Macquarie Group Limited — Earnings Release 2012

Apr 26, 2012

Macquarie Group Limited

Result Announcement for the full year ended 31 March 2012

Presentation to Investors and Analysts 27 April 2012

Nicholas Moore, Managing Director and Chief Executive Officer Patrick Upfold, Chief Financial Officer

The material in this presentation has been prepared by Macquarie Group Limited ABN 94 122 169 279 (Macquarie) and is general background information about Macquarie’s activities current as at the date of this presentation. This information is given in summary form and does not purport to be complete. Information in this presentation, including forecast financial information, 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. 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 including 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, specific provisions 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 to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events. While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts 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 year ended 31 March 12.

Certain financial information in this presentation is prepared on a different basis to the Macquarie Group Limited Financial Report, 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 report provides further detail in relation to key elements of Macquarie Group Limited’s financial performance and financial position. It also provides an analysis of the funding profile of the Group because maintaining the structural integrity of the Group'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 Macquarie Group Limited Financial Report was not subject to independent audit or review by PricewaterhouseCoopers.

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Introduction – Stuart Green 1.

Overview of Result – Nicholas Moore

Result Analysis and Financial Management – Patrick Upfold 3.

Outlook – Nicholas Moore

Appendices

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Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts

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Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts

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• Top 50 global asset manager with $A324b[1] of assets under management

• Provides clients with access to a diverse range of capabilities and products, including infrastructure and real asset

• Macquarie Funds management, securities investment management and structured access to funds, equity-based products and alternative assets

• Provider of specialist finance and asset management solutions, with $A20.6b[1] of loans and assets under finance 

• Corporate and Expertise in corporate debt and asset finance including aircraft, motor vehicles, technology, healthcare, Asset Finance manufacturing, industrial, energy, rail and mining equipment  One of the largest providers of motor vehicle finance in Australia  No.1 full-service Australian retail stockbroker in terms of volume and market share 

• Banking and Leading provider of retail advisory services and products Financial Services  Full-service retail broking, deposit-taking and services to intermediaries in Australia  Specialist Relationship Banking provider to Small to Medium Enterprises (SME)  Global institutional securities house with strong Asia-Pacific foundations covering sales, research, ECM, execution and derivatives activities

• Macquarie Full-service cash equities in Australia, Asia, South Africa and Canada with specialised offerings in US and Europe. Securities Specialised derivatives offerings in key locations globally  Key specialities: infrastructure and utilities, TMET, resources (mining and energy), industrials and financial institutions

• Global corporate finance capability, including M&A, capital markets and principal investments

• Macquarie Capital  Key specialities in six industry groups: Infrastructure, Utilities and Renewables; Resources (mining and energy); Real Estate; Telecommunications, Media, Entertainment and Technology (TMET); Industrials; Financial Institutions

• Global fixed income, currencies and commodities provider of finance, risk solutions and market access to

• Fixed Income, producers/consumers and financial institutions/investors  Growing presence in physical commodities (natural gas, LNG, power, oil, coal, base metals, iron ore, sugar and

• Currencies and freight)

• Commodities Predominant in US and Australia, niche offering in Canada and Latin America, growing presence in Asia and EMEA  Specialities: commodities, Asian and emerging markets, high yield and distressed debt

• At 31 Mar 12.

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• Net profit of $A425m, up 39% on 1H12 and down 23% on pcp

• Operating income $A3.7b, up 15% on 1H12 and down 8% on pcp

• As foreshadowed:

• Macquarie’s annuity-style businesses have delivered a combined net profit contribution in line with pcp, albeit down 21% on 1H12 primarily due to impact of the timing of performance fees

• FICC saw significantly improved conditions delivering a 2H12 result strongly up on 1H12 and up 31% on pcp

• Macquarie Securities (MSG) and Macquarie Capital were impacted by subdued activity levels across ECM and M&A. MSG was further impacted by low client volumes and the costs of exiting certain derivatives businesses

• 2H12 included the receipt of $A295m from Sydney Airport[1] which was recorded as income

• Operating expenses $A3.1b, up 9% on 1H12 and down 3% on pcp, due to the costs of exiting certain derivatives businesses, redundancies and increased profit share for market facing businesses

• Increase in the half year effective tax rate to 29.8% from 26.0% at 1H12 and 26.3% in pcp

• EPS $A1.24, up 43% on 1H12 and down 24% on pcp

• Return on equity 7.8%, up from 5.7% in 1H12 and down from 10.2% in pcp

• 2H12 dividend of $A0.75 (unfranked), up on 1H12 dividend of $A0.65 (unfranked) and down on 2H11 dividend of $A1.00 (unfranked)

• Formerly MAp Group.

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• Net profit of $A730m, down $A226m (or 24%) on FY11

• Operating income $A7.0b, down $A702m (or 9%) on FY11

• Capital market facing businesses down $A747m (or 20%) on FY11

• As foreshadowed;

• Macquarie Funds, Corporate and Asset Finance and Banking and Financial Services have delivered a combined net profit contribution for FY12 up $A287m (or 22%) on FY11

• Despite a difficult 1H12, a significant improvement in FICC saw it deliver a FY12 net profit contribution of $A539m down only $A36m (or 6%) on FY11

• Macquarie Securities delivered a loss of $A194m for FY12 reflecting difficult market conditions and the costs of exiting certain derivative businesses

• Macquarie Capital has delivered a FY12 net profit contribution of $A85m down $A129m (or 60%) on FY11 due to low levels of client activity across M&A and ECM

• Operating expenses $A5.9b, down $A480m (or 8%) on FY11

• Employment expenses[1] $A3.6b, down $A330m (or 8%) on FY11

• Increase in the full year effective tax rate to 28.2% from 22.8% in FY11

• EPS $A2.10, down 26% on FY11

• Return on equity 6.8%, down from 8.8% for FY11

• Full year dividend of $A1.40 (unfranked), down on FY11 dividend of $A1.86 (unfranked)

• Includes on-costs, staff procurement and staff training.

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	2H12 $Am	1H12 $Am	Mar 12 $Am Mar 11 $Am
Net operating income	3,720	3,243	6,963 7,665
Total operating expenses	(3,086)	(2,828)	(5,914) (6,394)
Operating profit before income tax	634	415	1,049 1,271
Tax expense	(180)	(107)	(287) (282)
Profit attributable to non-controlling interests	(29)	(3)	(32) (33)
Profit attributable to MGL shareholders	425	305	730 956

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

$Am
FY12 Operating income of $A6,963m
FY12 down 9% on FY11
2H12 up 15% on 1H12
4,000
2,000
0
1H10 2H10 1H11 2H11 1H12 2H12
$A FY12 EPS of $A2.10
2.00 FY12 down 26% on FY11
2H12 up 43% on 1H12
1.00
0.00
1H10 2H10 1H11 2H11 1H12 2H12
----- End of picture text -----

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$Am
FY12 Profit of $A730m
800 FY12 down 24% on FY11
2H12 up 39% on 1H12
400
0
1H10 2H10 1H11 2H11 1H12 2H12
$A FY12 DPS of $A1.40
FY12 down 25% on FY11
1.00
0.00
1H10 2H10 1H11 2H11 1H12 2H12
----- End of picture text -----

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• As foreshadowed, FY12 operating costs (excl. brokerage and commissions expense) $A5.2b; down $A0.4b on FY11

• Achieved across the group through centralising support functions, and reducing front office costs including the reduction of business scope in some cases

• Savings will enable investment in growth areas which include key markets, new products, processes & technologies

• As foreshadowed, Macquarie Securities and Macquarie Capital expect to reduce FY11 run rate costs by 20-25% by end FY13

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

$Am
6,000 90 112
227 19 127
5,800
145
5,609  16%
5,600  6% 135
5,400  12%  16% 58 15 125 reduction$A419m reduction$A736m
 20% 5,190 8% 13%
5,200  9%  51% including
 10% investment
5,000 in growth
areas
4,800
4,600
4,400
4,200
4,000
FY11 Investment Restructure MFG CAF BFS MSG Mac Cap FICC REB Corporate FY12
in growth
areas
----- End of picture text -----

Percentage reduction for each of the Operating Segments is based off the FY11 cost base. Restructuring includes incremental business rationalisation and restructuring costs.

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 Increase in AUM resulting from:

• Net inflows, investments in infrastructure and real assets and valuation changes

• Partially offset by asset disposals and FX movements of the Euro against AUD

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Operating income before writedowns, impairments, equity accounted gains/(losses) and one-off items[1 ]

12 months to 31 March 11 12 months to 31 March 12 $A7.6b $A7.3b

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14%
16%
27% 25% 4%
5%
20%
18%
14% 18%
7%
9% 11% 12%
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Institutional and retail cash equities

Equity derivatives

Funds management and administration

M&A and advisory income

Asset and equity investments

Commodities, resources and foreign exchange

Lending, leasing and margin related income

1. FY12: No adjustment for one-off items. FY11: One-off items related to gains from listed fund initiatives (Sydney Airport fair value adjustment of investment ($A95m) and sale of MPT management rights ($A14m)).

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

EUROPE, MIDDLE EAST
ASIA AMERICAS
& AFRICA [2]
Income: $A1,229m (18% of total) Income: $A743m (11% of total) Income: $A2,044m (31% of total)
Staff: 1,370 Staff: 2,795 Staff: 3,419
AUSTRALIA [3]
Income: $A2,654m (40% of total)
Staff: 6,618
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1. Operating income for year to 31 Mar 12. Operating income in each region excludes earnings from the Corporate segment of $A293m. 2. Excludes staff in Macquarie First South joint venture and staff seconded to Macquarie Renaissance joint venture (Moscow). 3. Includes New Zealand.

