Slide 1: Presentation to investors and analysts: 1H16 result announcement
For personal use only Presentation to investors and analysts Result announcement for the half-year ended 30 September 2015 30 October 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 $A502.3b1 of assets under management Management • Provides clients with access to a diverse range of capabilities and products, including infrastructure and real asset management, secu
Slide 7: 1H16 Result
1H16 Result For personal use only $A1,070m • Net profit $A1,070m, up 58% on 1H15 and up 16% on 2H15 • Operating income $A5.3b, up 24% on 1H15 and up 7% on 2H15 • Improved result largely driven by performance fees, foreign exchange and improved trading conditions • All operating groups’ net profit co
Slide 8: 1H16 Result
1H16 Result For personal use only 1H16 2H15 1H15 1H16 v $Am $Am $Am 1H15 Net operating income 5,318 4,978 4,284 24% Total operating expenses (3,699) (3,577) (3,163) 17% Operating profit before income tax 1,619 1,401 1,121 44% Income tax expense (530) (467) (432) 23% Profit attributable to non-contro
Slide 9: Financial performance
Financial performance For personal use only 1H16 Operating income of $A5,318m 1H16 Profit of $A1,070m $Am 1H16 up 24% on 1H15 $Am 1H16 up 58% on 1H15 6,000 1H16 up 7% on 2H15 1,250 1H16 up 16% on 2H15 5,000 1,000 750 4,000 500 3,000 250 2,000 - 2H13 1H14 2H14 1H15 2H15 1H16 2H13 1H14 2H14 1H15 2H15
Slide 10: Assets under management of $A504.3 billion
Assets under management of $A504.3 billion1 For personal use only AUM increased $A18.0b since 31 Mar 15, mainly due to additional investments and favourable currency movements, partially offset by asset realisations $Ab 550 500 450 400 350 300 250 200 150 100 50 - Mar 12 Mar 13 Mar 14 Mar 15 Sep 15
Slide 11: Diversification by region
Diversification by region International income 71% of total income1 For personal use only Total staff 13,582; International staff 54% of total Europe, Middle East & Africa Asia Americas Income: $A1,262m (24% of total) Income: $A850m (16% of total) Income: $A1,677m (31% of total) Staff: 1,360 Staff:
Slide 12: Diversification by region
Diversification by region For personal use only • 71% of total income1 in 1H16 was generated offshore • A 10% movement2 in AUD is estimated to have approx. 7% impact on full year NPAT – Given currency movements, we estimate approx. a quarter of the increase in 1H16 NPAT on 1H15 is attributable to fo
Slide 13: Macquarie Asset Management
Macquarie Asset Management Operating income of $A1,669m, up 36% on 1H15 and up 40% on 2H15 For personal use only Net profit contribution of $A1,139m, up 45% on 1H15 and up 71% on 2H15 AUM of $A502.3b1 up 4% on Mar 15 Macquarie Infrastructure and Real Assets Macquarie Investment Management Macquarie
Slide 14: Corporate and Asset Finance
Corporate and Asset Finance Operating income of $A863m, up 25% on 1H15 and down 5% on 2H151 For personal use only Net profit contribution of $A611m, up 31% on 1H15 and down 5% on 2H151 Asset and loan portfolio of $A32.3b2 up 13% on Mar 15 Lending Asset Finance • Lending’s funded loan portfolio of $A
Slide 15: Banking and Financial Services
Banking and Financial Services Operating income of $A736m, up 11% on 1H15 and up 8% on 2H15 For personal use only Net profit contribution of $A170m, up 21% on 1H15 and up 18% on 2H15 Australian client numbers 1.1 million Personal Banking Wealth Management Business Banking Serves Personal Banking c
Slide 16: Macquarie Securities
Macquarie Securities Operating income of $A718m, up 67% on 1H15 and up 47% on 2H15 For personal use only Net profit contribution of $A240m, up from $A17m in 1H15 and up from $A47m in 2H15 Cash Derivatives and Trading Increased client activity across the Asia-Pacific region driven by macroeconomic
Slide 17: Macquarie Capital
Macquarie Capital Operating income of $A516m, up 18% on 1H15 and down 16% on 2H15 For personal use only Net profit contribution of $A170m, up 13% on 1H15 and down 39% on 2H15 208 transactions valued at $A116b in 1H16 (242 transactions valued at $A68b in 1H15 and 239 transactions valued at $A75b in 2
Slide 18: Commodities and Financial Markets
Commodities and Financial Markets Operating income of $A811m, up 12% on 1H15 and down 27% on 2H15 For personal use only Net profit contribution of $A282m, up 13% on 1H15 and down 52% on 2H15 Commodity Markets (Physical & Financial) Financial Markets (Primary & Secondary) 55% of operating income 31%
