Slide 1: Presentation to investors and analysts
© macauaRiE Presentation to investors and analysts Result announcement for the full year ended 31 March 2023 5 May 2023
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
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 ~41% Markets-facing activities | Net Profit Contribution ~59% BFS MAM CGM MacCap Banking and Financial Services Macquarie Asset Management Co
Slide 7: 2H23 and FY23 result summary
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 2H23 result: $A2,877m up 25% on 1H23; up 8% on 2H22 FY23 result: $A5,182m up 10% on FY22 2H23 1H23 2H23 v FY23 FY22 FY23 v $Am $Am 1H23 $Am $Am FY22 Net operating income 10,481 8,641 á 21% 19,122 17,324 á 10%
Slide 8: 2H23 net profit contribution from Operating Groups
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 2H23 net profit contribution from Operating Groups $A5,778m up 26% on 1H23; up 5% on 2H22 Annuity-style activities â 18% Markets-facing activities á 71% $A1,862m $A3,916m ON 1H23 ON 1H23 â 30% á 40% ON 2H22 O
Slide 9: FY23 net profit contribution from Operating Groups
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices FY23 net profit contribution from Operating Groups $A10,351m up 9% on FY22 Annuity-style activities Markets-facing activities $A4,143m â 17% $A6,208m á 38% ON FY22 ON FY22 Non-Banking Group Macquarie Asset Ma
Slide 10: Financial performance
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Financial performance Operating income FY23 Profit FY23 $A19,122m $A5,182m $Am $Am 20,000 á 10% 6,000 á 10% 16,000 ON FY22 5,000 ON FY22 4,000 12,000 3,000 8,000 2,000 4,000 1,000 — — FY19 FY20 FY21 FY22 FY23
Slide 11: Assets under management of $A870.8b
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Assets under management of $A870.8b 1 AUM increased 10% from $A793.0b as at 31 Mar 22 Increase due to investments made by Private Markets-managed funds and foreign exchange movements, partially offset by mark
Slide 12: Diversification by region
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversification by region 1 International income 71% of total income 2 Total staff 20,509 of which 51% international. A further ~246,000 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 71% of total income in FY23 was generated offshore Total income $Am 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 — 2 Americas Europe, Middle East & Africa Asia Australia A
Slide 14: Macquarie Asset Management $A4,951m
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset • MAM Broadened and deepened long-term partnerships, with record Private Markets equity raising driven by growth in new clients and an increasing Management proportion of clients investing acr
Slide 15: Banking and Financial Services $A2,961m
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Personal Banking • Home loan portfolio of $A108.1b, up 21% • Business Banking Business Banking loan portfolio of Wealth Management • Funds on platform of $A123.1b, up 4% on Financial Services on M
Slide 16: Commodities and Global Markets $A8,717m
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and 1 1 1 Asset Finance 5% Commodities 81% Financial Markets 14% • Continued positive • Strong risk management income Foreign exchange, interest Equity Derivatives and Global Markets performance a
Slide 17: Macquarie Capital $A2,227m
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Summary • Maintained a leading market position in ANZ in M&A in 2022 2 Transaction Activity Delivering combined solutions – multi-product capabilities in areas of deep Capital expertise. Transaction
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 31 Mar 23 $Ab $Ab 330 330 300 300 6 ST wholesale issued paper 10% Total customer deposits Other debt maturing in the next 270
Slide 19: Basel III Group capital position
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Basel III Group capital position • Strong capital position to support business activity and invest in new opportunities where expected risk adjusted returns are attractive 1,2 • APRA Basel III Group capital s
Slide 20: Business capital requirements
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 1 2H23 Key drivers Business capital requirements MAM • Growth in fund co-investments and underwrites to seed core and adjacent FY23 business capital requirement increase of $A3.5b largely driven by FX fund op
Slide 21: Strong regulatory ratios
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Strong regulatory ratios Bank Group Level 2 Ratios (Mar 23) 250.0% 250.0% 8.0% 20.0% 18.4% 214% 1 200.0% 200.0% 5.9% 16.0% 6.0% 150.0% 150.0% 13.7% 5.2% 12.0% 4.0% 124% 100.0% 100.0% 8.0% 2.0% 50.0% 50.0% 4.0
Slide 22: Final dividend
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Final dividend 2H23 Ordinary Dividend FY23 Ordinary Dividend $A4.50 $A7.50 FROM FROM á $A3.50 á $A6.22 (40% franked) (40% franked) (40% franked) IN 2H22 (40% franked) IN FY22 2H23 Record Date Payout Ratio 16
Slide 23: Board Update
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Board Update Ensuring that the Board is an effective shareholder steward for a business as diverse as Macquarie requires balancing experience and longevity with fresh perspectives, underpinned by diversity of
Slide 24: Result Analysis and Financial Management
03 Result Analysis and Financial Management Alex Harvey Chief Financial Officer
Slide 25: Income statement key drivers
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Income statement key drivers Net interest and trading income of $A10,523m, up 53% on FY22 2H23 1H23 FY23 FY22 • Increased inventory management and trading income driven by trading gains from regional supply a
