Slide 1: Presentation to investors and analysts: FY15 result announcement
For personal use only Presentation to investors and analysts Result announcement for the full year ended 31 March 2015 8 May 2015
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: Agenda
Agenda For personal use only 1 Introduction – Karen Khadi 2 Overview of Result – Nicholas Moore 3 Result Analysis and Financial Management – Patrick Upfold 4 Outlook – Nicholas Moore 5 Appendices PAGE 3
Slide 4: Introduction
For personal use only 1 Introduction Karen Khadi - Head of Investor Relations
Slide 5: Overview of Result
For personal use only 2 Overview of Result Nicholas Moore - Managing Director and Chief Executive Officer
Slide 6: About Macquarie
About Macquarie For personal use only Building for the long term Macquarie Asset • Top 50 global asset manager with $A484.0b1 of assets under management Management (formerly • Provides clients with access to a diverse range of capabilities and products, including infrastructure and real asset manage
Slide 7: 2H15 Result
2H15 Result For personal use only $A926m Net profit $A926m, up 37% on 1H15 and up 21% on 2H14 Operating income $A5.0b, up 16% on 1H15 and up 12% on 2H14 As foreshadowed: ‒ Macquarie’s annuity-style businesses (Macquarie Asset Management, Corporate and Asset Finance and Banking and Financial Se
Slide 8: FY15 Result
FY15 Result For personal use only $A1,604m Net profit $A1,604m, up 27% on FY14 Operating income $A9.3b, up 14% on FY14 As foreshadowed: ‒ Macquarie’s annuity-style businesses (Macquarie Asset Management, Corporate and Asset Finance, and Banking and Financial Services) continued to perform well
Slide 9: FY15 Result
FY15 Result For personal use only 2H15 1H15 FY15 FY14 FY15 v $Am $Am $Am $Am FY14 Net operating income 4,995 4,298 9,293 8,132 14% Total operating expenses (3,594) (3,177) (6,771) (6,026) 12% Operating profit before income tax 1,401 1,121 2,522 2,106 20% Income tax expense (467) (432) (899) (827) 9%
Slide 10: Financial performance
Financial performance For personal use only FY15 Operating income of $A9,293m FY15 Profit of $A1,604m $Am $Am FY15 up 14% on FY14 FY15 up 27% on FY14 6,000 1,000 2H15 up 16% on 1H15 2H15 up 37% on 1H15 5,000 750 4,000 500 3,000 250 - 2,000 1H13 2H13 1H14 2H14 1H15 2H15 1H13 2H13 1H14 2H14 1H15 2H15
Slide 11: Assets under management of $A486.3 billion
Assets under management of $A486.3 billion1 For personal use only AUM increased $A59.4b or 14% since 31 Mar 14, largely due to: • additional investments, favourable currency and market movements • partially offset by asset disposals, formation of the JSP joint venture and management buyout of MIM Pr
Slide 12: Diversification by region
Diversification by region International income 70% of total income1 For personal use only Total staff 14,085; International staff 54% of total Europe, Middle East & Africa Asia Americas Income: $A2,013m (22% of total) Income: $A1,131m (12% of total) Income: $A3,338m (36% of total) Staff: 1,329 Staff
Slide 13: Diversification by region
Diversification by region For personal use only 70% of income1 in FY15 was generated offshore A 10% movement2 in AUD is estimated to have approx. 7% impact on full year NPAT $Ab 3,500 3,000 2,500 2,000 1,500 1,000 500 -0 Australia Asia Americas Europe, Middle East & Af rica FY11 FY12 FY13 FY14 F
Slide 14: Macquarie Asset Management
Macquarie Asset Management Operating income of $A2,447m, up 27% on prior year For personal use only Net profit contribution of $A1,450m, up 38% on prior year AUM of $A484.0b1 up 14% on prior year Macquarie Infrastructure and Real Assets Macquarie Investment Management (MIM) Macquarie Specialised Inv
Slide 15: Corporate and Asset Finance
Corporate and Asset Finance Operating income of $A1,594m, up 32% on prior year For personal use only Net profit contribution of $A1,112m, up 35% on prior year Asset and loan portfolio of $A28.7b1 up 13% on prior year Lending Asset Finance • Lending’s funded loan portfolio of $A11.2b2, up • Asset Fin