Slide 19: 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 • Total customer deposits1 continuing to grow, up 7.8% to $A42.8b at Sep 15 from $A39.7b at Mar 15 • Long term funding continues to be raised to
Slide 20: Funded balance sheet remains strong
Funded balance sheet remains strong For personal use only 30 September 2014 31 March 2015 30 September 2015 $Ab $Ab $Ab 130 4 130 130 120 120 120 ST wholesale issued paper (9%) 110 110 ST wholesale issued paper 110 Other debt maturing in the next 12 Cash, liquids and self securitised (11%) mths1 (7%
Slide 21: Basel III capital position
Basel III capital position For personal use only • APRA Basel III Group capital at Sep 15 of $A16.9b, Group surplus of $A3.1b (1 Jan 16 requirements1) • Bank Group APRA Basel III CET1 ratio: 9.9%; Tier 1 ratio: 11.1% • Bank Group Harmonised Basel III CET1 ratio: 11.6%; Tier 1 ratio: 12.8%2 $Ab Exclu
Slide 22: Strong regulatory ratios
Strong regulatory ratios For personal use only Macquarie Bank Group (Sep 15) Harmonised ratios 6.0% 14.0% 6% 200% 11.6% 170% 5% 10.5% 150% 4% 7.0% 3% 100% 2% 3.5% 50% 1% 0.0% 0% 0% CET1 ratio Leverage ratio 0 1 LCR 2 3 BCBS Basel III minimum Macquarie Bank Group (Harmonised) 1. Average LCR for Sep 1
Slide 23: Interim dividend
Interim dividend For personal use only • 1H16 dividend set at $A1.60 (40% franked), 51% payout ratio – 1H16 dividend up on 1H15 dividend of $A1.30 (40% franked) and down on 2H15 dividend of $A2.00 (40% franked) – Record date for 1H16 dividend is 11 Nov 15 and payment date is 16 Dec 15 • Dividend Rei
Slide 24: Board changes
Board changes For personal use only • On 24 Sep 15, MGL and MBL announced that Kevin McCann AM will retire as Chairman and a Voting Director of both companies effective 31 Mar 16. Kevin McCann was appointed an Independent Voting Director in 1996 and succeeded David Clarke AO as Chairman in 2011 • In
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 1H16 2H15 1H15 • Foreign exchange movements impacting all income statement key drivers $Am $Am $Am – Approx. a quarter of the increase in 1H16 NPAT on 1H15 due to FX Net interest and trading income 2,273 2,176 1,643 • Net interest and trading income
Slide 27: Macquarie Asset Management result
Macquarie Asset Management For personal use only Result 1H16 2H15 1H15 • Base fees of $A784m, up 22% on 1H15; AUM up 19% $Am $Am $Am – Favourable foreign exchange and market movement impacts Base fees 784 731 641 – MIM - net inflows into higher fee earning products Performance fees 609 294 373 – MIR
Slide 28: Corporate and Asset Finance result
Corporate and Asset Finance For personal use only Result 1H16 2H15 1H15 • Net interest and trading income of $A460m, up 41% on 1H15 $Am $Am $Am – Lending book benefiting from favourable foreign exchange impact, Net interest and trading income1 460 411 326 realisations and accretion of interest on lo
Slide 29: Banking and Financial Services result
Banking and Financial Services For personal use only Result 1H16 2H15 1H15 • Net interest and trading income of $A456m, up 12% on 1H15 $Am $Am $Am – Solid growth in Australian residential mortgages, business lending Net interest and trading income1 456 419 406 and deposits Platform and other fee and
Slide 30: Macquarie Securities result
Macquarie Securities For personal use only Result 1H16 2H15 1H15 • Brokerage and commissions of $A311m, up 19% on 1H15 $Am $Am $Am – Higher brokerage and commissions in Asia and Australia partially offset by Brokerage and commissions 311 280 262 lower brokerage and commissions in North America and E
Slide 31: Macquarie Capital result
Macquarie Capital For personal use only Result 1H16 2H15 1H15 • Fee and commission income of $A501m, up 39% on 1H15 $Am $Am $Am – Increased fee income across all product classes (M&A, ECM, DCM) Fee and commission income 501 499 361 – US and Australia experienced particularly strong growth in M&A Inv
Slide 32: Commodities and Financial Markets result
Commodities and Financial Markets For personal use only Result 1H16 2H15 1H15 • Commodities income of $A583m, up 39% on 1H15 $Am $Am $Am – Risk management products - increased client activity across most of the Commodities1 583 707 418 platform as a result of price volatility and continued business
