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No.1 Martin Place Sydney NSW 2000 GPO Box 4294 Sydney NSW 1164 AUSTRALIA
Telephone (61 2) 8232 3333 Facsimile (61 2) 8232 7780 Internet http://www.macquarie.com.au
MACQUARIE GROUP ROADSHOW PRESENTATION MARCH 2012 – Please find attached the Macquarie Group Roadshow presentation to be presented during March 2012 roadshows. Please note that all information included in this presentation has previously been released to the Australian Securities Exchange (ASX). Contacts: Investor Relations: Stuart Green +61 2 8232 8845 Joanne Spillane +61 2 8232 9906
Macquarie Group Limited
Presentation to Investors and Analysts March 2012
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. This information is given in summary form and does not purport to be complete. Information in this presentation, including forecast financial information, should not be considered as advice or recommendation or an offer or solicitation to investors or potential investors in relation to holding, purchasing or selling securities or other financial products or instruments and does not take into account your particular investment objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information having regard to these matters, any relevant offer document and in particular, you should seek independent financial advice. All securities and financial product or instrument transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments and, in international transactions, currency risk. Please note all information included in this presentation has previously been released to the Australian Securities Exchange (ASX) and is current as at February 7, 2012. 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. This presentation is being made only to investment professionals and must not be distributed to or relied upon by any other person. Macquarie Bank Limited maintains Representative Offices in the states of Illinois, New York and Texas, but is not authorised to conduct business in the US.
6. 1 2. 6 About Macquarie Update on market conditions Update on the interim result Capital management Operational efficiencies Outlook 3 . 4.Contents 1. 3. 5.
1 4 . ADR:MQBKY) and is regulated by APRA. as the owner of Macquarie Bank Limited. advisory. corporate and retail clients and counterparties around the world Macquarie Group Limited is listed in Australia (ASX:MQG. Macquarie employs more than 14. an authorised deposit taker Macquarie’s approach to risk management is long-standing. Data as at 31 Dec 11. financial. market. compliance and operational risk 1. funding. the Australian banking regulator. Strong risk management practices are embedded in business unit management with central oversight of credit.600 people in over 28 countries y Macquarie Group (Macquarie) is a global provider of banking.About Macquarie Founded in 1969. investment and funds management services Macquarie’s main business focus is making returns by providing a diversified range of services to clients. Macquarie acts on behalf of institutional.
Ranked 1st in Infrastructure Investor magazine’s listing of the largest infrastructure investors globally3 largest manager of infrastructure assets globally2 Won 20 Lipper Awards in 2011 for superior performance4 Delaware ranked 1st in the Barron’s Fund Families Report for 20115 Asian Alpha Hedge Fund Hedge Fund of the Year6 and awarded Best Asia (incl. Towers Watson Global Alternatives Survey. 5 . 8. 2011 AsiaHedge award for Best Asia (incl. 6. For pension and asset management. Barron's/Lipper's Best Fund Families of 2011. including: – Infrastructure and real asset management – Securities investment management – Structured access to funds. 7. Jun 11. 5.About Macquarie Macquarie F d G M i Funds Group Top 50 global asset manager with $314b1 of assets under management Provides clients with access to a diverse range of capabilities and p . ( Japan) Hedge Fund7 Best Global / Australian Bond fund Macquarie Master Diversified Fixed Interest Fund8 1. g products. Best Global / Australian Bond fund at the Financial Review Smart Investor Blue Ribbon Awards for Macquarie Master Diversified Fixed Interest Fund. 3. Japan) Hedge Fund. This award is based on producing the best risk-adjusted returns over a 12 month period. Jun 11. Including 4 group awards (for Delaware Investments and INNOVEST Kapitalanlage AG). Awarded AsiaRisk Hedge Fund of the Year for 2011 for achievements in risk management and based on nominations by prime brokers in the region. Data as at 31 Dec 11. 4. 2. equities and alternative assets AUM: $A96b1 AUM: $A216b1 Macquarie Infrastructure and Real Assets Macquarie Funds Group Macquarie Specialised Investment Solutions Macquarie Investment Management AUM: $A2b1 Largest Australian based asset manager.
attractive Niche iti i d tt ti markets – Origination through the cycles – Strong credit and asset discipline – Strong funder and investor demand for assets – Cost management and returns focus – Successfully converted opportunities during cycles Expertise in corporate debt and lease financing across aircraft.About Macquarie Corporate and A C t d Asset Fi t Finance More than $A21b1 of loans and assets under finance Provider of tailored finance and asset management solutions to clients across specialised assets through the cycles – Ni h positions in deep. assets. exposures and clients largest g independent lessors of technology equipment 6 . energy. manufacturing and mining assets 1.1b1 Corporate and Asset Finance Equipment Finance Portfolio: $A1.1b1 Motor Vehicles Portfolio: $A6.7b1 Mining Equipment Recently established Meters Portfolio: $A650m1 One of the largest providers of motor vehicle finance in Australia One of North America’s Portfolio diversified by geography. Lending Portfolio: $A8. motor vehicle. industries. rail. assets industries product types.5b1 Transport Portfolio: $A4. Data as at 31 Dec 11. IT&T.