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• 60% of operating income in FY12 generated offshore

• FX translation estimated to have a negative impact of approx. 5% due to the strengthening of AUD by an average of approx. 10% against major currencies

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1,600
1,400 2H10
1H11
1,200
2H11
1H12
1,000
2H12
800
600
400
200
0
Australia Asia Americas Europe, Middle East & Africa
1
Operating income $Am
----- End of picture text -----

1. Operating income excludes earnings from the Corporate segment of $A293m.

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AUM of $A324b up 6% on prior year

Macquarie Infrastructure and Real Assets

Activity

• Ranked as the largest manager of infrastructure assets globally[1] and ranked first in the Infrastructure Investor magazine listing of the largest infrastructure investors globally[2]

• Raised over $A2.2b in new equity commitments and completed $A17.8b in asset and fund level re-financings

• Focused on strategically investing capital across the globe, with over $A1.3b of equity invested

• Macquarie Essential Assets Partnership (MEAP) divested its final two assets, successfully concluding the term of the fund and realising a fund internal rate of return of 17.8 per cent[3 ]

• Performance fees of $A100m earned predominantly as a result of MEAP, Macquarie Atlas Roads and Thames Water outperforming their respective benchmarks

Macquarie Investment Management

Activity

• $A6.4b of net inflows across a range of products and regions

• Awarded ten Lipper Fund Awards in 2012 across the US, Europe and Asia[4]

• Delaware Investments was ranked first in the “Barron’s Fund Families Report” for 2011

• Strong performance across a range of asset classes relative to industry benchmarks, with top quartile performance over three years for:

• 15 Delaware Investments funds in their respective Lipper categories in the US

• Macquarie High Conviction Fund, Macquarie Australian Small Companies Fund and Macquarie Core Australian Fixed Interest Fund in Australia

• MFG’s flagship Australian fixed income retail strategies, Macquarie Diversified Fixed Interest and Macquarie Income Opportunities, each reached $A1.0b in AUM

Macquarie Specialised Investment Solutions

Activity

• Raised over $A300m for Australian retail specialised products

• Launched a range of new retail products including:

   - Macquarie Step
  

  • A series of European income opportunity funds

• Significant fee and margin income associated with the provision of financing facilities to external funds and their investors

  • Strong demand in 1H12 in Europe and US for short term financing facilities

• Continued to build out its global distribution platform, with senior hires in Australia, the US, Asia and Europe

• Launched several new funds including an international bond mutual fund, a short term currency alpha fund and an absolute return asset allocation fund

• Towers Watson Global Alternatives Survey, Jun 11. For pension assets under management. 2. Jun 11. 3. Net of fees and including fund level retained cash as at 20 Sep 11. 4. Including Best Mixed Asset Small Company for Delaware Investments and Best Overall Small Company for Macquarie Investment Management Austria.

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Asset and loan portfolio of $A20.6b up 5% on prior year

Corporate Lending

Asset Finance

• Funded loan portfolio of $A8.0b in line with prior year

• Continued deleveraging across the financial system created opportunities to add to the portfolio via the secondary market

• Completed selective new financings during the year

• Funded, originated or acquired $A2.3b of corporate debt in FY12

• Loan portfolio continues to be refinanced by borrowers and recycled into new opportunities

• Continued activity in commercial real estate lending, completing several opportunistic acquisitions and client financing transactions

• Motor vehicle leasing portfolio of $A6.2b, up 3% on 1H12 and up 5% on prior year. Total contracts in excess of 230,000

• Extending finance through the customer value chain – from manufacturer to end user:

• Motor vehicle manufacturers and dealers in Australia

• Technology distributors globally

• Expanded white label programs in Australia, Asia, Europe and US through manufacturers and vendors

• Aircraft leasing portfolio of $A3.4b, down 8% on 1H12 and down 7% on prior year

• Continue to see trading opportunities in the aircraft sector

• Sale of leased aircraft engine assets largely complete

• Acquired portfolio of North American rail freight cars, bringing Macquarie Rail assets to a total of approx. $US0.5b

• Continued growth of metering portfolio in the UK with acquisition of OnStream (Utility Metering Services) in Oct 11

• Acquisition brings total portfolio to 5.7 million gas and electric meters in the UK

• Integration of OnStream is progressing in line with expectations, with completion of integration expected by Apr 12

Funding activity

• Strong securitisation activity continues with $A2.6b of motor vehicle leases and loans secured during FY12

• Continued to access global securitisation markets – Approx. $A13.5b of external funding since programme’s inception in 2007

Comparatives have been restated for the transfer of Macquarie AirFinance (MAF) from Macquarie Capital during 1H12.

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Global client numbers 1.14 million, up 6% on prior year

Private Wealth/Direct Activity

Intermediary

Relationship Banking

Activity

Activity

• Average deposit volumes up 9% on prior year

• Macquarie Private Wealth (MPW) remains No.1 ranked full-service retail stockbroker in Australia in terms of volume and market share[1 ]

• Intermediary client numbers at 697,263 up 16% on prior year

• DEFT transactions up 27% by volume and up 24% by value on prior year

• Macquarie Wrap commenced white label administration services for Perpetual Limited’s $A8.7b platform business with transition on target for completion

• Total clients up 10% on prior year

• MPW ASX retail turnover down 19% on prior year and down 2% on prior period

  • New SME businesses up 44% on prior year

• Macquarie Wrap ranked top Australian platform in the prestigious Wealth Insights 2011 Platforms Service Level Report[3 ]

• Macquarie completed the transition of MPW Asia to Julius Baer (a Swiss Private Banking company) as part of a strategic collaboration agreement

• Macquarie Wrap funds under administration at $A22.0b down 3% on prior year

• Australian/NZ private wealth and direct client numbers at 321,000 down 11% on prior year due to system rationalisation and closure of dormant accounts

• Macquarie Life Active awarded the Canstar CANNEX Innovation Excellence Award for Financial Services and a five star rating in Beaton Benchmarks - Life Insurance Intermediaries Study for the 4[th] consecutive year Investment Funds

• Canadian client numbers at 142,371, up 13% on prior year and total assets under management/administration $C12.2b, up 25% on prior year

• Australian mortgage portfolio $A10.8b down 7% on prior year, with mortgage origination expected to result in net monthly portfolio growth in FY13

• Macquarie Pastoral Fund ends acquisition phase with purchase of Cutbush Property in northern NSW

• Three Macquarie Online Trading Platforms consolidated into one – Macquarie Prime – for a more holistic offering

  • Macquarie Professional Series named Money Management Fund Manager of the Year 2011 for Independent Franchise Partners’ Global Equities Fund and Winton Capital Management Alternative Investments fund[4 ]

• Mortgages awarded five star CANNEX ratings for seven of its premium products

• Macquarie Private Bank awarded Outstanding Institution ($10-$30m+)[2 ]

Deposits

• Total funds under management, advice or administration $A117.9b up 4% on prior period and down 2% on prior year

• Total retail deposits of $A29.0b up 9% on prior year

• CMA balance of $A16.1b up 11% on prior year

• IRESS: consideration traded and volume 31 Mar 12. 2. Australian Private Banking Awards 2010-2011. 3. Wealth Insights 2011 Platforms Service Level Report. 4. Money Management Fund Manager of the Year Awards 2011.

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	Market Conditions	Australia	Asia	North America	EMEA
		Activity	Activity	Activity	Activity
Cash	Significantly lower client volumes in cash equities, particularly in the third quarter – Australian market average daily turnover volumes down 8% on prior year – Average daily turnover volumes down across key Asian markets with HK down 9%, Japan down 18%, Singapore down 14%, and Taiwan down 19% on prior year – STOXX 600 turnover down 9% on prior year1 Weak investor confidence primarily due to European sovereign debt concerns	Market share of 8.6% down from 9.3% prior year2 No.2 overall research and sales strength for Australian institutional investors3, No.3 for Asian institutional investors3and No.1 for US/European institutional investors into Australian equities4 Over 290 stocks under coverage	Market share increased in Thailand and Singapore on prior year2 No.10 overall research and sales strength for Asian institutional investors7, No.4 for European institutional investors8and No.9 for US institutional investors into Asian equities8 Over 890 stocks under coverage	US secondary market cash commissions down 11% on prior year Canadian market share of 1.4% down from 2.0% in prior year2 Over 710 stocks under coverage	European market share slightly up on prior year European secondary market cash commissions down 10% on prior year South African market share of 2.8% down from 3.9% in prior year2 Over 350 stocks under coverage
ECM	Challenging macroeconomic environment, volatile markets and weak investor sentiment led to significantly lower levels of primary issuance activity Lower activity levels make comparisons against pcp and prior period difficult Global ECM markets, particularly in Asia, were extremely subdued in 2H12, well down on pcp and prior period Total market capital raised down across all regions: – Australia $A25b down 34% on prior year – Asia $US191b down 45% on prior year – US $US206b down 45% on prior year – Canada $C41b down 41% on prior year – Europe €124b down 17% on prior year	Market share of 28.0% up from 16.8% in prior year5 No.2 for Australian equity & equity related issuance, up from No.7 in prior year6 Increased hybrid issuance with over $4.5b raised (including listed debt)	Market share of 1.3%, down from 5.7% in prior year5	US market share of 4.4% up from 0.5% in prior year5 Canadian market share of 1.8% down from 3.5% in prior year5	European market share of 0.1%, down from 0.4% prior year5
Derivatives	Reduced institutional and retail client demand for derivatives products, particularly in Europe with volatile and thin markets Significant period of market volatility creating challenging trading conditions for hedging issued products	Restructure of activities reflecting reduced retail client demand No.3 market share for FY12 in listed warrants unchanged on prior period2 Market share of 22% down from 31% in prior year due to cessation of the issuance of new Instalments and Self Funding Instalment Warrants2 Launched MINIs capturing 18% market share2	No.1 market share in listed warrants in Singapore2and Korea9, unchanged on prior year. No.5 in HK, down from No.3 in prior year2 No.1 ranked broker by market share in Indian GDRs10 Exited Asian exotics business	Exited institutional derivatives business	Ceased issuance of retail structured products in Europe, and considering closing Structured Products and Exotics in Germany

1. STOXX Europe 600 (Price) Index. 2. Local exchanges. 3. Peter Lee Associates Survey of Asian/Australian Institutional Investors – Australian Equities. 4. Greenwich Survey of US Institutional Investors – Australian Equities and Greenwich Survey of European Institutional Investors – Australian Equities. 5. Dealogic. 6. Thompson Reuters 2011 Full Year League Tables. 7. Greenwich Survey of Asian Institutional Investors – Asian Equities. 8. Greenwich Survey of US Institutional Investors – Asian Equities and Greenwich Survey of European Institutional Investors – Asian Equities. 9. Market share by NOIP ‘Net over intrinsic premium’. 10. Bloomberg (using rank function for 2011 traded volumes excluding trading firms).