Slide 33: Provisions for impairment
Provisions for impairment For personal use only Collective allowance for credit losses Individually assessed provisions and write-offs Non-financial assets Investments (AVS and associates) $Am 300 250 200 150 100 50 - (50) 2H15 1H16 2H15 1H16 2H15 1H16 2H15 1H16 2H15 1H16 2H15 1H16 2H15 1H16 MAM CAF
Slide 34: Legislative tax disclosures by the Australian Tax Office
Legislative tax disclosures by the Australian Tax Office For personal use only • The Australian Tax Office (ATO) will be publicly disclosing specific information on the tax position of certain corporate taxpayers including Macquarie • This information will relate to Macquarie’s Australian Tax Consol
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 • Total customer deposits1 continuing to grow, up 7.8% to $A42.8b at Sep 15 from
Slide 36: Diversified issuance strategy
Diversified issuance strategy1 For personal use only FY16 Term funding - diversified by currency, tenor and type 2yrs Private EUR 15% OTH 2% Securitisations 12% Placements 16% PUMA RMBS • Well diversified issuance and funding sources & Other Syndicated 15% • Term funding beyond 1 year (excluding equ
Slide 37: Continued customer deposit growth
Continued customer deposit 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 BFS clients, of which approx. 600,000 are depositors • Focus on the composition and quality o
Slide 38: Loan portfolio growth – Funded Balance Sheet
Loan portfolio1 growth – Funded Balance Sheet For personal use only Sep 15 Mar 15 Balance predominately relates to the financing of Category $Ab $Ab gold producers. Positions well secured and Predominately financing oil counterparties generally hedge their commodity producers. Positions well secured
Slide 39: Equity investments of $A5.5b
Equity investments of $A5.5b1 For personal use only Carrying value2 Carrying value2 Sep 15 Mar 15 Category $Am $Am Description MIRA-managed funds 1,653 1,479 Macquarie Infrastructure Corporation, MPF Holdings Limited, Macquarie SBI Infrastructure Fund, Macquarie Atlas Roads, Macquarie Korea Infrastr
Slide 40: Regulatory update
Regulatory update For personal use only • Conglomerates – In Aug 14, APRA issued its final rules for Conglomerates with implementation timing yet to be announced. We continue to work through the application of the rules with APRA and our current assessment remains that Macquarie has sufficient capit
Slide 41: Bank Group Basel III
Bank Group Basel III Common Equity Tier 1 (CET1) Ratio For personal use only • APRA Basel III CET1 ratio: 9.9%1 • Harmonised Basel III CET1 ratio: 11.6%2 Bank Group Common Equity Tier 1 (CET1) Ratio: Basel III (Sep 15) 14% 12% 0.1% 0.1% 11.4% 11.6% (1.7%) 10% 9.9% 8% 6% 11.4% 11.5% Basel III minimum
Slide 42: Strong liquidity position maintained
Strong liquidity position maintained For personal use only • 170% average LCR for Sep 15 quarter, based on month-end observations – Maintained well above regulatory minimums – Includes APRA approved AUD CLF allocation of $A5b for 2015 calendar year • Reflects long-standing conservative approach to l
Slide 43: Net assets per share
Net assets per share For personal use only $A 50.00 Net tangible assets/share Net intangible assets/share assets/share 2.40 (1.65) 45.00 43.84 3.93 43.84 43.09 40.00 2.81 40.30 36.35 39.16 35.00 36.35 32.50 30.00 25.00 30 Sep 14 Retained earnings Movement in reserves Capital raisings Increase in num
Slide 44: Capital management update
Capital management update For personal use only • On-market share purchases since 31 Mar 15 – FY15 MEREP $A383m at a weighted average price of $A80.68 • In Oct 15, the Group issued $A0.4b in equity via an Institutional Placement (Placement) to provide capital for the acquisition of the Esanda dealer
Slide 45: Outlook
For personal use only 4 Outlook Nicholas Moore – Managing Director and Chief Executive Officer
Slide 46: Short term outlook
Short term outlook For personal use only • Summarised below are the outlook statements for each Operating Group • FY16 results will vary with market conditions, particularly the capital markets facing businesses Net profit contribution FY08–FY15 FY08–FY15 FY16 outlook as announced Update to FY16 FY1
Slide 47: Short term outlook
