Slide 1: Result Announcement for the full year ended 31 March 2012
Macquarie Group Limited For personal use only Result Announcement for the full year ended 31 March 2012 Presentation to Investors and Analysts 27 April 2012 Nicholas Moore, Managing Director and Chief Executive Officer Patrick Upfold, Chief Financial Officer
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 – Stuart Green 2. Overview of Result – Nicholas Moore 3. Result Analysis and Financial Management – Patrick Upfold 4. Outlook – Nicholas Moore 5. Appendices 3
Slide 4: Introduction
For personal use only 1 Introduction Stuart Green Investor Relations Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts 4
Slide 5: Overview of Result
For personal use only 2 Overview of Result Nicholas Moore Managing Director and Chief Executive Officer Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts 5
Slide 6: About Macquarie
About Macquarie Building for the medium term For personal use only Top 50 global asset manager with $A324b1 of assets under management Provides clients with access to a diverse range of capabilities and products, including infrastructure and real asset Macquarie Funds management, securities inve
Slide 7: 2H12 result
2H12 result For personal use only Net profit of $A425m, up 39% on 1H12 and down 23% on pcp Operating income $A3.7b, up 15% on 1H12 and down 8% on pcp As foreshadowed: Macquarie’s annuity-style businesses have delivered a combined net profit contribution in line with pcp, albeit down 21% on 1
Slide 8: FY12 result
FY12 result For personal use only Net profit of $A730m, down $A226m (or 24%) on FY11 Operating income $A7.0b, down $A702m (or 9%) on FY11 Capital market facing businesses down $A747m (or 20%) on FY11 As foreshadowed; Macquarie Funds, Corporate and Asset Finance and Banking and Financial Se
Slide 9: FY12 result
FY12 result For personal use only 2H12 1H12 Mar 12 Mar 11 $Am $Am $Am $Am Net operating income 3,720 3,243 6,963 7,665 Total operating expenses (3,086) (2,828) (5,914) (6,394) Operating profit before income tax 634 415 1,049 1,271 Tax expense (180) (107) (287) (282) Profit attributable to non-contro
Slide 10: Financial performance
Financial performance For personal use only $Am $Am FY12 Operating income of $A6,963m FY12 Profit of $A730m FY12 down 9% on FY11 800 FY12 down 24% on FY11 2H12 up 15% on 1H12 2H12 up 39% on 1H12 4,000 400 2,000 0 0 1H10 2H10 1H11 2H11 1H12 2H12 1H10 2H10 1H11 2H11 1H12 2H12 $A $A FY12 EPS of $A2.10
Slide 11: Cost Performance
Cost Performance For personal use only As foreshadowed, FY12 operating costs (excl. brokerage and commissions expense) $A5.2b; down $A0.4b on FY11 – Achieved across the group through centralising support functions, and reducing front office costs including the reduction of business scope in some c
Slide 12: Assets under management of $A327b
Assets under management of $A327b For personal use only Increase in AUM resulting from: Net inflows, investments in infrastructure and real assets and valuation changes Partially offset by asset disposals and FX movements of the Euro against AUD 12
Slide 13: Diversified income
Diversified income Operating income by source For personal use only Operating income before writedowns, impairments, equity accounted gains/(losses) and one-off items1 12 months to 31 March 11 12 months to 31 March 12 $A7.6b $A7.3b Institutional and retail cash equities Equity 16% 14% derivatives 27
Slide 14: Diversified by region
Diversified by region International income1 60% of total Total staff 14,202; International staff 53% of total For personal use only EUROPE, MIDDLE EAST ASIA AMERICAS & AFRICA2 Income: $A1,229m (18% of total) Income: $A743m (11% of total) Income: $A2,044m (31% of total) Staff: 1,370 Staff: 2,795 Staf
Slide 15: Diversified income: Operating income by region
Diversified income Operating income by region For personal use only 60% of operating income in FY12 generated offshore FX translation estimated to have a negative impact of approx. 5% due to the strengthening of AUD by an average of approx. 10% against major currencies 1,600 1,400 2H10 1H11 1,20
Slide 16: Macquarie Funds
Macquarie Funds Operating income of $A1,366m, up 6% on prior year Net profit contribution of $A655m, up 36% on prior year For personal use only AUM of $A324b up 6% on prior year Macquarie Infrastructure and Real Assets Macquarie Investment Management Macquarie Specialised Investment Solutions Activi
Slide 17: Corporate and Asset Finance
Corporate and Asset Finance Operating income of $A1,077m, up 23% on prior year Net profit contribution of $A698m, up 22% on prior year For personal use only Asset and loan portfolio of $A20.6b up 5% on prior year Corporate Lending Asset Finance Funded loan portfolio of $A8.0b in line Motor vehic
Slide 18: Banking and Financial Services
