Macquarie Bank Limited Investor Presentation Richard Sheppard Deputy Managing Director September 2006
Disclaimer The name "Macquarie" refers to the Macquarie group, which comprises Macquarie Bank Limited and its worldwide subsidiaries, affiliates, and the funds or companies that they manage. Future results are impossible to predict. Opinions and estimates offered in this presentation constitute our judgement and are subject to change without notice, as are statements about market trends, which are based on current market conditions. This presentation may include forward-looking statements that represent opinions, estimates and forecasts, which may not be realized. We believe the information provided herein is reliable, as of the date hereof, but do not warrant its accuracy or completeness. In preparing these materials, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources. Macquarie Bank Limited is not licensed to conduct banking business in the United States. It maintains Representative Offices in New York, Texas, California and Washington. With respect to matters pertaining to US securities laws, and to the extent required by such laws, Macquarie Bank Limited and its worldwide subsidiaries consult with, and act through, Macquarie Securities (USA) Inc., a registered broker-dealer and member of NASD, or another US broker-dealer. Any Macquarie subsidiary noted in this presentation is not an authorized deposit-taking institution for the purposes of banking act (Commonwealth of Australia) 1959, and such subsidiaries obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of any such subsidiary. 2
Agenda � Overview � Financial performance � Earnings drivers � Developments during the first half � Outlook � Appendices — Regional growth — Specialist fund initiatives — Significant managed assets, extensive community services 3
A diversified financial services institution � Full service in Australia � Broad investment banking in Asia-Pacific � Focussed participation in international markets � Key statistics — 26% compound annual growth in NPAT over a decade — Assets under Management $A150b (June 2006) — Balance Sheet Assets $A106b (March 2006) — Market capitalisation: — Macquarie Bank (MBL): $A15.6b* ($US12.1b) – Top 15 company on ASX, over 60,000 shareholders — Macquarie Bank and Macquarie-managed funds: $A56.1b* ($42.2b) – Top 5 company on ASX, over 200,000 shareholders (*as at 9c * Macquarie and Macquarie-managed funds hypothetical market capitalisation comprises the market capitalisations of all listed Macquarie entities at 14 September 4 h 06 – Macquarie Securities) 2006 and the capitalisation of all Macquarie unlisted funds as measured by net asset value at 30 June 2006.
Almost 8,900 staff in 24 countries International staff up 49% since August 2005 to over 3,000 EUROPE ASIA NORTH AMERICA MIDDLE EAST 21 staff 1,355 staff 783 staff 687 staff Dublin Amsterdam Frankfurt London Vancouver Munich Montreal Paris Vienna Seattle Zurich Toronto Geneva Milan Boston Chicago Beijing San Francisco Hartford Rome Seoul Tokyo New York San Jose Memphis Tianjin Irvine Los Angeles Charleston Shanghai Carlsbad Jacksonville San DiegoHouston Jupiter Taipei Abu Dhabi Miami Hong Kong Hsinchu Mumbai Manila Bangkok Labuan Kuala Lumpur Singapore Jakarta Sao Paulo Johannesburg Cape Town Auckland Wellington Christchurch AFRICA AUSTRALIA NEW ZEALAND SOUTH AMERICA 72 staff 5,828 staff 105 staff 25 staff 5 Staff numbers at 31 August 2006
Operating income is diversified Investment banking (37%*) Asset & wealth management (29%*) Up 24% on pcp Up 28% on pcp excluding impact of Macquarie Goodman restructure** Mergers and acquisitions, Infrastructure, property and advisory and underwriting other specialist funds Retail and wholesale funds management and private client broking Institutional stockbroking Commodities Financial products FX, futures, treasury and debt markets Banking and securitised lending Equity derivatives Equipment and other leasing Property lending Up 14% on pcp Up 44% on pcp Other lending Lending (13%*) Financial markets (21%*) Year ended 31 March 2006. * Represents the percentage contribution to total income. ** Down 1% on pcp including MGQ 6
