Macquarie Group, Ltd. · ASX:MQG
Macquarie — UBS Australian Financial Services Conference 2008
27 slides from Macquarie's conference presentation, Jun 25, 2008
Slide 1: Turbulence – friend or foe?
For personal use only Macquarie Group Limited UBS Australian Financial Services Conference “Turbulence – friend or foe?” 25 June 2008 Richard Sheppard – Deputy Managing Director
Slide 2: Disclaimer
For personal use only Disclaimer This material has been prepared for professional investors. The firm preparing this report has not taken into account any customer’s particular investment objectives, financial resources or other relevant circumstances and the opinions and recommendations herein are
Slide 3: Agenda
For personal use only Agenda Key points Market conditions Risk management Diversification Financial strength Growth through the cycle Adaption to change Specialist funds Post balance date events 3
Slide 4: Key points
For personal use only Key points Macquarie Group Limited is regulated by APRA as the holding company of an Australian bank. Licensed bank subsidiaries in Australia and the UK, and operations are subject to over 100 regulatory agencies around the world. Macquarie derives most of its operating inc
Slide 5: Market conditions
For personal use only Market conditions Continuing challenging markets for global financial institutions Recent downgrades for a number of investment banks with others on negative watch M&A activity down globally although strong outward investment from Asia and continued M&A activity in Austra
Slide 6: Risk management
For personal use only Risk management Long-standing, stable approach to risk over 30 years. This approach embedded in business unit management and business ownership of risk Seek a clear analysis of the risks before taking decisions, and apply a stress test approach in all risk types. Stress tes
Slide 7: Macquarie's control framework
For personal use only Macquarie’s control framework Recent events have tested controls in banking institutions Markets have been more volatile in recent past, but not beyond historic levels and not beyond levels we plan for Few of Macquarie’s stress tests have been exceeded. However, we have r
Slide 8: Diversification: Operating income
Diversification Operating income For personal use only Dividends & distributions, 1.0% Base funds management fees, specialist funds, 7.2% Share of net profits of associates, 1.9% Base funds management fees, other funds, 3.8% Net interest income, 8.1% Interest rate products, 1.2% Performance fees, 4.
Slide 9: Diversification: Operating income
Diversification Operating income 15% increase on prior year to $A8.2b For personal use only $Ab 9.0 Asset and equity investment realisations and other income 8.0 Interest income 7.0 Trading income 6.0 Fee and commission income 5.0 4.0 3.0 2.0 1.0 0.0 2004 2005 2006 2007 2008 9
Slide 10: Diversification: Fee revenue
Diversification Fee revenue 31% increase on prior year to $A4.6b For personal use only $Am 1600 Mar 2006 Mar 2007 Mar 2008 Approximately 20% of total Group operating income from specialist funds or managed asset agreements 1400 — Approx 10.8% of operating income derived from base and performance f
Slide 11: Diversification: staff outside Australia
Diversification More than 13,000 staff in 25 countries 40 per cent outside Australia For personal use only Europe and Middle East Asia North America 1,316 staff 2,016 staff 1,755 staff Beijing Seoul Tianjin Tokyo Shanghai Calgary Taipei Vancouver Winnipeg Hong Kong Hsinchu Seattle Toronto Dublin Man
Slide 12: Diversification: Income by region
Diversification Income by region 57 per cent outside Australia For personal use only Note: Income in each region excludes earnings on capital and other corporate items Australia Asia-Pacific 5 year CAGR to 31 Mar 08: 20% $Am 5 year CAGR to 31 Mar 08: 70% $Am 2500 3,500 3,000 2000 2,500 1500 2,00
Slide 13: Diversification: Broad range of assets under management
Diversification Broad range of assets under management For personal use only Retail Real Estate Commercial Real 5% Estate Other 6% 16% Industrial Real Estate 1% Investment Funds 5% Communications Infrastructure 12% Tourism/Leisure & Residential Real Estate 2% Roads Energy & Utilities 21% 20% Airport
Slide 14: Financial Strength: Macquarie is well funded
Financial Strength Macquarie is well funded For personal use only Mar 08 $Ab Total assets per Statutory Balance Sheet 167.2 Less accounting gross-ups and non-recourse funded assets: Self funded trading assets (28.9) Securitised assets and non-recourse warehouses (25.2) Derivative revaluation gross-u
