Presentation to investors and analysts Result announcement for the - - PowerPoint PPT Presentation

SLIDE 1

Presentation to investors and analysts

27 October 2017

Result announcement for the half-year ended 30 September 2017

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2

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

• therwise 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

• utside Macquarie’s control. Past performance is not a reliable indication of future performance.

Unless otherwise specified all information is for the half-year ended 30 September 2017. Certain financial information in this presentation is prepared on a different basis to the Financial Report within the Macquarie Interim Financial Report (“the Financial Report”) for the half-year ended 30 September 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.

Disclaimer

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

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 MACQUARIE 2017

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  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

SLIDE 4

 MACQUARIE 2017

Introduction

01 Karen Khadi – Head of Investor Relations

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

SLIDE 5

 MACQUARIE 2017

Overview of Result

02 Nicholas Moore – Managing Director and Chief Executive Officer

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

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6

Building for the long-term

• 1. As at 30 Sep 17. 2. CAF Principal Finance formerly known as CAF Lending. 3. Funds on platform includes Macquarie Wrap and Vision. 4. BFS deposits exclude corporate/wholesale deposits.

Corporate and Asset Finance (CAF)

• Global provider of specialist finance and asset management solutions, with a $A35.5b1 asset and loan portfolio
• Asset Finance has global expertise in aircraft, vehicles, technology, healthcare, manufacturing, industrial, energy, rail, and mining equipment
• Principal Finance2 provides flexible primary financing solutions and engages in secondary market investing, across the capital structure. It operates globally in both

corporate and real estate sectors

Banking and Financial Services (BFS)

• Macquarie’s retail banking and financial services business with a $A37.6b1 Australian loan portfolio, funds on platform3 of $A78.9b1 and BFS deposits4 of $A46.4b1
• 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 (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
• 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 core areas of expertise: Infrastructure, Utilities and Renewables; Real Estate; Telecommunications, Media, Entertainment & Technology; Resources;

Industrials; and Financial Institutions

ABOUT MACQUARIE

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

Capital markets facing businesses

Macquarie Asset Management (MAM)

• Top 50 global asset manager with $A471.9b1 of assets under management
• Provides clients with access to a diverse range of capabilities and products, including infrastructure, real assets, equities, fixed income, liquid alternatives and multi-

asset investment management solutions

Annuity- style businesses

SLIDE 7

7

1H18 $Am 2H17 $Am 1H17 $Am 1H18 v 1H17 1H18 v 2H17 Net operating income 5,397 5,146 5,218 3% 5% Total operating expenses (3,693) (3,527) (3,733) 1% 5% Operating profit before income tax 1,704 1,619 1,485 15% 5% Income tax expense (448) (430) (438) 2% 4%

Effective tax rate1 (%) 26.4 26.9 29.4

(Profit)/loss attributable to non-controlling interests (8) (22) 3 Profit attributable to MGL shareholders 1,248 1,167 1,050 19% 7% Annualised return on equity (%) 16.7 15.8 14.6 14% 6% Basic earnings per share $A3.70 $A3.46 $A3.12 19% 7% Ordinary dividends per share $A2.05 $A2.80 $A1.90 8% 27%

1H18 result: $A1,248m up 19% on 1H17; up 7% on 2H17

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

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

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8

CGM 14% MacCap 7% BFS 11% CAF 23% MAM 45%

Net profit contribution

1H18 net profit contribution from operating groups $A2,662m up 14% on 1H17; up 12% on 2H17

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

CGM: on 1H17

Reduced income from the sale of investments and lower volatility across the commodities platform resulting in reduced client activity and trading opportunities

Macquarie Capital: on 1H17

Increased client activity in DCM, offset by subdued activity in M&A and ECM, and lower investment-related income

Note: Net profit contribution is management accounting profit before unallocated corporate costs, profit share and income tax. Pie chart is based on 1H18 net profit contribution from operating groups.

MAM: on 1H17

Continued strong performance, benefited from increased performance fees; base fees and investment-related income broadly in line

CAF:

• n 1H17

Leasing book continued to perform well; higher prepayments, realisations and investment-related income in Principal Finance albeit reduced income from lower portfolio volumes; reduced provisions and impairments overall

ANNUITY-STYLE BUSINESSES

$A2,094m

28% ON 1H17 30% ON 2H17

BFS: on 1H17

Volume growth in loan and deposit portfolios and improved margins; 1H17 benefited from the gain on sale of Macquarie Life’s risk insurance business

CAPITAL MARKETS FACING BUSINESSES

$A568m

18% ON 1H17 25% ON 2H17

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9

Financial performance

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

1H18 OPERATING INCOME

Operating income

$A5,397m

1H18 DPS

DPS

$A2.05

1H18 PROFIT

Profit

$A1,248m

1H18 EPS

EPS

$A3.70

3%

ON 1H17

5%

ON 2H17

19%

ON 1H17

7%

ON 2H17

19%

ON 1H17

7%

ON 2H17

8%

ON 1H17

27%

ON 2H17

4,400 4,800 5,200 5,600 1H16 2H16 1H17 2H17 1H18

$Am

• 1.00

2.00 3.00 4.00 1H16 2H16 1H17 2H17 1H18

$A

• 1.00

2.00 3.00 1H16 2H16 1H17 2H17 1H18

$A

• 500

1,000 1,500 1H16 2H16 1H17 2H17 1H18

$Am

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10

AUM decreased $A8.1b since 31 Mar 17, largely due to net asset realisations in MIRA2 and unfavourable currency movements in MIM, partially offset by positive market movements

• 1. As at 30 Sep 17. 2. Includes divestment of Thames Water by MIRA-managed funds and ceasing asset services to consortia investors ($A25b).

Assets under management of $A473.6 billion1

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

$Ab

• 100

200 300 400 500 Mar 14 Mar 15 Mar 16 Mar 17 Sep 17 Fixed income Infrastructure Equities Other Real estate

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11

Diversification by region

• 1. Net operating income excluding earnings on capital and other corporate items. 2. Includes New Zealand.

International income 62% of total income1 Total staff 13,966; International staff 55% of total

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

Europe, Middle East and Africa

$A1,496m 1,694

INCOME STAFF

28% OF TOTAL

EUROPE Dublin Edinburgh Frankfurt Geneva London Luxembourg Madrid Munich Paris Reading Vienna Zurich MIDDLE EAST Abu Dhabi Dubai SOUTH AFRICA Cape Town Johannesburg

Asia

$A548m

INCOME

10% OF TOTAL

3,445

STAFF

ASIA Bangkok Beijing Gurugram Hong Kong Jakarta Kuala Lumpur Manila Mumbai Seoul Shanghai Singapore Taipei Tokyo

Australia2

$A2,025m

INCOME

38% OF TOTAL

6,241

STAFF

AUSTRALIA Adelaide Brisbane Canberra Gold Coast Manly Melbourne Parramatta Perth Sydney NEW ZEALAND Auckland

Americas

$A1,305m

INCOME

24% OF TOTAL

2,586

STAFF

CANADA Calgary Montreal Toronto Vancouver LATIN AMERICA Mexico City Ribeirao Preto Sao Paulo USA Austin Boca Raton Boston Chicago Denver Houston Jacksonville Los Angeles Minneapolis Nashville New York Philadelphia San Diego San Francisco San Jose

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12

• 62% of total income1 in 1H18 was generated offshore
• A 10% movement2 in AUD is estimated to have approx. 6% impact on NPAT
• 1. Net operating income excluding earnings on capital and other corporate items. 2. This represents an average movement against all major currencies.

Diversification by region

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

Total income ($Am)

• 600

1,200 1,800 2,400 Australia Asia Americas Europe, Middle East & Africa 1H16 2H16 1H17 2H17 1H18

SLIDE 13

13

MACQUARIE INFRASTRUCTURE AND REAL ASSETS (MIRA) MACQUARIE INVESTMENT MANAGEMENT (MIM) MACQUARIE SPECIALISED INVESTMENT SOLUTIONS (MSIS)

• $A79.5b in equity under management, up

3% on Mar 17

• Raised $A6.2b in new equity, including new

commitments for listed and unlisted North American and Australian infrastructure funds

• Invested equity of over $A5.0b across 7

acquisitions and 13 follow-on investments in 8 countries, including infrastructure in Australia, US, Spain, UK, Philippines, Korea, India and Italy and private concessions in Korea

• Equity proceeds from asset divestments2
• f over $A4.8b in UK, US, Mexico and Asia
• Performance fees of $A530m from MEIF3,

MQA and other MIRA-managed funds and co-investors

• Investment-related income included gains on

reclassification of certain infrastructure investments

• $A11.3b of equity to deploy as at 30 Sep 17
• Ranked No.1 infrastructure manager globally3
• $A325.2b in assets under management,

up 2% on Mar 17, largely due to positive market movements, partially offset by unfavourable FX movements

• Strong performance across a range of

asset classes including Australian equities, Emerging Markets equities and Global and US Fixed Income

• Distribution highlights include new

institutional mandates and contributions funded in:

• Australia: $A5.0b
• Asia: $A2.4b
• North America: $US1.2b
• EMEA: $US0.2b
• Launched two new funds in Macquarie

Professional Series, IPM Global Macro Fund and P/E Global FX Alpha Fund

• Industry awards received include six awards

for Australian equities and four Lipper Awards4; top 10 global insurance manager5

• Continued to grow the Macquarie

Infrastructure Debt Investment Solutions (MIDIS) business:

• Closed 6 third party investor

commitments totalling $A1.1b, bringing total commitments on MIDIS platform to over $A7.8b

• Closed five investments totalling

$A0.5b in US, UK, France, Hungary and Australia, bringing total AUM to over $A5.1b

• Closed $A0.6b in new loans to

Private Equity Secondaries funds and successfully completed sell down of $A0.2b underwritten facility

Macquarie Asset Management

Note: Net profit contribution is management accounting profit before unallocated corporate costs, profit share and income tax. Pie chart is based on 1H18 net profit contribution from operating groups.