Slide 16: Banking and Financial Services
Banking and Financial Services Operating income from continuing operations1 of $A1,345m, up 10% on prior year For personal use only Net profit contribution of $A285m, up 10% on prior year Australian client numbers 1.1 million Personal Banking Wealth Management Business Banking Serves Personal Bank
Slide 17: Macquarie Securities
Macquarie Securities Operating income of $A918m, up 6% on prior year For personal use only Net profit contribution of $A64m, down from $A107m in prior year Cash Derivatives and Trading ECM activity remained strong in Australia Favourable market conditions in China combined with greater market
Slide 18: Macquarie Capital
Macquarie Capital Operating income of $A1,054m, up 29% on prior year For personal use only Net profit contribution of $A430m, up 54% on prior year 470 transactions valued at $A141b in FY15 (482 transactions valued at $A94b in FY14)1 Market Conditions2 Australia and New Zealand Asia EMEA Americas ANZ
Slide 19: Commodities and Financial Markets
Commodities and Financial Markets Operating income of $A1,831m, up 9% on prior year For personal use only Net profit contribution of $A835m, up 15% on prior year Commodity Markets (Physical & Financial) Financial Markets (Primary & Secondary) 62% of operating income 27% of operating income 11% of op
Slide 20: Strong funding and balance sheet position
Strong funding and balance sheet position For personal use only Diverse and stable funding base, minimal reliance on short term wholesale funding markets Retail deposits1 continuing to grow, up 12% to $A37.3b at Mar 15 from $A33.3b at Mar 14 Long term funding continues to be raised to fund ass
Slide 21: Funded balance sheet remains strong
Funded balance sheet remains strong For personal use only $Ab $Ab $Ab 120 31 March 2014 120 30 September 2014 120 31 March 2015 110 110 110 ST wholesale issued paper (11%) 100 100 100 Other debt maturing in the next ST wholesale issued paper 12 mths 1 (8%) Cash, liquids and self ST wholesale issued
Slide 22: Regulatory update
Regulatory update For personal use only In Aug 14, APRA issued its final rules for Conglomerates with the implementation timing dependent on the outcomes of the Financial System Inquiry. We continue to work through the application of the rules with APRA and our current assessment remains that Macq
Slide 23: Basel III capital position
Basel III capital position For personal use only • APRA Basel III Group capital at Mar 15 of $A16.1b, Group surplus of $A2.7b (1 Jan 16 requirements1) • Bank Group APRA Basel III CET1 ratio: 9.7%; Tier 1 ratio: 11.0% • Bank Group Harmonised Basel III CET1 ratio: 11.4%; Tier 1 ratio: 12.6%2 $Ab Group
Slide 24: Final dividend
Final dividend For personal use only FY15 ordinary dividend set at $A3.30, 68% payout ratio, up on FY14 ordinary dividend of $A2.60 − 2H15 ordinary dividend $A2.00 (40% franked) up on 1H15 ordinary dividend of $A1.30 (40% franked) − Record date for 2H15 ordinary dividend is 20 May 15 and payment d
Slide 25: Result Analysis and Financial Management
For personal use only 3 Result Analysis and Financial Management Patrick Upfold - Chief Financial Officer
Slide 26: Income Statement key drivers
Income Statement key drivers For personal use only 2H15 1H15 FY15 FY14 Net interest and trading income of $A3,819m, up 17% on FY14 $Am $Am $Am $Am – Increased lending activity in CAF and BFS Net interest and trading income 2,176 1,643 3,819 3,275 – Improved trading results for CFM and MSG Fee an
Slide 27: Macquarie Asset Management
Macquarie Asset Management For personal use only Result FY15 FY14 Base fees of $A1,372m, up 9% on FY14 (AUM up 14%) $Am $Am – MIM – net inflows into higher fee earning products and positive market Base fees 1,372 1,262 movements, partially offset by impact of Jackson Square Partners (JSP) and Perf
Slide 28: Corporate and Asset Finance
