Credit Suisse 16 th Asian Investment Conference Conrad Hotel, Hong Kong

Transcription

1 Macquarie Group Limited Credit Suisse 16 th Asian Investment Conference Conrad Hotel, Hong Kong Presentation to Investors and Analysts March 2013 Patrick Upfold, Chief Financial Officer Stuart Green, Head of Corporate Communications and Investor Relations

2 Disclaimer This information has been prepared on a strictly confidential basis by Macquarie Group Limited ABN ( Macquarie ) and may neither be reproduced in whole nor in part, nor may any of its contents be divulged to any third party without the prior written consent of Macquarie. Other than Macquarie Bank Limited ABN (Macquarie), any Macquarie group entity noted in this document is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). That entity s obligations do not represent deposits or other liabilities of Macquarie and Macquarie does not guarantee or otherwise provide assurance in respect of the obligations of that entity, unless noted otherwise. This information is not intended to create legal relations and is not binding on Macquarie under any circumstances whatsoever. This information has been prepared in good faith and is based on information obtained from sources believed to be reliable, however Macquarie does not make any representation or warranty that it is accurate, complete or up to date. The information may be based on certain assumptions or market conditions, and if those assumptions or market conditions change, the information may change. No independent verification of the information has been made. Any quotes given are indicative only. No part of this information is to be construed as a solicitation to buy or sell any product, or to engage in, or refrain from engaging in, any transaction. To the extent permitted by law, neither Macquarie nor its related bodies corporate (the Macquarie Group ) nor any of its associates, directors, officers or employees, or any other person, makes any promise, guarantee, representation or warranty (express or implied) to any person as to the accuracy or completeness of this information, or of any other information, materials or opinions, whether written or oral, that have been, or may be, prepared or furnished by Macquarie Group, including, without limitation, economic and financial projections and risk evaluation. No responsibility or liability whatsoever (in negligence or otherwise) is accepted by any person for any errors, mis-statements or omissions in this information or any other information or materials. Without prejudice to the foregoing, neither the Macquarie Group, nor any of its associates, directors, officers, employees nor any other person shall be liable for any loss or damage (whether direct, indirect or consequential) suffered by any person as a result of relying on any statement in or omission from this information. Nothing in this information should be construed as legal, financial, accounting, tax or other advice. The Macquarie Group or its associates, directors, officers or employees may have interests in the financial products referred to in this information by acting in various roles including as provider of corporate finance, underwriter or dealer, holder of principal positions, broker, lender or adviser and may receive fees, brokerage or commissions for acting in those capacities. In addition, the Macquarie Group and its associates, directors, officers or employees may buy or sell the financial products as principal or agent and as such may effect transactions which are not consistent with any recommendations in this information. Unless otherwise specified all information is for the half year ended 30 September Certain financial information in this presentation is prepared on a different basis to the Macquarie Group Limited Financial Report, which is prepared in accordance with Australian Accounting Standards. Where financial information presented within this presentation does not comply with Australian Accounting Standards, a reconciliation to the statutory information is provided. This presentation provides further detail in relation to key elements of Macquarie Group Limited s financial performance and financial position. It also provides an analysis of the funding profile of the Group because maintaining the structural integrity of the Group's balance sheet requires active management of both asset and liability portfolios. Active management of the funded balance sheet enables the Group to strengthen its liquidity and funding position. This presentation may contain forward looking statements including statements regarding our intent, belief or current expectations with respect to Macquarie s businesses and operations, market conditions, results of operation and financial condition, capital adequacy, specific provisions and risk management practices. Readers are cautioned not to place undue reliance on these forward looking statements. Macquarie does not undertake any obligation to publicly release the result of any revisions to these forward looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events. While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts and hypothetical examples are subject to uncertainty and contingencies outside Macquarie s control. Past performance is not a reliable indication of future performance. Any additional financial information in this presentation which is not included in the Macquarie Group Limited Financial Report was not subject to independent audit or review by PricewaterhouseCoopers 2

3 Agenda 1. Overview 2. 3Q13 Update and Outlook 3. 1H13 Results 4. Appendix 5. Contacts 3

4 1 Overview Macquarie Group Limited Presentation to Investors and Analysts March

5 About Macquarie Global provider of banking, financial, advisory, investment and funds management services Main business focus is providing products and services to clients Listed on Australian Securities Exchange (ASX: MQG; ADR: MQBKY) Regulated by APRA, Australian banking regulator, as non-operating holding company of a licensed Australian bank Assets under management $A341b 1 Founded in 1969, currently operates in 28 countries and employs 13,549 2 people Short-term rating Macquarie Group Limited Long-term rating Long-term rating outlook Short-term rating Macquarie Bank Limited Long-term rating Long-term rating outlook Fitch Ratings F-2 A- Stable F-1 A Stable Moody s P-2 A3 Stable P-1 A2 Stable Standard and Poor s A-2 BBB Stable A-1 A Stable For further information on Macquarie, visit Sep Dec 12 5

