Macquarie Group Limited
ACN 122 169 279
Annual
Report
2024
Macquarie Group
Year ended 31 March 2024
Macquarie is a global financial
services group operating in 34
markets in 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.
2024 Annual General Meeting
Macquarie Group Limited’s 2024 AGM will be held at 10:30am
on Thursday, 25 July 2024.
Details of the meeting will be sent to shareholders separately.
Contents
01
02
About
About Macquarie
7
Letter from the Chair
8
Letter from the Managing Director
and CEO
10
Empowering people to innovate
and invest for a better future
12
Financial highlights
18
Operating and financial review
20
Governance
Corporate Governance Statement
36
Environmental, Social and Governance
53
Diversity, Equity and Inclusion
74
Macquarie Group Foundation
78
Risk Management
82
03
04
Directors’ Report
Directors’ Report
92
Directors’ experience and
special responsibilities
96
Executive Committee
102
Remuneration Report
106
Financial Report
Financial statements
Income statements
161
Statements of comprehensive income
162
Statements of financial position
163
Statements of changes in equity
164
Statements of cash flows
166
Notes to the financial statements
167
Statutory statements
Directors’ declaration
292
Independent auditor’s report
293
Ten year history
299
05
Further Information
Additional investor information
302
Glossary
310
4
01
1 Elizabeth, Sydney
Macquarie’s new global headquarters
at 1 Elizabeth Street is a landmark,
state-of-the-art office tower in the
heart of the city’s civic, cultural and
financial district. Connected to our
existing heritage 50 Martin Place
building, it will bring our Sydney
teams together in one campus for
the first time in 25 years when it
opens mid-2024 above a major
public transport interchange.
About
5
Further Information
Financial Report
Directors’ Report
Governance
About
Macquarie Group Limited and its subsidiaries 2024 Annual Report
6
Americas ~15%
EMEA ~15%
Asia ~21%
ANZ ~49%
Macquarie (MGL and its subsidiaries,
the Consolidated Entity) is a global
financial services group with offices
in 34 markets.
Macquarie now employs over 20,600(1) people
globally across 34 markets.
(1) This figure includes staff employed in certain operationally segregated subsidiaries (OSS). Unless otherwise stated, further
references to staff data and policies do not include those in OSS.
7
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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About
Macquarie Group Limited (MGL, the Company) is listed in Australia and is regulated by the Australian Prudential
Regulation Authority (APRA), the Australian banking regulator, as a Non-Operating Holding Company (NOHC)
of Macquarie Bank Limited (MBL), an authorised deposit-taking institution (ADI). Macquarie’s activities are also
subject to supervision by various other regulatory agencies around the world.
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.
FY2024 profit
$A3,522m
About Macquarie
1969
2024
8
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.
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.
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.”
Letter from the
Chair
9
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About
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.
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.
(2) As at 31 March 2024 on our balance sheet or under Macquarie management. Excludes lending and private credit funds. GW of green energy assets reflect 100% generating capacity
of each asset, not the proportion owned or managed by Macquarie.
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-only Non-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.
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-market
buy-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
10
Letter from the Managing Director
and CEO
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.
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.”
Letter from the
Managing Director and CEO
11
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Advancing climate solutions
Despite the more challenging macroeconomic backdrop, last year saw
record levels of investment in clean energy and in the deployment
of clean technology to reduce broad-based emissions, supported by
transformative government policy, investment incentives and investor
appetite in major markets around the world.
While certain sub-sectors of the climate response were affected
by higher levels of inflation and supply chain constraints, and some
governments scaled back their most ambitious climate pledges,
long-term momentum supporting the energy transition persists.
At Macquarie, we are using our deep expertise to develop, construct,
finance and manage practical solutions to climate change across six
continents. We are investing in renewable energy solutions at scale,
supporting the next wave of climate technologies, working with clients
and portfolio companies on their decarbonisation ambitions, and
investing in nature, adaptation and resilience.
Our longstanding view remains that a managed glidepath to deliver an
orderly energy transition is the best long-term solution to the energy
trilemma of availability, affordability, and emissions.
A culture of entrepreneurialism
By balancing entrepreneurial spirit with operational discipline, actively
seeking out and involving the contribution of others, and applying
expertise and skills, our people generate new ideas that support our
clients and communities through constantly changing times, while also
managing risks and being accountable for the outcomes they deliver. I
am proud of the many ways that our people have stepped up to support
our clients in navigating changing and challenging times.
As geopolitical tensions have escalated over recent years, very real
and often tragic human impacts have been exacerbated by the greater
uncertainty inflicted on the economic environment. Addressing the key
opportunities and challenges the world faces requires the imagination,
ideas and innovation that emerge when you collaborate and bring
together diverse points of view. We work hard to maintain a culture
that empowers people to identify and realise opportunity, and supports
them to learn, achieve and succeed.
Opportunities in new technologies
Macquarie is committed to investing in and making generative AI
technologies available to our people to unlock productivity, enhance
creativity and improve outcomes, ultimately enhancing the experiences
of our clients and the community. In FY2024, we piloted a range of
Generative AI products and commenced the rollout of enterprise tools
to help our staff with everyday activities. Our businesses continue to
explore targeted solutions in their areas. Through a strong focus on AI
governance and risk management, we have the guardrails in place to
protect our people, our business and our clients.
Investing in our communities
and our workplaces
A founding principle of Macquarie is creating value for the communities
in which we operate by using our expertise to address areas of unmet
need, and each of our businesses seeks to do this across their areas
of focus.
As a global leader in the infrastructure sector, we develop and manage
essential assets that connect communities around the world. This
includes creating, investing in, and operating assets across the energy,
utility, transportation, digital, waste management and social sectors.
In 2024, we will open our new global headquarters in the heart of
Sydney, which has drawn on our team’s skillsets across a complex urban,
multi-sector development. Part of a new integrated transport and
community precinct being delivered in partnership with the New South
Wales Government, the project will provide a place for people to come
together, facilitate interaction across communities and deliver shared
value to all.
This will be followed by the opening of our new regional headquarters
for the Americas at 660 Fifth Avenue in New York, coinciding with our
30th anniversary of operating in the region.
Management changes
After 28 years with Macquarie and five years as Group Head,
Nicholas O’Kane stepped down as Head of CGM and from
Macquarie’s Executive Committee, on 27 February 2024. Simon Wright,
who was Global Head of CGM’s Financial Markets division and has been
with Macquarie for 35 years, became Group Head, joining the Executive
Committee on 1 April 2024.
I would like to thank Nick for his significant contribution to CGM and
Macquarie more broadly. He leaves a team and business that is very
well-positioned for the future, and I look forward to continuing to work
with Simon to build on CGM’s success.
External outlook
Market conditions are likely to remain challenging for some time,
making forecasting difficult. While we haven’t provided overall guidance
for the 2025 financial year, factors impacting our client franchises in the
short-term outlook are outlined further in this report.
Macquarie remains well-positioned to deliver superior performance
for our clients, communities and shareholders in the medium term
due to Macquarie’s diversification, businesses that lead in their niches,
and our combination of global knowledge and local expertise. These
are supported by a strong and conservative balance sheet, ongoing
investment in our operating platform, flexibility to allocate capital,
and our proven risk management framework and culture.
On behalf of senior management, we would like to thank Macquarie’s
staff for their work and dedication. As a services business, our people
are one of our greatest strengths and our success over the past
55 years has been driven their expertise, commitment and ideas. Such
success would not be possible without the support of our clients and
shareholders, for which the Macquarie team is extremely grateful.
Shemara Wikramanayake
Managing Director and Chief Executive Officer
Sydney
3 May 2024
Empowering people to innovate and invest for a better
future
12
Through its investment in National Gas, Macquarie Asset Management is supporting the
safe, secure and reliable transportation of gas across the UK and working with partners to
future-proof the energy system.
13
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Empowering people to
innovate and invest for
a better future
A founding principle of Macquarie was creating value for the communities in which
we operate by bringing together expertise, commitment and ideas to develop
solutions that have a positive societal impact.
‘Empowering people to innovate and invest for a better future’ describes Macquarie’s purpose.
By empowering people – our colleagues, clients, communities, shareholders and partners – we seek to
achieve our shared potential.
Unlocking capital and ideas, we create investment opportunities while helping facilitate economic activity,
address unmet community needs and advance long-term prosperity.
We are custodians of businesses and
infrastructure that underpin economies
and communities around the world and are
relied on by hundreds of millions of people
every day. Through long-term investment, we
maintain, upgrade and build assets in energy,
transportation, technology, social infrastructure
and utilities.
We connect communities with capital and
innovation to meet the growing demands of
population growth, changing demographics
and the opportunities in digitalisation. Our
specialist teams in each region work with
clients and partners to respond to common
challenges, helping meet the specific needs of
local communities.
We offer solutions to help clients navigate
diverse energy, critical mineral and other
commodity markets, develop new approaches
to accelerate their energy transition, and
help communities decarbonise through the
deployment of green energy technologies.
We bring more choice and innovation to retail
financial services in Australia. From everyday
banking to investing, growing a business or
buying a home, we support our customers
through key moments in their lives.
14
Investing in world-class workplaces
Our workplaces are designed to inspire innovation and learning,
reinforce our culture, and empower our people, customers and
communities to connect and collaborate. We respond to the
changing needs of our business and create equitable workplace
environments that have a positive impact on the community. In the
past two years we have opened new or refurbished offices in Hong
Kong, Houston, Seoul, Melbourne, Milan, Paris, Santiago and Tokyo.
In the coming months, we will open our new global headquarters at
1 Elizabeth Street in the centre of Sydney, as part of our delivery of
the new Metro Martin Place station and surrounding precinct. Our
existing heritage 50 Martin Place building has been integrated with
the new development, bringing our Sydney teams together in one
campus for the first time in 25 years.
This will be followed by the opening of our new Americas
headquarters at 660 Fifth Avenue in New York, aligned with the
30th anniversary of operating in the region and demonstrating
our ongoing commitment to and growth in this dynamic part of
the world.
Through a focus on creating efficient, sustainable and inclusive
spaces and infrastructure with the latest technology, our
workplaces support the future growth and globally connected
culture of our businesses and our clients. Both our new Sydney
and New York offices have been designed with a dual focus on
sustainability and wellbeing. Each is designed to be 100% electric
in normal operations, maximise direct access to natural light and
views, provide landscaped outdoor areas, optimise indoor air
quality, and offer dedicated end-of-trip facilities. The 1 Elizabeth
Street, Sydney building has achieved a 6-Star Green Star Design
rating, and the 660 Fifth Avenue, New York project’s design is
targeting a LEED Gold Rating.
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Delivering essential infrastructure
Around the world we create, invest in and operate assets that underpin economic and social activity, working
with governments and communities to unlock the capital and specialist expertise required to maintain, upgrade
and build the infrastructure of the future.
Through its investment in National Gas, MAM is supporting the safe, secure and reliable transportation of gas
across the UK and working with partners to future-proof the energy system. As well as maintaining a safe, secure
and reliable source of energy for over 23 million homes, it’s helping create a next-generation transmission system
capable of transporting low-carbon gases.
CGM has played a pivotal role supporting UK energy providers in the transition to smart meters – a crucial
enabler of more efficient energy networks by giving consumers and businesses real-time access to their energy
usage data. Over the past 20 years, we have grown to become one of the largest independent meter asset
providers in the UK, with just under 8 million owned and managed smart meters.
Macquarie Capital is delivering community connectivity through investments and partnerships in digital
infrastructure projects. These include Onivia, Spain’s first independent fibre network operator, which is
investing in high-speed internet access, supporting the government’s agenda to accelerate the country’s digital
transformation. In India, through its investment in network infrastructure provider CloudExtel, Macquarie Capital
is helping to improve the coverage, capacity and speed of data connectivity in local communities.
As governments around the world tackle widespread residential real estate shortages, we are supporting the
delivery of new affordable, social and specialist disability accommodation. In the UK, MAM has established
Goodstone Living, a specialist residential
investment manager and developer with
almost 900 new energy-efficient homes under
construction. It has also supported a housing
association’s investment in its property
portfolio to meet current safety and energy
efficiency standards. Meanwhile in Australia,
MAM portfolio company Local is aiming to
create over 5,000 build-to-rent apartments at
affordable rental levels by 2026.(3)
In Australia and New Zealand, Macquarie Capital
is working with Kinetic, an industry leader in the
electrification of bus fleets and depot networks.
Through an infrastructure debt repositioning,
it is supporting Kinetic to meet its ambitious
growth pipeline and decarbonisation goals,
including replacing diesel buses with zero
emission vehicles.
(3) ‘Integrating impact housing in Australian build-to-rent developments’, Macquarie.
16
Advancing
climate solutions
2023 was more challenging for the energy
transition as new projects faced inflationary
and supply chain pressures. Nonetheless,
global investment reached $US1.8 trillion,
an increase of 17% on the previous year.(4)
During FY2024, we extended our activities
in supporting the scale-up of established
technologies, such as wind and solar, while
also investing in less mature technologies,
including green fuels.
MAM’s global offshore wind platform, Corio
Generation – named Offshore Developer
of the Year at the 2023 Wind Investment
Awards, progressed its development pipeline. Its two UK-based
projects, Outer Dowsing and the West of Orkney Wind Farm,
submitted offshore planning applications, with the West of Orkney
project being the first ScotWind project to achieve this milestone.(5)
MAM also launched Aula Energy, a new Australasia-focused
renewables platform created with an initial onshore wind
development pipeline of ~4GW of capacity.
During the year, Macquarie Capital acquired ONYX Insight, a leading
provider of wind turbine performance analytics and condition-based
monitoring to the wind energy industry. ONYX monitors more than
17,000 turbines in over 30 countries, providing technology solutions
to 7 of the top 10 wind asset owners.(6)
Beyond renewables, MAM sees a growing opportunity to generate
new institutional investment in more nascent elements of the
energy transition and reached first close on Macquarie’s first energy
transition fund, Macquarie Green Energy Transition Solutions.
Aligned to this strategy, MAM also became the lead investor in
a funding round to support the construction of a 16 GWh/year
gigafactory in Dunkirk, France. Among other investments, MAM
also committed to support an industrial-scale green nitrogen
fertiliser development platform in the Americas, contributing to the
decarbonisation of the agriculture sector.
CGM continues to develop and deploy climate solutions to help
clients with their decarbonisation pathways, including those in
carbon-intensive industries, and to support new initiatives in clean
fuels and critical minerals. This includes helping meet growing
demand for the supply of low-carbon methanol by the shipping
industry, through logistics, capital and price risk management
services. The business has also developed a new lithium hedging
solution to help corporate clients de-risk their supply chains,
supporting greater availability of the mineral for the manufacture of
clean technologies.
(4)
BloombergNEF.
(5)
‘West of Orkney Windfarm first ScotWind project to submit offshore consent application’, West of Orkney Windfarm.
(6)
‘About us’, ONYX Insight.
(7)
MAM generally only has influence over scope 1 and 2 emissions. However, to the extent possible, in line with the Net Zero Asset Managers initiative guidance, MAM intends to
support assets where it has control or significant influence to reduce their scope 3 emissions.
(8)
The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by maintaining a global temperature rise this century well below 2°C above
pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5°C. The Intergovernmental Panel on Climate Change concluded the need for net zero
emissions by 2050 to remain consistent with 1.5°C.
Progress towards net zero
During the year, we published our second Net Zero and Climate
Risk Report. It provided an update on financed emissions targets
for the coal, oil/gas and motor vehicle sectors, and added new
targets for Australian residential mortgage lending. We now have
targets in place for over 80% of our dollar ($A) exposures to carbon
intensive sectors.
MAM is committed to investing and managing its portfolio in line
with global net zero scope 1 and 2 greenhouse gas emissions by
2040, where it has control or significant influence.(7) It is working
with its portfolio companies and properties to ensure their net
zero business plans are firmly embedded within their organisations
and supported by the right resources, providing them with access
to Macquarie’s breadth of green investment expertise, industrial
capabilities and specialist external partners. Where it does not have
control or significant influence, such as in its managed portfolio
of public securities, MAM will continue to support the goals of the
Paris Agreement(8) in a manner consistent with its client-guided
fiduciary and regulatory responsibilities.
We believe that the energy transition needs to be managed, orderly
and just, and CGM is actively supporting carbon-intensive industries
to reduce their emissions while maintaining the vital services they
provide and on which communities and industries rely. The scale and
breadth of the transition is driving the delivery of holistic solutions
across CGM’s activities, markets, and client sectors, including
carbon and emissions; renewable and flexible power; clean fuels;
sustainable transport; critical minerals; the circular economy; and
sustainable finance.
Representatives from across Macquarie attended our third
successive Conference of the Parties (COP28), meeting with clients
and stakeholders in Dubai to discuss the role that we play to support
countries and corporates’ ambitions to reach net zero.
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Improving governance outcomes
As a custodian of vital businesses and through the investments we
make, we have the opportunity to actively drive positive change by
advancing governance and societal outcomes.
Macquarie Capital has supported the growth of Forwood, which
provides safety software to help companies in high-risk industries
globally, including mining, construction and utilities, prevent
fatalities. Using artificial intelligence and video analytics to monitor
safe behaviours and conditions, Forwood’s technology has now
been implemented across more than 800 sites globally.
Macquarie Capital also supported Partners Group’s refinancing of
Civica, which provides software to public bodies across government,
healthcare and education in the UK, Asia and the US that helps them
increase the efficiency and transparency of service delivery.(9)
MAM continues to encourage its portfolio companies to implement
board-approved DEI strategies. One such example is portfolio
company 2degrees, a New Zealand telecommunications provider,
which has secured Rainbow Tick certification, awarded to
organisations that demonstrate they understand and welcome
sexual and gender diversity, following the two-year development of
a new DEI strategy.
In the US, MAM is engaging with American Electric Power
(AEP) – one of America’s largest power companies – on how it
is supporting communities affected by coal plant shutdowns. A
portfolio investment of several MAM Public Investments funds, AEP
is working towards a just transition for those affected by its move
to net zero, ensuring it is an inclusive process that generates new
jobs and reduces inequality.
As a shareholder in over 1,000 stocks globally, the Macquarie
Systematic Investments team within MAM is taking a data-driven
approach to modern slavery risk. Through direct engagement with
companies, the team is able to improve the quality of investment
data and encourage improved transparency and disclosures,
while identifying those that require closer monitoring and further
engagement to track their progress.
In Australia, BFS continues to invest in new safety and
security technology, such as the Macquarie Authenticator
app, a market-leading multi-factor authentication tool that
provides banking customers with real-time account security
alerts and notifications.
(9) ’Governance, Risk & Compliance’, Civica.
Driving social impact around
the world
The Macquarie Group Foundation (The Foundation)
drives philanthropic social impact work for
Macquarie, supporting our people, businesses and
communities to build a better future.
During FY2024, $A67 million was contributed
to 3,000 non-profits around the world through
employee donations and fundraising, Foundation
matching and donations, grants and social impact
investments, marking a significant increase on
FY2023 and a record year of giving. This includes
a record $A10 million raised by the 10th annual
Foundation Week, during which our people organised
or participated in over 320 charitable initiatives, spanning 42 offices
in 25 markets and supporting more than 240 non-profits globally.
By partnering with Macquarie businesses, the Foundation helps
integrate a shared value approach into existing business models
and identify projects that can deliver both increased social value
and enhanced commercial outcomes. Catalysing this work, the
Macquarie Shared Value Award recognises a team driving social
impact through a shared value project. The 2023 winner was
a project managed by Macquarie Capital in the Americas – to
develop major bridges in Pennsylvania while also deploying an
enduring workforce development initiative. Philadelphia Works, the
non-profit involved in the project, was awarded a $A100,000 grant
to help increase the scope and scale of social impact.
During the year, World YMCA – whose vision is empowering young
people and communities worldwide to build a just, sustainable,
equitable and inclusive world – became the Foundation’s second
global grant partner. Grant funding will support pilot interventions
that use digital solutions and innovative financing to move
historically underserved young people beyond skilling and into work.
New social impact investments were also announced, including
one to US-based Pursuit which received a philanthropic grant
and a social impact investment. These two complementary
forms of catalytic capital will enable Pursuit to scale its impact
supporting low-income individuals without a college degree into
long-term careers.
18
FY2024 net profit
$A3,522m
¶
¶
32% on prior year
FY2024 net operating income
$A16,887m
¶
¶
12% on prior year
FY2024 operating expenses
$A12,061m
—
—
in line with the prior year
FY2024 earnings per share
$A9.17
¶
¶
32% on prior year
FY2024 return on equity
10.8%
¶
¶
from 16.9% in the prior year
FY2024 dividends per share
$A6.40
(40% franked)
¶
¶
15% on prior year
FY2024 effective tax rate
26.8%
µ
µ
from 26.0%
in prior year
Assets under management
$A938.3b
µ
µ
from $A878.6b(10)
as at 31 March 2023
(10) MAM Private Markets AUM includes equity yet to deploy and equity committed to assets but not yet deployed.
Financial highlights
19
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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About
FY2024 international income(11)
EMEA
23%
Asia
9%
Americas
34%
Australia(12)
34%
FY2024 net profit contribution(13) by activity
Annuity‑style activities
Markets‑facing activities
$A3,014m
¶
¶
27% on prior year
$A3,699m
¶
¶
40% on prior year
(11) International income is net operating income excluding Corporate items.
(12) Includes New Zealand.
(13) Net profit contribution is management accounting profit before unallocated corporate costs, profit share and income tax.
~18%
Macquarie Asset
Management
~19%
~8%
Macquarie
Capital
Commodities and
Global Markets
~39%
~16%
~45%
~55%
Banking and
Financial Services
20
Macquarie is a diversified financial
services group providing clients with
asset management and finance,
banking, advisory, and risk and capital
solutions across debt, equity and
commodities.
Operating and financial review
Our businesses
Further information is also available at
macquarie.com/company
For more details on the operational performance
of the Operating Groups, see slides 13 to 16 of the
presentation to investors and analysts available at
macquarie.com/fy24-investor-presentation
Asset
management
Banking
Advisory
Capital
solutions
21
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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About
For internal reporting and risk management purposes, Macquarie is divided into four Operating Groups, which are
supported by four Central Service Groups. The Operating Groups are split between annuity-style businesses and
markets-facing businesses.
Central Service Groups
The Central Service Groups provide a range of functions supporting Macquarie’s Operating Groups, ensuring they have the appropriate
workplace support and systems to operate effectively and the necessary resources to meet their regulatory, compliance, financial, legal and
risk management requirements.
Risk Management Group (RMG)
An independent and centralised function responsible for
independent and objective review and challenge, oversight,
monitoring and reporting in relation to Macquarie’s material
risks. RMG designs and oversees the implementation of the risk
management framework.
Legal and Governance Group (LGG)
Provides a full range of legal and corporate governance services,
including strategic legal and governance advice and risk assessment
on corporate transactions, treasury and funding, insurance,
regulatory enquiries and litigation.
Financial Management Group (FMG)
Responsible for capital, funding, liquidity, tax and strategic analysis
and advice to support the growth of the Macquarie business.
Ensures Macquarie meets its financial, regulatory and tax reporting
compliance obligations, as well as maintaining relationships with a
range of significant external stakeholders.
Corporate Operations Group (COG)
Provides specialist services in technology, operations, human
resources, workplace, data, digital, strategy, operational risk
management, business resilience and global security, and the
Macquarie Group Foundation.
22
Operating and financial review
Our businesses continued
Annuity‑style businesses
Macquarie Asset Management
Banking and Financial Services
$A1,208m
$A1,241m
¶
¶
48% on prior year
µ
µ
3% on prior year
MAM is investing to deliver positive outcomes for our clients, portfolio
companies and communities.
MAM provides investment solutions to clients across a range of capabilities,
including real assets, real estate, credit, equities & multi-asset and
secondaries.
BFS serves the Australian market and is organised into the following three
business divisions:
•
Personal Banking: Provides a diverse range of retail banking products
to clients with home loans, car loans, transaction and savings accounts
and credit cards
•
Wealth Management: Provides clients with a wide range of
wrap platform and cash management services, investment and
superannuation products, financial advice and private banking
•
Business Banking: Provides a full range of deposit, lending and payment
solutions, as well as tailored services to business clients, across a range
of key industry segments.
FY2024 Highlights
MAM assets under management as at 31 March 2024 increased 7% to
$A938.3 billion from $A878.6 billion as at 31 March 2023, due to favourable
market movements, investments made by Private Markets-managed
funds and favourable foreign exchange movements, partially offset by
assets no longer managed as a result of reduction of co-investment
management rights.
During the period, MAM raised $A21.9 billion in new equity from clients
across a diverse range of strategies, including regional and global
infrastructure and energy transition, with record raisings in private credit.
MAM invested $A17.9 billion of equity across 51 new investments, including:
19 real assets, 18 real estate and 14 private credit investments.
From 1 November 2023, MAM established Credit as a division, combining
the expertise and investment capabilities across Private Credit, Asset
Finance and Fixed Income, to create a global integrated credit platform with
broad offering to clients.
Medium‑term
MAM is well-positioned to respond to current market conditions and grow
assets under management through its diversified product offering, track
record and experienced investment teams. MAM continues to invest in
existing and new green platforms as MAM Green Investments transitions to
a fiduciary business.
FY2024 Highlights
For the year ended 31 March 2024, the loan portfolio increased 10% to
$A140.2 billion and BFS deposits increased 10% to $A142.7 billion. Funds
on platform increased 15% to $A141.8 billion driven by strong net flows of
$A3.0 billion and favourable market movements.
The home loan portfolio increased 10% to $A119.3 billion driven by strong
demand in lower loan-to-value ratio and owner-occupier lending tiers, while
the Business Banking loan portfolio increased 22% to $A15.8 billion driven
by strong client retention, an increase in client acquisition across core
segments and a continued build into emerging segments.
During the year, BFS expanded the Macquarie Wrap managed accounts
offering with funds under administration of $A13.8 billion, up from
$A10.5 billion at 31 March 2023.
Medium‑term
BFS remains focused on growth opportunities through intermediary and
direct retail client distribution, platforms and client service; opportunities
to increase financial services engagement with existing Business Banking
clients and extend into adjacent segments; and modernising technology to
improve client experience and support scalable growth.
23
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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About
Markets‑facing businesses
Commodities and Global Markets
Macquarie Capital
$A3,213m
$A1,051m
¶
¶
47% on prior year
µ
µ
31% on prior year
CGM is a global business offering capital and financing, risk management,
market access, physical execution and logistics solutions to its diverse client
base across:
•
Commodities: Provides capital and financing, risk management, and
physical execution and logistics solutions across power, gas, emissions,
agriculture, oil and resources sectors globally
•
Financial Markets: Provides risk management, capital and financing
solutions, and market access to corporate and institutional clients with
exposure to foreign exchange, rates, fixed income, credit markets and
listed derivatives markets
•
Asset Finance: Global provider of specialist finance and asset
management solutions across a variety of industries and asset classes.
Macquarie Capital has global capability in advisory and capital raising
services, providing clients with specialist expertise and flexible capital
solutions across a range of sectors.
It also has global capability in specialist investing across private credit,
private equity, real estate, growth equity, venture capital, and in
infrastructure and energy projects and companies.
Macquarie Capital’s Equities brokerage business provides clients with access
to equity research, sales, execution capabilities and corporate access.
FY2024 Highlights
CGM recorded a net profit contribution of $A3.2 billion, reflecting the
diversity and strength of CGM’s client platform. This result was down 47%
on the prior year, which was characterised by exceptionally strong market
volatility, particularly in commodities.
Commodities contribution was down on the prior year due to decreased risk
management income primarily in EMEA Gas and Power, and Resources. The
decrease was partially offset by an increased contribution from Agricultural
markets. Inventory management and trading income substantially lower
driven by a reduction in trading activity primarily in North American Gas and
Power, partially offset by timing of income recognition on Gas and Power
transport and storage contracts.
Financial Markets contribution was up on the prior year, driven by increased
client hedging activity across foreign exchange and interest rate products
and an increased contribution from the Futures business.
Asset Finance contribution was down on prior year, primarily due to an
increase in operating expenses, notwithstanding strong origination and
portfolio growth in Advanced Technology and Shipping Finance.
CGM continues to be recognised across the industries it operates in, with a
number of awards earned during the period including House of the Year for
Oil and Products, Electricity and Commodities Research at the Energy Risk
Awards 2023 and House of the Year for Commodities Research, Derivatives,
Environmental Products, Commodity Trade Finance, Natural Gas/LNG and
Emissions at the Energy Risk Asia Awards 2023. CGM is ranked as No.1
Futures Broker on the ASX.
Medium‑term
CGM remains focused on: opportunities to grow the commodities business,
both organically and through adjacencies; the development of institutional
and corporate coverage for specialised credit, rates and foreign exchange
products; providing tailored financing solutions globally across a variety
of industries and asset classes; continued investment in the asset finance
portfolio; supporting the client franchise as markets evolve, particularly
as it relates to the energy transition and growing the client base across
all regions.
FY2024 Highlights
Macquarie Capital maintained its leading market position in ANZ across
M&A (by deal count) and capital markets (by deal value) in FY2024 and
No.1 Global Financial Adviser in Energy Transition on the Inspiratia FY2023
Energy Transition League Table Report (by deal volume).
Macquarie Capital acted as lead sell-side adviser to Parchment, an academic
credential management platform on its sale to Instructure (NYSE: INST)
for $US835 million and Joint Bookrunner on the financing to fund
the acquisition.
As a market leading advisory business with global reach, Macquarie
Capital acted as financial adviser to MMG Limited on its acquisition of
the Khoemacau copper mine in Botswana for $A2.9 billion. Khoemacau is
expected to significantly increase MMG’s scale and place MMG as a Top 10
copper-focused producer globally.
As at 31 March 2024, the committed private credit portfolio grew to over
$A21.5 billion, with more than $A4.5 billion deployed in FY2024 through
focused investment in credit markets and bespoke financing solutions.
Macquarie Capital provided bespoke financing to Ottobock, the global
leader in orthotic and prosthetic solutions.
Macquarie Capital also announced the acquisition of ONYX Insight, the
leading provider of wind turbine performance analytics and condition-based
monitoring to the wind energy industry.
Medium‑term
Macquarie Capital continues to support clients globally across long-term
trends including tech-enabled innovation, the need for infrastructure and
resilience and the growth in private capital. It pursues opportunities for
balance sheet investment alongside clients and management teams and
infrastructure project development. It continues to tailor the business
offering to current opportunities and market conditions including providing
flexible capital solutions across sectors and regions. Macquarie Capital is
well-positioned to respond to changes in market conditions.
For more details on the financial performance of the Operating Groups, see section 3.0 Segment analysis of the Management
Discussion and Analysis available at macquarie.com/results
24
Operating and financial review
Our businesses continued
Our business strategy
The growth of Macquarie’s global operations over 55 years reflects our philosophy to expand selectively, focusing on specialist areas where
we bring deep expertise to address areas of unmet need on behalf of clients and communities in line with our purpose and longstanding
operating principles. We offer our teams significant operating freedom balanced by limits on risk. Alignment of interests is a longstanding
feature, demonstrated by willingness to both invest alongside clients and closely align the interests of shareholders and staff.
This approach has helped us to grow into a diversified global business, conducting a broad range of activities and creating enduring franchises
where we have differentiated perspectives. Our approach has not been to place big bets, but to expand adjacently, taking learnings from one
market to another, or using expertise built in one part of a sector to grow into another.
This philosophy is reflected in our flexible approach to allocating capital. We rely on our teams who are close to their markets and clients to
drive ideas, setting out both the opportunity they have identified but also the associated risks and how they plan to manage them, with the
teams in the business remaining accountable for the long-term outcomes they deliver. Teams at the centre of the organisation assess the
case being made, including second line review of risks, before allocating capital with a view to maintaining diversification across our activities
while seeking an acceptable risk adjusted return for each project, based on its specific characteristics.