Corporate and Asset Finance For personal use only Result FY15 FY14 Net interest and trading income of $A737m, up 11% on FY14 $Am $Am – Strong performance in Lending driven by underlying portfolio growth and Net interest and trading income1 737 663 realisations Net operating lease income 561 520 –
Slide 29: Banking and Financial Services
Banking and Financial Services For personal use only Result FY15 FY14 Net interest and trading income of $A825m, up 12% on FY14 $Am $Am – Continued growth in Australian mortgages partially offset by Canadian and Net interest and trading income1 825 738 US mortgage portfolios running off Platform a
Slide 30: Macquarie Securities
Macquarie Securities For personal use only Result FY15 FY14 Brokerage and commissions of $A542m, broadly in line with FY14 $Am $Am – Higher brokerage and commissions in Australia and Europe and favourable Brokerage and commissions 542 547 foreign exchange movements offset by lower brokerage in Asi
Slide 31: Macquarie Capital
Macquarie Capital For personal use only Result FY15 FY14 Fee and commission income of $A860m, up 18% on FY14 $Am $Am – Increased fee income across all product classes (M&A, ECM, DCM) Fee and commission income 860 727 – US largest contributor with strong growth in M&A and DCM Investment and other i
Slide 32: Commodities and Financial Markets
Commodities and Financial Markets For personal use only Result FY15 FY14 Commodities income of $A1,125m, broadly in line with FY14 $Am $Am – Risk management products – increased client activity across the platform Commodities1 1,125 1,124 primarily driven by increased price volatility and continue
Slide 33: Provisions for impairment
Provisions for impairment For personal use only $Am 400 Collective allowance for credit losses Individually assessed provisions and write-offs Non-financial assets Investments (AVS and associates) 350 300 250 200 150 100 50 0- FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY15 MAM
Slide 34: Costs of compliance increase in response to ongoing regulatory changes
Costs of compliance increase in response to ongoing regulatory changes For personal use only The industry is seeing a continuing increase in regulatory initiatives, resulting in increased compliance requirements across all levels of the organisation Macquarie is regulated by approx. 190 authorit
Slide 35: Balance sheet highlights
Balance sheet highlights For personal use only Balance sheet remains solid and conservative ‒ Term assets covered by term funding, stable deposits and equity ‒ Minimal reliance on short term wholesale funding markets ‒ Cash and liquid assets exceed all forecast requirements throughout a twelve mon
Slide 36: Well diversified funding sources
Well diversified funding sources For personal use only Diversity of MGL funding sources MGL term funding beyond one year Equity and Wholesale (including equity and hybrids) hybrids issued paper 13% 11% Deposits - $Ab Loan capital corporate 4% 25 and wholesale 2% 20 15 Bonds Deposits - 26% 10 retail
Slide 37: Continued retail deposit growth
Continued retail deposit1 growth For personal use only Macquarie has been successful in pursuing its strategy of diversifying its funding sources through growing its deposit base – In excess of 1.1 million retail clients, of which approx. 600,000 are depositors – Focus on the composition and quali
Slide 38: Loan portfolio growth – Funded Balance Sheet
Loan portfolio1 growth – Funded Balance Sheet For personal use only Mar 15 Mar 14 Balance predominately relates to the financing of Predominately financing oil Category $Ab $Ab gold producers. Positions well secured and producers. Positions well secured; counterparties generally hedge their commodit
Slide 39: Equity investments of $A4.4b
Equity investments of $A4.4b1 For personal use only Carrying value2 Carrying value2 Mar 15 Mar 14 Category $Am $Am Description Macquarie Asset Management (MIRA) 1,479 1,528 Includes Macquarie Infrastructure Company, MPF Holdings Limited, managed funds Macquarie Atlas Roads, Macquarie SBI Infrastruct