6 Macquarie has a long history of profitability US banks capital losses Global debt crisis Hill Samuel UK opens branch office in Sydney Recession Currency Crisis US recession $A floated Savings and loan crisis MBL established First listed property trust Enter stockbroking Stock market crash Global real estate crash Recession London office opens Hills Motorway Mortgage securitisation Orion Securities CIT Systems Leasing Group Restructure Significant Market Disruption MBL listed Asian Financial Crisis Russian Debt Crisis BT Australia acquired Dot Com crash 9/11 US Sydney Recession Airport SARS ING Acquired Thames Water Giuliani Capital GFC Constellation Tristone Delaware FPK Blackmont Sal Opp. ILFC GMAC Presidio Innovest REGAL Onstream H13 6

7 About Macquarie Macquarie Funds Group Top 50 global asset manager with $337b 1 of assets under management Provides clients with access to a diverse range of capabilities and products, including: Infrastructure and real asset management Securities investment management Fund and equity-based solutions Macquarie Infrastructure and Real Assets Macquarie Funds Group Macquarie Investment Management Macquarie Specialised Investment Solutions AUM: $A106b 1 AUM: $A229b 1 AUM: $A2b 1 Ranked 1 st in Infrastructure Investor magazine s list of top infrastructure investors 2 for the third consecutive year Best Infrastructure and Best Real Estate Fund Manager House Awards for 2012 by AsianInvestor 3 Macquarie Enhanced Global Bond Fund was recognised by AsianInvestor as the best Global Fixed Income Fund (Hedged) 4 Best Diversified Credit/Multi-Strategy Income Fund Macquarie Income Opportunities Fund 5 1. Data as at 30 Sep Based on the amount of infrastructure direct investment capital formed in the last five years. 3. AsianInvestor 2012 Investment Performance Awards for institutional funds management. 4. The award, based in Hong Kong, assesses funds that primarily sell into the Asian region and is judged on nominal and risk-adjusted performance over one, three and five year periods. 5. Financial Review Smart Investor Blue Ribbon Awards

8 Assets under management of $A341b AUM increased $A13.6b or 4% since 31 Mar 12, primarily driven by positive market and valuation movements and investments in the infrastructure and real assets business $Ab Fixed income Equities Direct real estate Other Direct infrastructure Cash Currency $A326b $A310b $A327b $A341b 250 $A243b Mar 09 Mar 10 Mar 11 Mar 12 Sep 12 Data as at 30 Sep 12 8

9 About Macquarie Corporate and Asset Finance $A21.4b 1 of loans and assets under finance Provider of tailored finance and asset management solutions to clients across specialised assets through the cycles Niche positions in deep, attractive markets Origination through the cycles Strong credit and asset discipline Strong funder and investor demand for assets Cost management and returns focus Lending Portfolio: $A8.1b 1 Motor Vehicles Portfolio: $A6.7b 1 Mining Equipment Portfolio: $A0.4b 1 Corporate and Asset Finance Aircraft Portfolio: $A3.2b 1 Meters Portfolio: $A0.7b 1 Rail Portfolio: $A0.4b 1 Equipment Finance Portfolio: $A1.9b 1 Successfully converted opportunities during cycles Expertise in corporate debt and asset finance including: aircraft, motor vehicles, technology, healthcare, manufacturing, industrial, energy, rail and mining equipment One of the largest providers of motor vehicle finance in Australia One of North America s largest independent lessors of technology equipment Portfolio diversified by geography, assets, industries, product types, exposures and clients 1. Data as at 30 Sep 12. 9

10 About Macquarie Banking and Financial Services $A30.8b 1 retail on-balance sheet cash ~1.1 million high net worth clients serviced by 625 Macquarie client advisers and our Independent Financial Adviser partners Leading provider of retail advisory services and products Extensive platform support services to intermediaries in Australia Specialist Relationship Banking provider to Small to Medium Enterprises (SME) Financial advice services Wrap Insurance Banking and Financial Services Cash Mortgages Relationship banking No.1 full-service Australian retail stockbroker in terms of volume and market share 2 No.1 National Independent Canadian Advisory firm 3 Macquarie Super and Pension Consolidator named Super Platform of the Year 4 Macquarie Mortgages awarded Money Magazine s 2012 Best of the Best awards 5 1. Data as at 30 Sep IRESS: consideration traded and volume 30 Sep Investment Executive Brokerage Report Card 2012 (Canada) 4. Fairfax Blue Ribbon Smart Investor Awards Money Magazine 2012 Best of the Best Awards Cheapest Flexible Home Loan for Classic P&L Home Loan. 10