• 1. As at 30 Sep 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. Willis Towers Watson 2017 Global Alternatives Survey, published 17 Jul 17.
• 4. For more information and disclosures about these awards, visit: https://www.macquarieim.com/mimdisclosures. 5. Insurance Investment Outsourcing Report.

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

%

45

MAM NET PROFIT CONTRIBUTION

$A1,189m 39%

ON 1H17

75%

ON 2H17 OPERATING INCOME

$A1,730m 26%

ON 1H17

41%

ON 2H17 AUM1

$A471.9b 2%

ON MAR 17

SLIDE 14

14

ASSET FINANCE PRINCIPAL FINANCE1

• Asset Finance portfolio of $A29.9b, up 1% on Mar 17
• Continued to provide tailored finance and asset management

solutions throughout the customer value chain – from manufacturer to end user: aircraft, vehicles, technology, healthcare, manufacturing, industrial, energy, rail and mining equipment

• Vehicles portfolio of $A17.4b, in line with Mar 17
• Aircraft leasing portfolio of $A8.3b, down 2% on Mar 17 due to

asset depreciation in the portfolio and the sale of three aircraft

• Telecoms, Media and Technology - growth in mobile device

finance programmes

• Energy - largest independent2 smart meter funder in UK; and a

specialist funder of energy efficient assets

• Resources - emerging opportunities in fleet replacement after

below trend industry capex

• Integration of small ticket originations and operations

through regional hubs FUNDING ACTIVITY

• Continued use of diverse funding sources with 30% of the Asset

Finance portfolio funded externally

• Principal Finance’s funded loan portfolio of $A5.6b3, down

18% on Mar 17 due to net repayments and realisations

• $A0.7b of portfolio additions for 1H18 comprising:
• $A0.2b of new primary financings across corporate and real

estate, weighted towards bespoke originations

• $A0.5b of corporate loans and similar assets acquired in the

secondary market

• Notable transactions included:
• Providing £25m of financing to a specialist rehabilitation and

care services company

• Completion of co-acquisition with Macquarie Aviation of a

secondary loan portfolio secured by aviation assets

• Notable realisations included the early repayment of an

investment in one of the UK’s largest private owners of residential property

• Asset quality remained sound and the portfolio continued to

generate strong overall returns

Corporate and Asset Finance

Note: Net profit contribution is management accounting profit before unallocated corporate costs, profit share and income tax. Pie chart is based on 1H18 net profit contribution from operating groups.

• 1. CAF Principal Finance formerly known as CAF Lending. 2. Not part of a distribution network or a vertically integrated utility. 3. Includes Real Estate Structured Finance legacy run-off portfolio and equity portfolio of $A0.4b.

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

%

23

CAF NET PROFIT CONTRIBUTION

$A619m 19%

ON 1H17

9%

ON 2H17 OPERATING INCOME

$A931m 11%

ON 1H17

7%

ON 2H17 ASSET AND LOAN PORTFOLIO

$A35.5b 3%

ON MAR 17

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PERSONAL BANKING WEALTH MANAGEMENT BUSINESS BANKING Provides a full retail banking product suite to clients with mortgages, credit cards, transaction and savings accounts. Serves clients through direct Macquarie offerings, a white label personal banking platform, strong intermediary relationships and a leading digital banking experience. Provides clients with a wide range of wrap platform and cash management services, investment and superannuation products, financial advice, private banking and

• stockbroking. Delivers products and services

through institutional relationships, adviser networks and dedicated direct relationships with clients. 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

• f channels including dedicated

relationship managers. Activity

• Australian mortgage portfolio of

$A29.9b, up 4% on Mar 17, representing approximately 2% of the Australian market

• Named Best Digital Banking Offering

and Most Innovative Card Product at the 2017 Australian Retail Banking Awards

• Launched instant digital rewards program,

Macquarie Rewards

• Announced as strategic partner and issuer
• f the new Myer Credit Card

Activity

• Funds on platform1 of $A78.9b, up 9%
• n Mar 17
• Wealth accounts added to Macquarie’s

award winning digital banking application to provide a view of wealth and investment holdings in the one place

• Expanded Macquarie Wrap managed

accounts offering, with funds under administration of $A0.8b, up 47% on Mar 17

• 1H17 included the gain on sale of

Macquarie Life’s risk insurance business to Zurich Australia Limited Activity

• Business banking deposit volumes

up 5% on Mar 17

• Business banking loan portfolio of

$A7.1b up 9% on Mar 17

• Total business banking SME clients

up 3% on Mar 17

• Continued rollout of DEFT AuctionPay to

replace the need for cheques at auction DEPOSITS

• Total BFS deposits2 of $A46.4b, up 4% on Mar 17

− CMA deposits of $A27.4b, up 5% on Mar 17

• Macquarie awarded Best Cash and Term Deposit Accounts at the 2017 SMSF Awards and Core Data SMSF Service Provider Awards

Banking and Financial Services

Note: Net profit contribution is management accounting profit before unallocated corporate costs, profit share and income tax. Pie chart is based on 1H18 net profit contribution from operating groups.

• 1. Funds on platform includes Macquarie Wrap and Vision. 2. BFS deposits exclude corporate/wholesale deposits.

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

%

11

BFS NET PROFIT CONTRIBUTION

$A286m 10%

ON 1H17

13%

ON 2H17 OPERATING INCOME

$A822m 6%

ON 1H17

7%

ON 2H17 AUSTRALIAN CLIENT NUMBERS MORE THAN 1 million

SLIDE 16

16

Commodity Markets (Physical & Financial) 42%1 Financial Markets (Primary & Secondary) 48%1 Futures 10%1

COMMODITY MARKETS AND FINANCE FIXED INCOME & CURRENCIES CREDIT MARKETS CASH EQUITIES AND EQUITY DERIVATIVES & TRADING FUTURES

• Mixed results across the

commodities platform

• Lower volatility impacted client

hedging activity and trading results in Global Oil, North American Gas and Metals, partially offset by stronger results in North American Power, Bulk Commodities, Investor Products and Agriculture

• 1H17 benefited from the sale of

equity holdings in energy-related investments

• Completed the acquisitions of

Cargill Petroleum and Cargill North America Power and Gas trading businesses

• Strong result

across the platform

• Increased

client flows in foreign exchange and rates, particularly in Japan, EMEA and North America

• Increased

client activity in Australian securitisation

• Steady client

activity in bespoke lending and balance sheet solutions

• Improved result

across the equities platform

• Growth in

structured client capital solutions

• Realisation of

benefits from cost synergies following the merger of CFM and MSG

• No.1 in ANZ for

IPOs and ECM follow-ons3

• No.1 market share

in listed warrants in Singapore, No. 2 in Malaysia, No.5 in Thailand & No.8 in Hong Kong4

• Strong results

across the platform with consistent client activity and volumes

• Expansion of Asian

distribution through Singapore branch buildout and full SGX membership

• Maintained strong

position in Australia, ranked No.2 overall market share in ASX24 Futures5

Commodities and Global Markets

Note: Net profit contribution is management accounting profit before unallocated corporate costs, profit share and income tax. Pie chart is based on 1H18 net profit contribution from operating groups.

• 1. Percentages are based on net profit contribution before impairment charges. 2. Platts Q2 CY17. 3. Dealogic. 4. Net outstanding notional on local exchange. 5. ASX24 Futures volumes CY17 YTD as at 30 Sep 17.

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

%

14

CGM NET PROFIT CONTRIBUTION

$A378m 23%

ON 1H17

21%

ON 2H17 OPERATING INCOME

$A1,321m 11%

ON 1H17

10%

ON 2H17 US PHYSICAL GAS MARKETER in North America2

No.2

SLIDE 17

17

AUSTRALIA AND NEW ZEALAND ASIA AMERICAS EMEA

Activity

• Maintained the leading market

position in M&A2 and ECM3 during a sustained period of lower deal volumes

• Executed a number of large, cross-

border and local M&A transactions, leveraging long-term relationships

• Continued focus on principal asset

creation across Infrastructure and Green Energy Notable deals

• Defence advisor to DUET in

response to the $A13.4b acquisition

• f 100% of DUET's securities by

Cheung Kong Infrastructure - the largest M&A deal in Australia this year4

• Financial advisor to Boral on the

acquisition of Headwaters for $A3.5b, following being joint lead manager and underwriter in the prior year to the associated $A2.1b equity capital raising, the largest equity raising in Australia in 20165 Awards/Rankings

• No.1 M&A for completed and

announced deals in ANZ2

• No.1 IPOs and ECM follow-ons

in ANZ3 Activity

• Facilitated cross border capital flows

between China and the rest of the world

• Increased focus on principal asset

creation across Infrastructure, Green Energy and Real Estate Notable deals

• Acquisition of 100% ownership

interest in RES Japan, a Japanese subsidiary of Renewable Energy Systems Group, rebranded as Acacia Renewables and focused on developing a pipeline of onshore wind energy projects

