Macquarie : 2024 full-year result annual report

01

About

04

Financial Report

Founded in 1969, Macquarie now employs over 20,600(1) people globally, has total assets of $A403.4 billion and total equity of $A34.0 billion as at 31 March 2024.

Macquarie's breadth of expertise covers asset management, retail and business banking, wealth management, leasing and asset financing, market access, commodity trading, renewables development, specialist advice, access to capital and principal investment. The diversity of our operations, combined with a strong capital position and robust risk management framework, has contributed to Macquarie's 55-year record of unbroken profitability.

Macquarie works with government, institutional, corporate and retail clients and counterparties around the world, providing a diversified range of products and services. We have established leading market positions as a global specialist in a wide range of sectors, including renewables, infrastructure, resources, commodities and energy.

Alignment of interests is a longstanding feature of Macquarie's client-focused business, demonstrated by our willingness to both invest alongside clients and closely align the interests of our shareholders and staff.

Letter from the

Chair

Macquarie Group delivered a profit of $A3,522 million in FY2024, a decline from the exceptional results

of the previous two years. The volatility in global energy markets that had previously increased customer demand for services and presented trading opportunities gave way to much quieter conditions, and hence lower earnings for the Commodities and Global Markets business. For much of the year, less active financial markets also constrained other areas of the Company's business, particularly in Macquarie Asset Management. As long-term investments in growth paid off, Banking and Financial Services and Macquarie Capital both generated higher profits than last year. Shemara's letter gives a more detailed account of performance during the year.

Macquarie remains well placed to respond to opportunities and manage the associated risks, thanks to

the diversity of our businesses, enduring client franchises, strong balance sheet and disciplined approach to risk management."

The company earned a return on shareholders' funds for the year of 10.8%, a bit below the level Macquarie typically seeks to achieve. Over the past five years, Macquarie has earned around 15% for shareholders on average.

Increases in headcount and in the broader cost base have been difficult to avoid in recent years given the extent of business growth, the volume of project work and particularly the increase in regulatory requirements. As some of these projects now deliver planned productivity benefits, management has heightened its focus on costs and is working to ensure value for shareholders.

The global economy appears to have stabilised after the disturbances of the immediate post-COVID period, and inflation has declined. Low inflation is not yet assured, however, and the prospects for interest rates are unclear.

Macquarie remains well placed to respond to opportunities - and to manage the associated risks - thanks to the diversity of our businesses, enduring client franchises, a strong balance sheet and our disciplined approach to risk management.

Environmental Social and Governance

Macquarie issued its second Net Zero and Climate Risk Report in late 2023. We continue to manage on balance sheet lending and equity exposures in line with our Net Zero Banking Alliance commitments. In addition, and probably more significantly, we continued to support the development of clean energy infrastructure, with

110 GW of clean energy capacity in development, construction, or operation at the end of FY2024.(2)

With global emissions still increasing, despite the rapid increase in renewable capacity, the global and local conversation about climate change has become more nuanced, and more challenging, as the full magnitude of the decarbonisation challenge becomes apparent. Recent experience highlights that fossil fuels, particularly natural gas, will be required for quite some time to come, even as the trend to renewables continues.

During the year, Susan Lloyd-Hurwitz joined the MGL and MBL Boards as an independent director. Susan brings with her significant expertise in the global investment and real estate sectors and is already making a valued contribution.

The process of appointing Bank-onlyNon-Executive Directors (BONDs) to the MBL Board was completed with the appointment of David Whiteing in September 2023 and Wayne Byres in February 2024. Both bring highly valued skills and experience to the

MBL board.

As previously advised, Michael Coleman will retire from the MBL Board after a two-year term as a BOND, expected by mid-2024. Michael has been associated with Macquarie as a Director for

12 years including nine years as Chair of the Audit Committee. We thank him for his exemplary service.

While financial institutions have an important role to play in marshalling financial resources for the transitions their clients are seeking to make, the carbon intensity of financial portfolios can only decline by as much, and as fast, as the underlying physical capital stock of economies is able to decarbonise. That will be determined mainly by non-financial factors - technological advancements, government policies, the supply of skilled labour and of other necessary capacity.

Within its field of influence and capability, and with around 20 years' experience in advancing climate solutions, Macquarie is well-positioned to continue playing a constructive role as a financier, adviser, investor and fiduciary. We expect this to be to the benefit of shareholders.