7 . 4. IRESS: consideration traded and volume.1 full-service Australian retail stockbroker in terms of volume and market share2 Product Distributor f Di t ib t of the Year3 (Professional Series) No. Money Magazine 2012 Best of the Best Awards’ Cheapest Flexible Home Loan for Classic P&L Home Loan. 2.1 million high net worth clients serviced by 610 Macquarie client advisers and our Independent Financial Adviser partners Leading provider of retail advisory services and products Extensive platform support services to p pp intermediaries in Australia Specialist Relationship Banking provider to Small to Medium Enterprises ( (SME) ) Standard & Poor’s Wrap Cash Financial advice services Banking and Financial Services Relationship banking Insurance Mortgages No. 3.1 Australian platform4 Macquarie Life Active Macquarie Mortgages awarded Canstar CANNEX C t Innovation Excellence Award5 awarded Money M Magazine’s 2012 Best of the Best awards6 1.About Macquarie Banking d Financial S i B ki and Fi i l Services $A29.4b1 retail on-balance sheet cash ~1.1 National Independent Canadian Advisory firm Macquarie Wrap ranked No. Canstar CANNEX Innovation Excellence Award for Financial Services. Data as at 31 Dec 11. Awarded fourth consecutive S&P Fund Manager of the Year award for Global Equities Developed Markets category for the Independent Franchise Partners Fund. 6. Wealth Insights 2011 Platforms Service Level Report. 5.
Greenwich Associates. Australian equities. research. Australian institutions. industrials and financial institutions Equity capital markets Research Execution Macquarie Securities Group Corporate Access Arbitrage Derivatives Equity finance 230+ equity 25+ years Knowledge and experience in Asia-Pacific research analysts in Australia2 No. Peter Lee Associates.1 N 1in Europe4 US3. Retail derivatives in Asia-Pacific Key specialities: infrastructure and utilities. 8 . 2. resources (mining and energy). overall sales & research No. South Africa and Canada with offerings in US and Europe.About Macquarie Macquarie S M i Securities G iti Group Global institutional securities house with strong Asia-Pacific foundations covering sales. Data as at 31 Dec 11.2 No.250+ 2 250+ stocks under coverage No. 3. US institutions. Asia.3 globally No.3 in Australia & HK 1. Thomson Reuters Equity & Equity Linked League tables. Peter Lee Associates. quarter ended 31 Dec 11. Australian equities 4. European institutions. 5. Australian equities.1 warrants No.1 Australian ECM5 No. TMET.1 in No.1 in execution in Asia. execution and derivatives activities Full-service cash equities in Australia. ECM. market share in Korea & Singapore 2.
9 . full value to each lead manager for 1 Oct 11 – 31 Dec 11.1 AU Equity and Equity-related deals4 Middle East Infrastructure deal of the year Muharraq STP5 Australian PPP deal of the year New R N Royal l Adelaide Hospital5 Americas deal of the year Pueto Rico PR-22 & PR-5 Toll Roads5 FIG capital raising deal of the year y Agricultural Bank of China6 PROJECT FINANCE F Equities deal of the year Sino-Ocean Sino Ocean Land6 1.About Macquarie Macquarie C it l G M i Capital Group Global corporate finance capability. Thomson Reuters – total proceeds raised in this market. FT Banker Awards. INFRASTRUCTURE UTILITIES & RENEWABLES REAL ESTATE FINANCIAL INVESTMENTS L S RESOURCES TELECOMMUNICATIONS. May 11. industrials and financial institutions Winner of 15 awards globally including Best Domestic Equity House (Australia) (A t li )2 FINANCIAL INSTITUTIONS INDUSTRIALS MANAGERS & ACQUISITIO S ONS PRIVATE CAPITAL MARKETS C EQUITY CA APITAL MARKETS DEBT CAPI ITAL MARKETS S INFRASTRUCTURE. resources (mining and energy). Jun 11. 2. Dec 11. 5. Dealogic – Australia and NZ completed deals (by deal count) for 1 Apr 11 – 31 Dec 11. 6. including M&A. 4. MEDIA ENTERTAINMENT & TECHNOLOGY No.1 AU/NZ M&A3 No. 3. TMET. capital markets and principal investments Key specialities: infrastructure. Project Finance International. AsiaMoney. real estate. Data as at 31 Dec 11. utilities and renewables.
