Macquarie Group Limited - Annual Report 2017

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Presentation to investors and analysts Result announcement for the full year ended 31 March 2017 5 May 2017

Macquarie  FY17 result announcement  macquarie.com

Introduction Overview of Result

Result Analysis and Financial Management Outlook Appendices

Disclaimer

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The material in this presentation has been prepared by Macquarie Group Limited ABN 94 122 169 279 (MGL) and is general background information about Macquarie’s (MGL and its subsidiaries) activities current as at the date of this presentation. This information is given in summary form and does not purport to be complete. The material contained in this presentation may include information derived from publicly available sources that have not been independently verified. Information in this presentation should not be considered as advice or a recommendation 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. No representation or warranty is made as to the accuracy, completeness or reliability of the information. 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.

This presentation may contain forward looking statements – that is, statements related to future, not past, events or other matters – including, without limitation, 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, provisions for impairments 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 or to otherwise update any forward looking statements, whether as a result of new information, future events or otherwise, after the date of this presentation. Actual results may vary in a materially positive or negative manner. Forward looking statements and hypothetical examples are subject to uncertainty and contingencies outside Macquarie’s control. Past performance is not a reliable indication of future performance.

Unless otherwise specified all information is for the full year ended 31 March 2017.

Certain financial information in this presentation is prepared on a different basis to the Financial Report within the Macquarie Group Annual Report (“the Financial Report”) for the year ended 31 March 2017, which is prepared in accordance with Australian Accounting Standards. Where financial information presented within this presentation does not comply with Australian Accounting Standards, a reconciliation to the statutory information is provided.

This presentation provides further detail in relation to key elements of Macquarie’s financial performance and financial position. It also provides an analysis of the funding profile of Macquarie because maintaining the structural integrity of Macquarie’s balance sheet requires active management of both asset and liability portfolios. Active management of the funded balance sheet enables the Group to strengthen its liquidity and funding position.

Any additional financial information in this presentation which is not included in the Financial Report was not subject to independent audit or review by PricewaterhouseCoopers.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Agenda

1. Introduction – Karen Khadi

2. Overview of Result – Nicholas Moore 3. Result Analysis and Financial Management – Patrick Upfold 4. Outlook – Nicholas Moore

5. Appendices

 MACQUARIE 2017

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook

Introduction

Appendices

Introduction 01 Karen Khadi – Head of Investor Relations

 MACQUARIE 2017

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook

Introduction

Appendices

02 Overview of Result Nicholas Moore – Managing Director and Chief Executive Officer

 MACQUARIE 2017

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

ABOUT MACQUARIE Building for the long-term

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Macquarie Asset Management (MAM)

Top 50 global asset manager with $A480.0b[1] of assets under management
Provides clients with access to a diverse range of capabilities and products, including infrastructure and real asset management, securities investment management and tailored investment solutions over funds and listed equities

Annuitystyle businesses

Corporate and Asset Finance (CAF)

Global provider of specialist finance and asset management solutions, with a $A36.5b[1] asset and loan portfolio
Global capability in corporate and real estate credit investing and lending
Expertise in asset finance including aircraft, motor vehicles, technology, healthcare, manufacturing, industrial, energy, rail and mining equipment

Banking and Financial Services (BFS)

Macquarie’s retail banking and financial services business with a $A35.8b[1] Australian loan portfolio, funds on platform of $A72.2b[1] and BFS deposits of $A44.5b[1]
Provides a diverse range of personal banking, wealth management and business banking products and services to retail clients, advisers, brokers and business clients

Commodities and Global Markets[2] (CGM)

Integrated, end-to-end offering across global markets including equities, fixed income, foreign exchange and commodities
Provides clients with risk and capital solutions across physical and financial markets

Capital markets facing businesses

Diverse platform covering more than 25 market segments, with more than 160 products
Growing presence in commodities (natural gas, LNG, NGLs, power, oil, coal, base metals, iron ore, sugar and freight)
Global institutional securities house with strong Asia-Pacific foundations covering sales, research, ECM, execution and derivatives and trading activities

Macquarie Capital (MacCap)

Global capability in M&A Advisory, Debt and Equity Capital Markets and Principal Investments
Focus on six core sectors: Infrastructure, Utilities and Renewables; Real Estate; Telecommunications, Media, Entertainment & Technology; Resources; Industrials; and Financial Institutions
As at 31 Mar 17. 2. Formerly Macquarie Securities Group and Commodities and Financial Markets.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

2H17 result: $A1,167m up 11% on 1H17

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2H17 $Am	1H17 $Am	2H17 v 1H17
5,146	5,218	1%
(3,527)	(3,733)	6%
1,619	1,485	9%
(430)	(438)	2%
26.9	29.4
(22)	3
1,167	1,050	11%

15.8	14.6	8%
$A3.46	$A3.12	11%
$A2.80	$A1.90	47%

Calculation of the effective tax rate is after adjusting for the impact of non-controlling interests.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

2H17 result: $A1,167m up 11% on 1H17; up 18% on 2H16

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ANNUITY-STYLE BUSINESSES $A1,610m

2% ON 1H17 34% ON 2H16

CAPITAL MARKETS FACING BUSINESSES 9% ON 1H17 $A759m 26% ON 2H16

MAM: on 1H17

Continued to perform well against a strong 1H17, which benefited from significant realisation income

CAF: on 1H17

Continued strong performance across Leasing books; increased realisations in the Lending portfolio

BFS: broadly in line with 1H17

Growth in Australian mortgage, business banking and deposit books; 1H17 benefited from the sale of Macquarie Life’s risk insurance business

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MAM
29%
CGM
Net profit 20%
contribution
CAF
28%
MacCap
12%
BFS
11%
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CGM: broadly in line with 1H17 Benefited from improved trading conditions across most businesses

Macquarie Capital: on 1H17 Increased M&A and DCM activity as well as lower impairments

Note: Net profit contribution is management accounting profit before unallocated corporate costs, profit share and income tax. Pie chart is based on 2H17 net profit contribution from operating groups.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook

Introduction

Appendices

FY17 result: $A2,217m up 7.5% on FY16

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2H17 $Am	1H17 $Am	2H17 v 1H17	FY17 $Am	FY16 $Am
5,146	5,218	1%	10,364	10,158
(3,527)	(3,733)	6%	(7,260)	(7,143)
1,619	1,485	9%	3,104	3,015
(430)	(438)	2%
			(868)	(927)

26.9	29.4		28.1	31.0
(22)	3		(19)	(25)
1,167	1,050	11%	2,217	2,063

15.8	14.6	8%	15.2	14.7
$A3.46	$A3.12	11%	$A6.58	$A6.19
$A2.80	$A1.90	47%	$A4.70	$A4.00

Calculation of the effective tax rate is after adjusting for the impact of non-controlling interests.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

FY17 result: $A2,217m up 7.5% on FY16

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ANNUITY-STYLE BUSINESSES $A3,249m

4% ON FY16

CAPITAL MARKETS FACING BUSINESSES $A1,454m

12% ON FY16

MAM: on FY16

Base fees broadly in line
Lower performance fees
Increased investment-related income

CAF:

on FY16

Full year contribution from AWAS/Esanda
Income from prepayments and realisations in Lending broadly in line; albeit lower lending volumes
Unfavourable FX impact largely due to weakening GBP

BFS: on FY16

Growth in Australian mortgage, business banking and deposit books
Gain on the sale of Macquarie Life’s risk insurance business; partially offset by increased project-related expenses (e.g. Core Banking)

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MAM
33%
CGM
Net profit 21%
contribution
CAF
MacCap
25%
10%
BFS
11%
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CGM: on FY16

Strong customer base and market volatility drove client flows and revenue across Commodities, Fixed Income and Futures
Lower level of impairments
Increased investment-related income
Subdued equity market conditions, particularly in Asia

Macquarie Capital:

on FY16

Improved fee income in M&A and DCM, partially offset by reduced ECM income
Lower investment-related income largely due to timing of transactions
Lower level of impairments

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Financial performance

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Operating income $A10,364m Profit $A2,217m
FY17 OPERATING INCOME FY17 PROFIT
$Am $Am
12,000 2 % 2,500 2,000 7.5 %
ON FY16 ON FY16
1,500
8,000
1,000
500
4,000 -
FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17
EPS $A6.58 DPS $A4.70
$A FY17 EPS $A FY17 DPS
8.00 6.00 ON FY16 6 % 5.00 4.00 SYD Special Dividend [1] 18 ON FY16%%
3.00 SYD Special Dividend [1]
4.00
2.00
2.00 1.00
- -
FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17
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$A4.70 FY17 DPS 18 ON FY16%%

In 2H14 eligible shareholders also benefited from the SYD distribution in Jan 14 which comprised a special dividend of $A1.16 (40% franked) and a return of capital of $A2.57 per share.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Annuity-style vs Capital markets facing businesses

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Annuity-style businesses represent approximately 70% of the Groups’ performance[1]

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5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
-
FY13 FY14 FY15 FY16 FY17
Annuity-style businesses: Macquarie Asset Management Corporate and Asset Finance Banking and Financial Services
Capital markets facing businesses: Commodities and Global Markets Macquarie Capital
($Am)
2
Net profit contribution
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Comparative figures have been restated to conform to changes in current year financial presentation and group restructures, where necessary. 1. Based on FY17 net profit contribution from operating groups. 2. Net profit contribution is management accounting profit before unallocated corporate costs, profit share and income tax.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Assets under management of $A481.7 billion[1]

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AUM was broadly in line with 31 Mar 16, due to favourable market movements and additional fund investments in MIRA, partially offset by a decrease in insurance assets and unfavourable FX movements

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$Ab
500
400
300
200
100
-
Mar 13 Mar 14 Mar 15 Mar 16 Mar 17
Fixed income Infrastructure Equities Other Real estate
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As at 31 Mar 17.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook Appendices

Introduction

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Diversification by region

International income 63% of total income[1] Total staff 13,597; International staff 55% of total

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Total staff 13,597; International staff 55% of total Americas
INCOME STAFF
INCOME Europe, Middle East and Africa STAFF Asia $A2,711m 2,502
27% OF TOTAL
INCOME STAFF
$A2,484m 1,509 CANADA USA Nashville
24% OF TOTAL $A1,238m 3,450 CalgaryMontreal AustinBoca Raton New YorkPhiladelphia
EUROPE Luxembourg MIDDLE EAST 12% OF TOTAL TorontoVancouver BostonChicago San DiegoSan Francisco
DublinFrankfurtGenevaGlasgowLondon MadridMunichParisViennaZurich Abu DhabiDubai SOUTH AFRICA Cape Town J ohannesburg ASIA BangkokBeijingGurugramHong Kong JakartaKuala LumpurManilaMumbaiSeoul ShanghaiSingaporeTaipeiTokyo LATIN AMERICA Mexico CityRibeirao PretoSao Paulo DenverHoustonJacksonvilleLos Angeles San Jose
Australia [2]
INCOME STAFF
$A3,702m 6,136
37% OF TOTAL
AUSTRALIA Melbourne Sydney
Adelaide Parramatta Manly
Brisbane Gold Coast NEW ZEALAND
Canberra Perth Auckland
1. Net operating income excluding earnings on capital and other corporate items. 2. Includes New Zealand.
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Net operating income excluding earnings on capital and other corporate items. 2. Includes New Zealand.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook Appendices

Introduction

Result Analysis and Financial Management

Diversification by region

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63% of total income[1] in FY17 was generated offshore
A 10% movement[2] in AUD is estimated to have approx. 6% impact on NPAT

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4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
-
Australia Asia Americas Europe, Middle East & Africa
FY13 FY14 FY15 FY16 FY17
Total income ($Am)
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Net operating income excluding earnings on capital and other corporate items. 2. This represents an average movement against all major currencies.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result Result Analysis and Financial Management Outlook

Introduction

Appendices

Macquarie Asset Management

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OPERATING INCOME
$A2,596m 4 %
ON FY16
NET PROFIT CONTRIBUTION
$A1,538m 6 %
ON FY16
AUM [1]
BROADLY IN
LINE WITH
$A480.0b
MAR 16
MAM
33 %
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MACQUARIE INFRASTRUCTURE AND REAL ASSETS

MACQUARIE INVESTMENT MACQUARIE SPECIALISED MANAGEMENT INVESTMENT SOLUTIONS

$A77.2b in equity under management , up 16% on Mar 16
$A320.3b in assets under management , down 5% on Mar 16, largely due to a reduction in lower fee earning insurance assets partially offset by positive market movements
Continued to grow the Macquarie Infrastructure Debt Investment Solutions (MIDIS) business:
Raised $A15.6b in new equity, including new fund commitments for European, Australian and Global infrastructure, co-investments capital for infrastructure in UK, North America and Europe, and agriculture in Brazil
- Closed six third party investor commitments amounting to $A1.7b, bringing total commitments on MIDIS platform to over $A6.5b
Strong performance across a range of asset classes including Australian equities, Emerging Markets equities, US Real Estate Securities, as well as affiliated managers
Invested equity of $A13.7b across 24 acquisitions and 12 follow-on investments in 13 countries, including:
Closed 11 investments amounting to $A1.6b, bringing total AUM to $A4.4b
Infrastructure in UK, US, Slovakia & Czech Republic, Australia, Italy, Korea, Japan, Mexico, India and New Zealand
Distribution highlights include:
Australia: $A5.9b new institutional mandates and contributions funded
Closed $A0.7b of new loans to Private Equity Secondaries funds
Arranged and underwrote an innovative Export Credit Agency financing for an infrastructure project
Real estate in China, Korea, Slovakia and Mexico; and
- Asia: $A5.6b new institutional mandates and contributions funded
Agriculture in Brazil and Australia
Equity proceeds from asset divestments[2] of over $A3.4b in Europe, China, US, India and Korea
Performance fees of $A254m , predominately from infrastructure funds and assets
North America: $US2.4b new institutional mandates and contributions funded
```
 - Raised over $A1.0b for Australian retail principal protected investments and specialist funds
```
- EMEA: $US1.7b new institutional mandates and contributions funded
Principal gains from the partial sale of MIRA's holding mandates and contributions funded in MQA and MIC, the sale of the trustee-manager of  Launched mortgage-backed securities APTT as well as the sale of unlisted real estate and funds for Asian markets and EM Debt and infrastructure holdings International Small Cap strategies in US
$A10.2b of equity to deploy as at 31 Mar 17 mutual funds  Named ‘Infrastructure Manager of the Year’ by  Received four Lipper awards and four Global Investor magazine and ranked first in equity awards at the Money raised for infrastructure over the past five years by Management/Lonsec Awards, including Infrastructure Investor Magazine[3] the ‘Overall Fund Manager of the Year ’[4]
Launched mortgage-backed securities specialist funds funds for Asian markets and EM Debt and  Named ‘European International Small Cap strategies in US infrastructure debt manager mutual funds of the year’ for the third year in
a row[5]

