Macquarie Group, Ltd. · ASX:MQG
Macquarie — Debt Investor Presentation (July 2021)
65 slides from Macquarie's debt investor presentation, July 2021
Slide 1: Macquarie Group Limited Presentation to Debt Investors
Macquarie Group Limited Presentation to Debt Investors July 2021 1
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 02 03 Overview MGL results for 1Q22 Update the full year ended 31 March 2021 04 05 06 Outlook Capital and Appendices Funding 3
Slide 4: Overview
Overview Presentation to debt investors July 2021
Slide 5: Macquarie overview
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Macquarie overview 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 overview1 Global
Slide 6: About Macquarie
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices About Macquarie MAM BFS CGM MacCap Macquarie Asset Banking and Commodities and Global Markets Macquarie Capital Management Financial Services Diverse platform covering more than 30 market segments, with more than 200 product
Slide 7: Diversification by region
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Diversification by region International income 68% of total income1 Total staff2 16,459, International staff 56% of total Americas EMEA Asia Australia3 34% 23% 11% of total 32% of total of total of total income income income
Slide 8: 50+ years of profitability
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices 50+ years of profitability $Am 2.0 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 Hills Motorway Global real Mortgage securitis
Slide 9: Macquarie's response to COVID-19
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Macquarie’s response to COVID-19 Employees Clients Portfolio Companies Community ● Gradual return to office commenced in 90% of ● Enhanced client support and lending relief ● Ongoing work with MIRA and Macquarie Capital ● $A
Slide 10: Macquarie funding structure
Overview Result Analysis 1Q22 Update 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 Group
Slide 11: Macquarie Asset Management
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Macquarie Asset FY21 awards & Private Public Management rankings Markets8 Investments9 Actively manages funds for investors across multiple asset classes #1 Infrastructure Investment $A142.0b 5% on Mar 20 $A367.1b 4% on Mar
Slide 12: Banking and Financial Services
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Banking and FY21 awards Financial Services Macquarie’s retail banking and $A67.0b 29% on Mar 20 $A80.7b 26% on Mar 20 Home loan portfolio Total BFS deposits2 financial services business $A10.2b 13% on Mar 20 $A40.0b 22% on M
Slide 13: Commodities and Global Markets
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Commodities and FY21 awards & Strong underlying client business Global Markets rankings Commodity Financial Markets Provides clients with access to markets, Markets Foreign exchange, interest rates and credit financing, fina
Slide 14: Macquarie Capital
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Macquarie Capital FY21 Advisory and Infrastructure and awards & Capital Solutions Energy Group Advises and invests alongside clients and rankings Leading market position in ANZ for Continued focus on green energy partners to
Slide 15: Environmental, Social and Governance (ESG)
Overview Result Analysis 1Q22 Update 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 ● In
Slide 16: Environmental, Social and Governance
Chair's Overview Update Overview Result Analysis of FY21 1Q22 1Q22 Update Update FY22 Outlook Outlook Capital Formal and Business Funding Appendices Glossary Environmental, Social and Governance Environmental Climate Environmental and Sustainability Client People Business conduct Macquarie and socia
Slide 17: Driving global climate solutions
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Driving global climate solutions Highlights of activities during FY21 Raised €1.6 billion from investors for renewable energy investment Funded 49 MW in new energy- from-waste developments Made £120 million long-term debt in
Slide 18: Macquarie's approach to risk management
Overview Result Analysis 1Q22 Update 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 cle
Slide 19: Trading performance: client driven, low loss profile
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Trading performance: client driven, low loss profile • Trading P&L shows consistent profits and low volatility of results. • FY21 had historic high for positive trading days (since included in annual report in FY08) despite
Slide 20: Stable earnings: earnings volatility relative to Macquarie
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Stable earnings 5 year earnings volatility relative to Macquarie 15 year earnings volatility relative to Macquarie (includes GFC) 8.0 8.0 Multiple to Macquarie Multiple to Macquarie 6.9x 7.0 7.0 6.0 6.0 4.9x 5.0 5.0 4.3x 4.1
Slide 21: MGL results for the full year ended March 2021
MGL results for the full year ended 31 March 2021 Presentation to debt investors July 2021
Slide 22: FY21 net profit contribution from Operating Groups
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices FY21 net profit contribution from Operating Groups $A6,097m up 12% on FY20 Annuity-style businesses Markets-facing businesses $A3,314m $A2,783m 4% 39% ON FY20 ON FY20 Non-Banking Group Macquarie Asset Management (MAM) Macqua
Slide 23: FY21 result: $A3,015m up 10% on FY20