Slide 40: Bank Group Basel III Common Equity Tier 1 Ratio
Bank Group Basel III Common Equity Tier 1 (CET1) Ratio For personal use only Harmonised Basel III CET1 ratio: 11.4%1 APRA Basel III CET1 ratio: 9.7%2 Bank Group CET1 Ratio: Basel III (Mar 15) 12% 0.6% (0.5%) (0.9%) 1.4% 11.4% (1.7%) 10% 10.8% 9.7% 8% 6% 9.9% CET1 (4.5%) Basel III minimum 9.9% CC
Slide 41: Net assets per share
Net assets per share For personal use only $A 45.00 Net tangible assets per share Net assets per share 40.00 1.17 41.68 3.22 38.19 35.00 2.09 35.51 30.00 31.71 25.00 20.00 31 Mar 14 Retained earnings Movement in reserves Net impact of capital raisings 31 Mar 15 (P&L less dividend) PAGE 41
Slide 42: Capital management update
Capital management update For personal use only The Board has resolved1: ‒ To purchase shares on-market2 to satisfy the MEREP requirements of approx. $A390m. The buying period for the MEREP will commence on 18 May and is expected to be completed by 10 Jul3 ‒ No discount will apply for the 2H15 DRP
Slide 43: Outlook
For personal use only 4 Outlook Nicholas Moore - Managing Director and Chief Executive Officer
Slide 44: Short term outlook
Short term outlook For personal use only • Summarised below are the outlook statements for each Operating Group • FY16 results will vary with market conditions, particularly the capital markets facing businesses Net profit contribution FY08–FY15 FY08–FY15 Operating Group historical range average FY1
Slide 45: Short term outlook
Short term outlook For personal use only While the impact of future market conditions makes forecasting difficult, we currently expect the FY16 combined net profit contribution1 from operating groups to be broadly in line with FY15 The FY16 tax rate is currently expected to be broadly in line wi
Slide 46: Medium term
Medium term For personal use only Macquarie remains well positioned to deliver superior performance in the medium term Deep expertise in major markets Build on our strength in diversity and continue to adapt our portfolio mix to changing market conditions ‒ Annuity-style income is provided by
Slide 47: Approximate business Basel III Capital & ROE
Approximate business Basel III Capital & ROE For personal use only 1 APRA Basel III Capital Approx. FY15 Return Approx. 9-Year average Return 2 Operating Group @ 8.5% ($Ab) on Ordinary Equity2 on Ordinary Equity Annuity-style businesses 7.5 Macquarie Asset Management 2.0 Corporate and Asset Finance
Slide 48: Medium term
Medium term For personal use only • Annuity-style business that is diversified across regions, products, asset classes and investor types • Diversification of capabilities allows for the business to be well placed to grow assets under management in different market MAM conditions • Well positioned f
Slide 49: Additional information: Funding
For personal use only A Additional information Funding
Slide 50: Group funding structure
Group funding structure For personal use only MGL and MBL are the Group’s two primary external funding vehicles which have separate and distinct funding, capital and liquidity management arrangements MBL provides funding to the Bank Group MGL provides funding predominately to the Non-Bank Grou
Slide 51: Funded balance sheet reconciliation
Funded balance sheet reconciliation For personal use only The Group’s statement of financial position 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
Slide 52: Funding for the Group
Funding for the Group For personal use only Mar 15 Mar 14 $Ab $Ab Well diversified funding sources Funding sources Negotiable certificates of deposits 1.4 1.9 Minimal reliance on short term wholesale funding markets Commercial paper Net trade creditors 11.1 2.0 6.6 1.0 Deposit base represents
Slide 53: Funding for the Bank Group
Funding for the Bank Group For personal use only Mar 15 Mar 14 $Ab $Ab Bank balance sheet remains liquid, well capitalised and Funding sources Negotiable certificates of deposits 1.4 1.9 with a diversity of funding sources Commercial paper 11.1 6.6 Term funding beyond one year (excluding equity)