38 year history of profit 14 years of continuous record profits Net Profit After Tax $Am 1000 March 2006 900 3 800 Gain on formation of Macquarie Goodman 700 Group (MGQ) 2 600 500 1 400 300 0 69 71 73 75 77 79 200 100 0 69 73 77 81 85 89 93 97 '01 '05^ 7 Years ended 31 March. ^Restated for Australian equivalents to International Financial Reporting Standards (AIFRS)
Agenda � Overview � Financial performance � Earnings drivers � Developments during the first half � Outlook � Appendices — Regional growth — Specialist fund initiatives — Significant managed assets, extensive community services 8
33% increase in 27% increase in underlying profit underlying EPS* EPS PROFIT $Am Acps Impact of AIFRS 450 Impact of AIFRS 1200 Gain realised on MGQ formation EPS attributable to MGQ formation 400 1000 350 300 800 250 600 200 150 400 100 200 50 0 0 2002 2003 2004 2005^ 2006 2002 2003 2004 2005^ 2006 (reported: 13% including impact of new accounting (reported: 8% including impact of new accounting standards and Macquarie Goodman restructure) standards and Macquarie Goodman restructure) Years ended 31 March. * Basic EPS. ^Restated for AIFRS 9
59% increase in 45% increase* in assets international income under management INTERNATIONAL INCOME ASSETS UNDER MANAGEMENT Infrastructure Property $Am $Ab Other Specialist FSG/FMG Retail 160 2500 FSG/FMG Wholesale 140 2000 120 100 1500 80 1000 60 40 500 20 0 0 2002 2003 2004 2005 Mar-06 Jun-06 2002 2003 2004 2005 2006 � 48% of total income � $150b at June 2006 Years ended 31 March. * % increase for year ended 31 March 2006 10
Agenda � Overview � Financial performance � Earnings drivers � Developments during the first half � Outlook � Appendices — Regional growth — Specialist fund initiatives — Significant managed assets, extensive community services 11
Operating income 17% increase to $A4,393m * $Am 5,000 Profit on formation of MGQ Other income 4,500 Net interest income 4,000 Trading income 3,500 Fee and commission income 3,000 2,500 2,000 1,500 1,000 500 0 2002 2003 2004 2005^ 2006 Years ended 31 March. * 32% up on pcp excluding gain realised on formation of Macquarie Goodman Group (MGQ) and impact of AIFRS. ^ Restated for AIFRS. 12
Fee and commission income 34% increase to $A2,440m $Am 1000 2003 2004 2005 2006 900 800 700 600 500 400 300 200 100 0 Base fees Performance fees M&A, advisory & Brokerage and Financial products Other underwriting commissions 13 Years ended 31 March. “Other” includes banking, lending & securitisation fee income, WRAP and other administration fee income
Trading income 19% increase to $A876m $Am 1,000 Interest Rate Products 900 Foreign Exchange 800 Commodities Equities 700 600 500 400 300 200 100 0 2002 2003 2004 2005^ 2006 Years ended 31 March. ^ Restated for AIFRS, except AASB139. 14
Net interest income Loan Assets (year-end volumes) $Ab $Am Property Net interest income (as reported) 592 20 Mortgages Margin lending & equities lending AASB 139 impacts: 18 Treasury & Commodities Banking SPV amortisation of deferred loan costs 114 Macquarie Capital: Leasing 16 Macquarie Capital: Other Other amortisation of deferred loan fees (including opening (45) Clearing houses 14 Other lending balance adjustment) 12 Funding expense on derivatives reported in trading assets (112) 10 Net interest income (excluding AASB 139) 549 8 6 2006 2005 4 Average Average Spread Volume Interest Spread Volume Interest 2 % $Ab $Am % $Ab $Am 0 Mortgage SPVs 1.11 16.0 178 1.10 13.0 143 2004 2005 2006 Loan assets 2.66 16.4 437 2.64 13.9 366 Spreads stable — Trading assets and other Mortgage portfolio average — securities 0.35 17.2 60 0.59 14.4 86 volume up 23%; loan portfolio Total interest bearing assets 1.36 49.6 675 1.44 41.3 594 average volume up 18% Non-interest (126) (58) bearing assets Increased funding cost on larger — Total 549 536 equity investments portfolio 15
Operating expenses Expense/ income ratio (%) A$m 5000 80 Income Expenses Expense to income ratio 4000 78 3000 76 2000 74 1000 72 0 70 2002 2003 2004 2005* 2006 * Prior period adjusted to exclude impact of formation of Macquarie Goodman Group (MGQ). Including MGQ, the prior year is 69.1%. 16
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