Interim Review


Half year ended 30 September 2017

CEO overview

Macquarie Group half-year result

27 Oct 2017
Macquarie Group

Macquarie Group CEO Nicholas Moore discusses the result for the half year ended 30 September 2017.

Approximately 62%

international income

13,966 staff

in 27 countries

$A473.6 billion

assets under management

16.7%

annualised return on equity

Operating group highlights

Macquarie Asset Management

Top 50 global asset manager with $A471.9 billion of assets under management.

Net profit contribution of $A1,189 million, up 39% on 1H17 and up 75% on 2H17.

Highlights of the half year:

  • Raised $A6.2 billion in new equity globally for infrastructure and real asset investments
  • Invested equity of over $A5.0 billion in infrastructure and real assets globally
  • Strong performance in Macquarie Investment Management across a range of asset classes including Australian equities, emerging markets equities, and global and US fixed income
  • Continued to grow the Macquarie Infrastructure Debt Investment Solutions business
  • Ranked No.1 infrastructure manager globally1
  • Received six awards for Australian equities and four Lipper Awards2; Macquarie Investment Management ranked top 10 global insurance manager.3

Read more about Macquarie Asset Management

Macquarie European Infrastructure Fund 3 recently sold its stake in Copenhagen Airport after 12 years of Macquarie ownership. During that time, and with substantial capital investment, the airport enhanced its route network, expanded passenger numbers by 45 per cent and increased employee numbers by 41 per cent. 

The airport was recently ranked the Best Airport in Northern Europe and has been named Europe’s most efficient airport 10 times in the last 12 years. It now serves 165 destinations and recently commenced a multi-year expansion plan. 

Corporate and Asset Finance

Corporate and Asset Finance consists of an Asset Finance business which provides specialist finance and asset management solutions globally, and a Principal Finance business which provides flexible primary financing solutions and engages in secondary market investing, across the capital structure. 

Net profit contribution of $A619 million, up 19% on 1H17 and down 9% on 2H17.

Highlights of the half year:

  • Vehicles portfolio of $A17.4 billion
  • Aircraft leasing portfolio of $A8.3 billion
  • Growth in mobile device finance programs in the Telecoms, Media and Technology business
  • Largest independent4 smart meter funder in UK; and a specialist funder of energy efficient assets
  • Principal Finance funded portfolio of $A5.6 billion, with portfolio additions of $A0.7 billion during the half year
  • Provider of a £25 million financing to a specialist rehabilitation and care services company
  • Principal Finance and Macquarie Aviation completed the acquisition of a secondary loan portfolio secured by aviation assets.

Corporate and Asset Finance has expanded its resources sector offering, acquiring a fleet of near new Caterpillar 793F mining trucks; a Caterpillar 994H large wheel loader and a Caterpillar 16M motor grader. Following acquisition, the equipment has been disassembled and transported via heavy haul transportation and ocean shipment for reassembly as part of leasing solutions for Macquarie clients globally. 

The business provides finance and asset management solutions for large mining, construction and drilling equipment globally, to clients in a range of industries including natural resources, civil contracting, aggregate supply and heavy construction.

Banking and Financial Services

Macquarie’s retail banking and financial services business, providing a range of personal banking, wealth management and business banking products and services. 

Net profit contribution of $A286 million, up 10% on 1H17 and up 13% on 2H17.

Highlights of the half year:

  • More than 1 million Australian clients
  • 4% increase in total Banking and Financial Services deposits to $A46.4 billion
  • $A29.9 billion Australian mortgage portfolio, representing approximately 2% of the Australian mortgage market
  • $A78.9 billion of funds on platform
  • 9% increase in business banking loan portfolio since March 2017
  • Launched instant digital rewards program, Macquarie Rewards
  • Announced as strategic partner and issuer of the new Myer Credit Card.

Read more about Banking and Financial Services

Home buyers will be able to pay their deposits electronically at auction through a new banking application launched by Macquarie Business Banking in August 2017. DEFT AuctionPay removes the need for cheques in property transactions, enabling Australians to securely transfer their deposit on the spot when buying a property at auction.

The application provides immediate confirmation of payment, improving the end-to-end process for buyers, vendors and real estate agents. The technology is a first in Australia and a further example of how Banking and Financial Services is investing in market leading technologies to make digital banking more intuitive and efficient for Australian consumers and businesses.

Commodities and Global Markets

Provides clients with an integrated, end-to-end offering across global markets including equities, fixed income, foreign exchange and commodities.  

