Macquarie Group, Ltd. · ASX:MQG
Macquarie — Debt Investor Presentation (February 2019)
46 slides from Macquarie's debt investor presentation, Feb 25, 2019
Slide 1: Macquarie Group Capital Notes 4 Offer
For personal use only Macquarie Group Capital Notes 4 Offer PAGE 1
Slide 2: ASIC Guidance
ASIC Guidance For personal use only Please consider ASIC Guidance before investing. www.moneysmart.gov.au/investing MCN4 are a complex investment and may be difficult to understand, even for experienced investors and involve different risks from a simple debt or ordinary equity security. You should
Slide 3: Important notice and disclaimer
Important notice and disclaimer For personal use only This presentation has been prepared by Macquarie Group Limited ABN 94 122 169 279 (“MGL”) in relation to its proposed offer of Macquarie Group Capital Notes 4 (“MCN4”) as described in this presentation. A Prospectus1 in respect of MCN4 was lodged
Slide 4: Overview of the Macquarie Group
For personal use only Overview of the Macquarie Group 01 PAGE 4
Slide 5: Macquarie overview
Macquarie overview For personal use only Diversified global 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 locations Annuity-style businesses Markets facing bus
Slide 6: Years of profitability
49 years of profitability For personal use only 2.0 $Am Hill Samuel UK opens branch office in Sydney 1.6 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 securitisation $Am 100 estate crash US banks London Recession 80
Slide 7: Macquarie funding structure
Macquarie funding structure For personal use only • 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 • MGL provides funding predominately to the Non-Bank
Slide 8: 1H19 result: $A1,310m up 5% on 1H18; in line with 2H18
1H19 result: $A1,310m up 5% on 1H18; in line with 2H18 For personal use only 1H19 2H18 1H18 1H19 v 1H19 v $Am $Am $Am 1H18 2H18 Net operating income1 5,830 5,523 5,397 8% 6% Total operating expenses1 (4,125) (3,763) (3,693) 12% 10% Operating profit before income tax 1,705 1,760 1,704 – 3% Income tax
Slide 9: 1H19 net profit contribution from operating groups
1H19 net profit contribution from operating groups $A2,601m down 2% on 1H18; up 8% on 2H18 For personal use only ANNUITY-STYLE BUSINESSES MARKETS FACING BUSINESSES $A1,495m 29% ON 1H18 $A1,106m 95% ON 1H18 10% ON 2H18 6% ON 2H18 MAM: on 1H18 CGM: on 1H18 Continued to perform well against a strong 1H
Slide 10: Macquarie Asset Management
Macquarie Asset Management For personal use only Actively manages money for investors MIRA AUM $A178.9b3 MIM AUM $A363.6b3 MSIS4 AUM $A7.0b3 across multiple asset classes No.1 infrastructure $A363.6b Closed 10 third party 1 Net profit contribution 10% in assets under investor commitments 33% on FY17
Slide 11: Corporate and Asset Finance
Corporate and Asset Finance For personal use only Finances the assets people use every day $A16.1 billion3 Leading global aircraft lessor 1 Net profit contribution 1% Vehicles portfolio4 260+ owned planes8 24% on FY17 FY18 $A1,206 million 29% Leading Australian $A8.2 billion3 on 1H18 vehicle financi
Slide 12: Banking and Financial Services
Banking and Financial Services For personal use only A technology-driven Australian retail bank and wealth manager Net profit contribution 9% 11% 1 FY18 $A560 million on FY17 Award winning $A88.1 billion 3% digital banking offering3 Funds on platform5 on 1H18 1H19 $A296 million 2 11% Australia’s 1st
Slide 13: Commodities and Global Markets
Commodities and Global Markets For personal use only Provides clients with access to markets, financing, hedging, research and market analysis, and physical execution 1 Net profit contribution 6% No.2 US physical gas Derivatives 18% on FY17 House of the Year4 FY18 $A910 million marketer in North Ame
Slide 14: Macquarie Capital
Macquarie Capital For personal use only Advises and invests alongside clients and partners to realise opportunity 1 Net profit contribution 45% No.1 global infrastructure Global in green energy leader 14% on FY17 finance adviser3 FY18 $A700 million 114% 16% 2 1H19 $A406 million on 1H18 No.1 complete
Slide 15: Stable earnings
Stable earnings For personal use only 5 year earnings volatility relative to Macquarie 10 year earnings volatility relative to Macquarie (since GFC) (includes GFC) Multiple to Macquarie Multiple to Macquarie 4.5 20.0 4.2x 4.0 3.7x 16.5x 16.0 3.5 3.0 12.0 2.5 2.0 8.0 1.5 1.3x 1.2x 1.0x 4.6x 1.0 0.7x