Our Purpose
Why we exist
Empowering people to innovate and invest for a better future
Our Principles
How we do business
Opportunity
Accountability
Integrity
Our Strategy
is developed from the bottom up
MAM
Macquarie
Asset Management
BFS
Banking and
Financial Services
Annuity style businesses
CGM
Commodities
and Global Markets
Macquarie
Capital
Markets-facing businesses
Our core business involves utilising our
human capital
to realise opportunities, backed by
a strong balance sheet
Evolution driven by:
• Addressing unmet client and community needs
• Building enduring franchises from positions of deep expertise
• Managing diversified businesses across regions and service offerings to deliver
consistent returns through the cycle
• Pursuing evolutionary growth opportunities adjacent to existing businesses
• Ensuring accountability and entrepreneurial endeavour from staff
• Maintaining a strong and conservative balance sheet with diversified sources
of funding
• Adopting a disciplined approach to risk management, underpinned by a sound risk
culture and embedded across Operating and Central Service Groups
Supported from the
centre
COG
Corporate
Operations Group
FMG
Financial
Management Group
RMG
Risk Management
Group
LGG
Legal and
Governance Group
Our purpose and principles and what we expect of our staff are set out in our Code of Conduct.
macquarie.com/what-we-stand-for
25
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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Risk management
A sound risk culture has been integral to
Macquarie’s risk management framework.
Risk culture
Macquarie sets, promotes, monitors and reflects on the
effectiveness of our risk culture. Macquarie’s approach to
maintaining a sound risk culture is based on:
• setting behavioural expectations
• leading and executing
• monitoring, measuring and reporting.
Risk management framework
Macquarie’s risk management framework is the totality of
systems, structures, policies, processes and people within
Macquarie that identify, measure, evaluate, monitor, report and
control or mitigate all internal or external sources of material risk.
Macquarie’s approach to risk management is based on stable and
robust core risk management principles. These are:
• ownership of risk at the business level
• understanding worst-case outcomes
• requirement for an independent sign-off by RMG.
Macquarie’s approach to risk management adopts the ‘three
lines of defence’ model, which sets risk ownership responsibilities
functionally independent from oversight and assurance:
• primary responsibility for day-to-day risk management lies
with the business
• RMG forms the second line of defence
• Internal Audit, as the third line, provides independent and
objective risk-based assurance.
Refer to the Risk Management section of this Annual
Report for details on Macquarie’s risk management
framework, risk culture and conduct risk management
Macroeconomic factors
The key macroeconomic risks to Macquarie’s
short and medium term financial outlook noted
on page 32 are:
Market conditions
The general condition of markets, driven by macroeconomic,
climate and geopolitical factors, may have a bearing on
Macquarie’s businesses. Changing market conditions influence
the volume and timing of client and principal transactions across
businesses and the value of various equity, credit and market risk
exposures held by Macquarie on its balance sheet.
The value of the Australian dollar
A significant proportion of Macquarie’s net income is
denominated in foreign currency. Therefore, net income will
be lower in Australian dollar terms if the Australian dollar
appreciates against other foreign currencies, and net income
will be higher in Australian dollar terms if the Australian dollar
depreciates against other foreign currencies.
Potential regulatory changes
Macquarie is affected by changes in regulation. Regulatory change
continues to increase at both the global and Australian levels
and has the potential to affect the regulatory capital and funding
requirements and profitability of Macquarie’s businesses.
Funding and liquidity
Macquarie uses deposits and debt markets, among other funding
sources, to fund its assets. Macquarie is therefore exposed to the
risk of an increase in the cost of funding, or of reduced access to
funding sources.
Technology
Macquarie recognises that with the use of systems, technology,
and platforms to support its business activities, it is exposed
to risk of loss resulting from failure, inadequacy or misuse of
technology and technology resources.
In determining those risks that are material to Macquarie, we
assess the potential for a risk to affect our earnings resilience
and financial strength across market cycles; our ability to meet
regulatory obligations; our stakeholders; and our reputation.
Macquarie’s material risks include asset, conduct, country, credit,
environmental and social, equity, financial crime, legal, liquidity,
market, operational, regulatory and compliance, strategic, tax,
technology and cyber, and work health and safety risks.
Further details on the management of these material
risks are available at macquarie.com/risk-management
26
Operating and financial review
for the year ended 31 March 2024
Review of Group performance and financial position
Overview
Profit attributable to ordinary
equity holders of $A3,522 million for
the year ended 31 March 2024
decreased 32% from $A5,182 million
in the prior year.
FULL YEAR TO
31 Mar 24
31 Mar 23
Movement
$Am
$Am
%
Net operating income
16,887
19,122
(12)
Operating expenses
(12,061)
(12,130)
(1)
Income tax expense
(1,291)
(1,824)
(29)
(Profit)/Loss attributable to non-controlling interests(14)
(13)
14
*
Profit attributable to ordinary equity holders
3,522
5,182
(32)
* Indicates that the result was a gain in one period and a loss in another, or vice versa.
For more details on the financial performance of the Operating Groups,
see section 3.0 Segment Analysis of the Management Discussion and Analysis
available at macquarie.com/fy24-mda
(14) Non-controlling interests’ adjusts reported consolidated profit or loss for the share that is attributable to non-controlling
interests, such that the net profit or loss contribution represents the net profit or loss attributable to ordinary equity holders.
27
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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FY2024 net profit contribution by Operating Group
Summary of the Operating Groups’ performance for the year ended 31 March 2024.
Annuity‑style businesses
Markets‑facing businesses
Non‑Banking Activities
Macquarie Asset Management (MAM)
$A1,208m
¶
¶
48% on prior year due to
Macquarie Capital
$A1,051m
µ
µ
31% on prior year due to
•
decreased net income on equity, debt and other
investments driven by lower asset realisations
in green investments
•
increased net expenditure on investments in green energy
portfolio companies operating on a standalone basis
•
increased net interest and trading expense primarily driven
by higher funding costs due to an increase in central bank
interest rates and investments.
Partially offset by:
•
reversal of an impairment previously recognised on a green
equity investment.
•
higher net interest and trading income primarily from the private credit portfolio,
benefitting from $A3.6 billion growth in average drawn loan assets with margins in
line with the prior year and the non-recurrence of mark-to-market losses on certain
debt underwriting positions
•
lower credit provisions due to an improvement in the macroeconomic outlook and
lower deployment of the private credit portfolio
•
reversal of impairments on a small number of previously underperforming investments.
Partially offset by:
•
lower net gains on investments including the non-recurrence of material asset realisations
•
lower fee and commission income driven by lower mergers and acquisitions fee
income due to weaker market activity
•
higher funding costs reflecting higher central bank interest rates and
investment activity
•
higher operating expenses driven by higher expenditure on technology platforms,
increased compliance and regulatory spend and higher employment expenses.
Banking Activities
Banking and Financial Services (BFS)
$A1,241m
µ
µ
3% on prior year due to
Commodities and Global Markets (CGM)(15)
$A3,213m
¶
¶
47% on prior year due to
•
higher net interest and trading income driven by growth
in the loan portfolio and BFS deposits, and the full year
benefit of the rising interest rate environment, partially
offset by margin compression due to changes in portfolio
mix, lending competition and higher funding costs
•
higher fee and commission income driven by growth in
average funds on platform, as well as higher lending and
transaction volumes
•
credit impairment reversals largely driven by improvement
in the macroeconomic outlook, particularly in the home
loans portfolio, partially offset by changes in composition
of portfolio growth.
Partially offset by:
•
higher operating expenses driven by higher employment
expenses and increased technology investment to support
portfolio growth, compliance and regulatory requirements.
•
substantially lower inventory management and trading income driven by a
reduction in trading activity, primarily in North American Gas and Power,
partially offset by timing of income recognition on Gas and Power transport and
storage contracts
•
decreased risk management income primarily in EMEA Gas and Power, and
Resources due to decreased client hedging as volatility and price movements
stabilised across commodity markets following record highs in the prior
year. The decrease was partially offset by an increased contribution from
Agricultural markets
•
higher operating expenses driven by higher expenditure on technology
platform and infrastructure, compliance and regulatory spend and higher
employment expenses.
Partially offset by:
•
increased foreign exchange, interest rate and credit products income driven by
increased client hedging activity in foreign exchange and interest rate products and
an increased contribution from the Futures business
•
increased operating lease income driven by increased volumes in technology and
energy sectors.
Corporate
Net expenses of $A3,191m
¶
¶
38% on prior year due to
•
reduced operating expenses driven by lower performance-related profit share expense as a result of the performance of the Consolidated Entity and
lower expenses on certain legacy and other transaction-related charges
•
increased net interest and trading income, driven by increased earnings on capital reflecting higher central bank interest rates and higher average
volumes, the impact of Macquarie’s previously elevated centrally held liquidity and funding surpluses being deployed into the Operating Groups, and
improved returns on Group Treasury’s liquid asset portfolio
•
reduced income tax expense as a result of the performance of the Consolidated Entity, partially offset by a higher effective tax rate mainly driven by the
geographic composition and nature of earnings.
For more details on the financial performance of the Operating Groups, see section 3.0 Segment analysis of the Management
Discussion and Analysis available at macquarie.com/results
(15) Certain assets of the Financial Markets business, certain activities of the Commodity Markets and Finance business, and some other less financially significant activities are
undertaken from within the Non-Banking Activities.
28
Operating and financial review
Review of group performance and financial position continued
Net operating income
Net operating income of $A16,887 million for the year ended 31 March 2024 decreased 12% from $A19,122 million in the prior year.
The decrease was primarily driven by lower net interest and trading income and lower net other operating income, partially offset by
credit and other impairment reversals in the current year.
Net interest and trading income
Fee and commission income
FULL YEAR TO
31 Mar 24
31 Mar 23
$Am
$Am
8,907
10,601
¶
¶
16%
on prior year
FULL YEAR TO
31 Mar 24
31 Mar 23
$Am
$Am
6,249
6,400
¶
¶
2%
on prior year
This movement was largely driven by:
•
substantially lower inventory management and trading income driven
by a reduction in trading activity, primarily in North American Gas and
Power, partially offset by timing of income recognition on Gas and
Power transport and storage contracts, in CGM
•
decreased risk management income, primarily in EMEA Gas and Power,
and Resources due to decreased client hedging, in CGM.
Partially offset by:
•
higher net interest and trading income from the private credit portfolio
and the non-recurrence of mark-to-market losses on certain debt
underwriting positions, in Macquarie Capital
•
higher earnings on capital reflecting higher central bank interest rates
•
growth in the loan portfolio and BFS deposits, and the full year benefit
of the rising interest rate environment, partially offset by margin
compression due to changes in portfolio mix, lending competition and
higher funding costs.
This movement was largely driven by:
•
lower mergers and acquisitions fee income due to weaker market
activity, in Macquarie Capital
•
lower performance fees in MAM
•
lower base fees in Public Investments primarily driven by outflows in
equity strategies, partially offset by favourable market and foreign
exchange movements in MAM.
Partially offset by:
•
higher base fees in Private Markets which were driven by fundraising and
investments made by Private Markets-managed funds and mandates, as
well as favourable foreign exchange movements, in MAM.
Share of net (losses)/profits from associates and joint ventures
Credit and other impairment charges
FULL YEAR TO
31 Mar 24
31 Mar 23
$Am
$Am
(49)
(113)
¶
¶
57%
on prior year
FULL YEAR TO
31 Mar 24
31 Mar 23
$Am
$Am
369
(454)
µ
µ
significantly
on prior year
This movement was largely driven by:
•
changes in the performance of the investment portfolio, in MAM.
This movement was largely driven by:
•
release of credit provisions due to improvement in the
macroeconomic outlook
•
reversal of impairments recognised on a small number of previously
underperforming assets and equity investments in Macquarie
Capital and MAM
•
lower deployment of the private credit portfolio in Macquarie Capital.
Partially offset by:
•
changes in composition of portfolio growth, in BFS.
Net other operating income
FULL YEAR TO
31 Mar 24
31 Mar 23
$Am
$Am
1,411
2,688
¶
¶
48%
on prior year
This movement was primarily driven by:
•
lower asset realisations in green investments in MAM
•
non-recurrence of material asset realisations in Macquarie Capital
•
increased net expenditure on investments in green energy portfolio
companies operating on a standalone basis in MAM.
Partially offset by:
•
gains on a number of investments in Macquarie Capital.
29
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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Operating expenses
Total operating expenses of $A12,061 million for the year ended 31 March 2024 were broadly in line from $A12,130 million in the prior year.
Employment expenses
Brokerage, commission and trading-related expenses
FULL YEAR TO
31 Mar 24
31 Mar 23
$Am
$Am
7,723
7,703
broadly
in line
with prior year
FULL YEAR TO
31 Mar 24
31 Mar 23
$Am
$Am
1,071
1,028
µ
µ
4%
on prior year
This movement was largely driven by:
•
higher salary and related expenses from higher average headcount
and wage inflation
•
unfavourable foreign exchange movements
•
higher share-based payments expense mainly driven by the prior year’s
performance of the Consolidated Entity
•
higher one-off staff costs.
Offset by:
•
lower performance-related profit share expenses as a result
of the performance of the Consolidated Entity.
This movement was largely driven by:
•
unfavourable foreign exchange movements
•
increased trading and brokerage activities in CGM
•
increased transaction volumes in BFS.
Non-salary technology expenses
Other operating expenses
FULL YEAR TO
31 Mar 24
31 Mar 23
$Am
$Am
1,163
1,092
µ
µ
7%
on prior year
FULL YEAR TO
31 Mar 24
31 Mar 23
$Am
$Am
2,104
2,307
¶
¶
9%
on prior year
This movement was largely driven by:
•
increased investment in technology initiatives, with a focus on data
and digitalisation, to support business growth and compliance.
This movement was largely driven by:
•
lower expenses on certain legacy and other transaction-related charges
•
lower professional fees.
Income tax expense
Income tax expense of $A1,291 million for the year ended 31 March 2024 decreased 29% from $A1,824 million in the prior year. The effective
tax rate for the year ended 31 March 2024 was 26.8%, up from 26.0% in the prior year.
The higher effective tax rate compared to the prior year was mainly driven by the geographic composition and nature of earnings.
30
Operating and financial review
Review of group performance and financial position continued
Statement of Financial Position
The Consolidated Entity’s Statement of financial position was impacted during the year ended 31 March 2024 by changes resulting from a
combination of business activities, Group Treasury management initiatives and macroeconomic factors.
Total assets
Total liabilities
AS AT
31 Mar 24
31 Mar 23
$Am
$Am
403,404
387,872
µ
µ
4%
on 31 Mar 23
AS AT
31 Mar 24
31 Mar 23
$Am
$Am
369,408
353,766
µ
µ
4%
on 31 Mar 23
Total assets of $A403.4 billion as at 31 March 2024 increased 4% from
$A387.9 billion as at 31 March 2023.
The principal drivers for the increase were as follows:
•
loan assets of $A176.4 billion as at 31 March 2024 increased 11% from
$A158.6 billion as at 31 March 2023, driven by volume growth in the
BFS home loans and business lending portfolios and Macquarie Capital’s
private credit portfolio
•
trading assets of $A27.9 billion as at 31 March 2024 increased 65% from
$A16.9 billion as at 31 March 2023, driven by an increase in holdings of
listed equity securities in CGM
•
cash collateralised lending and reverse repurchase agreements of
$A58.4 billion as at 31 March 2024 increased 8% from $A54.3 billion
as at 31 March 2023, driven by an increase in holdings of reverse
repurchase agreements as part of Group Treasury’s liquid asset
portfolio management
•
financial investments of $A24.4 billion as at 31 March 2024 increased
11% from $A21.9 billion as at 31 March 2023, driven by an increase
in holdings of debt securities as part of Group Treasury’s liquid asset
portfolio management
•
other assets of $A12.6 billion as at 31 March 2024 increased 21% from
$A10.4 billion as at 31 March 2023, driven by higher commodity-related
receivables from increased volumes in CGM.
These increases were partially offset by:
•
cash and bank balances of $A31.9 billion as at 31 March 2024 decreased
30% from $A45.7 billion as at 31 March 2023, driven by a reduction in the
overnight deposit held with the Reserve Bank of Australia (RBA) as part
of Group Treasury’s liquid asset portfolio management
•
derivative assets of $A24.1 billion as at 31 March 2024 decreased 33%
from $A36.1 billion as at 31 March 2023, driven by volatility and price
movements having stabilised across commodity markets, as well as
the maturity of prior year positions. After taking into account related
financial instruments, cash and other financial collateral, the residual
derivative asset exposure was $A7.4 billion (31 March 2023: $A9.7
billion). The majority of the residual derivative asset exposure was
short-term in nature and managed within the Consolidated Entity’s
market and credit risk frameworks, with a substantial portion of the
exposure with investment grade counterparties.
Total liabilities of $A369.4 billion as at 31 March 2024 increased 4% from
$A353.8 billion as at 31 March 2023.
The principal drivers for the increase were as follows:
•
deposits of $A148.4 billion as at 31 March 2024 increased 10% from
$A134.7 billion as at 31 March 2023, driven by volume growth in retail
and business banking deposits in BFS
•
issued debt securities and other borrowings of $A119.9 billion as at
31 March 2024 increased 10% from $A109.5 billion as at 31 March 2023,
driven by the issuance of short-term commercial paper and long-term
bonds by Group Treasury
•
other liabilities of $A14.5 billion as at 31 March 2024 increased 16% from
$A12.5 billion as at 31 March 2023, driven by higher commodity-related
payables from increased volumes in CGM
•
loan capital of $A14.2 billion as at 31 March 2024 increased 10% from
$A12.9 billion as at 31 March 2023 driven by the issuance of Tier 2
loan capital.
These increases were partially offset by:
•
derivative liabilities of $A25.6 billion as at 31 March 2024 decreased
22% from $A32.8 billion as at 31 March 2023 commensurate with
the movement in derivative assets. After taking into account related
financial instruments, cash and other collateral, the residual derivative
liability was $A6.8 billion (31 March 2023: $A6.6 billion)
•
cash collateralised borrowing and repurchase agreements of
$A12.6 billion as at 31 March 2024 decreased 33% from $A18.7 billion as
at 31 March 2023, driven by a reduction in trading activity in CGM and
partial maturity of the RBA Term-Funding Facility.
Total equity
AS AT
31 Mar 24
31 Mar 23
$Am
$Am
33,996
34,106
broadly
in line
on 31 Mar 23
Total equity of $A34.0 billion as at 31 March 2024 has remained broadly in
line with $A34.1 billion as at 31 March 2023.
The Consolidated Entity’s equity was impacted by:
•
$A2.7 billion in dividend payments
•
$A0.6 billion of ordinary shares on-market buy-back
•
$A0.4 billion decrease in non-controlling interests.
These decreases were partially offset by $A3.5 billion of earnings generated
during the current year and a $A0.5 billion increase in foreign currency
translation, largely driven by the depreciation of the Australian Dollar to the
United States Dollar.
31
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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Funding
Macquarie’s liquidity risk management framework is designed to ensure that it is able to meet its obligations as they
fall due under a range of market conditions.
Macquarie has a funding base that is stable with short-term wholesale funding covered by cash, liquids and other
short-term assets. As at 31 March 2024, Macquarie’s term assets were covered by term funding maturing beyond
one year, stable deposits, hybrids and equity.
The weighted average term to maturity of term funding maturing beyond one year (excluding equity and
securitisations) was 4.5 years as at 31 March 2024.
4.5
years
Weighted
average
maturity
Term funding profile
Diversity of funding source
Detail of drawn funding maturing beyond one year
Detail of drawn funding sources maturing across all tenors
0
10
20
30
40
50
60
Subordinated debt
Equity and hybrids
Senior Unsecured debt
Secured debt
1–2 yrs
2–3 yrs
3–4 yrs
4–5 yrs
5 yrs+
$A billion
Bonds
18%
Net trade
creditors
<1%
Equity and hybrids
12%
Commercial paper and
certificates of deposit
9%
Customer deposits
45%
Other
secured
funding(16)
4%
Securitisation
4%
Unsecured
loans
5%
Structured
notes
<1%
Subordinated
debt
3%
Macquarie has a liability-driven approach to balance sheet management, where funding is raised prior to assets being
taken on to the balance sheet. Since 1 April 2023, Macquarie has continued to raise term wholesale funding across
various products and currencies.
Details of term funding raised between 1 April 2023 and 31 March 2024:
Bank Group
Non‑Bank Group
Total
$Ab
$Ab
$Ab
Issued paper
– Senior and subordinated
8.7
4.7
13.4
Secured funding
– Term securitisation and other secured finance
5.0
0.7
5.7
Loan facilities
– Unsecured loan facilities
1.5
0.5
2.0
Total(17)
15.2
5.9
21.1
Macquarie has continued to develop its major funding markets and products during the year ended 31 March 2024.
(16) Includes RBA Term Funding Facility (TFF) of $A9.6 billion.
(17) Issuances cover a range of tenors, currencies and product types and are Australian dollar equivalent based on FX rates at the time of issuance. Includes refinancing of loan facilities.
32
Operating and financial review
Review of group performance and financial position continued
Capital
As an Australian Prudential Regulation Authority (APRA) authorised and regulated Non-Operating Holding Company
(NOHC), Macquarie’s capital adequacy framework requires it to maintain minimum regulatory capital requirements
calculated as the sum of:
• the Bank Group’s minimum Tier 1 capital requirement, based on a percentage of risk-weighted assets plus Tier 1
deductions using prevailing APRA ADI Prudential Standards; and
• the Non-Bank Group’s capital requirement, calculated using Macquarie’s Board approved Economic Capital
Adequacy Model (ECAM).
Transactions internal to Macquarie are eliminated.
The Bank Group’s Level 2 minimum Common Equity Tier 1 capital ratio (CET1) in accordance with Prudential Standard
APS 110 Capital Adequacy is 9%. This includes the industry minimum CET1 requirement of 4.5%, capital conservation
buffer (CCB) of 3.75% and a countercyclical capital buffer (CCyB)(18) of 0.75%. The corresponding requirement for
Tier 1 capital is 10.5%, inclusive of the CCB and CCyB18. APRA also requires ADIs to maintain a minimum leverage ratio
of 3.5%. In addition, APRA may impose ADI-specific minimum ratios which may be higher than these levels.
Macquarie is well capitalised, with the following capital adequacy ratios as at 31 March 2024:
Bank Group Level 2 Basel III ratios as at 31 March 2024
APRA Basel III
Harmonised Basel III(19)
Common Equity Tier 1 Capital Ratio
13.6%
18.7%
Tier 1 Capital Ratio
15.5%
20.9%
Leverage Ratio
5.2%
5.9%
For further information relating to the capital adequacy of Macquarie, refer to section 6.0 Capital of the
Management Discussion and Analysis at macquarie.com/results.
Outlook
We continue to maintain a cautious stance, with a conservative approach to capital, funding and liquidity
that positions us well to respond to the current environment.
The range of factors that may influence our short-term outlook include:
• market conditions including: global economic conditions, inflation and interest rates, significant
volatility events, and the impact of geopolitical events
• completion of period-end reviews and the completion of transactions
• the geographic composition of income and the impact of foreign exchange
• potential tax or regulatory changes and tax uncertainties.
(18) The CCyB of the Bank Group at 31 March 24 is 0.71%, this is rounded to 0.75% for presentation purposes. The individual CCyB varies by jurisdiction
and the Bank Group CCyB is calculated as a weighted average based on exposures in different jurisdictions at period end.
(19) Harmonised Basel III estimates are calculated in accordance with the updated BCBS Basel III framework, noting that MBL is not regulated by the
BCBS therefore the ratios are indicative only.
$A10.7b
Group capital surplus
33
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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About
This page has been intentionally left blank.
34
02
One IFC, Hong Kong
The 2021 award-winning redesign
of Macquarie’s Hong Kong office in
One International Finance Centre,
overlooking Victoria Harbour,
provides support for hybrid working
and enhances the connectivity
of our people by using flexible
multi‑use spaces to foster stronger
connections between teams.
Governance
35
Further Information
Financial Report
Directors’ Report
About
Governance
Macquarie Group Limited and its subsidiaries 2024 Annual Report
36
Corporate Governance Statement
This Corporate Governance Statement has been approved by the Macquarie Group Limited Board (Board). It
describes our key governance practices and articulates how decision-making is guided to meet stakeholder
expectations of sound corporate governance and prudent decision-making, acknowledging Macquarie’s specific
and broader responsibilities to its shareholders, funders, clients, employees and the communities in which
it operates.
Macquarie Group Limited’s (MGL) corporate governance practices have followed the recommendations set by the 4th edition of the
ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations throughout the financial year ended
31 March 2024.
MGL, together with its subsidiaries (Macquarie), is a global financial services group operating in 34 markets in asset management, retail and
business banking, wealth management, leasing and asset financing, market access, commodity trading, renewables development, specialist
advisory, capital raising and principal investment.
Macquarie’s purpose statement ‘Empowering people to innovate and invest for a better future’ explains why we exist. We believe that by
empowering people we will achieve our shared potential.
The way we fulfil our purpose is defined by our principles of Opportunity, Accountability and Integrity. These principles guide Board,
management and staff conduct, and it is expected that they will all meet these standards and deal honestly and fairly with our clients,
counterparties and regulators. There are appropriate consequences for anyone who fails to meet our standards.
Corporate Governance framework
Our corporate governance framework defines the relationship between the Board and management, underpinned by a strong risk
management framework and the infrastructure needed for our Operating Groups to manage their businesses.
Macquarie
MGL Board
Board Risk
Committee (BRiC)
Board Governance and
Compliance
Committee (BGCC)
Board Remuneration
Committee (BRC)
Board Audit Committee
(BAC)
Board Nominating
Committee (BNC)
MGL Managing Director and CEO (CEO)
MGL Management Committees
Macquarie Asset Management
(MAM)
Macquarie
Capital
Commodities
and Global Markets (CGM)
Banking and Financial Services
(BFS)
Risk Management Group (RMG)
Legal and Governance Group (LGG)
Financial Management Group (FMG)
Corporate Operations Group (COG)
37
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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Governance
Macquarie Bank
Macquarie Bank Limited (MBL) is a regulated authorised
deposit-taking institution in Australia and is a key subsidiary of MGL.
It has a similar governance structure to MGL, with five standing MBL
Board Committees: a Board Audit, Board Remuneration, Board Risk,
Board Governance and Compliance and Board Conflicts Committee.
In addition to supporting the MGL Board, the MGL Board
Nominating Committee supports the MBL Board in satisfying itself
that the MBL Board has an appropriate mix of skills, experience,
tenure and diversity for the Board.
The MBL Board is comprised of a majority of Non-Executive
Directors (NEDs), the MGL CEO and MBL CEO. Following the
retirement of Mr Michael Coleman, expected by mid-2024, there will
be three Bank-only Non-Executive Directors (BONDs) on the MBL
Board: Mr Wayne Byres, Mr Ian Saines and Mr David Whiteing, and
seven NEDs who also serve on the MGL Board.
The MBL CEO is assisted by MBL’s management committees and the
MBL CEO’s Office.
During FY2024, Macquarie and MBL continued their oversight of
ongoing programs that focus on strengthening MBL’s processes and
controls, including those around intra-group funding arrangements
and internal exposures; capital and liquidity reporting; risk
management frameworks; and accountabilities and governance.
A number of these programs also form part of a remediation
plan with APRA, which has been established to define and deliver
detailed programs of work that enhance MBL’s governance, risk
culture, group structure, and remuneration to ensure full and
ongoing compliance with prudential standards and management of
MBL-specific risks.
As part of governance changes to better protect the interests of
MBL within Macquarie, BOND representation on the MBL Board
and MBL Board Committees increased following the new BOND
appointments of Mr Whiteing and Mr Byres during FY2024.
Board oversight
The Board sets the ‘tone at the top’ in a highly visible manner. Board
members have broad contact with staff at various levels within the
organisation and across regions.
There is a culture of open and frank discussion at the Board. Actions
taken by the Board seek to promote long-term sustainability and
prudent management of risk consistent with What We Stand For.
Board workshops scheduled during FY2024 covered topical,
emerging business and governance issues, including presentations
on data ethics, operational risk management, risk appetite,
sustainability reporting, whistleblower training, anti-bribery and
corruption and sanctions compliance and cyber threat intelligence.
NEDs also met regularly without members of management and
Board Committees held private meetings with each of the external
auditor, Head of Internal Audit, Head of Compliance and Chief Risk
Officer (CRO) to assist with their oversight role.
Board members believe that informal conversations with staff are
important in assessing the culture within Macquarie and seeing
Macquarie’s purpose at work. Board members generally attend
various staff functions in Australia and conduct two international
trips to Macquarie offices each year. In FY2024, the Board visited
Macquarie offices in the US, UK and France. Key highlights from
these visits included visits to certain Macquarie fund assets in
London and New York and presentations from regional staff and
external speakers about topical issues in the region; regional
business updates; and Macquarie’s people, culture, and purpose
statement in practice. Each visit brought together staff from
various locations within the regions, increasing and enhancing
the Board’s opportunity for engagement with staff. During the US
Board visit, Board members engaged with approximately 650 staff
members across all levels of seniority in three key regional hubs:
Jacksonville, Philadelphia and New York. During the visit to London
and Paris, approximately 211 staff members were invited to engage
with Board members at various events, including a staff dinner.
38
Corporate Governance Statement
Continued
Board oversight
•
Commitment to achieving the highest standards of professional conduct across all Macquarie operations
•
Regularly reinforce company-wide expectations
•
Diligently take action as part of its responsibility to shareholders, funders, clients, employees and the communities in which Macquarie operates
•
Review and monitor operations and challenge of management.
Culture and Conduct
•
Set high behavioural standards and act in accordance with these standards
•
Take a dynamic approach to oversight of risk culture and conduct risk management in response to business outcomes and expectations of
communities and regulators
•
Monitor the actions management take to embed behavioural standards in operations (including a sound risk culture):
– staff training
– direct communications to staff
– risk surveillance activity.
Business strategy
Financial and non-financial risk management
Pay for performance
Assess ability of strategy to adapt to markets
and deliver sound client and community
outcomes within Board approved risk appetite
and related limits.
Approve budget and funding and capital
management strategy to deliver on
business strategy.
Approve Macquarie’s Risk Appetite Statement
and Risk Management Strategy, monitor
material risks faced by Macquarie and review
how they are managed.
Oversee management’s operation of Macquarie’s
risk management framework, including its
compliance framework.
Approve a remuneration policy that aligns the
interests of staff and shareholders to deliver
sustained results for our customers, clients
and communities.
Remuneration outcomes reflect an assessment
against a range of financial and non-financial
factors including risk management and
compliance.
FY2024 Governance activities
During FY2024, the MGL Board’s key governance activities included:
Continuing Board renewal and succession planning
Continuing cross-committee information sharing through
Board and Board Committee Chair meetings and reporting
on matters considered by the BGCC to the Board Risk
Committee (BRiC)
Overseeing Macquarie’s regulatory engagement, including
interacting with some key regulators directly
Continuing activities relating to the Banking Executive
Accountability Regime (BEAR) with respect to MBL and
implementation of the Financial Accountability Regime (FAR)
applying to MGL and MBL from 15 March 2024
Meeting with shareholders and proxy advisors as part of
Macquarie’s ongoing engagement to discuss matters relating
to Macquarie’s business performance, governance and
remuneration
Convening a joint annual meeting of the BRC, BGCC, BRiC and
BAC to discuss significant incidents, issues, regulatory and
litigation matters, internal audit outcomes and other financial
and non-financial risk matters as presented in independent
reports provided to the BRC by the CRO and the Head of
Internal Audit for consideration in the determination of
remuneration outcomes for FY2024
Conducting its annual Board performance review and detailed
biennial Board Committee performance reviews
Conducting a comprehensive review of the Board and Board
Committee Charters, as well as external reviews of the
Continuous Disclosure Policy and the MGL Trading Policy
Continuing oversight of ongoing programs that focus
on strengthening risk management frameworks and
accountabilities and governance
Meeting staff in Australia, the US, UK and France to discuss
in informal settings topics relating to Macquarie’s culture,
including risk culture, innovation and growth, people and
leadership, and diversity, equity and inclusion
39
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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Governance
Board and management
MGL’s Constitution sets out requirements concerning board
size, meetings, election of directors and the powers and duties
of directors. In accordance with the Constitution, the Board has
resolved that the maximum number of Voting Directors (Directors)
is currently 12.
