Slide 1: Presentation to investors and analysts
© macauarie Presentation to investors and analysts Result announcement for the half year ended 30 September 2023 3 November 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
Introduction Sam Dobson Head of Investor Relations Sapphire Wind Farm and Squadron Energy, New South Wales, Australia
Slide 5: Overview of Result
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 ~45% Markets-facing activities | Net Profit Contribution ~55% BFS MAM CGM MacCap Banking and Financial Services Macquarie Asset Management Co
Slide 7: 1H24 result: $A1,415m down 39% on 1H23; down 51% on 2H23
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 1H24 result: $A1,415m down 39% on 1H23; down 51% on 2H23 1H24 2H23 1H23 1H24 v 1H24 v $Am $Am $Am 1H23 2H23 Net operating income 7,910 10,498 8,624 â 8% â 25% Total operating expenses (5,919) (6,534) (5,596)
Slide 8: 1H24 net profit contribution from Operating Groups down 38% on 1H23
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 1H24 net profit contribution from Operating Groups $A2,858m down 38% on 1H23 Annuity-style activities Markets-facing activities â 43% â 32% $A1,296m ON 1H23 $A1,562m ON 1H23 Non-Banking Group Macquarie Asset
Slide 9: 1H24 net profit contribution from Operating Groups down 51% on 2H23
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 1H24 net profit contribution from Operating Groups $A2,858m down 51% on 2H23 Annuity-style activities Markets-facing activities â 30% â 60% $A1,296m ON 2H23 $A1,562m ON 2H23 Non-Banking Group Macquarie Asset
Slide 10: Financial performance
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Financial performance Operating income 1H24 Profit 1H24 $A7,910m $A1,415m $Am $Am 12,000 â 8% 3,000 â 39% ON 1H23 ON 1H23 9,000 6,000 â 25% 2,000 â 51% ON 2H23 ON 2H23 1,000 3,000 — — 1H22 2H22 1H23 2H23 1H24
Slide 11: Assets under management of $A892.0b
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Assets under management of $A892.0b 1 AUM increased 2% from $A878.6b as at 31 Mar 23 Increase due to investments made by Private Markets-managed funds and favourable foreign exchange movements, partially offs
Slide 12: Diversification by region
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversification by region 1 International income 65% of total income 2 Total staff 21,270 of which 50% international. A further ~237,000 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 65% of total income in 1H24 was generated offshore Total income $Am 6,000 5,000 4,000 3,000 2,000 1,000 — 2 Americas Europe, Middle East & Africa Asia Australia² 1H22 2H22 1H23 2H2
Slide 14: Macquarie Asset Management $A1,693m
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset • MAM Broadened and deepened client relationships with growth across institutional and wealth channels, including increasing private wealth Management capital access to alternative asset class
Slide 15: Banking and Financial Services $A1,609m
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Personal Banking • Home loan portfolio of $A114.2b, up 6% Business Banking • Business Banking loan portfolio of Wealth Management • Funds on platform of $A125.1b, up 2% on Financial Services 6 on
Slide 16: Commodities and Global Markets $A2,929m
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and Asset Finance 11% • 1 Continued positive performance Commodity Markets 56% • 1 Decreased Commodities risk management income Financial Markets 33% Foreign exchange, interest rates and 1 Global
Slide 17: Macquarie Capital $A1,220m
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie • Investing in areas of deep expertise. During 1H24, investments MacCap • 2 No. 1 in ANZ for M&A over the past decade Capital completed in sub-sectors such as Digital Infrastructure, Energy 3 Transi
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 23 30 Sep 23 $Ab $Ab 330 330 Commercial paper and certificates 300 Commercial paper and certificates 300 5 of deposit 10% Other d
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 Business capital requirements 1H24 Key drivers 1H24 business capital requirement growth of $A1.1b excluding FX movements MAM • Growth in fund co-investments and $Ab underwrites to seed core and adjacent 30.