New workplaces

Technological change is challenging conventional notions of the way work is done. Yet the physical workplace is still important as a place to come together, to collaborate, innovate and to advance professional development.

Macquarie has continued to invest in our physical workplaces around the world. This year sees the opening of our new global headquarters in Sydney, part of an ambitious project that integrates a major interchange for the city's new Metro transport system with two state-of-the-art office buildings and a regenerated public space. The project is one of Macquarie's largest balance sheet infrastructure undertakings to date and is a prime example of how we connect capital with community need.

Board Changes

Nicola Wakefield Evans retired from the Board in February 2024, having served for ten years. Nicola made an important contribution to Macquarie both in her career as a professional lawyer and as

a Director, including for over seven years as Chair of the Board Governance and Compliance Committee, a responsibility that has now been taken on by Rebecca McGrath.

Capital and Dividends

The company finished the year in a strong position, with the Bank Group posting a common equity tier 1 capital ratio of over 13% on an APRA basis, and with surplus capital at the MGL level. The Board declared a final dividend of $A3.85 per share, making for a total dividend of $A6.40 per share for the full year. This was in keeping with the Board's longstanding policy of paying between 50 and 70 per cent of earnings in dividends.

In November 2023, the Board also approved an on-marketbuy-back for Macquarie Group shares of up to $A2 billion. As at 31 March 2024, $A644 million had been purchased under this program. This decision returns more of the exceptional returns of FY2022 and FY2023 to shareholders.

It remains for me to thank my colleagues on the Board, and the staff and management of Macquarie, for their efforts in a challenging year. This is a high-performing team that remains focused on delivering the best possible results for shareholders.

Finally, your Directors thank you, the owners of Macquarie, for your ongoing support.

Glenn Stevens AC

Independent Director and Chair

Sydney

3 May 2024

Despite ongoing economic uncertainty and subdued market conditions in many parts of the world, Macquarie's client franchises remained resilient over the last year, with continued client growth, fundraising and new business origination across the group as we delivered our 55th consecutive year of profitability since inception.

With the relevant expertise and agility to respond to changes in market conditions and support our clients, our diversified portfolio of businesses continued to invest in structural themes driving long-term growth around the world. Our people partnered with our clients and communities as they navigated and adapted to uncertainty, identifying and realising new opportunities guided by our purpose and principles and supported by our proven risk management framework and distinct culture.

For the year ended 31 March 2024, in what was a period of transition for some of our businesses against a backdrop of less active markets, Macquarie delivered net profit after tax of $A3,522 million, down 32% on a record prior year, with all four of our operating groups delivering solid net profit contributions.

Banking and Financial Services (BFS) delivered a record net profit contribution of $A1,241 million, up 3% from $A1,201 million in FY2023. BFS benefitted from growth in the loan portfolio and BFS deposits, and credit and other impairment reversals primarily reflecting an improvement in the macroeconomic outlook. This was partially

offset by margin compression, higher employment expenses and technology investment to support portfolio growth, compliance and regulatory requirements.

Commodities and Global Markets (CGM) delivered a net profit contribution of $A3,213 million, down 47% from a record $A6,007 million in FY2023. Despite an environment characterised by much lower levels of market volatility, CGM delivered revenues at a similar level to the strong performance of FY2022, demonstrating ongoing growth and resilience in the client franchise. The result reflected a lower contribution from Commodities and Asset Finance, partially offset by stronger performance in Financial Markets.

Macquarie Asset Management (MAM) delivered a net profit contribution of $A1,208 million, down 48% from $A2,342 million in FY2023. The decrease was driven by lower asset realisations in green investments and increased net expenditure in investments in the green energy portfolio as it continues its transition into a fiduciary business. Base and performance fees were broadly in line with the prior year.

Macquarie Capital delivered a net profit contribution of $A1,051 million, up 31% from $A801 million in FY2023. The increase was driven by higher investment-related income driven by growth in the private credit portfolio, lower credit provisions and net reversals of impairments, partially offset by lower net gains on investments, lower advisory income and higher operating expenses.

This report provides examples of key areas of activity across Macquarie in FY2024, and explains how, by empowering people to innovate and invest for a better future, our teams continue to create value for our clients, communities, shareholders and each other.