• Reached financial close on the

principal acquisition and debt raising

• f two waste-to-energy assets in the

cities of Haman and Yeoju, South Korea

• Joint purchasing agent for open

market purchases by Jardine Strategic Holdings Limited to acquire a significant minority shareholding of Hong Kong listed Greatview Aseptic Packaging for $HK1.5b Activity

• Strong sponsor and record high

DCM activity

• Continued focus on principal asset

creation opportunities, realisations of existing positions, and expansion into businesses in niche areas Notable deals

• Financial advisor and equity investor

in the restructuring and acquisition of the 907MW Norte III combined cycle gas plant in Juarez, Mexico

• Financial advisor to Waste Industries
• n its sale to HPS Investment

Partners and Equity Group Investments and joint bookrunner and joint lead arranger on the $US1.1b senior secured credit facilities and $US305m senior secured notes to support the acquisition

• Joint bookrunner and joint lead

arranger on $US6.2b of senior secured credit facilities to support the acquisition of DH Corp by Misys, a portfolio company of Vista Equity Activity

• Strong performance across

Infrastructure and Green Energy

• Significant growth in German

Industrials Notable deals

• Acquisition of the UK Green

Investment Bank plc from HM Government for £2.3b, rebranded as Green Investment Group and now

• ne of Europe’s largest teams of

green energy investment specialists

• Financial advisor to Bain Capital and

Cinven on their €5.4b acquisition of STADA – the largest private equity transaction in German M&A history6

• Sole financial and debt adviser to a

consortium on the acquisition of 100% of High Speed 1, the UK's first high speed rail network7 Awards/Rankings

• No.1 Infra/Project Finance advisory

in EMEA8

• No.1 Project Finance sponsor

in EMEA9

• Most innovative investment bank for

Infrastructure and Project Finance10

Macquarie Capital

Note: Net profit contribution is management accounting profit before unallocated corporate costs, profit share and income tax. Pie chart is based on 1H18 net profit contribution from operating groups.

• 1. Prior period deal values and transaction numbers have been adjusted to reflect final transaction data. These changes are not material. 2. Dealogic (CY17, any Australian involvement, by number and value). 3. Dealogic (CY17, by value). 4. Dealogic (CY17, by value, completed M&A transactions).
• 5. Dealogic (FY17, by value). 6. Mergermarket (since 1998, by value). 7. Legal Week. 8. Inframation (CY17, by value). 9. IJGlobal (CY17, by value). 10. The Banker (2017).

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

%

7

MACCAP NET PROFIT CONTRIBUTION

$A190m 7%

ON 1H17

32%

ON 2H17 OPERATING INCOME

$A582m 2%

ON 1H17

9%

ON 2H17 152 TRANSACTIONS VALUED AT

$A73b

IN 1H18

212 transactions

$A65b

IN 1H171

216 transactions

$A97b

IN 2H171

SLIDE 18

18

Term liabilities exceed term assets

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 64. 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 netted down in ‘Equity and hybrids’ and ‘Equity Investments and PPE’.

• 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.Net Trade Debtors. 6. ‘Loan Assets (incl. op lease) > 1 year’ includes Debt Investment Securities. 7. ‘Equity

Investments and PPE’ includes Macquarie’s co-investments in Macquarie-managed funds and equity investments. 8. Total customer deposits as per the funded balance sheet ($A49.4b) differs from total deposits as per the statutory balance sheet ($A59.0b). The funded balance sheet excludes any deposits which do not represent a funding source for Macquarie. 9. 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.

Funded balance sheet remains strong

30 Sep 17

$Ab

TOTAL CUSTOMER DEPOSITS8

$A49.4b

3%

FROM MAR 17

NEW TERM FUNDING9

$A8.2b

RAISED IN 1H18

SYNDICATED LOAN FACILITIES

$A3.3b

REFINANCED IN 1H18

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

$Ab

31 Mar 17

Equity investments and PPE 3,7 (8%) Loan assets (incl. op lease) > 1 year6 (33%) Loan assets (incl. op lease) < 1 year5 (11%) Trading assets (15%) Cash, liquids and self securitised assets 4 (33%) ST wholesale issued paper (10%) Other debt maturing in the next 12 months 1 (7%) Customer deposits (40%) Debt maturing beyond 12 months 2 (30%) Equity and hybrids 3 (13%) ST wholesale issued paper (5%) Other debt maturing in the next 12 months 1 (9%) Customer deposits (40%) Debt maturing beyond 12 months 2 (33%) Equity and hybrids 3 (13%) Equity investments and PPE 3,7 (6%) Loan assets (incl. op lease) > 1 year 6 (33%) Loan assets (incl. op lease) < 1 year5 (11%) Trading assets (18%) Cash, liquids and self securitised assets 4 (32%)

SLIDE 19

19

Basel III capital position

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

• APRA Basel III Group capital at Sep 17 of $A18.1b, Group capital surplus of $A4.2b1
• 1. 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 $A5.6b calculated at 7% RWA, per the internal minimum Tier 1 ratio of the Bank Group. 2. ‘Harmonised’ Basel III estimates are calculated in

accordance with the BCBS Basel III framework. 3. $US250m of Macquarie Exchangeable Capital Securities (“ECS”) bought back in Jun 17. 4. Excluding foreign currency translation reserve. 5. Includes changes in business requirements, for example, Endeavour Energy, Land Services Group and the acquisition of GIG. Also includes the net impact of hedging employed to reduce the sensitivity of the Group’s capital position to FX translation movements. 6. APRA Basel III ‘super-equivalence’ includes the impact of changes in capital requirements in areas where APRA differs from the BCBS Basel III framework and includes full CET1 deductions for equity investments ($A0.6b); differences in mortgages treatment ($A0.6b); capitalised expenses ($A0.5b); investment into deconsolidated subsidiaries ($A0.2b); DTAs and other impacts ($A0.1b).

7.4 5.8 6.2 6.2 4.2 4.2 1.2 (0.3) (1.3) (0.8) (2.0)

• 1.0

2.0 3.0 4.0 5.0 6.0 7.0 8.0

Harmonised Basel III at Mar 17 Hybrid Capital Buyback FY17 Final Dividend and MEREP 1H18 P&L and movements in reserves Business growth and

• ther

Harmonised Basel III at Sep 17 APRA Basel III 'super equivalence' APRA Basel III at Sep 17

5 6 4 3

Based on 8.5% (minimum Tier 1 ratio + CCB)

2

Group regulatory surplus: Basel III (Sep 17)

$Ab

SLIDE 20

20

Strong regulatory ratios

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

Bank Group (Sep 17)

• 1. ‘Harmonised’ Basel III estimates are calculated in accordance with the BCBS Basel III framework. 2. Average LCR for Sep 17 quarter is based on an average of daily observations. 3. 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. 4. APRA released final NSFR requirements at the end of 2016. The NSFR and associated changes to APRA ADI Prudential Standard 210 will be effective from 1 Jan 18.

153%

40% 70% 100% 130% 160% 190% LCR Bank Group (APRA)

2

11.0% 13.3%

• 3.5%

7.0% 10.5% 14.0% 17.5% CET1 ratio

6.1% 6.9%

• 1.5%

3.0% 4.5% 6.0% 7.5% Leverage ratio Basel III minimum

3

Bank Group (Harmonised )

1

109%

90% 95% 100% 105% 110% 115% NSFR

4

SLIDE 21

21

• The Group’s capital position is strong with $A4.2b1 surplus at 30 Sep 17
• To provide additional flexibility to manage the Group’s capital position going forward, the Board has approved an
• n-market buyback of up to $A1b, subject to a number of factors including the Group’s surplus capital position,

market conditions and opportunities to deploy capital by the businesses

• This buyback has received the necessary regulatory approvals

Share buyback

• 1. Calculated at 8.5% RWA including the capital conservation buffer (CCB), per APRA ADI Prudential Standard 110.

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

SLIDE 22

22

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

Interim dividend

• 1. Shares may be issued if purchasing becomes impractical or inadvisable. The DRP pricing period is from 15 Nov 17 to 21 Nov 17.

1H18 PAYOUT RATIO

56%

Dividend policy remains 60-80% annual payout ratio DRP shares for the 1H18 dividend to be sourced

• n-market1

1H18 RECORD DATE

8 Nov 17

1H18 PAYMENT DATE

13 Dec 17

1H18 ORDINARY DIVIDEND

2.05

(45% franked)

$A $A1.90

in 1H17

from

(45% franked)

$A2.80

in 2H17

from

(45% franked)

SLIDE 23

23

Board and management changes

• Effective 1 Nov 17, Glenn Stevens will be appointed to the Macquarie Group Limited and

Macquarie Bank Limited Boards as an independent director

• Mr Stevens worked at the highest levels of the Reserve Bank of Australia for

20 years, most recently as Governor between 2006 and 2016. He led policy decisions through the global financial crisis, Australia’s mining boom, and an extended period of low interest rates and developed Australia’s successful inflation targeting framework for monetary policy

• After 25 years of service, Stephen Allen has announced his intention to retire from his role as

Chief Risk Officer and Head of RMG and will step down from the Executive Committee on 31 Dec 17

• Patrick Upfold, Chief Financial Officer and Head of FMG, will succeed Mr Allen as Chief Risk

Officer and Head of RMG

• Alex Harvey, Global Head of Principal Transactions in Macquarie Capital, will succeed

Mr Upfold as Chief Financial Officer and Head of FMG, and will join the Executive Committee