Banking and Financial Services Operating income of $A1,413m, down 6% on prior year Net profit contribution of $A265m, down 4% on prior year For personal use only Global client numbers 1.14 million, up 6% on prior year Private Wealth/Direct Intermediary Relationship Banking Activity Activity Activity
Slide 19: Macquarie Securities
Macquarie Securities Operating income of $A893m, down 33% on prior year Net loss of $A194m down from a profit of $A184m in prior year For personal use only Market Conditions Australia Asia North America EMEA Activity Activity Activity Activity Cash Significantly lower client volumes in cash Mark
Slide 20: Macquarie Capital
Macquarie Capital Operating income of $A659m, down 28% on prior year Net profit contribution of $A85m, down 60% on prior year For personal use only 435 transactions valued at $A97b1 during the year (547 transactions valued at $A159b in prior year) Advisory fee income down 21% on prior year, ECM fee
Slide 21: Fixed Income, Currencies and Commodities
Fixed Income, Currencies and Commodities Operating income of $A1,364m, down 4% on prior year Net profit contribution of $A539m, down 6% on prior year For personal use only Commodity Markets (Physical & Financial) Financial Markets (Primary & Secondary) 6% of operating 69% of operating income 25% of
Slide 22: 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 deposits1 increased to $A33.9b at Mar 12 from $A31.6b at Mar 11 Represents 39% of the Group’s total funding sources Group loan asset
Slide 23: Funded balance sheet remains strong
Funded balance sheet remains strong For personal use only Macquarie Group Limited $Ab 31 March 2011 $Ab 30 September 2011 $Ab 31 March 2012 100 100 100 90 90 ST wholesale 90 ST wholesale issued paper (6%) issued paper (6%) ST wholesale Other debt1 maturing in issued paper (7%) 80 Other debt1 maturin
Slide 24: Basel III surplus increased as a result of business actions and MIS eligibility
Basel III surplus increased as a result of business actions and MIS eligibility For personal use only Harmonised Basel III Group surplus of $A3.5b at Mar 121 $Ab Group regulatory surplus: Basel III (Mar 12) 5.0 Additional: Legacy assets 4.5 Retained earnings Hybrid issuance 0.2 0.3 4.4 Reduction:
Slide 25: Capital Management Strategy
Capital Management Strategy For personal use only On 28 Oct 11, we noted we were likely to satisfy our Basel III capital requirements including the capital conservation buffer of 2.5%. Given our shares were trading at a material discount to NTA and book value, we stated that we would apply some of
Slide 26: Dividends
Dividends For personal use only FY12 dividend set at $A1.40, ~66% payout ratio, down on FY11 dividend of $A1.86 2H12 dividend $A0.75 up on 1H12 dividend of $A0.65 Dividend remains unfranked Dividend policy remains 50 – 60% annual payout ratio Dividend Reinvestment Plan shares for the 2H12
Slide 27: Result Analysis and Financial Management
For personal use only 3 Result Analysis and Financial Management Patrick Upfold Chief Financial Officer Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts 27
Slide 28: Income Statement key drivers
Income Statement key drivers For personal use only 1H12 2H12 Mar 12 Mar 11 Net interest income up 5% on prior year to $A1,333m $Am $Am $Am $Am – Growth in lending and leasing volumes, improved margins – Partially offset by increased funding costs associated with a larger Net interest income 698 63
Slide 29: Macquarie Funds Result
Macquarie Funds Result For personal use only Mar 12 Mar 11 Base fees up on prior year due to increase in AUM/EUM $Am $Am – Net inflows into securities investment management business Base fees 893 874 – Investments in infrastructure and real assets Performance fees 125 30 – Partially offset by stro
Slide 30: Corporate and Asset Finance Result
Corporate and Asset Finance Result For personal use only Mar 12 Mar 11 Net interest income up 5% on prior year $Am $Am – Loan and finance lease portfolio up 5% on prior year Net interest income1 591 561 – Increased early repayments on lending portfolio Fee, commission and trading Net operating l
Slide 31: Banking and Financial Services Result
Banking and Financial Services Result For personal use only Mar 12 Mar 11 Net interest income up 2% on prior year $Am $Am – Increase in interest income partially offset by higher funding costs Net interest income1 691 680 – Retail deposits up 9% from $A26.6b at Mar 11 to $A29.0b at Mar 12 Base fee
Slide 32: Macquarie Securities Result
Macquarie Securities Result For personal use only Mar 12 Mar 11 Net trading income down 43% on prior year $Am $Am – Subdued global market conditions driving reduced institutional and retail activity and weak product demand for retail and structured Net trading income (including net interest income
Slide 33: Macquarie Capital Result
Macquarie Capital Result For personal use only Mar 12 Mar 11 Fee and commission income down 20% on prior year $Am $Am – Weak investor confidence and increased market volatility leading to Fee and commission income 573 716 significantly lower levels of ECM activity Equity investment income 199 121