11 About Macquarie Macquarie Securities Group Global institutional securities house with strong Asia-Pacific foundations covering sales, research, ECM, execution and derivatives activities Full-service cash equities in Australia, Asia, South Africa and Canada with offerings in US and Europe. Specialised derivatives in key locations globally Key specialities: infrastructure and utilities, TMET, resources (mining and energy), industrials and financial institutions Equity capital markets Execution Arbitrage Macquarie Securities Group Equity finance Research Corporate Access Derivatives 25+ years Knowledge and experience in Asia-Pacific 210+ equity research analysts 2,215+ stocks under coverage No.1 in Asia 1, US and Europe 2, and No.2 in Australia 1 for Australian equities No.1 Execution Quality Asia-Pacific 3 No.3 Australian ECM 4 No.1 warrants market share Singapore 5 No.3 in Australia 5 & No.5 HK 5 1. Peter Lee Associates Survey of Asian/Australian Institutional Investors Australian Equities. 2. Greenwich Survey of US Institutional Investors Australian Equities and Greenwich Survey of European Institutional Investors Australian Equities. 3. Abel Nosser Bloomberg league tables 1 Jan 30 Sep Local exchanges. 11

12 MERGERS & ACQUISITIONS PROJECT FINANCE EQUITY CAPITAL MARKETS DEBT CAPITAL MARKETS PRIVATE CAPITAL MARKETS PRINCIPAL INVESTMENTS About Macquarie Macquarie Capital Group Global corporate finance capability, including M&A, capital markets and principal investments Key specialities: infrastructure, utilities and renewables; resources (mining and energy); real estate; TMET; industrials and financial institutions Winner of over 20 awards globally in 2012, including Best Investment Bank (Australia) and Best Equity House (Australia) 1 No.1 ANZ M&A 2 No. 3 ANZ ECM 3 M&A Deal of the Year (Tokio Marine/Delphi Financial Group) 4 FINANCIAL INSTITUTIONS INDUSTRIALS INFRASTRUCTURE, UTILITIES & RENEWABLES REAL ESTATE RESOURCES TELECOMMUNICATIONS, MEDIA ENTERTAINMENT & TECHNOLOGY Best PPP EMEA Deal of the Year (Muharraq STP) 5 No.1 Financial Adviser for Project Finance Deals (Americas) 6 Best Project & Infrastructure Finance Sponsor (Global) Capital/CFO Awards. 2 Announced deals by value, any involvement, Bloomberg 1Jan 30 Sep Completed Equity, Equity-linked & Pfd deals by value, Bloomberg 1 Jan- 30 Sep International M&A Advisor Awards (for deals between $1-3b) 5. EMEA Finance. 6. Infrastructure Journal, Jan-Jun (Downtown Tunnel/Midtown Tunnel/MLK Extension Project) Global Finance Magazine. 12

13 About Macquarie Fixed Income, Currencies and Commodities A portfolio of businesses across Commodity and Financial markets Global fixed income, currencies and commodities provider of finance, risk solutions and market access to producers/consumers and financial institutions/investors Approx. 60% of operating income 1 for the 12 months to 30 Sep 2012 from Commodity markets Growing presence in physical commodities (natural gas, LNG, power, oil, coal, base metals, iron ore, sugar and freight) Predominant in US and Australia, niche offering in Canada and Latin America, growing presence in Asia and EMEA Specialties: commodities, Asian and emerging markets, high yield and distressed debt Specialist provider of FX transactional services Metals and energy capital Agricultural markets Fixed income, currency and credit markets Asian and emerging markets 10+ years in global energy markets - No.4 physical gas marketer in North America 2 FICC Energy markets 20+ years actively trading in global agricultural markets Metals markets Futures Environmental financial products 30+ years in metals markets and as a global full service futures broker 1. Percentages are based on operating income before impairment charges on investment securities available for sale and associates and joint ventures. 2. Platts, June

14 Long standing conservative Risk Management Macquarie s risk management principles have remained largely stable over 30 years and served the Group well over the past few years The key aspects of Macquarie s risk management approach are: Ownership of risk at the business level Business heads responsible for identifying risks within their businesses and ensuring these are managed appropriately. Seek a clear analysis of the risks before taking decisions. Understanding worst case outcomes Risk management approach based on examining the consequences of worst case outcomes and determining whether risks can be tolerated. Adopted for all material risk types and often achieved by stress testing. Requirement for independent sign-off by Risk Management Risk Management Group (RMG) signs off all material risk acceptance decisions. For material proposals, RMG opinion sought at the early stage in decision making process, and independent input from RMG on risk and return is included in the approval document submitted to senior management. Macquarie s approach to risk is supported by the Risk Management Group Macquarie determines aggregate risk appetite by assessing risk relative to earnings, more than by reference to capital 14

15 23Q13 Update and Outlook Macquarie Group Limited Presentation to Investors and Analysts March