Note: Net profit contribution is management accounting profit before unallocated corporate costs, profit share and income tax. Pie chart is based on FY17 net profit contribution from operating groups. 1. As at 31 Mar 17. 2. Equity proceeds from asset divestments differs to the impact of divestments on reported EUM which captures a reduction of the original capital commitment at time of return of capital to investors. 3. Infrastructure Investor 50 2016, a global ranking of the largest direct-investment programmes by Infrastructure Investor Magazine. 4. For more information and disclosures about these awards, visit: https://www.delawarefunds.com/MAMglobalcommunications. 5. PDI Awards 2016.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Corporate and Asset Finance

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OPERATING INCOME
$A1,831m 6 %
ON FY16
NET PROFIT CONTRIBUTION
$A1,198m 6 %
ON FY16
ASSET FINANCE AND LENDING PORTFOLIO
$A36.5b 7 %
ON MAR 16
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LENDING

Lending’s funded loan portfolio of $A6.8b[1] down 28% on Mar 16 due to net repayments and realisations, and the impact of foreign currency movements
$A1.9b of portfolio additions for FY17 comprising:
$A1.1b of new primary financings across corporate and real estate, weighted towards bespoke originations
$A0.8b of corporate loans and similar assets acquired in the secondary market
Notable transactions included:
Acquisition of a residential mortgage portfolio in the UK totalling £175m
Co-acquisition with Macquarie Aviation of a secondary loan portfolio secured by aviation assets
Notable realisations included:

CAF 25 %

Early repayment of the debt in a US Denver toll road
- Realisation of the debt and equity of an 8.8 mile toll road in Virginia in the US

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ASSET FINANCE

Asset Finance portfolio of $A29.7b , broadly in line with Mar 16
Continued to finance throughout the customer value chain – from manufacturer to end user: aircraft, motor vehicles, technology, healthcare, manufacturing, industrial, energy, rail and mining equipment
AWAS and Esanda acquisitions continue to perform in line with expectations
Motor vehicle leasing portfolio of $A17.4b , in line with Mar 16
Aircraft leasing portfolio of $A8.5b , down 4% on Mar 16 reflecting asset depreciation in the portfolio as well as the sale of nine aircraft during the year

FUNDING ACTIVITY

Continued use of diverse funding sources with 30% of the Asset Finance portfolio funded externally
Asset quality remained sound and the portfolio continued to generate strong overall returns

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Banking and Financial Services

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OPERATING INCOME $A1,648m 13 % ON FY16

NET PROFIT CONTRIBUTION $A513m 47 % ON FY16

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AUSTRALIAN CLIENT NUMBERS
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MORE THAN 1 million

BFS 11 %

PERSONAL BANKING

WEALTH MANAGEMENT

Provides a full retail banking product suite to its clients with mortgages, credit cards, transaction and savings accounts. It serves clients through direct Macquarie offerings, a white label personal banking platform, strong intermediary relationships and a leading digital banking experience.

Provides its clients with a wide range of wrap platform and cash management services, investment and superannuation products, financial advice, private banking and stockbroking. It delivers products and services through institutional relationships, adviser networks and dedicated direct relationships with clients.

Activity

Australian mortgage portfolio of $A28.7b, up 1% on Mar 16, representing approximately 2% of the Australian market
Funds on platform[5] of $A72.2b, up 24% on Mar 16 largely due to the successful migration of the ANZ Oasis wrap super and investment assets onto Macquarie’s platforms
iSelect’s Home Loans Partner of the Year 2016 for the third year in a row[1]
Best Third Party Lender at the Australian Lending Awards 2017[2]
Macquarie Wrap platform ranked the 2nd largest in Australia[6]
Macquarie’s digital banking offering recognised with Canstar Innovation Excellence Award[3]
Completed the sale of Macquarie Life to Zurich Australia Limited
Macquarie Platinum Transaction Account  Named Retail Superannuation Fund of and Travel Debit Card awarded a five star the Year at the Roy Morgan Customer Canstar rating for outstanding value[4] Satisfaction Awards 2017[7]
Macquarie Platinum Transaction Account and Travel Debit Card awarded a five star
Launched Apple Pay

BUSINESS BANKING

Provides a full range of deposit, lending and payment solutions, as well as tailored services to business clients, ranging from sole practitioners to corporate professional firms, who we engage with through a variety of channels including dedicated relationship managers.

Activity

Business banking deposit volumes up 16% on Mar 16
Business banking loan portfolio of $A6.5b up 10% on Mar 16
Total business banking SME clients up 6% on Mar 16
Launched Kubio, a cloud based CRM and loan origination software platform for commercial brokers
Launched DEFT AuctionPay and agreement to deliver BPAY payments on the Xero platform using the DEFT payment system

DEPOSITS

Total BFS deposits[8 ] of $A44.5b at Mar 17 up 10% on Mar 16
─ CMA deposits of $A26.2b at Mar 17 up 14% on Mar 16
Macquarie awarded Best Cash and Term Deposits in the Self Managed Super Fund Awards 2016[9]
Macquarie named Best Term Deposit Provider in the SMSF Adviser Awards 2016[10]

Note: Net profit contribution is management accounting profit before unallocated corporate costs, profit share and income tax. Pie chart is based on FY17 net profit contribution from operating groups. 1. iSelect Partner Awards 2014, 2015, 2016. 2. Australian Lending Awards 2017. 3. Canstar Innovation Excellence Awards 2017. 4. Canstar Everyday Banking and Savings Account Ratings 2016. 5. Funds on platform includes Macquarie Wrap and Vision. 6. Strategic Insight wrap administrator view as at quarter ended Sep 16. 7. Roy Morgan Customer Satisfaction Awards 2017. 8. BFS deposits exclude corporate/wholesale deposits. 9. Self Managed Super Fund Awards 2016. 10. SMSF Adviser Awards 2016.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result Result Analysis and Financial Management

Outlook

Introduction

Appendices

Commodities and Global Markets

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OPERATING INCOME
$A2,948m 1 %
ON FY16
NET PROFIT CONTRIBUTION
$A971m 15 %
ON FY16
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2016 Commodity House of the Year – 3[rd] consecutive year[3]

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CGM
21 %
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Commodity Markets (Physical & Financial) Financial Markets (Primary & Secondary) Futures 64%[1] 30%[1] 6%[1] CASH EQUITIES AND EQUITY
ENERGY METALS, MINING & FIXED INCOME & CREDIT DERIVATIVES & MARKETS AGRICULTURE CURRENCIES MARKETS TRADING FUTURES • Strong results for the energy • Subdued trading • Increased client • Improved results • Macro-economic • Strong results platform, particularly in Global Oil, and client hedging flows in foreign from credit trading events continued across the platform and North American Gas, however activity in base exchange in North as markets to impact global driven by mixed results in power markets with metals compared America and stabilised following equity market increased client subdued volatility impacting North to FY16, partially Japan challenging market volumes compared activity associated America compared to FY16 offset by increased • Strong results in conditions in FY16 to FY16 which with macro-
• Strong customer activity across client activity in interest rate and • Continued focus benefited from economic events, most sectors precious metals credit markets in on client demand strong Chinese particularly Brexit
• Increased realisations on a number driven by producer Australia and for speciality equity market and the US of investments across the energy hedging as CAD Europe lending and conditions election sector and AUD gold • Steady client balance sheet • No.1 in ANZ for • Growth in
• Entered into an agreement to acquire Cargill’s petroleum • prices increasedLower impairments activity in Australian and UK solutions IPOs and all ECM issues No.2[4] for execution volumes across both Voice business to expand physical oil and in the residual securitisation • Maintained equal Execution and oil products capabilities MEC portfolio 1[st] ranking overall Direct Market
• No. 4 US physical gas marketer • Ranked No. 1 in in the 2016 Peter Access in all in North America ranked non-producer– the highest[2] Agriculture & Softs Markets for Lee Survey of Australian • regionsRanked No. 2 the 7[th] consecutive Investors overall market year[3] • No.1 market share share in ASX24 in listed warrants in Futures[6] Singapore and Malaysia , No.3 in Thailand & No.6 in Hong Kong[5]

Note: Net profit contribution is management accounting profit before unallocated corporate costs, profit share and income tax. Pie chart is based on FY17 net profit contribution from operating groups. 1. Percentages are based on net profit contribution before impairment charges. 2. Platts Q4 CY16. 3. Commodity Business Awards, presented by Commodities Now Magazine. 4. Dealogic. 5. Net outstanding notional on local exchanges. 6. ASX24 Futures volumes for CY16.

Macquarie  FY17 result announcement  macquarie.com

Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

Macquarie Capital

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OPERATING INCOME
$A1,206m 2 %
ON FY16
NET PROFIT CONTRIBUTION
$A483m 7 %
ON FY16
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417 TRANSACTIONS 402 TRANSACTIONS VALUED AT VALUED AT $A180b $A159b IN FY17 IN FY16[1]

