Q3 2025 Macquarie Group Ltd Operating Results Call Transcript

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

Question: Andrei Stadnik - Morgan Stanley - Analyst : Good morning, Shemara and team. Can I ask two questions? But the first one probably, I think more front of mind for investors and that is, how are you thinking about the asset realization environment for green energy, particularly for Cero and Corio? How do you think about the asset realization environment, given what has changed globally in the past few months?

Question: Andrei Stadnik - Morgan Stanley - Analyst : Thank you. And look, my second question may be more about broader strategy. We have seen some news flow that you pivoting increasingly more aggressively into private credit to the point of actually, maybe closing down some businesses over in the US in terms of more traditional DCM. How are you thinking about private credit growth opportunity across both your balance sheet and also in MAM in the fund space?

Question: Andrei Stadnik - Morgan Stanley - Analyst : Thank you very much.

Question: Ed Henning - CLSA - Analyst : Hi, thanks for taking my questions. Just a couple from me. You called out an unfavorable impact on the timing of income recognition in CGM. Can you just touch on that a little bit more? Will that reverse in the fourth quarter, or will that reverse in the next half? And how big was that as a first question?

Question: Ed Henning - CLSA - Analyst : Thanks for that. And while it's not in the fourth quarter, how long are traditionally these contracts will we get a reversal in the first half or second half next year? How does it generally flow through?

Question: Ed Henning - CLSA - Analyst : Thank you. And then just a second question on private credit, obviously grew very substantially in the period, and you just touched on it before. Can you just remind us of the upfront provisions you need to raise when you go into the private credit and the impact on the P&L and how we should think about that in this period and then going forward?

Question: Ed Henning - CLSA - Analyst : Does that see a weakness in the P&L initially?

Question: Ed Henning - CLSA - Analyst : No, that's great. Thank you very much.

Question: Andrew Triggs - JPMorgan - Analyst : Thank you. Good morning. My first question just to follow-up to Shemara's previous answer to Andrei's question. You mentioned that offshore wind farm asset sales have taken place. From my understanding, both of those were operating assets. Could you comment please on to what extent you're confident on bidders paying for the development pipeline in your platform businesses, particularly Cero Generation, please?

Question: Andrew Triggs - JPMorgan - Analyst : Excellent. And just in terms of the -- what the US election result means for your collection of renewable assets, energy assets around the world? Obviously, most of the executive orders so far have revolved around US offshore wind, which is a small part of your Corio book. But in terms of like the broader piece, the wind back of tax incentives that's likely under the IRA later in the year. What does that mean for your broader portfolio, risk of impairment, and if there are some positives given a lot of your GIG platforms are actually non-US and capital may flow into those business, into those regions? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 11:00PM, MQG.AX - Q3 2025 Macquarie Group Ltd Operating Results Call

Question: Andrew Triggs - JPMorgan - Analyst : Thanks, Shemara.

Question: Jonathan Mott - Barrenjoey - Analyst : Thank you. Two questions if I could as well. The first one on the investment income in the green, you call that zero again. I just wanted to clarify the timing. Historically, when you make a transaction, you book the revenue at financial close. If you've only got about six weeks left before the end of this period, if you actually agree to a sale, can you book the revenue then, or do you actually have to wait till the financial close, which could easily be another couple of months later before you book the revenue?

Question: Jonathan Mott - Barrenjoey - Analyst : And a follow-on question, if I could, on the commodities. It's been very cold in the US. It's a lot of volatility and different weather patterns in different parts of the US, which historically has been very good for the fourth quarter, the March quarter, in similar environments. I wanted to get a feel if you look at two different lines of risk management. And I think you commented already the inventory management and trading, you've booked some revenue, which will come out over the next 12 to 18 months. Can you comment on those two lines? So the risk management, they're expecting to be very solid into that fourth quarter. And can you give us an idea? I know it's hard, Alex, but how large are the potential unrealized gains that you could get through the storage and transport, that could get released over the next 12, 18 months?

Question: Jonathan Mott - Barrenjoey - Analyst : Okay, can I just go back to Alex, just one of the comments you gave us a very detailed answer. Thank you for that. Does that give you more confidence in the commodities, revenue, especially that the inventory management and trading into FY26?

Question: Jonathan Mott - Barrenjoey - Analyst : Thank you.

Question: Matthew Dunger - BofA Global Research - Analyst : Yeah. Thank you very much for taking my first question. You've extended the buyback, obviously seeing some more opportunities to deploy capital. Is it fair to expect that you would want to wait for some of this capital recycling? And Shemara, you talked about $2.5 billion of green assets before you resume the buyback?

Question: Matthew Dunger - BofA Global Research - Analyst : Great, thank you very much. And just if I could talk to the nine months for FY25 being broadly in line implies that the third quarter, was down roughly $200 million versus the third quarter of '24, and you've called out those North American commodities contracts and private credit originations. Are there any impairments or any other one-offs in the third quarter that I should be thinking about on top of those?

Question: Jonathan Mott - Barrenjoey - Analyst : All right, thank you.

Question: Brian Johnson - MST Financial - Analyst : Thank you very much for the opportunity to ask two questions, if I may. The first one is, Shemara, when we actually have a look at the Macquarie Private Markets EU, I think it's a little bit disappointing given the weakness that we saw in the currency. Can we get some explanation why the strong fundraising activity and kind of like the inherent growth in this business doesn't seem to be flowing through in the EU in the quarter?

Question: Brian Johnson - MST Financial - Analyst : So Alex, so sorry, just on that European real estate business, that was about EUR10 billion. So from memory, yeah. So if we were to strip that out, it was actually phenomenally strong?

Question: Brian Johnson - MST Financial - Analyst : But it's just that real estate business didn't make a lot of money, is that correct? Like the costs were pretty high? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 11:00PM, MQG.AX - Q3 2025 Macquarie Group Ltd Operating Results Call

Question: Brian Johnson - MST Financial - Analyst : Okay. Just a second question, if I may. Just slide 19, which is the one that shows the ROE in first half of '25 versus the 18-year average. I just wonder, could we just get an explanation of, a, that the currency sensitivity, we used to have a really good feel that it was 7% moving currency, 10% moving currency was 7% on the earnings. Could we get in the context of this particular slide? What is the appropriate ROE that we should be thinking from Macquarie in the longer term? Is this 18-year average the right one, or is it not?

Question: Jonathan Mott - Barrenjoey - Analyst : Thank you.