Slide 15: Financial Strength: Macquarie is well funded
Financial Strength Macquarie is well funded For personal use only Balance sheet composition $Ab Diversity of funding sources ($Ab) Secured Funding sources Undrawn Senior funding, $A8.2 Bonds, $A8.1 Issued paper (NCDs, commercial paper and other issued paper) 25.8 credit facility, $A4.1 Secured fundi
Slide 16: Substantial capital growth
Substantial capital growth Return on equity: 23.7% For personal use only Consistently grown capital ahead of business requirements to allow for future growth $Ab $12 New Capital* Macquarie Income Preferred Securities $10 $A10.0b Macquarie Income Securities Ordinary shareholders equity $8 $A7.5b $6
Slide 17: Regulatory capital position
For personal use only Regulatory capital position Macquarie Group Limited – Regulatory Capital Position (31 March 2008) Banking Group Non Banking Group Buffer for volatility, growth Minimum Capital Requirement and strategic flexibility Buffer for Volatility CPS Growth and Strategic Flexibility Regul
Slide 18: Growth through the cycle
For personal use only Growth through the cycle Global real 60 estate crash 50 First listed London property trust office Enter opens stockbroking 40 Profit ($Am) Stock market crash 30 20 MBL established $A floated 10 0 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 18
Slide 19: Growth through the cycle
For personal use only Growth through the cycle Giuliani Capital 2000 Orion Securities CIT Systems Leasing 1800 Group restructure Credit disruption 1600 Russian debt SARS 1400 crisis 9/11 Profit ($Am) US recession Thames Asian financial 1200 Water crisis ING Dot com acquired crash Sydney 1000 BT Airp
Slide 20: Adaption to change: Group structure
Adaption to change Group structure For personal use only 2007 2008 Macquarie Capital Macquarie Capital Equity Markets Macquarie Securities Funds Management Macquarie Funds Treasury & Treasury & Commodities Commodities Financial Services Banking & Financial Banking & Services Securitisation Real Esta
Slide 21: Strong growth in assets under management
Strong growth in assets under management 18% increase on prior year to $A232b For personal use only $Ab 250 FSG/FMG Wholesale $A232b FSG/FMG Retail Other Specialist 200 Real estate $A197b Infrastructure 150 $A140b 100 $A97b $A63b 50 0 2004 2005 2006 2007 2008 Note: Sale of Macquarie-IMM Investment M
Slide 22: Specialist funds
For personal use only Specialist funds $A22.4b raised over the 12 months to 31 March 2008 $Ab 25 Raising Fund 20 ($Ab) Unlisted infrastructure 7.74 15 Listed Infrastructure 2.95 Unlisted Real Estate 5.39 10 Listed Real Estate 0.34 EMG Funds 2.50 5 Other 3.46 FY08 TOTAL $A22.4b 0 2005 2006 2007 200
Slide 23: Specialist funds – key facts
For personal use only Specialist funds – key facts Gearing — Macquarie Capital Funds: — Predominantly essential or privileged assets — Appropriately geared: 56%1 average gearing across assets managed by funds — Real Estate Funds: — Assets have quality underlying fundamentals — Approximately 50%2 a
Slide 24: Specialist funds – funding of distributions
For personal use only Specialist funds – funding of distributions Distributions are funded by cash from businesses, not revaluations or accounting profits — Across all Macquarie Capital managed funds, distributions are funded by: — Cash flows from business operating performance — Cash flows from b
Slide 25: Specialist funds – distribution coverage
For personal use only Specialist funds – distribution coverage A majority of fund distributions are fully covered by operating cash flows Fund1 Stock Exchange Market Capitalisation ($b)4 Distribution Coverage Commentary 55%2 – portfolio is weighted to development MIG ASX 5.7 and ramp-up 75%3 – int
Slide 26: Post March 2008 balance date events
For personal use only Post 31 March 2008 balance date events Russian infrastructure fund established (JV with Renaissance Capital) Indian infrastructure fund (MOU with State Bank of India) Establishment of Macquarie Special Situations Fund BrisConnections consortium awarded 45 year concessio
Slide 27: Macquarie Group Limited – UBS Australian Financial Services Conference
For personal use only Macquarie Group Limited UBS Australian Financial Services Conference “Turbulence – friend or foe?” 25 June 2008 Richard Sheppard – Deputy Managing Director
Macquarie Group — UBS Australian Financial Services Conference 2008 on 6ix