Macquarie Group, Ltd. · ASX:MQG
Macquarie — Q2 2023 Earnings Presentation
72 slides from Macquarie's earnings presentation, Oct 28, 2022
Slide 1: Presentation to investors and analysts
Presentation to investors and analysts Result announcement for the half year ended 30 September 2022 28 October 2022
Slide 2: Disclaimer
Disclaimer The material in this presentation has been prepared by Macquarie Group Limited ABN 94 122 169 279 (“MGL”) and is general background information about Macquarie’s (MGL and its subsidiaries) activities current as at the date of this presentation. This information is given in summary form an
Slide 3: Agenda
Agenda 01 02 03 Introduction Overview of Result Analysis Result and Financial Management 04 05 Outlook Appendices
Slide 4: Introduction
01 Introduction Sam Dobson Head of Investor Relations
Slide 5: Overview of Result
02 Overview of Result Shemara Wikramanayake Managing Director and Chief Executive Officer
Slide 6: About Macquarie
Introduction Overview of Result Result Analysis and Financial Management Outlook 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 Co
Slide 7: 1H23 result: $A2,305m up 13% on 1H22; down 13% on 2H22
Introduction Overview of Result Result Analysis and Financial Management Outlook 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 á 11% â 9% Total operating expenses (5,613) (5,716) (5,069) á 1
Slide 8: 1H23 net profit contribution from Operating Groups up 15% on 1H22
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 1H23 net profit contribution from Operating Groups $A4,573m up 15% on 1H22 Annuity-style activities Markets-facing activities $A2,281m flat $A2,292m á 35% ON 1H22 ON 1H22 Non-Banking Group Macquarie Asset Man
Slide 9: 1H23 net profit contribution from Operating Groups down 17% on 2H22
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 1H23 net profit contribution from Operating Groups $A4,573m down 17% on 2H22 Annuity-style activities Markets-facing activities â 15% â 18% $A2,281m ON 2H22 $A2,292m ON 2H22 Non-Banking Group Macquarie Asset
Slide 10: Financial performance
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Financial performance Operating income 1H23 Profit 1H23 $A8,641m $A2,305m $Am $Am 10,000 á 11% 3,000 á 13% 8,000 ON 1H22 ON 1H22 6,000 â 9% 2,000 â 13% 4,000 ON 2H22 ON 2H22 1,000 2,000 — — 1H21 2H21 1H22 2H2
Slide 11: Assets under management of $A795.6b
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Assets under management of $A795.6b AUM increased 3% from $A774.8b as at 31 Mar 22 Increase due to investments made by Private Markets-managed funds and foreign exchange movements, partially offset by market
Slide 12: Diversification by region
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversification by region 1 International income 72% of total income 2 Total staff 19,266 of which 53% international. A further ~238,000 people employed across managed 3 fund assets and investments 4 Americas
Slide 13: Diversification by region
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversification by region 1 72% of total income in 1H23 was generated offshore Total income $Am 6,000 5,000 4,000 3,000 2,000 1,000 — Americas Europe, Middle East & Africa Asia Australia 1H21 2H21 1H22 2H22 1
Slide 14: Macquarie Asset Management $A2,605m
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset • MAM Expanded and deepened long-term partnerships, with growth in new clients and an increasing proportion of clients investing across both Private Management • Markets and Public Investments
Slide 15: Banking and Financial Services $A1,423m
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Personal Banking • Home loan portfolio of $A101.0b, up Business Banking • Business Banking loan portfolio of Wealth Management • Funds on platform of $A111.4b, down Financial Services 13% on Mar 2
Slide 16: Commodities and Global Markets $A3,256m
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and 1 1 1 Asset Finance 7% Commodity Markets 65% Financial Markets 28% • Continued positive • Increased revenue across Commodities Foreign exchange, interest Equity Derivatives and Global Markets
Slide 17: Macquarie Capital $A595m
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Summary Transaction Activity 2 • Maintained a leading market position in ANZ across M&A in 2022 Advisory - fee and commission income down on a strong prior corresponding period from weakening market
Slide 18: Funded balance sheet remains strong
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funded balance sheet remains strong Term liabilities exceed term assets 31 Mar 22 30 Sep 22 $Ab $Ab 330 330 300 300 7 ST wholesale issued paper 13% Total customer deposits 270 270 Other debt maturing in the n
Slide 19: Basel III capital position
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Basel III capital position 1,2 • APRA Basel III Group capital at Sep 22 of $A37.2b; Group capital surplus of $A12.2b • APRA Basel III Level 2 CET1 ratio at Sep 22: 12.8%; Harmonised Basel III Level 2 CET1 rat
Slide 20: Business capital requirements
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 1 1H23 Key drivers Business capital requirements 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 underwri
Slide 21: Strong regulatory ratios
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Strong regulatory ratios Bank Group Level 2 Ratios (Sep 22) 17.5% 7.5% 200.0% 120.0% 15.9% 180.0% 2 116% 14.0% 6.0% 172% 1 160.0% 5.3% 12.8% 110.0% 140.0% 10.5% 4.5% 4.7% 120.0% 7.0% 3.0% 100.0% 100.0% 80.0%
Slide 22: Interim dividend
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Interim dividend 1H23 Ordinary Dividend From $A3.00 á$A2.72 â $A3.50 From (40% franked) (40% franked) (40% franked) in 1H22 in 2H22 1H23 Record Date 2 Payout Ratio 8 Nov 22 DRP shares for 1H23 Dividend policy