Slide 34: Fixed Income, Currencies and Commodities Result
Fixed Income, Currencies and Commodities Result For personal use only Mar 12 Mar 11 Commodities trading income down 7% on prior year $Am $Am – Limited trading opportunities experienced in the metals and agricultural markets Commodities1 576 618 – Partially offset by strong revenues across the glob
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 Surplus funding capacity continues to be deployed Minimal reliance on short term wholesale funding markets Retail deposits1 continuing
Slide 36: 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 on a daily basis and during a period of liquidity stress: a minimum twelve
Slide 37: Well diversified funding sources
Well diversified funding sources For personal use only MGL term funding (drawn and undrawn1) Diversity of MGL funding sources maturing beyond one year (including equity Net trade and hybrids) Wholesale creditors issued paper Deposits - corporate & $Ab Equity & Hybrids wholesale 20 Equity & hybrids L
Slide 38: Continued retail deposit growth
Continued retail 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 million retail clients, of which more than 600,000 are depositors Focus on the composition and qualit
Slide 39: Loan portfolio growth
Loan portfolio1 growth per the funded balance sheet For personal use only Volume Total Income $Ab $Am 40 1600 35 1400 30 1200 25 1000 20 800 15 600 10 400 5 200 0 0 Mar 09 Mar 10 Mar 11 Mar 12 Mortgages CAF lending Banking Aircraft leasing Structured investment loans Motor Vehicle leasing Resources
Slide 40: Equity investments of $A5.3b
Equity investments of $A5.3b1 For personal use only Carrying Carrying value2 value2 Mar 12 Mar 11 Category $Am $Am Description Macquarie Funds (MIRA) managed 869 880 Macquarie Atlas Roads, Macquarie SBI Infrastructure Company, funds Macquarie Infrastructure Company, Macquarie International Infrastru
Slide 41: Capital update
Capital update For personal use only Based on the Macquarie Group Basel III capital position as at 31 Mar 12 and on a fully implemented Harmonised Basel III basis1: – Group capital surplus is $A3.5b measured at 8.5%2 (BIS requirement in 2019) – MBL’s CET1 ratio is 12.2%, pro forma CET1 ratio of 13
Slide 42: Basel III Common Equity Tier (CET1) Ratio
Basel III Common Equity Tier 1 (CET1) Ratio For personal use only Strong Banking Group Harmonised Basel III CET1 ratio - Common Equity Tier 1: 12.2%; Tier 1: 13.2% Basel III applies only to the Banking Group and not the Non-Banking Group Banking Group Common Equity Tier 1 (CET1) Ratio: Basel III
Slide 43: Outlook
For personal use only 4 Outlook Nicholas Moore Managing Director and Chief Executive Officer Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts 43
Slide 44: Short term outlook
Short term outlook For personal use only Summarised below are the outlook statements for each operating group, the FY13 results will vary with market conditions, particularly the capital markets facing businesses which continue to experience volatility Net profit contribution FY07- FY12 FY07-FY12
Slide 45: Short term outlook
Short term outlook For personal use only While market volatility makes forecasting difficult, it is currently expected that the result for the Group for FY13 will be an improvement on FY12 provided market conditions for FY13 are not worse than those experienced over the past 12 months The FY13 r
Slide 46: Medium term
Medium term For personal use only Macquarie remains well positioned to deliver superior performance in the medium term Deep expertise in major markets Build on our strength in diversity and continue to adapt our portfolio mix to changing market conditions – Annuity-style income is provided by th
Slide 47: Approximate business Basel III ROE
Approximate business Basel III ROE For personal use only APRA Basel III Capital Approx. FY12 Return Group @ 8.5% ($Ab) on Ordinary Equity1 Annuity-style businesses Approx. 6-Year Average (excluding legacy) Return on Ordinary Equity1 Macquarie Funds Group 1.6 Corporate and Asset Finance 2.2 22% 20%2
Slide 48: Medium term
Medium term For personal use only Annuity-style business that is diversified across regions, products, asset classes and investor types MFG Well positioned for organic growth with several strongly performing products and an efficient operating platform Any improvement in market confidence shou
Slide 49: Appendix A: Cost Performance Drivers
For personal use only A Appendix Cost Performance Drivers Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts 49
Slide 50: Cost Performance Drivers
Cost Performance Drivers For personal use only Growth areas FY12 Cost reduction FY12 Streamlined product suite Distribution capability in Europe and US MFG $A10m Merging US fixed income onto Delaware platform $A112m Acquisition of Austrian investment management business Improved operationa