The Board Charter details the Board’s role and responsibilities and
matters expressly reserved for the Board, which include annually
approving the strategy and business plan, adopting an annual
budget, approving Macquarie’s funding and capital management
strategy, approving Macquarie’s Risk Appetite Statement and
Risk Management Strategy, monitoring material risks faced
by Macquarie and how they are managed, appointing the CEO
and approving major group policies including those relating to
remuneration, diversity and equity, and the Code of Conduct.
The role of the Board is to promote the long-term interests of
Macquarie, taking into account Macquarie’s specific and broader
responsibilities to its shareholders, funders, clients, employees
and the communities in which it operates. The Board is assisted
by its various Board Committees as detailed in each Board
Committee Charter.
MGL’s Constitution and Board Charter are available at
macquarie.com/corporate-governance
The Board determines delegations to management and approves
applicable limits and policies.
The CEO has been granted authority for matters not reserved
for the Board at law or as set out in the Board’s Charter, for a
Board Committee or one or more other Directors. Macquarie’s
management committees assist in the exercise of the CEO’s
delegated authority. The CEO, the CRO and the CFO report to
the Board at each meeting. In addition to regular reporting
from management, the Board has unrestricted access to senior
management and external advisers.
The Company Secretary is appointed by and accountable to the
Board, through the Chair, for matters relating to the proper
functioning of the Board.
Board renewal, appointment
and performance
The Board, with the assistance of the BNC, regularly assesses the
skills, experience, tenure and diversity required collectively for the
Board to effectively fulfil its role. MGL’s Policy on Board Renewal,
Appointment of Directors and Board Performance Review sets out
the fundamental factors relevant to the selection and appointment
of new Directors and the process for assessing performance of
the Board.
MGL’s Policy on Board Renewal, Appointment of
Directors and Board Performance Review is available at
macquarie.com/corporate-governance
Board diversity and tenure
The Board believes that its membership should comprise Directors
with an appropriate mix and diversity of skills, professional
experience, tenure, gender and personal background. The general
expectation is that NEDs will serve three 3-year terms from
first election by shareholders. NEDs may serve for longer than
three 3-year terms if the Board considers it to be of significant
benefit to MGL.
62.5%
of Directors are women
Years of NED tenure
0-3
3-6
6-9
3.9
years
Average
tenure of
NEDs is
40
Corporate Governance Statement
Continued
Director appointment, induction
and development
In accordance with Macquarie’s Fit and Proper Policy, for a Director
appointment, appropriate background checks are undertaken
(typically including criminal record, bankruptcy, employment history
and education checks). Directors appointed to fill a casual vacancy
stand for election at the first AGM following their appointment. The
notice of meeting provides shareholders with material information
relevant to a decision as to whether to elect or re-elect a Director
including their skills, experience, other directorships and an
acknowledgement that they will have sufficient time to fulfil their
responsibilities as a Director.
All Directors have received an appointment letter setting out the
terms of their appointment. The material terms of appointment are
set out in MGL’s Policy on Board Renewal, Appointment of Directors
and Board Performance Review.
New Directors also undertake an induction program covering
relevant matters such as Board and Board Committee practices and
procedures, prudential requirements and briefings with Heads of
Operating and Central Service Groups and other staff.
NEDs identify business awareness needs on an ongoing basis
and regular Board workshops are held during the year on topical,
emerging business and governance issues relevant to Macquarie.
The BRiC, including at regular meetings of the Chairs of the Board
and Board Committees, reviews the annual schedule of Board
workshop sessions. In addition to workshops, the Board has
generally scheduled two separate visits to international Macquarie
offices annually.
The BNC reviews the skills and experience of the NEDs. As part of
the Board performance review, the Board periodically considers
whether there is a need for existing Directors to undertake
professional development to maintain the skills and knowledge
needed to perform their role on the Board effectively.
Board performance
A Director’s continuing Board membership is subject to their
performance and ongoing relevance of their skills and experience.
The Board undertakes a formal annual performance evaluation
to review its performance and the performance of each Director
with emphasis on those individual Directors who are required to
stand for re-election at the next AGM. The Board considers the
performance and skills of Directors standing for re-election and
whether other particular skills or experience not currently available
are needed prior to determining whether to recommend their
re-election to shareholders.
Every three years an external facilitator conducts the Board’s
performance review. In the intervening years, an internal
performance assessment is led by the Chair with the support of the
Company Secretary. The process for conducting the review is agreed
by the Board. Typically, the process includes individual interviews by
the Chair or an external facilitator with each Director and the use of
a self-assessment questionnaire to cover matters such as:
• the Board’s contribution to developing strategy
• the Board’s performance relative to its objectives
• interaction between the Board and management and between
Board members
• the Board’s oversight of business performance and risk
management
• Board composition and renewal, including consideration of
relevant skills and capabilities
• the operation of the Board, including the conduct of Board
meetings, Board culture and Chair leadership
• stakeholder management
• succession and remuneration.
A written report summarising the results and feedback (e.g., with
themes in FY2024 relating to time allocation, board composition
and board operations) is presented to the Board and discussed at a
Board meeting. A nominated Independent Director or the external
facilitator provides performance feedback to the Chair based on
discussion with the other Directors.
The Board’s review in FY2024 was conducted internally in
accordance with the process described above. The FY2025
review is an external review.
Board Committee performance
As part of the Board’s annual performance evaluation, the
functioning and performance of the Board Committees is reviewed.
Each Board Committee also undertakes a more detailed review, at
least biennially, of its performance and the extent to which it has
met its responsibilities set out in its Charter. The process for the
review of Board Committee performance also includes use of a
self-assessment questionnaire to cover matters such as interaction
between the Board Committee and management, the operation of
the Board Committee, including the conduct of Board Committee
meetings, Board Committee culture and Chair leadership, and
Board Committee composition. A written report summarising the
results and outcomes, including recommendations, is reviewed and
discussed by each Board Committee, led by the Committee Chair.
During FY2024, each Board Committee undertook its biennial
performance review internally, in accordance with the process
described above. The next biennial review is scheduled for FY2026.
41
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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Employment and performance
of senior executives
In accordance with Macquarie’s Fit and Proper Policy, for a
senior executive appointment, appropriate background checks
are undertaken (typically including criminal record, bankruptcy,
employment history and education checks).
All Executive KMP receive an employment contract setting out
the terms of their employment. The material terms of their
employment are set out in the Remuneration Report.
There is a consistent and comprehensive process for the Board
and the BRC to assess the performance of the MGL CEO and
each Executive KMP during the year to enable them to determine
remuneration outcomes at the end of the year. A performance
evaluation for senior executives has taken place during the year
in accordance with the process described on page 127 in the
Remuneration Report.
Details of the nature and amount of remuneration for each
Executive KMP and Macquarie’s remuneration policies
and practices are contained on pages 106 to 156 in the
Remuneration Report of this Annual Report.
Board structure
Board Committees
MGL’s five standing Board Committees assist the Board in its
oversight role. Board members have access to all Board Committee
meeting papers and may attend any Board Committee meeting.
Subsequent to each Board Committee meeting, the minutes are
included in the Board papers and presented to the Board by the
respective Committee Chairs.
The Chairs of the Board and each Board Committee meet to broadly
consider the work plan, responsibilities and the performance of
each Committee and to focus on any areas of overlap or gaps in
Committee reporting and responsibilities, including coordination of
non-financial risk reporting between Committees and the coverage
of risk reporting across Committees.
The Board Committee Charters detailing the
responsibilities of each Committee are available at
macquarie.com/corporate-governance
42
Corporate Governance Statement
Continued
Allocation of responsibilities between Board Committees
The following table provides a summary of the allocation of responsibilities between Board Committees.
Committee
Role
Board Risk
Committee (BRiC)
The BRiC assists the Board by providing oversight of Macquarie’s risk management framework and advising the Board on
Macquarie’s risk appetite, risk culture and risk management strategy. Except to the extent another Board Committee is
responsible, the BRiC receives information on material risks and reviews the impact of developments in markets in which
Macquarie operates on its risk position and profile. The BRiC monitors Macquarie’s risk culture and, with assistance from the
BGCC, conduct risk and certain other non-financial risks, and forms a view on Macquarie’s risk culture and the extent to which it
supports the ability of Macquarie to operate consistently within its risk appetite. The CRO reports directly to the CEO and has a
secondary reporting line to the BRiC.
Board Governance
and Compliance
Committee (BGCC)
The BGCC assists the Board with adopting the most appropriate corporate governance standards for Macquarie and assists
the Board in monitoring regulatory, legal, compliance and financial crime risk matters for Macquarie, including reviewing
and monitoring compliance with Macquarie’s Conduct Risk Management Framework and its implementation. In addition, the
BGCC reviews and monitors Macquarie’s work health and safety, environmental and social risk management policies, practices
and performance, and customer and client reporting. The BRiC, BRC and BAC oversee aspects of the regulatory, legal and
compliance risk matters for Macquarie relating to their duties and responsibilities.
Board Remuneration
Committee (BRC)
The BRC is responsible for overseeing the design, operation and monitoring of Macquarie’s remuneration framework. It
makes recommendations to the Board that promote appropriate remuneration policies and practices for Macquarie that align
remuneration outcomes with Macquarie’s financial and non-financial risk outcomes, drive behaviours that support Macquarie’s
risk management framework, and promote Macquarie’s Code of Conduct and the accountability of staff for the business and
customer outcomes they deliver by encouraging a long-term perspective. The BRC reviews HR-related reports and consults
with the BRiC, BGCC and BAC to ensure risk outcomes are appropriately reflected in remuneration outcomes. The BRC is also
responsible for remuneration-related disclosures in the Remuneration Report.
Board Audit
Committee (BAC)
The BAC assists the Board with its oversight of the quality and integrity of the accounting, auditing and financial reporting of
Macquarie. The BAC also reviews the adequacy of Macquarie’s control framework for financial regulatory reporting to APRA and
prudential regulators in other jurisdictions and monitors the internal financial control environment. The BAC at least annually,
reviews and assesses, and reports to the Board on the quality, effectiveness, objectivity and independence of the external
auditor, and other matters relating to the prior year’s audit and reports to the Board on the annual performance review of
the external auditor. The BAC reviews reports from the external auditor and Internal Audit, referring matters relating to the
duties and responsibilities of the BRiC and BGCC to the appropriate Board Committee. The BAC also monitors and reviews
the performance objectives and rating, remuneration and the degree of independence of the Head of Internal Audit and the
effectiveness of the Internal Audit function.
Board Nominating
Committee (BNC)
The BNC assists the Board and MBL in satisfying itself that it has an appropriate mix of skills, experience, tenure and diversity
for each board to be an effective decision-making body and to provide successful oversight and stewardship of Macquarie and
MBL respectively.
Board and Board Committee membership
The Board has eight Directors, comprising seven Independent
Directors and one Executive Director, who is the MGL Managing
Director and Chief Executive Officer (CEO).
The Chair of the Board is Mr Glenn Stevens, an Independent
Director, who has been the Chair of the Board since 10 May 2022.
Ms Shemara Wikramanayake is the CEO of MGL.
Each Board Committee has an Independent Director as its Chair and
comprises members who are Independent Directors. Other than
the Chair of the Board, all Independent Directors are members of
at least two Board Committees and all Independent Directors are
members of the BNC.
The Chair of the Board and the CEO receive a standing
invitation to all Board Committee meetings and attend as they
consider appropriate.
The following changes to MGL Board and Board Committee
memberships occurred during FY2024:
• Ms Jillian Broadbent was appointed as a member of the BRiC,
effective 28 July 2023
• Ms Susan Lloyd-Hurwitz was appointed as a member of the
Board and the BNC effective 1 June 2023, and the BAC and BRC,
effective 28 July 2023
• Ms Rebecca McGrath was appointed Chair of the BGCC and
stepped down as a member of the BRC, effective 28 July 2023
• Ms Nicola Wakefield Evans retired as a member of the BGCC
and BRiC, effective after the conclusion of the Annual General
Meeting on 27 July 2023, and retired from the Macquarie board
effective 29 February 2024.
Members’ attendance at Board and Board Committee
meetings during the past year is contained on page 95 in the
Directors’ Report of this Annual Report.
43
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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The following table sets out the current composition of the Board, each Director’s date of appointment and the membership of each
Board Committee.
MGL Board
Risk
Governance
and Compliance
Remuneration
Audit
Nominating
MGL Independent Directors (when commenced)(1)
Glenn Stevens
(November 2017)
Chair
Chair
Jillian Broadbent
(November 2018)
Member
Member
Chair
Member
Philip Coffey
(August 2018)
Member
Chair
Member
Member
Michelle Hinchliffe
(March 2022)
Member
Member
Chair
Member
Susan Lloyd-Hurwitz
(June 2023)
Member
Member
Member
Member
Rebecca McGrath
(January 2021)
Member
Member
Chair
Member
Mike Roche
(January 2021)
Member
Member
Member
Member
Member
MGL CEO (when commenced)
Shemara Wikramanayake
(August 2018)
Member
Board skills and experience
(1) Board Committee composition changes that occurred in FY2024 are set out in the Directors’ Report under ‘Board and Board Committee meetings and attendance’ on page 95 in the
Directors’ Report of this Annual Report.
The Board believes that its membership should comprise high
calibre directors with an appropriate mix and diversity of skills,
professional experience, tenure and personal background that allow
the Directors individually, and the Board collectively, to:
• discharge their responsibilities and duties under the law
effectively and efficiently
• consider and form a view on Macquarie’s culture and governance
• understand the business of Macquarie and the environment in
which it operates so as to be able to set, with management, the
objectives, goals and strategic direction that will promote the
creation of superior and sustainable shareholder value; and meet
Macquarie’s responsibilities to its shareholders, funders, clients,
employees and the communities in which it operates
• assess the performance of management in meeting those
objectives and goals.
Accordingly, in selecting potential new Directors, the BNC identifies
the competencies and diversity required to enable the Board to fulfil
its responsibilities. In doing so, the BNC has regard to the results of
the annual appraisal of the Board’s performance, the performance
of each Director and ongoing succession planning.
The Board comprises highly experienced senior business leaders
from a variety of professional backgrounds who each meet
the fundamental requirements and, collectively, possess the
skills, experience, tenure and diversity considered necessary
to appropriately govern an ASX-listed, global, diversified
financial group.
The BNC also considers the necessary and desirable competencies
of new MBL directors. For example, through the appointment of
additional BONDs in FY2024, the MBL Board increased the number
of directors with skills in technology, digital and financial services
regulation. These skills complement those of both the MGL and
MBL Boards.
From time to time there are areas identified by the Board where
additional knowledge would be beneficial, which it addresses by
engaging external advisers, conducting site visits, Board workshops
and/or requesting more detailed reporting from management.
Sustainability reporting, data ethics and cyber threat intelligence
and generative AI (artificial intelligence) are examples where this
approach has been taken.
Details of the Directors’ qualifications and experience are
contained on pages 96 to 100 in the Directors’ Report of
this Annual Report.
44
Corporate Governance Statement
Continued
Skills matrix summary
The competencies of the current Board members and the number of Directors with each skill and their experience is set out below.
Skill
Description
Number of
Directors(2)
Leadership
Large P&L leadership
(CEO experience)
International CEO experience, significant P&L leadership, financial services (or other relevant industry)
leadership, and long-term value creation
7
International business
International leadership, multi-country acquisition integration, internationalisation of a
high-performance culture, internationalisation of remuneration and incentives, and international
business connections
5
Customer and growth
Innovation/growth mindset
Portfolio approach to innovation, growth business leadership, early adopter mindset, and
multi-decade investment horizon
5
Financial services customer/
client understanding
Customer advocacy, financial services customer segments, financial services customer needs and
frustrations, and the digital expectations of customers
7
Finance and commercial
Financial, commercial and
strategic acumen
Portfolio based capital allocation, multi-jurisdictional financial systems and processes, successful
strategic development and implementation, and business planning and budgeting
8
Technical audit
Financial services accounting, external and internal audit, financial controllership, and process and
preparation of financial statements
3
Governance, risk and legal
Large listed governance
Relevant board experience, board/committee leadership, board procedures and processes, investor
engagement, and continuous disclosure regime
8
Financial services regulation
Knowledge of regulation, regulatory relationship leadership, proactive regulatory engagement,
regulatory process and decision makers, and regulatory negotiation
6
Functional oversight
People, culture and
remuneration
Setting a balanced remuneration framework, external remuneration engagement, short and long-term
incentives, and succession planning
7
Change management
Major project governance and oversight, vendor management, change management, and project risk
and oversight
5
Technology and digital
Financial services technology, systems integration and vendor management, data management,
privacy and data regulation, cybersecurity risk, digital strategy, and execution of digital
transformation
1
Risk governance
Risk management systems, risk reporting to the board, crisis management, regulatory risk
management, HR and people risks, and development, construction and operations
8
Bank/Group specific
Australian retail/
commercial banking
Australian financial services understanding, banking P&L leadership, retail banking experience,
mortgage oversight, banking systems, and wealth management
5
Global financial and
capital markets
Trading P&L leadership, trading risk oversight, and global markets understanding
7
Global funds management
Funds management P&L leadership, private asset investment, public securities investment, emerging
markets investment, and client knowledge
5
Global investment banking
Global investment banking experience, investment banking P&L leadership, investment banking
risk oversight, investment banking people and culture oversight, debt and equity capital markets,
advisory, and merchant banking
5
(2) Number of directors who have a primary skill (i.e. a consistent ability to identify complex issues) in each area.
45
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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Director independence
Macquarie recognises that independent directors have an important
role in assuring shareholders that the Board is able to act in the best
interests of MGL and independently of management. MGL’s NEDs
meet regularly in the absence of management and Directors are
also able to consult independent experts at MGL’s expense, subject
to the estimated costs being approved by the Chair in advance as
being reasonable. The Board Charter requires that the Board has a
majority of NEDs who satisfy MGL’s criteria for independence.
The independence of NEDs is assessed prior to appointment
and reviewed annually by the BGCC. The Board believes that
independence is evidenced by an ability to constructively challenge
and independently contribute to the work of the Board. MGL’s
criteria for assessing director independence align with the guidance
provided in the 4th edition of the ASX Corporate Governance
Council’s Corporate Governance Principles and Recommendations.
MGL’s Policy on Director Independence is available at
macquarie.com/corporate-governance
88%
of Board members are
Independent Directors
100%
of Board Committee members
are Independent Directors
The findings of the annual review of Director independence by the
BGCC are considered by the Board. As part of the review, MGL’s
criteria for assessing director independence are sent to each
Independent Director. They are requested to confirm whether they
have any interests, positions or relationships with Macquarie that
could materially interfere with the Director’s capacity to bring
independent judgement on matters before the Board and act in
the best interests of MGL. This year, there were no material or
substantial relationships that were assessed as impacting on the
independent judgement of MGL’s NEDs. Some of the Directors
hold positions in companies with which Macquarie has commercial
relationships. All these dealings are not material and are in the
ordinary course of business on arm’s length commercial terms.
Dealing with potential conflicts of interest
Macquarie recognises that conflicts of interest or potential conflicts
of interest may arise from time to time for its Directors. Macquarie
has in place procedures to identify and monitor for such conflicts
and to adopt appropriate measures where these arise.
The Board has protocols for its members for declaring and dealing
with potential conflicts of interest that include:
• Board members declaring their interests required under the Act,
the ASX Listing Rules and general law requirements
• Board members with a material personal interest in a matter
before the Board not receiving the relevant Board paper and not
being present at the Board meeting during the consideration of
the matter and subsequent vote, unless the Board (excluding the
relevant Board member) resolves otherwise
• as a general rule, Board members with other conflicts not
involving a material personal interest in a matter before the
Board should not receive the relevant Board paper and not be
present at the Board meeting during discussion of the matter.
MBL is a subsidiary of MGL and all MGL NEDs generally also serve
on the MBL Board. The MBL Board is ultimately responsible for the
sound and prudent management of MBL, with due consideration
to the interests of deposit holders. Where potential conflicts
arise, there are a number of measures available to Directors of the
relevant Board to deal with such conflicts (e.g., consideration by
the MBL Board Conflicts Committee, BOND representation on the
MBL Board and Board Committees, etc.). Management will also
assist by giving Directors sufficient information to manage conflicts
appropriately. Each Director has the ability to obtain independent
advice or consult with independent experts where that Director
considers it necessary to carry out their duties and responsibilities.
Culture and values
The balance between opportunity and accountability, while
operating with integrity within a strong risk management
framework, is a feature of Macquarie’s success and a key factor in
our long record of unbroken profitability. Our corporate governance
practices reflect this balance.
The Board approves the Code of Conduct and oversees that the
culture instilled by management reflects the principles enshrined
within it:
Opportunity
We are entrepreneurial. Our people come from
diverse backgrounds and are empowered to work
together to pursue innovative ideas, to solve
problems and challenge conventional thinking and the
status quo. We work hard and with enthusiasm and
everyone has the opportunity to achieve to their full
potential. We have a learning and growth mindset,
and continually evolve our expertise. We recognise
and reward performance.
Accountability
We take pride and ownership of the long‑term
outcomes we deliver for our clients and
shareholders, our communities and each other. We
manage risk to ensure these outcomes are sustainable
and invest our time and capital to contribute to a
better future. We take ownership of the performance
of our endeavours and seek to quickly identify and
respond to change, emerging issues and trends.
Integrity
We operate with care and professionalism. We work
collaboratively to amplify our impact and consider
the effect of our decisions on others. We have the
courage, and are encouraged, to speak up with our
ideas, when we make a mistake or see something that
doesn’t seem right. We respect the law, community
expectations, our regulators, shareholders, clients
and customers and each other.
46
Corporate Governance Statement
Continued
The Board oversees compliance with key policies that are intended
to instil a culture of acting lawfully, ethically and responsibly.
An overview of the key policies that apply to our staff, such
as the Whistleblower Policy and Anti-bribery and Corruption
Policy, is provided in Macquarie’s Code of Conduct. Material
incidents and breaches relating to those policies and the Code of
Conduct are reported to the Board, typically through the relevant
Board Committee.
Macquarie’s Code of Conduct
The Board approved Code of Conduct, which applies to Macquarie’s
Independent Directors and staff:
• incorporates What We Stand For: Macquarie’s purpose and the
principles of Opportunity, Accountability and Integrity that guide
the way staff conduct business
• provides clear guidance on good decision-making and escalation,
encouraging staff to speak up and report genuine concerns about
improper conduct
• reinforces the main requirements of Macquarie’s key policies.
To ensure Macquarie’s culture of honesty and integrity remains
strong throughout the organisation, all staff who join Macquarie
receive specific training on What We Stand For and the Code of
Conduct. Existing staff also receive periodic training and sign an
annual certification that they understand the obligations imposed
on them by the Code of Conduct as well as their responsibility to
adhere to the Code.
What We Stand For and the Code of Conduct are available at
macquarie.com/what-we-stand-for
The Integrity Office
Consistent with the principles of What We Stand For, Macquarie
is committed to providing an environment in which people are
comfortable escalating improper conduct or voicing concerns about
unethical behaviour. The Code of Conduct sets out the expectation
that staff speak up, and outlines the mechanisms, support and
protections available to staff who do so.
The Integrity Office, established in 1998, supports this commitment
as an internally independent function dedicated to receiving
and investigating concerns about improper conduct or unethical
behaviour and protecting those who raise concerns.
Macquarie’s Whistleblower Program (Program) provides numerous
channels for staff and external parties to confidentially raise
concerns about improper conduct, including suspected breaches
of the Code of Conduct. The Program, which is managed by the
Integrity Office, is supported by the Whistleblower Policy and
includes an externally managed service that enables concerns to
be raised anonymously. All concerns raised with the Integrity Office
or through the externally managed service are assessed and where
appropriate, investigated.
The Integrity Office is also a point of contact for external parties
such as suppliers and former employees to raise concerns about
improper conduct by Macquarie or its staff.
The Integrity Office reports directly to MGL’s CEO and provides an
annual report to the BGCC. Supporting the Group Integrity Officer
are Regional Integrity Officers located in various Macquarie offices
around the world. The Integrity Office also promotes high ethical
standards and good decision-making through communications and
engagement with staff.
Macquarie’s Whistleblower Policy is available at
macquarie.com/whistleblower-policy
Customer Advocate
Macquarie established the Customer Advocate office in March 2017
to enhance its continuing commitment to its Australian retail and
small business customers. In addition to customer support provided
by the business, the Customer Advocate’s role is to:
• listen to Macquarie’s customers and provide a customer-centric
voice when making recommendations to improve
customer experience
• minimise the risk of future problems by reviewing key customer
themes and new product approvals to identify opportunities to
enhance products, services, systems and processes
• work with Macquarie complaint teams to promote fair and
reasonable customer outcomes.
The Customer Advocate reports directly to the CEO and provides
reporting to the BGCC.
Anti‑bribery and Corruption Policy
Macquarie’s Anti‑bribery and Corruption Policy strictly prohibits
the actual or attempted use of any form of bribery or corruption
whether direct or indirect and whether involving Public Officials or
private persons. Bribery and corruption are incompatible with the
Code of Conduct, What We Stand For and the probity and integrity
expected of Macquarie’s NEDs and staff.
RMG, headed by the CRO, oversees the operation of the policy.
Macquarie’s Anti‑bribery and Corruption Policy is available
at macquarie.com/corporate-governance
Diversity and Community
Diversity, Equity and Inclusion
Macquarie recognises that the diversity of its people is one of its
greatest strengths and is fundamental to Macquarie’s success.
An inclusive, equitable workplace enables Macquarie to embrace
diversity to deliver more innovation and sustainable solutions for its
people, clients, shareholders and communities.
Macquarie’s Workforce Diversity Policy defines its diversity
commitment and the structures in place to promote:
• a diverse workforce that is reflective of the communities in
which Macquarie operates
• equitable processes that enable staff to reach their full
potential, and
• an inclusive environment where all staff can bring their full
selves to work.
47
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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The BRC sets measurable objectives for increasing the diversity of
Macquarie’s workforce and annually assesses both those objectives
and Macquarie’s progress in achieving them.
Macquarie reports against its diversity objectives, which
include increasing the proportion of women and people from
under-represented groups at all levels in the Macquarie workforce.
This includes diverse representation at senior leadership levels
(Board of Directors, Executive Committee, Division Head and Senior
Executive). The principles of equity and inclusion are embedded
in Macquarie’s people related practices and processes, including
core talent programs, talent acquisition processes and promotion
criteria, to ensure all staff have access to equitable opportunities.
All Macquarie staff, including its most senior leaders, are required
to have annual DEI objectives, driving accountability from the top
down. The BRC is responsible for reviewing and approving the
annual Diversity, Equity and Inclusion section for the Annual Report.
Reporting to the BRC sets out the composition of Macquarie’s
workforce, gender and cultural representation and progress towards
achieving its measurable objectives for diversity.
Macquarie’s measurable objectives for achieving diversity,
and progress towards achieving those objectives, are
detailed on pages 74 to 77 in the Diversity, Equity and
Inclusion section of this Annual Report.
Macquarie’s Workforce Diversity Policy is available at
macquarie.com/diversity-equity-and-inclusion
Macquarie and the community
Macquarie supports the wider community through various
programs, including the Macquarie Group Foundation’s
(Foundation) employee engagement, grantmaking and social
impact investing, and Macquarie Sports and the Macquarie Group
Collection (Collection).
The Foundation is governed by the Macquarie Group Foundation
Committee (Committee), which comprises senior executives from
across Macquarie. The Committee is chaired by Mr Alex Harvey,
Chief Financial Officer of Macquarie.
Committee members bring specific areas of expertise and
experience and represent the geographical spread of Macquarie’s
employees. The Committee meets regularly to assess funding
applications, review the Foundation’s activities, and to set and
monitor strategy.
The Foundation’s Social Impact Investment Advisory Committee
(SIIAC) and Macquarie Sports Advisory Committee comprise senior
employees with a range of experience from across Macquarie.
Acquisitions for the Macquarie Group Collection are made by an
Art Committee, comprising Macquarie employees, together with a
curatorial consultant. The Collection has a cohesive integrity and
it is the Art Committee’s responsibility to uphold this integrity
through the acquisition process.
Further information is available on pages 78 to 81
in the Macquarie Group Foundation section of this
Annual Report.
Corporate reporting
Periodic corporate reports are verified internally by management
prior to release to ASX and subject to external audit or review by
PwC as required. The verification process allocates disclosures
within the relevant document to designated persons to substantiate
the disclosures by reference to company source documents or, if
no source documents are available, by persons with the knowledge
and expertise to confirm the accuracy and completeness of
the disclosures.
Financial reporting
On behalf of the Board, the BAC:
• oversees the quality and integrity of Macquarie’s financial
reporting and the operation of the financial reporting
processes: The processes are aimed at providing assurance
that the financial statements and related notes are complete, in
accordance with applicable legal requirements and accounting
standards and give a true and fair view of Macquarie’s financial
position and financial performance. During its review of
Macquarie’s interim and year-end financial reports the BAC
meets with the external auditor in the absence of management
• reviews the external auditor engagement: At least annually,
the BAC reviews the terms of the engagement and assesses the
performance, quality, expertise, resources and qualifications,
objectivity, independence and effectiveness of the external
auditor. During FY2024, the BAC oversaw Macquarie’s
comprehensive review of the external auditor. The governance
framework for the external auditor is described on page 48.
The BAC at least annually recommends to the Board the
continuation of, appointment of a new, or removal of the existing
external auditor
• monitors and reviews the operation of Internal Audit: The BAC
monitors and reviews the degree of independence of the Head
of Internal Audit, their performance and remuneration (after
seeking input from the CRO) and approves their appointment
and removal. The BAC also approves the Internal Audit annual
plan and monitors and reviews the effectiveness of the Internal
Audit function
• reviews the adequacy of Macquarie’s control framework for
financial regulatory reporting to banking regulators: The
BAC receives reports prepared by management that assess
the control effectiveness of Macquarie’s Operating and Central
Services Groups.
Auditor independence
Before the Board approves the interim and year-end financial
reports, the BAC reviews the independence of the external auditor,
PricewaterhouseCoopers (PwC).
Macquarie’s Audit and Assurance Independence Policy sets out
the independence requirements Macquarie requires of its auditor.
The policy supplements the legal and professional standard
requirements applicable to its auditor in each jurisdiction. The
policy ensures the independence of the audit firm from MGL, its
subsidiaries and Macquarie’s managed funds and their controlled
portfolio companies.
To ensure an effective and efficient audit, and to ensure the
independence of the auditor, the policy guides the use of a single
48
Corporate Governance Statement
Continued
audit firm for MGL, its subsidiaries, Macquarie’s managed funds and
their controlled portfolio companies.
Where non-audit work to be performed by the external auditor
falls outside the scope of pre-approved services or the proposed
engagement fee exceeds the policy’s local currency threshold the
policy requires BAC approval, or approval of the BAC Chair between
meetings for subsequent noting by the BAC.
The policy, which reflects Australian legal requirements, also
requires that Macquarie’s lead auditor and review auditor be rotated
every five years unless the Board grants approval to extend the
term for up to a further two years.
As previously announced, in FY2023, the BAC recommended to
the Board, and the Board approved, a replacement lead auditor.
Ms Voula Papageorgiou of PwC replaced Ms Kristin Stubbins
as Macquarie’s lead auditor in FY2024. Ms Stubbins had been
Macquarie’s lead auditor since FY2020.