Slide 23: Result Analysis and Financial Management
03 Result Analysis and Financial Management Alex Harvey Chief Financial Officer
Slide 24: Income statement key drivers
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Income statement key drivers 1H23 2H22 1H22 Net interest and trading income of $A4,210m, up 39% on 1H22 • Higher risk management revenue reflecting strong results across the platform, particularly in Gas and
Slide 25: Macquarie Asset Management
Introduction Overview of Result Result Analysis and Financial Management Outlook 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 f
Slide 26: MAM AUM movement
Introduction Overview of Result Result Analysis and Financial Management Outlook 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 900 Private Markets 36.9 Publi
Slide 27: Banking and Financial Services
Introduction Overview of Result Result Analysis and Financial Management Outlook 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 2 volumes ,
Slide 28: Banking and Financial Services
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Financial Services Strong growth in Home loans and Deposits, Funds on Platform impacted by market movements $Ab $Ab 116.7 118.6 13.7 120 14 111.4 12.3 101.0 101.4 98.0 12 11.5 11.5 100 89.5 10.2 8
Slide 29: Commodities and Global Markets
Introduction Overview of Result Result Analysis and Financial Management Outlook 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; w
Slide 30: Strong underlying client business
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Strong underlying client business Majority of income derived from underlying Client numbers 2 client business (excl. Asset Finance) Operating Income (excl. credit and other impairment charges) Mar 19 Mar 20 M
Slide 31: Macquarie Capital
Introduction Overview of Result Result Analysis and Financial Management Outlook 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 th
Slide 32: Macquarie Capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital Movement in capital $Ab 5.0 $A0.9b ($A0.6b) $A0.2b $A4.1b 4.0 $A3.6b 3.0 2.0 1.0 — 31 Mar 22 Investments Realisations FX 30 Sep 22 Debt Digital Infrastructure Infrastructure Energy Technolog
Slide 33: Cost of regulatory compliance and technology spend
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Cost of regulatory compliance and technology spend 1 Total regulatory compliance Total regulatory compliance spend • The industry continues to see an increase in regulatory initiatives, resulting $Am in incre
Slide 34: Central Service Group priorities
Introduction Overview of Result Result Analysis and Financial Management Outlook 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) 1 Central Service G
Slide 35: Balance sheet highlights
Introduction Overview of Result Result Analysis and Financial Management Outlook 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 o
Slide 36: Diversified issuance strategy
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversified issuance strategy 1 2 Term funding as at 30 Sep 22 – diversified by currency , tenor and type Currency Tenor 1-2yrs 14% Type EUR 5% GBP 3% CHF 1% 5.0 years WAM6 Syndicated loan facilities 8% JPY 2
Slide 37: Continued customer deposit growth
Introduction Overview of Result Result Analysis and Financial Management Outlook 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 ar
Slide 38: Loan and lease portfolios – funded balance sheet
Introduction Overview of Result Result Analysis and Financial Management Outlook 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 sec
Slide 39: Equity investments of $A9.3b
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 1 Equity investments of $A9.3b 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 Marke
Slide 40: Regulatory update
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Regulatory update Australia 1 APRA has finalised or is in the process of implementing changes to a number of prudential standards . Macquarie notes the following key updates: 2 • APRA finalised its new bank c
Slide 41: Bank Group Basel III Common Equity Tier 1 (CET1) Ratio
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Bank Group Basel III Common Equity Tier 1 (CET1) Ratio 1 • APRA Basel III Level 2 CET1 ratio at Sep 22: 12.8% 2 • Harmonised Basel III Level 2 CET1 ratio at Sep 22: 15.9% Bank Group Level 2 Common Equity Tier
Slide 42: Strong liquidity position maintained
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Strong liquidity position maintained 1 • 172% average LCR for Sep 22 quarter, based on daily observations – Maintained well above regulatory minimum 2 – Excludes CLF allocation • Reflects longstanding conserv
Slide 43: Capital management update
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Capital management update Dividend Reinvestment Plan 1 • On 4 July 2022, 2,736,737 ordinary shares were issued and allocated at $A177.11 per share under the DRP reflecting a total issuance of $A485m. 2 • The
Slide 44: Outlook
04 Outlook Shemara Wikramanayake Managing Director and Chief Executive Officer
Slide 45: Short-term outlook
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Short-term outlook Factors impacting short-term outlook Annuity-style businesses Markets-facing businesses Non-Banking Group Macquarie Asset Management (MAM) Macquarie Capital (MacCap) • Base fees expected to
Slide 46: Short-term outlook
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Short-term outlook The range of factors that may influence our short-term outlook include: • Market conditions including: global economic conditions, inflation and interest rates, significant volatility event
Slide 47: Medium-term outlook