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 23) 250.0% 250.0% 8.0% 20.0% 2 1 18.0% 200.0% 200.0% 199%¹ 16.0% 6.0% 5.6% 150.0% 150.0% 13.2% 5.0% 12.0% 4.0% 100.0% 100.0% 114% 8.0% 2.0% 50.0% 50.0%
Slide 22: On-market share buyback
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices On-market share buyback Macquarie has a strong capital position, with a Group capital surplus of $A10.5b at 30 Sep 23, and 1 intends to buy back up to $A2b of ordinary shares on-market On-market share buyback
Slide 23: Interim dividend
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Interim dividend 1H24 Ordinary Dividend From $A2.55 â$A3.00 â $A4.50 From (40% franked) (40% franked) (40% franked) in 1H23 in 2H23 1H24 Record Date 2 Payout Ratio 14 Nov 23 DRP shares for 1H24 Dividend polic
Slide 24: Board update
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Board update Effective 1 Feb 24, subject to completion of necessary approvals, Wayne Byres will be appointed as a non-executive director of Macquarie Bank Limited (MBL). Following the retirement of Michael Co
Slide 25: Result Analysis and Financial Management
Result Analysis and Financial Management Alex Harvey Chief Financial Officer
Slide 26: 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 $A4,179m, broadly in line with 1H23 1H24 2H23 1H23 • Growth in the loan portfolio and BFS deposits, and improved average margins from the rising
Slide 27: Macquarie Asset Management
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Asset Management Key drivers • Higher Private Markets base fees primarily due to fundraising and investments made by Private Decrease primarily driven by substantially lower investment- Markets-mana
Slide 28: 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 favourable foreign exchange movements, partially offset by reduction of co-investment management rights $Ab 1,000 Private
Slide 29: Green investments capex and PPA trends
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Green investments capex and PPA trends Recent flattening or increase in capex has been counterbalanced by rising solar and wind PPA prices, supporting required level of returns for investors 1 Long-term capex
Slide 30: 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 system growth of 14% in average home loan Growth in the loan portfolio and BFS deposits, together with volumes3, par
Slide 31: Banking and Financial Services
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Banking and Financial Services Growth in Home loans, Deposits, Funds on Platform and Business Banking loans $Ab $Ab 140 16 129.4 131.2 14.6 123.1 125.1 118.6 14 120 114.2 13.0 108.1 98.0 101.4 12 11.5 11.5 10
Slide 32: Commodities and Global Markets
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Commodities and Global Markets Key drivers • Commodities down on 1H23 – Risk management income decreased 25% on a Strong underlying client business, well-positioned for upside strong 1H23 particularly from Re
Slide 33: Strong underlying client business
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Strong underlying client business 2 Consistent levels of income derived from Client numbers (excl. Asset Finance) underlying client business Operating Income (excl. credit and other impairment charges) Mar 20
Slide 34: Macquarie Capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital Key drivers • Lower investment-related income primarily due to: – Non-recurrence of material asset realisations in Reflects higher net income from growth in the private credit the Americas a
Slide 35: Macquarie Capital
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Macquarie Capital Movement in capital Private Credit sector 1 exposures $Ab $A0.8b ($A0.4b) 5.0 6% $A0.1b $A4.7b 10% $A4.2b 30% 4.0 12% 3.0 2.0 13% 15% 14% 1.0 — Software and Tech Enabled Financial and Insura
Slide 36: 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 While compliance and technology spend increases, we have made progress on a number of initiatives to support regulatory changes 1 1H24 2H23 1H23 Regulatory c
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 30 Sep 23 - diversified by currency , tenor and type Currency Tenor Type EUR 5% GBP 4% CHF 1% JPY 2% OTH 2% Securitisations >1yr 8% 1-2yrs 15% Other secure
Slide 39: Diversified deposit base
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Diversified deposit base Macquarie has seen continued success in its long-term strategy of diversifying funding sources by growing its customer deposit base • Of approximately 1.8 million BFS clients, ~1.3 mi
Slide 40: Loan and lease portfolios – funded balance sheet
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 1 Loan and lease portfolios – funded balance sheet Operating Sep 23 Mar 23 Group Category $Ab $Ab Description Home loans 115.2 109.0 Secured by residential property Business banking 14.4 12.9 Loan portfolio s
Slide 41: Equity investments of $A11.4b
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices 1 Equity investments of $A11.4b Carrying value Carrying value Category Sep 23 $Ab Mar 23 $Ab Description Includes investments in regional infrastructure and new Macquarie Asset Management Private 1.9 1.8 core
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 • On 10 Aug 23, APRA informed ADIs
