Allan Moss Chief Executive Officer General update European focus operational briefing and general update Presentation to investors and analysts 14 September 2007
Comment on global market conditions � Credit markets — Significant deterioration in global debt capital markets’ ability to transact and fund structured debt — Funds managers and other intermediaries are preserving liquidity – sharply reduced appetite for financial intermediary term investments — Banks are now funding much of what used to be placed in the non-bank sector — Transaction levels are lower — Credit spreads have widened and cost of funds has increased — Credit markets are distinguishing much more between regulated and non-regulated financial intermediaries — Quality funding transactions are still taking place on satisfactory terms � Equity markets — High volatility in equity markets globally — Very high trading volumes in Asia and Australia (retail and institutional) — Future impact of credit market disruption is uncertain 8
Comment on global market conditions � Industry transaction flow — M&A cautious — ECM subdued — Reduced private equity activity � Global real estate — US residential prices have suffered and volumes have fallen — Rising spreads affecting mortgage rates generally — Investor interest remains strong across all non-residential sectors — Upturn in Australian east coast residential ‘inner ring’ — Significant funds available for appropriate investment � Volatility positive for most global financial markets activities except in debt capital markets where transaction volumes, liquidity and debt book positions have been impacted by broader market turmoil � Australia and Asia much less affected than US or Europe � Continuing competitive environment for staff 9
Conservatively capitalised and operating very profitably � Conservatively capitalised — Tier 1 capital ratio at 31 August in excess of 15% � Well funded � All Groups are operating profitably � No unusual provisions or write downs � Businesses are diversified by product and geography � Continuing to grow staff – currently approximately 11,000* � Held For Sale assets on balance sheet: $A628m at 31 August 2007 ($A1,370m at 30 September 2006) — Expect to realise for greater than book value � Risk-weighted asset growth slower � Expect strategic opportunities in the current environment * At 31 August 2007 10
No unusual trading exposures � Main business focus is making returns by providing services to clients rather than by principal trading � No material exposures not already known to investors � No problem trading exposures � No material problem credit exposures � No exposure to Structured Investment Vehicles (SIVs) � Only modest holdings of AAA and AA rated CLOs and CDOs ($US300m approx) � No problems with debt underwritings � No underwriting of leveraged loans � Very little underwriting of corporate loans � Only modest credit exposures to the hedge fund industry 11
MBL has a long standing policy of granting very few standbys or warehouses � Minimal standby facilities to conduits : — $A255m at 31 August 2007 (zero drawn, $A255m undrawn) — $A275m at 31 March 2007 (zero drawn, $A275m undrawn) � Liquidity policy is to very substantially pre-fund any standby facilities and hold in liquid assets � Warehouse commitments are client related and high quality � Warehouse facilities also very substantially pre-funded Warehouse commitments 31 August 2007 31 March 2007 Total ($Am) Drawn ($Am) Undrawn ($Am) Total ($Am) Drawn ($Am) Undrawn ($Am) Insured prime residential 1,450 925 525 1,450 708 742 mortgages Motor vehicle leasing 828 620 208 835 644 191 Other* 395 186 209 395 306 89 Total 2,673 1,731 942 2,680 1,658 1,022 All warehouse assets are either Australian or New Zealand assets. * Other: Warehouse collateral includes non-conforming auto & RMBS loans, commercial property 12 loans and commercial lease & hire purchase receivables (including some vehicles within mixed pools).
All Groups operating profitably � Investment Banking Group — M&A and ECM pipelines reasonable — Very strong M&A completion in first quarter (to June) — Australian ECM activity lower than first quarter - partly seasonal — Solid pipeline in Asia — Cash equities – excellent volumes in Australia and Asia — Profitable asset sales in progress — Continued growth in Investment Banking Funds and assets performing well (See slides 17-18) � Equity Markets Group — Benefiting from current volatility — Generally high trading volumes in Australia and Asia 13
All Groups operating profitably � Treasury and Commodities — Benefiting from current volatility — Increased volumes across most businesses except Debt Markets � Real Estate Group — All major businesses continue to perform well — Some profitable disposals completed — Continued growth in Real Estate Funds and assets performing well (See slides 17-18) — Well positioned to capitalise on counter-cyclical opportunities associated with stress in some market sectors 14
All Groups operating profitably � Financial Services Group — Record retail broking volumes — Large June quarter inflows into Wrap and Cash Management Trust due to superannuation reforms ($A17b) — Seasonal outflows post June 30 as expected — CMT up 26% from $A14.1b (31 Mar 2007) to $A17.7b (31 Aug 2007); Wrap up 13% from 23.2b (31 Mar 2007) to $A26.2b (31 Aug 2007) � Funds Management Group — Good fund performance relative to benchmarks — Credit funds performed especially well relative to market � Banking and Securitisation — Record volumes in margin lending but expecting more subdued growth for remainder of the year — Launch of credit card business in April 2007 — Deposit volumes well up — Challenging funding markets for mortgages - see slide 16 15
Mortgage business – challenging funding markets but high quality assets � The mortgage business contributed approximately 1% of MBL profit^ for year to 31 March 2007 � Credit quality is high across all mortgage books � No lending on subprime mortgages � Default rates low by industry standards � 95% insured � Cost of funds has increased relative to prior periods � Term issuance market is challenging ^ Percentage contribution based on management accounts before unallocated corporate costs, profit share and income tax. 16
Continued growth of specialist funds � Asset Performance — Assets continue to perform well � Refinancings — Still being achieved on reasonable terms — Investment Banking Funds: approximately 2% of total asset debt due for refinancing over next 12 months — Real Estate Funds: approximately 3% of total asset debt due for refinancing over next 12 months � Acquisition Pipeline — Track record and experience position funds well to pursue opportunities — Deep expertise in debt markets — Strong investment discipline — Significant capital available for investment 17
Continued growth of specialist funds � Capital raised from investors — $A12.4b total funds raised April to August 2007 (77% international, 77% unlisted) — $A4.0b for Investment Banking Funds* (72% international, 35% unlisted) — $A2.8b for Real Estate Funds^ (88% international, 91% unlisted) — $A5.6b of other specialist funds (including Financial Products) — Other fund raisings in progress � Significant capital available for investment — Investment Banking Funds $A9.6b** — Real Estate Funds approx $A3.7b^ � New funds being developed across existing and new markets � Refer Appendix (slides 22 and 23) for further details As at 31 August 2007. * Capital raised by Macquarie and joint venture fund manager partners, including approx. A$1b of Exchangeable Convertible Bonds (ECBs) issued by MCG. **Listed funds - cash available for investment; unlisted funds- 18 investor commitments less capital invested or committed to investments. For jointly managed funds the amount is representative of Macquarie's share in the JV manager. ^Macquarie and associates
Assets under management over $A225b 14% increase since March 2007 $Ab $A225b Securities Wholesale Securities Retail $A197b 200 Other Specialist Real Estate Infrastructure 150 $A140b $A97b 100 $A63b $A52b 50 $A41b 0 2002 2003 2004 2005 2006 2007 Aug-07 19
Outlook – expect record half year result for the six months ending 30 September 2007 � Expect record first half, up strongly on pcp � Expect second quarter to be up on pcp; as in most years, down on very strong first quarter � Planning for strategic initiatives: — Group level management and central strategy unit tasked to identify opportunities — Slower risk-weighted asset growth — Continuing to hire quality staff especially in areas where we see special opportunities — Possible boutique acquisitions 20
Appendix
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