16 3Q13 Overview Since our 1H13 result announcement, market conditions have shown some signs of improvement, however client activity remains subdued for capital markets facing businesses Macquarie s annuity-style businesses (Macquarie Funds, Banking and Financial Services and Corporate and Asset Finance) continue to perform well with combined Dec 12 qtr net profit contribution 1 up on pcp (Dec 11 qtr) and the prior period (Sep 12 qtr) Whilst Macquarie s capital markets facing businesses (FICC, Macquarie Securities Group and Macquarie Capital) continued to face subdued market conditions, combined Dec 12 qtr net profit contribution 1 was up strongly on both weak pcp and prior period Macquarie Securities: Cash equities business remains marginally profitable and legacy expenses continuing to decline Macquarie Capital: Overall deal activity was up on both weak pcp and prior period, although ECM levels remain low, particularly in Asia and Australia FICC: Continued good performance from Energy Markets and Credit Trading, however Metals & Energy Capital and Metals & Agriculture Sales and Trading continue to be impacted by market conditions Benefits from operating efficiencies continue with Dec 12 qtr operating expenses down approx. 10% on pcp 1. Net Profit Contribution is operating income less operating expenses and is reported before profit share and income tax. 16

17 FY13 outlook Summarised below are the outlook statements for each Operating Group FY13 results will vary with market conditions, particularly the capital markets facing businesses which continue to experience subdued market conditions Net profit contribution Operating Group FY07- FY12 historical range FY07-FY12 average FY12 FY13 outlook as updated in Oct 12 Update to FY13 outlook Macquarie Funds $A0.3b $A1.1b $A0.7b $A0.7b Up on FY12 No change Corporate and Asset Finance $A0.1b $A0.7b 1 $A0.3b $A0.7b Broadly in line with FY12 No change Banking and Financial Services $A0.1b $A0.3b 2 $A0.2b $A0.3b Up on FY12 No change Macquarie Securities $A(0.2)b $A1.2b $A0.5b $A(0.2)b Up on FY12 but unlikely to be profitable if current markets persist No change Macquarie Capital $A(0.1)b $A1.6b $A0.6b $A0.1b Up on FY12 No change FICC $A0.5b $A0.8b $A0.6b $A0.5b Up on FY12 Broadly in line Corporate Compensation ratio to be consistent with historical levels Continued higher cost of funding reflecting market conditions and high liquidity levels No change No change 1. Range excludes FY09 provisions for loan losses of $A135m related to Real Estate Structured Finance loans as this is a restructured business. 2. Range excludes FY09 loss on sale of Italian mortgages of $A248m as this is a discontinued business. 17

18 FY13 outlook Subject to market conditions, FY13 net profit contribution from operating groups expected to be materially up on FY12 FY13 contribution from Corporate expected to be down on FY12 due to the net impact of a number of items including the receipt of $A295m from Sydney Airport in FY12 Tax rate is expected to increase from 28% in FY12 to over 30% for FY13 due to the ongoing strength of US businesses and weakness in Asian capital markets facing businesses Whilst market conditions remain uncertain, we currently expect Macquarie s result for FY13 to be up approx. 10% on FY12 with the probability of a stronger result should improved market conditions persist The FY13 result remains subject to market conditions, completion rate of transactions and impairment testing as well as a range of other factors including the cost of our continued conservative approach to funding and capital regulation, including the potential for regulatory changes increased competition in some markets the overall cost of funding 18

19 13,549 1 staff in over 28 countries EUROPE, MIDDLE EAST & AFRICA 2 Staff: 1,184 ASIA Staff: 2,945 AMERICAS Staff: 3,267 AUSTRALIA 3 Staff: 6, Staff numbers as at 31 Dec Excludes staff in Macquarie First South joint venture and staff seconded to Macquarie Renaissance joint venture (Moscow). 3. Includes New Zealand. 19

20 Funded balance sheet remains strong $Ab ST wholesale issued paper (7%) Other debt 1 maturing in the next 12 mths (7%) Wholesale Deposits (6%) Retail Deposits (33%) Macquarie Group Limited $Ab $Ab 31 March September March September December 2012 Cash and liquid assets (27%) Self securitisation 2 (4%) Trading assets (18%) ST wholesale issued paper (6%) Other debt 1 maturing in the next 12 mths (6%) Wholesale Deposits (6%) Retail Deposits (35%) Cash and liquid assets (26%) Self securitisation 2 (5%) Trading assets (18%) ST wholesale issued paper (6%) Other debt 1 maturing in the next 12 mths (9%) Wholesale Deposits (6%) Retail Deposits (35%) Cash and liquid assets (23%) Self securitisation 2 (6%) Trading assets (21%) 40 Loan assets < 1 year (9%) 40 Loan assets < 1 year (10%) 40 Loan assets < 1 year (10%) Debt maturing beyond 12 mths (29%) Loan assets > 1 year (30%) Debt maturing beyond 12 mths (30%) Loan assets > 1 year (29%) Debt maturing beyond 12 mths (28%) Loan assets > 1 year (29%) 10 0 Loan capital Equity and Hybrids (14%) Funding sources Debt investment securities Equity investments 3 (6%) Funded assets PPE 10 0 Loan capital Equity and Hybrids (13%) Funding sources Net trade debtors 10 Debt investment securities Equity investments 3 (6%) PPE 0 Funded assets Loan capital Equity and Hybrids (13%) Funding sources Debt investment securities Equity investments 3 (6%) Funded assets These charts represent Macquarie Group Limited s funded balance sheets at the respective dates noted above. 1. Includes Structured Notes, Secured Funding, Bonds, Other Bank Loans maturing within the next 12 months and Net Trade Creditors. 2. Previously shown within Loan assets > 1 year. 3. This represents the Group s co-investment in Macquarie managed funds and equity investments. Net trade debtors PPE 20