PwC attended the Annual General Meeting (AGM) held during the
reporting period and was available to answer questions about
the conduct of the audit, and the preparation and content of the
auditor’s report.
Macquarie’s auditor provides a declaration to the BAC at the time
of Macquarie’s interim and year-end financial reports, that no
prohibited non-audit services have been provided. The external
auditor is also required to declare in their audit report that they
are independent of MGL and its subsidiaries in accordance with
the auditor independence requirements of the Act and the ethical
requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants
(including Independence Standards) that are relevant to its audit of
the financial report in Australia.
The External Auditor Policy Statement describe key aspects
of Macquarie’s Audit and Assurance Independence Policy
and external auditor review process, and are available at
macquarie.com/corporate-governance
Review of the quality and effectiveness of
the external auditor’s performance
The BAC conducts an annual review of the quality and effectiveness
of the external auditor, including qualifications, expertise, resources
and performance of the external auditor, PwC. In addition to the
BAC’s annual external auditor review processes, a more detailed
comprehensive review of the external auditor will be conducted at
least every five years, beginning in FY2024.
The annual evaluation involves assessing PwC’s performance
against ASIC’s audit quality guidance, obtaining feedback from the
Board and senior stakeholders across various Macquarie finance and
business teams, and obtaining and reviewing feedback from PwC
on the results of any internal or other external audit quality reviews
relating to the audit.
The comprehensive review conducted during FY2024 considered
the performance of the audit firm over several years – both at
Macquarie and as an audit firm in servicing its clients, its industry
expertise, application of professional scepticism, internal quality
processes and independence processes. This enhanced periodic
review strengthens the governance framework for the external
auditor and helps manage risks relating to the external auditor’s
independence and effectiveness, which may include the risk of
institutional familiarity arising from the external auditor’s tenure.
The outcomes of the annual and comprehensive reviews were
presented to and discussed with the BAC, and separately discussed
with PwC. Having considered these outcomes, the BAC continues to
be satisfied with the audit quality of the auditor.
The comprehensive review identified opportunities for both the
auditor and Macquarie to evolve the audit relationship.
Macquarie has revised its Audit and Assurance Independence Policy
to include requirements relating to audit tender, comprehensive
review frequency and the provision of tax services, specifically:
• Macquarie will tender the audit of MGL and its subsidiaries every
10 years and require the same of its managed funds and their
controlled portfolio companies, where circumstances allow, and
Macquarie has the power to require such appointment
• Macquarie will continue to conduct a comprehensive review of
its auditor in the intervening 5-year period with timing aligned to
the rotation of the lead audit partner. Macquarie will continue to
conduct an annual review of the quality and effectiveness of its
auditor which aligns to ASIC’s audit quality guidance
• Other than those tax services required for the audit or assurance
of the financial statements, MGL and its subsidiaries will cease
the use of its auditor for the provision of tax (including tax
compliance) services with effect from 1 April 2025
• Macquarie has minimal appetite for the provision of tax services
by the auditor to MGL and its subsidiaries and to Macquarie’s
managed funds and their controlled portfolio companies. Any
new engagement will require BAC approval, unless:
– the managed funds or controlled portfolio companies have an
independent executive governance committee or board; and
– that entity’s auditor independence policy contains equivalent
provisions as Macquarie’s policy.
In limited commercial circumstances, and where the
independence of the auditor is not impaired, the BAC may
consider approving these services on an exceptional basis.
Macquarie expects to tender the audit of MGL, its subsidiaries, and
its managed funds no later than mid-2026.
Based on the outcomes of this year’s annual and comprehensive
reviews, and the auditor’s independence confirmations, the BAC
recommended to the Board that PwC continue in its role as
Macquarie’s external auditor.
Board evaluation and consideration
In FY2024, the Board exercised its continuing oversight of the
performance of the external auditor. Board members provided
feedback forming part of the comprehensive review of the external
auditor considered by the BAC to assess their effectiveness and
service quality.
Based on that assessment, the results of the auditor independence
reviews and recommendation of the BAC, in May 2024 the Board
agreed that PwC should continue as Macquarie’s external auditor.
49
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
Financial Report
Directors’ Report
About
Governance
Chief Executive Officer and Chief Financial
Officer declaration
Before the MGL and MBL Boards consider and approve the interim
and year-end financial statements, each Board receives written
confirmation from their respective CEO and the Chief Financial
Officer (CFO) that, in their opinion, the financial records have been
properly maintained, the financial statements comply with the
appropriate accounting standards and give a true and fair view of
the company’s financial position and performance, and their opinion
is based on a sound system of risk management and internal control
which is operating effectively in all material respects
Commitment to shareholders and an
informed market
Macquarie is committed to ensuring that the market as a whole
is relevantly and consistently informed regarding information
about Macquarie by providing securityholders and the market with
timely, balanced, direct and equal access to information issued
by Macquarie, to promote investor confidence in the integrity of
Macquarie and in the trading of its securities.
Macquarie has a Continuous Disclosure Policy, which outlines
the responsibility of the Continuous Disclosure Committee
for authorising the release of any price sensitive market
announcements, unless such announcement requires
Board approval.
All external communications that include any price sensitive
material for public announcement, annual and interim result
announcements, release of financial reports, presentations to
investors and analysts and other prepared investor presentations
for Macquarie will, in accordance with the Continuous
Disclosure Policy:
• be factual and subject to internal review and authorisation
before issue
• not omit material information
• be timely and expressed in a clear and objective manner.
Material announcements relating to matters that fall within the
reserved powers of the Board and not delegated to management,
or which are otherwise clearly within the purview of the Board’s
responsibilities, are referred to the Board for approval. The Board
receives copies of material market announcements promptly after
they have been released by ASX.
Macquarie’s Continuous Disclosure Policy is available at
macquarie.com/corporate-governance
Macquarie has an investor relations program to facilitate effective
two-way communication with investors and analysts and to provide
a greater understanding of Macquarie’s business, performance,
governance and financial prospects. Macquarie engages with
institutional investors, private investors, sell-side analysts and
buy-side analysts throughout the year via scheduled and ad
hoc interactions.
As part of Macquarie’s commitment to keep its investor base
informed, management presents at various investment conferences
and conducts investor visits and meetings (including virtual)
throughout the year.
All material investor or analyst presentations are lodged
with ASX ahead of the presentation and made available on
Macquarie’s website.
Macquarie’s website
Recent announcements, past and current reports to shareholders,
including summaries of key financial data, operational briefing
presentations, AGM webcasts and copies of recent notices of
meeting are available on the investor centre page of our website.
Investor Relations contacts are also available on our website.
Further information about Macquarie is available at
macquarie.com
Shareholder meetings
MGL encourages shareholders to participate in general meetings
and aims to choose a date, time and venue convenient to its
shareholders. For shareholders who are unable to attend in person,
MGL provides a webcast of its AGM and any other general meetings.
The results of all resolutions are lodged with ASX as soon as they
are available after the meeting.
MGL typically holds its AGM in July each year.
Notices of meeting are accompanied by explanatory notes on the
items of business and together they seek to clearly explain the
nature of business of the meeting.
If shareholders are unable to attend the meeting, they are
encouraged to vote on the proposed motions by appointing a proxy.
The proxy form sent to shareholders explains how to appoint a
proxy. Online proxy voting is also available to shareholders.
Unless specifically stated in a notice of meeting, all holders of
fully paid ordinary shares are eligible to vote on all resolutions.
MGL’s practice is that voting on each proposed resolution is
conducted by poll.
MGL seeks to conduct its shareholder meetings in a courteous
manner for those attending. In the interests of attending
shareholders, the Chair of the meeting will exercise their powers to
ensure the meeting is conducted in an orderly and timely fashion.
MGL’s 2023 AGM was held as a hybrid meeting with shareholders
able to attend in person or online. Shareholders were provided
with various alternatives to participate in the AGM, including
by watching the AGM live through a facility that enabled
shareholders to vote and to ask questions or make comments
online and a dial-in teleconference to listen to the meeting live
and to ask questions on the telephone but not vote.
Shareholder communications
Shareholders can elect to receive communications from, and send
communications to, MGL and MGL’s share registry electronically by
visiting the Investor contacts page on Macquarie’s website.
Further information about Macquarie is available at
macquarie.com/investors
50
Corporate Governance Statement
Continued
Risk governance
Macquarie’s approach to risk management is based on stable and robust core risk management principles.
Ownership of risk
at the business level
Understanding
worst case outcomes
Independent sign-off by
Risk Management Group
Supported by a sound risk culture
The Board annually approves Macquarie’s Risk Appetite Statement
and Risk Management Strategy. The BRiC assists the Board by
providing oversight of Macquarie’s risk management framework and
advising the Board on Macquarie’s risk appetite, risk culture and risk
management strategy.
The BRiC constructively challenges management’s proposals and
decisions on risk management arising from Macquarie’s activities.
The Board is also assisted by the BAC, BRC and BGCC in its oversight
of financial and non-financial risk.
Each year, including FY2024, the Board oversees the operation
of Macquarie’s risk management framework by management to
satisfy itself that the framework continues to be appropriate and
that Macquarie is operating with due regard to the risk appetite
set by the Board. Key components of the framework are reviewed
by the relevant Risk Management Group (RMG) divisions and the
results are reported to the Board. The Internal Audit Division (IAD)
independently and objectively reviews the compliance with, and
effectiveness of, Macquarie’s risk management framework at least
annually, with coverage of all material elements of the framework
over a 3-year period.
The risk management framework has been established on the
premise that a disciplined approach to risk management is best
maintained with a single risk management framework that is applied
appropriately throughout Macquarie (including the Bank Group). In
addition, the Bank Group maintains its own governance structure,
which includes the MBL Board and Board Committees, MBL CEO,
MBL Executive Committee and other management committees.
Macquarie’s risk culture
A sound risk culture has been integral to Macquarie’s risk
management framework since inception. Macquarie sets, promotes,
monitors and reflects on the effectiveness of our risk culture. All
staff have a role in managing risk. Ownership of risk, including risk
culture, is at the business level. The Board, assisted by the BRiC,
is responsible for forming a view on Macquarie’s risk culture and
the extent to which it supports the ability of Macquarie to operate
consistently within its risk appetite. The Board also identifies
and monitors any necessary or desirable actions to change the
risk culture.
Chief Risk Officer
The Head of RMG, as Macquarie’s CRO, is a member of the
Executive Committee and reports directly to the CEO. The CRO
has a secondary reporting line to the BRiC, which reviews the
performance and objectives of the CRO and approves the
appointment and removal of the CRO. The CRO has unfettered
access to the Board, the BRiC and its Chair. The BRiC meets with
the CRO, in the absence of other management, at least annually to
discuss any matters that the BRiC or the CRO believe should be
discussed privately. The CRO reports risk matters at the BRiC
meetings. Where there is no scheduled BRiC meeting, the CRO
presents risk matters at a Board meeting.
Internal audit
The IAD provides independent and objective risk-based assurance
to the BAC, Board, other relevant Board Committees and Senior
Management on the compliance with, and effectiveness of,
Macquarie’s financial and risk management framework, including its
governance, systems, structures, policies, processes and people for
managing material risks.
The structure of the IAD, and further details of
Macquarie’s risk management approach, are contained on
pages 82 to 88 in the Risk Management section of this
Annual Report.
51
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
Financial Report
Directors’ Report
About
Governance
Environmental, Social and Governance risk
The Board and management recognise the importance of sound
Environmental, Social and Governance (ESG) practices as part of
their responsibility to our shareholders, funders, clients, employees
and the communities in which Macquarie operates.
Macquarie’s ESG approach is structured around eight focus areas
considered to be material to our business and stakeholders. They
are: environmental and social risk management; climate change;
environmental and social financing; sustainability in our own
business operations; client and customer experience; people and
workplace; business conduct and ethics; and community. Building
on What We Stand For and the Code of Conduct, these focus areas
reflect the risks and opportunities identified by the business and the
issues of interest to our stakeholders.
Environmental and social risks have been identified as material
risk events within Macquarie’s risk management framework, while
climate change and net zero transition are incorporated as causal
risks under External Risk and Strategic/Business Risk, respectively,
within Macquarie’s risk management framework.
Information on Macquarie’s management of environmental
and social risks, including climate-related, nature-related, and
human rights risks, are provided within the ESG section of this
Annual Report. Further details are also available in Macquarie’s
Net Zero and Climate Risk Report and Modern Slavery Act
Transparency Statement.
Additional information is available at macquarie.com/esg
and macquarie.com/risk-management
Oversight of remuneration
Macquarie’s longstanding and consistent approach to remuneration
continues to support Macquarie’s purpose statement, ‘Empowering
people to innovate and invest for a better future’. Staff interests
are aligned with shareholders to meet the needs of clients and
customers, while ensuring that the spirit and intent of regulatory
requirements are upheld. This broad approach has been in place
since Macquarie’s inception and is reviewed regularly to ensure
the framework continues to meet our remuneration objectives
and aligns with our remuneration principles and the expectations
of stakeholders.
MGL’s NEDs oversee management’s implementation of Macquarie’s
remuneration framework. The BRC assists the Board with
Macquarie’s remuneration policies and practices.
Non-Executive Director remuneration
MGL’s NEDs are remunerated for their services from the maximum
aggregate annual amount approved by shareholders, currently
$A5 million. They do not receive payments on their retirement from
office other than payments relating to their accrued superannuation
contributions comprising part of their remuneration, if any.
To align the interests of the Board with shareholders, NEDs are
required to have a meaningful direct shareholding in MGL. Unlike
Macquarie executives, NEDs are not granted equity nor are they
eligible to receive profit share payments.
The Board minimum shareholding requirement for:
• NEDs other than the Chair, is an investment equivalent to one
times the average annual NED fee for the financial year ended
prior to their appointment
• the Chair, is an investment equivalent to one times the
annual Chair fee
with the minimum number of shares to be acquired by NEDs
determined using the share price as at the date of appointment.
The above requirements apply to MGL’s NEDs and are to be
met within three years from appointment with one third of the
requirement to be held after one year, two thirds after two years
and in full after three years.
Each NED’s current Macquarie shareholding is set out in the
Key Management Personnel disclosure on page 150 in the
Remuneration Report of this Annual Report.
Executive remuneration
Macquarie’s remuneration framework has been a key driver of
our sustained success as an international organisation. Staff are
motivated to grow businesses over the medium to long-term,
taking accountability for all decisions and their accompanying risk
management, customer, economic and reputational outcomes. This
approach has been fundamental in ensuring we can continue to
attract, motivate and retain exceptional and entrepreneurial people
with deep industry expertise across the 34 markets in which we
operate. It is characterised by an emphasis on performance-based
remuneration, profit share determined based on a range of financial
and non-financial factors and retaining a significant proportion of
performance-based remuneration to enable risk outcomes to be
considered over a longer period.
Macquarie’s remuneration framework works as an integrated whole.
An individual’s remuneration comprises fixed remuneration, profit
share and, for Executive Committee members (our Executive Key
Management Personnel (Executive KMP)), Performance Share Units.
Macquarie retains a percentage of each individuals’ annual profit
share allocation (retained profit share) above a certain threshold.
This is invested in a combination of Macquarie ordinary shares
under the Macquarie Group Employee Retained Equity Plan and
Macquarie-managed fund equity.
Details of Macquarie’s approach and the amount of
remuneration paid to NEDs and Executive KMP are
contained on pages 106 to 156 in the Remuneration Report
of this Annual Report.
52
Corporate Governance Statement
Continued
Key policies
Dealing with potential conflicts
Macquarie’s Conflicts of Interest Policy sets out the framework,
controls and administration for identifying, preventing and
managing conflicts of interest – whether actual, potential
or perceived.
Macquarie has established various systems and controls to prevent
and manage conflicts of interest, many of which are outlined in
Macquarie’s policies in relation to conflicts of interest, information
barriers and confidentiality, investment research, personal
investments, gifts and entertainment, outside business activities,
allocations of financial products, personal relationships in the
workplace and political contributions. Conflict checks are required
prior to entering into certain business arrangements.
Staff are expected to appropriately manage or avoid any conflict
of interest between Macquarie or its clients and the interests of a
staff member. Activities such as personal investment and outside
business activities are subject to disclosure and pre-approval.
Managing conflicts of interest forms part of the training on What
We Stand For and the Code of Conduct for all new and existing staff.
Trading Macquarie securities
Key requirements of the Trading Policy include:
• trading prohibition while in possession of material non-public
information: dealing in Macquarie securities while in possession
of inside information is prohibited
• trading windows: generally, Directors and staff may only trade
in Macquarie securities during designated trading windows
following MGL’s announcement of its interim results, full year
results and AGM
• pre‑clear securities trading: directors and staff must pre-clear
their Macquarie securities trading
• excluded dealings: certain types of transactions such as
acquisition of securities under an employee share plan or
participation in a dividend reinvestment plan may be effected
outside a trading window without pre-clearance
• unvested equity held in the MEREP and shares held to meet
the minimum shareholding requirement cannot be hedged.
Each member of the Board is encouraged to consider positions in a
Macquarie security as a long-term investment and is not permitted
to trade derivatives relating to a Macquarie security without the
prior approval of the Chair of the Board (in consultation with
the CEO). Board members and Executive KMP are also required
to annually disclose to Macquarie any financing arrangements
relating to their Macquarie securities and manage their financing
arrangements in accordance with Macquarie’s policies.
MGL’s Trading Policy sets out the restrictions that apply
to dealing in Macquarie securities by Directors and
Macquarie staff, including Executive KMP, and is available at
macquarie.com/corporate-governance
Corporate governance in
Macquarie‑managed funds
Macquarie’s expertise in managing fund assets and sourcing new
value-adding opportunities is a key attraction for investors in
Macquarie-managed funds (Funds).
The Funds adopt an appropriate governance framework to ensure
that key decisions are taken in the best interests of investors
consistent with the Funds’ mandates and regulatory requirements.
Macquarie’s Statement of Corporate Governance in
Macquarie‑managed Funds sets out the key elements
of the corporate governance framework for
Macquarie-managed funds and is available
at macquarie.com/corporate-governance
This Corporate Governance Statement is current as at
2 May 2024 and has been approved by the Board.
Our Key to Disclosures (Appendix 4G) has been
lodged with ASX and is available at
macquarie.com/corporate-governance
53
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
Financial Report
Directors’ Report
About
Governance
ESG approach and governance
The Board and Management recognise the importance of sound Environmental, Social and Governance (ESG) practices as part of their
responsibility to shareholders, funders, clients, employees, and the communities in which Macquarie operates. Macquarie’s ESG approach is
structured around eight focus areas considered to be material to our business and stakeholders.
The Board is responsible for approving Macquarie’s ESG framework, including major ESG policies. In accordance with its Charter, the
Board Governance and Compliance Committee (BGCC) assists the Board in adopting appropriate governance standards and reviewing and
monitoring Macquarie’s environmental and social risk management policies, practices and performance. Management is responsible for
implementation of the ESG framework.
ESG focus areas
Environmental and social risk management (see page 56)
Assessing and managing environmental and social risks (including work health and safety risks) is a key business priority
for Macquarie. Failure to effectively manage these risks could result in harm to communities, the environment and other
external parties, and expose the organisation to regulatory, reputational and financial impacts.
Climate change (see page 59)
Macquarie’s approach to climate is based around four areas of action. This includes: reducing the emissions of our own
business operations; leveraging our knowledge to help others decarbonise; aligning our financing activity with the global
goal of net zero emissions by 2050; and increasing investment in climate mitigation and adaption solutions.
Environmental and social financing (see page 62)
Across our Operating Groups, Macquarie is supporting a range of activities under the following broad categories: financing
and developing; advising; managing; researching and trading.
Sustainability in our own business operations (see page 65)
The environmental and social impacts of Macquarie’s own business operations predominantly relate to the energy and
resources we consume in our offices and data centres, business travel, and our procurement activities. We seek to manage
these impacts by monitoring and reducing our operational emissions, developing innovative and sustainable workplaces,
being efficient with energy and resource use, and improving the sustainability and diversity of our supply chain.
Client and customer experience (see page 69)
Macquarie’s relationships with our clients and customers, and their trust in us, is central to our business and future success.
Macquarie focuses on delivering exceptional outcomes, services and customer experiences, continuously building on the
trust and confidence in our organisation.
People and workplace (see page 71)
At Macquarie, we foster a culture that welcomes diverse ideas and perspectives and empowers individuals to explore
what’s possible in an environment that values inclusion, collaboration, innovation and creativity.
Business conduct and ethics (see page 72)
Macquarie’s organisational culture drives the way we do business, and our expectations of our people are outlined
in Macquarie’s Code of Conduct. Our principles of Opportunity, Accountability and Integrity determine how we
conduct business.
Community (see page 78)
The Macquarie Group Foundation (the Foundation) drives social impact work for Macquarie, supporting its people,
businesses, and communities to build a better future. In FY2024, $A67m was contributed by Macquarie employees and the
Foundation ($A641m since inception).
Environmental, Social and Governance
54
Environmental, Social and Governance
Continued
Process for determining our ESG focus areas
Macquarie’s ESG approach is structured around eight focus areas
considered to be material to our business and stakeholders.
On an annual basis, we identify the ESG focus areas and topics
most material to our business and stakeholders by assessing the
environmental, social (including human rights) and economic
impacts of our activities and business relationships.
Stakeholder engagement
Clear dialogue with stakeholders is important for building strong
relationships, understanding external dynamics, earning and
maintaining trust, enhancing business performance and evolving
our ESG approach. We regularly engage with a broad range of
stakeholders including clients, customers, shareholders, investors,
analysts, governments, regulators, employees, suppliers and the
wider community.
Our engagement with stakeholders helps identify and validate our
ESG focus areas.
Materiality process
We refer to the approach of the Global Reporting Initiative (GRI)
(GRI 3: Material Topics 2021) to determine our ESG focus areas.
This involves:
• understanding the organisation’s context: gathering and
analysing data and information from a broad range of external
and internal sources to better understand the context in which
we operate
• identifying negative and positive, actual and potential
impacts and assessing their significance: analysing direct
external stakeholder feedback and engaging across our
Operating and Central Service Groups to identify impacts,
generate a real-world perspective of stakeholder priorities and
evaluate the relative importance of material ESG topics across
our activities
• prioritising the most significant impacts for reporting:
utilising inputs from our research and engagement to determine
the most material impacts to report
• validating our ESG focus areas and material ESG topics:
testing our material ESG topics with internal stakeholders and
against external standards and market expectations.
(1) ESG topics are listed in the order in which they are discussed in the relevant sections of this report. Some ESG topics are relevant across more than one ESG focus area and have
therefore been repeated in the table above. To avoid duplication, these may not be discussed in detail within each relevant section.
ESG focus areas
The ESG topics identified during the FY2024 materiality process
were the same as those identified in FY2023. As a result, our eight
overarching ESG focus areas remain unchanged.
ESG focus areas
ESG topics(1)
Environmental
and social risk
management
(pages 56)
•
Integration of environmental and social risk
(ESR) factors in decision-making
•
Climate change
•
Human rights
•
Nature and biodiversity
•
Work health and safety (WHS) and wellbeing
Climate change
(pages 59)
•
Climate change
•
Net zero
Environmental
and social
financing
(pages 62)
•
Pursuing investments, markets and products
with an ESG focus
Sustainability in
our own business
operations
(pages 65)
•
Management of environmental and social
issues in our own business operations
•
Human rights
Client and customer
experience
(pages 69)
•
Client and customer satisfaction
•
Financial crime
•
Innovation and digitalisation
•
Transparent information and fair advice
and dealing
People and
workplace
(pages 71)
•
Talent attraction and development
•
Remuneration
•
WHS and wellbeing
•
Human rights
•
Diversity, equity and inclusion – refer to
pages 74–77 in the Diversity, Equity and
Inclusion section of this Annual Report
Business conduct
and ethics
(pages 72)
•
Risk culture and conduct
•
Taxation
•
Political contributions
•
Information security and data privacy
•
Financial crime
•
Management of legal and regulatory
environment
Community
(pages 78)
•
Social impact – refer to pages 78–81 in the
Macquarie Group Foundation section of this
Annual Report
Further details are available at
macquarie.com/esg
55
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
Financial Report
Directors’ Report
About
Governance
About these disclosures
Macquarie’s FY2024 ESG disclosures comprise relevant sections of
Macquarie’s FY2024 Annual Report and Macquarie’s website.
Relevant sections of Macquarie’s FY2024
Annual Report
• About (pages 4–32)
• Corporate Governance Statement (pages 36–52)
• Diversity, Equity and Inclusion (pages 74–77)
• Macquarie Group Foundation (pages 78–81)
Other relevant disclosures
The below reports and documents provide additional information
and context on our ESG approach and material topics, and are
available on our website.
Data, reporting and assurance
• FY2024 ESG Dataset
• FY2024 Basis of Preparation for ESG Reporting
• FY2024 GRI Index table
• FY2024 SASB Index table
Net zero and climate risk
• Net Zero and Climate Risk Report
Green finance
• Green Finance Impact Report
Sustainability in our own business operations
• 2025 Sustainability Plan
Sustainability in our MAM business
• Macquarie Asset Management Sustainability Report
• Green Investment Group Progress Report
• Macquarie Asset Management Stewardship Report
• Macquarie Asset Management Responsible Investment
Transparency Report
Human rights and modern slavery
• Modern Slavery Statement
Australian Reconciliation Action Plan
• Reconciliation Action Plan
The disclosures listed above can be downloaded from
macquarie.com/esg, macquarie.com/climate and
macquarie.com/diversity
Reporting standards
Macquarie’s FY2024 ESG disclosures have been prepared with
reference to the GRI Standards and are complemented by selected
Sustainability Accounting Standards Board (SASB) Standards.
Given the growing number of standards and best practices,
Macquarie welcomes moves by regulators and governments to
progress disclosure requirements to enable consistent reporting and
approaches across the industry. During the year, the International
Sustainability Standards Board (ISSB) published the following
sustainability reporting standards:
• IFRS S1 General Requirements of Sustainability-related
Financial Information (IFRS S1), which sets out the overall
requirements for sustainability-related financial disclosures; and
• IFRS S2 Climate-related Disclosures (IFRS S2), which will require
the disclosure of information that enables the users of financial
statements to understand the reporting entity’s governance,
strategy, risk management, and metrics and targets in relation
to climate-related risks and opportunities.
In Australia, the proposed sustainability standards have been
issued for exposure and comment while proposed legislation has
been tabled in Parliament under the Treasury Laws Amendment
(Financial Market Infrastructure and Other Measures) Bill 2024
(Cth). In the present form, these requirements would have the
MGL Consolidated Entity commence reporting for its FY2026
financial year. Macquarie acknowledges the growing importance
of sustainability-related disclosures and continues to progress its
established project to assess and prepare for future sustainability
and climate-related reporting obligations.
Independent assurance
PwC has provided limited assurance over select ESG metrics for
the FY2024 reporting period, as detailed in the PwC independent
assurance report available within Macquarie’s FY2024 Basis of
Preparation for ESG Reporting on our website. This also sets out
the reporting boundaries, metric definitions and measurement
methodologies for the assured metrics.
Macquarie’s FY2024 Basis of Preparation for ESG Reporting,
FY2024 independent limited assurance report and FY2024
GRI Index and SASB Index tables can be downloaded from
macquarie.com/esg
56
Environmental, Social and Governance
Continued
Environmental and
social risk management
Under Macquarie’s Code of Conduct, all our people share
responsibility for identifying and managing environmental and
social risks as part of normal business practice. They are supported
by the Environmental and Social Risk (ESR) team.
The ESR team coordinates a diverse range of ESG activities across
Macquarie, including developing and implementing company-wide
and business-specific policies, reviewing transactions, providing
advice on environmental and social risks and opportunities and
facilitating training. The ESR team provides six-monthly reports to
the CRO and BGCC on environmental and social risk management
policies, practices and performance.
Details on Macquarie’s approach to assessing and managing its
material risks, and our broader risk management framework are
included on pages 82–88 in the Risk management section of this
Annual Report.
Environmental and social risks are managed through the
implementation of the ESR and WHS policies. These are updated
periodically to address opportunities for improvement and
emerging issues.
Macquarie’s ESR Policy describes our approach to ESR management
when onboarding or reviewing clients and other counterparties and
across a broad range of transactions including equity investments,
financing, leasing and advisory mandates. The ESR Policy provides
a process to assess, manage, mitigate, monitor and report
environmental and social risks and takes a precautionary approach
to ESR issues including labour and employment practices, climate
change, human rights, resource efficiency, pollution prevention,
biodiversity and cultural heritage. Guided by international
guidelines, including the International Finance Corporation
Performance Standards, the ESR Policy provides escalated
decision-making and approval processes, alongside the credit and
broader RMG approval processes, for material environmental and
social risks. Transactions with material environmental and social
risks are referred to the CRO and may be escalated to the CEO or
at least two Non-Executive Directors of the Board.
Macquarie’s WHS Policy describes our approach to recognise,
support and promote the rights of every worker throughout
our global operations and investment activities. The WHS Policy
outlines how we apply our WHS risk management principles for:
Macquarie’s day-to-day operations and potential impacts to
our people, third-party suppliers and visitors to Macquarie
premises; product and services provided to our clients; and
investments in businesses or projects by Macquarie or on
behalf of third-party investors.
(2) Includes risk managers and those in specific business groups with greatest potential exposure to environmental, social and WHS risks. Excludes global online WHS training
completions. Some employees may have attended more than one training session, in which case their attendance was counted for each session.
(3) PwC has provided limited assurance over this metric as detailed in the PwC independent assurance report available within Macquarie’s FY2024 Basis of Preparation for ESG
Reporting. This also sets out the reporting boundaries, definitions and measurement methodologies for the assured metrics.
(4) PwC has provided limited assurance over the total reviews completed under the ESR Policy for the FY2024 reporting period as detailed in the PwC independent assurance report
available within Macquarie’s FY2024 Basis of Preparation for ESG Reporting. This also sets out the reporting boundaries, definitions and measurement methodologies for the
assured metrics. PwC has not provided assurance over the split by sector.
864
961
attendances at ESR and WHS
training sessions in FY2024(2)
reviews completed under
the ESR Policy in FY2024(3)
Reviews completed under the ESR Policy in FY2024(4)
Forestry 29
Renewables 30
Technology 26
Infrastructure 20
Transport 27
Chemicals &
pharmaceuticals
33
Manufacturing
46
Financial services
44
Mining
167
Defence 54
Agriculture 47
Social infrastructure
107
Nuclear
66
Other 60
Gaming &
entertainment
40
Energy
165
reviews
(1,094 in FY23)
961
(4)
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Climate change
Our approach to managing climate risk is underpinned by the
ESR Policy. Macquarie considers the risks of climate change
(climate risk) to be cross-cutting, meaning we recognise climate
risk may impact a broad range of material risks within our risk
management framework as detailed on pages 82–88 in the Risk
management section of this Annual Report. Macquarie continues
to embed and enhance the identification, assessment, monitoring,
management and reporting of climate risks across the risk
management framework.
Human rights
Macquarie respects fundamental human rights as set out in
the Universal Declaration of Human Rights and codified in
the International Covenant on Civil and Political Rights, the
International Covenant on Economic, Social and Cultural Rights and
core International Labour Organization Conventions.
Macquarie has a company-wide framework of polices and processes
in place to identify, prevent or mitigate and, where relevant,
remediate potential and actual human rights impacts, including
modern slavery, resulting from our business activities and the
relationships connected to those activities.
Macquarie’s Modern Slavery Statement can be downloaded
from macquarie.com/human-rights-at-macquarie
Nature and biodiversity
Macquarie recognises that nature-related risks, such as biodiversity
loss, can have material economic, social and environmental
implications.
We have no tolerance for breaches of environmental and social laws
and regulations. We seek to comply with recognised international
standards to ensure that our business activities limit harm to
the environment. We seek to make a positive contribution to
environmental performance, including considering our direct
and indirect impacts and dependencies on resource efficiency
and pollution prevention, biodiversity and natural resource
management, and environmentally sensitive or protected areas.