Dec 11. currencies and Gl b l fixed i i d commodities provider of finance. Platts.4 physical gas marketer in North America1 Leading provider of agricultural hedging products Specialist provider of FX transactional t ti l services 30+ years in metals markets and specialist i li t global futures broking 1. currency and credit markets Futures Asian and emerging markets Environmental financial products No. growing presence in Asia and EMEA Specialties: commodities Asian and commodities.About Macquarie Fixed I Fi d Income. 10 . Currencies and Commodities C i dC diti Global fi d income. LNG. base metals. sugar and freight) g ) Predominant in US and Australia. coal. niche offering in Canada and Latin America. oil. high yield and distressed debt Metals and energy capital Energy markets Agricultural markets Metals markets FICC Fixed income. iron ore. risk solutions and market access to producers/consumers and financial institutions/investors Growing presence in physical commodities (natural gas. emerging markets. power.
600 2. of shares 80 70 60 S&P500 – volumes 5yr quarterly average: 69.Update on market conditions Equity E it $Ab 500 450 400 350 300 250 200 150 100 50 4Q10 1Q11 2Q11 3Q11 4Q11 1.400 1. Value and volume data to 31 Dec 11. 11 .200 No. Source: Bloomberg.800 5yr quarterly average: $HK1.200 Hang Seng – value 5yr quarterly average: $A326b 1.000 4Q10 1Q11 2Q11 3Q11 4Q11 1.7tr 1.000 ASX200 – value $HKb 2. Quarterly data based on calendar year ending 31 Dec.5tr shares GBPb 500 450 400 350 FTSE – value 5yr quarterly average: GBP378b 50 40 30 20 300 250 200 150 100 10 4Q10 1Q11 2Q11 3Q11 4Q11 50 4Q10 1Q11 2Q11 3Q11 4Q11 1.
Middle East and Africa IPOs and secondary issues Secondary Offering IPO 5yr average CY07 CY08 CY09 CY10 CY11 1. Source: ThomsonOne. Data to 31 Dec 11. 12 .Update on market conditions ECM Australian IPOs and secondary issues $USb 60 50 40 30 150 20 10 0 CY07 CY08 CY09 CY10 CY11 100 50 0 CY07 CY08 CY09 CY10 CY11 Secondary Offering IPO 5yr average $USb 350 300 250 200 Asia (ex Japan) IPOs and secondary issues Secondary Offering IPO 5yr average United States IPOs and secondary issues $USb 300 250 200 150 100 50 0 CY07 CY08 CY09 CY10 CY11 Secondary Offering IPO 5yr average $USb 400 350 300 250 200 150 100 50 0 Europe.
13 .Update on market conditions Derivatives D i ti VIX volatility index1 pts $USb Equity inflows2 Index Net cash flow into long term stock US mutual funds (3m average) LHS S&P 500 (RHS) 55 50 45 40 35 60 50 40 30 20 1. VIX data and Indices data to 31 Dec 11.600 1 600 1.800 1.200 25 0 20 15 10 5 0 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 -10 -20 -30 -40 Jun 07 Mar 08 Dec 08 1.400 30 10 1. 2. Thomson Reuters Global Equity Fund Flow Dec 11.000 800 Monthly Sep 09 Jun 10 Mar 11 600 Dec 11 1. Source: Bloomberg.