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MACCAP
10 %
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AUSTRALIA AND ASIA AMERICAS EMEA
NEW ZEALAND
Activity Activity Activity Activity
• Continued leadership in M&A • Continued focus on • Continued focus on • Continued focus on
and ECM, in a subdued market Infrastructure, including green Infrastructure, including green Infrastructure, including green
environment energy, and Real Estate energy, Real Estate and TMET energy, Real Estate and TMET
• Strong performance in Principal • Focus on growing a green • Improved M&A and DCM fee • Strong performance in Principal
realisations in Technology and energy development capital revenue, particularly in TMET investment and realisation of
increased green energy business • Focus on Principal Investment green energy assets
Notable deals • investmentExclusive financial adviser to Exclusive financial adviser to Notable deals • Advised a consortium led by Maeda Corporation for the Maeda Corporation for the • Notable deals alongside clientsReduced impairmentsReduced impairments ••• Improved M&A performance in EuropeReduced impairmentsEuropeReduced impairmentsReduced impairments
AustralianSuper and IFM on the privatisation of eight toll roads in • Financial adviser and debt
acquisition of a 50.4% interest in Aichi Prefecture, the first toll road arranger to a group of North Notable deals
the 99 year lease of Ausgrid for concession in Japan ($US1.3b) American infrastructure investors • Capital raising and acquisition in
~$A16.2b, the largest M&A • Partnered with China Jinmao to on the acquisition of Cleco conjunction with CGM of a 50%
transaction in ANZ in 2016 [[2]] establish JM Capital, a real Corporation for an enterprise Principal Investment in the
• Joint lead manager, joint estate investment platform value of $US4.7b 299MW Tees Renewable Energy
bookrunner and joint underwriter managing both domestic (RMB) • Exclusive financial adviser on Plant being developed by MGT
to Boral Limited’s ~$A2.1b equity and international capital in the Laureate Education’s $US400m Power
raising to partially fund its People’s Republic of China of convertible securities, leading • Acquisition of a 25% stake in the
acquisition of Headwaters principal investor on a preferred £1.6b, 573MW Race Bank
Incorporated, the largest equity Awards/Rankings co-investment and joint offshore wind farm. Macquarie
raising of 2016 in ANZ [[3]] • Capital Advisory Firm of the year bookrunner on their $US490m Capital also advised MIRA on
2016 in Asia [[6]] initial public offering the acquisition of a 25% stake in
Awards/Rankings • No.1 in ANZ for M&A • Manila Light Rail Transit 1 PPP was awardedwas awarded Asia-Pacific Infra Awards/Rankings the project
• transactions and IPOsBest IPO – Reliance Worldwide Best IPO – Reliance Worldwide [[4]] Deal of the year 2016Project Finance Deal of the year Project Finance Deal of the year [[7]] , Best • No.1 US Technology LBO BookrunnerBookrunner [[10]] Awards/Rankings • No.1 for Infrastructure/ Project
••• $A919mBest M&A Deal – Ausgrid long-term lease $A16.2bMost Innovative Deal – Ascianotakeover $A12.2bBest M&A Deal – Ausgrid long-term lease $A16.2bMost Innovative Deal – Ascianotakeover $A12.2bterm lease $A16.2bMost Innovative Deal – Ascianotakeover $A12.2bMost Innovative Deal – Ascianotakeover $A12.2btakeover $A12.2b [[5]] [[5]] [[5]] 2016 in Southeast AsiaPacific Rail Deal of the year 2016Pacific Rail Deal of the year 20162016 [[9]] [[8]] and Asia ••• No.2 Infrastructure/Project AdvisoryNorth America Capital Raise of the Year – Lennar Multifamily VentureAdvisoryNorth America Capital Raise of the Year – Lennar Multifamily VentureNorth America Capital Raise of the Year – Lennar Multifamily Venturethe Year – Lennar Multifamily VentureVenture [[6]] in the US [[11]] ••• Advisory in the UKEuropean & African Financial Adviser of the YearEuropean & African Sponsor of the YearEuropean & African Financial Adviser of the YearEuropean & African Sponsor of the YearAdviser of the YearEuropean & African Sponsor of the YearEuropean & African Sponsor of the Yearthe Year [[13]] [[12][13]][[13]]
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AUSTRALIA AND ASIA AMERICAS EMEA
NEW ZEALAND
Activity Activity Activity Activity
• Continued leadership in M&A • Continued focus on • Continued focus on • Continued focus on
and ECM, in a subdued market Infrastructure, including green Infrastructure, including green Infrastructure, including green
environment energy, and Real Estate energy, Real Estate and TMET energy, Real Estate and TMET
• Strong performance in Principal • Focus on growing a green • Improved M&A and DCM fee • Strong performance in Principal
realisations in Technology and energy development capital revenue, particularly in TMET investment and realisation of
increased green energy business • Focus on Principal Investment green energy assets
Notable deals •
Notable deals • alongside clientsReduced impairmentsReduced impairments •••
• investmentExclusive financial adviser to Exclusive financial adviser to Advised a consortium led by Maeda Corporation for the Maeda Corporation for the Notable deals Improved M&A performance in EuropeReduced impairmentsEuropeReduced impairmentsReduced impairments
AustralianSuper and IFM on the privatisation of eight toll roads in • Financial adviser and debt
acquisition of a 50.4% interest in Aichi Prefecture, the first toll road arranger to a group of North Notable deals
the 99 year lease of Ausgrid for concession in Japan ($US1.3b) American infrastructure investors • Capital raising and acquisition in
~$A16.2b, the largest M&A • Partnered with China Jinmao to on the acquisition of Cleco conjunction with CGM of a 50%
transaction in ANZ in 2016 [[2]] establish JM Capital, a real Corporation for an enterprise Principal Investment in the
• Joint lead manager, joint estate investment platform value of $US4.7b 299MW Tees Renewable Energy
bookrunner and joint underwriter managing both domestic (RMB) • Exclusive financial adviser on Plant being developed by MGT
to Boral Limited’s ~$A2.1b equity and international capital in the Laureate Education’s $US400m Power
raising to partially fund its People’s Republic of China of convertible securities, leading • Acquisition of a 25% stake in the
acquisition of Headwaters principal investor on a preferred £1.6b, 573MW Race Bank
Incorporated, the largest equity Awards/Rankings co-investment and joint offshore wind farm. Macquarie
raising of 2016 in ANZ [[3]] • Capital Advisory Firm of the year bookrunner on their $US490m Capital also advised MIRA on
2016 in Asia [[6]] initial public offering the acquisition of a 25% stake in
Awards/Rankings • No.1 in ANZ for M&A • Manila Light Rail Transit 1 PPP was awardedwas awarded Asia-Pacific Infra Awards/Rankings the project
• transactions and IPOsBest IPO – Reliance Worldwide Best IPO – Reliance Worldwide [[4]] Deal of the year 2016Project Finance Deal of the year Project Finance Deal of the year [[7]] , Best • No.1 US Technology LBO BookrunnerBookrunner [[10]] Awards/Rankings • No.1 for Infrastructure/ Project
and Asia
in the US [[11]]
••• 2016 in Southeast AsiaPacific Rail Deal of the year 2016Pacific Rail Deal of the year 20162016 [[9]] [[8]] ••• •••
$A919mBest M&A Deal – Ausgrid long-term lease $A16.2bMost Innovative Deal – Ascianotakeover $A12.2bBest M&A Deal – Ausgrid long-term lease $A16.2bMost Innovative Deal – Ascianotakeover $A12.2bterm lease $A16.2bMost Innovative Deal – Ascianotakeover $A12.2bMost Innovative Deal – Ascianotakeover $A12.2btakeover $A12.2b [[5]] [[5]] [[5]] No.2 Infrastructure/Project AdvisoryNorth America Capital Raise of the Year – Lennar Multifamily VentureAdvisoryNorth America Capital Raise of the Year – Lennar Multifamily VentureNorth America Capital Raise of the Year – Lennar Multifamily Venturethe Year – Lennar Multifamily VentureVenture [[6]] Advisory in the UKEuropean & African Financial Adviser of the YearEuropean & African Sponsor of the YearEuropean & African Financial Adviser of the YearEuropean & African Sponsor of the YearAdviser of the YearEuropean & African Sponsor of the YearEuropean & African Sponsor of the Yearthe Year [[13]] [[12][13]][[13]]
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Note: Net profit contribution is management accounting profit before unallocated corporate costs, profit share and income tax. 1. FY16 deal values and transaction numbers have been adjusted to reflect final transaction data. These changes are not material. 2. Dealogic (any ANZ involvement announced transaction). 3. Dealogic, by deal values. 4. Dealogic, by deal value FY17, Announced and Completed M&A (any ANZ Involvement, ex-Fairness Opinions) and ANZ IPOs. 5. Finance Asia Awards. 6. PERE Magazine. 7. PFI. 8. Alpha Southeast Asia. 9. IJGlobal Awards. 10. Bloomberg CY16. 11. InfraDeals 2016. 12. InfraDeals FY17, by deal value. 13. IJGlobal Awards 2016.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Green Investment Bank

Macquarie-led consortium acquires GIB for £2.3b

Green Investment Bank

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Macquarie-managed and
supervised investments
Offshore wind
investment
vehicle
Investors
Low carbon • MEIF5
lending • USS
platform • GCP
Infrastructure
Green
infrastructure • UK
investment Government
platform • Macquarie
balance sheet
Existing third
party invest.
vehicles
Total green projects under management
£4 billion
New investment vehicles
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Macquarie Group

The acquisition from HM Government will provide:
A principal investment platform for European green infrastructure with a combined team of over 100 green energy specialists who have led £15b of investment in the UK low carbon economy since 2010
Strong UK presence in Edinburgh and London
Targeting £3b of investment in green energy projects over the next 3 years based upon a strong pipeline
The GIB will continue to operate primarily within Macquarie Capital
Transaction expected to complete, subject to regulatory approval, in first half of 2017

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Combined investment[1] in green infrastructure

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Note: Map illustrative of project locations which have received investment from or arranged by Macquarie and/or Green Investment Bank since 2010. 1. Assets on the map depict a selection of investments and are not representative of all assets.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Funded balance sheet remains strong

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Term liabilities cover term assets

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$Ab 31 Mar 16 $Ab 31 Mar 17
TOTAL CUSTOMER DEPOSITS [7]
140 140
ST wholesale issued paper (7%) $A 9.6%
47.8b
120 Other debt maturing in the 120 ST wholesale issued paper (5%) FROM MAR 16
next 12 months [1] (9%) Cash, liquids and self Other debt maturing in the
securitised assets [4] (34%) next 12 months [1] (9%) Cash, liquids and self
100 100 securitised assets [4] (32%) NEW TERM FUNDING [8]
Customer deposits RAISED SINCE
80 (33%) Trading assets 80 Customer deposits $A10.5b MAR 16
(16%) (40%) Trading assets
(18%)
60 Loan assets (incl. op lease) 60
< 1 year (10%) Loan assets (incl. op lease)< 1 year (11%) ACQUISITION DEBT FACILITIES [9]
40 Debt maturing beyond12 months [2] (39%) 40 Debt maturing beyond12 months [2] (33%) $A FULLY REPAID OR REFINANCED
Loan assets (incl. op lease) Loan assets (incl. op lease) 8.4b IN FY17
> 1 year [5] (34%) > 1 year [5] (33%)
20 20
Equity and hybrids [3] Equity and hybrids [3]
- (12%) Equity investmentsand PPE [3,6] (6%) - (13%) Equity investmentsand PPE [3,6] (6%)
Funding sources Funded assets Funding sources Funded assets
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These charts represent Macquarie’s funded balance sheets at the respective dates noted above. For details regarding reconciliation of the funded balance sheet to Macquarie’s statutory balance sheet refer to slide 62. 1. ‘Other debt maturing in the next 12 months’ includes Structured Notes, Secured Funding, Bonds, Other Loans, Loan Capital maturing within the next 12 months and Net Trade Creditors. 2. ‘Debt maturing beyond 12 months’ includes Loan Capital not maturing within next 12 months. 3. Non-controlling interests have been netted down in ‘Equity and hybrids’ and ‘Equity Investments and PPE’. Mar 16 has been restated accordingly. 4. ‘Cash, liquids and self securitised assets’ includes self securitisation of RBA repo eligible Australian mortgages originated by Macquarie. 5. ‘Loan Assets (incl. op lease) > 1 year’ includes Debt Investment Securities. 6. ‘Equity Investments and PPE’ includes Macquarie’s co-investments in Macquarie-managed funds and equity investments. 7. Total customer deposits as per the funded balance sheet ($A47.8b) differs from total deposits as per the statutory balance sheet ($A57.7b). The funded balance sheet excludes any deposits which do not represent a funding source for Macquarie. 8. Issuances cover a range of tenors, currencies and product types and are AUD equivalent based on FX rates at the time of issuance and include undrawn facilities. 9. AWAS $A2.4b and Esanda $A6.0b. The AWAS acquisition debt facility was refinanced into a term loan in Apr 16.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook

Introduction

Appendices

Basel III capital position

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• APRA Basel III Group capital at Mar 17 of $A18.7b, Group capital surplus of $A5.5b[1]

Group regulatory surplus: Basel III (Mar 17)

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$Ab
8.0
(0.1)
7.0 0.8
(1.9)
1.0
6.0
5.0
4.0
7.4
3.0 Based on 8.5%
5.7 (minimum Tier 1 5.5
2.0 ratio + CCB)
1.0
0.0
Harmonised Basel IIIat Sep 16 Hybrid Capital Issuance2 Net Capital Generation3 Other 4 Harmonised Basel IIIat Mar 17 'super equivalence'APRA Basel III 5 APRA Basel IIIat Mar 17
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Calculated at 8.5% RWA including the capital conservation buffer (CCB), per APRA ADI Prudential Standard 110. The APRA Basel III Group capital surplus is $A6.8b calculated at 7% RWA, per the internal minimum Tier 1 ratio of the Bank Group. 2. $US750m of Macquarie Additional Capital Securities (“MACS”) issued in Mar 17. 3. Includes 2H17 P&L, the 1H17 dividend and movements in reserves (excluding foreign currency translation reserve). 4. Includes changes in business requirements, for example, higher MAM and MacCap capital requirements offset by reduced CAF Lending loan portfolio and the sale of Macquarie Life’s risk insurance business. Also includes the net impact of hedging employed to reduce the sensitivity of the Group’s capital position to FX translation movements. 5. APRA Basel III ‘super-equivalence’ includes the impact of changes in capital requirements in areas where APRA differs from the BCBS Basel III framework and includes full CET1 deductions for equity investments ($A0.6b); differences in mortgages treatment ($A0.5b); capitalised expenses ($A0.5b); investment into deconsolidated subsidiaries ($A0.2b); DTAs and other impacts ($A0.1b).

Macquarie  FY17 result announcement  macquarie.com

Overview of Result Result Analysis and Financial Management Outlook Appendices

Introduction

Strong regulatory ratios

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Bank Group (Mar 17)

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7.3%
17.5% 250%
7.0%
14.0% 13.3% 6.0% 200%
5.0% 6.4%
10.5% 150% 168%
11.1% 4.0%
7.0% 3.0% 100%
2.0%
3.5% 50%
1.0%
- - -
3
CET1 ratio Leverage ratio LCR
Bank Group (APRA) Bank Group (Harmonised )1 Basel III minimum 2
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‘Harmonised’ Basel III estimates are calculated in accordance with the BCBS Basel III framework. 2. Includes the capital conservation buffer in the minimum CET1 ratio requirement. The minimum BCBS Basel III leverage ratio requirement of 3% is effective from 1 Jan 18. 3. Average LCR for Mar 17 quarter is based on an average of daily observations.