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435 transactions valued at $A97b[1] during the year (547 transactions valued at $A159b in prior year) Advisory fee income down 21% on prior year, ECM fee income down 54% on prior year, DCM fee income up 42% on prior year

• Market Conditions Australia and NZ Asia EMEA Americas

• Market activity affected Activity Activity Activity Activity by continuing reduced  90 deals valued at $A53b, down  50 deals valued at $A11b, down  37 deals valued at $A8b, down  258 deals valued at $A25b, market confidence, low 44% on prior year[1] 49% on prior year[1] 52% on prior year[1] down 8% on prior year volumes of ECM activity,  64 deals valued at $A39b in  34 deals valued at $A9b in  28 deals valued at $A5b in  particularly in HK and 2H12, down 17%[3] on pcp and 2H12, down 6%[3] on pcp and up 2H12, down 42%[3] on pcp and 2H12, up 31%[[3]]

• Australia, and ongoing up 194%[3] on prior period 413%[3] on prior period up 96%[3 ] on prior period 150%[[3]] on prior period concerns regarding the European debt crisis Awards / Rankings Awards / Rankings Awards / Rankings Awards / Rankings

• 258 deals valued at $A25b, down 8% on prior year[1]

• 182 deals valued at $A18b in 2H12, up 31%[[3]] on pcp and up 150%[[3]] on prior period

• Global ECM activity  No.1 in Australian announced and completed M&A deals[4]  FIG Capital Raising of the Year (ABC IPO)[10] ; Equities Deal of  Middle East Infrastructure Deal of the Year (Muharraq STP)[8 ] down 28% on prior year, 2H12 down 55% on pcp and down 35% on prior  Best Domestic Equity House No.2 in ANZ Equity, Equity-Linked and Preferred deals[5 ] the Year (Sino Ocean Land)Best Philippines Deal (Casop)Best Singapore Deal (Beijing[10] ;[11] ; Notable deals  Adviser to HgCapital on the period[2] (Australia)[6] ; M&A Deal of the Enterprise Water)[[12]] disposal of SLV Group, one of the fastest growing providers of

• Global DCM activity up Year (AMP/AXA)[7] ; PPP Deal of Notable deals innovative lighting products and 6% on prior year, 2H12 the Year (Royal Adelaide  Adviser to SK Telecom, the systems in Europe, to Cinven; down 6% on pcp and Hospital)[[8]] ; Equity Deal of the leading telecommunication one of the largest private equity down 3% on prior Year (Origin Energy PAITREO)[[9 ]] service provider in South Korea, transactions in Germany in 2011 period[2] Notable deals

• Infrastructure & Project Financing Deal of the Year (Denver FasTracks)[10] ; M&A Deal of the Year (Cumulus)[13] ; Americas Deal of the Year (Puerto Rico Toll Roads)[8]

• Best Singapore Deal (Beijing  Adviser to HgCapital on the Enterprise Water)[[12]] disposal of SLV Group, one of the fastest growing providers of

• Notable deals innovative lighting products and  Adviser to SK Telecom, the systems in Europe, to Cinven; leading telecommunication one of the largest private equity service provider in South Korea, transactions in Germany in 2011

Notable deals

  - Adviser on the $US1b financing of the Mareña Renovables project, one of the largest wind farm financings in the world to date. The 396MW wind farm, to be built in the State of Oaxaca in the southwest of Mexico, will be built in the State of Oaxaca in the southwest of Mexico, will in the southwest of Mexico, will be the largest wind farm in Latin America

• Adviser to SK Telecom, the

• Hospital)[[8]] ; Equity Deal of the leading telecommunication

• Year (Origin Energy PAITREO)[[9 ]] service provider in South Korea,

• Notable deals on its acquisition of a 21%  Adviser to Telstra Corporation on its $A11b tri-partite cooperation agreement with the controlling interest, in Hynix Semiconductor for $US3.0b Adviser to a consortium led by Semiconductor for $US3.0b Adviser to a consortium led by

• Other deals include: Muharraq

• Global M&A activity up 8% on prior year, 2H12 down 22% on pcp and  Adviser to Telstra Corporation on its $A11b tri-partite cooperation agreement with the  controlling interest, in Hynix Semiconductor for $US3.0b Adviser to a consortium led by Wastewater Treatment Plant and Sewage Conveyance (PPP); Blue Transmission date. The 396MW wind farm, to be built in the State of Oaxaca in the southwest of Mexico, will Commonwealth Government Daewoo Engineering & (M&A); Quinn Group (M&A); be the largest wind farm in Latin

• down 31% on prior and National Broadband Construction Co., Ltd. for its Thames Water (DCM); Global America period[2 ] Network Company (NBN Co) KRW 1.7 tr ($US1.5b) greenfield Via Infraestructuras (M&A,  Other deals include: Cumulus  Adviser to Rio Tinto on its financing of the Guri~Pocheon ECM); Infracapital Partners LP Media (M&A, DCM); Puerto $A4.0b acquisition of the ASX Expressway Project (M&A); APG Algemene Rico PPP Authority and Puerto listed coking coal developer  Other deals include: Oji Paper Pensioen Groep N.V. and Rico Highways and Riversdale Mining (M&A); United Energy Group Goodman Group led consortium Transportation Authority

• Other deals include: (M&A); First Commercial Joint (M&A); RAK Petroleum (M&A); (Advisory, Project Finance); Rio/Mitsubishi (M&A); CITIC Stock Bank (M&A); Harum Gold One International (M&A) International Lease Finance Australia (M&A); Transpacific Energy (ECM); Huaneng Corporation (DCM); B2Gold (DCM/ECM); ConnectEast Renewables (ECM); Petrovis (M&A); Encompass Digital (M&A); Catalpa Resources Resources (ECM) Media (M&A, DCM) (M&A); Perth Airport (DCM)

• Total includes cross-border transactions. 2. Based on deal value, Macquarie regions and Macquarie financial year period. 3. Movement by deal value. 4 Dealogic CY11, by volume. 5. Bloomberg CY11 by value. 6. Asiamoney Awards. 7. CFO Awards. 8. PFI Awards. 9. Insto Awards. 10. FT Banker Awards. 11. FinanceAsia Awards. 12. Alpha Southeast Asia Magazine Awards. 13. Deal Magazine Awards.

20

Commodity Markets (Physical & Financial) 69% of operating income	Commodity Markets (Physical & Financial) 69% of operating income	Commodity Markets (Physical & Financial) 69% of operating income	Financial Markets (Primary & Secondary) 25% of operating income	Financial Markets (Primary & Secondary) 25% of operating income	Financial Markets (Primary & Secondary) 25% of operating income	6% of operating income
Metals & Energy Capital	Metals & Agriculture Sales **and Trading1 **	Energy Markets	Fixed Income & Currencies	Credit Trading	Asian Markets	Futures
Activity Improved sentiment in resource equity markets resulting in asset realisations – Sale of Net Profits Interest in a substantial North American oil asset – Initiated and realised a number of material principal investments during the year. Larger realisations include Discovery Metals and Beadell Resources Currently holds146 equity investments with total market value of $A586m Increased client term hedging activity on the back of reduced volatility Currently have committed financing facilities of $A1.9b across 61 counterparties	Activity Lack of trending markets and high correlation to macro influences led to limited trading opportunities Customer flow solid but down on prior year. For most clients hedging has been difficult and risk taking constrained, resulting in reduced volumes during the period Physical metals business growing well	Activity Overall customer activity continuing to grow Stronger client flows in US gas and power and the European utilities business during Northern Hemisphere winter resulting in increased trading opportunities Maintained ranking as No.4 US physical gas marketer in North America2 IPO of Energy Assets Limited on the London Stock Exchange	Activity Some signs of improvement in client activity Marginally improved liquidity High Australian dollar continues to adversely impact level of term hedging activity Growing and increasingly diversified client base in FX and rates, including an increasing presence in Japan Expansion of securitisation expertise into Europe, including acting as Sole Arranger and Joint Lead Manager for Paragon Mortgages securitisation of UK Buy-To-Let loans	Activity Markets mostly stronger in 2H12 than earlier in the year as the threat of a US default and European financial contagion receded Improved volumes as confidence returned to the market New issue debt markets were more active during 2H12 than 1H12 US investment grade credit spreads tightened by 46.3% over prior period3 US high yield bond prices up 7.7% on prior period4	Activity Continued challenging global market conditions impacting market share traction Stronger FX volumes due to slightly improved volatility conditions Rates and credit markets continue to be challenging	Activity Volatile client volumes in line with fluctuating market confidence New client accounts following MF Global bankruptcy as clients increased focus on the credit worthiness of their clearing broker Addition of a listed derivatives sales team in Montreal

1. Merger of sales and trading activities in metals and agricultural commodities into one Division during 2H12. 2. Platts (Dec 11). 3. Bloomberg CDX IG Index (30 Sep 11 to 31 Mar 12). 4. Bloomberg CDX HY Index (30 Sep 11 to 31 Mar 12).

21

• Diverse and stable funding base, minimal reliance on short term wholesale funding markets

• Total deposits[1] increased to $A33.9b at Mar 12 from $A31.6b at Mar 11

• Represents 39% of the Group’s total funding sources

• Group loan assets represent 85% of total deposits[2 ]

• Retail deposits increased to $A29.0b at Mar 12 from $A26.6b at Mar 11, primarily driven by an increase in the CMA

• $A8.2b of new term funding raised since Mar 11[3] , including

• MGL’s $A2.4b refinance of Senior Credit Facility

• MBL’s $US700m inaugural non-government guaranteed senior unsecured debt issuance

• MBL’s $US250m Exchangeable Capital Securities (ECS) issuance

• These balances represent total deposits per the funded balance sheet, which differs from total deposits per the statutory balance sheet ($37.2b at 31 Mar 12). The funded balance sheet excludes any deposits which do not represent a funding source for the Group. 2. Loan assets exclude Canadian mortgages which are funded via a government sponsored securitisation program. 3. Includes $A0.2b term secured finance in Apr 12.