q p p – Macquarie Capital 2H12 operating income is expected to be down 35% on pcp with FY12 down 30% on pcp 1. Banking and Financial Services and Corporate and Asset Finance) FY12 net profit contribution3 is expected to be up 20% on pcp FICC saw improved conditions in a number of markets to deliver a Dec 11 qtr net profit contribution up on pcp and significantly up on prior period q p (MSG) and Macquarie Capital were severely impacted by ) q p y p y Macquarie Securities Group ( macroeconomic conditions. annuitystyle businesses’ (Macquarie Funds. CY11 v CY10 Asia Cash equities (value traded)1 q ( ) ECM (IPOs by value)2 Down 4% Down 48% Australia Down 4% Down 87% Dec 11 qtr v Sep 11 qtr Asia Down 24% Down 4% Australia Down 25% Down 61% Macquarie’s annuity-style businesses are performing in line with expectations. with Dec 11 qtr net profit contributions from both groups significantly down on pcp and prior period – MSG 2H12 operating income3 is expected to be down 55% on pcp with FY12 down 35% on pcp – ECM down 60%. Net Profit Contribution is operating income less operating expenses and is reported before profit share and income tax. global economic uncertainty has deepened.ASX200. ThomsonOne. Operating Income represents revenues less those expenses directly attributable to the revenues. Asia .Hang Seng Index + Nikkei. 14 . with substantially lower levels of client activity in many markets for example: markets. Australia . DD1 down 50% and cash equities commissions down 25% for FY12 on pcp . 2. 3. Combined.Recent operational update – Feb 2012 Overview Since our 1H12 result announcement.
10% (~$A100m) on pcp – Macquarie Capital operating expenses anticipated to be down approx. Macquarie Capital and FICC) FY12 operating income1 is expected to be down approx 25% on pcp with FY12 net profit contribution1 expected to be approx. pcp. 80% on pcp Dec 11 qtr included the receipt of the $A300m cash amount from MAp which has been recorded as income Annuity-style businesses’ operating expenses for FY12 are expected to be down 5% on pcp Capital market facing businesses’ operating expenses for FY12 are expected to be down approximately 10% on pcp – MSG operating expenses anticipated to be down approx.Recent operational update – Feb 2012 Overview In total. down approx. 20% in 2H12 on pcp with FY12 down approx. Operating income represents revenues less those expenses directly attributable to the revenues.15% in both 2H12 and FY12 (~$A100m FY12) on pcp 1. capital market facing businesses (MSG. Net Profit Contribution is operating income less operating expenses and is reported before profit share and income tax. 15 .
APRA has advised that meeting fully implemented APRA’s Basel III requirements (not otherwise required until 2016) is a pre-requisite for buyback approval.7b measured at 8. $A3. 3. $A0. Pro-forma 31 Mar 12 surplus calculated using the Tier 1 capital ratio of 7% which is the 2013 requirement. subject to regulatory approval – Buyback expected to commence in first half of FY13 and to proceed concurrent with further capital actions 1.5%2 (APRA 2016 requirement) at 31 Mar 12. Does not include future retained earnings or hybrid issuance.Recent operational update – Feb 2012 Overview Reported capital surplus at Dec 11 (APRA Basel II) remains unchanged from Sep 11 at $A3. Capital requirements may vary with changes in market conditions.5b Capital surplus measured under Harmonised Basel III expected to be approx. 16 . 2.7b measured at 7%1 and $A2. The Tier 1 capital ratio of 8.5% is not required by APRA until 2016 and includes the capital conservation buffer.9b3 measured after APRA ‘super equivalence’ – This surplus capital is expected to allow the commencement of a buyback of up to 10% of MGL p p p y p ordinary shares.
496 AUSTRALIA3 Staff: 6.628 14 6281 staff in over 28 countries EUROPE.959 AMERICAS Staff: 3.409 ASIA Staff: 2. 17 . 2. Staff numbers as at 31 Dec 11. 3.764 1. MIDDLE EAST & AFRICA2 Staff: 1. Includes New Zealand.14. Excludes staff in Macquarie First South joint venture and staff seconded to Macquarie Renaissance joint venture (Moscow).
1. Secured Funding. Bonds. 18 . This represents the Group’s co-investment in Macquarie-managed funds and equity investments. Includes Structured Notes.Funded balance sheet remains strong Macquarie Group Limited $Ab 100 31 March 2011 $Ab 100 30 September 2011 ST wholesale issued paper (6%) Other debt1 mat ring in maturing the next 12 mths (9%) Cash and liquid assets (31%) $Ab 100 31 December 2011 90 ST wholesale issued paper (6%) 90 90 ST wholesale issued paper (5%) 80 Other debt1 maturing in the next 12 mths (10%) 80 Cash and liquid assets (30%) 80 Other debt1 maturing in the next 12 mths (10%) Cash and liquid assets (26%) 70 70 70 Deposits (38%) 60 Deposits (36%) 60 Trading assets (17%) 60 Trading assets (16%) Deposits (40%) Trading assets (16%) 50 Loan assets < 1 year (9%) 50 Loan assets < 1 year (9%) 50 Loan assets < 1 year (10%) 40 40 Debt maturing beyond 12 mths (30%) 40 30 Debt D bt maturing t i beyond 12 mths (31%) 30 Loan assets > 1 year (33%) 30 Loan assets > 1 year (31%) Debt maturing beyond 12 mths (29%) Loan assets > 1 year (34%) 20 Loan capital 20 Loan capital Debt investment securities 20 Net trade debtors Debt investment securities Equity investments2 q y (6%) PPE Loan capital Net trade debtors Debt investment securities Equity investments2 q y (6%) PPE 10 Hybrid Equity (13%) 10 Hybrid PPE Equity (12%) 10 Hybrid Equity (12%) Equity investments2 (6%) 0 Funding sources Funded assets 0 Funding sources Funded assets 0 Funding sources Funded assets Note: These charts represent Macquarie Group Limited’s funded balance sheets at the respective dates noted above. 2. Other Bank Loans maturing within the next 12 months and Net Trade Creditors.