Macquarie  FY17 result announcement  macquarie.com

Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

Final dividend

2H17 ORDINARY DIVIDEND FROM $A2.80 $A1.90 (45% franked) (45% franked) IN 1H17

2H17 RECORD DATE 17 May 17

DRP shares for the 2H17 dividend to be sourced on-market[1]

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2H17 PAYMENT DATE
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3 Jul 17

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FY17 ORDINARY DIVIDEND
$A4.70
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(45% franked)

FY17 ANNUAL PAYOUT RATIO

72%

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FROM
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$A4.00 (40% franked) IN FY16

Dividend policy remains 60-80% annual payout ratio

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Determined in accordance with the DRP rules as the average of the daily volume weighted average price over the seven business days commencing on the fourth business day after the relevant election date.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook

Introduction

Appendices

03 Result Analysis and Financial Management Patrick Upfold – Chief Financial Officer

 MACQUARIE 2017

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook Appendices

Introduction

Income Statement key drivers

	2H17 $Am	1H17 $Am	FY17 $Am	FY16 $Am
Net interest and trading income	2,090	1,864	3,954	4,346
Fee and commission income	2,129	2,202	4,331	4,862
Net operating lease income	445	476	921	880
Share of net gains/(losses) of associates	59	(8)	51	4
Impairments of investments and non- financial assets	(42)	(131)	(173)	(222)
Loan impairments and provisions	(120)	(151)	(271)	(577)
Other income	585	966	1,551	865
Net operating income	5,146	5,218	10,364	10,158
Employment expenses	(2,089)	(2,290)	(4,379)	(4,244)
Brokerage, commissions and trading- related expenses	(434)	(418)	(852)	(892)
Other operating expenses	(1,004)	(1,025)	(2,029)	(2,007)
Total operating expenses	(3,527)	(3,733)	(7,260)	(7,143)
Net profit before tax and non- controlling interests	1,619	1,485	3,104	3,015
Income tax expense	(430)	(438)	(868)	(927)
Non-controlling interests	(22)	3	(19)	(25)
Profit attributable to MGL shareholders	1,167	1,050	2,217	2,063

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Net interest and trading income of $A3,954m, down 9% on FY16
CGM impacted by limited trading opportunities in equity markets (prior year benefited from strong activity, particularly in China), lower levels of commodities-related client activity and trading opportunities in energy markets; partially offset by a stronger performance in FX, interest rates and credit markets products
Lower loan volumes in CAF and full year impact of funding costs of the AWAS portfolio, partially offset by the full year impact of the Esanda dealer finance portfolio
Growth in average volumes and improved margins across the Australian loan portfolios in BFS; higher deposit volumes
Fee and commission income of $A4,331m, down 11% on FY16
Lower performance fees in MAM compared to a particularly strong prior year
Higher M&A and DCM fee income, partially offset by lower ECM fee income due to subdued market conditions in Australia
Net operating lease income of $A921m, up 5% on FY16 mainly driven by the full year contribution of the AWAS portfolio partially offset by unfavourable currency movements for GBP denominated energy assets
Impairment of investments and non-financial assets of $A173m, down 22% on FY16 due to lower impairment charges in Macquarie Capital, CGM and CAF
Loan impairments and provisions of $A271m, down 53% on FY16 mainly due to reduced exposure to underperforming commodity-related loans in CGM
Other income of $A1,551m, up 79% on FY16 largely due to increased investment-related income including BFS’ sale of Macquarie Life’s risk insurance business to Zurich Australia Limited, the partial sale of holdings in MQA and MIC by MAM and sales of investments in CAF and CGM
Employment expenses of $A4,379m, up 3% on FY16 impacted by increased share-based payments expense and costs associated with a small increase in average headcount, partially offset by favourable FX impacts
Other operating expenses of $A2,029m, up 1% on FY16 mainly due to increased technology spend in BFS
Effective tax rate of 28.1%, down from 31.0% in FY16 reflecting changes in the geographic composition of earnings combined with reduced tax uncertainties; partially offset by an increase in operating profit before tax and the write-off of certain tax assets

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Income Statement by Operating Group

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2,500
32
127 (189) 59
163
68
2,000 (106)
1,500
2,217
1,000 2,063
500
-
FY16 NPAT MAM CAF BFS CGM MacCap Corporate (excl. Tax expense FY17 NPAT
tax expense)
Net profit contribution ($Am)
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Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Macquarie Asset Management

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Strong result; pcp benefited from record performance fees

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$Am
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1,800
1,600 59
61
5
1,400 (429)
44 (39) 198
1,200
Underlying FX impact
base fees on base
1,000 fees
800 1,644
1,538
600
400
200
-
FY16 NPC Lower Base fees Increased gains Increased Other FY17 NPC
performancefees broadly in line reclassificationon sale and 1 accountedequity
income 2
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KEY DRIVERS

Lower performance fees compared to a particularly strong FY16, predominately from infrastructure assets:
FY17 included fees from a broad range of funds. FY16 benefited from significant fees from MEIF1, MIC, and MIRA co-investors in respect of a UK asset
Underlying base fees up on FY16:
Positive impact from investments made by MIRA-managed funds, growth in the MSIS Infrastructure Debt business and positive market movements in MIM AUM, partially offset by asset realisations by MIRAmanaged funds and net AUM outflows in the MIM business
Unfavourable FX impacts on base fees
Increased gains on sale largely due to the partial sale of MIRA’s holdings in MQA and MIC, gains on sale and reclassification of unlisted infrastructure and real estate holdings in MIRA (including the trusteemanager of APTT) and income from the sell down of infrastructure debt in MSIS
Improved equity accounted income driven by gains on the sale of a number of assets in the current year
Represents movement in net gains on sale of debt and equity investments and non-financial assets and net gains on reclassification of debt and equity investments. 2. Represents movement in share of net profits/(losses) of associates and joint ventures accounted for using the equity method.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook Appendices

Introduction

MAM AUM movement

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MAM $A477b MIM ($A17b) MIRA +$A18b MSIS +$A2b MAM $A480b
$Ab
600
Flat
500 MSIS $A4b 17 18 2 MSIS $A6b
(34)
400
MIM MIM
300
$A337b $A320b
200
100 MIRA MIRA
$A136b $A154b
-
FY16 AUM Equities net flows Fixed Income net Market movements MIRA movement MSIS movement FY17 AUM
flows (see EUM)1
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MIRA tracks its funds under management using an EUM measure as base management fee income is typically aligned with EUM. EUM and AUM are calculated under different methodologies and as such, EUM movement is the more relevant metric for analysis purposes – refer to MIRA EUM movement on slide 31. MIRA’s total EUM includes market capitalisation at measurement date for listed funds, the sum of original committed capital less capital subsequently returned for unlisted funds and mandates as well as invested capital for managed businesses. AUM is calculated as proportional enterprise value at measurement date including equity value and net debt of the underlying assets of funds and managed assets. AUM excludes uninvested equity in MIRA. Refer MD&A s7.1 & 7.2 for further information with respect to EUM and AUM measures.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook

Introduction

Appendices

MIRA EUM movement

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$Ab
90
1.3
80
15.6 (3.9) (2.3)
70
60
50
40
77.2
66.5
30
20
10
-
FY16 EUM Capital raised Listed security price Committed capital FX 2 FY17 EUM
movements returned or no longer
managed1
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Committed capital returned by unlisted funds or under mandates due to asset divestments, redemption or other capital distributions as well as capital no longer managed due to sale of management rights or expiry of asset management agreements. 2. FX reflects the movement in EUM driven by changes in FX rates. EUM is calculated using capital commitments translated at period end FX rates. Spot FX rates are used for capital raised and returned and average FX rates are used for security price movements.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Corporate and Asset Finance AWAS and Esanda contribution partially offset by reduced activity in CAF Lending

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$Am
1,600
56
1,400
(58)
(54)
192 (68)
1,200
1,000
800
600 1,198
1,130
400
200
-
FY16 NPC Impact of prior Lower Lower loan FX impacts Other FY17 NPC
year business impairments volumes in
acquisitions 1 Lending
portfolio,
prepayments
and realisations
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KEY DRIVERS

Contribution from the acquisitions of a portfolio of aircraft from AWAS Aviation Capital Limited and the Esanda dealer finance portfolio; continue to perform in line with expectations
Lower impairments in Lending and Aviation
Decreased income due to lower Lending volumes resulting in reduced contribution from the Lending portfolio; income from prepayments and realisations broadly in line with FY16
Unfavourable FX impacts particularly in relation to CAF Lending and Energy Leasing as a result of GBP exposures
Other includes reduced aviation income following the sale of nine aircraft and additional maintenance expenses
Excludes impairments and investments previously held as associates.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Banking and Financial Services

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Strong organic growth as well as gain on sale of businesses

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$Am
600
(43)
500
(52)
114
192
(3) (45)
400
300
513
200
350
100
-
FY16 NPC Net gain on UK asset Change in Increased Increased Business FY17 NPC
disposal of performance approach to credit other growth
businesses fee and capitalised provisions impairments1
dividend software
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KEY DRIVERS

Gain on sale of the Macquarie Life’s risk insurance business to Zurich Australia Limited partially offset by losses on the sale of US mortgages portfolio
FY16 benefited from a performance fee and dividend received in respect of the sale of a UK asset
Change in approach to the capitalisation of software expenses has resulted in the narrowing of the eligibility criteria for capitalisation in connection with the Core Banking platform
Modest increase in credit provisions on a small number of loans, as well as growth in the Australian lending portfolio
Increased other impairments due to the underperformance of certain equity positions and impairments of intangibles relating to the Core Banking platform primarily in 1H17
Business growth:
Australian average loan portfolio increased 6% on FY16 driven by average business lending growth of 9% and a 5% increase in the Australian average mortgages portfolio
BFS average deposits volumes up 9%
NIM up across Australian mortgages and business lending portfolios, partially offset by lower NIM across business banking deposits
FY17 includes impairment charge on equity investments ($A24m), intangibles ($A10m) and Core Banking project impairments ($A19m). FY16 included impairment charge on equity investments ($A8m).

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Commodities and Global Markets Increased contribution reflects improved asset performance and continued strength across the trading platform

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$Am

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1,400
Commodities
1,200
(71)
126
(50) 209 (233)
1,000 (80)
198 (67) 95
800
600
971
844
400
200
-
FY16 NPC Lower Increased Risk Lending and Inventory Credit, Equities net Fee and Lower FY17 NPC
impairments investment management finance management, interest rates interest and commission operating
related products transport and and FX trading income and expenses
income storage income other
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KEY DRIVERS

Lower impairments due to reduced exposure to underperforming commodity-related loans and a reduction in the residual MEC equity investment portfolio
Investment-related income increased due to gains on sale of a number of investments, mainly in energy and related sectors
Net interest and trading income (net of associated expenses):
Risk management products down $A71m: strong contributions from Global Oil and North American Gas, offset by a lower contribution from power – largely in North America due to subdued volatility compared to FY16; lower income from Agricultural and Metals markets
Lending and financing down $A50m: decreased on FY16 mainly due to a reduction in average loan balances
Inventory management, transport and storage down $A80m: reduced opportunities from price dislocations in US and EMEA gas and power markets as well as accounting volatility associated with the timing of income recognition
Increase in credit, interest rates and foreign exchange income was underpinned by contributions from FX and interest rate markets due to ongoing market volatility as well as improved performance in high yield debt markets and revenues from specialty lending products
Equities down on a strong FY16 which benefited from strong equity markets activity, particularly in China
Lower fee and commission income predominately in relation to lower ECM and cash equities income as well as reduced DCM fee income following the transfer of CGM’s 25% interest in the US DCM business to Macquarie Capital, partially offset by improved Futures income
Lower operating expenses reflecting a decrease in headcount (including the transfer of US DCM business to Macquarie Capital) and reduced trading activity

Macquarie Group Limited and its subsidiaries 2017 Full Year Results  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Macquarie Capital

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Improved result driven by reduced impairments and increased fee activity

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$Am
600
59 (48)
500 90 (76) 47 (41) 1
400
300
483
451
200
100
-
FY16 NPC Lower Lower M&A fee DCM fee ECM fee Other fee and Other FY17 NPC
impairments investment income income income commisssion
related income
income 1
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KEY DRIVERS

Lower impairment charges relating to a small number of underperforming principal investments
Lower investment-related income:
Timing of transactions resulting in lower gains on the sale and reclassification of equity and debt investments
Reduced income from both dividends and consolidated investments
Increased fee and commission income:
Increased fee income across M&A Advisory in the US and Europe and DCM in the US
The transfer of CGM’s US DCM business to Macquarie Capital
Partially offset by a decline in ECM income due to more subdued equity market conditions in Australia
Lower other fee and commission income primarily related to a reduction in brokerage and commissions with the non-recurrence of a royalty fee
Includes movements in share of net profits/(losses) of associates and joint ventures accounted for using the equity method, net gains on sale and reclassification of equity and debt investments, net interest and trading income (which represents the interest earned from debt investments and the funding costs associated with Macquarie Capital’s investments), other income and non-controlling interests.

Macquarie Group Limited and its subsidiaries 2017 Full Year Results  macquarie.com

Overview of Result Result Analysis and Financial Management Outlook Appendices

Introduction

Other income

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$Am
1,800
1,600
124 (107) 116
1,400
172
1,200
166
1,000 215
800
1,551
600
865
400
200
-
FY16 MAM CAF BFS CGM MacCap Corporate FY17
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KEY DRIVERS

Increase in MAM primarily due to gains from the partial sale of MIRA’s holdings in MQA and MIC, gains on sale and reclassification of unlisted infrastructure and real estate holdings in MIRA including the trusteemanager of APTT, and income from the sell down of infrastructure debt in MSIS
Increase in CAF primarily relates to a gain realised on the sale of an interest in a toll road in the US by the Lending business
Increase in BFS predominately relates to the sale of Macquarie Life’s risk insurance business
Increase in CGM due to gains on the sale of a number of investments, mainly in energy and related sectors
Decrease in Macquarie Capital due to timing of transactions resulting in lower gains on the sale and reclassification of equity and debt investments
Increase in Corporate primarily due to the disposal of legacy assets and a number of investments held for the purposes of managing Macquarie’s liquidity

Note: Other income includes net gains on sale and reclassification of equity and debt investments, income from NPI’s and royalties, dividends and distributions received from investment securities available for sale, proceeds from the sale of other securities, gains on repurchase of debt, gains on the sale of non-financial assets, gains on the disposal of operating lease assets, gains on the sale of loans and receivables and other income.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result Result Analysis and Financial Management

Outlook Appendices

Introduction

Impairment expense

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KEY DRIVERS

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$Am
900
48
800
(28)
(56) 3 48 45
700
Credit Equity
and (198)
600 intangibles
(90)
500
(31)
400 799
300
444
200
100
-
FY16 MAM CAF BFS CGM MacCap Corporate FY17
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Decline in CAF due to lower impairments in Lending and Aviation
Increase in BFS predominately due to the underperformance of certain equity positions and impairment of intangibles relating to the Core Banking platform, primarily in 1H17
Decrease in CGM due to reduced exposure to underperforming commodity-related loans and a reduction in the residual MEC equity investment portfolio
Decrease in Macquarie Capital due to lower impairment charges relating to a small number of underperforming principal investments
Decrease in Corporate compared to FY16 which included an increase to the central management overlay and charges on legacy assets that are no longer strategic holdings