During FY2024, Macquarie Asset Management (MAM) continued
to support the development of frameworks to identify, measure
and disclose nature-related risk and impacts as a founding member
of the Taskforce on Nature-related Financial Disclosures (TNFD).
Furthermore, Macquarie participated in a pilot study sponsored
by the Australian Government’s Department of Climate Change,
Energy, the Environment and Water (DCCEEW) to obtain a better
understanding of the challenges, barriers and opportunities for
Australian organisations in preparing for the adoption of the
TNFD framework.
Work health and safety, and wellbeing
At Macquarie we are committed to providing safe workplaces where
our employees, contractors and visitors can work and collaborate
without risk of physical and psychological harm.
Macquarie’s WHS vision, ‘Safe workplaces that enable and empower
people to do their best work’, is designed in connection with our
purpose of ‘Empowering people to innovate and invest for a better
future’. Our strong culture of leadership, governance and assurance
is integral to how we do this.
Our WHS practices are supported by:
• clear expectations and behaviours agreed with Macquarie
employees, contractors, visitors and business partners
• incorporation of WHS into our investment and business
decision-making processes
• WHS management frameworks and controls to: manage
safety-critical risks effectively; comply with laws, regulatory
obligations and standards; select, contract with and govern
third-party suppliers; and enable effective consultation and
communication of relevant WHS matters and information
• sufficient resourcing to manage material WHS risks
• measuring, monitoring and managing the progress of our
WHS performance to achieve our WHS vision.
Continued integration of work health and safety
into the investment lifecycle and tailored Safety
Alignment Frameworks across all Macquarie
Operating Groups
Health, safety and wellbeing of our people
The safety and wellbeing of all our people is at the centre of
Macquarie’s vision to create a healthy and safe environment by
identifying, preventing, and managing work-related physical and
psychosocial risks.
Our people are provided with opportunities to engage in health
and safety forums and consultation committees to address local
and regional WHS matters. This input assists in shaping our focus
for future wellbeing initiatives and strategies for injury and illness
prevention and management.
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Environmental, Social and Governance
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To maintain a safety-positive culture and manage our WHS risks
effectively, Macquarie has implemented:
• resources supporting the identification of health and wellbeing
risks, trends and insights used to proactively work on
preventative measures to improve the physical and psychological
health and safety of our people
• ongoing access to education, assessment and equipment for the
prevention of workplace injuries and incidents
• access to mental health and wellbeing training and resources
for our employees, including employee and family counselling,
mental health first-aid, health coaching, financial counselling
and targeted support and training for people leaders in leading a
mentally healthy workplace
• resources to support the identification of potential work-related
psychosocial risks, including through regular review and
workplace assessment
• an enhanced event management standard to ensure WHS risks,
including conduct-related risks, are appropriately identified,
assessed, and managed.
In addition to these health and safety initiatives, Macquarie’s
holistic wellbeing program, Macquarie Plus, provides a
comprehensive range of wellbeing benefits to equip our people with
the tools and resources to help prevent and manage any physical or
psychological injury and illness.
Macquarie’s Lost Time Injury Frequency Rate (LTIFR) in FY2024
was 0.18.(5) In FY2024, 99% of our people completed global online
Conduct at Macquarie training, including managing and responding
to psychosocial risks and expected standards of behaviour relating
to sexual harassment.
Health and safety in our investments
Macquarie integrates WHS into the investment lifecycle from due
diligence prior to investment, through to divestment. We believe
there is a strong correlation between actively managing WHS risk
and improving investment returns. This includes identifying WHS
risks and improvement opportunities at acquisition, if necessary
establishing transition plans in agreement with shareholders and
assets, and monitoring investments’ WHS performance throughout
the investment lifecycle.
Macquarie’s Operating Groups have tailored Safety Alignment
Frameworks to address the specific WHS risk profiles within our
investments. Frameworks are regularly reviewed and enhanced
to drive consistent WHS governing principles and expectations
for equity and fund management portfolio companies, seeking to
eliminate fatalities and serious injuries. In FY2024, 205 Macquarie
Nominee Directors received WHS governance training and are
supported by a network of senior WHS professionals.
(5) Lost time Injury (LTI) is an incident that results in time lost from work equal to or greater than a full day/shift. The LTI Frequency Rate (LTIFR) is the number of LTIs resulting in a
compensable claim per million workhours. Data is based on total global workforce for the period 1 April 2023 to 31 March 2024, for Macquarie employees.
WHS is the responsibility of each portfolio company. The portfolio
company board oversees the management of WHS and regularly
monitors and reports on WHS performance and risk management
to Macquarie, including high potential near miss reporting and
outcomes of incident investigations where there was a fatality or
serious injury.
During FY2024, Macquarie increased its focus on critical safety
risk management with the identification of high-risk sectors
and industries based on our investment insights, including the
introduction of additional WHS performance metrics. Macquarie
continues to focus on implementing WHS leading practices,
improvement initiatives, ensuring adequate WHS resources are
in place, updating WHS performance metrics and sharing lessons
learnt across our regions and Operating Groups. This also includes
Macquarie regularly promoting intra-industry WHS forums to share
lessons between organisations and across regions. In FY2024, 19
safety alerts and lessons were shared across our organisation.
More detailed information, including examples of how we
put WHS into practice, is available at macquarie.com/esg
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Climate change
At Macquarie, our approach to addressing climate challenges is
rooted in our purpose of ‘Empowering people to innovate and invest
for a better future’.
We believe we can contribute most positively to the challenges and
opportunities of climate change mitigation and adaptation through
the financing of practical solutions driven by the core capabilities
of our teams. Over the course of FY2024, we continued to drive
additional capacity in established clean energy technologies,
while also investing in emerging technologies that seek to reduce
emissions across energy, transportation, land use, buildings, waste
and industrial processes.
While our fossil fuel financed emissions(6) remain relatively small
compared to global peers, we continue to believe that an effective
transition must be managed, orderly and just. Consistent with that
philosophy, and in recognition that much of the world will depend
on the oil/gas industries for years to come, we are working with
our oil/gas clients to help them reduce their emissions as well as
maintain sufficient energy supply. In addition, our commodity
trading activities are helping clients manage their transition risks
by maintaining and developing deep and liquid hedging markets,
including in emerging commodities essential to the transition,
thereby providing greater price certainty as they navigate this
historic transformation.
Macquarie’s approach to climate is based around
four areas of action
The climate strategy set out in our 2023 Net Zero and Climate Risk
Report is based around four areas of action:
1
Continue to reduce the emissions of our own
business operations
2
Leverage our knowledge and networks to help
others decarbonise
3
Align our financing activity with the global goal
of net zero emissions by 2050
4
Increase investment in climate mitigation and
adaptation solutions
(6) For a detailed explanation of our financed emissions, refer to Appendix 3 of our 2023 Net Zero and Climate Risk Report.
(7) MAM generally only has influence over Scope 1 and 2 emissions. However, to the extent possible, in line with the Net Zero Asset Managers initiative guidance, MAM intends to
support assets where it has control or significant influence to reduce their Scope 3 emissions.
(8) The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by maintaining a global temperature rise this century well below 2°C above
pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5°C. The Intergovernmental Panel on Climate Change concluded the need for net zero
emissions by 2050 to remain consistent with 1.5°C.
(9) Own business operations’ Scope 3 covers Categories 1–8 operational value chain emissions as defined by the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting
and Reporting Standard. It excludes financed emissions (Scope 3, Category 15).
Separately to Macquarie’s direct financing activities, MAM has made
a commitment to invest and manage its portfolio in line with global
net zero Scope 1 and 2 financed greenhouse gas emissions by 2040,
where it has control or significant influence.(7) Where MAM does
not have control or significant influence, such as in its managed
portfolio of public securities, it will continue to support the goals of
the Paris Agreement(8) in a manner consistent with its client-guided
fiduciary and regulatory responsibilities. Further details on MAM’s
net zero commitment can be found on the MAM website.
1. Continue to reduce the emissions of our own
business operations
We have committed to net zero emissions in our own business
operations across Scope 1 and 2 by FY2025 and are progressing
well towards achieving this. As part of this commitment, we are
aiming to reduce Scope 1 and 2 emissions from a FY2020 baseline,
including purchasing renewable electricity for our office premises
in line with our RE100 commitment. We are continuing to
purchase carbon credits to offset residual Scope 1 emissions
that are difficult to abate, and we continue to offset our Scope 3
Category 6: Business travel emissions. In relation to our own
business operations’ Scope 3 emissions, we are developing methods
to measure and track emission reductions and are working towards
Scope 3 operational value chain emissions reduction targets aligned
to science.(9)
More details can be found on pages 65–68 and in Macquarie’s 2025
Sustainability Plan which articulates our corporate sustainability
commitments with specific and measurable targets across
environmental and social pillars.
Macquarie’s 2025 Sustainability Plan can be downloaded
from macquarie.com/esg-sustainability-in-
business-operations
2. Leverage our knowledge and networks to help
others decarbonise
As part of our broader activities, which are described on pages
20–32 in the Operating and financial review section of this Annual
Report, each Operating Group is engaging in a range of activities
aligned to Macquarie’s climate strategy and net zero commitments.
This involves partnering with clients and engaging with portfolio
companies in different ways to scale clean energy solutions and
support their decarbonisation journeys.
More details can be found on pages 62–64 of this Annual Report and
on pages 11–13 of the 2023 Net Zero and Climate Risk Report.
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Environmental, Social and Governance
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3. Align our financing activity with the global goal of
net zero emissions by 2050
A key aspect of Macquarie’s climate strategy is prioritising efforts
to reduce financed emissions in carbon-intensive sectors, to help set
a path for the global goal of net zero emissions by 2050. We have
estimated our financed emissions and set interim targets for the
residential mortgage, oil/gas, motor vehicle and coal sectors:
• for residential mortgages we have set a 2030 interim target
of 11.6–19.3 kgCO2e/m2 for Scope 1 and 2 which implies a
50–70% reduction in physical emissions intensity from the
FY2021 baseline
• for oil/gas we are making progress towards our 2030 interim
target of 56.3–59.6 gCO2e/MJ for Scope 1, 2 and 3 which implies
a 9–14% reduction in physical emissions intensity from the
FY2020 baseline
• for motor vehicles we had set a 2030 interim target of
147 gCO2e/km for Scope 1 and 2 which implies a 34% reduction
in physical emissions intensity from the FY2020 baseline. BFS
no longer originates new car loans and finance leases and the
interim target when adopted had assumed that this business
was ongoing. Our physical emissions intensity for this portfolio
will be determined by the remaining vehicle mix as loans and
leases run-off
• for coal, we are on track to run-off our remaining on-balance
sheet lending and equity exposures to the coal sector by the
end of 2024.(10)
We now have targets in place for over 80% of our dollar exposures
to carbon-intensive sectors and, in line with the Net-Zero Banking
Alliance (NZBA) Guidelines for Climate Target Setting – Supporting
notes (Guidelines), we will outline our approach to all remaining
material carbon-intensive sectors in our next Net Zero and Climate
Risk Report.(11),(12) In addition to the four sectors where we have set
financed emissions targets, for the first time this year, we reported
historical emissions in the power generation sector of 0.75 MtCO2e
for Scope 1.(13)
Our approach to coal
Our broader approach to coal continues to evolve to reflect the
needs of the energy transition and industry practice:
• in 2021 we announced our intention to run-off our limited
remaining on-balance sheet lending and equity exposures to coal
companies by the end of 2024.(10) This commitment is on track
and applies to coal companies in both the mining and coal-fired
power generation sectors, and to both metallurgical and thermal
coal. At the time of making the 2021 coal commitment, we
followed the then standard industry practice of classifying
clients as coal companies based on ANZSIC and GICS codes
(10) Lending refers to loan assets held at amortised cost and excludes certain items such as leasing, asset finance, trading assets and short-term financing (e.g., inventory finance).
(11) The percentage of dollar exposures is shown as at 31 March 2023. Exposures include on‑balance sheet lending and equity investments. In addition, for motor vehicles, exposures
include novated leases. See Appendix 3 of the 2023 Net Zero and Climate Risk Report for details.
(12) UN Environment Programme, Finance Initiative (2022), Guidelines for Climate Target Setting – Supporting notes.
(13) For National Renewable Energy Laboratory (NREL) proxied renewable power generation assets, this also includes immaterial Scope 2 emissions.
(14) Advisory transactions are defined as advisory mandates, introducer roles or similar structures, Debt Capital Markets transactions on a best endeavours (non-underwritten) basis
and Equity Capital Markets transactions where there is strong confidence that there is no (or will be no) net underwriting risk exposure post book closure.
(15) International Energy Agency (2023), World Energy Outlook 2023.
• in 2022, based on the NZBA Guidelines, we began defining coal
companies based on the proportion of a company’s revenue
that comes from coal-related activities. Given computational
challenges associated with revenue shares (particularly in a world
of high and volatile coal prices), we have consistently defined a
coal company as one that derives the majority (i.e., more than
50%) of its revenue from coal (both thermal and metallurgical)
production, mine ownership or operation, or coal-fired power
station ownership or operation. We acknowledge that the 50%
threshold is not in line with the NZBA Guidelines, which define
a coal company as one that derives more than 5% of revenues
directly from thermal coal only
• separately, Macquarie also committed to not enter into new
business activity with any counterparty where the underlying
purpose is to fund the purchase, development or expansion
of a coal mine or coal-fired power station. Commencing April
2024, we have refined this commitment to note that advisory
transactions where the underlying purpose is to fund the
purchase, development or expansion of a metallurgical coal mine
will be in appetite.(14) This takes into consideration the ongoing
importance of metallurgical coal for steel making, the industry’s
differential treatment of metallurgical and thermal coal, and
the short-term nature of advisory relationships. Thermal coal
buy-side advisory mandates remain out of appetite
• the global community has recognised the urgent need to
reduce global carbon emissions and the importance of working
with carbon intensive industries, such as coal, to help them
decarbonise. As noted in our 2023 Net Zero and Climate Risk
Report, we will maintain the ability to work with coal companies
to finance projects that will significantly reduce their carbon
emissions in line with science-based scenarios or are for the
purpose of diversifying away from the coal sector in line with a
credible transition plan.
4. Increase investment in climate mitigation and
adaptation solutions
The International Energy Agency (IEA) has suggested that annual
clean energy investment worldwide will need to increase from
$US1.8 trillion in 2023 to $US4.3 trillion by 2030 to put the world on
track to reaching net zero emissions by 2050.(15) This will require a
collective effort across the private and public sectors. Supporting
this need, our businesses are focused on providing solutions to our
clients to help them and the communities we serve to navigate the
challenges and opportunities ahead.
More details can be found on pages 62–64 of this Annual Report and
on pages 15–16 of the 2023 Net Zero and Climate Risk Report.
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Working in partnership
Macquarie works across a wide range of sectors, including
renewables, infrastructure, resources, commodities and energy.
To better understand the policy context in those sectors, we
work in close partnership with a wide range of public and private
stakeholders. Through those partnerships, we aim to find solutions
to some of the major transition challenges of the financial sector
and the real economy.
Refer to pages 13–14 of the 2023 Net Zero and Climate Risk Report
and page 43 of the FY23 MAM Sustainability Report for more details
on Macquarie’s partnerships.
Climate‑related financial disclosures
Macquarie will continue to evolve our climate-related financial
disclosures in line with related emerging standards, regulations and
best practices, and other reporting commitments such as those set
out under the NZBA Guidelines.
Our 2023 Net Zero and Climate Risk Report was informed by the
Task force on Climate-Related Financial Disclosures (TCFD) and its
recommendations, which are based on four key pillars: governance;
strategy; risk management; and metrics and targets. The latest
report (along with our other historical reports) is available on
Macquarie’s website.
More detailed information is available in Macquarie’s 2023
and 2022 Net Zero and Climate Risk Report which can be
downloaded from macquarie.com/esg
More detailed information on our approach to climate
change is also available at macquarie.com/esg
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Environmental, Social and Governance
Continued
Environmental and social financing
Macquarie continues to support clients seeking to manage and
respond to environmental and social challenges and capitalise
on emerging opportunities. Drawing on our global network,
sector expertise and strong track record, Macquarie provides a
diverse range of products and services with an ESG outcome to
corporate, government and institutional clients. Our activities
span the investment cycle from research on alternative energy to
tailored capital solutions for the development and construction of
renewable assets and social infrastructure.
Across our Operating Groups, Macquarie is supporting a range of
environmental and social financing activity under the following
broad categories: financing and developing; advising; managing;
researching and trading. Our activities are described on pages 20–32
in the Operating and financial review section of this Annual Report.
Financing and developing
To further support our climate ambition, Green Investment
Group (GIG) moved from Macquarie Capital to Macquarie Asset
Management (MAM) in April 2022 (now MAM Green Investments).
This allows us to combine the market leading renewables project
development and finance expertise of MAM Green Investments and
its portfolio of specialist development platforms with the fiduciary
capital resources entrusted to MAM, thereby providing access
to larger pools of capital and finance that in turn will allow us to
facilitate the development of renewables projects on a much larger
scale. The sell-down of on-balance sheet MAM Green Investments
assets is ongoing.
110 GW
of green energy assets in development, under
construction or currently operating, as at
31 March 2024 measured using 100% of generating
capacity for assets managed / owned (including
partially) by Macquarie(16),(17)
$A2.4 billion
invested or arranged in green energy assets for the
year ended 31 March 2024(17),(18)
(16) On our balance sheet or under Macquarie management. GW of green energy assets reflect 100% generating capacity of each asset, not the proportion owned/managed by
Macquarie. Excludes lending and private credit funds. Split by life cycle stage: 95 GW in development; 3 GW under construction; 12 GW currently operating. PwC has not provided
assurance over the split by life cycle stage. Refer to Macquarie’s FY2024 Basis of Preparation for ESG Reporting for the definition of ‘green energy assets’.
(17) PwC has provided limited assurance over this metric as detailed in the PwC independent assurance report available within Macquarie’s FY2024 Basis of Preparation for ESG
Reporting. This also sets out the reporting boundaries, definitions and measurement methodologies for the assured metrics.
(18) On our balance sheet or under Macquarie management. Refer to Macquarie’s FY2024 Basis of Preparation for ESG Reporting for the definition of ‘green energy assets’.
Examples of environmental and social financing and development
activities from across our Operating Groups are described below.
MAM’s specialist Green Investments team is connecting clients
to a range of green investment opportunities and transition
solutions, across technologies, geographies, and stages of the
energy transition.
In core renewables, MAM is working to help accelerate deployment
and create scale, with the launch of its Australian and New Zealand
onshore renewable energy business Aula Energy in November
2023, as well as MAM portfolio companies Corio Generation and
Cero Generation taking part in country-first projects and auctions
globally. In addition to the mature technologies of wind and solar,
MAM is investing across the next generation of decarbonisation
solutions – such as French battery manufacturer Verkor and
green nitrogen fertiliser company Atlas Agro in September and
October 2023 respectively.
CGM is developing and deploying climate solutions that meet
our clients’ diverse needs and ambitions to help them with
their decarbonisation pathways. CGM is supporting clients in
carbon-intensive industries, like oil and gas, to reduce their
emissions while maintaining the vital services they provide and on
which our communities and industries still rely.
The scale and breadth of the energy transition is driving the delivery
of holistic solutions across CGM’s activities, markets, and client
sectors, which includes actively investing in and financing a variety
of decarbonisation and sustainability initiatives globally. These are
captured under the following broad verticals: carbon and emissions;
renewable and flexible power; clean fuels; sustainable transport;
critical minerals; the circular economy; and sustainable finance.
CGM has recently established a low-carbon fuels platform, providing
market access and working capital solutions across the methanol
supply chain via structured supply and offtake solutions.
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In addition, CGM continues to be a long-term strategic partner
of Storegga, a UK-based independent, international developer of
Carbon Capture and Storage (CCS), hydrogen and direct air capture
projects. CGM was a cornerstone investor in Storegga’s first
equity raise in mid-2020 and has supported three further funding
rounds, helping the company grow from a developer of a single CCS
project into an international developer of multiple decarbonisation
technologies.
Macquarie Capital invests capital into resilient energy transition
infrastructure, and advises clients in connection with their own
investments in that sector.
In Asia, Macquarie Capital announced a strategic investment into
ChargeZone, an Indian EV charging company which will support the
growth of electric vehicle infrastructure and green mobility in India.
In Europe, Macquarie Capital has partnered with IP to create
IPLANET, a joint venture for electrification of service stations on
urban and suburban roads across Italy.
Additionally, Macquarie Capital is focused on driving tech-enabled
innovation and connecting capital with opportunities across key
sectors, such as an investment in BioCatch, a global leader in
behavioural biometrics, leveraging device and behavioural data to
protect global organisations against fraud.
Advising
With market-leading renewables and infrastructure advisory
expertise,(19) Macquarie Capital acted as a financial advisor to
APG Asset Management on its €250 million investment in Driveco,
a French EV charging company. This investment aims to support
Driveco’s ambition to be a major player in EV charging infrastructure
in France and wider Europe.
In the UK, Macquarie Capital is acting as exclusive financial
adviser to Statera Energy Limited, on behalf of InfraRed Capital
Partners Ltd and Statera’s Founder Management, on its sale to EQT
Infrastructure. Statera Energy develops and operates large-scale
energy storage and flexible generation assets, balancing the grid to
the best value for energy users and supporting the UK’s transition
to a low-carbon future.
In the US, Macquarie Capital acted as financial adviser to PureSky
Energy, a leading developer, owner and operator of US community
solar and battery storage projects, on the successful raise of a
3-year $US150 million development loan. The facility will support
funding of interconnection and equipment deposits, including
deployment of capital towards in-construction projects and the
company’s growing greenfield and acquisition pipeline.
(19) In February 2024, Macquarie Capital was ranked #1 Global Energy Transition Financial Adviser by inspiratia for the 2023 calendar year by deal value. There can be no assurance that
other providers would reach the same conclusions.
Further in the US, Macquarie Capital has joined a White House-led
initiative to support renewable energy projects for healthcare
facilities. The projects aim to increase efficiency, lower energy costs,
reduce emissions and improve resilience for critical healthcare hubs,
with a focus on safety-net providers in economically
disadvantaged communities.
As part of Macquarie’s social engagement, we are helping clients
expand access to education around the world. Macquarie Capital
acted as exclusive financial adviser to Remind, a popular platform
for communication and learning, on its merger with ParentSquare,
a unified school-home education engagement platform, aimed at
increasing student success through expanded communications for
educators, students, and families across the US.
Managing
As part of MAM’s fiduciary responsibility to our clients we assess
a range of commercial factors through our asset management
activities, including material ESG risks and opportunities, before
actively investing in companies and managing portfolios over their
holding period.
MAM manages a diverse suite of investment capabilities and
asset classes on behalf of its clients, with different levels of
ownership in, and influence over, the businesses it is invested in.
As a result, the way we exercise our rights and responsibilities as
stewards varies between the public markets and private markets
businesses of MAM.
Within MAM’s public markets businesses, our investment teams
have continued to advance their approach to integrating ESG
factors into their investment processes through access to a variety
of ESG-related analytical tools and resources to help them identify,
measure and track material ESG factors associated with investee
companies or issuers.
MAM is also focused on its investment stewardship activities by
encouraging investee companies and issuers to enhance their
disclosures, as well as act on material sustainability risks and
opportunities, through direct engagement and by exercising proxy
voting rights. In doing so, we can better understand how our
investee companies are responding to these risks and opportunities
and share learnings across our portfolio.
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Environmental, Social and Governance
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Within MAM’s private markets businesses ESG considerations are
embedded in investment decision-making processes and integrated
throughout the investment lifecycle. During FY2024, MAM has
made progress on its net zero commitment with its infrastructure
and agriculture portfolio companies and real estate properties
measuring and verifying their baseline emissions, setting interim
2030 targets, and identifying abatement measures to form the
basis of their net zero business plans.
Alongside scaling green investments, MAM continues to support
carbon-intensive industries and companies to decarbonise, including
those in the electricity, water, gas, agriculture, transport, mining,
oil and waste sectors. These industries provide products and
services that communities rely on and our approach recognises that
long-term solutions lie in collaboration, rather than divestment.
MAM also seeks to promote social outcomes through investments
in products that intentionally seek to contribute to social goals,
such as social and affordable housing.
#1 infrastructure investment manager globally(20)
Further details on MAM’s approach to sustainability and
performance may be found in Macquarie’s FY2023 MAM
Sustainability Report, 2022 Stewardship Report and in our
Green Investment Groups Progress Report 2023 which can
be downloaded at macquarie.com/mam-sustainability
Researching
In Australia, stock initiation reports include a section discussing
relevant ESG considerations. We have issued specialist ESG reports
this year covering topics such as carbon offsets, mandatory climate
disclosure requirements, human capital management, company ESG
ratings and COP28. We also hosted virtual investor calls focused
on renewable energy, biodiversity offsets, circular economy,
cyber insurance, board diversity, as well as other sustainability
themed events.
Top rating
for Australian ESG research by institutional investors in
2023 Peter Lee survey(21)
(20) The ranking was awarded to MAM in July 2023 and is the opinion of IPE Real Assets. The ranking is based on Assets Under Management (AUM) at 31 March 2023. There can be no
assurance that other providers or surveys would reach the same conclusions.
(21) The ranking was awarded in November 2023 in the Peter Lee Associates 2023 Survey of Australian Institutional Investors – All Investors. There can be no assurance that other
providers or surveys would reach the same conclusions.
(22) In September 2023, Macquarie Group was named the Environmental Products House of the Year, and Emissions House of the Year based on the Energy Risk Asia Awards 2023.
There can be no assurance that other providers would reach the same conclusions.
In Europe, Macquarie has continued the strategic partnership with
Kepler Cheuvreux, a UN PRI signatory. The partnership provides our
clients with access to a larger pool of alternative energy research.
In Asia, we continue to see increased client demand for ESG
research. Our ESG team works alongside our existing equity
and macro research teams on company-level assessments and
also thematic research. Since 2021, we have run sector specific
ESG scores for our coverage of approximately 800 companies
across 11 Asian markets. Our scoring system layers analysts’
impressions of covered companies on top of company-reported and
third-party data.
We provide more context for the scores and company-level ESG
performance through sector thematic reports and investor calls
on a wide range of topics. We have focused on EV charging and
global cooling (both air conditioners and data centres) in FY2024.
Meanwhile, we are continuing our workstreams on labour rights,
fossil fuel divestment and EV supply chains in Indonesia, and the
impact of geopolitics on the energy transition across Asia.
Trading
CGM provides risk management and trading solutions to support
clients’ varying energy transition needs. It provides wholesale
energy market access and hedging for a wide range of green energy
suppliers, retailers and producers, such as waste-to-energy and
biomass power plants. Further information about how we manage
risks within our markets-facing businesses is provided on pages
82–88 in the Risk management section of this Annual Report.
CGM also provides access for corporations, including those
operating in hard-to-abate sectors, to both voluntary and
compliance global carbon markets to help manage their
emission-related risks and achieve their climate goals. Our
Global Carbon business builds on our voluntary carbon and wider
commodity market expertise to provide a range of emissions risk
management solutions. As part of this, the business brings capital
and expertise to carbon offset generating projects as well as
wider decarbonisation initiatives including nature-based solutions,
carbon capture, utilisation and storage (CCUS), and other forms of
innovative environmental and low-carbon technology.
Environmental Products
House of the Year and
Emissions House of the Year
at the Energy Risk Asia Awards 2023(22)
Further examples that demonstrate how Macquarie put its
capabilities into practice to pursue recent ESG opportunities can
be found on our website.
More detailed information is available at
macquarie.com/esg and macquarie.com/climate
65
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Sustainability in our own
business operations
Scope 1 and 2 operational emissions(23)
We are progressing well towards our commitment to achieve
net zero emissions in our own business operations across
Scope 1 and 2 by FY2025. To achieve this, we are focusing on
improving energy efficiency within our premises and reducing
energy use overall; implementing 100% electrification of our
premises; purchasing 100% renewable electricity for our operational
requirements; and offsetting any residual emissions in line with
industry guidance on the use of credible carbon offsets.
Our FY2024 electricity consumption was 39.9 GWh, which is a
decrease of 2% from the previous year and a 38% reduction from
the FY2014 baseline. The reduction since FY2014 is the result of
the consolidation, relocation, and upgrades of office premises to
more sustainable buildings, together with our cloud transformation
strategy that enables rationalisation of servers.
Following the move into our new global headquarters in Sydney in
2024, we will re-baseline our electricity consumption to reflect the
corresponding energy performance.
This year, Macquarie has sourced the equivalent of 100% of
our electricity consumption from renewable sources through a
combination of renewable energy from building owners or utilities
(47%) and energy attribute certificates (53%).(24)
Based on RE100 boundary criteria, the equivalent of our FY2024
electricity consumption sourced from renewable sources is 98.8%.(25)
We will continue to work towards full RE100 compliance by FY2025,
noting there are challenges purchasing renewable certificates in the
South Korean market.
Scope 1 emissions are not considered to be material at 392 tCO2e
and have been offset.(26) These emissions continue to decline as we
move to, or develop, premises that are 100% electrified.(27)
Commitment to reach net zero
in Scope 1 and 2 emissions
by FY2025, while developing
emissions reduction strategies
for Scope 3(28),(29)
Sourced the equivalent
of 100% of our global
electricity consumption
from renewable sources
in FY2024(30)
(23) Unless otherwise stated, all Scope 2 emissions in this Annual Report have been calculated using the market-based methodology as described by the GHG Protocol Scope 2
Guidance.
(24) Energy Attribute Certificates will be retired by 30 June 2024.
(25) Due to insufficient renewable energy certificates in the South Korean market. Renewable energy certificates were purchased from other international markets to cover this gap.
(26) Carbon offset certificates will be retired by 30 June 2024.
(27) Premises are 100% electrified in normal operations.
(28) Throughout this Annual Report, when we refer to ‘net zero’ in relation to our own business operations Scope 1 and 2 emissions ambition, and industry guidance, we are informed by
recommendations from the Science Based Targets initiative (SBTi) Corporate Net Zero Standard, Net-Zero Banking Alliance Supporting note: The Use of Carbon Credits in Climate
Target Setting, and The Oxford Principles for Net Zero Aligned Carbon Offsetting.
(29) Own business operations’ Scope 3 covers Categories 1–8 operational value chain emissions as defined by the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting
and Reporting Standard. It excludes financed emissions (Scope 3, Category 15).
(30) PwC has provided limited assurance over these metrics as detailed in the PwC independent assurance report available within Macquarie’s FY2024 Basis of Preparation for ESG
Reporting. This also sets out the reporting boundaries, definitions, and measurement methodologies for the assured metrics.
(31) Scope 3 Categories 1, 2, 4 and 8 are calculated using the spend-based methodology as set out in the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and
Reporting Standard and are directly correlated to our total spend with suppliers that is processed via Macquarie’s procurement system. This methodology does not take into
account any supplier specific emission reduction initiatives. Currently, due to data limitations, this category excludes capital expenditure on the development of our new global
headquarters 1 Elizabeth Street, Sydney, due to be completed in 2024. These offices will be included in Scope 1 and Scope 2 reporting from FY2025.
Scope 1 and 2 emissions and total energy use(30)
0
10,000
20,000
30,000
40,000
FY24
FY23
FY22
FY21
FY20
0
100
200
300
FY24
FY23
FY22
FY21
FY20
Emissions in tCO2e
Energy use in terajoules
Scope 1 emissions
(left scale)
Scope 2 emissions
(left scale)
Total energy use
(right scale)
29,767
22,121
477
465
343
0
0
0
385
392
Scope 3 operational value chain emissions
We are improving methods to measure and track Scope 3 emissions
for our own business operations, while developing emissions
reduction strategies.