• Both appointments will be effective 1 Jan 18

Glenn Stevens Alex Harvey

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

SLIDE 24

 MACQUARIE 2017

Result Analysis and Financial Management

03 Patrick Upfold – Chief Financial Officer

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

SLIDE 25

25

1H18 $Am 2H17 $Am 1H17 $Am Net interest and trading income 1,892 2,069 1,874 Fee and commission income 2,568 2,128 2,203 Net operating lease income 469 445 476 Share of net profits/(losses) of associates and joint ventures 103 59 (8) Impairments charges (70) (42) (131) Provisions for credit losses (72) (122) (149) Other income 507 609 953 Net operating income 5,397 5,146 5,218 Employment expenses (2,261) (2,089) (2,290) Brokerage, commissions and trading-related expenses (422) (434) (418) Other operating expenses (1,010) (1,004) (1,025) Total operating expenses (3,693) (3,527) (3,733) Operating profit before tax and non- controlling interests 1,704 1,619 1,485 Income tax expense (448) (430) (438) Non-controlling interests (8) (22) 3 Profit attributable to MGL shareholders 1,248 1,167 1,050

• Net interest and trading income of $A1,892m, up 1% on 1H17 was mainly driven by:

– Volume growth in BFS loan and deposit portfolios and improved margins – Reduced cost of holding long-term liquidity in Corporate Partially offset by: – reduced interest income from Macquarie Capital’s debt investment portfolio and higher funding costs associated with the increase in principal investments (including the acquisition of GIG) – Lower trading income in CGM as a result of lower market volatility

• Fee and commission income of $A2,568m, up 17% on 1H17 largely driven by higher performance fees

in MAM

• Net operating lease income of $A469m, down 1% with improved underlying income in CAF from Aviation,

Energy, and Technology portfolios offset by foreign exchange movements

• Share of net profits/(losses) of associates of $A103m, up from a loss of ($A8m) in 1H17 primarily due to

the improved underlying performance of investments held in Macquarie Capital

• Impairment charges of $A70m, down 47%. 1H17 included impairments in BFS and Macquarie Capital
• Provisions for credit losses of $A72m, down 52% on 1H17 reflecting improved performance of underlying

credit portfolios and reversal of collective provisions in CAF Principal Finance as a result of a reduction in book size

• Other income of $A507m, down 47% on 1H17 with lower principal gains in Macquarie Capital and CGM,

and the non-recurrence on the gain on sale of Macquarie Life’s risk insurance business in 1H17 by BFS

• Employment expenses of $A2,261m, down 1% on 1H17 driven by lower average headcount and

favourable foreign currency movements, partially offset by higher performance-related profit share

• Other operating expenses of $A1,010m, down 1% on 1H17 due to reduced project activity in BFS and the

realisation of benefits from cost synergies following the merger of CFM and MSG. This was partially offset by transaction, integration and ongoing costs associated with the GIG acquisition in Macquarie Capital

• Income tax expense of $A448 million increased 2% due to higher profit before tax. Effective tax rate of

26.4% was broadly in line with 2H17 (26.9%), reflecting the geographic mix and nature of earnings

Income Statement key drivers

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

SLIDE 26

26

Income Statement by Operating Group

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

Net profit contribution ($Am) 1,050 332 98 25 (112) (15) (120) (10) 1,248

• 200

400 600 800 1,000 1,200 1,400 1,600 1H17 NPAT MAM CAF BFS CGM MacCap Corporate (excl. tax expense) Tax expense 1H18 NPAT

SLIDE 27

27

• 1. Represents movement in net gains on sale and reclassification of debt and equity investments and non-financial assets, share of net profits of associates and joint ventures accounted for using the equity method, and dividend and distribution income.

KEY DRIVERS

• Higher performance fees with 1H18 benefiting from fees from

MEIF3, MQA and other MIRA-managed funds and co-investors

• Underlying base fees up:

– Increased fees as a result of 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, net flow impacts in the MIM business and foreign exchange

• Investment-related income, which includes gains from sale and

reclassification of certain infrastructure investments, and equity accounted income, broadly in line with 1H17

Macquarie Asset Management

Strong result; 1H18 benefiting from strong performance fees

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

857 367 5 (6) (34) 1,189

• 200

400 600 800 1,000 1,200 1,400 1H17 NPC Higher performance fees Stable base fees Investment-related income Other 1H18 NPC

$Am

5

Underlying base fees FX impact on base fees

21 (16)

1 FX impact on base fees Underlying base fees

SLIDE 28

28

MAM AUM movement

MIM +$A5b

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

MIRA ($A12b)2 MSIS ($A1b)3 MAM $A472b MAM $A480b

• 1. Includes movement in contractual insurance assets. 2. Includes divestment of Thames Water by MIRA-managed funds and ceasing asset services to consortia investors ($A25b). 3. MIDIS increase offset by maturing Australian retail products. 4. 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 29. 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.

(6) (12) (1) 1 10 MIRA $A154b MIRA $A142b MIM $A320b MIM $A325b MSIS $A6b MSIS $A5b

• 100

200 300 400 500 600 31 Mar 17 Net flows¹ Market movements FX impacts MIRA movement (see EUM ) MSIS movement 30 Sep 17 $Ab

4

SLIDE 29

29

MIRA EUM movement

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

• 1. 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.

$Ab 77.2 79.5

(0.3)

(6.7) 6.2 2.2 0.9

• 10

20 30 40 50 60 70 80 90 31 Mar 17 EUM Capital raised Acquisition of GIB Listed security price movements Capital returned or no longer managed¹ FX² 30 Sep 17 EUM Acquisition of GIG

SLIDE 30

30

KEY DRIVERS

• Increased income from Asset Finance due to improved underlying

contributions from Aviation, Resources and Energy portfolios, partially offset by unfavourable FX movements. Vehicles contribution broadly flat

• Increased income from Principal Finance with higher prepayments,

realisations and investment-related income, partially offset by lower interest income as a result of a reduction in portfolio size

• Lower impairments reflecting net loan repayments (partial reversal
• f collective provisions) and improved credit performance of

underlying portfolios

• Other movement largely reflects reduced gains from the sale
• f aircraft

Corporate and Asset Finance

Higher Asset Finance and Principal Finance income and lower impairments

$Am

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

521 22 25 62 (11) 619

• 100

200 300 400 500 600 700 1H17 NPC Higher Asset Finance income Higher Principal Finance income Lower impairments Other 1H18 NPC

$Am

SLIDE 31

31

• 1. 1H17 included impairment charge on equity investments ($A15m), intangibles ($A10m) and Core Banking project impairments ($A19m). 2. Income relating to businesses sold in 1H17 which includes the sale of Macquarie Life’s risk insurance business to Zurich Australia Limited, the sale of the US

mortgages portfolio and the continued run down of the Canadian mortgage portfolio.

KEY DRIVERS

• 1H17 impacted by:

– net overall gain on the disposal of Macquarie Life’s risk insurance business to Zurich Australia Limited and the US mortgages portfolio – A change in approach to the capitalisation of software expenses in relation to the Core Banking platform and non- recurring technology spend – Impairment of certain equity positions and impairments of intangibles relating to the Core Banking platform

• 1H18 experienced lower credit provisions compared to 1H17
• Underlying Business growth in 1H18:

– Average Australian loan portfolio increased 3% on 1H17 driven by average business lending growth of 11% and a 5% increase in the average Australian mortgages portfolio – Average BFS deposits volumes increased 11% – NIM increased across Australian mortgages, business lending portfolios and BFS deposits

Banking and Financial Services

Strong business growth across the portfolio

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

$Am $Am

261 (191) 77 46 24 (10) 79 286

• 50

100 150 200 250 300 350 1H17 NPC Lower net gain on disposal of businesses Accelerated and increased technology related expenses and

• ther items in

1H17 Lower equity and

• ther

impairments¹ Lower credit provisions Reduced underlying income from businesses sold² Business growth 1H18 NPC

SLIDE 32

32

KEY DRIVERS

• Lower investment-related income with 1H17 benefiting from gains on sale of

a number of investments, mainly in energy and related sectors

• Net interest and trading income (net of associated expenses):

– Commodities: ° Risk management products down $A36m reflecting lower volatility resulting in reduced client activity and trading opportunities ° Lending and financing down $A34m, largely due to a reduction in average loan balances in oil and gas sectors due to the wind down of residual Metals, Energy Capital and other legacy portfolios ° Inventory management, transport and storage in line with 1H17 – Increased interest rates and foreign exchange income underpinned by strong contributions from FX and interest rate markets in Japan, EMEA, and North America. Credit remains subdued – Equities up reflecting improvements in Asia following challenging conditions in 1H17 and strong demand for structured client capital solutions

• Lower operating expenses reflecting reduced commodity-related trading

activity, reduced average headcount and associated activity, and realisation

• f benefits from cost synergies following the merger of CFM and MSG
• Movement in Other reflects lower equities-related brokerage and

commission fee income largely offset by increased equity accounted income as a result of improved performance of the underlying portfolio of investments

Commodities and Global Markets

Lower result with 1H17 benefiting from strong investment-related income

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

$Am

Commodities 490 (129) (36) (34)

• 14

25 51 (3) 378

• 100

200 300 400 500 600

1H17 NPC Lower Investment-related income Lower Risk management products Lower Lending and financing Inventory management, transport and storage in line Higher Credit, interest rates and FX Higher Equities net interest and trading income Lower operating expenses Other 1H18 NPC

• 1. Represents movement in net gains on sale and reclassification of debt and equity investments and non-financial assets.

1

SLIDE 33

33

• 1. 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 and funding of DCM portfolio), other income and non-controlling interests.