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: 13.2% 1 • Harmonised Basel III Level 2 CET1 ratio: 18.0% Bank Group Level 2 CET 1 Ratio 20.0% 4.8% 18.0% 16.0% 1.0%
Slide 44: Strong liquidity position maintained
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Strong liquidity position maintained 1 • 199% average LCR for Sep 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 On-market share buyback • On 3 Nov 23, Macquarie announced that it intends to buy back up to $A2b of ordinary shares on-market. • The buyback provides additional flexibility to manag
Slide 46: Outlook
Outlook Shemara Wikramanayake Managing Director and Chief Executive Officer
Slide 47: Short-term outlook
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Short-term outlook Factors impacting short-term outlook Annuity-style businesses Markets-facing businesses Non-Banking Group Macquarie Asset Management (MAM) Macquarie Capital (MacCap) • Base fees expected to
Slide 48: Short-term outlook
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Short-term outlook The range of factors that may influence our short-term outlook include: • Market conditions including: global economic conditions, inflation and interest rates, significant volatility event
Slide 49: Medium-term outlook
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Medium-term outlook Macquarie remains well-positioned to deliver superior performance in the medium term with its diverse business mix across annuity-style and markets-facing businesses Deep expertise across
Slide 50: Medium-term outlook
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Medium-term outlook Annuity-style businesses Markets-facing businesses Non-Banking Group Macquarie Asset Management (MAM) Macquarie Capital (MacCap) • Well-positioned to respond to current market conditions a
Slide 51: Approximate business Basel III Capital and ROE
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Approximate business Basel III Capital and ROE 30 Sep 23 APRA Basel III Capital 1H24 Return on Ordinary 17-year Average Return on Operating Group 1 2 @ 10.5% ($Ab) Equity Ordinary Equity Annuity-style busines
Slide 52: Presentation to investors and analysts
© macauarie Presentation to investors and analysts Result announcement for the half year ended 30 September 2023 3 November 2023
Slide 53: Appendix A: Detailed Result Commentary
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 $A1,407m, broadly in line with 1H23 with offsetting impacts across MAM 1H24 2H23 1H23 $Am $Am $Am – Base fees in Private Markets were higher due to fundraising
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 $A1,360m, up 14% on 1H23 1H24 2H23 1H23 $Am $Am $Am – 11% growth in the average loan portfolio and 21% growth in the average BFS 5 de
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 $A1,468m, down 22% on 1H23: 1H24 2H23 1H23 – Risk management down 25% on a strong 1H23 particularly from Resources and EMEA Gas, Power $Am $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 $A334m, up 117% on 1H23 primarily due to higher 1H24 2H23 1H23 net interest income from the private credit portfolio, up 26% on 1H23, benefitting
Slide 58: Appendix B: Additional Information – Funding
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 Sep 23 Mar 23 Sep 22 • Well diversified funding sources $Ab $Ab $Ab • Term assets covered by term funding, stable deposits, hybrids Funding sources and equity Commercial paper and certif
Slide 62: Funding for the Bank Group
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Funding for the Bank Group Sep 23 Mar 23 Sep 22 • Bank balance sheet remains liquid and well capitalised, $Ab $Ab $Ab with a diverse range of funding sources Funding sources Commercial paper and certificates
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 Sep 23 Mar 23 Sep 22 • Non-Bank Group is predominantly term funded $Ab $Ab $Ab • Term funding beyond one year (excluding equity and Funding sources Net trade (debtors)/creditors
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: Additional Information – Capital
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 Basel III 30 Sep 23 $Am Macquarie eligible capital Bank Group Gross Tier 1 capital 22,611 Non-Bank Group eligible capital 16,000 Eligible capita
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 30 Sep 23 $Am $Am $Am Credit risk On balance sheet 55,409 5,818 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 30 Sep 23 $Ab $Am Weight Funded assets Cash and liquid assets 14.6 305 26% 1 Loan assets 19.9 1,980 124% Deb
Slide 71: Framework to manage and limit 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
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Slide 73: Glossary
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Glossary $A / AUD Australian Dollar CGM Commodities and Global Markets $US / USD United States Dollar CLF Committed Liquidity Facility £ / GBP Pound Sterling CMA Cash Management Account € / EUR Euro DCM Debt
Slide 74: Glossary
Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices Glossary IFRS International Financial Reporting Standards MWh Mega Watt hour IT Information Technology No. Number LAC Loss-Absorbing Capacity NPAT Net Profit After Tax LCR Liquidity Coverage Ratio NPC Net Pro
Slide 75: Presentation to investors and analysts
© macauarie Presentation to investors and analysts Result announcement for the half year ended 30 September 2023 3 November 2023