Slide 26: Macquarie Asset Management
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset Management Key drivers • Higher Private Markets base fees due to fund raising and investments made by Decrease driven by income related to the disposition of MIC assets in Private Markets-mana
Slide 27: 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 Private Markets 78.4 Public Invest
Slide 28: 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 BFS deposits, together with system growth of 31% in average home loan volumes, albe
Slide 29: Banking and Financial Services
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Financial Services Strong growth across home loans, deposits, funds on platform and business banking loans $Ab $Ab 140 14 13.7 129.4 13.0 123.1 118.6 120 12 11.5 11.5 108.1 101.4 10.2 98.0 100 10
Slide 30: Commodities and Global Markets
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and Global Markets Key drivers • Commodities up substantially on FY22 Strong underlying client business which benefitted from – Strong Risk Management revenue across the platform particularly in G
Slide 31: Gas market movements
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Gas market movements Elevated volatility levels experienced in global gas markets since 2H22 have largely abated in 4Q23 1 European Gas Prices Dutch TTF 1 US Gas Prices Henry Hub FY20 to FY21 FY22 1H23 3Q23 4
Slide 32: Strong underlying client business
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Strong underlying client business Majority of income derived from underlying client business 2 Operating Income Client numbers (excl. credit and other impairment charges) (excl. Asset Finance) Underlying clie
Slide 33: Underlying client activity driving regulatory capital and trading revenues
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Underlying client activity driving regulatory capital and trading revenues 1 Regulatory capital (normalised) Group Daily trading profit and loss FY19 - FY23 ($Am) 2 Days 120 100 80 60 40 20 — $Am Mar 19 Mar 2
Slide 34: Macquarie Capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital Key drivers • Lower fee and commission income driven by: Result reflects lower fee and commission and investment- – Lower mergers and acquisitions fee income, which decreased 24% on a strong
Slide 35: Macquarie Capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital Movement in capital Private Credit capital 1 sector exposures $Ab 6.0 6% 1.4 (0.9) 9% 5.0 26% 0.1 4.2 4.0 3.6 0.1 14% 3.0 2.0 16% 14% 1.0 15% — 31 Mar 22 Investments Realisations FX 31 Mar 2
Slide 36: Regulatory compliance and technology spend
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Regulatory compliance and technology spend 1 2 Total compliance spend $A1,043m up 33% on FY22 and total technology spend up 26% on FY22 FY23 FY22 Regulatory compliance spend Regulatory compliance spend $Am $A
Slide 37: 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 38: Diversified issuance strategy
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversified issuance strategy 1 2 Term funding as at 31 Mar 23 – diversified by currency , tenor and type Currency Tenor Type GBP 3% CHF 1% 4.9 years WAM6 EUR 5% 1-2yrs 17% JPY 2% Unsecured loans 9% OTH 2% Se
Slide 39: 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 approximately 1.8 million BFS clients, ~1.2 mi
Slide 40: 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 Mar 23 Mar 22 Group Category $Ab $Ab Description Home loans 109.0 89.9 Secured by residential property Business banking 12.9 11.4 Loan portfolio sec
Slide 41: Equity investments of $A9.6b
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 1 Equity investments of $A9.6b Carrying value Carrying value Category Mar 23 $Ab Mar 22 $Ab Description Macquarie Asset Management Private Includes investments in new core infrastructure and new 1.8 1.5 Marke
Slide 42: Regulatory update
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Regulatory update Australia APRA has finalised or is in the process of implementing changes to a number of prudential standards. Macquarie notes the following key updates: 1 • APRA’s revised bank capital fram
Slide 43: Basel III Bank Group Common Equity Tier 1 (CET1) Ratio
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Basel III Bank Group Common Equity Tier 1 (CET1) Ratio • APRA Basel III Level 2 CET1 ratio at Mar 23: 13.7% 1 • Harmonised Basel III Level 2 CET1 ratio at Mar 23: 18.4% 2 • APRA’s UQS reforms effective from 1
Slide 44: Strong liquidity position maintained
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Strong liquidity position maintained 1 • 214% average LCR for Mar 23 quarter, based on daily observations – Maintained well above regulatory minimum • Reflects longstanding conservative approach to liquidity
Slide 45: Capital management update
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Capital management update Dividend Reinvestment Plan (DRP) 1 • On 13 Dec 22, the DRP in respect of the 1H23 dividend was satisfied through the allocation of ordinary shares at a price of $178.80 per share. Th
Slide 46: Outlook
04 Outlook Shemara Wikramanayake Managing Director and Chief Executive Officer
Slide 47: Short-term outlook
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Short-term outlook Factors impacting short-term outlook Annuity-style businesses Markets-facing businesses Non-Banking Group Macquarie Asset Management (MAM) Macquarie Capital (MacCap) • Base fees expected to