KEY DRIVERS

• Increased fee income:

– M&A: lower fee income in the US and Asia, partially offset by higher income in Australia – ECM: reflects subdued conditions in Australia – DCM: higher fee income in the US due to increased client activity

• Investment-related income (excluding non-controlling interests)

down on 1H17: – Lower gains on sale of investments – Decreased net interest reflecting lower interest income from the debt investment portfolio and higher funding costs for principal investments (including the acquisition of GIG) – Partially offset by an increase in equity accounted income as a result of the improved underlying performance of investments

• Lower impairment charges with 1H17 impacted by a small number
• f underperforming principal investments
• Other includes transaction, integration and ongoing costs

associated with the acquisition of GIG and higher operating expenses from increased principal activity

Macquarie Capital

Lower impairments and higher fees offset by lower investment-related income

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

205 (52) (6) 76 (83) 72 (22) 190

• 50

100 150 200 250 1H17 NPC Lower M&A fee income ECM fee income broadly in line Increased DCM fee income Lower principal income¹ Lower impairments Other 1H18 NPC

$Am $A18m

Lower investment- related income¹

SLIDE 34

34

Impairment expense

• Decrease in CAF reflecting net loan repayments

(reversal of collective provisions) and improved credit performance of underlying portfolios

• Decrease in BFS with 1H17 impacted by the

underperformance of certain equity positions, impairments of intangibles relating to the Core Banking platform and higher business lending provisions on a small number of loans

• Decrease in Macquarie Capital with 1H17 impacted by

a small number of underperforming principal investments

• Corporate includes impairments relating to legacy

assets

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.

KEY DRIVERS

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

$Am

280 15 (62) (70) 5 (72) 46 142

• 50

100 150 200 250 300 350 1H17 MAM CAF BFS CGM MacCap Corporate 1H18

SLIDE 35

35

Regulatory project spend 1H18 $Am 2H17 $Am 1H17 $Am Basel III and liquidity 4 7 5 OTC reform 5 13 9 MiFID II 10 5 1 Other Regulatory Projects (e.g. Privacy, Managed Investment) 36 21 24 Sub-total 55 46 39 Business as usual compliance spend 1H18 $Am 2H17 $Am 1H17 $Am Financial, Regulatory & Tax reporting and Compliance 54 57 58 Compliance policy and oversight 44 38 41 AML Compliance 16 12 12 Regulatory Capital Management 9 9 8 Regulator Levies 8

• 6

Other Compliance functions (e.g. Privacy, Super, Consumer Protection) 34 32 46 Sub-total 165 148 171 Total compliance spend 220 194 210

• The industry continues to see an increase in

regulatory initiatives, resulting in increased compliance requirements across all levels of the

• rganisation
• Direct cost of compliance approx. $A220m in 1H18

(excluding indirect costs), up on 1H17

• Project spend has increased during 1H18,

as a result of new projects

Costs of compliance

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

SLIDE 36

36

• 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 deposits1 continuing to grow, up 3% to $A49.4b as at Sep 17 from $A47.8b as at Mar 17
• $A8.2b2 of term funding raised during 1H18:

– $A3.3b MGL loan facilities3 – $A2.2b mortgage and motor vehicle/equipment secured funding – $A1.9b private placement issuance – $A0.8b MGL secured trade finance facility

Balance sheet highlights

• 1. Total customer deposits as per the funded balance sheet ($A49.4b) differs from total deposits as per the statutory balance sheet ($A59.0b). The funded balance sheet excludes any deposits which do not represent a funding source for Macquarie. 2. Issuances are AUD equivalent based on

FX rates at the time of issuance and represent full facility size. 3. Includes $A3.2b Senior Credit Facility refinance and upsize and $A0.1b addition to the existing MGL Asian Bank Facility refinanced in FY17.

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

SLIDE 37

37

• 5

10 15 20 25 30 35 FY14 FY15 FY16 FY17 1H18 <1 yr 1-2yrs 2-3yrs 3-4yrs 4-5yrs >5yrs Debt Loan Capital Equity & Hybrid AWAS Acquisition Facility Esanda Syndicated Facility

Diversified issuance strategy

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

Tenor Type Currency

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

• ther secured finance. Issuances are converted to AUD at the 30 Sep 17 spot rate. Maturities shown are as at 30 Sep 17.
• Well diversified issuance

and funding sources

• Term funding beyond 1 year

(excluding equity and securitisations) has a weighted average maturity

• f 4.2 years

Term Issuance and Maturity Profile3

Sep 17: Weighted average maturity 4.2 years

$Ab

Term funding as at 30 Sep 17 – diversified by currency1, tenor2 and type

Issuances Maturities

Private Placement 6% Secured Funding 4% Senior Unsecured 35% Subordinated debt 8% Syndicated loan facility 7% Covered Bonds 1% PUMA RMBS 6% SMART ABS 7% Equity & Hybrids 26% AUD 45% USD 42% EUR 6% GBP 2%CHF 2% JPY 2% OTH 1% 1-2yrs 14% 2-3yrs 14% 3-4yrs 11% 4-5yrs 6% >5yrs 43% Securitisations > 1 yr 12%

SLIDE 38

38

• 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. 560,000 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

Continued customer deposit growth

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

Note: Total customer deposits include BFS deposits of $A46.4b and $A3.0b of Corporate/Wholesale deposits.

Customer deposits

31.6 33.9 36.2 36.9 39.7 43.6 47.8 49.4

• 10

20 30 40 50 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Mar 17 Sep 17 $Ab

SLIDE 39

39 Operating Group Category Sep 17 $Ab Mar 17 $Ab Description CAF Asset Finance2 23.5 22.2 Secured by underlying financed assets

Finance lease assets 13.6 12.2 Operating lease assets 9.9 10.0

Principal Finance3 5.7 6.6 Diversified corporate and real estate lending portfolio, predominately consisting of loans which are senior, secured, well covenanted and with a hold to maturity horizon Total CAF 29.2 28.8 BFS Retail Mortgages2,4 25.4 23.5 Secured by residential property and predominately supported by mortgage insurance

Australia 25.4 23.0 Canada, US and Other

• 0.5

Business Banking4 7.7 7.1 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. The portfolio also includes other retail lending including credit cards Total BFS 33.1 30.6 CGM Resources and commodities 2.6 2.5 Diversified loan portfolio primarily to the resources sector that are secured by the underlying assets Other 2.3 2.8 Predominately relates to recourse loans to financial institutions, as well as financing for real estate and other sectors Total CGM 4.9 5.3 MAM Structured investments 2.2 2.0 Loans to retail and wholesale counterparties that are secured against equities, investment funds or cash, or are protected by capital guarantees at maturity MacCap Corporate and other lending 0.7 0.8 Includes secured corporate lending Total loan and lease assets per funded balance sheet5 70.1 67.5

Loan and lease portfolios1 – Funded Balance Sheet

• 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 $A76.9b at 30 Sep 17 ($A76.7b at 31 Mar 17)

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 $A25.4b differs from the figure disclosed on slide 15 of $A29.9b and Asset Finance per the funded balance sheet of $A23.5b differs from the figure disclosed on slide 14 of $A29.9b. The funded balance sheet nets down loans and funding liabilities of non-recourse securitisation and warehouse vehicles to show the net funding requirement. 3. Principal Finance per the funded balance sheet of $A5.7b includes property and related assets and differs from the figure disclosed on slide 14 of $A5.6b. 4. Securitised business banking portfolio with underlying residential mortgages was included in Retail Mortgages: Australia and has been reclassed to business banking and restated accordingly in Mar 17. 5. Total loan assets per funded balance sheet includes self securitised assets.

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

SLIDE 40

40

Category Carrying value2 Sep 17 $Ab Carrying value2 Mar 17 $Ab Description

Macquarie Asset Management (MIRA) managed funds 1.9 1.6 Includes Macquarie Infrastructure Company, Macquarie Atlas Roads, Macquarie SBI Infrastructure Fund, MPF Holdings Limited, Macquarie Korea Infrastructure Fund, Macquarie European Infrastructure Fund 4 Investments acquired to seed new MIRA products and mandates 1.4 0.6 Includes held for sale investments acquired to seed new MIRA products and mandates. Balance includes a range of investments including Cadent Gas (gas distribution network in the UK) and other various investments Other Macquarie managed funds 0.5 0.5 Includes MIM funds as well as investments that hedge directors’ profit share plan liabilities Transport, industrial and infrastructure 0.9 0.6 Over 35 separate investments, increase includes new investments in the infrastructure sector in MacCap Telcos, IT, media and entertainment 0.7 0.6 Over 40 separate investments Energy, resources and commodities 1.7 0.6 Over 80 separate investments. Increase due to a number of additional investments mainly in MacCap, which included assets associated with GIG and a combined cycle gas plant Real estate investment, property and funds management 0.1 0.1 Over 15 separate investments Finance, wealth management and exchanges 0.4 0.4 Includes investments in fund managers, investment companies, securities exchanges and

• ther corporations in the financial services industry

7.6 5.0

Equity investments of $A7.6b1

• 1. Equity investments per the statutory balance sheet of $A9.3b (Mar 17: $A7.2b) have been adjusted to reflect the total economic exposure to Macquarie. 2. Total funded equity investments of $A7.7b (Mar 17: $A5.5b), less available for sale and associates’ reserves of $A0.1b (Mar 17: $A0.5b).