21 Stable Basel III capital surplus Harmonised Basel III Banking Group capital ratios at Dec 12 Common Equity Tier 1: 11.3%; Tier 1: 12.3% $Ab 5.0 Group regulatory surplus: Basel III (Dec 12) (0.1) (0.1) 4.2 (1.2) Based on 8.5% (minimum Tier ratio + CCB), 3.3 which is not required by APRA until Harmonised Basel III 1 at Sep 12 2 Net capital generation Increased regulatory 3 requirements Other Harmonised Basel III at Dec 12 APRA Basel III 'super equivalence' 4 APRA Basel III at Dec 12 Group regulatory surplus at 8.5% RWA Group regulatory surplus at 7% RWA 1. Harmonised Basel III estimates assume alignment with BIS in areas where APRA differs from the BIS. 2. Includes 3Q12 P&L net of 1H13 dividend and movement in reserves. 3. Relating to Operational Risk. 4. APRA Basel III super-equivalence includes full CET1 deductions of equity investments ($A0.7b); deconsolidated subsidiaries ($A0.3b); and DTA s and other impacts ($A0.2b). 21

22 Medium term 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 three significant businesses which are delivering superior returns following years of investment and recent acquisitions Macquarie Funds, Corporate and Asset Finance and Banking and Financial Services Three capital markets facing businesses: Macquarie Securities and Macquarie Capital are well positioned to benefit from improvements in market conditions with strong platforms and franchise positions FICC well placed to benefit from niche expertise and more normalised conditions Ongoing benefits of continued cost initiatives Strong and conservative balance sheet Well matched funding profile with minimal reliance on short term wholesale funding Surplus funding and capital available to support growth Proven risk management framework and culture 22

23 Approximate business Basel III & ROE Operating Group Annuity-style businesses (excluding legacy) APRA Basel III 8.5% ($Ab) Macquarie Funds Group 1.6 Corporate and Asset Finance 2.1 Banking and Financial Services 0.9 Capital markets facing businesses (excluding legacy) Approx. 1H13 Return on Ordinary Equity 1 Approx. 6-Year Average Return on Ordinary Equity 1 22% 20% 2 6-Year Average profit pre tax and profit share ($Ab) Approx. 6-Year Average Return on Ordinary Equity 1 Macquarie Securities % - Macquarie Capital % FICC 2.6 9% % Corporate and Other Legacy Assets 0.9 Corporate 0.5 Total regulatory capital 8.5% 10.5 Comprising: Ordinary Equity Hybrid Add: Surplus Ordinary Equity Total APRA Basel III capital supply 12.6 As at 30 Sep NPAT used in the calculation of approx. ROE is based on Operating Group s net profit contribution adjusted for indicative allocations of profit share, tax and other corporate expenses. Accounting equity is attributed to businesses based on regulatory capital requirements. 6-year average covers FY07 to FY12, inclusively. 2. CAF excluded from 6-year average as not meaningful given the significant increase in scale of CAF s platform over the 6-year period. 23

24 31H13 Results Macquarie Group Limited Presentation to Investors and Analysts March

25 1H13 result Net profit of $A361m, up 18% on 1H12 and down 15% on 2H12 Operating income $A3.1b, down 5% on 1H12 and down 17% on 2H12 Macquarie s annuity-style businesses, Macquarie Funds Group, Corporate and Asset Finance, Banking and Financial Services, continued to perform well with 1H13 combined results broadly in line with a strong 1H12 and up on 2H12 As foreshadowed, Macquarie s capital markets facing businesses, Macquarie Securities, Macquarie Capital and FICC, although continuing to face subdued market conditions, delivered a combined result up on 1H12 due to improved conditions for FICC Macquarie Securities and Macquarie Capital continued to be impacted by low activity levels across ECM and M&A Macquarie Securities impacted by low levels of client activity combined with run-off costs in its legacy businesses partially offset by ongoing cost efficiencies Operating expenses $A2.6b, down 9% on 1H12 and down 17% on 2H12, as a result of continued operating efficiencies Increase in the half year effective tax rate to 30.2% up from 26.0% in 1H12 and 29.8% in 2H12 EPS $A1.06, up 22% on 1H12 and down 15% on 2H12 Return on equity 6.6%, up from 5.7% in 1H12 and down from 7.8% in 2H12 1H13 dividend of $A0.75 (unfranked), up on 1H12 dividend of $A0.65 (unfranked) and in line with 2H12 dividend of $A0.75 (unfranked) 25