5 3. DTA’s and other impacts (-$0.5% which is not required by APRA until 2016 Harmonised Bas III surplus sel 0.0 2.5 4.2b). Based on expected Mar 12 numbers 19 . reserve movements and other Net Completed/In progress capital actions Pro forma Harmonised Basel III at Mar-12 APRA Basel III 'super equivalence' 3 Bank Hybrids (transition arrangements not yet finalised) 4 Pro forma APRA Basel III at Mar-12 Capital efficiency Legacy assets and businesses Planned Basel III hybrid issuance Future projected Regulatory surplus 5 Group regulatory surplus1: Basel III pro forma (Mar 12) 4.5 0.9 Group regulatory surplus at Tier 1 ratio at 7% Group regulatory surplus at Tier 1 ratio at 8. matter still to be finalised with APRA.4) 1. Ineligible under APRA discussion paper.9 49 3.2 3. 5.5% 1.5 2. Capital requirement may vary with changes in market conditions 2. 4.0 1. deconsolidated subsidiaries (-$0.6 (1.5 1. 'Harmonised' Basel III estimates assume full alignment with BIS in areas where APRA differs from the BIS.3 AP PRA Basel III surplus 2.Basel III surplus to increase as a result of Capital Actions $Ab 5.5) 2.0 0. APRA Basel III 'super-equivalence' includes full CET1 deductions of equity investments (-$0.5 0. Group regulatory surplus is calculated (per the MGL NOHC authority) applying the internal minimum Tier 1 ratio of 7% in the banking group.9b) .7 2.8 (0.0 Harmonised Basel III at Sep-112 Growth.4b).5 0.0 3. 3.2 (0.7 3.1) 0.0 4.0 Using minimum Tier 1 ratio of 8.8 0.
9% 11. Capital requirement may vary with changes in market conditions.Pro-forma Pro forma Basel III CET1 Ratio Strong Banking Group Harmonised Basel III capital ratios1 .8% MBL Common Equity Tier 1 (CET1) ratio: Basel III pro-forma (Mar 12) 14% 12% 13. DTA’s and other impacts (-0.5% 10.8% 0.2% 11 2% 9. APRA Basel III 'super-equivalence' includes full CET1 deductions of equity investments (-1.5%) APRA Basel III Harmonised Basel III Growth.2%). 20 .2% 11. Tier 1: 11 8% 11 2%. deconsolidated subsidiaries (-0. 3.3% (2.1% Group capital surplus Harmonised Basel III 10% 8% 6% 4% 2% 0% 1.Common Equity Tier 1: 11. reserve at Sep-11 2 movements and other Net completed/In progress capital actions Pro forma APRA Basel III 'super Harmonised Basel III equivalence' at Mar-12 Pro forma APRA Basel III at Mar-12 3 Capital efficiency Legacy assets and businesses Future projected Basel III CET1 ratio Basel III applies only to Macquarie Bank Limited and not the Non-Bank Group 1. 2.0%) 11.3% Basel III minimum CET1 (4.5%).2% 0. 'Harmonised' Basel III estimates assume full alignment with BIS in areas where APRA differs from the BIS.9% 9.2%.5%) CCB (2.3%). 11.6% 0.