Previously, in FY2023, we performed a materiality assessment and
developed a baseline for categories of emissions in our upstream
operational value chain, except for Scope 3 Category 7: Employee
commuting which was subject to further analysis on materiality.
We have commenced methodology development and collection of
baseline data for employee commuting to support inclusion of this
in future business operations Scope 3 inventories.
For Category 1: Purchased goods and services (which includes
Category 2: Capital goods, Category 4: Upstream transportation and
distribution, and Category 8: Upstream leased assets), emissions
have increased 6% from the FY2020 baseline due to an increase in
expenditure and a greater proportion of this being for technology
services with higher emission factors. For this category, we have
a target that by FY2030, suppliers representing 75% of our total
supplier related emissions (estimated based on spend) have set
a science-based emissions reduction target.(31) We are engaging
with our suppliers to understand their climate commitments and
transition plans, and making progress toward achieving this target.
We are also seeking improved visibility of the emissions associated
with the supply of goods and services.
66
Environmental, Social and Governance
Continued
For Category 6: Business travel (including air, hotels, taxis and car
rental, and food and beverages), we continue to offset our emissions
through the purchase of credible carbon credits. We also continue
to explore emissions reduction strategies, including reviewing travel
reduction opportunities, and enhancing data visibility to support
lower emissions travel choices.
In FY2024 we conducted a review of our aviation and hotel suppliers’
carbon commitments and transition plans, and with this improved
understanding we are including business travel (Category 6) in the
scope of our purchased goods and services supplier engagement
target, so that by FY2030 75% of our aviation and hotel-related
emissions will be with suppliers that have set a science-aligned
emissions reduction target.(32)
Scope 3 operational value chain categories(33)
Category
FY20 baseline (tCO2e)
FY24 (tCO2e)
Category 1:
Purchased goods & services(34)
147,003
156,018
Category 2:
Capital goods
Included in Category 1
Category 3:
Fuel & energy related
activities
4,054
3,631
Category 4:
Upstream transportation
and distribution
Included in Category 1
Category 5:
Waste generated in
operations
112
239
Category 6:
Business travel
67,141(35)
63,122
Category 7:
Employee commuting
Commenced methodology development
and collection of baseline data
Category 8:
Upstream leased assets
Included in Category 1
Total
(Categories 1–6 and 8)
218,310
223,010
(32) Covers air-travel and hotel bookings made through our corporate travel agency.
(33) PwC has provided limited assurance over the FY2020 baseline Scope 3 business operations emissions in the 2022 Net Zero and Climate Risk Report. Limited assurance was also
provided over FY2024 Scope 3 emissions (Categories 1–6, and 8) as detailed in the PwC independent assurance report available within Macquarie’s FY2024 Basis of Preparation for
ESG Reporting. This also sets out the reporting boundaries, definitions, and measurement methodologies for the assured metrics.
(34) The methodology for Category 1 has been refined following identification of some commissions or equivalent payments related to a financial transaction, which MGL considers
to be outside of the procurement process, which had been included in the goods and services calculated emissions. These payments have now been excluded from the Category 1
baseline and calculated emissions to ensure alignment with our company-wide methodology. Please refer to the FY2024 ESG Dataset for further detail.
(35) We have improved data sources and methodology for this category which has resulted in the FY2020 baseline for Category 6 decreasing by 1,603 tCO2e compared to the previously
reported figure. This revised methodology has also seen changes in reported emissions for FY2021, FY2022, and FY2023, and we are purchasing and retiring additional carbon
offsets to cover the net increase. Please refer to the FY2024 ESG Dataset for further detail.
(36) To meet our RE100 commitment, in FY2021 we transitioned from purchasing carbon certificates to offset Scope 2 emissions, to purchasing energy attribute certificates to achieve
the equivalent of 100% renewable electricity consumed.
Carbon offsetting
Since FY2010, Macquarie has been offsetting its Scope 1, Scope 2
and Scope 3 business travel emissions and we continue to evolve
our carbon offsetting strategy.(36) Where residual or hard-to-abate
emissions exist, we utilise credible offsets to achieve carbon
reduction targets, consistent with emerging industry guidance
including the Science Based Targets initiative (SBTi) Corporate Net
Zero Standard, Net-Zero Banking Alliance Supporting note: The
Use of Carbon Credits in Climate Target Setting, and The Oxford
Principles for Net Zero Aligned Carbon Offsetting.
We have committed to continue offsetting residual Scope 1
emissions and Scope 3 business travel emissions beyond FY2025.
For FY2024, Macquarie will purchase and retire a portfolio of
Australian Carbon Credit Units and other voluntary carbon offsets
by 30 June 2024. Leveraging our internal due diligence processes,
offset projects are selected based on quality and verifiability
of emissions reductions. We have also engaged an independent
third-party to assist with the evaluation and selection of suitable
offset projects.
67
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Sustainably-rated buildings
Macquarie’s corporate offices are fitted with water and energy
efficient fittings and fixtures and are continually monitored for
energy performance, environmental quality, and our people’s
comfort. We have a commitment that 80% of our employees will be
in sustainably-rated premises by FY2025, and at the end of FY2024,
71% of Macquarie people occupied a sustainably-rated office.(37)
Our new offices in Sydney
and New York
Macquarie is delivering the new Sydney Metro Martin Place
integrated station precinct. The precinct includes the new
Martin Place metro station, a retail and dining destination,
underground pedestrian connections, and two landmark
buildings: the 39-storey 1 Elizabeth Street (1 Elizabeth) which,
together with 50 Martin Place, will become Macquarie’s new
global headquarters; and the 28-storey 39 Martin Place.
When construction is completed in 2024, the precinct
will feature accessible public spaces that are sustainable,
maximise the use of natural light, feature native plants and
public art, pay respect to the land’s traditional owners, and be
digitally enabled. Our goal is that this precinct will contribute
to the reinvigoration of Martin Place that has been taking
place over the past several years.
The 1 Elizabeth building has achieved a 6 Star Green Star
Design Review (Design & As Built) rating,(38) has been designed
to be energy efficient, 100% electric in normal operations, and
our workplace will be powered by 100% renewable electricity.
Throughout the construction and fit-out stages, and as we
relocate from other offices, we have focused on reuse of
materials, fittings, and furniture.
In 2024, coinciding with Macquarie’s 30th anniversary in
New York, our New York office will be relocated to a recently
refurbished building at 660 Fifth Avenue and our tenancy will
utilise many of the design principles of our new Sydney global
headquarters including a 100% electric design.
The New York project design has achieved a LEED Gold Rating
with features such as direct access to natural light and views,
multiple outdoor terraces with planting, optimal indoor air
quality, and dedicated end-of-trip change room facilities.
The project is also being built with materials, and furnished
with items, that incorporate reused and sustainable products
that have been sourced, moved, and installed with local and
diverse-owned businesses.
(37) Minimum LEED Gold, BREEAM Good, 5 Star Green Star, Green Mark Gold Plus, Beam Plus Gold or equivalent. See Sustainability ratings for Macquarie major offices
at macquarie.com/esg-sustainability-in-business-operations
(38) 6 Star Green Star Design Review (Design & As Built) rating from the Green Building Council of Australia.
(39) This target and progress relates to our fit-out projects and excludes the Sydney Metro Martin Place integrated station precinct development currently underway.
Resource efficiency and minimising waste
to landfill
We continue to raise awareness and improve waste recycling
rates across our offices. In our Sydney global headquarters and
our London office, we diverted 63% of our operational waste from
landfill in FY2024 (compared to our 50% target by FY2025). We have
diverted 83% of fit-out construction and demolition waste from
landfill in the year, exceeding the 70% target for FY2024.(39)
We have made a FY2025 commitment to eliminate single-use plastic
in our premises operations and are making progress towards this by
focusing on removing single-use cups, cutlery, and plastic packaging
for food presented for sale in our cafes.
In FY2024, we achieved a 74% paper use reduction from our FY2019
baseline (exceeding our 60% reduction target by FY2025). We have
an ongoing commitment to use certified sustainable or recycled
paper stock for 100% of our office paper needs.
We have committed to managing our electronic waste (e-waste) in
our major offices globally through sustainably certified suppliers to
ensure it is managed in a responsible manner. We are progressing
the first phase of managing our e-waste which involves disposal of
laptops, desktops, and information technology (IT) communications
room equipment. Macquarie follows the principle of reduce, reuse,
and recycle for its devices and appliances, and is aiming to improve
the scope of reporting.
68
Environmental, Social and Governance
Continued
Sustainable procurement
In FY2023, a new sustainable procurement framework was
launched, and this has been further embedded this year. The
framework outlines how Macquarie manages our environmental,
social, and economic impacts across the corporate supply chain,
integrating sustainability throughout the procurement life cycle.
We continue to work towards our FY2025 commitment to increase
our spend on environmentally and socially sustainable products,
with an ambition to have 80% of prioritised goods being sustainable.
Clear and consistent sustainability definitions for prioritised
categories, such as IT equipment, stationery, pantry consumables,
and office furniture, have been developed in partnership with our
suppliers, and adoption of these new standards is underway. We
have identified challenges in obtaining consistent data, at the
product level, across our priority categories to enable reporting
against this target, and are working to address this with
our suppliers.
Macquarie remains committed to spending 1% of our annual
global spend (in our tier one and tier two supply chains) with
diverse suppliers and 10% of our annual global spend with small
businesses by FY2025.(40) In FY2024, Macquarie spent over
$A25.3 million (or 0.6% of global spend) with diverse suppliers and
over $A290.4 million (or 6.3% of global spend) with small businesses.
Our supplier diversity commitment is now available on our website
to support our conversations with our external stakeholders and our
commitment to the diverse supplier community.
Since the launch of our Reconciliation Action Plan (RAP) in Australia
in February 2023, Macquarie has engaged with First Nations
suppliers, partnering with Supply Nation as the peak body that aims
to grow the Aboriginal and Torres Strait Islander business sector
through the promotion of supplier diversity in Australia.
In FY2024, we continued to achieve 100% compliance with
Macquarie’s Supplier Governance Policy’s environmental and
social risk requirements.(41) We have also continued to engage an
independent auditor to complete ESR audits. These audits follow
the Sedex Members Ethical Trade Audit (SMETA) social auditing
methodology enabling us to assess our sites and suppliers to
understand working conditions in the supply chain.
(40) Diverse suppliers means businesses owned and operated by an individual or group that is part of a traditionally underrepresented group in society such as companies owned and
operated by minorities, women, or First Nations peoples.
(41) Applies to suppliers that have been identified as presenting heightened environmental or social risk under Macquarie’s Supplier Governance Framework.
Macquarie’s approach towards identifying and mitigating the risk of
modern slavery within our supply chain and business operations is
set out in our Modern Slavery Statement.
Further information is available at
macquarie.com/esg
Macquarie’s FY2024 ESG Dataset, including prior years’ data
can be downloaded from macquarie.com/esg
Macquarie’s 2025 Sustainability Plan can be downloaded
from macquarie.com/esg
Macquarie’s 2023 Net Zero and Climate Risk Report and
Modern Slavery Act Transparency Statement 2023 can be
downloaded from macquarie.com/esg
Macquarie’s Principles for Suppliers and Supplier Diversity
Commitment are available at macquarie.com/suppliers
Macquarie’s Reconciliation Action Plan can be downloaded
from macquarie.com/diversity
69
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Client and customer experience
Maintaining and developing our relationships with our corporate,
institutional, government and retail clients, along with our
co-investors is a focus across all our Operating Groups.
MFAA 2023
Major Lender of the Year
for the fourth year in a row(42)
Supporting vulnerable and
disadvantaged customers
BFS continues to equip our customer-facing teams to support
customers who may be experiencing heightened vulnerability
by utilising specialist training programs, and partnering
with an external specialist community services provider to
develop resources for customers and deliver specialist training
for employees.
In addition, BFS has continued to offer financial support to
customers that may experience financial difficulty or require
financial assistance. The business is committed to supporting our
customers through uncertain and difficult times, and understands
every situation is different, offering a range of solutions that can be
tailored to meet our customers’ needs.
Beyond the commitments made in Macquarie’s RAP, BFS has
continued an online First Nations cultural competency training
program for relevant BFS customer-facing teams, which was
developed by an Australian Indigenous business specialising in
cultural competency training. The program is designed to enhance
participants’ understanding of First Nations peoples, culture and
history while providing practical knowledge and skills to serve and
support First Nations peoples more effectively.
Protecting clients from scams and fraud
As customer fraud and cyber scam attempts are increasing all
around the world, BFS is committed to helping our employees,
clients and customers become more cyber-resilient.
BFS launched a Scams Awareness Campaign, which includes a
customer education program focused on providing the latest
updates on trending scams and how best to protect themselves.
BFS continues to provide customers with informative content and
resources through the Macquarie Scams Hub, as part of our ongoing
scams awareness activity.
(42) In July 2023, Macquarie Bank was named the winner of the 2023 Major Lender Award based on information by Mortgage and Finance Association of Australia (MFAA). There can be
no assurance that other providers would reach the same conclusions.
(43) Macquarie User Digital Platform Transactional NPS for the period 1 April 2023 to 31 March 2024.
The Macquarie Authenticator mobile app, with leading digital
security features, gives customers control to approve or deny
transactions, log-in attempts or account changes in real-time,
and is a key part of our proactive approach to keeping customers’
accounts and information safe.
Throughout FY2024, BFS has continued to invest in fraud
prevention solutions to help identify and prevent fraud and
scam losses.
Providing innovative digital solutions
As a digital bank, BFS has a strong focus on innovation, and a key
part of that is the development of new products, features and
reduced costs for customers. While digital security enhancements
make it safer and easier to manage risks for our customers,
innovation also allows us to enhance how they manage their money
with intuitive and connected digital banking experiences.
Our everyday transaction account allows customers to apply for an
account, have their identity fully verified and start banking in under
three minutes. Customers are able to load new debit cards into
their Apple or Google wallet so they can start using their account
straight away.
Macquarie’s Business Savings Account, a new digital high interest
savings account for small businesses with no fees, is one of the first
business accounts in Australia to have a digital-only application
process and instant account opening for eligible businesses.
BFS is running more than 96% of its applications on public
cloud, including its core banking platform, giving us enhanced
performance, agility and security capabilities to underpin our digital
banking offering.
Our commitment to delivering exceptional customer experiences
across our platforms is reflected in our net promoter scores (NPS),
including an NPS score of 51.5 across mobile banking and 45.3
across internet banking.(43)
70
Environmental, Social and Governance
Continued
Fair and efficient resolution of issues
Reflecting our commitment to our customers, Macquarie Bank
Limited subscribes to the latest version of the Australian Banking
Association Banking Code of Practice.
Macquarie has a robust complaint management framework across
our retail banking business to resolve customer complaints quickly
and fairly. BFS teams analyse complaint data to understand the
root causes of complaints so they can be addressed at their source,
with oversight from senior management. In FY2024, 39% of BFS
complaints were resolved within one business day and 90% within
five business days.
Macquarie’s Customer Advocate is separate to the operating, risk
and support groups including our internal dispute resolution teams.
The Customer Advocate’s role is to:
• listen to our customers and provide a customer-centric voice
when making recommendations to improve customer experience
• minimise the risk of future problems by reviewing key customer
themes and new product approvals to identify opportunities to
enhance products, services, systems and processes
• work with Macquarie complaint teams to promote fair and
reasonable customer outcomes.
The Customer Advocate reports directly to the MGL CEO and
provides annual reporting to the BGCC.
Responsible and transparent communications
There are longstanding regulatory requirements in relation to
treating customers fairly and prohibiting misleading statements.
Recently, attention on greenwashing as a regulatory, litigation and
reputational risk is increasing. Greenwashing is defined at Macquarie
as a false, misleading, unsubstantiated, ambiguous or overstated
representation of the ESG attributes of an organisation, product or
service. This definition is intended to incorporate similar concepts
such as impact-washing and social-washing. While the regimes that
govern greenwashing vary between jurisdictions, and good practice
continues to evolve, we recognise the importance of mitigating
this risk for our stakeholders. In FY2024 we implemented a
company-wide Greenwashing Standard to support the management
of legal, regulatory, reputational and environmental and social
risks associated with greenwashing. It provides information on
communications with potential for greenwashing risk, and review
considerations and requirements in managing greenwashing risk.
During FY2024, 3,275 employees completed an online training
module that accompanies this standard.
Further information is available at
macquarie.com/bank
Further information on the Customer Advocate office is
available at macquarie.com/customer-advocate
The Banking Code of Practice can be downloaded from
macquarie.com/banking-code
Macquarie’s Reconciliation Action Plan can be downloaded
from macquarie.com/diversity
71
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People and workplace
Macquarie leadership programs
The Director Leadership Program (DLP) is a multi-month
developmental experience for Macquarie directors globally,
designed to develop capability for leading self, leading people,
leading teams, and leading business growth. Program delivery
continued in FY2024, with directors participating in the program
in Sydney, London, New York, Singapore and Hong Kong. Since its
inception in 2022, 13% of Associate Directors and 16% of Division
Directors have participated in the DLP globally. Overall, the DLP
continues to receive favourable feedback, with the program
delivering on its objectives, demonstrating a commercial impact,
and resonating strongly with participants from across Macquarie.
Executive Directors continue to have access to 3-day Executive
Director Leadership Program (EDLP) workshops. During FY2024,
newly promoted and lateral hire Executive Directors attended
a workshop focused on building self-awareness and conscious
impact, and the skills needed to inspire and develop others.
Experienced Executive Directors were offered the Leading a
Purpose Driven Culture workshop, which equips participants with
the knowledge and tools to embed a purpose-driven culture across
Macquarie. These workshops build a shared understanding of
leadership at Macquarie and facilitate strong connections across
the organisation. Since its inception in 2017, 84% of Executive
Directors have participated in at least one EDLP workshop globally.
Digital upskilling
The talent market remains tight for certain skillsets and Macquarie
remains committed to giving employees the opportunity to develop
skills that build their careers and that remain in demand in the
changing world of work. Macquarie continues to deliver digital
upskilling opportunities for in-demand transformation skills such
as Agile ways of working, human-centred design, data skills and
process improvements to increase organisational efficiencies, with
more than 5,800 attendances globally in FY2024.(44)
Training
During FY2024, 3,200 instructor-led courses were delivered globally;
93% of these were non-mandatory, covering topics including:
management and leadership; personal effectiveness; and wellbeing.
In addition, 1,877 web-based training sessions were completed of
which 92% were non-mandatory.
In FY2024, Macquarie launched the Macquarie Learning Portal
(MLP), a global platform consolidating numerous regional and
business-specific learning opportunities and risk resources
within a single environment. The platform delivers an improved
developmental experience for all of our people.
(44) Some employees may have attended more than one training session, in which case their attendance was counted for each session.
(45) Macquarie 2023 Voice Survey; participation rate is consistently above 80%.
(46) International career moves based on transfers related to changed countries (including international assignments, permanent international transfers and repatriations) for
permanent staff only.
Talent and performance management
Macquarie has always had a strong focus on developing talent and
enabling career mobility within the organisation. This approach
to talent management has evolved company-wide with more
focus on dedicated talent conversations by leadership teams,
ensuring our top talent stays engaged, continues to develop, and is
matched with internal opportunities to build their career further.
Across Macquarie globally, employee engagement is strong and
remains consistently high.(45) International mobility has been
invigorated this year with 306 international career moves facilitated
and supported.(46)
Macquarie’s company-wide performance management approach
promotes ongoing performance and development check-ins and at
least one annual career development conversation, in addition to an
annual performance appraisal.
During FY2024 Macquarie saw an ongoing commitment to our early
career programs as a valuable source of junior talent. Our Early
Careers offering includes a variety of early university engagement
programs to provide a pipeline to our Graduate Program which
involved around 550 new graduates this year. The breadth of
programs include Summer and Winter Internships and dedicated
programs and events for disadvantaged and under-represented
groups such as the EMEA CGM Rise to it program and ASHA
Community Programme in India which provide opportunities for
socially disadvantaged young people and further supplements
the pipeline of talent into the Graduate Program. We have also
continued investment in our Early Careers Future Technologists
programs in addition to technology graduates, with around 100 new
hires, many of whom have used the opportunity for a career change
or to re-enter the workforce with structured training to support
their career in technology.
Approach to remuneration
Details on Macquarie’s remuneration framework, including the
link between ESG considerations and remuneration outcomes, are
outlined on pages 106–156 in the Remuneration report section of
this Annual Report.
Macquarie’s approach to pay equity is outlined on pages 74–77 in the
Diversity, equity and inclusion section of this Annual Report.
Information on our approach to work health and safety
is provided on pages 57–58
Information on our approach to human rights
is provided on page 57
Macquarie’s Reconciliation Action Plan can be downloaded
from macquarie.com/diversity
Macquarie’s Modern Slavery Statement can be downloaded
from macquarie.com/human-rights-at-macquarie
72
Environmental, Social and Governance
Continued
Business conduct and ethics
Macquarie’s purpose ‘Empowering people to innovate and invest for
a better future’ represents why we exist and what we do. We believe
that by empowering people – our employees, clients, communities,
shareholders and partners – we will achieve our shared potential.
Macquarie’s principles explain how we do business.
Macquarie sets, promotes, monitors and reflects on the risk
culture that is needed to effectively manage risk. Macquarie’s Risk
Culture teams are responsible for developing and maintaining the
framework for risk culture, and monitoring and reporting on the
application of the framework across Macquarie. As part of their
role, risk culture specialists:
• assess the risk culture across the group and provide oversight
of its alignment to expectations
• challenge and advise Macquarie teams on how to enhance
risk culture.
Macquarie’s Conduct Risk team is responsible for managing
Conduct Risk globally through establishing and maintaining the
Conduct Risk Management Framework and associated policies,
processes, guidelines, controls and reporting mechanisms. The team
also provides Conduct Risk training and awareness activities for
Macquarie employees, and provides regular reports to the BGCC.
Macquarie’s Integrity Office provides an internally independent
and confidential point of contact for Macquarie employees and
external parties to safely raise concerns about improper conduct.
It is responsible for implementing the Whistleblower Policy and for
managing the investigation of concerns raised under this policy.
Further information is outlined in the Corporate Governance
Statement section of this Annual Report.
74
disclosures received and managed by the Integrity
Office in FY2024(47)
15,500+
attendances at tailored training, workshops and
leadership sessions in FY2024(48)
Information on our risk culture and approach to conduct risk
is provided on pages 82–88 in the Risk management section
of this Annual Report
What We Stand For is available at
macquarie.com/what-we-stand-for
(47) Covers all disclosures received and managed by the Integrity Office, including whistleblower disclosures, and includes disclosures made through the Integrity Hotline.
(48) Tailored content focused on conduct and supervisory requirements, including those relating to a hybrid working environment. Some employees may have attended more than
one training session, in which case their attendance was counted for each session. Macquarie also requires all employees globally to undertake mandatory online Code of Conduct
training.
Tax transparency
Macquarie acknowledges stakeholder expectations for increased
transparency on tax-related matters. Macquarie is a signatory to the
Australian Board of Taxation’s voluntary Tax Transparency Code.
More detailed information on Macquarie’s approach
to tax transparency is available at macquarie.com/
fy24-tax-transparency
Political engagement and public policy
Macquarie believes we need to be engaged and understand the
evolving policy, political and regulatory environments in Australia
and other jurisdictions in which we operate, as these factors impact
our business as well as those of our clients.
As a listed financial institution operating in highly regulated sectors,
we have a responsibility to our shareholders, clients, counterparties
and employees to understand and contribute to public policy and to
ensure that our organisation and operating environments are well
understood by parliamentarians and policy makers. Additionally,
our clients, many of whom also operate in regulated sectors, expect
us to have detailed current knowledge of public policy issues and
drivers when we provide them with advice and services.
Macquarie contributes to public policy in the markets in which we
operate in the following ways:
• making submissions to industry consultation processes and
inquiries, where appropriate. These may be processes established
by parliaments, government departments or government
agencies such as regulators. Submissions may be made by
Macquarie directly or as part of a broader industry group
• participating in government and other policy advisory panels
when invited to do so, and where we can make a differentiated
contribution based on our expertise
• engaging with parliamentarians and policy-makers through
avenues such as formal meetings, attending events, speaking
in public forums and appearing before parliamentary inquiries
where appropriate
• contributing to the advocacy work done by industry groups in
key markets around the world. Given the diversity of Macquarie’s
business activities, we are members of industry groups
representing sectors such as financial services and markets,
infrastructure, energy as well as general business peak bodies.
In Australia, political parties are funded by a mix of public and
private monies. As part of its engagement with the Australian
political process, Macquarie provides financial support to the major
political parties, primarily by paying for our attendance at events.
73
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Macquarie has a full disclosure policy and declares all monies paid to
Australian political parties to the Australian Electoral Commission
(AEC) regardless of any thresholds or other provisions that may
otherwise limit the need to disclose. This disclosure is made by way
of an annual AEC return on a 1 July to 30 June basis and is published
by the AEC in the February following the end of the disclosure year.
In the year ended 30 June 2023, Macquarie’s political contributions
in Australia totalled $A202,950 comprising of $A115,153 to
the Australian Labor Party and $A87,797 to the Liberal Party of
Australia. Contributions were to meet the costs of memberships
of political party business forums, attendance at events and party
conference corporate days, and sponsorship and hosting of events.
Macquarie did not make any direct donations.
Macquarie does not generally make political donations in other
jurisdictions.
Cybersecurity
Macquarie acknowledges the inherent cyber risks associated with
employing technology platforms to support our business activities.
Macquarie manages cyber and information security risk through
Macquarie’s operational risk management framework. The
Board Risk Committee receives regular technology and cyber
reporting updates.
Throughout FY2024, Macquarie observed the evolving threat
landscape including:
• the potential for cyber attacks due to geopolitical tensions
• increasing regulation to protect individual, organisational and
national security
• a continued increase in instances of data breaches and
high-profile ransomware attacks against supply chains,
companies and individuals.
The cyber threat landscape includes financially motivated entities,
nation states and hacktivists who attempt to gain access directly
to systems or data from anywhere in the world. We continuously
monitor for changes in this threat landscape, assess the potential
impact on Macquarie, implement controls to mitigate the risks
identified and manage residual risks appropriately.
Data privacy
The Macquarie Group Privacy Policy sets out why we need to collect
personal information, how we collect it, what we do with it, how
it is stored and who we might share it with. It also describes how
individuals can access or correct information about themselves
and how to ask further questions or make a complaint. The policy is
available on Macquarie’s website. It is administered by a dedicated
privacy and data function and is supported by privacy and data
training and awareness activities. Macquarie has processes in place
to investigate data breaches involving personal information and
will notify clients, customers, regulators, and other appropriate
stakeholders of a data breach where we are required to do so under
local legislation or as is otherwise appropriate in the circumstances.
(49) For example, as per section 26WE of the Australian Privacy Act 1988 (Cth) and reportable under Part IIIC of the Act.
In FY2024, Macquarie did not have any data protection incidents
that were required to be reported under a data protection regime in
which Macquarie operates.(49)
FY2024
FY2023
Reported data protection incidents
0
1
Financial crime prevention
Financial crime can have a significant, adverse impact on our
clients, counterparties, and the communities in which we operate.
Macquarie plays an important role in monitoring and reporting
suspicious activities and complying with anti-bribery and corruption,
economic and trade sanctions, and anti-money laundering and
counter-terrorism financing laws and regulations globally.
Macquarie’s Financial Crime Risk Governance Framework outlines
our approach to the identification, mitigation and management
of financial crime risks that we face. This includes maintaining
appropriate policies, standards and procedures and working closely
with AUSTRAC and our international regulators, law enforcement
and the Fintel Alliance to detect and deter financial crime.
Further information is available at
macquarie.com/corporate-governance and
macquarie.com/what-we-stand-for
A summary of our policies, including Macquarie’s Sanctions
Compliance Statement, Code of Conduct, Anti-Bribery
and Corruption Policy, Anti-Money Laundering and
Counter-Terrorism Financing Policy, Macquarie Group
Privacy Policy, and Whistleblower Policy are available at
macquarie.com/esg
Anti-bribery and corruption
Macquarie seeks to prevent the actual or attempted use of any form
of bribery or corruption. Macquarie’s Anti-Bribery and Corruption
Policy outlines the expectations and elements of Macquarie’s
Anti-Bribery and Corruption Framework and program of activities to
prevent, detect and deter bribery and corruption.
Maintaining procedures for identifying bribery and corruption
(B&C) risk and ensuring key business processes have appropriate
B&C controls and systems is an important part of our anti-bribery
and corruption (AB&C) program. The Anti-Bribery and Corruption
Framework sets out the company-wide approach to managing the
risk of bribery and corruption. AB&C training and awareness forms
part of the control framework. Macquarie employees receive annual
training to ensure they understand their role in preventing financial
crime including AB&C risk. Additional AB&C training is also provided
as required, including for board directors.
Macquarie employees must report suspected or actual instances
of bribery or other corrupt practices in accordance with our
Anti-Bribery and Corruption Policy, Whistleblower Policy and
Incidents and Issues Policy.
74
Diversity, Equity and Inclusion
Macquarie’s ongoing commitment to diversity, equity and inclusion ensures that our business accesses, retains,
develops and empowers the broadest and most diverse talent.
Our commitment
In the second year of implementing our FY2023–26 Global Diversity,
Equity, and Inclusion (DEI) Strategy we have continued to focus our
action and measure our progress in three areas: our diverse people,
our equity commitment, and our inclusive culture. The global
strategy is implemented through DEI strategies that are led by our
group and regional leaders.
Our efforts to level the playing field for talent from
underrepresented groups are global and focused on maintaining
equitable talent processes, mitigating bias, gathering and
monitoring data, and evaluating appropriate outcomes at all stages
of the talent lifecycle. These efforts are enhanced by building
manager capability and maintaining an inclusive culture.
Macquarie’s Workforce Diversity Policy is available at
macquarie.com/diversity-and-inclusion
Diversity, Equity and
Inclusion objectives
The Executive Committee and Board Remuneration Committee
(BRC) monitor the diversity, equity and inclusion objectives and the
progress of each group and region. The Workforce Diversity Policy
requires that each year the BRC will set measurable objectives for
increasing the diversity of Macquarie’s workforce and maintaining a
culture of respect and inclusion.
Executive Committee members have DEI objectives in their
performance assessment criteria. Leadership teams globally, in
each Operating and Central Service Group and region, are also
accountable for achieving Macquarie’s DEI objectives. The Board and
BRC receive regular updates on progress against Macquarie’s DEI
commitments and encourage continuous improvement.
Macquarie’s BRC has endorsed the FY2023–2026 DEI objectives as
set out in the global strategy.
Global DEI Strategy FY2023‑2026
In FY2023, we used Human Centred Design methodology to refresh our Global DEI Strategy.
Our diverse people
Building a workforce that harnesses a
range of perspectives, ideas, and insights
in everything we do.
Diversity objectives:
• support leader accountability for
DEI outcomes
• increase the diversity in
talent pipelines
• increase availability and completeness
of candidate and employee data.
Success measures:
• diverse employee representation
• leader DEI objectives
• leader visibility and actions based on
diversity metrics
• meet regulatory and stakeholder
commitments
• employee self-identification
completion rates.
Our equity commitment
Achieving equitable outcomes by
removing barriers and valuing differences,
enabling everyone to be included and to
reach their full potential.
Equity objectives:
• align principles of equity in all
people-related policies, processes
and programs
• champion and elevate equity for
people from under-represented groups
• encourage an equitable approach when
engaging with our clients, community
and suppliers.
Success measures:
• diverse representation across the
talent lifecycle
• organisational spend with
diverse suppliers
• employee support to advance equity
in our community
• pay equity.
Our inclusive culture
Creating an environment where people
are respected for their uniqueness, valued
for their contributions and celebrated for
being their authentic selves.
Inclusion objectives:
• continue education and
maintain awareness
• enable inclusive leaders, teams
and employees
• elevate inclusive networks and
strong allyship.