Slide 16: Diversification by region
Diversification by region For personal use only International income 67% of total income1 Asia Total staff 15,110; International staff 56% of total Staff 9% of total income 3,630 Income EMEA Staff $A532m 2,019 27% Income Assets under management Americas of total income $A55.2b $A1,545m employing 48,
Slide 17: Operating groups update
Operating groups update For personal use only Effective 1 December 2018 Martin Stanley Florian Herold — New Group Head of MAM and new Group Head of CAF Principal Finance — Following the changes Macquarie’s Executive Committees will include representatives based in all regions — Some teams in MAM a
Slide 18: Outlook
For personal use only Outlook PAGE 18 02
Slide 19: Factors impacting short-term outlook
Factors impacting short-term outlook For personal use only Annuity-style businesses Markets-facing businesses Macquarie Asset Management (MAM) Commodities and Global Markets (CGM) Base fees expected to be up, benefiting from strong capital Strong customer base expected to drive consistent flow raisi
Slide 20: Short-term outlook
Short-term outlook For personal use only • While the impact of future market conditions makes forecasting difficult, we currently expect an increase of up to 15 per cent in the FY19 result compared with the FY18 result • Our short-term outlook remains subject to: – The conduct of period-end reviews
Slide 21: Medium-term outlook
Medium-term outlook For personal use only • Macquarie remains well positioned to deliver superior performance in the medium-term • Deep expertise in major markets • Build on our strength in diversity and continue to adapt our portfolio mix to changing market conditions – Annuity-style income is prov
Slide 22: Approximate business Basel III Capital and ROE
Approximate business Basel III Capital and ROE For personal use only 30 Sep 18 1 APRA Basel III Capital Approx. 1H19 Return Approx. 12-Year Average Operating Group 2 @ 8.5% ($Ab) on Ordinary Equity2 Return on Ordinary Equity Annuity-style businesses 9.0 Macquarie Asset Management 2.2 Corporate and A
Slide 23: Capital and Funding
For personal use only Capital and Funding 03 PAGE 23
Slide 24: Strong regulatory ratios
Strong regulatory ratios For personal use only Bank Group (Dec 18) 1. ‘Harmonised’ Basel III estimates are calculated in accordance with the BCBS Basel III framework. 2. Average LCR for Dec 18 quarter is based on an average of daily observations. 3. Includes the capital conservation buffer in the mi
Slide 25: Basel III capital position
Basel III capital position For personal use only APRA Basel III Group capital at Dec 18 of $A20.4b, Group capital surplus of $A4.0b1,2 1. Calculated at 8.5% RWA including the capital conservation buffer (CCB), per APRA ADI Prudential Standard 110. The APRA Basel III Group capital surplus is $A5.2b c
Slide 26: 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 9% to $A52.3b as at Sep 18 from
Slide 27: 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 policy is that the entities are able to meet all liquidity obligations during a period of liquidity stress: - A minimum 12 month period with constrai
Slide 28: Funded balance sheet remains strong
Funded balance sheet remains strong For personal use only These charts represent Macquarie’s funded balance sheets at the respective dates noted above. 1. ‘Other debt maturing in the next 12 months’ includes Structured Notes, Secured Funding, Bonds, Other Loans, Loan Capital maturing within the next
Slide 29: Diversified issuance strategy
Diversified issuance strategy For personal use only Term funding as at 30 Sep 18 – diversified by currency1, tenor2 and type Well diversified issuance and funding sources Term funding beyond 1 year (excluding equity and securitisations) has a weighted average maturity of 4.6 years Term Issuance
Slide 30: MCN4 Offer
For personal use only MCN4 Offer PAGE 30 04
Slide 31: Macquarie Group Capital Notes Offer Overview
Macquarie Group Capital Notes 4 Offer For personal use only Overview Issuer Macquarie Group Limited (“MGL”) Type of security Fully paid, subordinated, non-cumulative, unsecured, mandatorily convertible, perpetual capital notes (“MCN4”), automatically convertible at the point of Non-Viability of
Slide 32: MCN4 Key Terms: Distributions
MCN4 Key Terms For personal use only Distributions Distributions on MCN4 are discretionary, non-cumulative floating rate payments Distributions are scheduled to be paid quarterly in arrears commencing on 10 June 2019 and thereafter quarterly, subject to the Payment Conditions, until MCN4 are Exc