26 1H13 result Sep 12 v Sep 11 Sep 12 $Am Mar 12 $Am Sep 11 $Am Net operating income 5% 3,081 3,720 3,243 Total operating expenses 9% (2,564) (3,086) (2,828) Operating profit before income tax 25% Income tax expense 46% (156) (180) (107) Profit attributable to non-controlling interests - (29) (3) Profit attributable to MGL shareholders 18%

27 Financial performance $Am 1H13 Operating income of $A3,081m 1H13 down 5% on 1H12 $Am 800 1H13 Profit of $A361m 1H13 up 18% on 1H12 4,000 2, H10 1H11 2H11 1H12 2H12 1H13 0 2H10 1H11 2H11 1H12 2H12 1H13 $A H13 EPS of $A1.06 1H13 up 22% on 1H12 $A 1H13 DPS of $A0.75 1H13 up 15% on 1H H10 1H11 2H11 1H12 2H12 1H H10 1H11 2H11 1H12 2H12 1H13 27

28 Diversified income Operating income 1 by source Operating income before impairments charges on equity investments and non-financial assets 12 months to 31 Mar 12 $A7.2b 6 months to 30 Sep 12 $A3.3b Institutional and retail cash equities 25% 23% 14% 4% 26% 29% 11% 11% 2% 3% Equity derivatives Securities funds management and administration 18% 7% 12% 7% 14% 20% 18% 9% 8% 8% 11% 23% M&A and advisory income Asset and equity investments Commodities, resources and foreign exchange Lending, leasing and margin related income 1. Operating income before impairments charges on equity investments and non-financial assets. 28

29 Diversified by region International income 1 61% of total Total staff 13,463; International staff 54% of total EUROPE, MIDDLE EAST & AFRICA 2 Income: $A625m (19% of total) Staff: 1,229 ASIA Income: $A353m (11% of total) Staff: 2,813 AMERICAS Income: $A1,006m (31% of total) Staff: 3,276 AUSTRALIA 3 Income: $A1,253m (39% of total) Staff: 6, Operating income for half year to 30 Sep 12. Operating income in each region before impairment charges on equity investments and non-financial assets and income from the Corporate segment. 2. Excludes staff in Macquarie First South joint venture and staff seconded to Macquarie Renaissance joint venture (Moscow). 3. Includes New Zealand. 29

30 Diversified income Operating income 1 by region 61% of operating income 1 in 1H13 is generated offshore FX translation estimated to have a minimal impact on the 1H13 result compared to both 1H12 and 2H12 $Am 1,600 1,400 1,200 1, H11 2H11 1H12 2H12 1H Australia Asia Americas Europe, Middle East & Africa 1. Operating income in each region before impairment charges on equity investments and non-financial assets and income from the Corporate segment. 30

31 Cost Performance 1H13 operating expenses (excluding brokerage and commissions expense) $A2.2b; down $A0.2b on 1H12 Achieved by ongoing cost reduction initiatives including centralisation of support functions and continued focus on costs Select investment in growth areas including key markets, new products, processes and technologies Macquarie Securities and Macquarie Capital continue to expect to reduce FY11 run rate costs by 20-25% by end of FY13 $Am 2,600 2,500 2, ,400 7% 96 2% 39 2,300 9% 52 2,200 23% 14% 2,100 16% 2,000 1,900 1,800 1,700 2,217 $A254m reduction 10% 1,600 1H12 Investment in growth areas Restructure MFG CAF BFS MSG Mac Cap FICC 1H13 Percentage reduction for each of the Operating Segments is based off 1H12 operating expenses (excluding brokerage and commissions expense). Restructuring includes incremental business rationalisation and restructuring costs. 31

32 Strong funding and balance sheet position Diverse and stable funding base, minimal reliance on short term wholesale funding markets Total deposits 1 increased to $A36.2b at Sep 12 from $A33.9b at Mar 12 Represents 41% of the Group s total funding sources Group loan assets represent 88% of total deposits 2 Retail deposits increased to $A30.8b at Sep 12 from $A29.0b at Mar 12, primarily driven by an increase in the CMA $A5.9b of new term funding raised since Mar 12 3 Continue to diversify funding base and develop new markets including Switzerland, South Africa, Korea and Taiwan $A2.1b raised through private placements and structured note issuance 1. These balances represent total deposits per the funded balance sheet, which differs from total deposits per the statutory balance sheet ($A40.0b at 30 Sep 12). The funded balance sheet excludes any deposits which do not represent a funding source for the Group. 2. Loan assets exclude Canadian mortgages which are funded via a government sponsored securitisation program. 3. Includes $A1.0b term secured finance in Oct