22

Macquarie Group Limited

==> picture [652 x 308] intentionally omitted <==

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

$Ab 31 March 2011 $Ab 30 September 2011 $Ab 31 March 2012
100 100 100
90 90 ST wholesale 90
ST wholesale issued paper (6%)
issued paper (6%) Other debt [1 ] maturing in issued paper (7%)ST wholesale
80 Other debtthe next 12mths (10%) [1] maturing in Cash and liquid 80 the next 12 mths (9%)Wholesale Deposits Cash and liquid assets (31%) 80 Other debtthe next 12 mths (7%) [1 ] maturing in Cash and liquid
Wholesale Deposits assets (30%) (7%) Wholesale Deposits assets (27%)
70 (6%) 70 70 (6%)
60 60 60
Retail Deposits Trading assets
Retail Deposits Trading assets (31%) (16%) Retail Deposits Trading assets
(30%) (17%) (33%) (18%)
50 50 50
Loan assets Loan assets
Loan assets < 1 year (9%) < 1 year (9%)
40 < 1 year (9%) 40 40
30 12 mths (31%)Debt maturing beyond > 1 year (33%)Loan assets 30 12 mths (30%)Debt maturingbeyond > 1 year (31%)Loan assets 30 12 mths (29%)Debt maturingbeyond > 1 year (34%)Loan assets
20 20 20
Net trade
Loan capital Loan capital debtors Loan capital
10 Debt investment securities 10 Debt investment securities 10 Debt investment securities
Equity and Equity Equity and Equity Equity and Equity
0 hybrids (14%) investments [2] (6%) PPE 0 hybrids (13%) investments [2] (6%) PPE 0 Hybrids (14%) investments [2] (6%) PPE
Funding sources Funded assets Funding sources Funded assets Funding sources Funded assets
----- End of picture text -----

Note: These charts represent Macquarie Group Limited’s funded balance sheets at the respective dates noted above. For details regarding reconciliation of the funded balance sheet to the Group’s statutory balance sheet, refer to slide 53

1. Includes Structured Notes, Secured Funding, Bonds, Other Bank Loans maturing within the next 12 months and Net Trade Creditors. 2. This represents the Group’s co-investment in Macquarie managed funds and equity investments.

23

 Harmonised Basel III Group surplus of $A3.5b at Mar 12[1 ]

==> picture [682 x 333] intentionally omitted <==

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

$Ab Group regulatory surplus: Basel III (Mar 12)
5.0
Additional:
Legacy assets
4.5 Retained earnings
0.2 Hybrid issuance
4.0 0.3 4.4 Reduction:
Buyback
3.5 0.1 0.6 (1.4) DividendsMEREP
3.0
3.2
3.0
2.5
3.5
2.0
1.5 Based on 8.5%
2.0 (minimum Tier1
ratio + CCB), 2.1
1.0
which is not
required by APRA
0.5 until 2016
0.0
Harmonised Basel III at Sep 11 2 reserve movements Retained earnings, Completed business actions Additional completed business actions 3 issuance - ECSNew hybrid 4 Harmonised Basel III at Mar 12 'super equivalence' APRA Basel III 5 APRA Basel IIIat Mar 12
and other
Series1 Group regulatory surplus at 8.5% RWAs Group regulatory surplus at 7% RWAs
----- End of picture text -----

1. Calculated at 8.5% RWAs which includes the 2.5% capital conservation buffer (CCB) not required to be met by APRA until 2016 and by BIS until 2019. 2. ‘Harmonised’ Basel III estimates assume full alignment with BIS in areas where APRA differs from the BIS. 3. Capital initiatives completed in addition to those shown in the Feb 12 Operational Briefing. 4. Issuance of $US250m hybrid, Exchangeable Capital Securities (ECS), as per MGL update provided on 22 Mar 12. 5. APRA Basel III ‘superequivalence’ includes full CET1 deductions of equity investments ($A0.9b); deconsolidated subsidiaries ($A0.3b); and DTAs and other impacts ($A0.2b).

24

• On 28 Oct 11, we noted we were likely to satisfy our Basel III capital requirements including the capital conservation buffer of 2.5%. Given our shares were trading at a material discount to NTA and book value, we stated that we would apply some of the capital generated beyond this for an on-market buyback of up to 10% of MGL ordinary shares

• The board has resolved:

• To purchase shares on-market to satisfy the MEREP requirements of approx. $A275m. The buying period for the MEREP will commence on 7 May and is expected to be completed by mid June[1] (buying for the MEREP will be suspended during the DRP pricing period)

• That shares for the 2H12 DRP are to be acquired on-market

• To buy back up to $A500m of MGL ordinary shares, once acquisition of the DRP and MEREP shares has been completed, subject to market conditions and the Macquarie share price

• All these share acquisitions have received the appropriate regulatory approval

• Once the above capital management actions have been completed, and subject to market conditions and the Macquarie share price, it remains Macquarie’s intention, subject to regulatory approval, to continue the buyback for a total of up to 10%[2] of MGL ordinary shares

• Actual buying may be completed sooner or later. 2. Inclusive of the initial buyback.

25

 FY12 dividend set at $A1.40, ~66% payout ratio, down on FY11 dividend of $A1.86

 2H12 dividend $A0.75 up on 1H12 dividend of $A0.65

 Dividend remains unfranked

• Dividend policy remains 50 – 60% annual payout ratio

 Dividend Reinvestment Plan shares for the 2H12 dividend to be sourced on-market

26

Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts

27

	1H12 $Am 2H12 $Am	Mar 12 $Am Mar 11 $Am
Net interest income	698 635	1,333 1,275
Fee and commission income	1,766 1,598	3,364 3,891
Trading income	374 661	1,035 1,389
Equity accounted gains	49 59	108 179
Equity investment impairments	(32) (178)	(210) (123)
Loan impairments	(66) (113)	(179) (128)
Other income	454 1,058	1,512 1,182
Total operating income	3,243 3,720	6,963 7,665
Employment expenses	(1,652) (1,908)	(3,560) (3,890)
Brokerage & commissions	(386) (338)	(724) (785)
Other operating expenses	(790) (840)	(1,630) (1,719)
Total operating expenses	(2,828) (3,086)	(5,914) (6,394)
Net profit before tax and minorities	415 634	1,049 1,271
Income tax expense	(107) (180)	(287) (282)
Non-controlling interests	(3) (29)	(32) (33)
Net profit after tax	305 425	730 956

• Net interest income up 5% on prior year to $A1,333m

• Growth in lending and leasing volumes, improved margins

• Partially offset by increased funding costs associated with a larger portfolio of operating leased assets and the stronger AUD

• Fee and commission income down 14% on prior year to $A3,364m

• Impact of strong inflows in AUM partially offset by stronger AUD resulted in base fees being broadly flat on prior year

• Performance fees well up on prior year

• Weak market conditions impacting capital market facing businesses resulting in lower M&A, brokerage and commissions

• Trading income down 25% on prior year to $A1,035m largely in interest rate products and equities

• Continued weak product demand for retail and structured products

• – Challenging credit and financial market conditions in 1H12 improved in 2H12

• Impairments up reflecting changes in some market conditions

• Other income up 28% on prior year to $A1,512m driven by special distribution received from Sydney Airport and increased operating lease income within CAF

• Operating expenses down 8% on prior year to $A5,914m

• Cost initiatives continue to deliver savings

• Partially offset by targeted investment in growth areas, consolidation of recent acquisitions, costs of scaling back or exiting certain businesses

• Effective tax rate of 28%, up from 23% in prior year

28

	Mar 12	Mar 11
	$Am	$Am
Base fees	893	874
Performance fees	125	30
Other fee and commission income	196	257
Equity investment and other income	95	77
Net interest income1	76	1
Share of net (losses)/gains of associates	(12)	67
Writedowns, impairment charges	(28)	(30)
Internal management revenue2	21	17
Total operating income	1,366	1,293
Total operating expenses	(714)	(817)
Non-controlling interests	3	6
**Net profit contribution3 **	655	482
AUM ($Ab)	323.8	305.4
EUM ($Ab)	37.1	36.4
Staff numbers	1,368	1,457

• Base fees up on prior year due to increase in AUM/EUM

• Net inflows into securities investment management business

• Investments in infrastructure and real assets

• Partially offset by stronger AUD and divestments

• Performance fees up significantly on prior year

• MEAP, Macquarie Atlas Roads, Thames Water and Quant Hedge Funds outperformed their respective benchmarks

• Other fee and commission income down 24% on prior year

• Scheduled maturities of Infrastructure Bonds

• Impact of stronger AUD

• Net interest income up significantly driven by expansion of financing facilities to external funds and their investors in 1H12

• Impairments and revaluation losses within investments in associates adversely impacting equity accounted income

• Operating expenses down 13% on prior year

• Headcount down 6%

• Cost management initiatives

• Delaware systems integration completed

• 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. Internal revenue allocations are eliminated on consolidation in the Group’s statutory P&L. 3. Management accounting profit before unallocated corporate costs, profit share and income tax.

