable A-1 BBB+ Stable A-2 Moody’s
Slide 44: Appendix A: General Appendices
Appendix A: General Appendices Presentation to debt investors November 2022 44
Slide 45: Macquarie Asset Management
Overview Result Analysis Outlook Capital and Funding Appendices Macquarie Asset Management Key drivers • Base fees broadly in line due to: – Fund raising and investments made by Private Higher investment-related and other income due to asset realisations Markets-managed funds and mandates, Public In
Slide 46: Banking and Financial Services
Overview Result Analysis Outlook Capital and Funding Appendices Banking and Financial Services Key drivers • Higher Personal Banking income driven by above Growth in the loan portfolio and total BFS deposits, together system growth of 30% in average home loan volumes2, albeit volumes slowing over th
Slide 47: Commodities and Global Markets
Overview Result Analysis Outlook Capital and Funding Appendices Key drivers Commodities and Global Markets • Commodities up on 1H22 – Increased Risk Management revenue across platform particularly in Gas and Power businesses, Resources Strong underlying client business; well diversified across and G
Slide 48: Macquarie Capital
Overview Result Analysis Outlook Capital and Funding Appendices Macquarie Capital Key drivers • Lower fee and commission income primarily driven by: Lower fee and commission income and higher operating – Lower capital markets fee income, which decreased 51% compared to the prior corresponding period
Slide 49: Approximate business Basel III Capital and ROE
Overview Result Analysis Outlook Capital and Funding Appendices Approximate business Basel III Capital and ROE 30 Sep 22 APRA Basel III Capital Approx. 1H23 Return on Approx. 16-year Average Operating Group @ 8.5% ($Ab) Ordinary Equity1 Return on Ordinary Equity2 Annuity-style businesses 10.9 Macqua
Slide 50: Regulatory update
Overview Result Analysis Outlook Capital and Funding Appendices Regulatory update Australia APRA has finalised or is in the process of implementing changes to a number of prudential standards1. Macquarie notes the following key updates: • APRA finalised its new bank capital framework, designed to em
Slide 51: Macquarie Bank Limited Board update
Overview Result Analysis Outlook Capital and Funding Appendices Macquarie Bank Limited Board update Enhancing Macquarie Bank Limited’s (MBL) governance, culture and structure ● Macquarie has been working with APRA to strengthen the voice of MBL within the Group, and making good progress on a compreh
Slide 52: Macquarie's ESG initiatives and standards
Overview Result Analysis Outlook Capital and Funding Appendices Macquarie’s ESG initiatives and standards Macquarie joined the Net-Zero Formal supporter since 2019. Net Zero Banking Alliance in October 2021 MAM joined the Net Zero Asset Commitments Managers initiative in March 2021 Macquarie joined
Slide 53: Appendix B: Funding and Liquidity
Appendix B: Funding and Liquidity Presentation to debt investors November 2022 53
Slide 54: Funded balance sheet reconciliation
Overview Result Analysis Outlook Capital and Funding 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 from the statement of financial
Slide 55: Funding for Macquarie
Overview Result Analysis Outlook Capital and Funding Appendices Funding for Macquarie Sep 22 Mar 22 Sep 21 • Well diversified funding sources $Ab $Ab $Ab • Term assets covered by term funding, stable deposits, hybrids Funding sources and equity Certificates of deposit 1.2 0.7 0.4 • Short-term wholes
Slide 56: Funding for the Bank Group
Overview Result Analysis Outlook Capital and Funding Appendices Funding for the Bank Group Sep 22 Mar 22 Sep 21 • Bank balance sheet remains liquid and well capitalised, with $Ab $Ab $Ab a diverse range of funding sources Funding sources Certificates of deposit 1.2 0.7 0.4 • Term funding beyond one
Slide 57: Funding for the Non-Bank Group
Overview Result Analysis Outlook Capital and Funding Appendices Funding for the Non-Bank Group Sep 22 Mar 22 Sep 21 • Non-Bank Group is predominantly term funded $Ab $Ab $Ab • Term funding beyond one year (excluding equity) has a Funding sources Net trade (debtors)/creditors — 1.0 (0.4) weighted ave
Slide 58: Explanation of funded balance sheet reconciling items
Overview Result Analysis Outlook Capital and Funding 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 activities are mostly These represent
Slide 59: Strong liquidity position maintained
Overview Result Analysis Outlook Capital and Funding Appendices Strong liquidity position maintained • 172% average LCR for Sep 22 quarter, based on daily observations1 – Maintained well above regulatory minimum – Excludes CLF allocation2 • Reflects longstanding conservative approach to liquidity ma
Slide 60: Conservative long standing liquidity risk management framework
Overview Result Analysis Outlook Capital and Funding Appendices Conservative long standing liquidity risk management framework Liquidity Policy Liquidity Framework The liquidity risk appetite is intended to ensure that Macquarie is able A robust liquidity risk management framework is designed to ens
Slide 61: Capital management update
Overview Result Analysis Outlook Capital and Funding Appendices Capital management update Dividend Reinvestment Plan • On 4 July 2022, 2,736,737 ordinary shares were issued and allocated at $A177.11 1 per share under the DRP reflecting a total issuance of $A485m • The Board has resolved that no disc
Slide 62: Appendix C: Other Financial Information
Appendix C: Other Financial Information Presentation to debt investors November 2022 62
Slide 63: Loan and lease portfolios – funded balance sheet
Overview Result Analysis Outlook Capital and Funding Appendices Loan and lease portfolios1 – funded balance sheet Operating Sep 22 Mar 22 Group Category $Ab $Ab Description Home loans 101.8 89.9 Secured by residential property Business banking 12.2 11.4 Loan portfolio secured largely by working capi
Slide 64: Equity investments of $A9.3b
Overview Result Analysis Outlook Capital and Funding Appendices Equity investments of $A9.3b1 Carrying value Carrying value Category Sep 22 $Ab Mar 22 $Ab Description Macquarie Asset Management Private Includes investments in new core infrastructure and new 1.6 1.5 Markets-managed funds real estate
Slide 65: Cost of regulatory compliance and technology spend
Overview Result Analysis Outlook Capital and Funding Appendices Cost of regulatory compliance and technology spend Total regulatory compliance Total regulatory compliance spend1 • The industry continues to see an increase in regulatory initiatives, resulting $Am in increased compliance requirements
Slide 66: Central Service Group priorities
Overview Result Analysis Outlook Capital and Funding Appendices Central Service Group priorities Macquarie has made a significant investment in Central Service Group platforms to enable business growth and profitability Corporate Operations Group (COG) Central Service Group cost base1 Significant in
Slide 67: Macquarie Group Limited
Macquarie Group Limited Presentation to debt investors November 2022 67
Macquarie Group — Debt Investor Presentation (November 2022) on 6ix