Note: Impairment expense includes collective allowance for credit losses, specific provisions and write-offs, impairment charge on non-financial assets, and impairment charge on investment securities available for sale, interest in associates and joint ventures.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook Appendices

Introduction

Costs of compliance

Regulatory project spend	FY17 $Am	FY16 $Am
Basel III and liquidity	12	20
OTC reform	22	13
Other Regulatory Projects (e.g. Privacy, Managed Investment)	51	65
Sub-total	85	98

Business as usual compliance spend	FY17 $Am	FY16 $Am
Financial, Regulatory & Tax reporting and Compliance	115	93
Compliance policy and oversight	79	87
AML Compliance	24	31
Regulatory Capital Management	17	19
Regulator Levies	6	5
Other Compliance functions (e.g. Privacy, Super, Consumer Protection)	78	72
Sub-total	319	307

Total compliance spend	404	405

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The industry continues to see an increase in regulatory initiatives, resulting in increased compliance requirements across all levels of the organisation
Direct cost of compliance approx. $A404m in FY17 (excluding indirect costs), was in line with FY16
Whilst project spend reduced during FY17, business as usual spend continues to increase

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Balance sheet highlights

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Balance sheet remains solid and conservative
Term assets covered by term funding, stable deposits and equity
Minimal reliance on short-term wholesale funding markets
Total customer deposits[1] continuing to grow, up 9.6% to $A47.8b as at Mar 17 from $A43.6b as at Mar 16
$A8.4b of acquisition debt facilities fully repaid or refinanced in FY17 (AWAS $A2.4b[2] and Esanda $A6.0b)
$A10.5b[3] of term funding raised during FY17:
$A3.4b MGL loan facilities[4]
$A2.9b mortgage and motor vehicle/equipment secured funding
$A2.4b AWAS term loan[2]
$A1.0b loan capital (Macquarie Additional Capital Securities)
$A0.5b private placements and structured note issuance
$A0.3b expansion of MBL Sterling syndicated loan facility
Total customer deposits as per the funded balance sheet ($A47.8b) differs from total deposits as per the statutory balance sheet ($A57.7b). The funded balance sheet excludes any deposits which do not represent a funding source for Macquarie. 2. The AWAS acquisition debt facility was refinanced into a term loan in Apr 16. 3. Issuances are AUD equivalent based on FX rates at the time of issuance and represent full facility size. 4. Includes $A1.4b Asian Bank Facility refinance and upsize, committed 30 Mar 17 and effective 18 Apr 17.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook Appendices

Introduction

Diversified issuance strategy

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Term funding as at 31 Mar 17 – diversified by currency [1] , tenor [2] and type
Currency Tenor Type
Subordinated debt
EUR 6% Securitisations > 1 yr15% 1-2yrs14% 8% Syndicated loan facility 7%Covered Bonds 1%
USD GBP 4% PUMA RMBS • Well diversified issuance
38% CHF 2%JPY 2% Senior 7%
OTH 2% 2-3yrs13% Unsecured34% SMART ABS 8% and funding sources
• Term funding beyond 1 year
(excluding equity and securitisations)
>5yrs 3-4yrs
42% 12% has a weighted average maturity
AUD46% 4-5yrs4% Secured Funding Private Equity & Hybrids25% of 4.5 years
5% Placement
5%
$Ab Term Issuance and Maturity Profile [3]
Mar 17: Weighted average maturity 4.5 years
35
30 Issuances Maturities
25
20
15
10
5
0
FY13 FY14 FY15 FY16 FY17 <1 yr 1-2yrs 2-3yrs 3-4yrs 4-5yrs >5yrs
Debt Loan Capital Equity & Hybrid AWAS Acquisition Facility Esanda Syndicated Facility
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Note: All data presented in these charts represents drawn facilities. 1. Equity has been allocated to the AUD currency category. 2. Securitisations have been presented on a behavioural basis and represent funding expected to mature in >1yr. 3. Issuances and Maturities exclude securitisations and other secured finance. Issuances are converted to AUD at the 31 Mar 17 spot rate. Maturities shown are as at 31 Mar 17. In FY17 the AWAS acquisition debt facility ($A2.4b) was refinanced via a term loan and the Esanda acquisition facility ($A6.0b) was repaid in full.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result Result Analysis and Financial Management Outlook

Introduction

Appendices

Continued customer deposit growth

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Macquarie has been successful in pursuing its strategy of diversifying its funding sources through growing its deposit base
In excess of 1 million BFS clients, of which approx. 550,000 are depositors
Focus on the composition and quality of the deposit base
Continue to grow deposits in the CMA product, which has an average account balance of approx. $A45,000

$Ab 50

45 40 35 30 25 20 15 10 5 -

Customer deposits

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47.8
43.6
39.7
36.2 36.9
33.9
31.6
19.6
Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Mar 17
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Note: Total customer deposits include BFS deposits of $A44.5b and $A3.3b of Corporate/Wholesale deposits.

Macquarie  FY17 result announcement  macquarie.com

Introduction Overview of Result

Outlook Appendices

Result Analysis and Financial Management

Loan and lease portfolios[1] – Funded Balance Sheet

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Operating Group	Category	Mar 17 $Ab	Mar 16 $Ab	Description
CAF	Asset Finance2	22.2	23.3	Secured by underlying financed assets
	Finance lease assets	12.2	12.7
	Operating lease assets	10.0	10.6
	Lending3	6.6	9.0	Diversified corporate and real estate lending portfolio, predominately consisting of loans which are senior, secured, well covenanted and with a hold to maturityhorizon
	Total CAF	28.8	32.3
BFS	Retail Mortgages2	24.5	23.1	Secured by residential property and supported by mortgage insurance: • Australia: most loans are fully mortgage insured • Canada: most loans are fully insured with underlying government support
	Australia	24.0	21.6
	Canada, US and Other	0.5	1.5
	Business Banking4	6.1	5.8	Secured relationship managed loan portfolio to professional and financial services firms, real estate industry clients, insurance premium funding, mortgages to Business Banking clients and other small business clients. Secured largely by real estate, working capital, business cash flows and credit insurance. Theportfolio also includes other retail lendingincludingcredit cards
	Total BFS	30.6	28.9
CGM	Resources and commodities	2.5	3.0	Diversified loan portfolio primarily to the resources sector that are secured by the underlying assets
	Other	2.8	2.2	Predominately relates to recourse loans to financial institutions, as well as financing for real estate and other sectors
	Total CGM	5.3	5.2
MAM	Structured investments	2.0	1.6	Loans to retail and wholesale counterparties that are secured against equities, investment funds or cash, or are protected bycapitalguarantees at maturity
MacCap	Corporate and other lending	0.8	1.1	Includes secured corporate lending
Total loan and lease as	sets per funded balance sheet5	67.5	69.1

Loan assets are reported on a funded balance sheet basis and therefore exclude certain items such as assets that are funded by third parties with no recourse to Macquarie. In addition, loan assets at amortised cost per the statutory balance sheet of $A76.7b at 31 Mar 17 ($A80.4b at 31 Mar 16) are adjusted to include fundable assets not classified as loans on a statutory basis (e.g. assets subject to operating leases which are recorded in Property, Plant and Equipment and loans booked in Fair Value through P&L in the statutory balance sheet). 2. Australian Retail Mortgages per the funded balance sheet of $A24.0b differs from the figure disclosed on slide 18 of $A28.7b and Asset Finance per the funded balance sheet of $A22.2b differs from the figure disclosed on slide 17 of $A29.7b. The funded balance sheet nets down loans and funding liabilities of non-recourse securitisation and warehouse vehicles to show the net funding requirement. 3. Lending per the funded balance sheet of $A6.6b differs from the figure disclosed on slide 17 of $A6.8b. The statutory balance sheet includes AVS debt investments which are reported in the funded balance sheet as debt investment securities. 4. Business Banking loans per the funded balance sheet of $A6.1b differs from the figures disclosed on slide 18 of $A6.5b. The difference relates to mortgages written by Business Banking which have been included in Retail Mortgages in the table above. In addition to this the $A6.5b on slide 18 excludes retail lending including credit cards which have been included in this category in the table above. 5. Total loan assets per funded balance sheet includes self securitised assets.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook

Introduction

Appendices

Equity investments of $A5.0b[1]

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Category	Carrying value2 Mar 17 $Ab	Carrying value2 Mar 16 $Ab	Description
Macquarie Asset Management (MIRA) managed funds	1.6	1.7	Includes Macquarie Infrastructure Company, Macquarie SBI Infrastructure Fund, Macquarie Atlas Roads, MPF Holdings Limited, Macquarie Korea Infrastructure Fund, Macquarie European Infrastructure Fund 4, Macquarie European Infrastructure Fund 3
Other Macquarie managed funds	0.5	0.6	Includes MIM funds as well as investments that hedge directors’ profit share plan liabilities
Transport, industrial and infrastructure	1.5	1.0	Over 45 separate investments, increase primarily due to a consolidated investment in a gas distribution network in the United Kingdom
Telcos, IT, media and entertainment	0.6	0.7	Over 40 separate investments, decrease due to divestment of Axicom
Energy, resources and commodities	0.4	0.5	Over 60 separate investments, decrease due to a number of divestments in CGM
Real estate investment, property and funds management	0.1	0.1	Over 15 separate investments
Finance, wealth management and exchanges	0.3	0.4	Includes investments in fund managers, investment companies, securities exchanges and other corporations in the financial services industry, decrease due to divestments in MacCap
	5.0	5.0

Equity investments per the statutory balance sheet of $A7.2b (Mar 16: $A6.8b) have been adjusted to reflect the total economic exposure to Macquarie. 2. Total funded equity investments of $A5.5b (Mar 16: $A5.8b), less available for sale and associates’ reserves of $A0.5b (Mar 16: $A0.8b).

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook Appendices

Introduction

Regulatory update

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• Basel Capital Framework

The Basel Committee has delayed the finalisation of proposals to amend the calculation of certain risk weighted assets under Basel III. Any impact on capital will depend upon the final form of the proposals and local implementation by APRA
APRA has delayed until at least 1 Jan 19 the implementation of a new standardised approach for measuring counterparty credit risk exposures on derivatives (SA-CCR) and capital requirements for bank exposures to central counterparties. APRA will consult again on these requirements in 2017
APRA has also announced that it does not expect to finalise a new market risk standard[1] until at least 2020, with implementation from 2021 at the earliest

• Financial System Inquiry (FSI)

APRA will give more detail around the middle of the year on how it proposes to address the FSI recommendation that Australian ADIs’ capital ratios should be unquestionably strong

• Net Stable Funding Ratio (NSFR)

APRA released final NSFR requirements at the end of 2016, however the exact application of certain elements of the standard remains under discussion. The NSFR and associated changes to APRA ADI Prudential Standard 210 will be effective from 1 Jan 18
Macquarie’s NSFR was >100% at 31 Mar 17

Note: The Basel Capital Framework and NSFR apply to the Bank Group only. 1. Also known as the Fundamental Review of the Trading Book.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Bank Group Basel III Common Equity Tier 1 (CET1) Ratio

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APRA Basel III CET1 ratio: 11.1%[1]
Harmonised Basel III CET1 ratio: 13.3%[2]

Bank Group Common Equity Tier 1 Ratio: Basel III (Mar 17)

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14%
0.5%
0.2%
13.3%
12% 12.6% (2.2%)
11.1%
10%
8%
6% CCB (2.5%)
Basel III minimum CET1 (4.5%)
4%
2%
0%
Harmonised Basel III Net Capital Generation 3 Other 4 Harmonised Basel III APRA Basel III APRA Basel III
at Sep 16 at Mar 17 'super equivalence' 5 at Mar 17
1. Basel III applies only to the Bank Group and not the Non-Bank Group. APRA Basel III Tier 1 ratio at Mar 17: 13.3%. APRA Basel III CET1 ratio at Sep 16: 10.4%. 2. ‘Harmonised’ Basel III estimates are calculated in accordance with the BCBS Basel III framework. Harmonised Basel III Tier 1 ratio at
Mar 17: 15.6%. 3. Includes MBL 2H17 P&L, the 1H17 MBL to MGL interim dividend and movements in reserves (excluding foreign currency translation reserve). 4. Includes changes in business requirements, for example, reduced CAF Lending loan portfolio and the sale of Macquarie Life’s risk
insurance business. Also includes the net impact of hedging employed to reduce the sensitivity of the Group’s capital position to FX translation movements. 5. APRA Basel III ‘super-equivalence’ includes the impact of changes in capital requirements in areas where APRA differs from the BCBS Basel III
framework and includes full CET1 deductions for differences in the treatment of mortgages (0.8%); equity investments (0.5%); capitalised expenses (0.5%); investment into deconsolidated subsidiaries (0.2%); DTAs and other impacts (0.2%).
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Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Strong liquidity position maintained

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168% average LCR for Mar 17 quarter, based on daily observations
Maintained well above regulatory minimums
Includes APRA approved AUD CLF allocation of $A5.0b for 2017 calendar year
Reflects long-standing conservative approach to liquidity management
$A29.5b of unencumbered liquid assets and cash on average over the quarter to Mar 17 (post applicable haircuts)

Unencumbered Liquid Asset Portfolio[1]

MBL LCR position

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$A32.2b
$A29.2b $A29.5b
8.9
7.1 7.9
4.6
4.6 5.0
5.0 5.1 2.8
12.5 13.6 13.8
Sep 16 Qtr Dec 16 Qtr Mar 17 Qtr
HQLA Available Cash CLF Surplus CLF Collateral
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200%
150%
169% 174% 168%
Regulatory
100% Minimum
50%
-
Sep 16 Qtr Dec 16 Qtr Mar 17 Qtr
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Unencumbered Liquid Asset Portfolio represents the quarterly average of these balances.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Capital management update

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The Board has resolved:
To purchase shares[1,2] to satisfy the MEREP requirements of approx. $A378m. The buying period for the MEREP will commence on 16 May 17 and is expected to be completed by 7 Jul 17[3]
MQG shares sold by staff between 16 May 17 and 9 Jun 17[4] are expected to be acquired by the MEREP Trustee to meet the MEREP buying requirements
Shares sold by staff during this window are to be acquired off-market at the daily VWAP[5] , reducing the number of shares acquired on-market to meet the MEREP requirements
No discount will apply for the 2H17 DRP and the shares are to be acquired on-market[2]
Following the issue of $US750m MACS hybrid capital in March, MBL (London Branch) intends to buyback $US250m ECS hybrid capital in Jun 17:
ECS are Basel III-Transitional Additional Tier 1 Capital securities issued in 2012
Under the proposed transaction, a Resale of ECS will take place, whereby all ECS Holders will sell to a third party financial institution for par value on 20 Jun 17 after interest has been paid[6] . MBL (London Branch) will buyback ECS immediately following the Resale such that no Exchange to MGL ordinary shares will occur
A Resale Notice will be required to be delivered to ECS Holders in accordance with the ECS Terms
Shares may be purchased on-market and off-market. 2. Shares will be issued if purchasing becomes impractical or inadvisable. 3. Actual buying may be completed sooner or later. On-market buying for the MEREP will be suspended during the DRP pricing period (24 May 2017 to 1 June 2017). 4. This date is subject to change. 5. Trades will be crossed off-market by Macquarie Securities (Australia) Limited and reported to ASX and Chi-X accordingly. 6. Subject to the Interest Payment Conditions under the ECS Terms.