29

	Mar 12	Mar 11
	$Am	$Am
Net interest income1	591	561
Fee, commission and trading income	28	40
Net operating lease income	381	200
Share of net gains/(losses) of associates	5	24
Writedowns, impairment charges	(63)	(43)
Other income	109	74
Internal management revenue2	26	20
Total operating income	1,077	876
Total operating expenses	(376)	(302)
Non-controlling interests	(3)	-
**Net profit contribution3 **	698	574
Loan and finance lease portfolio ($Ab)	15.9	15.2
Operating lease portfolio ($Ab)	4.7	4.3
Staff numbers	953	888

• Net interest income up 5% on prior year

• Loan and finance lease portfolio up 5% on prior year

• Increased early repayments on lending portfolio

• Net operating lease income up significantly on prior year due to the impact of acquisitions

• ILFC aircraft lease portfolio (44 aircraft)

• Macquarie AirFinance (91 aircraft, Nov 10)

• Onstream acquisition (meters, Oct 11)

• Higher writedowns and impairment charges compared to prior year

• Growth in the lending and leasing portfolios

• Collective provisions released in the prior year

• Other income benefited from the sale of one aircraft in the current period and the continuing divestment of the aircraft engines business

• Operating expenses up 25% on prior year due to

• Higher average headcount offset by benefit of stronger AUD

• Full year impact of Macquarie AirFinance and the Onstream acquisition

• 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. Internal revenue allocations are eliminated on consolidation in the Group’s statutory P&L. 3. Management accounting profit before unallocated corporate costs, profit share and income tax.

30

	Mar 12	Mar 11		Net interest income up 2% on prior year
	$Am	$Am		– Increase in interest income partially offset by higher funding costs
Net interest income1	691	680		– Retail deposits up 9% from $A26.6b at Mar 11 to $A29.0b at Mar 12
Base fees	44	74		– Australian mortgage portfolio down 7% from $A11.6b at Mar 11 to
				$A10.8b at Mar 12
Brokerage and commissions	217	257
Platform and other fee and commission income	408	412		Base fees down 41% on prior year – Full year impact of CMT conversion to CMA in Jul 10 and reduction i
Income from life insurance				AUM
business and other unit holder businesses	58	51		Brokerage and commissions income down 16% on prior year
Writedowns, impairment charges Other income	(39) 33	(53) 65		– Full year impact of OzForex partial sale in Nov 10 (~$A20m) – Deterioration in global equity market conditions and investor appetite (~$A20m)
Internal management revenue2	1	10		Wrap platform FUA down 3% to $A22.0b from $A22.7b in prior year due
Total operating income	1,413	1,496		to negative market movements
Total operating expenses	(1,148)	(1,216)		Writedowns and impairment charges in the current period include:
Non-controlling interests	-	(5)		– Loan impairments ($A34m)
**Net profit contribution3 **	265	275		– Other impairment charges ($A5m)
AUM ($Ab)	3.1	3.4		Operating expenses down 6% on prior year driven by
FUM / FUA4($Ab)	117.9	120.7		– Reduced headcount
Retail Deposits ($Ab)	29.0	26.6		– Cost management initiatives
Staff numbers	3,163	3,228		– Lower advisor commissions as a result of subdued equity market conditions

• Increase in interest income partially offset by higher funding costs

• – Retail deposits up 9% from $A26.6b at Mar 11 to $A29.0b at Mar 12

• – Australian mortgage portfolio down 7% from $A11.6b at Mar 11 to $A10.8b at Mar 12

• Full year impact of CMT conversion to CMA in Jul 10 and reduction in AUM

• Brokerage and commissions income down 16% on prior year – Full year impact of OzForex partial sale in Nov 10 (~$A20m)

• – Deterioration in global equity market conditions and investor appetite (~$A20m)

1. 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 and deposit premium paid to BFS by Group Treasury for the generation of deposits. 2. Internal revenue allocations are eliminated on consolidation in the Group’s statutory P&L. 3. Management accounting profit before unallocated corporate costs, profit share and income tax. 4. Funds under management / advice / administration (“FUM / FUA”) includes AUM, funds on BFS platforms (e.g. Wrap FUA), total loan and deposit portfolios, client CHESS holdings and funds under advice (e.g. Macquarie Private Bank).

31

	Mar 12	Mar 11
	$Am	$Am
Net trading income (including net interest income)1	227	397
Brokerage and commissions	525	715
Other fee and commission income	140	212
Internal management revenue and other income2	1	6
Total operating income	893	1,330
Total operating expenses	(1,087)	(1,146)
**Net profit/(loss) contribution3 **	(194)	184
Staff numbers	1,187	1,768

• Net trading income down 43% on prior year

• Subdued global market conditions driving reduced institutional and retail activity and weak product demand for retail and structured products

• Brokerage and commissions down 27% on prior year

• Continued weak investor confidence driving reduced client activity across all regions

• Client rankings maintained or improving

• Other fee and commission income down 34% on prior year

• Reduced ECM activity in most regions driven by subdued market conditions

• Operating expenses down 5% on prior year driven by:

• Cost management initiatives leading to lower headcount

• Partially offset by exit costs from closing down and scaling back businesses

• During the year support functions embedded within the business, including Market Operations, were merged into Corporate service areas to drive scale efficiencies

• 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. Internal revenue allocations are eliminated on consolidation in the Group's statutory P&L. 3. Management accounting profit before unallocated corporate costs, profit share and income tax.

32

	Mar 12	Mar 11
	$Am	$Am
Fee and commission income	573	716
Equity investment income	199	121
Net interest expense1	(77)	(108)
Net operating lease income	9	43
Writedowns, impairment charges	(54)	(22)
Other income	(8)	138
Internal management revenue2	17	29
Total operating income	659	917
Total operating expenses	(574)	(694)
Non-controlling interests	-	(9)
**Net profit contribution3 **	85	214
Staff numbers	1,215	1,397

• Fee and commission income down 20% on prior year

• Weak investor confidence and increased market volatility leading to significantly lower levels of ECM activity

• Advisory and capital markets activity: 435 deals valued at approx. $A97b (547 deals valued at approx. $A159b in prior year)

• Equity investment income up due to:

• Asset sales in renewable energy and resource investments

• Increased equity accounted income

• Net interest expense down 29% on prior year

• Growth in portfolio of debt investments increased interest income

• Net operating lease income down due to the sale of MALT

• Increased impairment charges and increased collective allowances

• Other income significantly down due to fair value movements of swaps shared with FICC, and a non-recurring lease transaction in FY11

• Expenses down 17% on prior year driven by reduced headcount

• 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. Internal revenue allocations are eliminated on consolidation in the Group’s statutory P&L. 3. Management accounting profit before unallocated corporate costs, profit share and income tax.

33

	Mar 12	Mar 11
	$Am	$Am
Commodities1	576	618
Foreign exchange products1	65	38
Interest rate products1	245	286
Fair value adjustments relating to leasing contracts	(3)	(17)
Fee and commission income	148	171
Equity investment income	200	159
Other income	198	102
Writedowns, impairment charges	(81)	4
Internal management revenue2	16	55
Total operating income	1,364	1,416
Total operating expenses	(825)	(841)
**Net profit contribution3 **	539	575
Staff numbers	949	980

• Commodities trading income down 7% on prior year

• Limited trading opportunities experienced in the metals and agricultural markets

• Partially offset by strong revenues across the global energy platform due to growth and volatility in energy prices

• Foreign exchange products up 71% on prior year due to market volatility and improved client margins

• Interest rate products down 14% on prior year

• 1H12: credit and financial markets impacted by uncertainty in Europe and US and concerns over global growth

• 2H12: confidence returning to the markets

• Equity investment income up 26% on prior year

• A number of realisations in MEC and Energy Markets, including the partial realisation of Energy Assets Limited through IPO

• Other income up 94% on prior year

• Increased income on sale of profit interests in the energy sector

• Writedowns and impairment charges driven by more difficult market conditions

• 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. Internal revenue allocations are eliminated on consolidation in the Group’s statutory P&L. 3. Management accounting profit before unallocated corporate costs, profit share and income tax.

34

• Balance sheet remains solid and conservative

• Term assets covered by term funding, stable deposits and equity

• Surplus funding capacity continues to be deployed

• Minimal reliance on short term wholesale funding markets

• Retail deposits[1] continuing to grow, up 9% to $A29.0b at Mar 12 from $A26.6b at Mar 11

• $A8.2b of new term funding raised since 31 Mar 11

• $A3.2b[2] mortgage and motor vehicle/equipment securitisations

• $A2.4b MGL Senior Credit Facility

• $A2.0b MBL unsecured and subordinated debt issuance

• $A0.4b MGL unsecured bond issuance

• $A0.2b MBL hybrid issuance

• As part of broader reviews of the banking sector globally, the three major rating agencies have now concluded their reviews on Macquarie with MBL remaining rated single A or equivalent by each of the agencies

• Retail deposits are a subset of total deposits per the funded balance sheet ($A33.9b at 31 Mar 12), which differs from total deposits per the statutory balance sheet ($37.2b at 31 Mar 12). The funded balance sheet excludes any deposits which do not represent a funding source for the Group. 2. Includes $A0.2b term secured finance in Apr 12.

35

Liquidity Policy

• The key requirement of MGL and MBL’s liquidity policies is that the entities are able to meet all liquidity obligations on a daily basis and during a period of liquidity stress:

• a minimum twelve month period with constrained or no access to funding markets and with only a limited impact on franchise businesses

• Term assets are funded by term liabilities

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:

• Scenario Analysis

• Unencumbered liquid asset holdings, and

• Liability driven approach to funding

• 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

36

MGL term funding (drawn and undrawn[1] ) maturing beyond one year (including equity and hybrids)

Diversity of MGL funding sources

==> picture [625 x 205] intentionally omitted <==

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

Net trade
Wholesale
creditors issued paper Deposits -
Equity & Hybrids corporate & $Ab
wholesale
20 Equity & hybrids Loan capital Debt
Loan capital
15
Bonds 10
Deposits - retail
5
Senior credit
facility 0
1-2 yrs <3 yrs <4 yrs <5 yrs 5 yrs+
Secured funding
Other loans Structured notes  Term funding beyond one year (excluding equity) has
----- End of picture text -----

• Term funding beyond one year (excluding equity) has a weighted average term to maturity of 3.8 years

• Well diversified funding sources

• Minimal reliance on short term wholesale funding markets

• Deposit base represents 39% of total funding sources

• Includes $A0.2b of undrawn term facilities for the Group.