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices FY21 result: $A3,015m up 10% on FY20 2H21 1H21 2H21 v FY21 FY20 FY21 v $Am $Am 1H21 $Am $Am FY20 Net operating income 7,255 5,519 31% 12,774 12,325 4% Total operating expenses (4,601) (4,266) 8% (8,867) (8,871) - Operating p
Slide 24: Financial performance
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Financial performance Operating income FY21 Profit FY21 $A12,774m $A3,015m $Am $Am 14,000 4 % 3,000 10 % ON FY20 ON FY20 10,000 2,000 6,000 1,000 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 EPS FY21 DPS FY21 $A8.43 $A4
Slide 25: Regulatory update
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Regulatory update Australia ● APRA is in the process of implementing changes to a number of regulatory standards1 ● APRA released a letter on 21 Jul 21 outlining proposed policy settings for the Bank Capital Reforms and will
Slide 26: Approximate business Basel III Capital and ROE
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Approximate business Basel III Capital and ROE 31 Mar 21 APRA Basel III Capital1 Approx. FY21 Return on Approx. 15-year Average Operating Group @ 8.5% ($Ab) Ordinary Equity2 Return on Ordinary Equity3 Annuity-style businesse
Slide 27: 1Q22 Update
1Q22 Update Presentation to debt investors July 2021
Slide 28: 1Q22 Overview
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices 1Q22 Overview Improved trading conditions with 1Q22 operating group contribution significantly up on the prior corresponding period (pcp) (1Q21) which had mixed trading conditions ● Macquarie’s annuity-style businesses (MAM
Slide 29: 1Q22 Overview: Annuity-style businesses
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices 1Q22 Overview Annuity-style businesses Macquarie Asset Management Banking and Financial Services ~34% FY21 contribution1 ~13% FY21 contribution1 • AUM2 of $A693.2 at Jun 21, up 23% on Mar 21, predominantly driven by the acqu
Slide 30: 1Q22 Overview: Markets-facing businesses
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices 1Q22 Overview Markets-facing businesses Commodities and Global Markets Macquarie Capital ~42% FY21 contribution1 ~11% FY21 contribution1 ● Favourable market conditions contributed to strong results across the commodities ● 1
Slide 31: Outlook
Outlook Presentation to debt investors July 2021
Slide 32: Short-term outlook
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Short-term outlook The range of factors that may influence our short-term outlook include: ● The duration of COVID-19, speed of the global economic recovery and extent of government support for economies ● Market conditions
Slide 33: Short-term outlook
Overview Result Analysis 1Q22 Update 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) ● Excluding Waddell & Reed: ● Improved
Slide 34: Medium-term outlook
Overview Result Analysis 1Q22 Update 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 po
Slide 35: Medium term
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Medium term Annuity-style businesses Markets-facing businesses Non-Banking Group Macquarie Asset Management (MAM) Macquarie Capital (MacCap) ● Leading specialist global asset manager, well-positioned to respond to current ma
Slide 36: Capital and Funding
Capital and Funding Presentation to debt investors July 2021
Slide 37: Strong regulatory ratios
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Strong regulatory ratios Bank Group Level 2 Ratios (Jun 21) 125% 17.5% 7.5% 190% 15.5% 120% 122% 5.9% 171% 14.0% 6.0% 160% 115% 110% 12.1% 5.2% 10.5% 4.5% 130% 105% 7.0% 3.0% 100% 100% 95% 3.5% 1.5% 70% 90% 0.0% 0.0% 40% 85%
Slide 38: Basel III capital position
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Basel III capital position ● APRA Basel III Group capital at Jun 21 of $A26.4b; Group capital surplus of $A7.4b1, 2 ● APRA Basel III Level 2 CET1 ratio: 12.1%; Harmonised Basel III Level 2 CET1 ratio: 15.5% Group regulatory
Slide 39: Business capital requirements
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Business capital requirements1 1Q22 key drivers $Ab MAM 20 $A3.8b increase $A19.0b ● Includes fund underwriting activity overall 0.2 0.2 offset by divestments (including 19 0.6 Waddell & Reed’s wealth management 18 0.6 0.3 $
Slide 40: Balance sheet highlights
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Balance sheet highlights ● 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
Slide 41: Conservative long standing liquidity risk management framework
Overview Result Analysis 1Q22 Update 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 to A robust liquidity risk management framework is
Slide 42: Funded balance sheet remains strong
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Funded balance sheet remains strong Term liabilities exceed term assets 31 Mar 21 30 Jun 21 $Ab $Ab 210 210 Total customer deposits7 ST wholesale issued paper 180 ST wholesale issued Other debt maturing in the 180 Other debt
Slide 43: Diversified issuance strategy
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Diversified issuance strategy Term funding as at 31 Mar 21 – diversified by currency1, tenor2 and type Currency Tenor Type Term funding beyond 1 year (including drawn TFF, excluding equity and securitisations) has a weighted
Slide 44: Continued customer deposit growth
Overview Result Analysis 1Q22 Update 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 approximately 1.7 million BFS clients, circa 780,000 are depos