Macquarie  FY17 result announcement  macquarie.com

Introduction Overview of Result

Result Analysis and Financial Management Outlook

Appendices

04 Outlook Nicholas Moore – Managing Director and Chief Executive Officer

 MACQUARIE 2017

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Factors impacting short-term outlook

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FY18 combined net profit contribution from operating groups expected to be broadly in line with FY17

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Annuity-style businesses
Macquarie Asset Management
• FY17: $A1.5b down 6% on FY16
• Base fees expected to be broadly in line MAM
• Performance fees and investment-related income
expected to be broadly in line, subject to timing of
asset realisations CGM
Corporate and Asset Finance FY17
• FY17: $A1.2b up 6% on FY16
• Leasing book broadly in line CAF
•• Reduced loan volumes in LendingTiming and level of early prepayments and realisations in MacCap
Lending
BFS
Banking and Financial Services
• FY17: $A0.5b up 47% on FY16
• Higher loan portfolio, deposit and platform volumes
• Non-recurrence of gain on sale of life business and
reduced project-related expenses Corporate
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Macquarie Asset Management

Reduced impairments with respect to equity investments and intangibles
Compensation ratio to be consistent with historical levels
• Based on present mix of income, currently expect FY18 tax rate to be broadly in line with FY17

Capital markets facing businesses

Commodities and Global Markets

FY17: $A1.0b up 15% on FY16
Strong customer base expected to drive consistent flow across Commodities, Fixed Income and Futures
Lower levels of impairments and investment-related income expected
Cargill acquisition not expected to have material impact

Macquarie Capital

FY17: $A0.5b up 7% on FY16
Assume market conditions broadly consistent with FY17
Solid pipeline of Principal realisations expected
GIB acquisition not expected to have material impact

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Short-term outlook

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We currently expect the FY18 combined net profit contribution[1] from operating groups to be broadly in line with FY17
The FY18 tax rate is currently expected to be broadly in line with FY17
Accordingly, the Group’s result for FY18 is currently expected to be broadly in line with FY17
Our short-term outlook remains subject to:
Market conditions
The impact of foreign exchange
Potential regulatory changes and tax uncertainties

Net profit contribution is management accounting profit before unallocated corporate costs, profit share and income tax.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Medium-term

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Macquarie remains well positioned to deliver superior performance in the medium-term
Deep expertise in major markets
Build on our strength in diversity and 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 Asset Management, Corporate and Asset Finance and Banking and Financial Services
Two capital markets facing businesses well positioned to benefit from improvements in market conditions with strong platforms and franchise positions
- Commodities and Global Markets and Macquarie Capital
Ongoing benefits of continued cost initiatives
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
Proven risk management framework and culture

Macquarie  FY17 result announcement  macquarie.com

Introduction Overview of Result

Result Analysis and Financial Management Outlook Appendices

Approximate business Basel III Capital & ROE

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Operating Group	APRA Basel III Capital 1 @ 8.5% ($Ab)	Approx. FY17 Return on Ordinary Equity2	Approx. 11-Year Average Return on Ordinary Equity 2
Annuity-style businesses	8.3
Macquarie Asset Management	1.7	22%	20%3
Corporate and Asset Finance	4.4
Banking and Financial Services	2.2
Capital markets facing businesses	4.6
Commodities and Global Markets	2.9	15%	15% - 20%
Macquarie Capital	1.7
Corporate	0.3
Total regulatory capital requirement @ 8.5%	13.2
Group surplus	5.5
Total APRA Basel III capital supply	18.74

Business Group capital allocations are indicative and are based on allocations as at 31 Dec 16 adjusted for material movements over the Mar 17 quarter. 2. NPAT used in the calculation of approx. annualised ROE is based on operating group’s net profit contribution adjusted for indicative allocations of profit share, tax and other corporate expenses. Accounting equity is attributed to businesses based on regulatory capital requirements. 11-year average covers FY07 to FY17, inclusively. 3. CAF returns prior to FY11 are excluded from the 11-year average as they are not meaningful given the significant increase in scale of CAF’s platform over this period. 4. Comprising of $A15.6b of ordinary equity and $A3.1b of hybrids.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Medium-term

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Macquarie Asset Management (MAM)

Annuity-style business that is diversified across regions, products, asset classes and investor types
Diversification of capabilities allows for the business to be well placed to grow assets under management in different market conditions
Well positioned for organic growth with several strongly performing products and an efficient operating platform

Annuitystyle businesses

Corporate and Asset Finance (CAF)

Leverage deep industry expertise to maximise growth potential in loan and lease portfolios
Positioned for further asset acquisitions and realisations, subject to market conditions
Funding from asset securitisation throughout the cycle

Banking and Financial Services (BFS)

Strong growth opportunities through intermediary and direct retail client distribution, white labelling, platforms and client service
Opportunities to increase financial services engagement with existing business banking clients and extend into adjacent segments
Modernising technology to improve client experience and support growth

Commodities and Global Markets (CGM)

Opportunities to grow commodities business, both organically and through acquisition
Development of institutional coverage for specialised credit, rates and foreign exchange products

Capital markets facing businesses

Increase financing activities
Growing the client base across all regions
Well positioned for a recovery in equity market activity levels through both improved market rankings combined with existing strong research platform and strong market position in Asia

Macquarie Capital (MacCap)

Positioned to benefit from any improvement in M&A and capital markets activity
Continues to tailor the business offering to current opportunities, market conditions and strengths in each region

Macquarie  FY17 result announcement  macquarie.com

Overview of Result Result Analysis and Financial Management Outlook Appendices

Introduction

A APPENDIX Detailed result commentary

 MACQUARIE 2017

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Macquarie Asset Management

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Result

	FY17 $Am	FY16 $Am
Base fees	1,574	1,569
Performance fees	264	693
Other fee and commission income	229	242
Investment and other income1	529	206
Net operating income	2,596	2,710
Brokerage, commission and trading-related expenses	(200)	(219)
Other operating expenses	(857)	(834)
Total operating expenses	(1,057)	(1,053)
Non-controlling interests	(1)	(13)
Net profit contribution2	1,538	1,644

AUM ($Ab)	480.0	476.9

Headcount	1,559	1,498

• Base fees of $A1,574m, broadly in line with FY16

Underlying base fees up on FY16 - positive impact from investments made by MIRA-managed funds, growth in the MSIS Infrastructure Debt business and positive market movements in MIM AUM, partially offset by asset realisations by MIRA-managed funds and net AUM outflows in the MIM business
Unfavourable FX impacts on base fees
Performance fees of $A264m, down 62% from a particularly strong FY16, predominately from infrastructure assets
FY17 included fees from a broad range of funds. FY16 benefited from significant fees from MEIF1, MIC and MIRA co-investors in respect of a UK asset
Other fee and commission income of $A229m, down 5% on FY16 primarily due to a reduction in income earned from True Index products
Investment and other income of $A529m, up significantly on FY16 mainly due to increased investment realisations including:
Gains from the partial sale of MIRA's holding in MQA and MIC, gains on sale and reclassification of unlisted infrastructure and real estate holdings in MIRA (including the trustee-manager of APTT), and income from the sell down of infrastructure debt in MSIS
Improved equity accounted income driven by underlying gains on the sale of a number of assets in the current year
Total operating expenses of $A1,057m, broadly in line with FY16
Includes gains on disposal of equity investments and share of net gains of associates. 2. Management accounting profit before unallocated corporate costs, profit share and income tax.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Corporate and Asset Finance

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Result

	FY17 $Am	FY16 $Am
Net interest and trading income1	712	848
Net operating lease income	904	865
Impairments and provisions2	(111)	(167)
Fee and commission income	53	43
Other income3	273	134
Net operating income	1,831	1,723
Total operating expenses	(634)	(594)
Non-controlling interests	1	1
Net profit contribution4	1,198	1,130

Loan and finance lease portfolio5 ($Ab)	26.5	28.8
Operating lease portfolio ($Ab)	10.0	10.6

Headcount	1,258	1,353

Net interest and trading income of $A712m, down 16% on FY16
Lower Lending volumes and reduced income from prepayments and realisations from loans
Increased funding costs driven by the full year impact of funding the AWAS portfolio
Partially offset by the contribution from the acquisition of the Esanda dealer finance portfolio
Net operating lease income of $A904m, up 5% on FY16
Full year contribution of the AWAS portfolio
Partially offset by unfavourable FX impacts and the sale of 9 aircraft in FY17
Impairments and provisions down on FY16 due to lower impairments in Lending and Aviation
Other income of $A273m up on FY16 due to a gain realised on the sale of an interest in a US toll road by the Lending business
Lending income from prepayments and realisations (included in both net interest and trading income and other income) broadly in line with FY16
Total operating expenses of $A634m, up 7% on FY16
Full year impact of costs associated with the Esanda dealer finance portfolio
Includes internal net interest expense and transfer pricing on funding provided by Group Treasury that is eliminated on consolidation in the Group’s statutory P&L. 2. Includes investment and loan impairments. 3. Internal revenue allocations are eliminated on consolidation in the Group’s statutory P&L. 4. Management accounting profit before unallocated corporate costs, profit share and income tax. 5. Includes equity portfolio of $A0.4b (FY16: $A0.3b).

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Banking and Financial Services

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Result

	FY17 $Am	FY16 $Am
Net interest and tradingincome1	1,049	941
Fee and commission income	472	526
Wealth management fee income	313	313
Banking fee income	132	137
Life insurance income	27	56
Other	-	20
Netgain on disposal of businesses	192	-
Impairments andprovisions2	(91)	(43)
Other income	26	40
Net operating income	1,648	1,464
Total operating expenses	(1,135)	(1,114)
Netprofit contribution3	513	350

Funds onplatform4 ($Ab)	72.2	58.4
Australian loanportfolio5 ($Ab)	35.8	35.1
Legacyloanportfolio6 ($Ab)	0.5	1.6
BFS deposits7 ($Ab)	44.5	40.4

Headcount	1,992	2,182

Net interest and trading income of $A1,049m, up 11% on FY16
Increased average balances of the Australian loan and deposit portfolio: average business lending up 9%, average Australian mortgages up 5% and average deposit volumes up 9% on FY16
Average lending margins up, partially offset by lower deposit margins
Fee and commission income of $A472m, down 10% on FY16
Decrease in life insurance income following the sale of Macquarie Life’s risk insurance business in Sep 16
Other fee and commission income in FY16 included a $A20m performance fee
Net gain on disposal of businesses of $A192m
Includes gain on sale of Macquarie Life’s risk insurance business to Zurich Australia Limited partially offset by losses on the sale of US mortgages portfolio
Impairments and provisions of $A91m, up on FY16
Increase predominately due to the underperformance of certain equity positions, impairment of intangibles relating to the Core Banking platform and specific loan impairments, primarily in 1H17
Total operating expenses of $A1,135m, up 2% on FY16 mainly due to elevated project activity and a change in approach to the capitalisation of software expenses in relation to the Core Banking platform
Includes internal net interest expense and transfer pricing on funding provided by Group Treasury and deposit premium paid to BFS by Group Treasury for the generation of deposits, that are eliminated on consolidation in the Group’s statutory P&L. 2. Includes investment and loan impairments. 3. Management accounting profit before unallocated corporate costs, profit share and income tax. 4. Funds on platform includes Macquarie Wrap and Vision. 5. The Australian loan portfolio comprises residential mortgages, loans to Australian businesses, insurance premium funding and credit cards. 6. The legacy loan portfolios primarily comprise residential mortgages in Canada and the US. 7. BFS deposits excludes corporate/wholesale deposits.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Commodities and Global Markets

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Result

	FY17 $Am	FY16 $Am
Commodities1	1,132	1,333
Risk management products	748	819
Lending and financing	260	310
Inventory management, transport and storage	124	204
Credit, interest rates and foreign exchange1	621	412
Equities	307	540
Fee and commission income	857	922
Investment and other income	180	55
Impairments and provisions2	(149)	(347)
Net operating income	2,948	2,915
Brokerage, commission and trading-related expenses	(423)	(443)
Other operating expenses	(1,553)	(1,628)
Total operating expenses	(1,976)	(2,071)
Non-controlling interests	(1)	-
Net profit contribution3	971	844