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

SLIDE 41

41

• Finalisation of Basel III

– 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 has also announced that it does not expect to finalise a new market risk standard1 until at least 2020, with implementation from 2021 at the earliest

• APRA’s ‘Unquestionably Strong’ proposal

– APRA provided guidance around CET1 capital ratios for Australian banks to be considered ‘unquestionably strong’ and intends to release further details on how the new requirements will be implemented later this year – APRA has indicated2 that the implementation of the proposal will incorporate changes to the prudential framework resulting from the finalisation of Basel III – Based on existing guidance, Macquarie’s surplus capital position remains sufficient to accommodate any additional requirements

Regulatory update

Note: The Basel Capital Framework applies to the Bank Group only. 1. Also known as the Fundamental Review of the Trading Book. 2. APRA’s information paper published Jul 17: ‘Strengthening banking system resilience – establishing unquestionably strong capital ratios’.

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

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• APRA Basel III CET1 ratio: 11.0%1
• Harmonised Basel III CET1 ratio: 13.3%2
• 1. Basel III applies only to the Bank Group and not the Non-Bank Group. APRA Basel III Tier 1 ratio at Sep 17: 12.9%. APRA Basel III CET1 ratio at Mar 17: 11.1%. 2. ‘Harmonised’ Basel III estimates are calculated in accordance with the BCBS Basel III framework. Harmonised Basel III Tier 1 ratio at

Sep 17: 15.2%. 3. Excluding foreign currency translation reserve. 4. Includes changes in business requirements and 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 (0.9%); equity investments (0.5%); capitalised expenses (0.5%); investment into deconsolidated subsidiaries (0.2%); DTAs and other impacts (0.2%).

12.7% 12.7% 13.3% 11.1% 13.3% 13.3% 11.0% 0.6% 0.1% (0.7%) (2.3%) 0% 2% 4% 6% 8% 10% 12% 14%

Harmonised Basel III at Mar 17 FY17 MBL to MGL Dividend 1H18 P&L and movements in reserves Other Harmonised Basel III at Sep 17 APRA Basel III 'super equivalence' APRA Basel III at Sep 17 CCB (2.5%) Basel III minimum CET1 (4.5%)

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

3 4 5

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43

• 153% average LCR for Sep 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
• $A30.1b of unencumbered liquid assets and cash on average over the quarter to Sep 17 (post applicable haircuts)
• 1. Unencumbered Liquid Asset Portfolio represents the quarterly average of these balances.

Strong liquidity position maintained

Unencumbered Liquid Asset Portfolio1 MBL LCR position

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

168% 163% 153% 0% 50% 100% 150% 200% Mar 17 Qtr Jun 17 Qtr Sep 17 Qtr Regulatory Minimum 13.8 12.7 13.5 2.8 2.8 3.9 5.0 5.0 5.0 7.9 8.0 7.7

Mar 17 Qtr Jun 17 Qtr Sep 17 Qtr HQLA Available Cash CLF Surplus CLF Collateral

$A29.5b $A28.5b $A30.1b

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44

• Share purchases since 31 Mar 17
• FY17 MEREP $A373m was purchased – $A260m off-market under the staff sale arrangements and $A113m
• n-market, with a combined weighted average price of $A89.25
• Following the issuance of $US750m MACS hybrid capital in Mar 17, MBL (London Branch) completed a $US250m

buyback of ECS hybrid capital in Jun 17. ECS were delisted from the SGX on 22 Jun 17

• The Board has resolved that no discount will apply for the 1H18 DRP and the shares are to be acquired
• n-market1
• To provide additional flexibility to manage the Group’s capital position going forward, the Board has approved an
• n-market buyback of up to $A1b, subject to a number of factors including the Group’s surplus capital position,

market conditions and opportunities to deploy capital by the businesses

Capital management update

• 1. Shares may be issued if purchasing becomes impractical or inadvisable. The DRP pricing period is from 15 Nov 17 to 21 Nov 17.

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SLIDE 45

 MACQUARIE 2017

Outlook

04 Nicholas Moore – Managing Director and Chief Executive Officer

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46

FY18 combined net profit contribution from operating groups expected to be slightly up on FY17

Factors impacting short-term outlook

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.

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

Corporate and Asset Finance

• FY17: $A1.2b up 6% on FY16
• Leasing book broadly in line
• Reduced loan volumes in Principal Finance
• Timing and level of early prepayments and realisations

in Principal Finance

Macquarie Asset Management

• FY17: $A1.5b down 6% on FY16
• Base fees expected to be broadly in line
• 2H18 performance fees expected to be lower than 1H18

Banking and Financial Services

• FY17: $A0.5b up 47% on FY16
• Higher loan portfolio, deposit and platform volumes

Annuity-style businesses Capital markets facing businesses

Macquarie Capital

• FY17: $A0.5b up 7% on FY16
• Assume market conditions broadly consistent with

1H18

• Solid pipeline of Principal realisations expected
• GIG acquisition completed

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; albeit subdued market conditions in Commodities

• Lower levels of impairments and investment-related

income expected

• Cargill acquisitions completed

Corporate

• 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 1H18

CGM MacCap BFS CAF MAM

FY17

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47

• We currently expect the FY18 combined net profit contribution1 from operating groups to be slightly up on FY17
• The FY18 tax rate is currently expected to be broadly in line with 1H18
• Given substantial performance fees were recognised in 1H18, we expect the 2H18 result to be down on 1H18

and broadly in line with 2H17

• Accordingly, the Group’s result for FY18 is currently expected to be slightly up on FY17
• Our short-term outlook remains subject to:

– Market conditions – The impact of foreign exchange – Potential regulatory changes and tax uncertainties

Short-term outlook

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

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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

Medium-term

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Approximate business Basel III Capital & ROE

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

Operating Group APRA Basel III Capital

1

@ 8.5% ($Ab)

• Approx. 1H18 Return
• n Ordinary Equity2
• Approx. 11-Year Average

Return on Ordinary Equity

2

Annuity-style businesses 8.6 Macquarie Asset Management 2.0 28% 20%3 Corporate and Asset Finance 4.2 Banking and Financial Services 2.4 Capital markets facing businesses 5.3 Commodities and Global Markets 3.0 11% 15% - 20% Macquarie Capital 2.3 Total regulatory capital requirement @ 8.5% 13.9 Group surplus 4.2 Total APRA Basel III capital supply 18.14

• 1. Business Group capital allocations are indicative and are based on allocations as at 30 Jun 17 adjusted for material movements over the Sep 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 $A15.4b of ordinary equity and $A2.7b of hybrids.

As at 30 Sep 17

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50

Medium-term

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

Corporate and Asset Finance (CAF)

• Leverage deep industry expertise to maximise growth potential in asset and loan portfolio
• 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
• Increase financing activities
• Growing the client base across all regions
• Well positioned for a recovery in equity markets activity by leveraging a strong market position in Asia-Pacific through investment in the equities platform and

further integration of the business across CGM

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

Annuity- style businesses Capital markets facing businesses

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SLIDE 51

Presentation to investors and analysts

27 October 2017

Result announcement for the half-year ended 30 September 2017

SLIDE 52

 MACQUARIE 2017

Detailed result commentary

A

APPENDIX

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• 1. Includes net gains on sale and reclassification of debt and equity investments and non-financial assets, share of net profits of associates and joint ventures accounted for using the equity method, and dividend and distribution income. 2. Management accounting profit before unallocated corporate

costs, profit share and income tax.

1H18 $Am 2H17 $Am 1H17 $Am Base fees 795 784 790 Performance fees 537 94 170 Other fee and commission income 114 124 105 Investment and other income1 284 221 308 Net operating income 1,730 1,223 1,373 Brokerage, commission and trading-related expenses (123) (103) (97) Other operating expenses (420) (438) (419) Total operating expenses (543) (541) (516) Non-controlling interests 2 (1)

• Net profit contribution2

1,189 681 857 AUM ($Ab) 471.9 480.0 491.3 Headcount 1,581 1,559 1,517

• Base fees of $A795m, broadly in line with 1H17

– Underlying base fees up on 1H17 as a result of 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, net flow impacts in the MIM business and foreign exchange impacts

• Performance fees of $A537m, up on 1H17

– 1H18 included performance fees from MEIF3, MQA and other MIRA-managed funds and co-investors – 1H17 included performance fees from MQA, MKIF, Australian managed accounts and from co-investors in respect of infrastructure assets

• Other fee and commission income of $A114m, up 9% on 1H17 due to higher fees from

MSIS Retail and True Index income

• Investment and other income of $A284m

– Investment-related income, which includes gains from sale and reclassification of certain infrastructure investments, and equity accounted income, broadly in line with 1H17

• Total operating expenses of $A543m, up 5% on 1H17 driven by higher brokerage and

commission expense in MSIS Retail

Macquarie Asset Management

Result

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• 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. 2. Includes investment and loan impairments. 3. Management accounting profit before unallocated corporate costs, profit share and

income tax. 4. Includes equity portfolio of $A0.4b (FY17: $A0.4b).

1H18 $Am 2H17 $Am 1H17 $Am Net interest and trading income1 336 358 354 Net operating lease income 465 437 467 Impairments and provisions2 1 (50) (61) Fee and commission income 22 32 21 Other income 107 219 54 Net operating income 931 996 835 Total operating expenses (312) (319) (315) Non-controlling interests

• 1

Net profit contribution3 619 677 521 Loan and finance lease portfolio4 ($Ab) 25.6 26.5 28.1 Operating lease portfolio ($Ab) 9.9 10.0 10.0 Headcount 1,263 1,258 1,347

• Net interest and trading income of $A336m, down 5% on 1H17

– Reduction in Principal Finance portfolio size, partially offset by increased income from prepayments and realisation of loan assets

• Net operating lease income of $A465m, broadly in line with 1H17
• Impairments and provisions down on 1H17 due to impact of loan repayments and

improvement in underlying portfolios

• Other income of $A107m up 98% on 1H17

– 1H18 includes a gain on reclassification of an asset held in the Principal Finance business, partially offset by reduced gains on sale of aircraft in 1H18 compared to 1H17 – Prior period included a gain realised on the sale a US toll road by the Principal Finance business

• Total operating expenses of $A312m broadly in line with 1H17

Corporate and Asset Finance

Result

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• 1. 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.