Slide 54: Funding for the Non-Bank Group
Funding for the Non-Bank Group For personal use only Mar 15 Mar 14 $Ab $Ab Non-Bank Group is predominately term funded Funding sources Term funding beyond one year (excluding equity) has a Net Trade Creditors 0.1 0.3 Structured notes 0.5 0.7 weighted average term to maturity of 5.4 years Secured
Slide 55: Explanation of Funded Balance Sheet reconciling items
Explanation of Funded Balance Sheet reconciling items For personal use only Self funded trading assets: Macquarie enters into stock borrowing and lending as well as repurchase agreements and reverse repurchase agreements in the normal course of trading activity that it conducts with its clients an
Slide 56: Conservative long standing liquidity risk management framework
Conservative long standing liquidity risk management framework For personal use only Liquidity Policy The key requirement of MGL and MBL’s liquidity policies is that the entities are able to meet all liquidity obligations during a period of liquidity stress: ‒ a minimum 12 month period with constr
Slide 57: Additional information: Capital
For personal use only B Additional information Capital
Slide 58: Macquarie Group Basel III regulatory capital
Macquarie Group Basel III regulatory capital For personal use only Surplus calculation Harmonised APRA Basel III Basel III 31 March 2015 $Am $Am Macquarie Group eligible capital: Bank Group Gross Tier 1 capital 12,297 12,297 Non-Bank Group eligible capital 3,780 3,780 Eligible capital 16,077 16,077
Slide 59: Macquarie Group APRA Basel III regulatory capital
Macquarie Group APRA Basel III regulatory capital For personal use only Bank Group contribution Risk-weighted assets Tier 1 Deductions Capital Requirement1 31 March 2015 $Am $Am $Am Credit risk On balance sheet2 47,074 3,295 Off balance sheet 20,880 1,462 Credit risk total2 67,954 4,757 Market risk
Slide 60: Macquarie Group regulatory capital: Non-Bank Group contribution
Macquarie Group regulatory capital For personal use only Non-Bank Group contribution APRA has specified a regulatory capital framework for MGL A dollar capital surplus is produced; no capital ratio calculation is specified APRA has approved Macquarie’s Economic Capital Adequacy Model (ECAM) fo
Slide 61: Macquarie Group regulatory capital: Non-Bank Group contribution
Macquarie Group regulatory capital For personal use only Non-Bank Group contribution Capital Assets Requirement Equivalent Risk 31 March 2015 $Ab $Am Weight Funded assets Cash and liquid assets 1.9 30 20% Loan assets1 1.2 127 133% Debt investment securities 0.6 77 161% Co-investment in Macquarie-man
Slide 62: Glossary
For personal use only Glossary C
Slide 63: Glossary
Glossary For personal use only $A / AUD Australian Dollar BIS Bank for International Settlements $C Canadian Dollar CAF Corporate and Asset Finance $US / USD United States Dollar CCB Capital Conservation Buffer £ British Pound CET1 Common Equity Tier 1 € Euro CFM Commodities and Financial Markets 1H
Slide 64: Glossary
Glossary For personal use only EPS Earnings Per Share LCR Liquidity Coverage Ratio FUA Funds Under Administration LNG Liquefied Natural Gas FUM Funds Under Management LP Limited Partner FX Foreign Exchange Ltd Limited FY07 Full Year ended 31 March 2007 M&A Mergers and Acquisitions FY08 Full Year end
Slide 65: Glossary
Glossary For personal use only MIRA Macquarie Infrastructure and Real Assets SBI State Bank of India MPW Macquarie Private Wealth SGX Singapore Exchange MQA Macquarie Atlas Roads SME Small and Medium Enterprise MSG Macquarie Securities Group ST Short Term Mths Months SYD Sydney Airport NGLs Natural
Slide 66: Presentation to investors and analysts: FY15 result announcement
For personal use only Presentation to investors and analysts Result announcement for the full year ended 31 March 2015 8 May 2015