Asian Exotics and European index synthetics Although not directly impacted by Basel III (business does not operate in MBL). Currencies and Commodities 1.Examples of capital actions1 Return of excess capital currently held in fund management subsidiaries where currently over capitalised Netting of cash collateral to reduce exposures in respect of retail structured investment products Exit aircraft engine leasing business Move from Standardised to IRB treatment for Relationship Banking portfolio. consistent with the treatment of other credit books in Macquarie Strategic partnership with Julius Baer in relation to Asian Private Wealth business resulting in reduced balance sheet usage g g Exit underperforming derivatives businesses including institutional derivatives. review of capital usage continuing to provide additional capital surplus at the MGL level Reduce holdings of securitised assets that attract penal capital treatments under Basel III OTC derivatives will be increasingly centrally cleared as regulatory reforms are implemented i l t d Update systems to enable improved precision in capital calculations Macquarie Funds Corporate and Asset Finance Banking and Financial Services Macquarie Securities Macquarie Capital Fixed Income. 21 . Includes examples that are completed / in progress and that are included in the Mar 12 Harmonised Basel III pro-forma as well as those in progress and potential actions that are expected to be completed after Mar 12.
0 0.4) 1. awaiting APRA’s final rules on some aspects of Basel III hybrid requirements Subject to APRA approval and market conditions.2 0.5 (0.4 0.2b of hybrid capacity at the Group level post Capital Actions A$b 2.5 Projected Group hybrid capacity post capital actions1 Macquarie plans to undertake hybrid capital issuance in order to – Improve capital structure efficiency under Basel III whilst maintaining high levels of Core Equity – Replace hybrid instruments which no longer qualify under Basel III rules – Better match capital and funding requirements for offshore activities (foreign currency denominated) Current status of hybrid issuance – Market conditions improving – However.Update on Hybrid issuance $A2.0 1.0 Group Hybrid at Dec-11 Potential exclusion of MIS Potential hybrid issuance Additional hybrid capacity Pro forma Group Hybrid under APRA Basel III 2012 capacity 3 1.5 0. Group hybrid capacity is required under the APRA NOHC authority to be no more than 25% of the MGL minimum capital requirement. targeting issuance as soon as practical 2. 22 .7 1.5 2.
400 2.828 10% 51% 19% Reduction $A380m 12% $Am 1.208 3. redesigning business and operating models and increasing the effective use of offshore locations – Savings will enable investment in growth areas which include key markets.8b. down $A0.4b on 2H11 – Achieved through a range of initiatives including exiting unprofitable businesses creating scalable platforms.600 2.Cost Performance Recap of 1st half performance 1H12 operating costs $A2. platforms reducing complexity. processes and technologies as well as other inflationary cost pressures – Lower compensation expense due to a number of factors including lower profit share 3.400 3.200 2.000 . 2H11 Investment Corporate Macquarie Banking and Macquarie Macquarie Fixed Real Estate Corporate in growth and Asset Funds Financial Securities Capital Income.200 3. new products. Banking areas Finance Services Currencies and Commodities FX 1H12 115 1 40 70 1% 10% 11% 78 80 13% 22% 45 10 107 64 2.800 2. 23 . businesses.000 2. Percentage reduction off 2H11 cost base.
Consolidating functions to leverage scale Case Study: Creation of single Capital Markets Operations & Technology team As part of our program to create a single market operations and technology function to improve efficiency and reduce costs. Collateral Mgmt.500 $A20m saving $A8m saving $A20m saving Further savings 24 . Recs. costs the operations and technology areas supporting MSG and FICC have been combined Complete merger of all MSG and FICC Operations and IT teams as part of The creation of the MOT Group p Dec 2011 Scope: Consolidation of remaining MSG Middle and back office functions into the Market O M k Operations Division i Di i i and the merger of MSG and FICC IT teams Driver: Combining the remaining Middle Office and IT functions for scale benefits Key Activities: Consolidation of all Capital Markets Middle & Back Office and IT functions. FIDESSA. MTS and Market data Scope: Consolidation of FICC Settlements (CAG) with common MSG back office functions into M k f i i Market Operations Division (MOD) Driver: Combine overlapping back office functions for scale benefits Key Activities: C bi i of K A ti iti Combining f Settlements. and use of lower cost locations Consolidation of systems supporting MSG and FICC From 2010 Combining of MSG and FICC back offices Apr 2011 Leverage Market Operation functions for other Business Groups On Going Scope: Greater sharing of discrete systems and Market Data between FICC and MSG Driver: Need for single view of clients as industry moves to multi-asset solutions and reduction in the systems portfolio Key Activities: Consolidation of the shared systems including CONNECT. Calypso. Corporate actions and Compliance Ops Scope: Leverage the combined Capital Market Operations and Technology team f the enterprise for h i Driver: Further cost reduction through providing enterprise wide services Key Activities: Leveraging these centralised operations th t li d ti and IT functions across the organisation for further reduction Total MOT headcount is 3.