Headcount	1,888	2,012

Commodities income of $A1,132m, down 15% on FY16
Risk management products down 9% on FY16: strong contributions from Global Oil and North American Gas, offset by a lower contribution from power – largely in North America due to subdued volatility compared to FY16; lower income from Agricultural and Metals markets
Lending and financing down 16% on FY16 mainly due to a reduction in average loan balances
Inventory management, transport and storage down 39% on FY16 due to reduced opportunities from price dislocations in US and EMEA energy markets as well as volatility associated with the timing of income
Credit, interest rate and foreign exchange income of $A621m, up 51% on FY16
Increased contributions from FX and interest rates markets due to ongoing market volatility
Improved performance of high yield debt markets and revenues from specialty lending products
Equities down on a strong FY16 which benefited from strong equity markets activity, particularly in China
Fee and commission income of $A857m, down 7% on FY16 predominately in relation to lower ECM and cash equities income as well as reduced DCM fee income following the transfer of CGM’s 25% interest in the US DCM business to Macquarie Capital, partially offset by improved Futures income
Investment and other income of $A180m, up significantly on FY16 driven by gains on sale of a number of investments, mainly in energy and related sectors
Impairments and provisions of $A149m, down 57% on FY16
Reduced exposure to underperforming commodity-related loans and a reduction in the residual MEC equity investment portfolio
Total operating expenses of $A1,976m, down 5% on FY16 largely due to lower headcount (including the transfer of US DCM business to Macquarie Capital)
Includes internal net interest expense and transfer pricing on funding provided by Group Treasury that is eliminated on consolidation in the Group’s statutory P&L. 2. Includes investment and loan impairments. 3. Management accounting profit before unallocated corporate costs, profit share and income tax.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Macquarie Capital

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Result

	FY17 $Am	FY16 $Am
Fee and commission income	887	870
Investment and other income	396	464
Net interest and trading income1	14	16
Impairments and provisions2	(97)	(187)
Internal management revenue3	6	15
Net operating income	1,206	1,178
Total operating expenses	(722)	(732)
Non-controlling interests	(1)	5
Net profit contribution4	483	451

Capital markets activity5:
Number of transactions	417	402
Transactions value ($Ab)	159	180

Headcount	1,136	1,213

Fee and commission income of $A887m, up 2% on FY16; increased fee income across M&A Advisory in the US and Europe and DCM in the US as well as the transfer of CGM’s 25% interest in the US DCM business to Macquarie Capital, partially offset by a decline in ECM income due to more subdued equity market conditions in Australia
Investment and other income of $A396m, down 15% on FY16
Timing of transactions resulting in lower gains on the sale and reclassification of equity and debt investments
Reduced income from both dividends and consolidated investments
Impairment charges of $A97m, down 48% on FY16
Relates to a small number of underperforming principal investments
Total operating expenses of $A722m, down 1% on FY16
Decline due to the impact of the appreciation of the AUD on offshore expenses, partially offset by increased principal activity and changes in business operations, which included the transfer of CGM’s US DCM business to Macquarie Capital
Includes internal net interest expense and transfer pricing on funding provided by Group Treasury that is eliminated on consolidation in the Group’s statutory P&L. 2. Includes investment and loan impairments. 3. Internal revenue allocations are eliminated on consolidation in the Group’s statutory P&L. 4. Management accounting profit before unallocated corporate costs, profit share and income tax. 5. FY16 deal values and transaction numbers have been adjusted to reflect final transaction data. These changes are not material.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result Result Analysis and Financial Management Outlook Appendices

Introduction

B APPENDIX Additional information – Funding

 MACQUARIE 2017

Macquarie  FY17 result announcement  macquarie.com

Overview of Result Result Analysis and Financial Management

Outlook Appendices

Introduction

Macquarie funding structure

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MGL and MBL are Macquarie’s two primary external funding vehicles which have separate and distinct funding, capital and liquidity management arrangements
MBL provides funding to the Macquarie Bank Group
MGL provides funding predominately to the Non-Bank Group

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----- Start of picture text -----

Non-Bank Group
Macquarie Group Limited
Debt and
(MGL) Equity
Hybrid Equity
Debt and Equity Debt and Equity
Macquarie Bank Limited Non-Bank Subsidiaries
Debt and (MBL)
Hybrid Equity Bank Group
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Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook

Introduction

Appendices

Funded balance sheet reconciliation

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Macquarie’s statement of financial position is prepared based on generally accepted accounting principles which do not represent actual funding requirements
A funded balance sheet reconciliation has been prepared to reconcile the reported assets of Macquarie to the assets that require funding

	Mar 17 $Ab	Mar 16 $Ab
Total assetsper Statement of Financial Position	182.9	196.8
*Accounting deductions:*
Self funded tradingassets	(14.6)	(16.6)
Derivative revaluation accounting gross-ups	(10.7)	(14.4)
Life investment contracts and other segregated assets	(9.6)	(8.4)
Outstandingtrade settlement balances	(6.6)	(5.8)
Short-term workingcapital assets	(5.8)	(5.6)
Non-controllinginterests	(1.3)	(0.2)
*Less non-recourse funded assets:*
Securitised assets and non-recourse funding	(13.5)	(15.0)
Total assetsper Funded Balance Sheet	120.8	130.8

For an explanation of the above deductions refer to slide 66.

Macquarie  FY17 result announcement  macquarie.com

Introduction Overview of Result

Outlook

Result Analysis and Financial Management

Appendices

Funding for Macquarie

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	Mar 17 $Ab	Mar 16 $Ab
*Funding sources*
Certificates of deposits	0.9	0.4
Commercialpaper	5.7	8.9
Net trade creditors	2.4	1.7
Structured notes	3.1	3.4
Secured funding1	4.6	5.3
Bonds1	29.3	37.5
Other loans	0.5	0.4
Syndicated loan facilities2	4.8	5.9
Customer deposits	47.8	43.6
Loan capital	5.7	5.2
Equityand hybrids3,4	16.0	15.5
Total funding sources2,4	120.8	127.8
*Funded assets*
Cash and liquid assets2	21.7	27.4
Self-securitisation	16.5	13.9
Net tradingassets	22.1	21.1
Loan assets includingoperatinglease assets less than oneyear	13.9	13.1
Loan assets includingoperatinglease assetsgreater than oneyear	37.1	42.1
Debt investment securities	2.3	2.7
Co-investment in Macquarie-managed funds and other equity investments4	5.5	5.8
Property,plant & equipment and intangibles	1.7	1.7
Total funded assets2,4	120.8	127.8

Well diversified funding sources
Minimal reliance on short-term wholesale funding markets
Deposit base represents 40%[5] of total funding sources
Term funding beyond one year (excluding equity and securitisations) has a weighted average term to maturity of 4.5 years[5]

Macquarie term funding maturing beyond one year (includes equity and hybrid)[6]

$Ab 30 Debt Loan capital Equity and hybrids 25 20 15 10 5 0 1-2yrs 2-3yrs 3-4yrs 4-5yrs 5yrs+

Covered Bonds have been reclassified as Secured Funding, previously classified as Bonds. Accordingly, the Mar 16 position has been restated. 2. Mar 16 numbers adjusted for partial repayment of Esanda facility of $A3.0b in Apr 16. 3. Mar 17 includes ordinary capital and Macquarie Income Securities of $A0.4b. 4. Non-controlling interests have been netted in the funded balance sheet. Accordingly, the Mar 16 position has been restated. 5. As at 31 Mar 17. 6. Includes drawn term funding facilities only.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook Appendices

Introduction

Result Analysis and Financial Management

Funding for the Macquarie Bank Group

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	Mar 17 $Ab	Mar 16 $Ab	• Bank balance sheet remains liquid, well capitalised and with a diversity of funding sources • Term funding beyond one year (excluding equity and securitisations) has a weighted average term to maturity of 4.6 years4 • Accessed term funding in markets including US, Europe and Australia as well as opening new markets Macquarie Bank Group term funding maturing beyond one year (includes equity and hybrid)5 $Ab 0 5 10 15 20 25 30 1-2yrs 2-3yrs 3-4yrs 4-5yrs 5yrs+ Debt Loan capital Equity and hybrids	• Bank balance sheet remains liquid, well capitalised and with a diversity of funding sources • Term funding beyond one year (excluding equity and securitisations) has a weighted average term to maturity of 4.6 years4 • Accessed term funding in markets including US, Europe and Australia as well as opening new markets Macquarie Bank Group term funding maturing beyond one year (includes equity and hybrid)5 $Ab 0 5 10 15 20 25 30 1-2yrs 2-3yrs 3-4yrs 4-5yrs 5yrs+ Debt Loan capital Equity and hybrids
*Funding sources*
Certificates of deposit	0.9	0.4
Commercialpaper	5.7	8.9
Net trade creditors	1.6	1.4
Structured notes	2.6	3.0
Secured funding1	4.4	5.2
Bonds1	21.7	29.1
Other loans	0.3	0.2
Syndicated loan facilities2	2.4	3.0
Customer deposits	47.8	43.6
Loan capital	4.6	4.1
Equityand hybrids3	12.6	12.7
Total funding sources2	104.6	111.6
*Funded assets*
Cash and liquid assets2	20.0	25.9
Self-securitisation	16.5	13.9
Net tradingassets	21.8	20.4
Loan assets includingoperatinglease assets less than oneyear	13.6	12.5
Loan assets includingoperatinglease assetsgreater than oneyear	36.1	41.1
Debt investment securities	1.9	2.2
Non-Bank Groupdeposit with MBL	(6.7)	(6.2)
Co-investment in Macquarie-managed funds and other equity investments	0.8	1.1
Property, plant & equipment and intangibles	0.6	0.7
Total funded assets2	104.6	111.6	1-2yrs	2-3yrs 3-4yrs 4-5yrs 5yrs+

Covered Bonds have been reclassified as Secured Funding, previously classified as Bonds. Accordingly, the Mar 16 position has been restated. 2. Mar 16 numbers adjusted for partial repayment of Esanda facility of $A3.0b in Apr 16. 3. Includes ordinary capital and Macquarie Income Securities of $A0.4b. 4. As at 31 Mar 17. 5. Includes drawn term funding facilities only.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result Result Analysis and Financial Management Outlook

Introduction

Appendices

Funding for the Non-Bank Group

	Mar 17 $Ab	Mar 16 $Ab
*Funding sources*
Net trade creditors	0.8	0.3
Structured notes	0.5	0.4
Secured funding	0.2	0.1
Bonds	7.6	8.4
Other loans	0.2	0.2
Syndicated loan facilities	2.4	2.9
Loan capital1	1.1	1.1
Equity2	3.4	2.8
Total funding sources2	16.2	16.2
*Funded assets*
Cash and liquid assets	1.7	1.5
Non-Bank Group deposit with MBL	6.7	6.2
Net trading assets	0.3	0.7
Loan assets less than one year	0.3	0.6
Loan assets greater than one year	1.0	1.0
Debt investment securities	0.4	0.5
Co-investment in Macquarie-managed funds and other equity investments2	4.7	4.7
Property, plant & equipment and intangibles	1.1	1.0
Total funded assets2	16.2 16.2

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Non-Bank Group is predominately term funded
• Term funding beyond one year (excluding equity) has a weighted average term to maturity of 4.3 years

Non-Bank Group term funding maturing beyond one year (includes equity and hybrid)[3]

	Non-Bank Group term funding maturing beyond one year (includes equity and hybrid)3	Non-Bank Group term funding maturing beyond one year (includes equity and hybrid)3
0 5 10 15 20 25 30 $Ab	Debt Loan capital Equity & hybrids
	1-2yrs 2-3yrs 3-4yrs	4-5yrs 5yrs+

Macquarie Group Capital Notes 1 & 2 of $A1.1b. 2. Non-controlling interests have been netted in the funded balance sheet. Accordingly, the Mar 16 position has been restated. 3. Includes drawn term funding facilities only.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Explanation of Funded Balance Sheet reconciling items

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Self-funded trading assets: Macquarie enters into stock borrowing and lending as well as repurchase agreements and reverse repurchase agreements in the normal course of trading activity that it conducts with its clients and counterparties. Also as part of its trading activities, Macquarie pays and receives margin collateral on its outstanding derivative positions. These trading-related asset and liability positions are presented gross on the statement of financial position but are viewed as being self funded to the extent that they offset one another and, therefore, are netted as part of this adjustment.
Derivative revaluation accounting gross-ups: Macquarie’s derivative activities are mostly client driven with client positions hedged by offsetting positions with a variety of counterparties. The derivatives are largely matched and this adjustment reflects that the matched positions do not require funding.
Life investment contracts and other segregated assets: These represent the assets and liabilities that are recognised where Macquarie provides products such as investment-linked policy contracts or where Macquarie holds segregated client monies. The policy (contract) liability and client monies will be matched by assets held to the same amount and hence does not require funding.
Outstanding trade settlement balances: At any particular time Macquarie will have outstanding trades to be settled as part of its brokering business and trading activities. These amounts (payables) can be offset in terms of funding by amounts that Macquarie is owed on other trades (receivables).
Short-term working capital assets: As with the outstanding trade settlement balances above, Macquarie through its day-to-day operations generates working capital assets (e.g. receivables and prepayments) and working capital liabilities (e.g. creditors and accruals) that produce a ‘net balance’ that either requires or provides funding.
Non-controlling interests: These represent the portion of equity ownership in subsidiaries not attributable to Macquarie. As this is not a position that Macquarie is required to fund it is netted against the consolidated assets and liabilities in preparing the funded balance sheet.
Securitised and non-recourse assets: These represent assets that are funded by third parties with no recourse to Macquarie including lending assets (mortgages and leasing) sold down into external securitisation entities.