Slide 45: Current credit ratings
Overview Result Analysis 1Q22 Update 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 Moody’s A2 Stable P-1 A3 Stab
Slide 46: Appendix A: General Appendices
Appendix A: General Appendices Presentation to debt investors July 2021
Slide 47: Macquarie Asset Management
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Macquarie Asset Management Key drivers ● Base fees down due to: − Foreign exchange movements, asset realisations in MIRA-managed funds and the full year impact of FY20 net flows in MIM Strong performance despite challenging
Slide 48: Banking and Financial Services
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Banking and Financial Services Key drivers ● Higher Personal Banking income driven by 27% growth in average home loan volumes, Strong home loan and deposits growth and lower credit partially offset by lower vehicle finance i
Slide 49: Banking and Financial Services
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Banking and Financial Services Record 2H21 result - driven by growth in home loan portfolio, growth in deposits and lower credit impairment charges 1. Includes brokerage, commission and trading-related fee expenses. © Macqua
Slide 50: Commodities and Global Markets
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Commodities and Global Markets Key drivers ● Commodities − Increased Risk Management revenue across the commodities platform driven by increased contributions from Resources, North American Strong underlying client business
Slide 51: Strong underlying client business
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Strong underlying client business Majority of income derived from underlying client business Operating Income (excl. credit and other impairment charges) Client numbers2 (excl. SAF) ● 40+ years of client partnership evolving
Slide 52: Macquarie Capital
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Macquarie Capital Key drivers ● Lower net income on investments predominantly due to fewer material asset realisations compared to prior year Result reflects lower income on investments and lower fee and ● Lower fee and comm
Slide 53: Appendix B: Funding and Liquidity
Appendix B: Funding and Liquidity Presentation to debt investors July 2021
Slide 54: Funded balance sheet reconciliation
Overview Result Analysis 1Q22 Update 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
Slide 55: Funding for Macquarie
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Funding for Macquarie ● Well diversified funding sources ● Minimal reliance on short-term wholesale funding markets ● Deposit base represents 48%1 of total funding sources ● Term funding beyond one year (including drawn TFF,
Slide 56: Funding for the Bank Group
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Funding for the Bank Group ● Bank balance sheet remains liquid and well capitalised, with a diverse range of funding sources ● Term funding beyond one year (including drawn TFF, excluding equity and securitisations) has a we
Slide 57: Funding for the Non-Bank Group
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Funding for the Non-Bank Group ● Non-Bank Group is predominantly term funded ● Term funding beyond one year (excluding equity) has a weighted average term to maturity of 5.5 years1 ● Accessed term funding across a variety of
Slide 58: Explanation of funded balance sheet reconciling items
Overview Result Analysis 1Q22 Update 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 The
Slide 59: Strong liquidity position maintained
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Strong liquidity position maintained ● 174%1 average LCR for Mar 21 quarter, based on daily observations − Maintained well above regulatory minimum − Includes CLF and TFF allocations2 ● Reflects longstanding conservative app
Slide 60: Appendix C: Other Financial Information
Appendix C: Other Financial Information Presentation to debt investors July 2021
Slide 61: Costs of compliance
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Costs of compliance Total compliance spend1 $A646m in FY21, up 19% on FY20 ● The industry continues to see an increase in regulatory initiatives, resulting in increased compliance requirements across all levels of the organi
Slide 62: Loan and lease portfolios – funded balance sheet
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Loan and lease portfolios1 – funded balance sheet 1. Loan assets are reported on a funded balance sheet basis and therefore exclude certain items such as assets that are funded by third party debt with no recourse to Macquar
Slide 63: Equity investments of $A5.9b
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Equity investments of $A5.9b1 1. Equity investments per the statutory balance sheet of $A5.7b (Mar 20: $A9.7b) have been adjusted to reflect the total net exposure to Macquarie. Total funded equity investments of $A5.7b as a
Slide 64: Macquarie Basel III regulatory capital
Overview Result Analysis 1Q22 Update Outlook Capital and Funding Appendices Macquarie Basel III regulatory capital Surplus calculation 1. ‘Bank Group’ refers to Level 2 regulatory group. 2. In calculating the Bank Group’s contribution to Macquarie’s capital requirement, RWA internal to Macquarie are
Slide 65: Macquarie Group Limited
Macquarie Group Limited Presentation to Debt Investors July 2021 65
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