Slide 33: MCN4 Key Terms: Mandatory Exchange
MCN4 Key Terms For personal use only Mandatory Exchange The Issuer must Exchange MCN4 into Ordinary Shares on 10 September 2029 (if MCN4 have not been Redeemed, Exchanged or Written-Off beforehand) provided that certain Exchange Conditions are satisfied Mandatory Exchange The conditions to Manda
Slide 34: MCN4 Key Terms: Optional Exchange and Acquisition or Non-Viability Event
MCN4 Key Terms Optional Exchange and Exchange on an Acquisition Event or Non- For personal use only Viability Event Optional Exchange The Issuer may choose to Exchange all or some MCN4 on 10 September 2026, 10 March 2027 or 10 September 2027 or if there has been a Tax Event or a Regulatory Event
Slide 35: MCN4 Key Terms: Summary of certain events
MCN4 Key Terms For personal use only Summary of certain events that may occur during the term of MCN4 APRA Do approval conditions What value will a MCN4 holder In what form will the value be provided Event When could this occur? Consequences required?1 apply?2 receive (per MCN4)?3 to MCN4 Holders? T
Slide 36: MCN4 Key Terms: Comparison between MCN4 and other Securities
MCN4 Key Terms For personal use only Comparison between MCN4 and other Securities Feature Term deposit BCN MCN2 and MCN3 MCN4 Ordinary Shares Issuer Bank, credit union or Macquarie Bank Limited Macquarie Group Limited Macquarie Group Limited Macquarie Group Limited building society (e.g. MBL) Eligib
Slide 37: MCN4 Key Terms: Ranking in a winding up
MCN4 Key Terms For personal use only Ranking in a winding up In a Winding Up of MGL, MCN4 will rank ahead of Ordinary Ranking Illustrative examples Shares, equally with Equal Ranking Obligations, but behind all Senior Creditors of MGL However, any return on MCN4 may be adversely affected or High
Slide 38: Investment Risks
For personal use only Investment Risks 05 PAGE 38
Slide 39: ASIC Guidance
ASIC Guidance For personal use only Please consider ASIC Guidance before investing. www.moneysmart.gov.au/investing MCN4 are a complex investment and may be difficult to understand, even for experienced investors and involve different risks from a simple debt or ordinary equity security. You should
Slide 40: Key Risks
Key Risks For personal use only Outlined below are some of the key risks associated with an investment in MCN4 There are risks associated with an investment in MCN4, many of which are outside the control of MGL. These risks include those in Section 1.3 and Section 4 of the Prospectus. Before app
Slide 41: Key Risks (cont.)
Key Risks (cont.) For personal use only Key risk Overview Changes in Distribution rate The Distribution Rate will fluctuate (both increasing and decreasing) over time as a result of movements in the Reference Rate A higher Franking Rate for a Distribution will result in a lower Distribution Rate
Slide 42: Key Risks (cont.)
Key Risks (cont.) For personal use only Key risk Overview MGL has rights for Exchange, Redemption or MGL may elect to Exchange, Redeem or arrange a Resale of all or some MCN4 in certain circumstances, subject to a Resale at its election number of conditions, including prior written approval from A
Slide 43: Key Risks (cont.)
Key Risks (cont.) For personal use only Key risk Overview Restrictions on rights and ranking in a MCN4 are not deposit liabilities or protected accounts of MBL or MGL and are not guaranteed or insured by any Winding Up of MGL government, government agency or compensation scheme of Australia or any
Slide 44: Key Dates and Contacts
For personal use only Key Dates and Contacts 06 PAGE 44
Slide 45: Key Dates
Key Dates For personal use only KEY DATES FOR OFFER DATE Record date for Eligible Securityholders Friday, 22 February 2019 Lodgement of Prospectus Monday, 25 February 2019 Bookbuild period commences Monday, 25 February 2019 Announcement of Margin Friday, 1 March 2019 Lodgement of the replacement Pro
Slide 46: Key Contacts
Key Contacts For personal use only Issuer Macquarie Group Limited Stuart Green, Group Treasurer Brad Milson, Division Director +61 2 8232 8845 +61 2 8232 7550 Sole Arranger Macquarie Capital (Australia) Limited Georgina Lalor, Executive Director Michael Daley, Associate Director +61 2 8232 6742 +61
Macquarie Group — Debt Investor Presentation (February 2019) on 6ix