centralisation and sharing Bankwide functions Consolidation of technology teams into Market Operations and Technology (MOT) Initiatives 70% of savings achieved by significantly scaling back or exiting derivatives businesses Streamlining teams in Cash Equities Consolidating and centralising operations into Market Operations and Technology (MOT) Progress to date Total run rate savings ~10% net savings FY12 ~15% net savings FY12 ~ 20% net savings by FY13 ~ 25% net savings by FY13 25 .Focusing on capital market facing businesses Case St d M C Study: Macquarie S i Securities and M iti d Macquarie C it l i Capital MSG and Macquarie Capital expected to reduce FY11 run rate costs by 20-25% by end FY13 Macquarie Securities Macquarie Capital Sizing teams based on targeted areas of expertise Efficiencies in support functions through rationalisation.
200 25% 1. 20% of Fi t f Finance. HR and B i d Business S i Services f functions ti Staffing in regional service hubs 1.International support functions Increasing the use of international locations to support our global businesses Now over 1.000 staff located in regional service hubs. supporting Macquarie’s global operations This Thi represents approx.000 20% 800 15% 600 10% 400 5% 200 0 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Dec-11 0% ■ Headcount in regional service hubs ▬ % of Service Area headcount in regional service hubs (ex Risk and CEX) 26 . T h l Technology.
full value to each lead manager for 1 Oct 11 – 31 Dec 11. 11. 6. Munich.3 Asian institutional investors1. May 11.31 Dec 11. 5. Greenwich Associates. Insto Distinction Awards. No.1 in Australia and NZ M&A by number of deals4 No.3 execution broker globally3 g y No. 3. Peter Lee Australia. Zurich and selected US operations Exited listed public derivatives in Germany Reduced cash equities headcount in Europe and Japan Macquarie Securities – – – – – – – Macquarie Capital – – – – – Reviewed front and back-office costs and team sizes to reflect market opportunities Entered strategic collaboration with Julius Baer in response to future private and investment banking opportunities in North and South East Asia – – FICC – Credit Trading ceased providing Latin American fixed income products Selectively growing our niche physical businesses – recent additions to the offering include physical sugar – 1. FT Banker Awards.2 for FX and No. Dec 11. Thomson Reuters – total proceeds raised in this market. 2. 10. 7. 4. Sep 11.1 US institutional investors2 and No. 9.4 US physical gas marketer in North America11 Developments since 1H12 – – – – Exited institutional derivatives in the US. Jun 11. Dealogic – Australia and NZ M&A completed deals (by deal count) for 1 Apr 11 . 27 . No. Project Finance International. Bloomberg.Overview Capital market facing businesses Operating Group Market positions – No.1 for currency options10 No. Asia and South Africa Closed continental Europe operations – Paris.2 Australian institutional investors1. AsiaMoney. AFMA Financial Markets Report 2011. UK. No.1 for Australian Equity and Equity-related deals5 Received 15 awards globally in 2011 including Best Domestic Equity House (Australia)6 Middle East Infrastructure Deal of the Year (Muharraq STP)7 Australian PPP Deal of the Year (New Royal Adelaide Hospital)7 Americas Deal of the Year (Puerto Rico PR-22 & PR-5 Toll Roads)7 FIG Capital Raising Deal of the Year (Asia Pacific) ( g (Agricultural Bank of China)8 ) Equities Deal of the Year (Sino-Ocean Land)8 ABS Deal of the Year (Macquarie SMART Series 2011-3 Trust)9 Winner: Commodity Business Awards for Excellence in Agriculture and Softs. No.1 execution broker in Asia for execution quality.1 European institutional investors1 overall sales and research into Australian equities No. Platts. 8.