1H18 $Am 2H17 $Am 1H17 $Am Net interest and trading income1 584 551 498 Fee and commission income 234 216 256 Wealth management fee income 168 154 159 Banking fee income 66 62 70 Life insurance income

• 27

Net gain on disposal of businesses 1

• 192

Impairments and provisions2 (8) (13) (78) Other income 11 15 11 Net operating income 822 769 879 Total operating expenses (536) (517) (618) Net profit contribution3 286 252 261 Funds on platform4 ($Ab) 78.9 72.2 62.1 Australian loan portfolio5 ($Ab) 37.6 35.8 35.6 Legacy loan portfolio6 ($Ab)

• 0.5

0.6 BFS deposits7 ($Ab) 46.4 44.5 42.2 Headcount 2,077 1,992 1,959

• Net interest and trading income of $A584m, up 17% on 1H17

– Increased average balances of the Australian loan and deposit portfolios: average business lending up 11%, average Australian mortgages up 5% and average deposit volumes up 11% on 1H17 – Improved lending and deposit margins

• Fee and commission income of $A234m, down 9% on 1H17

– Wealth management income up 6% due to increase in funds on the Wrap and Vision platforms following the migrations of full service broking accounts and ANZ Oasis Wrap superannuation and investment assets – Decrease in Life insurance income following the sale of Macquarie Life’s risk insurance business in Sep 16

• Net gain on disposal of businesses of $A1m down from $A192m in 1H17 which benefited

from the sale of Macquarie Life’s risk insurance business to Zurich Australia Limited, partially

• ffset by losses on the sale of US mortgages portfolio
• Impairments and provisions of $A8m, down on 1H17

– 1H17 impacted by the underperformance of certain equity positions, impairments of intangibles relating to the Core Banking platform and higher business lending provisions on a small number of loans

• Total operating expenses of $A536m, down 13% on 1H17 which was impacted by elevated

project activity and a change in approach to the capitalisation of software expenses in relation to the Core Banking platform

Banking and Financial Services

Result

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• 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. 2. Includes investment and loan impairments. 3. Management accounting profit before unallocated corporate costs, profit share and

income tax.

1H18 $Am 2H17 $Am 1H17 $Am

Commodities1 435 627 505 Risk management products 285 427 321 Lending and financing 108 118 142 Inventory management, transport and storage 42 82 42 Credit, interest rates and foreign exchange1 283 352 269 Equities 186 146 161 Fee and commission income 436 410 447 Investment and other income 37 26 154 Impairments and provisions2 (56) (98) (51) Net operating income 1,321 1,463 1,485 Brokerage, commission and trading-related expenses (190) (218) (205) Other operating expenses (753) (764) (789) Total operating expenses (943) (982) (994) Non-controlling interests

• (1)

Net profit contribution3 378 481 490 Headcount 1,986 1,888 1,922

• Commodities income of $A435m, down 14% on 1H17

– Risk management products down 11% on 1H17 reflecting lower volatility resulting in reduced client activity and trading opportunities – Lending and financing down 24% on 1H17 largely due to a reduction in average loan balances in the oil and gas sectors due to the wind down of residual Metals, Energy Capital and other legacy portfolios – Inventory management, transport and storage in line with 1H17

• Credit, interest rate and foreign exchange income of $A283m, up 5% on 1H17

– Strong contributions from foreign exchange and interest rates markets in Japan, EMEA, and North America. Credit remains subdued

• Equities up 16% on 1H17 reflecting improvements in Asia following challenging conditions

in 1H17 and strong demand for structured client capital solutions

• Fee and commission income of $A436m broadly in line with 1H17
• Investment and other income down on a strong 1H17 which included gains on the sale of a

number of investments in energy and related sectors

• Impairments and provisions of $A56m, broadly in line with 1H17
• Total operating expenses of $A943m, down 5% on 1H17 reflecting reduced commodity-

related trading activity, reduced average headcount and associated activity, and realisation

• f benefits from cost synergies following the merger of CFM and MSG

Commodities and Global Markets

Result

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• 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. 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. Prior period deal values and transaction numbers have been adjusted to reflect final transaction data. These changes are not material.

1H18 $Am 2H17 $Am 1H17 $Am Fee and commission income 436 471 416 Principal Income (ex Non-controlling interests) 165 175 235

Investment and other income

222 183 224

Net interest and trading income1

(57) (8) 11 Impairments and provisions2 (20) (5) (92) Internal management revenue3 1 (4) 10 Net operating income 582 637 569 Total operating expenses (390) (347) (375) Non-controlling interests (2) (12) 11 Net profit contribution4 190 278 205 Capital markets activity5: Number of transactions 152 216 212 Transactions value ($Ab) 73 97 65 Headcount 1,177 1,136 1,149

• Increased fee income:

– M&A: lower fee income in the US and Asia, partially offset by higher income in Australia – ECM: reflects subdued conditions in Australia – DCM: higher fee income in the US due to increased client activity

• Investment-related income (excluding non-controlling interests) down on 1H17:

– Lower gains on sale of investments – Decreased net interest reflecting lower interest income from the debt investment portfolio and higher funding costs for principal investments (including the acquisition of GIG) – Partially offset by an increase in equity accounted income as a result of the improved underlying performance of investments

• Lower impairment charges with 1H17 impacted by a small number of underperforming

principal investments

• Operating expenses increased, reflecting transaction, integration and ongoing costs

associated with the acquisition of GIG and higher operating expenses from increased principal activity

Macquarie Capital

Result

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 MACQUARIE 2017

Additional information – Funding

B

APPENDIX

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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

Macquarie funding structure

Macquarie  1H18 result announcement  macquarie.com Introduction Overview of Result Result Analysis and Financial Management Outlook Appendices

Non-Bank Group Debt and Equity Debt and Equity Equity Macquarie Bank Limited (MBL) Bank Group Debt and Hybrid Equity Debt and Hybrid Equity Non-Bank Subsidiaries

Macquarie Group Limited (MGL)

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60

• 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

Sep 17 $Ab Mar 17 $Ab Sep 16 $Ab Total assets per Statement of Financial Position 189.8 182.9 193.1 Accounting deductions: Self funded trading assets (20.1) (14.6) (21.1) Derivative revaluation accounting gross-ups (10.4) (10.7) (12.5) Life investment contracts and other segregated assets (9.0) (9.6) (9.4) Outstanding trade settlement balances (7.5) (6.6) (7.0) Short-term working capital assets (6.2) (5.8) (7.0) Non-controlling interests (1.4) (1.3) (0.1) Less non-recourse funded assets: Securitised assets and non-recourse funding (11.3) (13.5) (13.7) Total assets per Funded Balance Sheet 123.9 120.8 122.3

For an explanation of the above deductions refer to slide 64.

Funded balance sheet reconciliation

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• 1. Sep 17 includes ordinary capital and Macquarie Income Securities of $A0.4b. 2. Non-controlling interests have been netted in the funded balance sheet. 3. As at 30 Sep 17. 4. Includes drawn term funding facilities only.

Sep 17 $Ab Mar 17 $Ab Sep 16 $Ab Funding sources Certificates of deposits 0.8 0.9 0.5 Commercial paper 11.6 5.7 6.8 Net trade creditors 2.0 2.4

• Structured notes

2.6 3.1 3.7 Secured funding 4.5 4.6 4.7 Bonds 27.5 29.3 34.6 Other loans 0.5 0.5 0.7 Syndicated loan facilities 3.9 4.8 4.9 Customer deposits 49.4 47.8 46.1 Loan capital 5.4 5.7 4.9 Equity and hybrids1,2 15.7 16.0 15.4 Total funding sources 123.9 120.8 122.3 Funded assets Cash and liquid assets 24.6 21.7 20.4 Self-securitisation 16.7 16.5 15.4 Net trading assets 18.1 22.1 23.8 Loan assets including operating lease assets less than one year 13.8 13.9 14.9 Loan assets including operating lease assets greater than one year 39.6 37.1 37.9 Debt investment securities 1.7 2.3 2.7 Co-investment in Macquarie-managed funds and other equity investments2 7.7 5.5 5.2 Property, plant & equipment and intangibles 1.7 1.7 1.6 Net trade debtors

• 0.4

Total funded assets 123.9 120.8 122.3

• Well diversified funding sources
• Minimal reliance on short-term wholesale funding markets
• Deposit base represents 40%3 of total funding sources
• Term funding beyond one year (excluding equity and securitisations)

has a weighted average term to maturity of 4.2 years3 Macquarie term funding maturing beyond one year (includes equity and hybrid)4

Funding for Macquarie

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$Ab

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62

• 1. Includes ordinary capital and Macquarie Income Securities of $A0.4b. 2. As at 30 Sep 17. 3. Includes drawn term funding facilities only.