37

• Macquarie has been successful in pursuing its strategy of diversifying its funding sources through growing its deposit base

• In excess of 1 million retail clients, of which more than 600,000 are depositors

• Focus on the composition and quality of the deposit base

• Continue to grow deposits in the CMA product which has an average balance of $A39k

==> picture [611 x 254] intentionally omitted <==

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

$Ab
40
35
30
25
20
15
10
5
0
Mar 07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12
Retail Corporate/wholesale
----- End of picture text -----

38

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

Total Income
Volume
$Am
$Ab
40 1600
35 1400
30 1200
25 1000
20 800
15 600
10 400
5 200
0 0
Mar 09 Mar 10 Mar 11 Mar 12
Mortgages CAF lending Banking Aircraft leasing
Structured investment loans Motor Vehicle leasing Resources & commodities Equipment leasing
2
Other lending Other leasing Real Estate Total income (RHS)
----- End of picture text -----

1. For the purposes of this disclosure, loan assets at amortised cost of $A45.2b per the statutory balance sheet are adjusted to include fundable assets not classified as loans on the statutory balance sheet and exclude loan assets that do not represent a funding requirement of the Group. 2. Total income includes net interest income from mortgages and other lending areas, and net operating lease income, net of funding costs.

39

Category	Carrying value2 Mar 12 $Am Carrying value2 Mar 11 $Am Description
Macquarie Funds (MIRA) managed funds	869 880 Macquarie Atlas Roads, Macquarie SBI Infrastructure Company, Macquarie Infrastructure Company, Macquarie International Infrastructure Fund, Macquarie Korea Infrastructure Fund and Macquarie European Infrastructure Funds
Other Macquarie managed funds	222 361 Includes investments that hedge DPS plan liabilities
Transport, industrial and infrastructure	1,730 1,862 Includes investments in Sydney Airport, Miclyn Express Offshore, and BrisConnections
Telcos, internet, media and entertainment	702 369 Includes investments in Cumulus Media Inc. and Southern Cross Media Group Limited. Increase due to additional investments through rights issues
Finance, investment, funds management and exchanges	650 619 Significant investments include MGPA, Charter Hall Limited and Macquarie Goodman Japan Limited
Energy and resources	619 509 Over 100 separate investments
Real estate	371 479 Represents property and JV investments/loans. Includes investments in Redford Australian Investment Trust, MGPA Shenton and Medallist
Debt investment entities	22 79 Largely relates to holding in Diversified CMBS Investments Inc. Underlying investments are commercial mortgage-backed securities that are highly rated. Reduction due to principal repayments
Held for sale	134 79 Investments classified as HFS when it’s highly probable that the asset will be sold in the subsequent 12 months
	5,319 5,237

1. Equity investments per the statutory balance sheet of $A7,509m have been adjusted to reflect the total economic exposure to Macquarie. 2. Total funded equity investments of $A5,304m (Mar 11: $A5,541m) excluding available for sale reserves of $A140m (Mar 11: $A385m), associate reserves of ($A21m) (Mar 11: ($A2m)) and held for sale investments of $A134m (Mar 11: $A79m).

40

• Based on the Macquarie Group Basel III capital position as at 31 Mar 12 and on a fully :

• implemented Harmonised Basel III basis[1]

• Group capital surplus is $A3.5b measured at 8.5%[2] (BIS requirement in 2019)

• MBL’s CET1 ratio is 12.2%, pro forma CET1 ratio of 13.1% including surplus capital held in the Non-Bank

• The Banking Group’s CET1 ratio of 12.2% compares favourably to the current estimated global average of 7.1% reported by BIS in a recent survey of 103 global banks[3]

• Under Basel III, local regulators have the discretion to make adjustments to the timing, nature and quantum of Basel III reforms (so called “super equivalence”). After adjusting for APRA’s “super equivalence”[4 ] and on a fully implemented basis (not otherwise required by APRA until 2016):

• Group capital surplus is $A2.1b measured at 8.5%

• MBL’s CET1 ratio is 10.1%, pro forma CET1 ratio of 11.2% including surplus capital held in the Non-Bank

• Potential impact of the initial buyback, on-market purchases of MEREP and DRP is expected to see an overall purchase of shares in excess of $A800m

1. ‘Harmonised’ Basel III estimates assume full alignment with BIS in areas where APRA differs from the BIS. 2. The Tier 1 capital ratio of 8.5% includes the capital conservation buffer (CCB) and is not required by APRA until 2016 and by BIS until 2019. 3. Quantitative impact study results published by the Basel Committee, as reported by BIS, 12 Apr 12. Average of 103 Group 1 banks (i.e. those that have Tier 1 capital in excess of €3b and are internationally active). 4. Based on draft capital standards published by APRA on 30 Mar 12.

41

• Strong Banking Group Harmonised Basel III CET1 ratio - Common Equity Tier 1: 12.2%; Tier 1: 13.2%

• Basel III applies only to the Banking Group and not the Non-Banking Group

Banking Group Common Equity Tier 1 (CET1) Ratio: Basel III (Mar 12)

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

Banking Group Common Equity Tier 1 (CET1) Ratio: Basel III (Mar 12)
Additional:
Legacy assets
Retained earnings
Hybrid issuance
14% Reduction:
Buyback
Dividends
13.1% MEREP
12%
1.0%
12.2%
(2.1%)
1.4% 11.2%
10%
10.1%
9.8%
8%
6%
CCB (2.5%)
Basel III minimum CET1 (4.5%)
4%
2%
0%
Harmonised Basel IIIat Sep 11 1 Completed business actions Additional completed business actions 2 Harmonised Basel IIIat Mar 12 'super equivalence' APRA Basel III 3 APRA Basel IIIat Mar 12
Surplus capital held in the Non-Bank
----- End of picture text -----

• 1.‘Harmonised’ Basel III estimates assume full alignment with BIS in areas where APRA differs from the BIS. 2. Capital initiatives completed in addition to those shown in the Feb 12 Operational Briefing (Slide 90). 3. APRA Basel III ‘superequivalence’ includes full CET1 deductions of equity investments (1.1%); deconsolidated subsidiaries (0.5%); DTA’s and other impacts (0.5%).

42

Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts

43

 Summarised below are the outlook statements for each operating group, the FY13 results will vary with market conditions, particularly the capital markets facing businesses which continue to experience volatility

	Net profit contribution	Net profit contribution	Net profit contribution	Net profit contribution
Operating Group	FY07- FY12 historical range	FY07-FY12 average	FY12	FY13 outlook
Macquarie Funds	$A0.3b – $A1.1b	$A0.7b	$A0.7b	Broadly in line with FY12, subject to performance fees
Corporate and Asset Finance	$A0.1b – $A0.7b1	$A0.3b	$A0.7b	Broadly in line with FY12
Banking and Financial Services	$A0.1b – $A0.3b2	$A0.2b	$A0.3b	Up on FY12
Macquarie Securities	$A(0.2)b – $A1.2b	$A0.5b	$A(0.2)b	Up on FY12
Macquarie Capital	$A(0.1)b – $A1.6b	$A0.5b	$A0.1b	Up on FY12
FICC	$A0.5b – $A0.8b	$A0.6b	$A0.5b	Up on FY12
Corporate	– Compensation ratio to be consistent with historical levels – Continued higher cost of funding reflecting market conditions and high liquidity levels			No change

1. Range excludes FY09 provisions for loan losses of $A135m related to Real Estate Structured Finance loans as this is a restructured business. 2. Range excludes FY09 loss on sale of Italian mortgages of $A248m as this is a discontinued business.

44

• While market volatility makes forecasting difficult, it is currently expected that the result for the Group for FY13 will be an improvement on FY12 provided market conditions for FY13 are not worse than those experienced over the past 12 months

• The FY13 result also remains subject to a range of other challenges including:

• the cost of our continued conservative approach to funding and capital;

• regulation, including the potential for regulatory changes;

• increased competition in some markets; and

• the overall cost of funding.

45

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 Funds, Corporate and Asset Finance and Banking and Financial Services

• Three capital markets facing businesses:

  • Macquarie Securities and Macquarie Capital are well positioned to benefit from improvements in market conditions with strong platforms and franchise positions

  • FICC well placed to benefit from more normalised conditions

• 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

46

Group	APRA Basel III Capital @ 8.5% ($Ab)	Approx. FY12 Return on Ordinary Equity1
Annuity-style businesses (excluding legacy)			Approx. 6-Year Average Return on Ordinary Equity1
Macquarie Funds Group	1.6	22%	20%2
Corporate and Asset Finance	2.2
Banking and Financial Services	0.7
Capital market businesses (excluding legacy)			6-Year average profit pre tax and profit share ($Ab) Approx. 6-Year Average Return on **Ordinary Equity1 **
Macquarie Securities	0.6	-	0.5	30%
Macquarie Capital	1.4		0.6	20%
FICC	2.7	10%	0.6	15%
Corporate and Other
Legacy Assets3	1.0
Corporate	0.5
Total regulatory capital requirement @ 8.5%	10.7
Comprising: Ordinary Equity Hybrid	9.0 1.7
Add: Surplus Ordinary Equity	2.1
Total APRA Basel III capital supply	12.8

1. NPAT used in the calculation of approx. 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. 2. CAF excluded from 6-year average as not meaningful given the significant increase in scale of CAF’s platform over the 6-year period. 3. Includes the $A0.8b of legacy assets and businesses identified on Slide 90 of the Feb 12 Operational Briefing, plus $A0.2b of capital relating to businesses in run-off and other.

