Sydney, 25 July 2019
Macquarie Group (ASX: MQG; ADR: MQBKY) Managing Director and Chief Executive Officer, Shemara Wikramanayake, said today that Macquarie’s operating groups were performing in line with expectations, with their contribution in the first quarter of the 2020 financial year (1Q20) broadly in line with the first quarter of the 2019 financial year (1Q19) and slightly down on the prior quarter (4Q19).
Speaking ahead of Macquarie’s 2019 Annual General Meeting in Sydney, Ms Wikramanayake said: “Macquarie’s annuity-style businesses were down on the prior corresponding period. Specifically, and compared with the prior corresponding period, Macquarie Asset Management (MAM) was down mainly due to the timing of performance fees and higher operating expenses following recent platform acquisitions; Corporate and Asset Finance (CAF) was down due to reduced loan volumes and realisations in CAF Principal Finance; and Banking and Financial Services (BFS) was broadly in line.”
“Macquarie’s markets-facing businesses were up on the prior corresponding period primarily due to the strong performance of the commodities platform in Commodities and Global Markets (CGM), partially offset by lower investment-related income in Macquarie Capital (MacCap).”
Macquarie Group’s financial position comfortably exceeds the Australian Prudential Regulation Authority’s (APRA) Basel III regulatory requirements, with Group capital surplus of $A5.0 billion at 30 June 2019. This was down from $6.1 billion at 31 March 2019, following payment of the final dividend for the financial year ended 31 March 2019 (FY19). The Bank Group APRA Basel III Common Equity Tier 1 capital ratio was 12.0 per cent (Harmonised: 14.9 per cent) at
30 June 2019, up from 11.4 per cent at 31 March 2019. The Bank Group’s APRA leverage ratio was 5.4 per cent (Harmonised: 6.0 per cent), LCR was 166 per cent and NSFR was 111 per cent at 30 June 2019.
The acquisition of Macquarie shares required for FY19 profit share and promotion awards under Macquarie Group Employee Retained Equity Plan (MEREP) was completed in June 2019. As previously disclosed, a total of approximately $A607 million of Macquarie shares were purchased: $A326 million off-market under arrangements announced to the market on 3 May 2019 and $A281 million on-market.
In commenting on the Group’s start to the 2020 financial year (FY20), Ms Wikramanayake noted the following highlights:
Macquarie today announced the following operating group updates:
Garry Farrell has announced his intention to retire as Co-Head of CAF and from the Executive Committee, effective 1 September 2019. Florian Herold, currently Co-Head of CAF, will join MacCap and will continue to lead Principal Finance. He will remain on the Executive Committee.
Results for the half-year ended 30 September 2019 will be reported under the new Group structure with rebased prior periods.
The Group’s result for FY20 is currently expected to be slightly down on FY19.
The Group’s short-term outlook remains subject to:
Ms Wikramanayake said: “Macquarie remains well positioned to deliver superior performance in the medium term due to its deep expertise in major markets, strength in diversity and ability to adapt its portfolio mix to changing market conditions, ongoing program to identify cost saving initiatives and efficiency, strong and conservative balance sheet and proven risk management framework and culture.”
In providing an overview of FY19, Macquarie Group Chairman, Peter Warne, noted that Macquarie’s businesses continued to grow and had delivered a 50th consecutive year of profitability.
Mr Warne spoke about the importance of risk culture and conduct at Macquarie and the continued evolution of its approach following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in Australia:
“We continue to review and monitor the outcomes and initiatives emanating from the Commission as well as key learnings as we continually improve our Group-wide approach to risk culture and conduct management. This includes an intense focus on customer outcomes, reporting on which has now been included in the Board Governance and Compliance Committee’s responsibilities.”
Mr Warne said APRA’s request to review governance, culture and accountability was a valuable exercise. The review confirmed that these factors remain critical to Macquarie’s continued success and are well embedded.
The Board and Management also recognises the importance of sound environmental, social and corporate governance practices as part of Macquarie’s responsibility to clients, shareholders, communities and the environment in which it operates. Mr Warne noted, “Macquarie’s Group-wide Environmental and Social Risk Policy provides a robust framework for embedding environmental and social risk management into investment decision-making.”
In relation to the transition to a low carbon and climate-resilient economy, Mr Warne noted Macquarie has been involved in the energy sector for over 20 years supporting clients’ needs across the spectrum of energy production and distribution. Over the last 10 years Macquarie has played a leading role in facilitating the shift towards renewables, with a particular focus on trying to address the various challenges which remain to full transition.
Mr Warne commented on the activities of Macquarie staff and the Macquarie Group Foundation across the various communities in which it operates:
“One of the oldest and largest corporate foundations in Australia, the Macquarie Group Foundation and Macquarie staff have together contributed more than $A360 million to projects in our local communities since the Foundation was established in 1985.
“In the year to 31 March 2019, the Foundation and Macquarie staff globally contributed $A31.7 million to more than 1,600 organisations, all of which are selected by our staff, who also gave over 53,000 hours of their time as volunteers, fundraisers and pro bono advisers. We are very proud of the commitment shown by all Macquarie staff to the communities in which they live and work around the world.”
Mr Warne said Macquarie’s 50th Anniversary Award, announced last year, is a reflection of the Group’s philanthropic culture and the commitment of staff over the past five decades. A total of $A50 million will be awarded later this year to five finalists to help deliver projects that initiate or build on bold ideas that address an area of social need.