Net profit contribution of $A378 million, down 23% on 1H17 and down 21% on 2H17.

Highlights of the half year:

  • Completed the acquisitions of Cargill Petroleum and Cargill North America Power and Gas trading businesses
  • Strong results across the Fixed Income and Currencies platform with increased client flows in foreign exchange and rates, particularly in Japan, EMEA and North America
  • Improved result across the equities platform with growth in structured client capital solutions and the realisation of benefits from cost synergies following the merger of Commodities and Financial Markets and Macquarie Securities Group
  • Strong results across the futures platform with consistent client activity and volumes. Expansion of Asian distribution through Singapore branch buildout and full Singapore Exchange membership
  • No. 2 US physical gas marketer in North America5
  • No. 1 in ANZ for IPOs and ECM follow-ons.6

Read more about Commodities and Global Markets

In June 2017, Macquarie completed its acquisition of Cargill’s petroleum trading business, a respected participant in the crude and products markets globally with a strong team and record of success.

The acquisition represents an exciting step for Macquarie’s commodities business, which has evolved over more than three decades, bringing greater reach to the platform and positioning the Commodities and Global Markets group for continued growth. The newly acquired business forms part of the Commodity Markets and Finance division.

Macquarie Capital

Global capability in Mergers and Acquisitions Advisory (M&A), Debt and Equity Capital Markets and Principal Investments. 

Net profit contribution of $A190 million, down 7% on 1H17 and down 32% on 2H17.

Highlights of the half year:

  • Advised on 152 transactions valued at $A73 billion
  • No.1 in completed and announced M&A transactions in Australia and New Zealand7 and No.1 IPOs and ECM follow-ons in ANZ8
  • Acquisition of the UK Green Investment Bank plc from HM Government for £2.3 billion, rebranded as Green Investment Group and now one of Europe’s largest teams of green energy investment specialists
  • Defence adviser to DUET in response to the $A13.4 billion acquisition of 100% of DUET's securities by Cheung Kong Infrastructure - the largest M&A deal in Australia this year9
  • Acquisition of 100% ownership interest in RES Japan, a Japanese subsidiary of Renewable Energy Systems Group, rebranded as Acacia Renewables and focused on developing a pipeline of onshore wind energy projects
  • Financial adviser and equity investor in the restructuring and acquisition of the 907-megawatt Norte III combined cycle gas plant in Juarez, Mexico
  • No.1 Infra/Project Finance advisory in EMEA10, No.1 Project Finance sponsor in EMEA11, and most innovative investment bank for infrastructure and Project Finance.12

Read more about Macquarie Capital

In August 2017, a Macquarie-led consortium completed the acquisition of the Green Investment Bank from HM Government for £2.3 billion.

The integration of this new business into Macquarie has created a market leading platform in green infrastructure, backed by one of Europe’s largest teams of green energy investment experts. Having led over £15 billion of transactions in the UK, the combined team plans to expand the business internationally to support the growth of the global green economy. 

Board and management changes

Glenn Stevens

Glenn Stevens, former Governor of the Reserve Bank of Australia, will be appointed to the Macquarie Group Limited and Macquarie Bank Limited Boards as an independent director, effective 1 November 2017. 

Mr Stevens worked at the highest levels of the Reserve Bank of Australia for 20 years, including as Governor between 2006 and 2016. He led policy decisions through the global financial crisis, Australia’s mining boom and an extended period of low interest rates, and developed Australia’s successful inflation targeting framework for monetary policy.

Alex Harvey

After 25 years of service, Stephen Allen has announced his intention to retire from his role as Chief Risk Officer and Head of the Risk Management Group, and will step down from the Executive Committee on 31 December 2017. 

Patrick Upfold, Chief Financial Officer and Head of the Financial Management Group, will succeed Mr Allen.

Alex Harvey, Global Head of Principal Transactions in Macquarie Capital, will succeed Mr Upfold and will join the Executive Committee. Both appointments will be effective from 1 January 2018.

Interim Financial Report

The Interim Financial Report contains the Directors’ Report, including a review of operations and the financial result, and the full financial statements for Macquarie Group for the half-year ended 30 September 2017. 

Additional information

Investor information

Key dates

Nov 07 Ex-dividend date for 1H18 interim ordinary dividend
Nov 08 Record date for 1H18 interim ordinary dividend
Dec 13 Payment date for 1H18 interim ordinary dividend