47

Medium term

MFG CAF

• Annuity-style business that is diversified across regions, products, asset classes and investor types

• Well positioned for organic growth with several strongly performing products and an efficient operating platform

• Any improvement in market confidence should lead to increased allocations to higher margin products

• Pursuing growth in the loan and lease portfolio

• Continue to seek opportunities for further asset realisations

• Funding from asset securitisation throughout the cycle

• Increased savings through compulsory superannuation supports both direct and indirect business

BFS MSG MacCap FICC

• Any improvement in investor confidence should lead to higher activity in higher return assets such as equities

• Increased adviser numbers should deliver increased profitability for MPW Australia and Canada

• Ongoing expansion of intermediary portfolios including Wrap and Australian Mortgages

• Highly leveraged to any improvement in market conditions and return of investor confidence

• MSG well positioned for recovery in Asian retail derivatives, cash equities and ECM

• Monetise existing strong research position

• Increased profitability through operational efficiencies

• MacCap can expect to benefit from any improvement in M&A and ECM market activity

• MacCap should also benefit from activities undertaken to improve efficiency and align the business footprint to current opportunities and market conditions in each region

• Opportunities to grow commodities business, both organically and through acquisition

• Development of institutional coverage for specialised credit, rates and foreign exchange products

• Increase in asset realisations as metals and resource equity market prices improve

• Growing the client base across all regions

48

Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts

49

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Growth areas FY12 Cost reduction FY12
MFG  Acquisition of Austrian investment management business Distribution capability in Europe and US $A10m  Streamlined product suite Merging US fixed income onto Delaware platform Improved operational efficiency $A112m
 Impact of investment in OnStream Meters, Macquarie
CAF AirFinance, Distribution Finance and Mining Equipment $A82m  Operational efficiencies $A19m
 Growth in Lending and Leasing
 Growth in MPW Canada  Operational/staffing efficiencies
BFS  $A41m  Discretionary cost savings and project reductions $A127m
Investment in Wrap platform and Mortgages relaunch  Closure UK Wrap platform
 Core middle/back office platforms  IT project spend initiatives
MSG  Upgrade global research and ecommerce platforms $A41m  Operational/staffing efficiencies $A145m
 Selective hiring to fill out required skill mix $A7m  Operational/staffing efficiencies in front and back office $A135m
MacCap Global support model review
 Established G10 currency and sales trading platform in  Largely completed build out of global platform
FICC Singapore, MBL Singapore branch operational $A46m  Restructuring and platform enhancements $A58m
 Amortisation from investment in energy sector intangibles  Cessation of Latin America fixed income products
REB  Nil $A0m  Continued business rationalisation $A15m
 Finance, HR, ITG and Operations operating model redesign
Corporate – allocated  Corporate Data Program Investment in systems/teams to meet growing regulatory requirements  including utilisation of lower cost locations IT Infrastructure savings and reduction in global occupancy $A125m
to Operating  Investment in platforms to continue to achieve scale growth  Corporate decrease relates to cost not allocated to business footprint
Groups
units including profit share and share based payments
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$A736m

$A227m Total cost reduction

Growth areas

50

Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts

51

• MGL and MBL are the Group’s two primary external funding vehicles which have separate and distinct funding, capital and liquidity management arrangements

• MBL provides funding to the Bank Group

• MGL provides funding predominantly to the Non-Bank Group

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Debt Equity
MACQUARIE GROUP LIMITED (MGL)
Debt and Equity Debt and Equity
Debt and MACQUARIE BANK
Hybrid LIMITED (MBL)
Non-Bank Group
Equity
Bank Group
----- End of picture text -----

52

• The Group’s statutory balance sheet 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 the consolidated Group to the assets that require funding

	Mar 12	Mar 11
	$Ab	$Ab
Total assets per Statutory Balance Sheet	153.6	157.6
Deductions:
Self funded trading assets	(10.0)	(14.7)
Derivative revaluation accounting gross ups	(20.5)	(20.5)
Life investment contracts and other segregated assets	(9.0)	(8.1)
Broker settlement balances	(9.2)	(6.3)
Short-term working capital assets	(5.7)	(7.6)
Less non-recourse funded assets:
Securitised assets and non-recourse warehouses	(13.0)	(12.8)
Total assets per Funded Balance Sheet	86.2	87.6

53

31 March 2012

	Mar 12	Mar 11
	$Ab	$Ab
Funding sources
Negotiable certificates of deposit	1.7	1.7
Commercialpaper	4.6	3.5
Net trade creditors	0.2	0.5
Structured notes Secured funding	2.3 10.9	3.5 10.6
Bonds Other loans	14.0 0.4	16.6 0.3
Senior credit facility	3.2	4.5
Retail deposits	29.0	26.6
Corporate/wholesale deposits	4.9	5.0
Loan capital1	3.3	2.9
Equity and hybrids2 Total funding sources Funded assets	11.7 86.2	11.9 87.6
Cash and liquid assets	23.2	26.0
Net tradingassets	15.9	15.0
Loan assets < 1year	7.7	7.6
Loan assets > 1year Assets held for sale	29.3 0.1	28.6 0.1
Debt investment securities	2.9	2.8
Co-investment in Macquarie-managed funds and other equityinvestments	5.3	5.5
Property, plant & equipment and intangibles	1.8	2.0
Total funded assets	86.2	87.6

• Well diversified funding sources

• Minimal reliance on short term wholesale funding markets

• Deposit base represents 39% of total funding sources

• Term funding beyond one year (excluding equity) has a weighted average term to maturity of 3.8 years

MGL term funding (drawn and undrawn[3] ) maturing beyond one year (including equity and hybrids)

$Ab

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

20 Equity & hybrids Loan capital Debt
15
10
5
0
1-2 yrs <3 yrs <4 yrs <5 yrs 5 yrs+
----- End of picture text -----

1. This includes Convertible Preference Securities of $A0.6b, Preferred Membership Interests of $A0.4b and Exchangeable Capital Securities of $A0.2b. 2. Equity and hybrids include ordinary capital, Macquarie Income Securities of $A0.4b and Macquarie Income Preferred Securities of $A0.1b. 3. Includes $A0.2b of undrawn term facilities for the Group.

54

31 March 2012

Mar 12 $Ab Mar 11 $Ab Funding sources Negotiable certificates of deposit 1.7 1.7 Commercialpaper 4.6 3.5 Net trade creditors 0.7 - Structured notes 1.7 2.9 Secured funding 10.7 8.9 Bonds 9.5 12.5 Other loans 0.1 - Retail deposits 29.0 26.6 Corporate/wholesale deposits 4.9 5.0 Loan capital1 2.3 1.9 Equity and hybrids2 9.2 9.1 Total funding sources 74.4 72.1 Funded assets Cash and liquid assets 20.9 23.8 Net tradingassets 14.5 13.4 Loan assets < 1year 7.3 7.2 Loan assets > 1year 28.4 26.2 Debt investment securities 2.7 2.6 MBL intra-grouploan to MGL - 0.7 Non-BankingGroupdeposit with MBL (1.7) (4.6) Co-investment in Macquarie-managed funds and other equityinvestments 1.4 1.8 Property, plant & equipment and intangibles 0.9 1.0 Total funded assets 74.4 72.1      0 5 10 15 $Ab	Bank balance sheet remains very liquid, well capitalised and with a diversity of funding sources Term funding beyond one year (excluding equity) has a weighted average term to maturity of 3.3 years Retail deposits of Macquarie Bank Limited benefit from t guarantee provided by the Australian Government3. The majority of Macquarie’s deposits are covered by the Financial Claims Scheme MBL issued its inaugural non-government guaranteed senior unsecured debt of $US700m $US250m Exchangeable Capital Securities (ECS) issue MBL term funding (drawn and undrawn4) maturing beyond one year (including equity and hybrids)
	Equity & hybrids Loan capital Debt
	1-2 yrs <3 yrs <4 yrs <5 yrs 5 yrs+

• Retail deposits of Macquarie Bank Limited benefit from the guarantee provided by the Australian Government[3] . The majority of Macquarie’s deposits are covered by the Financial Claims Scheme

• $US250m Exchangeable Capital Securities (ECS) issued

MBL term funding (drawn and undrawn[4] ) maturing beyond one year (including equity and hybrids)

1. This includes Exchangeable Capital Securities of $A0.2b. 2. Equity and hybrids include ordinary capital, Macquarie Income Securities of $A0.4b and Macquarie Income Preferred Securities of $A0.1b. 3. Effective 1 Feb 12, the first $A250,000 of aggregate retail deposits held by an individual is guaranteed under the Financial Claims Scheme. 4. Includes $A0.2b of undrawn term facilities for the Banking Group.

55

31 March 2012

	Mar 12	Mar 11
	$Ab	$Ab
Funding sources
MBL intra-grouploan to MGL	-	0.7
Net trade creditors	-	0.5
Structured notes	0.6	0.6
Secured funding	0.2	1.7
Bonds	4.5	4.1
Other loans	0.3	0.3
Senior credit facility	3.2	4.5
Loan capital1	1.0	1.0
Equity	2.5	2.8
Total funding sources	12.3	16.2
Funded assets Cash and liquid assets	2.3	2.2
Non BankingGroupdeposit with MBL	1.7	4.6
Net tradingassets	1.4	1.6
Loan assets < 1year	0.4	0.4
Loan assets > 1year	0.9	2.4
Assets held for sale	0.1	0.1
Debt investment securities	0.2	0.2
Co-investment in Macquarie-managed funds and other equityinvestments	3.9	3.7
Property, plant & equipment and intangibles	0.9	1.0
Net trade debtors	0.5	-
Total funded assets	12.3	16.2

• Non-Bank Group is predominantly term funded

• Term funding beyond one year (excluding equity) has a weighted average term to maturity of 4.9 years

• Refinanced $A2.4b of MGL’s Senior Credit Facility

Non-Bank Group term funding (drawn and undrawn[2] ) maturing beyond one year (including equity)

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$Ab
Equity Loan capital Debt
6
4
2
0
1-2 yrs <3 yrs <4 yrs <5 yrs 5 yrs+
----- End of picture text -----

1. Mar 12 balance includes Convertible Preference Securities of $A0.6b and Preferred Membership Interests of $A0.4b. 2. There are no undrawn term facilities in the Non-Bank Group.