Slide 48: Short-term outlook
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Short-term outlook The range of factors that may influence our short-term outlook include: • Market conditions including: global economic conditions, inflation and interest rates, significant volatility event
Slide 49: Medium-term outlook
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Medium-term outlook Macquarie remains well-positioned to deliver superior performance in the medium term with its diverse business mix across annuity-style and markets-facing businesses Deep expertise across
Slide 50: Medium term
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Medium term Annuity-style businesses Markets-facing businesses Non-Banking Group Macquarie Asset Management (MAM) Macquarie Capital (MacCap) ▪ Well-positioned to respond to current market conditions and grow
Slide 51: Approximate business Basel III Capital and ROE
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Approximate business Basel III Capital and ROE 31 Mar 23 APRA Basel III Capital Approx. FY23 Return on Approx. 17-year Average Operating Group 1 2 @ 10.25% ($Ab) Ordinary Equity Return on Ordinary Equity Annu
Slide 52: Presentation to investors and analysts
Presentation to investors and analysts Result announcement for the full year ended 31 March 2023 5 May 2023
Slide 53: Appendix A
05 Appendix A Detailed Result Commentary
Slide 54: Macquarie Asset Management
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset Management Result • Base fees of $A2,782m, broadly in line with FY22 with offsetting impacts across MAM FY23 FY22 – Fund raising and investments by Private Markets-managed funds and mandates,
Slide 55: 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 $A2,520m, up 28% on FY22 FY23 FY22 – 22% growth in the average loan portfolio and 31% growth in average BFS $Am $Am deposit volumes 1
Slide 56: Commodities and Global Markets
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and Global Markets Result • Commodities income of $A6,043m, up 82% on FY22; FY23 FY22 – Risk management up 50% on a strong prior period with gains across the platform, particularly in Gas $Am $Am
Slide 57: Macquarie Capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital Result • Net interest and trading income of $A410m, broadly in line with the prior year. Net interest FY23 FY22 income from the private credit portfolio was up 37% on prior year, and benefit
Slide 58: Appendix B
05 Appendix B Additional Information Funding
Slide 59: 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 60: 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 61: Funding for Macquarie
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funding for Macquarie Mar 23 Mar 22 • Well diversified funding sources $Ab $Ab • Term assets covered by term funding, stable deposits, hybrids Funding sources and equity Certificates of deposit 0.7 0.7 • Shor
Slide 62: Funding for the Bank Group
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funding for the Bank Group Mar 23 Mar 22 • Bank balance sheet remains liquid and well capitalised, $Ab $Ab with a diverse range of funding sources Funding sources Certificates of deposit 0.7 0.7 • Term fundin
Slide 63: Funding for the Non-Bank Group
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funding for the Non-Bank Group Mar 23 Mar 22 • Non-Bank Group is predominantly term funded $Ab $Ab • Term funding beyond one year (excluding equity and Funding sources Net trade creditors — 1.0 securitisation
Slide 64: 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 Outstanding trade Derivative revaluation Segregated funds settlement balances Working capital assets Offsetting derivative positions do not These represen
Slide 65: 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 66: Appendix C
05 Appendix C Additional Information Capital
Slide 67: Macquarie Basel III regulatory capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Basel III regulatory capital Surplus calculation APRA 1 Basel III 31 Mar 23 $Am Macquarie eligible capital Bank Group Gross Tier 1 capital 22,771 Non-Bank Group eligible capital 16,303 Eligible capi
Slide 68: 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 31 Mar 23 $Am $Am $Am Credit risk On balance sheet 52,869 5,419 Off balance she
Slide 69: 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 70: 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 31 Mar 23 $Ab $Am Weight Funded assets Cash and liquid assets 15.4 262 21% 1 Loan assets 18.5 1,842 124% Deb
Slide 71: Framework to manage interest rate risk in the banking book
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie has a robust framework to manage & limit interest rate risk in the banking book (“IRRBB”) Risk appetite & framework Aggregate exposures Macquarie has limited appetite for market risk in non-traded I
Slide 72: Appendix D
05 Appendix D Glossary
Slide 73: Glossary
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Glossary $A / AUD Australian Dollar CCB Capital Conservation Buffer $US / USD United States Dollar CCyB Countercyclical Capital Buffer £ / GBP Pound Sterling CET1 Common Equity Tier 1 € / EUR Euro CGM Commodi
Slide 74: Glossary
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Glossary IRRBB Interest Rate Risk in the Banking Book MPA Mortgage Professional Australia IFRS International Financial Reporting Standards MWh Mega Watt hour IT Information Technology No. Number LAC Loss-Abso
Slide 75: Presentation to investors and analysts
Presentation to investors and analysts Result announcement for the full year ended 31 March 2023 5 May 2023