Macquarie  FY17 result announcement  macquarie.com

Introduction Overview of Result

Outlook

Result Analysis and Financial Management

Appendices

Conservative long standing liquidity risk management framework

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Liquidity Policy

The key requirement of MGL and MBL’s liquidity policies is that the entities are able to meet all liquidity obligations during a period of liquidity stress:
A minimum 12 month period with constrained access to funding markets and with only a limited impact on franchise businesses
Term assets are funded by term funding, stable deposits and equity

Liquidity Framework

A robust liquidity risk management framework ensures that both MGL and MBL are able to meet their funding requirements as they fall due under a range of market conditions. Key tools include:
Liability driven approach to balance sheet management
Scenario analysis
Maintenance of unencumbered liquid asset holdings
Liquidity management is performed centrally by Group Treasury, with oversight from the Asset and Liability Committee and the Risk Management Group
The Boards of each entity approve their respective liquidity policy and are provided with liquidity reporting on a monthly basis

Macquarie  FY17 result announcement  macquarie.com

Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

C APPENDIX Additional information – Capital

 MACQUARIE 2017

Macquarie  FY17 result announcement  macquarie.com

Overview of Result Result Analysis and Financial Management

Outlook

Introduction

Appendices

Macquarie Basel III regulatory capital

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Surplus calculation

31 Mar 17	Harmonised Basel III $Am	APRA Basel III $Am
Macquarie eligible capital:
Bank Group Gross Tier 1 capital	14,255	14,255
Non-Bank Group eligible capital	4,415	4,415
Eligible capital	18,670	18,670	(a)
Macquarie capital requirement:
Bank Group capital requirement
Risk-Weighted Assets (RWA)1	88,183	89,568
Capital required to cover RWA2	7,496	7,613
Tier 1 deductions	460	2,261
Total Bank Group capital requirement	7,956	9,874
Total Non-Bank Group capital requirement	3,301	3,301
Total Macquarie capital requirement (at 8.5%2 of the Bank Group RWA)	11,257	13,175	(b)
Macquarie regulatory capital surplus (at 8.5%2 of the Bank Group RWA)	7,413	5,495	(a)-(b)

In calculating the Bank Group’s contribution to Macquarie’s capital requirement, $A448m RWA associated with exposures to the Non-Bank Group are eliminated. 2. Calculated at 8.5% RWA including capital conservation buffer (CCB), per APRA ADI Prudential Standard 110.

Macquarie  FY17 result announcement  macquarie.com

Introduction Overview of Result Result Analysis and Financial Management

Outlook

Appendices

Macquarie APRA Basel III regulatory capital

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Bank Group contribution

31 Mar 17	Risk-weighted assets $Am	Tier 1 Deductions $Am	Capital Requirement1 $Am
Credit risk
On balance sheet	59,828		5,086
Off balance sheet	15,721		1,336
Credit risk total2	75,549		6,422
Market risk	3,958		336
Operational risk	9,979		848
Interest rate risk in the banking book	82		7
Tier 1 deductions		2,261	2,261
Contribution to Group capital calculation2	89,568	2,261	9,874

Calculated at 8.5% RWA including capital conservation buffer (CCB), per APRA ADI Prudential Standard 110, plus Tier 1 deductions. 2. In calculating the Bank Group’s contribution to Macquarie’s capital requirement, $A448m RWA associated with exposures to the Non-Bank Group are eliminated.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Outlook

Introduction

Result Analysis and Financial Management

Appendices

Macquarie regulatory capital

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Non-Bank Group contribution

APRA has specified a regulatory capital framework for Macquarie
A dollar capital surplus is produced; no capital ratio calculation is specified
APRA has approved Macquarie’s Economic Capital Adequacy Model (ECAM) for use in calculating the regulatory capital requirement of the Non-Bank Group
Any significant changes to the ECAM must be approved by the MGL Board and notified to APRA within 14 days
The ECAM is based on similar principles and models as the Basel III regulatory capital framework for Banks, with both calculating capital at a one year 99.9% confidence level:

Risk1	Basel III	ECAM
Credit	Capital requirement generally determined by Basel III IRB formula, with some parameters specified by the regulator (e.g. loss given default)	Capital requirement generally determined by Basel III IRB formula, but with internal estimates of key parameters
Equity	Harmonised Basel III: 250%, 300% or 400% risk weight, depending on the type of investment2. Deduction from Common Equity Tier 1 above a threshold APRA Basel III: 100% Common Equity Tier 1 deduction	Extension of Basel III credit model to cover equity exposures. Capital requirement between 36% and 82% of face value; average 49%
Market	3 times 10 day 99% Value at Risk (VaR) plus 3 times 10-day 99% Stressed VaR plus a specific risk charge	Scenario-based approach
Operational	Advanced Measurement Approach	Advanced Measurement Approach

The ECAM also covers insurance underwriting risk, non-traded interest rate risk and the risk on assets held as part of business operations, e.g. fixed assets, goodwill, intangible assets, capitalised expenses and certain minority stakes in associated companies or stakes in joint ventures. 2. Includes all Banking Book equity investments, plus net long Trading Book holdings in financial institutions.

Macquarie  FY17 result announcement  macquarie.com

Overview of Result Result Analysis and Financial Management Outlook

Introduction

Appendices

Macquarie regulatory capital

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Non-Bank Group contribution

31 Mar 17	Assets $Ab	Capital Requirement $Am	Equivalent Risk Weight
*Funded assets*
Cash and liquid assets	1.7	20	15%
Loan assets1	1.3	118	114%
Debt investment securities	0.4	68	214%
Co-investments in Macquarie-managed funds and other equityinvestments	4.4	2,054	589%
Co-investments in Macquarie-managed funds and other equityinvestments(relatingto investments that hedge DPSplan liabilities)	0.3
Property,plant and equipment and intangibles	1.1	198	225%
Non-Bank Groupdeposit with MBL	6.7
Net tradingassets	0.3
Total funded assets	16.2	2,458
*Self-funded and non-recourse assets*
Self funded tradingassets	0.2
Outstandingtrade settlement balances	3.2
Derivative revaluation accounting gross ups	0.1
Short-term workingcapital assets	3.5
Non-controllinginterests	1.3
Total self-funded and non-recourse assets	8.3
Total Non-Bank Group assets	24.5
Off balance sheet exposures, operational, market and other risks, and diversification offset2		843
Non-Bank Group capital requirement		3,301

Includes leases. 2. Capital associated with net trading assets (including market risk capital) and net trade debtors has been included here.

Macquarie  FY17 result announcement  macquarie.com

Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

C APPENDIX Glossary

 MACQUARIE 2017

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook

Introduction

Appendices

Glossary

$A / AUD	Australian Dollar
$C / CAD	Canadian Dollar
$US / USD	United States Dollar
£ / GBP	Pound Sterling
€	Euro
1H17	Half-Year ended 30 September 2016
2H16	Half-Year ended 31 March 2016
2H17	Half-Year ended 31 March 2017
ABN	Australian Business Number
ADI	Authorised Deposit-TakingInstitution
AML	Anti-MoneyLaundering
ANZ	Australia and New Zealand
Approx.	Approximately
APRA	Australian Prudential Regulation Authority
APTT	Asian PayTelevision Trust
ASX	Australian Stock Exchange
AUM	Assets under Management
AVS	Available For Sale
BCBS	Basel Committee on BankingSupervision
BFS	Bankingand Financial Services

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CAF	Corporate and Asset Finance
CCB	Capital Conservation Buffer
CCP	Central Counterparty
CET1	Common EquityTier 1
CGM	Commodities and Global Markets
CLF	Committed Liquid Facility
CMA	Cash Management Account
CMBS	Commercial Mortgage-Backed Securities
CRM	Customer RelationshipManagement
CY16	Calendar Year ended 31 December 2016
CY17	Calendar Year ending31 December 2017
DCM	Debt Capital Markets
DPS	Dividends Per Share
DRP	Dividend Reinvestment Plan
DTA	Deferred Tax Asset
ECAM	Economic Capital AdequacyModel
ECM	EquityCapital Markets
ECS	Exchangeable Capital Securities
EMEA	Europe,the Middle East and Africa
EPS	Earnings Per Share

Macquarie  FY17 result announcement  macquarie.com

Overview of Result

Result Analysis and Financial Management Outlook Appendices

Introduction

Glossary

EUM	EquityUnder Management
FSI	Financial System Inquiry
FX	Foreign Exchange
FY07	Full Year ended 31 March 2007
FY08	Full Year ended 31 March 2008
FY09	Full Year ended 31 March 2009
FY11	Full Year ended 31 March 2011
FY13	Full Year ended 31 March 2013
FY14	Full Year ended 31 March 2014
FY15	Full Year ended 31 March 2015
FY16	Full Year ended 31 March 2016
FY17	Full Year ended 31 March 2017
FY18	Full Year ending31 March 2018
GIB	Green Investment Bank
HQLA	HighlyQualityLiquid Assets
IPO	Initial Public Offering
IRB	Internal Ratings-Based
IT	Information Technology
JV	Joint Venture
LBO	Leveraged Buyout

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LCR	LiquidityCoverage Ratio
LNG	Liquefied Natural Gas
LP	Limited Partner
Ltd	Limited
M&A	Mergers and Acquisitions
MacCap	Macquarie Capital
MACS	Macquarie Additional Capital Securities
MAM	Macquarie Asset Management
MBL	Macquarie Bank Limited
MD&A	Management Discussion & Analysis
MEC	Metals and EnergyCapital
MEIF1	Macquarie European Infrastructure Fund 1
MEREP	Macquarie GroupEmployee Retained EquityPlan
MGL / MQG	Macquarie GroupLimited
MKIF	Macquarie Korea Infrastructure Fund
MIC	Macquarie Infrastructure Corporation
MIDIS	Macquarie Infrastructure Debt Investment Solutions
MIM	Macquarie Investment Management
MIRA	Macquarie Infrastructure and Real Assets
MPW	Macquarie Private Wealth

Macquarie  FY17 result announcement  macquarie.com

Introduction Overview of Result

Result Analysis and Financial Management Outlook Appendices

Glossary

MQA	Macquarie Atlas Roads
MSIS	Macquarie Specialised Investment Solutions
MW	Mega Watt
NGLs	Naturalgas liquids
NIM	Net Interest Margin
No.	Number
NPAT	Net Profit After Tax
NPC	Net Profit Contribution
NSFR	Net Stable FundingRatio
OTC	Over-The-Counter
P&L	Profit and Loss Statement
PCP	Prior CorrespondingPeriod
PPE	Property,Plant and Equipment
PPP	Public Private Partnership
RBA	Reserve Bank of Australia
REIT	Real Estate Investment Trust
ROE	Return on Equity
RWA	Risk Weighted Assets
SBI	State Bank of India

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SGX	Singapore Exchange
SME	Small and Medium Enterprise
SMSF	Self Managed Super Fund
ST	Short-term
TMET	Telecommunications,Media,Entertainment and Technology
UK	United Kingdom
US	United States of America
VaR	Value at Risk
VWAP	Volume Weighted Average Price
yr	Year

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Presentation to investors and analysts Result announcement for the full year ended 31 March 2017 5 May 2017

AI assistant

Macquarie Group Limited — Annual Report 2017

10518_rns_2017-05-04_23c44494-001d-4993-9b20-e5c75d498ac2.pdf

Disclaimer

Agenda

Introduction 01 Karen Khadi – Head of Investor Relations

ABOUT MACQUARIE Building for the long-term

Macquarie Asset Management (MAM)

Corporate and Asset Finance (CAF)

Banking and Financial Services (BFS)

Commodities and Global Markets[2] (CGM)

Macquarie Capital (MacCap)

2H17 result: $A1,167m up 11% on 1H17

2H17 result: $A1,167m up 11% on 1H17; up 18% on 2H16

MAM: on 1H17

CAF: on 1H17

BFS: broadly in line with 1H17

FY17 result: $A2,217m up 7.5% on FY16

FY17 result: $A2,217m up 7.5% on FY16

4% ON FY16

12% ON FY16

MAM: on FY16

CAF:

on FY16

BFS: on FY16

CGM: on FY16

Macquarie Capital:

on FY16

Financial performance

Annuity-style vs Capital markets facing businesses

Assets under management of $A481.7 billion[1]

Diversification by region

Diversification by region

Macquarie Asset Management

MACQUARIE INFRASTRUCTURE AND REAL ASSETS

MACQUARIE INVESTMENT MACQUARIE SPECIALISED MANAGEMENT INVESTMENT SOLUTIONS

Corporate and Asset Finance

LENDING

ASSET FINANCE

FUNDING ACTIVITY

Banking and Financial Services

PERSONAL BANKING

WEALTH MANAGEMENT

Activity

Activity

BUSINESS BANKING

Activity

DEPOSITS

Commodities and Global Markets

Macquarie Capital

Green Investment Bank

Macquarie-led consortium acquires GIB for £2.3b

Green Investment Bank

Macquarie Group

Funded balance sheet remains strong

Basel III capital position

• APRA Basel III Group capital at Mar 17 of $A18.7b, Group capital surplus of $A5.5b[1]

Strong regulatory ratios

Bank Group (Mar 17)

Final dividend

Income Statement key drivers

Income Statement by Operating Group

Macquarie Asset Management

KEY DRIVERS

MAM AUM movement

MIRA EUM movement

Corporate and Asset Finance AWAS and Esanda contribution partially offset by reduced activity in CAF Lending

KEY DRIVERS

Banking and Financial Services

Strong organic growth as well as gain on sale of businesses

KEY DRIVERS

$Am

KEY DRIVERS

Macquarie Capital

KEY DRIVERS

Other income

KEY DRIVERS

Impairment expense

KEY DRIVERS

Costs of compliance

Macquarie Group Limited Annual Report 2017