Slide 51: Appendix B: Additional Information – Funding
For personal use only B Appendix Additional Information – Funding Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts 51
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 predominantly to the Non-Bank Grou
Slide 53: Funded balance sheet reconciliation
Funded balance sheet reconciliation For personal use only The Group’s statutory balance sheet 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 assets
Slide 54: Funding for the Group March 2012
Funding for the Group 31 March 2012 For personal use only Mar 12 Mar 11 Well diversified funding sources $Ab $Ab Funding sources Minimal reliance on short term wholesale Negotiable certificates of deposit 1.7 1.7 funding markets Commercial paper 4.6 3.5 Net trade creditors 0.2 0.5 Deposit base
Slide 55: Funding for the Bank Group March 2012
Funding for the Bank Group 31 March 2012 For personal use only Mar 12 Mar 11 Bank balance sheet remains very liquid, well capitalised $Ab $Ab and with a diversity of funding sources Funding sources Term funding beyond one year (excluding equity) has a Negotiable certificates of deposit 1.7 1.7 w
Slide 56: Funding for the Non-Bank Group March 2012
Funding for the Non-Bank Group 31 March 2012 For personal use only Mar 12 Mar 11 Non-Bank Group is predominantly term funded $Ab $Ab Funding sources Term funding beyond one year (excluding MBL intra-group loan to MGL - 0.7 equity) has a weighted average term to maturity Net trade creditors - 0.5
Slide 57: Explanation of Funded Balance Sheet reconciling items
Explanation of Funded Balance Sheet reconciling items For personal use only Self funded trading assets: There are a number of entries on the balance sheet that arise from the normal course of trading activity we conduct with our clients and counterparties. They typically represent both sides of a
Slide 58: Appendix C: Additional Information – Capital
For personal use only C Appendix Additional Information – Capital Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts 58
Slide 59: Regulatory update
Regulatory update For personal use only APRA released draft capital standards covering definition of capital on 30 March 2012 for industry consultation: Proposals broadly consistent with the APRA discussion paper published Sep 11 APRA’s interpretation of the Basel III risk coverage proposals w
Slide 60: Macquarie Group Basel III regulatory capital
Macquarie Group Basel III regulatory capital Surplus calculation For personal use only Harmonised APRA Basel III Basel III 31 March 2012 $Am $Am Macquarie Group eligible capital: Bank Gross Tier 1 capital 9,545 9,545 Non-Bank eligible capital 3,304 3,304 Eligible capital 12,849 12,849 (a) Macquarie
Slide 61: Macquarie Group regulatory capital: Non-Banking Group contribution
Macquarie Group regulatory capital Non-Banking Group contribution For personal use only 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)
Slide 62: Macquarie Group Basel II regulatory capital
Macquarie Group Basel II regulatory capital1 Surplus calculation For personal use only 31 March 12 Basel II $Am Macquarie Group eligible capital: Bank eligible capital 9,061 Non-Bank eligible capital 3,495 Eligible capital 12,556 (a) Macquarie Group capital requirement: Banking Group contribution Ri
Slide 63: Macquarie Group Basel II regulatory capital: Banking Group
Macquarie Group Basel II regulatory capital Banking Group contribution For personal use only Strong Banking Group capital ratios - Tier 1: 13.8% (Core Tier 11: 12.5%); Total Capital: 16.6% Risk-weighted Tier 1 Capital 31 March 2012 assets Deductions Requirement2 $Am $Am $Am Credit risk On balance
Slide 64: Macquarie Group regulatory capital: Non-Banking Group contribution
Macquarie Group regulatory capital Non-Banking Group contribution For personal use only Capital Assets Equivalent Requirement 31 March 2012 $Ab Risk Weight $Am Funded assets Cash and liquid assets 2.3 16 9% Loan assets1 1.3 115 109% Assets held for sale 0.1 72 655% Debt investment securities 0.2 5 4
Slide 65: Appendix D: Glossary
For personal use only D Appendix Glossary Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts 65
Slide 66: Glossary
Glossary For personal use only $A Australian Dollar CMA Cash Management Account $C Canadian Dollar CMT Cash Management Trust $US United States Dollar CVA Credit Valuation Adjustment € Euro DEFT Direct Electronic Funds Transfer 1H10 Half Year ended 30 September 2009 DCM Debt Capital Markets 1H11 Half
Slide 67: Glossary
Glossary For personal use only FY13 Full Year ended 31 March 2013 MIS Macquarie Income Securities G10 Group of Ten Industrialised Nations MSG Macquarie Securities Group GDR Global Depository Receipt MPW Macquarie Private Wealth HFS Held For Sale No. Number HK Hong Kong Net profit Operating Income le
Slide 68: Macquarie Group Limited
Macquarie Group Limited For personal use only