Sep 17 $Ab Mar 17 $Ab Sep 16 $Ab Funding sources Certificates of deposit 0.8 0.9 0.5 Commercial paper 11.6 5.7 6.8 Net trade creditors 1.2 1.6 0.5 Structured notes 2.1 2.6 3.3 Secured funding 4.0 4.4 4.6 Bonds 20.9 21.7 26.1 Other loans 0.4 0.3 0.4 Syndicated loan facilities 0.7 2.4 2.5 Customer deposits 49.4 47.8 46.1 Loan capital 4.2 4.6 3.8 Equity and hybrids1 12.6 12.6 12.5 Total funding sources 107.9 104.6 107.1 Funded assets Cash and liquid assets 22.8 20.0 18.7 Self-securitisation 16.7 16.5 15.4 Net trading assets 17.4 21.8 23.3 Loan assets including operating lease assets less than one year 13.3 13.6 14.4 Loan assets including operating lease assets greater than one year 39.0 36.1 37.1 Debt investment securities 1.4 1.9 2.0 Non-Bank Group deposit with MBL (4.2) (6.7) (5.2) Co-investment in Macquarie-managed funds and other equity investments 0.8 0.8 0.8 Property, plant & equipment and intangibles 0.7 0.6 0.6 Total funded assets 107.9 104.6 107.1

• Bank balance sheet remains liquid, well capitalised and with a diversity
• f funding sources
• Term funding beyond one year (excluding equity and securitisations)

has a weighted average term to maturity of 4.2 years2

• Accessed term funding in markets including US, Europe and Australia

as well as opening new markets Bank Group term funding maturing beyond one year (includes equity and hybrid)3

Funding for the Bank Group

$Ab

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SLIDE 63

63 Sep 17 $Ab Mar 17 $Ab Sep 16 $Ab Funding sources Net trade creditors 0.8 0.8

• Structured notes

0.5 0.5 0.4 Secured funding 0.5 0.2 0.1 Bonds 6.6 7.6 8.5 Other loans 0.1 0.2 0.3 Syndicated loan facilities 3.2 2.4 2.4 Loan capital1 1.2 1.1 1.1 Equity2 3.1 3.4 2.9 Total funding sources 16.0 16.2 15.7 Funded assets Cash and liquid assets 1.8 1.7 1.7 Non-Bank Group deposit with MBL 4.2 6.7 5.2 Net trading assets 0.7 0.3 0.5 Loan assets less than one year 0.6 0.3 0.5 Loan assets greater than one year 0.5 1.0 0.8 Debt investment securities 0.3 0.4 0.7 Co-investment in Macquarie-managed funds and other equity investments2 6.9 4.7 4.4 Property, plant & equipment and intangibles 1.0 1.1 1.0 Net trade debtors

• 0.9

Total funded assets 16.0 16.2 15.7

• Non-Bank Group is predominately term funded
• Term funding beyond one year (excluding equity) has a weighted

average term to maturity of 4.4 years3 Non-Bank Group term funding maturing beyond one year (includes equity and hybrid)4

Funding for the Non-Bank Group

$Ab

• 1. Macquarie Group Capital Notes 1 & 2 of $A1.2b. 2. Non-controlling interests have been netted in the funded balance sheet. 3. As at 30 Sep 17. 4. Includes drawn term funding facilities only.

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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 do 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. The netted amount excludes Macquarie Income Securities which are included in Equity and hybrids in the funded balance sheet.

• Securitised and other 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.

Explanation of Funded Balance Sheet reconciling items

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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

Conservative long standing liquidity risk management framework

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Additional information – Capital

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Surplus calculation

30 Sep 17 Harmonised Basel III $Am APRA Basel III $Am Macquarie eligible capital: Bank Group Gross Tier 1 capital 13,845 13,845 Non-Bank Group eligible capital 4,303 4,303 Eligible capital 18,148 18,148 (a) Macquarie capital requirement: Bank Group capital requirement Risk-Weighted Assets (RWA)1 86,886 88,880 Capital required to cover RWA2 7,385 7,555 Tier 1 deductions 549 2,327 Total Bank Group capital requirement 7,934 9,882 Total Non-Bank Group capital requirement 4,038 4,038 Total Macquarie capital requirement (at 8.5%2 of the Bank Group RWA) 11,972 13,920 (b) Macquarie regulatory capital surplus (at 8.5%2 of the Bank Group RWA) 6,176 4,228 (a)-(b)

Macquarie Basel III regulatory capital

• 1. In calculating the Bank Group’s contribution to Macquarie’s capital requirement, $A745m 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.

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Bank Group contribution

Macquarie APRA Basel III regulatory capital

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30 Sep 17 Risk-weighted assets $Am Tier 1 Deductions $Am Capital Requirement1 $Am Credit risk On balance sheet 58,840 5,001 Off balance sheet 16,701 1,420 Credit risk total2 75,541 6,421 Market risk 3,314 282 Operational risk 10,025 852 Interest rate risk in the banking book

• Tier 1 deductions

2,327 2,327 Contribution to Group capital calculation2 88,880 2,327 9,882

• 1. Calculated at 8.5% RWA including capital conservation buffer (CCB), per APRA ADI Prudential Standard 110. 2. In calculating the Bank Group’s contribution to Macquarie’s capital requirement, $A745m RWA associated with exposures to the Non-Bank Group are eliminated.

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Macquarie regulatory capital

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• 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
• f 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 47% 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, including: fixed assets, goodwill, intangible assets and capitalised expenses. 2. Includes all Banking Book equity investments, plus net long

Trading Book holdings in financial institutions.

Non-Bank Group contribution

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Macquarie regulatory capital

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Non-Bank Group contribution

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

30 Sep 17 Assets $Ab Capital Requirement $Am Equivalent Risk Weight Funded assets Cash and liquid assets 1.8 22 15% Loan assets1 1.1 117 132% Debt investment securities 0.3 85 356% Co-investment in Macquarie-managed funds and other equity investments 6.6 2,715 518% Co-investment in Macquarie-managed funds and other equity investments (relating to investments that hedge DPS plan liabilities) 0.3 Property, plant & equipment and intangibles 1.0 275 344% Non-Bank Group deposit with MBL 4.2 Net trading assets 0.7 Total funded assets 16.0 3,214 Self-funded and non-recourse assets Self funded trading assets 0.3 Outstanding trade settlement balances 3.2 Derivative revaluation accounting gross ups 0.0 Short-term working capital assets 3.8 Non-controlling interests 1.4 Total self-funded and non-recourse assets 8.7 Total Non-Bank Group assets 24.7 Off balance sheet exposures, operational, market and other risks, and diversification offset2 824 Non-Bank Group capital requirement 4,038

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Glossary

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Glossary

$A / AUD Australian Dollar $C / CAD Canadian Dollar $US / USD United States Dollar £ / GBP Pound Sterling ¥ / JPY Japanese Yen € Euro 1H17 Half-Year ended 30 September 2016 1H18 Half-Year ended 30 September 2017 2H16 Half-Year ended 31 March 2016 2H17 Half-Year ended 31 March 2017 ABN Australian Business Number ADI Authorised Deposit-Taking Institution AML Anti-Money Laundering ANZ Australia and New Zealand Approx. Approximately APRA Australian Prudential Regulation Authority APTT Asian Pay Television Trust ASX Australian Stock Exchange AUM Assets under Management AVS Available For Sale BCBS Basel Committee on Banking Supervision BFS Banking and Financial Services CAF Corporate and Asset Finance Capex Capital Expenditure CCB Capital Conservation Buffer CCP Central Counterparty CET1 Common Equity Tier 1 CFM Commodities and Financial Markets CGM Commodities and Global Markets CHF Swiss Franc CLF Committed Liquid Facility CMA Cash Management Account CMBS Commercial Mortgage-Backed Securities CRM Customer Relationship Management CY16 Calendar Year ended 31 December 2016 CY17 Calendar Year ending 31 December 2017 DCM Debt Capital Markets DPS Dividends Per Share DRP Dividend Reinvestment Plan DTA Deferred Tax Asset

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Glossary

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 FSI Financial System Inquiry FMG Financial Management Group 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 ending 31 March 2018 GIG Green Investment Group (rebranded from Green Investment Bank) HK Hong Kong Dollar HQLA Highly Quality Liquid Assets IPO Initial Public Offering IRB Internal Ratings-Based IT Information Technology JV Joint Venture LBO Leveraged Buyout LCR Liquidity Coverage 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 Energy Capital MEIF1 Macquarie European Infrastructure Fund 1 MEIF3 Macquarie European Infrastructure Fund 3 MEREP Macquarie Group Employee Retained Equity Plan

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Glossary

MGL / MQG Macquarie Group Limited MIC Macquarie Infrastructure Corporation MIDIS Macquarie Infrastructure Debt Investment Solutions MIM Macquarie Investment Management MIRA Macquarie Infrastructure and Real Assets MKIF Macquarie Korea Infrastructure Fund MPW Macquarie Private Wealth MQA Macquarie Atlas Roads MSG Macquarie Securities Group MSIS Macquarie Specialised Investment Solutions MW Mega Watt NGLs Natural gas liquids NIM Net Interest Margin No. Number NPAT Net Profit After Tax NPC Net Profit Contribution NSFR Net Stable Funding Ratio OTC Over-The-Counter P&L Profit and Loss Statement PCP Prior Corresponding Period PPE Property, Plant and Equipment PPP Public Private Partnership RBA Reserve Bank of Australia REIT Real Estate Investment Trust RMG Risk Management Group ROE Return on Equity RWA Risk Weighted Assets SBI State Bank of India SGX Singapore Exchange SME Small and Medium Enterprise SMSF Self Managed Super Fund 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

27 October 2017

Result announcement for the half-year ended 30 September 2017