Macquarie Group Limited

Well good morning everyone and thank you for joining us here today for Macquarie's third quarter and third quarter 26 and 2026 operational briefing. Before we begin today I would like to acknowledge the traditional custodians of this land, the Gadigal of the Eora Nation and pay our respects to Elders past, present and emerging. Today, we will have a third quarter update, which will be given by our CEO, Shamara Wickramanayake, followed by a Q&A session. We'll then hear from each of our operating groups, talking about Macquarie's presence here in ANZ. And then we'll hear from Andrew Cassidy, talking about risk, and Nicole Sabara and her team talking about technology. So with that, I will hand over to Shamara. Thank you.

Good morning, everyone. Welcome from me. And I should note before I get going that we have all our operating group heads here in the front row as well with Benway and Michael Silverton joining us from overseas. We've just got Greg Ward travelling, but they're all here for questions if needed. So turning to the third quarter, we'll start with this slide as we always do that just notes our footprint of our four operating groups and the four central service groups that support them and the mix of our income. This is no different to what you saw at the end of the first half. But turning to the third quarter result, as we mentioned throughout this year, we expected the earnings to be weighted to the second half over this financial year. And we saw that play out in the results for the third quarter, being in line with what we expected. So Macquarie asset management was substantially up both on the third comparable quarter and the year to date. And that was driven by in the third quarter, as you know, we had the completion of the divestment of the public investments in North America and Europe. and we also had increased performance fees for the year-to-date period. Then BFS is up slightly on the prior quarter and the year-to-date, and that's driven by ongoing growth in our volume, in our loans, and also in our deposits, offset to some extent by margin compression, and that's competition, but also the runoff of the car lease portfolio, which was a higher margin business. And then in CGM, the result in CGM is up on the prior comparable period and it's in line with the year to date for last year. And the catch-up that we had in that third quarter was mostly driven by an increase in our asset finance business. And then Macquarie Capital, also like Macquarie Asset Management, substantially up both on the prior quarter last year and on the prior year to date. And that was driven by the ongoing growth of our credit book that's delivering consistent earnings realisations in our equity book. And in the fee and commission income, we were up on the full year to date versus last year. But the quarter, we had a very big quarter last year. So looking in a bit more detail at each of our four operating groups and where they sit at the end of this quarter, Macquarie Asset Management at the bottom there you can see, as I mentioned, we completed the divestment of our North American and European public investments, which is about $250 billion Australian dollars of assets that we've now transferred to Nomura. But people may not be as aware that in Australia we have now $314 billion of assets under management in public investments. And that is up 5%. And that's being driven by inflows, mostly into fixed income, but also favourable market. And you'll get a bit more of a deep dive on that business today. In private markets, we're at about $227 billion of equity under management, which is up 1%, mostly driven by fundraising. We had a good fundraising period of $6.3 billion, investing of $7.7 billion. and we're sitting with dry powder in the private markets business of about 25.9. Banking and financial services, again, strong growth in our home loans, up 7%. Our business banking also up 1% and that was supported by deposits which are up 6%. The funds on platform were down 1% and that was due to market movements in the composition of our funds on the platform. And then turning to commodities and global markets, as I mentioned just now, the asset finance business is up with growing in our shipping and meters book. Financial markets are in line. And in the commodities business, we had an improved performance in the North American gas and power and resources business particularly. Now, that performance was offset to some extent by the increase in costs. as we talked about in the first half, as we invest in the operating platform remediation programs, and there were some transaction costs as well in the third quarter, as in the first half. And then Macquarie Capital, big contribution there was private credit is a big contributor, and the book was up $5.7 billion to $28.9. In this period, we also had equity realisations, which have, as you know, the book's been seasoning and we're getting into a period of more realisations, the parking eye and the iPlanet assets in Europe. And then as I mentioned in relation to the fee and commission income, this year activity levels, we had a strong year last year as well, but our activity levels are up, although the third quarter last year was very strong. Then turning to the balance sheet side of it and the funding, capital, funding, liquidity, You can see our ratios up the top there, our set ones, leverage ratios, LCRs and NSFRs, all comfortably above the BAL 3 amendments. And the other thing I note on this page is our surplus capital is at $7.5 billion, which is down a billion, and that's because we paid out the second half dividend, so that's slightly offset by the 3Q earnings. but also absorption of capital into the businesses. And in terms of that absorption, you can see in this last quarter, CGM, we had about 800 million in credit capital as we head into the northern winter as well. We also had in Macquarie Capital, as I mentioned, the growth of the private credit book absorbing capital. But in Macquarie Asset Management, we released several hundred million of capital with the exit of the public investments business in Macquarie. North America and Europe and BFS even though the books were growing it was flat because of the runoff of the car leasing. Then looking at update on regulatory and legal matters and we regularly give or we always give an update on this. In terms of regulatory the main thing I'd note there is that we had APRA recently announce the reduction of the add-ons in our LCRs and NSFRs, and we're continuing to work with AFRA on the range of programs we've discussed with you before. And similarly with ASIC, we, between us, have agreed in relation to the short-sell transaction reporting matter that we will submit to the court a $35 million penalty. So the last thing for me to cover really is a short-term outlook before moving on to questions. And in relation to that, again, taking it by operating group, Macquarie Asset Management, as we've been saying, we expect, excluding the divestment of that public investments business, that our base fees will be broadly in line. But we expect our net other operating income to be significantly up, and the big driver of that is the performance fees this year that we've been sharing with you. Banking and financial services, ongoing growth in volumes in our loan books, our deposits and our funds on platform, always subject to market competitive dynamics impacting margins and ongoing investment in our tech platform. And in Macquarie Capital, On the transaction activity side, we continue to expect it to be in line with last year, which was a strong year. But on the capital investing side, we're continuing to see growth in the private credit book, and now we're starting to have realisations in the equity book, and we're continuing to deploy there. And then CGM, whilst we expect the continued contribution from asset finance and financial markets, we're now guiding that we expect the commodities income to be up for FY26. And at the corporate level we expect the compensation ratio to be in line with historical levels and the tax rate we expect to be consistent with the first half of this financial year which is at the higher end of the broad range that we typically have for our expected tax rate. And that's because of the mix of our income. So these short-term outlooks are always subject to the factors that we have shared with you previously that are noted on that page. And I'll hand over to Sam now for questions because I want to leave time for you to hear from our Australian teams.

Thank you. Great. Thanks, Shamara. So we'll start with questions in the room and then we'll go online. I'll start with Brendan and we'll move across to the right. I'll just get a microphone to you Brendan, just wait one second.