Half Year 2024 Macquarie Group Ltd Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jonathan Mott - Barrenjoey Markets Pty Limited, Research Division - Analyst : John Mott from Barrenjoey. A couple of questions if I could. The first one, you talk a lot about the dry powder that you've got. I think it's $35 billion that you've got within the funds that you're looking to deploy. Yet at the same time, you come out and you just announced a $2 billion buyback, which would suggest that you don't have the opportunities to invest shareholders' money for principal or other opportunities. So usually, when you're trading at 2x book, the market's wanting you to continue to deploy to continue to grow. So (technical difficulty) of other people's money. You're happy to deploy it, but you don't think you've got opportunities for the $2 billion of your own money.

Question: Jonathan Mott - Barrenjoey Markets Pty Limited, Research Division - Analyst : Can I just follow on from those comments? So you raised equity in year '21, [200 bucks, I think it was], and then you've had great profit the last 2 years. We've now come back down to, would you describe this as a more normal year? Obviously, less volatility than the extreme that we saw last year, especially in commodities. And I think we had a polar vortex even before that. So that was -- you made more money than you anticipated, and we're now at a more normally -- and from our perspective, given guidance to the second half, but when we look forward to FY '25, '26, it's pretty hard to sort of estimate what you guys are going to make, and the market's contemplating that at the moment. Is this the more normal year we should be thinking of the model from this is a more realistic year after 2 extraordinary years? Alexander Harms Harvey - Macquarie Group Limited - CFO, Head of Financial Mgt Group & Executive Chairman of Macquarie Group, Asia Yes. I mean I'll have a go first, I suppose. The way I would think about it is, firstly, to organize it, we think in a medium-term sense. So what we're trying to do is grow medium-term sustainable franchises that have a unique proposition in the market that's attractive to the customer base. So if you think about Greg's world, we've obviously gone from 1% share in the mortgages to 5% share. We're still 1% of the business bank. We're slowly but surely growing a digitally-enabled financial services business that we think is attractive to customers. We're growing deposits. We're growing deposits to continue to grow that franchise. We think there's a long runway in that franchise. From an asset management viewpoint, we're now nearly $900 billion of assets under management. That's obviously a record amount of assets under management. That assets under management, we think, and the superior position we have in infrastructure, to cite a good example, and renewables, these are long-term secular trends that we think we're well placed to participate in. From a CGM viewpoint, we've talked a lot about the customer franchise, and we've given you those slides to talk about the customer franchise growing in a whole range of different markets, Macquarie Capital growing the private credit portfolio or growing the equity. So what we try and do, from a management viewpoint, we're not trying to forecast the next 6 months or the next 3 months. What we're trying to do is really trying to say, are we -- is the organization positioned well in structurally advantaged sectors, and we think the answer to that question is yes. I mean obviously, what we did say, and we're very clear about this, John. Obviously, last year, we talked about the exceptionality of the conditions. Those conditions were exceptional in '22. They continued into '23. And there were a whole range of circumstances which gave rise to that. Energy markets, we talked about. They're also great opportunities for us to realize. That allowed us to outperform what we expected to do, but what we're really trying to do in the medium term is grow the franchise. And so that's the question that I guess, yes, you all need to have a view on.