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Medium-term outlook Macquarie remains well-positioned to deliver superior performance in the medium term Deep expertise in major markets Build on our strength in business and geographic diversity and continue
Slide 48: Medium-term outlook
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Medium-term outlook Annuity-style businesses Markets-facing businesses Non-Banking Group Macquarie Asset Management (MAM) Macquarie Capital (MacCap) ▪ Global specialist asset manager, well-positioned to respo
Slide 49: Approximate business Basel III Capital and ROE
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Approximate business Basel III Capital and ROE 30 Sep 22 APRA Basel III Capital Approx. 1H23 Return on Approx. 16-year Average Operating Group 1 2 @ 8.5% ($Ab) Ordinary Equity Return on Ordinary Equity Annuit
Slide 50: Presentation to investors and analysts
Presentation to investors and analysts Result announcement for the half year ended 30 September 2022 28 October 2022
Slide 51: Appendix A: Detailed Result Commentary
05 Appendix A Detailed Result Commentary
Slide 52: Macquarie Asset Management
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset Management Result • Base fees of $A1,378m, broadly in line with 1H22 1H23 2H22 1H22 – Increase was mainly due to fund raising and investments made by Private Markets- $Am $Am $Am managed funds
Slide 53: Banking and Financial Services
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Financial Services Result • Net interest and trading income of $A1,214m, up 25% on 1H22 1H23 2H22 1H22 – 20% growth in the average loan portfolio and 24% growth in the average BFS $Am $Am $Am depo
Slide 54: Commodities and Global Markets
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and Global Markets Result • Commodities income of $A1,889m, up 51% on 1H22; 1H23 2H22 1H22 – Risk management up 58% on a strong 1H22 with gains across the platform, particularly in Gas and $Am $Am
Slide 55: Macquarie Capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital Result • Net interest and trading income of $A154m, down 3% on 1H22 primarily due to higher 1H23 2H22 1H22 mark-to-market losses on underwriting positions related to a deterioration in curre
Slide 56: Appendix B: Additional Information – Funding
05 Appendix B Additional Information Funding
Slide 57: Macquarie funding structure
Introduction Overview of Result Result Analysis and Financial Management Outlook 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 1 • MBL provides funding
Slide 58: Funded balance sheet reconciliation
Introduction Overview of Result Result Analysis and Financial Management Outlook 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 fro
Slide 59: Funding for Macquarie
Introduction Overview of Result Result Analysis and Financial Management Outlook 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
Slide 60: Funding for the Bank Group
Introduction Overview of Result Result Analysis and Financial Management Outlook 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.
Slide 61: Funding for the Non-Bank Group
Introduction Overview of Result Result Analysis and Financial Management Outlook 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 1 Net trade (debtors)/cred
Slide 62: Explanation of funded balance sheet reconciling items
Introduction Overview of Result Result Analysis and Financial Management Outlook 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 activitie
Slide 63: Conservative long standing liquidity risk management framework
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Conservative long standing liquidity risk management framework Liquidity Policy Liquidity Framework The liquidity risk appetite is intended to ensure that Macquarie is A robust liquidity risk management frame
Slide 64: Appendix C: Additional Information – Capital
05 Appendix C Additional Information Capital
Slide 65: Macquarie Basel III regulatory capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Basel III regulatory capital Surplus calculation Harmonised APRA 1 1 Basel III Basel III 30 Sep 22 $Am $Am Macquarie eligible capital Bank Group Gross Tier 1 capital 23,121 23,121 Non-Bank Group eli
Slide 66: Macquarie APRA Basel III regulatory capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie APRA Basel III regulatory capital Bank Group contribution 1 Risk-weighted assets Tier 1 Deductions Capital Requirement 30 Sep 22 $Am $Am $Am Credit risk On balance sheet 58,535 4,975 Off balance she
Slide 67: Macquarie regulatory capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie regulatory capital Non-Bank Group contribution • APRA has specified a regulatory capital framework for Macquarie • A dollar capital surplus is produced; no capital ratio calculation is specified • T
Slide 68: Macquarie regulatory capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie regulatory capital Non-Bank Group contribution Assets Capital Requirement Equivalent Risk 30 Sep 22 $Ab $Am Weight Funded assets Cash and liquid assets 16.0 293 23% 1 Loan assets 16.3 1,664 128% Deb
Slide 69: Appendix D: Glossary
© macauariE q = ilies OS Appendix D Glossary
Slide 70: Glossary
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Glossary $A / AUD Australian Dollar CLF Committed Liquidity Facility $US / USD United States Dollar CMA Cash Management Account £ / GBP Pound Sterling CRM Customer Relationship Management € Euro CY20 Calendar
Slide 71: Glossary
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Glossary GIG Green Investment Group MW Mega Watt IPO Initial Public Offering MWDC Mega Watt direct current IRB Internal Ratings-Based MWhr Mega Watt hour IFRS International Financial Reporting Standards NFR N
Slide 72: Presentation to investors and analysts
Presentation to investors and analysts Result announcement for the half year ended 30 September 2022 28 October 2022