Success measures:
• employee and candidate feedback
• employee DEI objectives
• employ of people from
underrepresented groups
• training completion.
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DEI Progress in FY2024
We have made progress against the objectives and success
measures in all three pillars of diversity, equity and inclusion.
Progress – Our diverse people
We measure the diversity of our workforce by encouraging
our employees to confidentially self-identify across a range of
dimensions, including gender, race, cultural identity, gender identity,
sexual orientation, and parenting and caring responsibilities.
Gender Equity
The outcome of our ongoing commitment to gender equity is
demonstrated in Table 1. Female representation on the MGL Board
of Directors has stayed at 62.5% with the retirement of Nicola
Wakefield Evans and the appointment of Susan Lloyd-Hurwitz, who
is currently also President of Chief Executive Women (CEW)
in Australia.
Female representation has increased year-on-year across
Macquarie’s total workforce and senior executive population.
There was a temporary increase in female representation at the
Executive Committee level because Nicholas O’Kane stepped down
as Group Head of CGM and from the Executive Committee before
31 March 2024, whereas new CGM Group Head Simon Wright was
not appointed to Executive Committee until 1 April 2024. Female
representation in the Division Head population decreased because
of some senior male appointments.
Table 1: Global female representation by level over five years(1)
2020
2021
2022
2023
2024
As of 31 March
%
%
%
%
%
Board of Directors
36.4
45.5
50.0
62.5
62.5
Executive Committee(2)
25.0
27.3
30.0
30.0
33.3
Division Head(3)
23.9
23.0
26.5
25.5
23.3
Senior Executive(4)
19.1
20.5
21.8
23.3
24.3
Macquarie Workforce(5)
40.1
42.0
43.0
44.1
44.3
We supported the work of CEW and its partner Intersection, as the
sponsor of a research project and report detailing the experiences
of culturally diverse women leaders. To launch the report, ‘Unlocking
Leadership: Conversations about Gender and Race in Corporate
Australia’, we hosted an event where our CEO joined a panel to
discuss the findings, which she also addressed as a keynote speaker
at the CEW Leadership Summit in Melbourne.
We continue to invest in gender equity partnerships and programs
around the world, including the Bright Network in EMEA, Girls who
Invest in the US and The Women’s Foundation, Girls Go Tech, and
NavGurukul in Asia. The Male Allies program in Asia is now in its
third year.
(1) Workforce data based on total global workforce as at 31 March 2024, excluding employees in operationally segregated subsidiaries and investments where Macquarie does not have
a controlling interest.
(2) Executive Committee excludes Head of Commodities and Global Markets Group as Nicholas O’Kane was a member of the Executive Committee until 27 February 2024 while
Simon Wright was appointed to the Executive Committee effective 1 April 2024.
(3) Division Head refers to critical roles across Macquarie. It typically includes executives two layers down from the CEO. For this metric, we consider individuals who are direct reports
of Group Heads and are at Executive Director and Division Director levels.
(4) Senior Executive refers to Macquarie’s combined Division Director and Executive Director population.
(5) Data includes permanent staff only in all employee statuses (Active, Paid Leave, Leave without Pay).
Our CEO hosted an International Women’s Day event, leading
a discussion on this year’s United Nations theme, Count Her
In: Invest in Women. Accelerate Progress, exploring how the
economic empowerment of women, within Macquarie and the
broader community, contributes to building a resilient society and
dynamic future economy. Ms Wikramanayake was joined by Nicole
Sorbara, our Global COO and Group Head of COG, Lisa Sonnabend,
CGM’s Global COO and Head of its Central Division, Ric Deverell,
Macquarie’s Chief Economist and Head of Net Zero, and Lisa George,
Global Head of the Macquarie Group Foundation.
Families and carers
Macquarie continues to provide support to working parents
and carers through flexibility, paid leave, and initiatives such as
coaching. We were the first organisation in Australia to achieve a
National Level 3 carer accreditation from Carers+Employers and
have retained accreditation as a Family Friendly Workplace.
Macquarie’s global return to work rate was 97% in FY2024 and we
continue to achieve high retention rates for employees who have
taken parental leave. To support the transition back to work after
a period of parental leave, our employees can choose to take 12
paid transition days in the first 12 weeks of returning to work. This
benefit, and other forms of flexibility are available to parents and
carers in all regions.
Cultural diversity and racial equity
Cultural diversity and racial equity continue to be priorities for
Macquarie, and we take an active and localised approach to drive
progress in our business and communities. We continue to invest
in internship and recruitment channels that expand our reach and
better connect with talent from under-represented racial groups
around the world.
Macquarie was shortlisted for ‘Company of the Year’ in the
European Diversity Awards 2023 and ranked a top 10 exemplary
employer in the Ethnicity Awards in the UK. Our regional
sponsorship program connected high potential ethnically diverse
individuals with experienced leaders.
76
Diversity, Equity and Inclusion
Continued
In the US, we offered targeted leadership development programs
for Black, Latinx and Asian talent to accelerate their careers and
implement strategies to increase contribution and personal growth.
We continued to partner with Seizing Every Opportunity (SEO) and
Hive Diversity, growing the talent pipeline for the future.
In Australia, in line with our inaugural Reconciliation Action Plan
(RAP), Macquarie held sessions to support staff in informing and
educating themselves on the proposed Aboriginal and Torres Strait
Islander Voice to Parliament. The sessions featured Greg Ward,
Group Head of BFS, in conversation with Indigenous ABC
commentator Dan Bourchier, and Group General Counsel, Evie Bruce,
in conversation with University of Sydney Professor Emerita, Anne
Twomey. More than 4,000 Australian employees (approximately 40%
of the ANZ workforce) also completed an eLearning program made
available to them on this topic.
LGBTQ+
Once again, Macquarie has been recognised by external community
partners as a leading LGBTQ+ inclusive organisation. Macquarie
achieved a perfect score (one hundred) for the fifth consecutive
year on the Human Rights Campaign’s Corporate Equality Index in
the US. In Asia, Macquarie was recognised as a Gold Employer by the
India Workplace Equality Index 2023, Silver Standard, Community
Business’ 2023 LGBT+ Inclusion Index in Hong Kong and Gold
Standard in Singapore.
Jay Adams, Louise McNaughton, and Cameron Mangnall co-chairs of Pride ANZ
Accessibility
Macquarie is a member of The Valuable 500, a global collective
focused on disability inclusion. This year we participated in the pilot
of the global Generation Valuable mentoring program, where a
senior leader was matched with an employee living with disability to
share insights and experiences. We have progressed our work on a
global Accessibility Action Plan (AAP). Elements of the plan address
candidate, employee and customer experiences, global offices,
and technology.
Progress – Our equity commitment
Our equity commitment extends beyond candidate and employee
experience to customers and our supply chain. It also guides the
work of the Macquarie Group Foundation (Foundation), which has
taken steps to evolve its grantmaking processes and practices
globally with the goal of becoming a more equitable funder. The
Foundation also funds organisations that focus on promoting a
more equitable and just society for underrepresented people.
We monitor diversity data to ensure equitable outcomes in
candidate and employee experiences such as recruitment,
performance, remuneration and promotion.
Macquarie conducts annual pay equity reviews, provides
comprehensive data to the Workplace Gender Equality Agency
(WGEA) in Australia, and is also required to adhere to regulatory
requirements in other locations where we operate.
Macquarie has continually ensured that we have pay equity across
the organisation for men and women performing the same
roles, similar roles, or work of equal or comparable value. This is
reviewed on an annual basis, during which we work with all groups
as part of Macquarie’s commitment to ensure there is no bias in
how we pay our people and to maintain pay equity for like roles
and performance.
Progress – Our inclusive culture
Macquarie has a range of Employee Network Groups (ENGs) and DEI
committees in each region. Their focus spans culture and heritage,
First Nations, gender, LGBTQ+, race and ethnicity, families and
carers, neurodiversity, and military veterans. They amplify the
voices of under-represented people, enhance networks, and support
our DEI strategy.
Allies are essential to inclusion. Macquarie continues to
offer Allyship and Inclusive Leadership training, especially
to Management.
Every employee is held accountable for contributing to our inclusive
culture through the Macquarie Standards and Objectives, which
include DEI.
Inclusion remains a strong component of Macquarie’s culture.
Progress is measured through an annual employee engagement
survey, which also informs local and regional action plans.
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Diversity, Equity & Inclusion awards
In FY2024 Macquarie was recognised for its commitment to and progress towards creating an inclusive workplace for all employees and
supporting our communities in each of our regions.
Select Diversity, Equity & Inclusion partnerships
78
Macquarie Group Foundation
The Macquarie Group Foundation drives social impact work for Macquarie, supporting its people, businesses,
and communities to build a better future.
$A67m
contributed in FY2024(1)
21,000+
people supported through
employment focused grants(2)
36%
eligible employees involved
in the community(3)
$A641m
contributed since
inception in 1985(4)
(1) In the 12 months to 31 March 2024.
(2) Data was supplied and not independently verified between 1 April 2023 – 31 March 2024 for activities undertaken by Macquarie’s employment focused partners with philanthropic
and impact investment support from Macquarie Group.
(3) Eligible employees engaged in the community by giving their time, financial support or skills in the 12 months to 31 March 2024.
(4) Contribution figures comprise Macquarie employees’ donations and fundraising; Foundation matching support for employees’ donations and fundraising; Foundation donations to
commemorate employees attaining 10-year and 25-year anniversaries at Macquarie; Foundation grants to non-profit organisations to recognise 12 months of board service by a
Macquarie employee; and Macquarie and Foundation grants and social impact investments to community organisations since inception in 1985 to 31 March 2024.
(5) Data was supplied and not independently verified between 1 April 2023 – 31 March 2024 for activities undertaken by Macquarie’s employment focused partners with philanthropic
and impact investment support from Macquarie Group. ‘Into employment’ is defined by our partners using one or more of these categories: type of work, hours of work, living wage
work, meaningful work, secure work, career progression, income progression, jobs created, jobs maintained. It is possible for a person to be counted as employed more than once
(for example: if they move to another employment position within the reporting period). ‘Support’ is defined by our partners using one or more of these categories: direct help,
indirect help, giving information. Into employment is a subset of the total number of people supported.
Together with Macquarie employees, the Macquarie Group
Foundation (the Foundation) has contributed $A641 million
to thousands of non-profit organisations since its inception in 1985.
During FY2024, $A67 million was contributed to 3,000 non-profits
around the world through employee donations and fundraising,
Foundation matching and donations, grants and social impact
investments, marking a significant increase on FY2023 and a
record year of giving.
Our people
The Foundation’s impact reflects Macquarie’s biggest asset:
its people.
Macquarie encourages employees to support the causes that
matter to them by providing a range of benefits including
donation matching, paid volunteer leave and charitable donations
in recognition of time spent volunteering or serving on a
non-profit board.
In FY2024, 36% of eligible employees globally were engaged in
the community by giving their time, financial support or skills.
Employees donated or fundraised a record $A19.5 million in
FY2024 and took over 1,900 days of paid volunteer leave to
support community organisations.
In October 2023 a record $A10 million was raised during Macquarie’s
10th annual Foundation Week, during which additional matching
incentives are available. Macquarie employees organised or
participated in over 320 initiatives, spanning 42 offices in 25
markets and supporting more than 240 non-profits globally.
For more information about how our people contribute
to the community see pages 80 and 81.
Our businesses
As well as providing advice on philanthropic giving, the Foundation
is partnering with Macquarie businesses to integrate a shared value
approach into existing business models and identify upcoming
projects that can deliver both increased social value and enhanced
commercial advantage.
To catalyse this work within Macquarie, the Foundation
created the Macquarie Shared Value Award, in memory of
Macquarie’s former Managing Director and Executive Chairman
David Clarke AO (1942–2011). The Award recognises a Macquarie
team driving social impact through a business-led shared
value project and the inaugural winner was the Pennsylvania
Department of Transportation Major Bridge P3 Initiative managed
by Macquarie Capital in the Americas. This project is developing
major bridges throughout the Commonwealth of Pennsylvania
while also deploying an enduring workforce development initiative.
Philadelphia Works, the non-profit involved in the project, was
awarded a $A100,000 grant to help increase the scope and scale
of social impact.
Our communities
The Foundation supports community organisations through
its global focus on breaking down barriers to employment, its
commitment to promoting a more equitable and just society for
underrepresented people and its special grants programs.
Breaking down barriers to employment
Recognising that many people around the world face systemic
barriers to employment, the Foundation uses a range of tools,
including grants and social impact investments, to break down
these barriers and build effective pathways to employment.
The Foundation’s grantmaking efforts in each region focus on
issues of local relevance, and garner additional support from
employees through mentoring, training, knowledge sharing and
employability programs.
In FY2024, the Foundation provided $A13.4 million in philanthropic
and impact investment funding to 54 employment focused
partners. The Foundation’s existing employment focused partners
reported supporting 1,300 people into employment, with a
total of 21,000 people supported through training, skilling and
employment programs.(5) In FY2024, World YMCA joined Generation,
You Employed as the Foundation’s second global grant partner.
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Grant funding for World YMCA will support pilot interventions that
use digital solutions and innovative financing to move historically
underserved young people beyond skilling and into work. New
regional grant partners in FY2024 also include social enterprises
through the Lord Mayor’s Charitable Foundation, The Majurity Trust
and An Cosán.
In FY2024, the Foundation announced that Pursuit, based in the
USA, would receive both a philanthropic grant and a social impact
investment. These two complementary forms of catalytic capital
will enable Pursuit to scale its impact supporting low-income
individuals without a college degree into long-term careers.
The Foundation also made a social impact investment into the
Growth Impact Fund in the United Kingdom. Capital provided
through social impact investments aim to be patient, risk-tolerant
and flexible, with any financial returns to be re-invested into future
Foundation social impact projects.
Promoting a more equitable and just society
The Foundation takes an equitable approach to its grantmaking, and
also funds organisations that focus on promoting a more equitable
and just society for underrepresented people. These grants include
the Centre for Social Impact (ANZ), Asia Pacific Mission for Migrants
(Asia), Baobab Foundation (EMEA) and four Racial Equity Fund
grantees in the Americas.
Now in its fourth year, the Racial Equity Fund supports four partners
as well as this year’s four People’s Choice grant recipients selected
by employees. In FY2024, the Foundation provided a grant to the
Bullard Center for Environmental & Climate Justice to fund a new
HBCU (Historically Black College or University) Climate Corps at
Texas Southern University. The program will equip young people
with the tools they need to become the next generation of leaders
and educate them on climate change and its impact on communities
of colour.
Macquarie 50th Anniversary Award
Throughout FY2024 the five organisations awarded $A10 million
each as part of the Macquarie 50th Anniversary Award in 2019
continued to make progress against each of the project milestones.
One award recipient, the Murdoch Children’s Research Institute’s
World Scabies Program (WSP) rolled out world-first, nation-wide
mass drug administration (MDA) programs to treat scabies in both
Fiji and the Solomon Islands. These MDAs have positioned WSP to
help drive similar programs across the globe, surfacing best practice
scabies management and advocacy to replicate the outcomes seen
in Fiji and the Solomons thus far.
Another award recipient, Social Finance US, continued to scale its
talent finance portfolio, expanding high quality career training to
help unemployed and underemployed people participate in the
modern economy.
Over the past year, Social Finance launched a Pay It Forward Fund
in Colorado to prepare residents for in-demand, well-paying jobs
in industries including IT, cybersecurity, and health care. Seeded
with over $A12 million from multiple philanthropic sources, the
Colorado Pay It Forward Fund provides different kinds of financing
for learners, training providers, and employers. For each kind of
financing, all loan repayments are recycled back into the fund to
support future learners.
Responding to humanitarian needs
In support of humanitarian relief efforts in Israel and the Palestinian
Territories, employees and the Foundation contributed over
$A3 million to organisations working to provide vital support. In
addition, the Foundation also provided $A1 million in grant funding
to two aid agencies – Anera and IsraAID – both providing critical
humanitarian relief in the region.
Our broader community
Macquarie Sports
Macquarie Sports aims to engage young Australians by improving
access to sporting opportunities. In FY2024, Macquarie Sports
supported 36 sporting clinics in communities around Australia,
reaching over 1,500 participants.
Aligned with the Foundation’s focus of breaking down barriers
to employment, in FY2024 Macquarie Sports renewed grants
to Surfing Australia and Clontarf Foundation, organisations
that support young people through education, training and
employment-based programs. During calendar year 2023 this
funding supported 60 young people and provided pathways for
29 people into employment.
Macquarie Sports also awarded four corporate scholarships to
elite sportspeople, to assist with their transition into the financial
services sector following their sporting careers.
Macquarie Group Collection
The Macquarie Group Collection (Collection) is a unique
philanthropic corporate collecting model comprising 940 works.
Featuring art in all media, the theme of the Collection is The Land
and Its Psyche. The Collection promotes the talent and diversity of
Australian emerging artists by acquiring and displaying their art in
44 Macquarie offices worldwide.
Planning is underway for the opening of the new public gallery,
The Art Space, in Macquarie’s new global headquarters at
1 Elizabeth Street, Sydney (1 Elizabeth). The Art Space will
host the 2024 Macquarie Group Emerging Artist Prize opening
night and exhibition.
Find out more about the Macquarie Group Foundation visit
macquarie.com/community.
$A67 million contribution in total during FY2024
Total Macquarie contribution
(including matching of staff contributions)
Staff contribution
(estimation based on Foundation match funding)
$A47,189,715
$A19,492,986
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Macquarie Group Foundation
Social impact
led by
our people
Macquarie employees are at the heart of the
Foundation’s social impact work. Through a range
of Foundation benefits, Macquarie encourages
employees to give their time, financial support
or skills to the causes that matter to them.
Fundraising for a cause
In Asia, Teng Ee Teoh, Jamie Chung and The Majurity Trust working group in
Macquarie’s Singapore office held a fundraising event on World Alzheimer’s
Day. Designed to uncover the fastest thinking team, 13 teams took part in a
series of quizzes over three rounds of intense competition.
Together with matching from the Foundation, over $A4,000 was raised
for The Majurity Trust’s Silver is Gold program, which supports innovative
solutions and services to meet the needs of persons living with dementia and
tackles public stigma surrounding dementia.
“The quiz was a fun way to engage our colleagues and fundraise for a good
cause. With matching from the Foundation, it doubles our fundraising
efforts and means a larger donation for The Majurity Trust. Many of us know
someone living with dementia so it was meaningful to be able to contribute in
this way.”
Teng Ee Teoh
Commodities and Global Markets, Singapore
Giving time
Macquarie encourages volunteering by offering two days of paid volunteering
leave to all eligible employees, and the Foundation recognises time spent
volunteering by providing volunteer rewards and board service rewards in the
form of charitable donations. Employees can explore hands-on, skills sharing
or pro bono volunteering opportunities.
In Sydney, a popular team building activity is spending a day volunteering at
Our Big Kitchen, which prepares and distributes meals to shelters for people
suffering from homelessness, extreme illness, and domestic violence. Sohan
Pujarand and his colleagues recently spent a day volunteering and received
volunteer rewards.
“Together we made over 200 meals for people in need. After a fun day,
everyone returned home with their newfound cooking skills but more
importantly with a feeling of fulfilment. We also received volunteer rewards of
$A25 per hour to donate to a charity of our choice, so this was another way we
could support Our Big Kitchen’s vital services.”
Sohan Pujarand
Financial Management Group, Sydney
Sharing skills
Many employees around the world volunteer as board members for
non-profit organisations and are eligible to receive a $A10,000 charitable
donation for the non-profit organisation they support. Matt Osborn has
been a longtime volunteer with Noah’s House, an organisation dedicated
to providing opportunities for growth, fulfillment, and independence for
adults with intellectual and developmental disabilities.
“Having a son with Down Syndrome, Noah’s House’s mission is one I’m
passionate about and it’s incredible to see how a few people can come
together and have such a big impact.
Macquarie’s first ever Racial Equity Fund externship, New York.
Courtney Lollback (second from left) and James Gardner (fourth from left) pictured with
the Growth Impact Investment pro bono team in London.
Sohan Pujarand’s colleagues at The Big Kitchen, Sydney.
Camille Andrada (first from the left, front row) volunteering
at the Fair Training Center in Manila.
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As a current board member, I know how much of an effect the
fundraising, matching and board service donation makes on an
organisation that is changing the lives of many people.”
Matt Osborn
Corporate Operations Group, Houston
Recognising exceptional contributions to the community
Avantika Pratap, James Sim, Mai Dinh and Mark Yam led BFS’s annual
trivia fundraiser event in both Sydney and Melbourne, which supported
the Cooper Rice-Brading Foundation (CRBF). CRBF funds clinical
research into sarcoma, an aggressive form of cancer, whilst also raising
awareness to promote early diagnosis, and providing support for
patients and their families.
In FY2024, the team were recognised with a Macquarie Award
(Community category) for their fundraising.
“It was a thrill to win the Macquarie Award and receive an additional
charitable donation for CRBF. This is a close and personal cause for
many at Macquarie, especially for those who knew Cooper personally
before his passing in 2017. To raise over $A158,000 including matching
from the Foundation for such a meaningful cause was an honour and it
has truly been one of the highlights of our Macquarie journey.”
Avantika Pratap
Banking and Financial Services, Sydney
Our businesses
Driving shared value
The Foundation is partnering with Macquarie businesses to integrate
a shared value approach into existing business models and identify
upcoming projects that can deliver both increased social value and
commercial advantage.
Geoff Segal was part of the Macquarie Capital team who won the
inaugural Macquarie Shared Value Award for their Pennsylvania
Department of Transportation Major Bridge P3 Initiative.
“As well as having a direct positive impact on the local economy, this
project will establish an enduring workforce development program.
When we commenced work on the proposal, we sought advice from the
Foundation team on how we could maximise the benefit of the project
for jobseekers in the local community.
It’s a great example of how our work can build a better future for the
communities in which we operate by delivering both economic and
social outcomes.”
Geoff Segal
Macquarie Capital, New York
Our communities
Macquarie’s support for grant and social impact investment partners
expands beyond funding thanks to our people.
Supporting Macquarie 50th Anniversary Award winners
The Macquarie 50th Anniversary Award Ambassador Network was
established to engage employees to further support and contribute to
each of the five causes. Emily Mellett volunteers her time on The Ocean
Cleanup Ambassador network, which brings together colleagues from
across the globe.
“As a network, we have organised a range of initiatives to raise
awareness and funds for The Ocean Cleanup’s mission. We’ve also
supported them to progress a global research study, which aims to
identify global and political incentives to fund the cleanup efforts.
The strength of Macquarie’s networks and connectivity allowed us to
provide essential and different insights to support them to progress
their analysis and research and develop their industry connections.”
Emily Mellett
Corporate Operations Group, London
Supporting our Racial Equity Fund grant partners
In addition to funding for grant partners, the Foundation creates
opportunities for staff engagement through mentoring, training,
knowledge sharing and employability programs.
In November 2023, nearly 50 college sophomores in Houston and
New York celebrated completion of Macquarie’s first ever Racial
Equity Fund externship, designed to expose students that have
historically been underrepresented in the sector to financial services.
Through the externship, students spent eight weeks meeting with
Macquarie colleagues, building their skills and confidence and growing
their knowledge of the business.
“During their time at Macquarie, the externs toured our offices, visited
Macquarie-owned assets and connected with over 40 Macquarie
colleagues for mentorship, networking, mock interviews and
informational sessions. Students also completed a final project to
develop an investment pitch in the green energy sector, meeting with
colleagues from across Macquarie to refine their presentations and
deliver a final pitch. It was fantastic to see Macquarie’s Racial Equity
Fund make such an impactful experience for the students.”
Nicole Spaur
Risk Management Group, Houston
Working groups dedicated to breaking down barriers to
employment
Across Asia there are several working groups made up of passionate
employees who come together to support a non-profit organisation.
In Manila, one working group supports the Fair Training Center (FTC),
which focuses on ending the forced labour of migrant workers by
reinventing domestic worker training. The working group has organised
fundraising and volunteering throughout the year for FTC and recently
collaborated with a local designer to help FTC revamp its video training
materials.
“Being part of a group of volunteers focused on creating better
migration outcomes for migrant workers is a meaningful way to make
a difference. I’ve taken volunteer leave and sought matching from the
Foundation to further contribute to FTC, so I’m grateful that Macquarie
supports me to give back in this way.”
Camille Andrada
Corporate Operations Group, Manila
Pro bono contributions enabling social impact investments
Every social impact investment the Foundation makes utilises
knowledge and expertise from across Macquarie. The Foundation
collaborates with small teams of colleagues from around the world
who conduct various forms of due diligence, incorporating impact,
commercial and risk considerations.
During FY2024 Courtney Lollback and James Gardner from Macquarie’s
Asset Management Group and Legal and Governance Group provided
their expertise on Macquarie’s investment into the Growth Impact Fund
social impact investment, announced in October 2023.
“The opportunity to work alongside the Foundation on commercial
and financial due diligence of the Growth Impact Fund investment was
a highlight of my year. I thoroughly enjoyed the experience and the
chance to put my skills to use to help create positive social change.”
Courtney Lollback
Macquarie Asset Management, London
“Working on the Growth Impact Fund transaction was brilliant in many
ways. It’s been helpful from a professional perspective, great to work
with different people and to be running towards something that feels
purposeful and tangible.”
James Gardner
Legal and Governance Group, Macquarie Asset Management, London
82
Risk Management
Risk governance at Macquarie
Role of the Board
The role of the Board is to promote the long-term interests of
Macquarie, taking into account Macquarie’s specific and broader
responsibilities to its shareholders, funders, clients, staff and the
communities in which it operates. In accomplishing its role with
respect to risk management, among the Board’s key responsibilities
are oversight of management’s operation of Macquarie’s risk
management framework, approving risk appetite and the risk
management strategy, engagement with key regulators and forming
a view of risk culture.
Role of Management
The Group Heads of the Operating and Central Service Groups
are responsible for the implementation of the risk management
framework in their Groups. They are required semi-annually to attest
that key risks have been identified and are adequately controlled
in their Groups. These management representations support the
sign-off of the half-year and full-year financial statements.
Three lines of defence
Macquarie’s approach to risk management adopts the ‘three
lines of defence’ model, which sets risk ownership responsibilities
functionally independent from oversight and assurance:
• primary responsibility for day-to-day risk management lies
with the business. The risk owner is the first line of defence.
All staff throughout Macquarie are expected to manage risks
in accordance with the risk management framework
• the Risk Management Group (RMG) forms the second line of
defence and provides independent and objective review and
challenge, oversight, monitoring and reporting in relation to
Macquarie’s material risks
• Internal Audit, as the third line, provides independent and objective
risk-based assurance on the compliance with, and effectiveness of,
Macquarie’s financial and risk management framework.
Risk management framework
Macquarie’s risk management framework is the totality of systems,
structures, policies, processes and people within Macquarie that
identify, measure, evaluate, monitor, report and control or mitigate
all internal and external sources of material risk. Macquarie
maintains a single risk management framework that is applied
appropriately throughout the Operating and Central Service Groups.
In determining those risks that are material to Macquarie, we assess
the potential for a risk to affect our earnings resilience and financial
strength across market cycles, our ability to meet regulatory
obligations, our stakeholders, and our reputation.
Macquarie’s material risks include asset, conduct, country, credit,
environmental and social, equity, financial crime, legal, liquidity,
market, operational, regulatory and compliance, strategic, tax,
technology and cyber, and work health and safety risks.
Details about the risks we manage are available at
macquarie.com/risk‑management
Details on Environmental and Social risks, and Work Health
and Safety risks, are set out in the ESG section of this
Annual Report.
Key components
Risk management principles
Macquarie’s approach to risk management is based on stable and
robust core risk management principles. These are:
• ownership of risk at the business level: Group Heads are
responsible for ownership of material risks that arise in, or
because of, their business’ operations, including identification,
measurement, evaluation, monitoring, control and mitigation of
these risks. Before making decisions, clear analysis of the risks
is sought to ensure those decisions are consistent with the risk
appetite and strategy of Macquarie
• understanding worst-case outcomes: Macquarie’s risk
management approach is based on examining the consequences
of worst-case outcomes and determining whether these are
acceptable and within Macquarie’s risk appetite. This approach
is adopted for all material risk types and is often achieved by
stress testing. Macquarie operates a number of sophisticated
quantitative risk management processes, but the foundation of
the approach is the informed consideration of both quantitative
and qualitative inputs by experienced professionals
• requirement for an independent sign-off by RMG: Macquarie
places significant importance on having a strong, independent
risk management function to review, challenge and sign-off
all material risk acceptance decisions. It is essential that RMG
has the capability to do this effectively. RMG has invested in
recruiting skilled professionals from a range of industries,
including those with trading or advisory and capital markets
experience. For all material proposals, RMG’s opinion must be
sought at an early stage in the decision-making process. The
approval document submitted to Senior Management must
include independent input from RMG on risk and return.
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Risk Management Group
RMG, which forms the second line of defence, is an independent
and centralised function responsible for independent and objective
review and challenge, oversight, monitoring and reporting in
relation to Macquarie’s material risks. RMG designs and oversees
the implementation of the risk management framework. RMG is
structured into specialist functional divisions (depicted below) and
employs an integrated approach to risk analysis and management
across risk classes. RMG’s assessment and monitoring of risks
involves a collaborative effort across the divisions to ensure a
detailed analysis takes place both at the individual and aggregate
risk level.
RMG’s oversight of risk is based on five principles:
• independence: RMG is independent of Macquarie’s Operating
Groups and other Central Service Groups. The Head of RMG, as
the CRO, reports directly to the CEO with a secondary reporting
line to the BRiC. RMG approval is required for all material risk
acceptance decisions
• centralised risk management: RMG’s responsibility
covers the whole of Macquarie. It assesses risks from a
company-wide perspective and provides a consistent approach
across Macquarie
• approval of all new business activities: the Operating and
Central Service Groups may not undertake new businesses or
activities, offer new products, enter new markets, or undertake
significant projects without first consulting RMG. RMG reviews
and assesses risks and sets limits. Where appropriate, these
limits are approved by the Executive Committees and the Board
• continuous assessment: RMG continually reviews risks to
account for changes in market circumstances and developments
within Macquarie’s business
• frequent monitoring and reporting: the risk profile of
Macquarie with respect to all material risks is monitored by RMG
on an ongoing basis. Centralised systems exist to allow RMG
to monitor financial risks daily. For the valuation of all trading
positions and deals, daily revaluation factors are sourced, where
possible, from independent market sources. Reporting on all
material risks is provided to Senior Management, the Board and
relevant Board Committees.
Internal audit
The Internal Audit Division (IAD), as the third line, provides
independent and objective risk-based assurance to the Board Audit
Committee (BAC), Board, other relevant Board Committees and
Senior Management on the compliance with, and effectiveness of,
Macquarie’s financial and risk management framework, including
its governance, systems, structures, policies, processes and
people for managing material risks. The Internal Audit Division
assesses whether material risks have been properly identified
by management and reported to the Board or relevant Board
Committees, and whether key internal controls have been properly
designed and are operating effectively and sustainably to mitigate
those material risks.
The BAC has primary power of direction over the IAD and is
accountable for reviewing the effectiveness of the IAD. The Head
of Internal Audit reports functionally to the BAC and is primarily
accountable to it. The Head of Internal Audit has unrestricted
access to the BAC (and its Chair) and meets privately with the
BAC members at least annually. The BAC monitors and reviews
the performance, objectives, rating, remuneration and degree of
independence of the Head of Internal Audit. The BAC also approves
any appointment and removal of the Head of Internal Audit.
The Head of Internal Audit reports operationally to the CRO for
day-to-day management. For audit matters relating to RMG, the
role of the CRO is substituted by the CEO.
