Sydney, 26 July 2018
Macquarie Group (ASX: MQG; ADR: MQBKY) Managing Director and Chief Executive Officer, Nicholas Moore, said today that Macquarie’s operating groups were performing well, in line with expectations, with the contribution from the first quarter of the 2019 financial year (1Q19) up on the first quarter of the 2018 financial year (1Q18) and down on a strong prior quarter (4Q18).
Speaking ahead of Macquarie’s 2018 Annual General Meeting in Sydney, Mr Moore said: “Macquarie’s annuity-style businesses4 continued to perform well, with continued strong base and performance fees in Macquarie Asset Management (MAM). Corporate and Asset Finance (CAF) Principal Finance was down on the prior corresponding period (1Q18), mainly due to the timing of transactions and a reduction in the size of the portfolio. CAF Asset Finance was broadly in line with the prior corresponding period. Growth continued in Banking and Financial Services (BFS) particularly across mortgages, business banking and platforms, while deposits were broadly in line with the prior corresponding period.”
“Macquarie’s capital markets facing businesses4 experienced strong trading conditions across most markets. Commodities and Global Markets (CGM) experienced stronger activity, particularly in commodity markets and fixed income products. Macquarie Capital’s balance sheet positions performed in line with expectations, with solid realisations during the quarter. Debt capital markets activity was down compared to a strong prior corresponding period.
There were no significant one-off items in the quarter.
Macquarie Group’s financial position comfortably exceeds the Australian Prudential Regulation Authority’s (APRA’s) Basel III regulatory requirements2, with Group capital surplus of $A3.4 billion at 30 June 2018. This was down from $A4.2 billion at 31 March 2018, following payment of the final dividend for the financial year ended 31 March 2018 (FY18) and the Macquarie Capital Notes redemption, offset by the Macquarie Capital Notes 3 issuance. The Bank Group APRA Basel III Common Equity Tier 1 capital ratio was 10.3 per cent (Harmonised: 12.8 per cent) at 30 June 2018, down from 11.0 per cent at 31 March 2018. The Bank Group’s APRA leverage ratio was 5.6 per cent (Harmonised: 6.4 per cent), LCR was 155 per cent3 and NSFR was 112 per cent at 30 June 2018.
The acquisition of Macquarie shares required for the FY18 profit share and promotion awards under the MEREP was completed in June 2018. As previously disclosed, a total of approximately $A454 million of Macquarie shares were purchased: $A361 million off market under arrangements announced to the market on 5 May 2017 and $A93 million on market. The shares were acquired at a weighted average purchase price of $A113.76 per share.
First quarter business highlights
In commenting on the Group’s start to the 2019 financial year (FY19), Mr Moore noted the following highlights:
The Group’s result for FY19 is currently expected to be broadly in line with FY18.
The Group’s short-term outlook remains subject to:
Mr Moore 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, the ongoing benefits of continued cost initiatives, a strong and conservative balance sheet and a proven risk management framework and culture.”
Highlights from the address of Chairman, Peter Warne
In addition to announcing Nicholas Moore’s retirement, Macquarie Group Chairman, Peter Warne, provided an overview to shareholders of FY18. He noted that Macquarie's businesses continued to grow with profit up 15 per cent highlighting the diversity of Macquarie’s business offering and the Group’s ability to adapt to changing conditions.
Mr Warne said: “As we outlined at our full year result announcement, Macquarie reported a record profit of $A2,557 million for the year to 31 March 2018, an increase of 15 per cent on the prior year.”
“Operating income was up five per cent to $A10,920 million. Earnings per share was $A7.58, an increase of 15 per cent from $A6.58 in the prior year.”
Mr Warne remarked on Macquarie’s sound risk culture, the Group’s commitment to the renewable energy, and the Royal Commission.
With respect to risk culture, Mr Warne outlined the Group’s commitment to achieving the highest standards of professional conduct across all operations, and effective consequence management as a key component of Macquarie’s risk management framework and risk culture.
In relation to renewable energy and clean technology, Mr Warne noted Macquarie’s substantial and longstanding commitment to these sectors as part of a broader commitment to continue to support clients in the transition to a low carbon economy. Macquarie has invested or arranged over $A9.5 billion in renewable energy, energy efficiency and clean energy in FY18.
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has been underway since December last year. Mr Warne commented that Macquarie has made submissions to the Commission’s inquiries and will continue to respond appropriately.
Mr Warne advised that Patricia Cross will be retiring as a Non-Executive Director of Macquarie Group Limited and Macquarie Bank Limited after five years on the Board, effective after today’s Annual General Meetings. Mr Warne said: “Mrs Cross’ extensive experience in wholesale and retail banking, international capital markets, financial risk management and treasury as well as considerable experience as a company director of financial and wealth management corporations has been invaluable to the Board. The Board thanks Patricia for her dedicated service and wishes her well for the future.”
Mr Warne closed his remarks by commenting 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 contributed more than $A330 million since its establishment in 1985.”
“In the year to 31 March 2018, the Foundation and Macquarie staff globally contributed $A28.3 million in donations to more than 1,500 community organisations around the world. In addition, staff gave over 60,000 hours of their time as volunteers, fundraisers and pro bono advisers.”
“We are very proud of the commitment shown by Macquarie staff to the communities in which they live and work around the world.”
The Macquarie Group Foundation 2018 Annual Review is now available on Macquarie’s website at macquarie.com/foundation. The Review provides an update on the contribution Macquarie staff members are making in their communities around the world.