q restructurings Continued to build out unlisted infrastructure funds platform Continued to build out global distribution platform with senior hires in the US. For achievements in risk management and based on nominations by prime brokers in the region. 5. largest manager of infrastructure assets globally1 Ranked first in the Infrastructure Investor magazine listing of the largest infrastructure investors globally2 Won 20 Lipper Awards in 2011 for superior performance3 Developments since 1H12 – Macquarie Funds – – Delaware was ranked first in the “Barron’s Fund Families Report” for 20114 Asian Alpha hedge fund was named Asia Risk’s Hedge Fund of the Year in 20115 and won the 2011 AsiaHedge award for the Best Asia (including Japan) Hedge Fund6 Macquarie Master Diversified Fixed Interest Fund awarded Best Global / Australian Bond fund7 One of the largest providers of motor vehicle finance in Australia One of North America’s largest independent lessors of technology equipment No.Overview Annuity-style Annuity style businesses Operating Group Market positions – – – Largest Australian-based asset manager. Jun 11. Jun 11. 7. 28 .1 ranked full-service retail stockbroker in Australia8 Standard & Poor’s Product Distributor of the Year (Professional Series)9 Macquarie Life Active awarded Canstar CANNEX Innovation Excellence Award for Financial Services AUM has decreased from $A324b to $A314b primarily driven by $A16b of negative FX translation against $A6b of p positive market movements. Including 4 group awards (for Delaware Investments and INNOVEST Kapitalanlage AG). net inflows and acquisitions / . Best Global / Australian Bond fund at the Financial Review Smart Investor Blue Ribbon Awards for Macquarie Master Diversified Fixed Interest Fund. Barron's/Lipper's Best Fund Families of 2011. Europe and Australia – – – – – – – Acquisition of portfolios (lending. IRESS: consideration traded and volume. 8. This award is based on producing the best risk-adjusted returns over a 12 month period. 3. 31 Dec 11. 9. For pension assets under management. Towers Watson Global Alternatives Survey. Global Equities Developed Markets category for the Independent Franchise Partners fund. UK meters and US rail) Divestment of non-scalable businesses (sale of engine leasing business) Recycling of loan portfolio through reinvestment of capital Corporate and Asset Finance – – Banking and Financial Services – – – Broadening existing annuity platforms to attract new funds – including providing administrative functions for Perpetual’s $A8b wrap platform Migrating Macquarie Private Wealth Asia to Julius Baer – 1. 4. 2. 6.
Based on current market conditions we anticipate: – 2H12 NPAT to be approx 35% up on 1H12 and approx 25% down on pcp Expected approx. 2H12 increase on 1H12 principally due to significantly improved FICC contribution and the MAp cash amount which offset weaker contribution from Macquarie Securities – FY12 to be approx. Macquarie Securities and Macquarie Capital have continued to experience difficult trading conditions in many markets Accordingly. pcp. 29 . and as previously indicated. 25% lower than FY11 FY12 outlook is also subject to the completion rate of transactions and the conduct of period end reviews In addition to market conditions. FY12 result remains subject to a range of other challenges including: ─ Movements in foreign exchange rates ─ Cost of our continued conservative approach to funding and capital ─ Regulation including the potential for regulatory changes Regulation. approx. Macquarie’s result for FY12 is expected to be lower than FY11.Outlook for 2H12 Since our update on 28 October.
Macquarie Capital and FICC Strong and conservative balance sheet – Well matched funding profile with minimal reliance on short term wholesale funding – Surplus funding and capital available to support growth g Proven risk management framework and culture 30 .Medium term Macquarie is well positioned to deliver superior performance in the medium term Continue to adapt our portfolio mix to changing market conditions – Annuity-style income is provided by three significant businesses which are delivering superior returns following years of investment and recent acquisitions − Macquarie Funds. Corporate and Asset Finance and Banking and Financial Services – Three capital market facing businesses are well positioned to benefit from improvements in market conditions with strong platforms and franchise positions − Macquarie Securities.
31 . 2.1b Increased activity +$A0. 5 Year Average Return on Equity1 0.5 1. Annualised 1H12 Return on Equity1 Approx.6 16 0.1b FICC Continuation of activity levels seen during 2H12 g 1. ROE is based on Operating Group’s net profit contribution adjusted for indicative allocations of profit share.2b Macquarie Capital ECM fees to FY11 levels +$A0.7 0. NPAT used in the calculation of approx.2b q $ Reduced operating costs +$A0. 5 Year Average FY07 – FY11 Approx. tax and other corporate expenses. Return on Equity1 Annuity-style businesses (excluding legacy) Macquarie Funds Group Corporate and A C t d Asset Fi t Finance Banking and Financial Services 1. RoE calculated as NPAT divided by Pro-forma Basel III equity (applying a 7% core equity ratio in the banking group). CAF excluded from 5 year average as not meaningful given the significant increase in scale of CAF’s platform over the 5 year period.7 Approx.2 to +$A0.6 0. 0% 5 Year Average Profit pre tax and profit share $Ab Approx.5 Approx.7 1.Medium Term Approximate business Basel III ROE Group Basel III Equity $Ab Approx.3 2.1b Cash equities FY11 levels +$A0.4b y $ $ Reduced operating costs +$A0. 23% A 20%2 Capital market businesses (excluding legacy) Macquarie Securities Macquarie Capital FICC 0.6 40% 20% 15% Potential performance factors Macquarie Securities ECM fees to FY11 levels +$A0.
Macquarie Group Limited .
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