33 Funded balance sheet remains strong Macquarie Group Limited $Ab 100 $Ab 30 September March September 2012 $Ab ST wholesale issued paper (6%) Other debt 1 maturing in the next 12 mths (9%) Wholesale Deposits (7%) Cash and liquid assets (31%) ST wholesale issued paper (7%) Other debt 1 maturing in the next 12 mths (7%) Wholesale Deposits (6%) Cash and liquid assets (27%) ST wholesale issued paper (6%) Other debt 1 maturing in the next 12 mths (6%) Wholesale Deposits (6%) Cash and liquid assets (26%) Retail Deposits (31%) Trading assets (16%) Loan assets < 1 year (9%) Retail Deposits (33%) Trading assets (18%) Loan assets < 1 year (9%) Retail Deposits (35%) Trading assets (18%) Loan assets < 1 year (10%) Debt maturing beyond 12 mths (30%) Loan capital Equity and hybrids (13%) Funding sources Loan assets > 1 year (31%) Net trade debtors 10 Debt investment securities Equity investments 2 (6%) Funded assets PPE Debt maturing beyond 12 mths (29%) Loan capital Equity and Hybrids (14%) Funding sources Loan assets > 1 year (34%) Debt investment securities Equity investments 2 (6%) Funded assets These charts represent Macquarie Group Limited s funded balance sheets at the respective dates noted above. For details regarding reconciliation of the funded balance sheet to the Group s statutory balance sheet, refer to slide Includes Structured Notes, Secured Funding, Bonds, Other Bank Loans maturing within the next 12 months and Net Trade Creditors. PPE Debt maturing beyond 12 mths (30%) Loan capital Equity and Hybrids (13%) Funding sources Loan assets > 1 year (35%) Debt investment securities Equity investments 2 (6%) Funded assets Net trade debtors PPE 33

34 Well diversified funding sources Diversity of MGL funding sources Equity & hybrids Wholesale issued paper Deposits - corporate & wholesale MGL term funding (drawn and undrawn 1 ) maturing beyond one year (including equity and hybrids) Loan capital $Ab 20 Equity & hybrids Loan capital Debt 15 Bonds Deposits - retail 10 5 Senior credit facility Secured funding Structured notes yrs <3 yrs <4 yrs <5 yrs 5 yrs+ Other loans Well diversified funding sources Minimal reliance on short term wholesale funding markets Deposit base represents 41% of total funding sources Term funding beyond one year (excluding equity) has a weighted average term to maturity of 4.5 years 1. Term facilities for the Group were fully drawn as at 31 Dec 12 34

35 Continued retail deposit growth 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 641,000 are depositors Focus on the composition and quality of the deposit base Continue to grow deposits in the CMA product which has an average balance of $A39k $Ab Retail Corporate/wholesale % of total funding source 40% 35% Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Sep 12 30% 25% 20% 15% 10% 35

36 Stable Basel III capital position Harmonised Basel III Group capital of $A12.6b, Group surplus of $A3.4b at Sep 12 1 $Ab Harmonised Basel III 2 at Mar 12 (0.5) Based on 8.5% (minimum Tier 1 ratio + CCB), which is not required by APRA until 2016 Group regulatory surplus: Basel III (Sep 12) MEREP and Buyback Net capital generation Other Harmonised Basel III at Sep 12 Group regulatory surplus at 8.5% RWA Group regulatory surplus at 7% RWA (1.3) 3.0 APRA Basel III 'super equivalence' APRA Basel III at Sep Calculated at 8.5% RWA which includes the 2.5% capital conservation buffer (CCB) not required to be met by APRA until 2016 and by BIS until Harmonised Basel III estimates assume alignment with BIS in areas where APRA differs from the BIS, except that central counterparty (CCP) capital changes are not included in the estimates. 3. Includes 1H13 P&L net of FY12 dividend and movements in share based payment reserve. 4. APRA Basel III super-equivalence includes full CET1 deductions of equity investments ($A0.8b); deconsolidated subsidiaries ($A0.4b); and other impacts ($A0.1b). 36