56

• Self funded trading assets: There are a number of entries on the balance sheet that arise from the normal course of trading activity we conduct with our clients and counterparties. They typically represent both sides of a transaction. The entries off-set each other as both the asset and liability positions are recorded separately. Where these entries are matched, they do not require funding

• Derivative re-valuation accounting gross ups: Macquarie’s derivative activities are mostly client driven with client positions hedged by off-setting positions. 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 we provide products such as investment-linked policy contracts. The policy (contract) liability will be matched by assets held to the same amount and hence do not require funding

• Broker settlement balances: At any particular time our broking business will have outstanding trades to settle with other brokers. These amounts (payables) can be offset in terms of funding by amounts that we are owed at the same time by brokers on other trades (receivables)

• Short term working capital assets: As with the broker 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’ or provides funding

• Securitised assets and non-recourse warehouses: Some lending assets (mortgages and leasing) are commonly sold down into external securitisation entities or transferred to external funding warehouses. As a consequence they are non-recourse to Macquarie and are funded by third parties rather than Macquarie

57

Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts

58

• APRA released draft capital standards covering definition of capital on 30 March 2012 for industry consultation:

• Proposals broadly consistent with the APRA discussion paper published Sep 11

• APRA’s interpretation of the Basel III risk coverage proposals will be released later in 2012

• APRA proposes to adopt all Basel III reforms, but with some additional “in-principle” conservatism (“super-equivalence”)

• APRA requires ADI’s to meet 4.5% Common Equity Tier 1 (CET1) capital ratio from 1 January 2013 (BIS has 2 year phase-in from 2013), with capital conservation buffer (CCB) of 2.5% to apply from 1 January 2016 (BIS has 3 year phase-in from 2016)

• APRA expects banks to meet the CCB ‘as soon as reasonably possible’ post 1 January 2013

• Leverage ratio to be implemented per BIS timetable, with disclosure from 2015 and migration to Pillar 1 in 2018

• Basel III applies only to Macquarie Banking Group

• Macquarie’s response to APRA’s draft Liquidity standards submitted in Feb 12

59

	Harmonised	APRA
	Basel III	Basel III
31 March 2012	$Am	$Am
Macquarie Group eligible capital:
Bank Gross Tier 1 capital	9,545	9,545
Non-Bank eligible capital	3,304	3,304
Eligible capital	12,849	12,849	(a)
Macquarie Group capital requirement:
Banking Group contribution
Risk-Weighted Assets	61,542	56,099
Capital required to cover Risk-Weighted Assets1	4,308	3,927
CET1 and Additional Tier 1 deductions2	1,338	3,164
Total Banking Group contribution @ 7% RWAs	5,646	7,091
Total Non-Banking Group contribution3	2,774	2,774
Total Macquarie Group capital requirement @ 7% RWAs	8,420	9,865	(b)
Macquarie Group regulatory capital surplus @7%	4,429	2,984	(a)-(b)
Additional capital requirement required to maintain 8.5% Tier 1 ratio in Bank	923	841	(c)
Macquarie Group regulatory capital surplus @8.5%	3,506	2,143	(a)-(b)-(c)

1. Calculated at the internal minimum Tier 1 ratio of the Banking Group, which is 7%. 2. In calculating the Banking Group’s contribution to MGL’s capital requirement, Tier 1 deductions arising from transactions with the Non-Bank are eliminated (31 Mar 12: $A60m). 3. Non-Bank capital requirement differs from that shown in the Basel II surplus calculation due to expected addition of a CVA capital requirement into the ECAM from late 2012.

60

• APRA has specified a regulatory capital framework for MGL

• 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-Banking 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 some 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 39% and 79% of face value; average 53%
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

1. 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 where the ADI does not own more than 10% of the issued common share capital of the entity.

61

Basel II	31 March 12 $Am
Macquarie Group eligible capital:
Bank eligible capital	9,061
Non-Bank eligible capital	3,495
Eligible capital	12,556	(a)
Macquarie Group capital requirement:
Banking Group contribution
Risk-weighted assets	51,871
Internal minimum Tier 1 ratio (Bank)	7%
Capital required to cover risk-weighted assets	3,631
Tier 1 deductions2	1,828
Banking Group contribution	5,459
Non-Banking Group contribution	2,764
Capital requirement	8,223	(b)
Surplus over Group’s minimum regulatory capital requirement	4,333	(a)-(b)

1. Now calculated on a “Basel 2.5” basis, including Stressed VaR and changes to securitisation risk weights. 2. In calculating the Banking Group’s contribution to Group capital requirement, Tier 1 deductions arising from transactions with the Non-Bank are eliminated ($A60m at 31 Mar 12).

62

Banking Group contribution

 Strong Banking Group capital ratios - Tier 1: 13.8% (Core Tier 1[1] : 12.5%); Total Capital: 16.6%

	Risk-weighted	Tier 1	Capital
31 March 2012	assets	Deductions	**Requirement2 **
	$Am	$Am	$Am
Credit risk
On balance sheet	28,648		2,005
Off balance sheet	8,887		622
Credit risk total	37,535		2,627
Equity risk	2,028		142
Market risk	4,666		327
Operational risk	6,312		442
Other	1,330	1,828	1,921
Contribution to Group capital calculation	51,871	1,828	5,459
Intra-group transactions3	0	60
Banking Group standalone capital calculation	51,871	1,888

1. Core Tier 1 ratio excludes hybrids. 2. The capital requirement is calculated as the capital required for RWA, at the internal minimum Tier 1 ratio of the Banking Group (7%), plus Tier 1 deductions. 3. Tier 1 deductions arising from transactions with the Non-Bank are eliminated.

63

Non-Banking Group contribution

31 March 2012	Assets $Ab	Capital Requirement $Am	Equivalent Risk Weight
Funded assets
Cash and liquid assets	2.3	16	9%
Loan assets1	1.3	115	109%
Assets held for sale	0.1	72	655%
Debt investment securities	0.2	5	40%
Co-investment in Macquarie-managed funds and equityinvestments	3.8	1,854	607%
Co-investment in Macquarie-managed funds (relating to investments that hedge DPS plan liabilities)	0.1
Property,plant & equipment and intangibles2	0.9	292	426%
Non-BankingGroupdeposit with MBL	1.7
Net tradingassets	1.4
Net trade debtors	0.5
Total Funded Assets	12.3	2,354
Self-funded and non-recourse assets
Self-funded tradingassets	0.0
Broker settlement balances	5.8
Derivative revaluation accounting gross-ups	0.1
Workingcapital assets	3.4
Total self-funded and non-recourse assets	9.3
TOTAL NON-BANKING GROUP ASSETS	21.6
Off balance sheet exposures, operational, market and other risk, and diversification offset3		410
NON-BANKING GROUP CAPITAL REQUIREMENT		2,764

1. Includes leases. 2. A component of the intangibles relating to the acquisitions of Orion Financial Inc and Tristone Capital Global Inc are supported 100% by exchangeable shares. These exchangeable shares have not been included in eligible regulatory capital. 3. Capital associated with net trading assets (e.g. market risk capital) and net trade debtors has been included here.

64

Macquarie Group Limited Result Announcement for the year ended 31 March 2012 27 April 2012 – Presentation to Investors and Analysts

65

$A	Australian Dollar
$C	Canadian Dollar
$US	United States Dollar
€	Euro
1H10	Half Year ended 30 September 2009
1H11	Half Year ended 30 September 2010
1H12	Half Year ended 30 September 2011
2H10	Half Year ended 31 March 2010
2H11	Half Year ended 31 March 2011
2H12	Half Year ended 31 March 2012
ADI	Authorised Deposit -Taking Institution
Approx.	Approximately
APRA	Australian Prudential Regulatory Authority
ANZ	Australia and New Zealand
ASX	Australian Securities Exchange
AUD	Australian Dollar
AUM	Assets Under Management
AVS	Available for Sale
BIS	Bank for International Settlements
BFS	Banking and Financial Services
CAF	Corporate and Asset Finance
CCB	Capital Conservation Buffer
CET1	Common Equity Tier 1
CHESS	Australian Clearing House and Electronic Sub-Register System

CMA	Cash Management Account
CMT	Cash Management Trust
CVA	Credit Valuation Adjustment
DEFT	Direct Electronic Funds Transfer
DCM	Debt Capital Markets
DPS	Dividend Per Share
DRP	Dividend Reinvestment Plan
DTA	Deferred Tax Asset
ECAM	Economic Capital Adequacy Model
ECM	Equity Capital Markets
ECS	Exchangeable Capital Securities
EMEA	Europe, the Middle East and Africa
EPS	Earnings Per Share
EUM	Equity Under Management
Excl.	Excluding
FICC	Fixed Income, Currencies and Commodities
FIG	Financial Institutions Group
FT	Financial Times
FUA	Funds Under Administration
FUM	Funds Under Management
FX	Foreign Exchange
FY07	Full Year ended 31 March 2007
FY09	Full Year ended 31 March 2009
FY11	Full Year ended 31 March 2011
FY12	Full Year ended 31 March 2012

66

FY13	Full Year ended 31 March 2013
G10	Group of Ten Industrialised Nations
GDR	Global Depository Receipt
HFS	Held For Sale
HK	Hong Kong
HR	Human Resources
ILFC	International Lease Finance Corporation
IPO	Initial Public Offering
IT	Information Technology
ITG	Information Technology Group
JV	Joint Venture
LNG	Liquefied Natural Gas
M&A	Mergers and Acquisitions
MacCap	Macquarie Capital
MAF	Macquarie AirFinance
MALT	Macquarie Asset Leasing Trust
MBL	Macquarie Bank Limited
MEAP	Macquarie Essential Assets Partnership
MEC	Metals and Energy Capital
MEREP	Macquarie Group Employee Retained Equity Plan
MFG	Macquarie Funds Group
MGL	Macquarie Group Limited
MGPA	Macquarie Global Property Advisers
MIRA	Macquarie Infrastructure and Real Assets

MIS	Macquarie Income Securities
MSG	Macquarie Securities Group
MPW	Macquarie Private Wealth
No.	Number
Net profit contribution	Operating Income less Operating Expenses
NPAT	Net Profit After Tax
NZ	New Zealand
Operating	Revenues less those expenses directly attributable to the
Income	revenues
Pcp	Prior Corresponding Period
P&L	Profit and Loss
PPE	Property, Plant & Equipment
PPP	Public Private Partnership
REB	Real Estate Banking
ROE	Return on Equity
RWA	Risk Weighted Assets
SME	Small and Medium Enterprises
ST	Short Term
TMET	Telecommunications, Media, Entertainment and Technology
UK	United Kingdom
US	United States of America
VaR	Value at Risk

67

Macquarie Group Limited