Short term outlook For personal use only • While the impact of future market conditions makes forecasting difficult, Macquarie currently expects the FY16 combined net profit contribution1 from operating groups to be up on FY15 • The FY16 tax rate is currently expected to be broadly in line with 1H16
Slide 48: Medium term
Medium term For personal use only • Macquarie remains well positioned to deliver superior performance in the medium term • Deep expertise in major markets • Build on our strength in diversity and continue to adapt our portfolio mix to changing market conditions – Annuity-style income is provided by
Slide 49: Approximate business Basel III Capital & ROE
Approximate business Basel III Capital & ROE For personal use only 1 APRA Basel III Capital Approx. 1H16 Return Approx. 9-Year Average 2 Operating Group @ 8.5% ($Ab) on Ordinary Equity2 Return on Ordinary Equity Annuity-style businesses 7.7 Macquarie Asset Management 1.6 Corporate and Asset Finance
Slide 50: 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 MAM market conditions • Well positioned f
Slide 51: Additional information: Funding
For personal use only A Additional information Funding
Slide 52: 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 53: 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 54: Funding for the Group
Funding for the Group For personal use only • Well diversified funding sources Sep 15 Mar 15 Sep 14 $Ab $Ab $Ab Funding sources Negotiable certificates of deposits 0.7 1.4 1.7 • Minimal reliance on short term wholesale funding markets Commercial paper Net trade creditors 10.8 1.0 11.1 2.0 10.0 0.3 •
Slide 55: Funding for the Bank Group
Funding for the Bank Group For personal use only • Bank balance sheet remains liquid, well capitalised and Sep 15 Mar 15 Sep 14 $Ab $Ab $Ab Funding sources Negotiable certificates of deposits 0.7 1.4 1.7 with a diversity of funding sources Commercial paper 10.8 11.1 10.0 • Term funding beyond one ye
Slide 56: Funding for the Non-Bank Group
Funding for the Non-Bank Group For personal use only Sep 15 $Ab Mar 15 $Ab Sep 14 $Ab • Non-Bank Group is predominately term funded Funding sources • Term funding beyond one year (excluding equity) has a Net Trade Creditors (0.1) 0.1 (0.7) Structured notes 0.5 0.5 0.5 weighted average term to maturi
Slide 57: 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 58: 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 59: Additional information: Capital
For personal use only B Additional information Capital
Slide 60: Macquarie Group Basel III regulatory capital
Macquarie Group Basel III regulatory capital For personal use only Surplus calculation Harmonised APRA Basel III Basel III 30 September 2015 $Am $Am Macquarie Group eligible capital: Bank Group Gross Tier 1 capital 12,668 12,668 Non-Bank Group eligible capital 4,244 4,244 Eligible capital 16,912 16,
Slide 61: 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 30 September 2015 $Am $Am $Am Credit risk On balance sheet2 54,865 3,841 Off balance sheet2 19,746 1,382 Credit risk total2 74,611 5,223 Market
Slide 62: 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 63: 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 30 September 2015 $Ab $Am Weight Funded assets Cash and liquid assets 1.7 19 14% Loan assets1 1.8 169 117% Debt investment securities 0.5 48 120% Co-investment in Macquarie
Slide 64: Glossary
For personal use only C Glossary
Slide 65: Glossary
Glossary For personal use only $A / AUD Australian Dollar BIS Bank for International Settlements $C Canadian Dollar BFS Banking and Financial Services $US / USD United States Dollar CAF Corporate and Asset Finance £ British Pound CCB Capital Conservation Buffer € Euro CET1 Common Equity Tier 1 1H15
Slide 66: Glossary
Glossary For personal use only EMEA Europe, the Middle East and Africa JV Joint Venture EPS Earnings Per Share LCR Liquidity Coverage Ratio FUM Funds Under Management LNG Liquefied Natural Gas FX Foreign Exchange LP Limited Partner FY07 Full Year ended 31 March 2007 Ltd Limited FY08 Full Year ended
Slide 67: Glossary
Glossary For personal use only MIM Macquarie Investment Management RWA Risk Weighted Assets 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 Gro
Slide 68: Presentation to investors and analysts: 1H16 result announcement
For personal use only Presentation to investors and analysts Result announcement for the half-year ended 30 September 2015 30 October 2015