37 CET1 Ratio Macquarie Bank capital position relative to global peers MBL Harmonised Basel III CET1 ratio is well above minimum CET1 + CCB and highest among peers MBL s CET1 ratio of 11.3% 1 compares favourably to the estimated global average of 7.1% reported by BIS in a survey of 103 global banks² 12% 10% Australian Banks Harmonised Basel III CET1 Ratio 3 Overseas Banks 8% 6% 4% Minimum BIS Basel III CET1 Ratio + CCB = 7% Minimum BIS Basel III CET1 Ratio = 4.5% 2% 0% MBL Bank 2 Bank 3 Bank 4 Bank 5 Bank 6 Bank 7 Bank 8 Bank 9 Bank 10 Bank 11 Bank 12 Bank 13 Bank 14 Bank As at Dec Results of the Basel III monitoring exercise as of 30 June 2011, Basel Committee on Banking Supervision, 12 Apr 12. Average of 103 Group 1 banks (i.e. those that have Tier 1 capital in excess of 3b and are internationally active). 3. The Harmonised Basel III CET1 ratio for each bank is sourced from their most recently available Basel III public disclosure. For Australian banks, this refers to the disclosed estimated Basel III BIS harmonised or aligned CET1 ratios, which include full phase-in of additional Basel III deductions. For overseas banks, banks have been included where the disclosure indicated that the CET1 ratio was based on full implementation of the 2019 BIS rules, which include full phase-in of additional Basel III deductions and excludes any future run-off, management action and growth. Banks included are ANZ, CBA, NAB and WBC for the Australian banks; Barclays, BMO, BoA ML, BNP, Citi, CS, Deutsche Bank, HSBC, JPMorgan and UBS for the overseas banks. 37

38 Rating movement (notches) Rating movement (notches) MBL long term ratings stability Standard & Poor s and Moodys Rating Movements from 1 May 2007 MBL has maintained its S&P rating for 21 years AA+ AA AA - A+ A A - BBB+ Macquarie Bank JPMorgan Chase Bank Barclays Bank Credit Suisse AG Deutsche Bank UBS AG Bank of America Citibank Morgan Stanley Bank Goldman Sachs Group MBL long term Moody s rating stability Intra period ratings movement - AAA Aa1 Aa2 Aa3 A1 A2 A3 Baa1 Macquarie Bank JPMorgan Chase Bank Credit Suisse AG UBS AG Barclays Bank Deutsche Bank Bank of America Citibank Goldman Sachs Group Morgan Stanley Bank Intra - period ratings movement 38

39 4 Appendix Macquarie Group Limited Presentation to Investors and Analysts March

40 Loan portfolio 1 growth Volume $Ab Peak in 1H12 due to early loan repayments in Corporate Lending portfolio and higher income from financing facilities to external funds Total Income $Am Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 0 Mortgages CAF lending Banking Aircraft leasing Structured investment loans Motor Vehicle leasing Resources & commodities Equipment leasing Other lending Other leasing Real Estate Total income (RHS) 2 1. For the purposes of this disclosure, loan assets at amortised cost of $A47.6b at 30 Sep 12 per the statutory balance sheet are adjusted to include fundable assets not classified as loans on the statutory balance sheet (for example, assets subject to operating leases) and exclude loan assets that do not represent a funding requirement of the Group. 2. Total income includes net interest income from mortgages and other lending areas, and net operating lease income, net of funding costs. 40

41 Equity investments of $A5.0b 1 Category Carrying value 2 Sep 12 $Am Carrying value 2 Mar 12 $Am Description Macquarie Funds (MIRA) managed Macquarie Atlas Roads, Macquarie SBI Infrastructure Company, Macquarie Infrastructure funds Company, Macquarie International Infrastructure Fund, Macquarie Korea Infrastructure Fund and Macquarie European Infrastructure Funds Other Macquarie managed funds Includes investments that hedge DPS plan liabilities Transport, industrial and infrastructure Telcos, internet, media and entertainment 1,540 1,730 Includes investments in Sydney Airport and BrisConnections; decrease mainly due to asset sales Includes investments in Cumulus Media Inc. and Southern Cross Media Group Limited Finance, investment, funds Significant investments include MGPA, Charter Hall Limited and Macquarie Goodman Japan management and exchanges Limited Energy and resources Over 100 separate investments Real estate Represents property and JV investments/loans. Includes investments in Redford Australian Investment Trust, MGPA Shenton and Medallist Debt investment entities - 22 Decrease due to the sale of Diversified CMBS Investments Inc. 4,985 5, Equity investments per the statutory balance sheet of $A7,419m have been adjusted to reflect the total economic exposure to Macquarie. 2. Total funded equity investments of $A5,226m (Mar 12: $A5,438m), net of available for sale reserves of $A244m (Mar 12: $A144m) and associate reserves of $A(3)m (Mar 12: $A(25)m). 41

42 5 Contacts Macquarie Group Limited Presentation to Investors March

43 Contact Details Patrick Upfold Chief Financial Officer Macquarie Group Limited Level 7, No.1 Martin Place Sydney NSW 2000 Telephone: Stuart Green Head of Corporate Communications & Investor Relations Macquarie Group Limited Level 7, No.1 Martin Place Sydney NSW 2000 Telephone:

44 Macquarie Group Limited