RMG structure
Management reporting line
Operational reporting line
Head of RMG
Chief Risk Officer
Credit
Prudential
Risk
Market Risk
Operational
Risk
Financial
Crime Risk
RMG Central
Internal Audit
Compliance
84
Risk Management
Continued
Risk appetite
Risk appetite is set by the Board as the degree and type of risk that
Macquarie is prepared to accept in pursuit of its strategy, giving
consideration to the interests of its stakeholders. Macquarie’s
Board-approved Risk Appetite Statement (RAS) defines the
overarching risk-taking settings of Macquarie through risk appetite
and risk tolerances.
As part of the Annual Strategy Review and Business Planning process,
RMG undertakes an independent review of Macquarie’s strategy
and considers how risks identified could individually or in aggregate
impact Macquarie’s risk profile and risk appetite. Macquarie’s strategy
and the outcome of RMG’s review together inform the annual review
of Macquarie’s risk appetite and tolerance settings.
Stress testing
Stress testing is a key component of Macquarie’s risk management
framework and is integrated with Macquarie’s strategy review and
financial forecasting. Stress testing, including scenario analysis
and sensitivity analysis, is a key tool that informs the calibration
of Macquarie’s risk tolerances; provides insights into the Annual
Strategy Review and Business Planning process; and tests and
informs whether Macquarie’s strategy remains, and is forecast to
remain, in line with its risk appetite.
Policies
Policies are key tools for ensuring that risks taken are consistent
with Macquarie’s risk appetite. They are designed to set out the
principles that govern decision-making across Macquarie.
New product and business approval process
All new businesses, new products, major organisational projects,
and significant changes to existing businesses, products, processes
or systems which will expose Macquarie to new or significantly
varied risks must be assessed against the applicable risk appetite
and tolerances.
This formal process sets out the requirement for each Operating
and Central Service Group to have a demonstrable robust change
management process to ensure material risks are appropriately
identified, assessed and within Macquarie’s risk appetite as defined
in the RAS. The Operating and Central Service Groups may not
undertake the proposed activity without first consulting RMG. RMG
reviews and assesses risk and sets limits. Where appropriate, these
limits are approved by the Executive Committee and the Board.
RMG is also responsible for reviewing that all relevant internal
approvals are obtained prior to commencement.
Risk culture
A sound risk culture has been integral to Macquarie’s risk
management framework since inception. Macquarie sets, promotes,
monitors and reflects on the effectiveness of our risk culture. All
staff have a role in managing risk. Ownership of risk, including risk
culture, is at the business level. The Board, assisted by the BRiC,
is responsible for forming a view on Macquarie’s risk culture and
the extent to which it supports the ability of Macquarie to operate
consistently within its risk appetite. The Board also identifies
and monitors any necessary or desirable actions to change the
risk culture.
Macquarie’s approach to maintaining a sound risk culture is based
on three components:
Setting behavioural expectations
Senior Management, with oversight from the Board, set behavioural
expectations. The way we fulfil Macquarie’s purpose is defined by
our principles of What We Stand For: Opportunity, Accountability
and Integrity. Staff are made aware that these principles must
form the basis of all behaviours and actions. These behavioural
expectations are specified in the Board-approved Code of Conduct,
which is actively promoted by Management and cascaded through
the organisation.
Leading and executing
Management implements behavioural expectations through:
• leadership actions and communication
• organisational governance
• incentives and consequence management
• organisational and individual capability.
Monitoring, measuring and reporting
Macquarie monitors and measures its risk culture to gauge
its effectiveness while promoting continuous improvement.
Mechanisms include:
• reports incorporating behavioural indicators (such as policy,
limit and training breaches) prepared by all Operating and
Central Service Groups, including reports prepared by RMG, HR
and Macquarie’s Integrity Office, and escalated where relevant,
in accordance with our governance framework. These include
regular reports relating to risk culture which are provided to
Senior Management, the Board and relevant Board Committees
• risk culture teams in both RMG Prudential Risk and IAD
undertake a range of business level and thematic assessments of
risk culture and behaviour.
These mechanisms facilitate a feedback loop of sharing good
practice and lessons learnt to enable cultural alignment.
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Remuneration and consequence management
The Board considers that the effective alignment of remuneration
with prudent risk-taking is fundamental to Macquarie’s
remuneration approach. Risk considerations are embedded
throughout the remuneration process, including through the
determination of individual profit share allocations, business
group and company-wide profit share pools, as well as through the
way in which remuneration is structured and delivered. Effective
consequence management is a key component of Macquarie’s risk
culture. Macquarie aims to apply consequences for non-compliance
in a timely manner, and as fairly and consistently as possible.
See the Remuneration Report for more details on
Macquarie’s remuneration framework and consequence
management process
Conduct risk
Macquarie defines conduct risk as the risk of behaviour, action or
omission by individuals employed by, or on behalf of, Macquarie
or taken collectively in representing Macquarie that may have a
negative outcome for our clients, counterparties, the communities
and markets in which we operate, our staff, or Macquarie.
Such behaviour, actions or omissions may include:
• breaches of laws or regulations
• disregard for Macquarie’s principles of What We Stand For or the
Code of Conduct
• negligence and/or a lack of reasonable care and diligence
• failure to escalate improper conduct
• inadequate product design and distribution.
Conduct risk can arise inadvertently or deliberately in any of
Macquarie’s Operating and Central Service Groups.
Macquarie’s approach to conduct risk management is integrated
in our risk management framework and is consistent with our
three lines of defence model. Risk-taking must be consistent
with Macquarie’s principles of What We Stand For and the
Board-approved Code of Conduct.
Macquarie has a range of controls and processes in place to identify
and manage conduct risk, including:
• new and emerging conduct risks are identified through the
annual strategy and business planning process
• conduct risks that may arise when Macquarie establishes a new
business or product, or makes a significant change to an existing
business, product, process or system are identified and assessed
through the new business and product approval process
• independent monitoring and surveillance conducted by RMG,
in addition to front line supervisory activities performed by
the business
• the Risk and Control Self-Assessment requires businesses to
identify and assess their key conduct risks
• supporting the efficient operation of markets through
appropriate controls and monitoring
• where incidents occur, businesses investigate the underlying
contributing behaviours and are responsible for recording all
conduct related issues and incidents in Macquarie’s Governance,
Risk and Compliance system, and escalating within the
set timeframes
• performance-based remuneration reflects an individual’s
performance, which is assessed against a range of financial and
non-financial factors including approach to risk management
and compliance
• an Integrity Office that is an independent point of contact
for staff to safely raise concerns about misconduct,
unethical behaviour or breaches of the Code of Conduct,
and protects those who raise concerns under Macquarie’s
Whistleblower Policy
• a global Staff Hotline for staff who wish to speak up anonymously
• a Customer Advocate Office (ANZ only) to promote fair and
reasonable customer complaint outcomes and to review and
assist with determining escalated customer complaints.
86
Risk Management
Continued
Market and credit risk
Year-end performance indicators
Macquarie monitors and measures a range of risks as outlined above in the risk management framework overview. The following graphs
provide historical and current year information on key market and credit risks.
Trading revenue
The effectiveness of Macquarie’s market risk management framework can be partially measured by Macquarie’s daily trading results. These
are daily profit and loss results that are directly attributable to market-based activity from Macquarie’s trading desks.
Macquarie’s market risk activities continue to be based on earning income from client-facing businesses. The majority of trading income is
derived from client activities rather than outright proprietary trading activity.
Macquarie’s trading results over time have shown consistent profits and low volatility. In FY2024, Macquarie made a net trading profit on 221
out of 260 trading days (FY2023 results: 208 out of 261 trading days).
Daily trading profit and loss
0
20
40
60
80
100
120
FY 2024
FY 2023
FY 2022
FY 2021
FY 2020
Days
$Am
>100
>90
>80
>70
>60
>50
>40
>30
>20
>10
>0
<0
<-10
<-20
<-30
<-40
<-50
<-60
<-70
<-80
<-90
<-100
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Value at Risk (VaR)
VaR provides a statistically based summary of overall market risk in Macquarie. The magnitude of VaR reflects changes in positions as well
as changes in market volatility, correlations and enhancements to the model. The integrity of the VaR model is regularly tested against daily
profit and loss.
Macquarie’s market risk decreased compared to the previous year, primarily driven by lower commodity exposure from gas and power as well
as decreasing market volatility. VaR remains modest in comparison to capital and earnings, representing less than 0.2% of total equity.
Aggregate VaR
Average Value at Risk to Total Equity %
Value at Risk ($Am)
Average Value at Risk to Total Equity
Value at Risk (1-day 99% confidence interval)
Apr 22
Jul 22
Oct 22
Jan 23
Apr 23
Jul 23
Oct 23
Jan 24
Apr 24
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
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Risk Management
Continued
Loan impairment review
Macquarie prospectively adopted AASB 9 Financial Instruments (AASB 9) effective 1 April 2018. As permitted by AASB 9, prior year
comparative information was not restated. AASB 9 contains requirements for the classification and measurement of certain financial
instruments, hedge accounting requirements and, from a credit provisioning perspective, introduced an expected credit loss methodology,
which differed to the incurred loss methodology applied prior to FY2019.
For AASB 9 disclosures refer to Note 36.1 Credit risk to the financial statements including disclosure of loan asset exposures by stage of
credit performance. Note 13 Expected credit losses to the financial statements discloses expected credit losses on loan assets by stage of
credit performance. The FY2024 numbers presented below are calculated with reference to this information. Loan assets categorised as
Stage 3 in terms of AASB 9 are defined as ‘credit impaired’. As noted, AASB 9 did not require the restatement of comparative information,
and for that reason the comparative numbers in the graph below have not been restated.
Underlying credit quality in FY2024, remains broadly unchanged relative to FY2023, with the reduction in Stage 1 & 2 Provisions, and Net
Credit Losses, being the result of a more favourable forward looking economic outlook as at 31 March 2024 compared to 31 March 2023 (as
disclosed in the Notes to the financial statements). The increase in Stage 3 Loan Assets, is the result of inflationary pressure on wages and
costs in addition to the higher interest rate environment.
Ratio of Provisions and Credit Impaired Loan Assets to Loans Assets
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2024
2023
AASB 139
AASB 9
%
-1
0
1
2
3
4
5
Net Stage 3 Loan Assets to Loan Assets (Prior year comparatives to FY18: Impaired assets to loans, advances and leases) - Balance sheet
Stage 1 & 2 Provisions to Loan Assets (Prior year comparatives to FY18: Collective provision to loans, advances and leases) - Balance sheet
Net Credit Losses/releases to Loan Assets (Prior year comparatives to FY18: Net Credit losses to loans, advances and leases) - Income statement
Notes to prior year comparatives(1)
• Loans, advances and leases excluded securitised mortgages, securitised Macquarie Capital loans/leases, segregated futures funds and
receivables in the form of fees.
• The collective provision is intended to cover losses inherent in the existing overall credit portfolio which are not yet
specifically identifiable.
• Net impaired assets and net losses excluded investment securities.
• Net credit losses represented the total P&L impact in the stated period due to additional individual provisions, direct write-offs (net of any
writebacks) and change in Stage 1 & 2 provisions.
(1) The information for the financial years ended 31 March 2009–2024 is based on results using the Australian Accounting Standards that were effective and adopted by the
Consolidated Entity at the reporting dates. Reporting periods have been restated only to the extent as required by the accounting standards. The financial reporting periods may
hence not be fully comparable with one another as a result of changes in accounting standards’ requirements.
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90
03
100 Independence, Philadelphia
Situated amongst cultural landmarks
including the Liberty Bell, Macquarie’s
office in the iconic 100 Independence
building opened in 2021 and is
a significant global location for
Macquarie Asset Management.
Designed to create a connected
architecture and leveraging a
human-centred design approach,
its balance of spaces for physical
and virtual interaction encourages
connectivity and collaboration.
Directors’
Report
91
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Macquarie Group Limited and its subsidiaries 2024 Annual Report
92
Directors’ Report
For the financial year ended 31 March 2024
The Directors of MGL submit their report with the financial report of the Consolidated Entity and of the Company
for the year ended 31 March 2024.
Principal activities
The principal activity of MGL during the financial year ended
31 March 2024 was to act as a Non-Operating Holding Company
(NOHC) for the Consolidated Entity. The activities of the
Consolidated Entity were those of a global financial group providing
clients with asset management and finance, banking, advisory and
risk and capital solutions across debt, equity and commodities.
In the opinion of the Directors, there were no significant changes
to the principal activities of the Consolidated Entity during the
financial year under review that are not otherwise disclosed in
this report.
Result
The financial report for the financial year ended 31 March 2024 has
been prepared in accordance with Australian Accounting Standards.
The consolidated profit after income tax attributable to the
ordinary equity holders for the financial year ended 31 March 2024
was $A3,522 million (2023: $A5,182 million).
Dividends and distributions
Subsequent to the year ended 31 March 2024, the Directors have
resolved to pay a final ordinary dividend of $A3.85 per share
($A1,471 million in aggregate), 40% franked based on tax paid
at 30%. The final ordinary dividend is payable on 2 July 2024.
On 19 December 2023, the Company paid an interim ordinary
dividend of $A2.55 per share ($A982 million in aggregate),
40% franked, for the financial year ended 31 March 2024.
On 4 July 2023, the Company paid a final ordinary dividend of
$A4.50 per share ($A1,734 million in aggregate), 40% franked,
for the financial year ended 31 March 2023.
No other ordinary share dividends or distributions were declared
or paid during the financial year by the Company.
Rounding of amounts
In accordance with ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191, amounts in the Directors’
Report and Financial Report have been rounded off to the nearest
million Australian dollars unless otherwise indicated.
Events subsequent to balance date
At the date of this report the Directors are not aware of any
matter or circumstance, other than transactions disclosed in the
financial statements, that has arisen and has significantly affected
or may significantly affect the operations of the Consolidated
Entity, the results of those operations or the state of affairs
of the Consolidated Entity in the financial years subsequent to
31 March 2024.
State of affairs
There were no other significant changes in the state of affairs of the
Consolidated Entity that occurred during the financial year under
review that are not otherwise disclosed in this report.
Operating and financial review
Please refer to section 1 of this Annual Report for the following in
respect of the Consolidated Entity:
• a review of operations during the year and the results of those
operations
• likely developments in the operations in future financial years
and the expected results of those operations
• comments on the financial position
• comments on business strategies and prospects for future
financial years.
In respect of likely developments, business strategies and prospects
for future financial years, material which if included would be likely
to result in unreasonable prejudice to the Consolidated Entity, has
been omitted.
Environmental regulations
The Consolidated Entity has policies and procedures in place that
are designed to ensure that, where operations are subject to any
particular and significant environmental regulation under a law of
the Commonwealth or of a State or Territory, those obligations are
identified, appropriately addressed and material breaches notified.
The Directors have determined that there has not been any material
breach of those obligations during the financial year.
93
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Directors
At the date of this report, the Directors of MGL are:
Independent Directors
G.R. Stevens AC, Chair
J.R. Broadbent AC
P.M. Coffey
M.A. Hinchliffe
S.J. Lloyd-Hurwitz
R.J. McGrath
M. Roche
Executive Voting Director
S.R. Wikramanayake, Managing Director and Chief Executive
Officer (CEO)
Other than Ms Lloyd-Hurwitz, the Directors listed above each
held office as a Director of MGL throughout the financial year
ended 31 March 2024.
Ms Lloyd-Hurwitz was appointed as an Independent Director on
1 June 2023. Ms N.M. Wakefield Evans AM retired as an Independent
Director on 29 February 2024.
Those Directors listed as Independent Directors have been
independent throughout the period of their appointment.
Details of the qualifications, experience and special
responsibilities of the Directors and qualifications and
experience of the Company Secretaries at the date of this
report are set out on pages 96 to 100.
Directors’ and officers’ indemnification
and insurance
Under MGL’s Constitution, MGL indemnifies all past and present
directors and secretaries of MGL and its wholly-owned subsidiaries
(including at this time the Directors named in this report and the
Secretaries), against certain liabilities and costs incurred by them
in their respective capacities. The indemnity covers the following
liabilities and legal costs (subject to the exclusions described
as follows):
• every liability incurred by the person in their respective capacity
• all legal costs incurred in defending or resisting (or otherwise
in connection with) proceedings in which the person becomes
involved because of their respective capacity
• legal costs incurred by the person in good faith in obtaining
legal advice on issues relevant to the performance and discharge
of their duties as an officer of MGL and its wholly-owned
subsidiaries, if that has been approved in accordance with
MGL policy.
This indemnity does not apply to the extent that:
• MGL is forbidden by law to indemnify the person against the
liability or legal costs, or
• an indemnity by MGL of the person against the liability or legal
costs, if given, would be made void by law.
MGL has also entered into a Deed of Access, Indemnity, Insurance
and Disclosure (as amended from time to time) (Deed) with each of
the Directors. Under the Deed, MGL agrees to, among other things:
• indemnify the Director upon terms broadly consistent with the
indemnity contained in MGL’s Constitution
• take out and maintain an insurance policy against liabilities
incurred by the Director acting as an officer of MGL or its
wholly-owned subsidiaries. The insurance policy must be for
an amount and on terms and conditions appropriate for a
reasonably prudent company in MGL’s position. Insurance must
be maintained for seven years after the Director ceases to be a
Director or until any proceedings commenced during that period
have been finally resolved (including any appeal proceedings)
• grant access to the Director to all relevant company papers
(including Board papers and other documents) for seven
years after the Director ceases to be a Director or until any
proceedings commenced during that period have been finally
resolved (including any appeal proceedings).
In addition, MGL made an Indemnity and Insurance Deed Poll on
12 September 2007 (Deed Poll). The benefit of the undertakings
made by MGL under the Deed Poll have been given to each of the
directors, secretaries, persons involved in the management and
certain other persons, of MGL and its wholly-owned subsidiaries
and other companies where the person is acting as such at the
specific request of MGL and its wholly-owned subsidiaries. The
Deed Poll provides for broadly the same indemnity and insurance
arrangements for those persons with the benefit of the Deed Poll
as for the Deed described above. However, the Deed Poll does not
provide for access to company documents.
The indemnities and insurance arrangements provided for under
the MGL Constitution, the Deed and the Deed Poll, are broadly
consistent with the corresponding indemnities and insurance
arrangements provided under the MBL Constitution and deeds
entered into by MBL.
Macquarie maintains a Directors’ and Officers’ insurance policy that
provides cover for each person in favour of whom such insurance
is required to be taken out under the Deed and the Deed Poll and
for MGL in indemnifying such persons pursuant to the Deed and
the Deed Poll. Relevant individuals pay the premium attributable
to the direct coverage under the policy and MGL pays the premium
attributable to the company reimbursement coverage under the
policy. The Directors’ and Officers’ insurance policy prohibits
disclosure of the premium payable under the policy and the nature
of the liabilities insured.
To the extent permitted by law, MGL has agreed to reimburse its
auditor, PricewaterhouseCoopers (PwC), for any liability (including
reasonable legal costs) PwC incurs in connection with any claim by
a third party arising from MGL’s breach of the letter of engagement
dated 5 July 2023.
94
Directors’ Report
For the financial year ended 31 March 2024 continued
Directors’ equity participation and other relevant interests
As at the date of this report, the Directors have relevant interests in MGL ordinary shares, MGL securities, or managed investment schemes
made available by related companies of MGL and other relevant disclosable interests, as notified by the Directors to ASX in accordance with
the Corporations Act 2001 (Cth) (the Act), in the following:
EQUITY PARTICIPATION
OTHER RELEVANT INTERESTS
Name and position
MGL
ordinary shares
RSUs held
in MEREP(1)
PSUs held
in MEREP(1)
Direct and
Indirect Interests
Number held
Executive Voting Director
S.R. Wikramanayake
1,175,897
509,300
97,751
MAFCA Investments Pty
Ltd ordinary shares
2,000,000
Independent Directors
J.R. Broadbent AC
16,062
–
–
Macquarie Group Capital
Notes 3 (MCN3)
7,177
Macquarie Group Capital
Notes 4 (MCN4)
4,000
Macquarie Bank Capital
Notes 2 (BCN2)
1,500
P.M. Coffey
8,895
–
–
Walter Scott Global Equity
Fund units
408,699.89
M.A. Hinchliffe
2,800
–
–
–
–
S.J. Lloyd-Hurwitz
880
R.J. McGrath
3,817
–
–
–
–
M. Roche
7,000
–
–
–
–
G.R. Stevens AC
5,847
–
–
–
–
During the financial year, Directors received dividends relating to their holdings of MGL ordinary shares at the same rate as
other shareholders.
(1) These RSUs and PSUs were issued pursuant to the MEREP and are subject to the vesting, forfeiture and other conditions applied to grants of awards to Executive Directors,
as described in Note 32 Employee equity participation to the financial statements in the Financial Report.
95
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Board and Board Committee meetings and attendance
The number of meetings of the Board of Directors (the Board) and of the Committees of the Board and the individual attendance by
Directors at those meetings which they were eligible to attend as members, during the financial year, is summarised in the table below. The
table excludes the attendance of those Directors who attended the Board Committee meetings of which they were not a member.
Committee
membership
Regular Board
meetings(2)
BAC
meetings(2),(3)
BGCC
meetings(2),(3)
BNC
meetings(2)
BRC
meetings(2),(3)
BRiC
meetings(2),(3)
Special Board
meetings(2)
Number of meetings
10
7
5
4
7
6
2
Chair and Executive Directors
G.R. Stevens AC
C
10/10
4/4
2/2
S.R. Wikramanayake
10/10
2/2
Non-Executive Directors
J.R. Broadbent AC(4)
C
10/10
4/4
7/7
4/4
2/2
P.M. Coffey
C
10/10
5/5
4/4
6/6
2/2
M.A. Hinchliffe
C
10/10
7/7
5/5
4/4
2/2
S.J. Lloyd-Hurwitz(5)
8/8
4/4
3/3
3/3
2/2
R.J. McGrath(6)
C
10/10
5/5
4/4
4/4
6/6
2/2
M. Roche
10/10
7/7
4/4
7/7
6/6
2/2
Former Non-Executive Director
N.M. Wakefield Evans AM(7)
9/9
6/6
2/2
4/4
2/2
2/2
Key
C Committee Chair
Board Audit Committee
Board Governance & Compliance Committee
Board Nominating Committee
Board Remuneration Committee
Board Risk Committee
The Chair of the Board and the CEO receive a standing invitation to all Board Committee meetings and attend as they consider appropriate.
All Board members are sent Board Committee meeting agendas and may attend any meeting.
There was one Board sub-committee convened during the period, with two meetings held. Both meetings were attended by all eligible
sub-committee members, being Mr Stevens, Ms Wikramanayake, Ms Hinchliffe and the Chief Financial Officer (CFO), Mr Harvey.
(2) Number of meetings attended by the member/total number of meetings eligible to attend as a member.
(3) There was one meeting of the relevant committee that was a joint meeting during the year.
(4) Ms Broadbent became a member of the Board Risk Committee on 28 July 2023.
(5) Ms Lloyd-Hurwitz was appointed to the MGL Board as an Independent Voting Director and became a member of the Board Nominating Committee on 1 June 2023 and became a
member of the Board Audit Committee and Board Remuneration Committee on 28 July 2023. She became an Independent Voting Director of the MBL Board, and a member of the
MBL Board Audit Committee and MBL Board Remuneration Committee on 28 July 2023.
(6) Ms McGrath ceased to be a member of the Board Remuneration Committee and became Chair of the Board Governance and Compliance Committee on 28 July 2023.
(7) Ms Wakefield Evans ceased to be Chair and a member of the Board Governance and Compliance Committee, and a member of the Board Risk Committee, on 27 July 2023. She
retired from her role as an Independent Voting Director of the MGL Board on 29 February 2024.
96
Glenn R
Stevens AC
BEc (Hons) (Sydney),
MA (Econ) (UWO)
Resides: New South Wales
Independent Chair of MGL
and MBL since May 2022
Independent Voting Director
of MGL and MBL since
November 2017
Mr Stevens is Chair
of the BNC
Shemara R
Wikramanayake
BCom, LLB (UNSW)
Resides: New South Wales
Managing Director and Chief
Executive Officer of MGL
since December 2018
Executive Voting Director
of MGL and MBL since
August 2018
Experience
Glenn Stevens worked at the highest levels of the Reserve
Bank of Australia (RBA) for 20 years and, as well as developing
Australia’s successful inflation targeting framework for
monetary policy, played a significant role in central banking
internationally. Most recently, he was Governor of the Reserve
Bank of Australia between 2006 and 2016.
Mr Stevens has also made key contributions to a number of
Australian and international boards and committees, including
as chair of the Australian Council of Financial Regulators
between 2006 and 2016, as a member of the Financial Stability
Board and on a range of G20 committees.
Other current directorships/appointments
• Board member, NSW Treasury Corporation
• Director, Anika Foundation
• Director, Lowy Institute
• Deputy Chair, Temora Aviation Museum
Experience
Shemara Wikramanayake has been Macquarie’s
Managing Director and CEO since late 2018.
Shemara joined Macquarie in 1987 in Macquarie Capital in
Sydney. In her time at Macquarie, Shemara has worked in six
countries and across several business lines, establishing and
leading Macquarie’s corporate advisory offices in New Zealand,
Hong Kong and Malaysia, and the infrastructure funds
management business in the US and Canada. Shemara has also
served as Chair of the Macquarie Group Foundation.
As Head of Macquarie Asset Management for 10 years before
her appointment as CEO, Shemara led a team of 1,600 staff in
24 markets. Macquarie Asset Management grew to become a
world-leading manager of infrastructure and real assets and a
top 50 global public securities manager.
Before joining Macquarie, Shemara worked as a corporate
lawyer at Blake Dawson Waldron in Sydney. She holds Bachelor
of Commerce and Bachelor of Laws degrees from UNSW and
completed the Advanced Management Program at Harvard
Business School in 1996.
Other current directorships/appointments
• Founding Member, Glasgow Financial Alliance for Net
Zero (GFANZ)
• Founding Member, Climate Finance Leadership Initiative;
Co-Chair, CFLI India
• Founding Commissioner, Global Commission on Adaptation
• Member, UK Investment Council
• Member, World Bank Private Sector Investment Lab
• Member, Global Investors for Sustainable
Development Alliance
• Member, International Advisory Panel, Monetary Authority
of Singapore
Directors’ experience and special responsibilities
Board independence
88%
of Board members
are independent directors
Gender diversity
Male:
Female:
3
5
Board tenure
0-3 years
6-9 years
Directors
3-6 years
1
5
2
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Jillian R
Broadbent AC
BA (Maths &
Economics) (Sydney)
Resides: New South Wales
Independent Voting Director
of MGL and MBL since
November 2018
Ms Broadbent is Chair of the
BRC and a member of the
BNC and BRiC
Experience
Jillian Broadbent has extensive investment banking industry
knowledge and markets expertise, including a deep knowledge
of risk management and regulation in these areas. She
also has considerable executive management and listed
company board experience. Ms Broadbent spent 22 years at
Bankers Trust Australia until 1998, initially as an economic
strategist and then as executive director responsible for risk
management and derivatives in foreign exchange, interest
rates and commodities.
Ms Broadbent was also a Member of the Reserve Bank of
Australia Board between 1998 and 2013 and has previously
served as Chair of the Board of Clean Energy Finance
Corporation (CEFC), and as a director of ASX Limited, SBS,
Coca Cola Amatil Limited, Woodside Petroleum Limited,
Qantas Airways Limited, Westfield Management Limited,
Woolworths Group Limited and the National Portrait Gallery
of Australia.
Other current directorships/appointments
• Director, Lowy Institute
• Director, National Portrait Gallery Board Foundation
• Director, Seaborn, Broughton & Walford Pty. Limited
• Director, Sydney Dance Company
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Directors’ experience and special responsibilities
Continued
Philip M
Coffey
BEc (Hons) (Adelaide),
GAICD, SF Finsia
Resides: New South Wales
Independent Voting Director
of MGL and MBL since
August 2018
Mr Coffey is Chair of the
BRiC and a member of the
BGCC and BNC
Michelle A
Hinchliffe
BCom (UQ), FCA, ACA
Resides: United Kingdom
Independent Voting Director
of MGL and MBL since
March 2022
Ms Hinchliffe is Chair of the
BAC and a member of the
BGCC and BNC
Experience
Phil Coffey served as the Deputy Chief Executive Officer (CEO)
of Westpac Banking Corporation, from April 2014 until his
retirement in May 2017. As the Deputy CEO, Mr Coffey had
the responsibility for overseeing and supporting relationships
with key stakeholders of Westpac including industry
groups, regulators, customers and government. He was also
responsible for the Group’s Mergers & Acquisitions function.
Prior to this role, Mr Coffey held a number of executive
positions at Westpac including Chief Financial Officer and
Group Executive, Westpac Institutional Bank.
He has successfully led operations based in Australia,
New Zealand, the United States, the United Kingdom and
Asia and has extensive experience in financial markets,
funds management, balance sheet management and risk
management. He began his career at the Reserve Bank of
Australia and has also held executive positions at AIDC Limited
and Citigroup. Mr Coffey previously served as a director of
Clean Energy Finance Corporation.
Listed company directorships (last three years)
• Director, Lendlease Group (Lendlease Corporation
Limited and Lendlease Responsible Entity Limited)
(since January 2017)
Other current directorships/appointments
• Director, Goodstart Early Learning Ltd
Experience
Michelle Hinchliffe has more than 35 years’ professional
experience within the financial services sector in the United
Kingdom and Australia, with extensive experience in leading
large global teams in the provision of external audit, internal
audit and advisory services to clients across financial services.
Michelle was the Global Lead Audit Partner for a number of
global banking institutions as well as the Head of Audit, KPMG
UK from September 2017 to April 2019 and then Chair of
Audit, KPMG UK from May 2019 to September 2021. During
the period from May 2019 to February 2022 she was a board
member of KPMG UK. Prior to this she was the Head of
Financial Services for KPMG Australia, where she was also a
member of the board.
Listed company directorships (last three years)
• Director, BHP Group Limited (since March 2022)
Other current directorships/appointments
• Director, Santander UK plc
• Director, Santander UK Group Holdings plc
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Susan J
Lloyd‑Hurwitz
BA (Hons) (USYD),
MBA (Distinction), INSEAD
Resides: New South Wales
Independent Voting Director
of MGL since June 2023 and
MBL since July 2023
Ms Lloyd-Hurwitz is a
member of the BAC,
BNC and BRC
Rebecca J
McGrath
BTP (Hons) (UNSW), MAppSc
(ProjMgt) (RMIT), FAICD
Resides: Victoria
Independent Voting Director
of MGL and MBL since
January 2021
Ms McGrath is Chair of the
BGCC and a member of the
BNC and BRiC
Experience
Susan Lloyd-Hurwitz has significant expertise in the global
investment and real estate sectors. She served as the CEO
of Mirvac for more than a decade and prior to that was
the Managing Director of Europe for LaSalle Investment
Management.
Susan was the National President for the Property Council of
Australia, a director of the Business Council of Australia, and
Chair of the Green Building Council of Australia.
Listed company directorships (last three years)
• Chief Executive Officer and Managing Director, Mirvac
Group (November 2012–June 2023)
• Director, Rio Tinto Limited (since June 2023)
Other current directorships/appointments
• Director, Rio Tinto plc
• Director, Spacecube Pty Ltd
• Director and President, Chief Executive Women
• Chair, Advisory Board, Gender Equality and
Inclusion @ Work
• Chair, Australian National Housing Supply &
Affordability Council
• Global Board member, INSEAD
• Member, Sydney Opera House Trust
Experience
Rebecca McGrath is an experienced professional company
director and Chair, with substantial international business
experience. She spent 25 years at BP plc where she held
various executive positions, including Chief Financial Officer
Australasia and served as a member of BP’s Executive
Management Board for Australia and New Zealand.
Ms McGrath has served as a director of Goodman Group, CSR
Limited, Big Sky Credit Union and Incitec Pivot Ltd, and as
Chair of Oz Minerals Limited, Scania Australia Pty Limited and
Kilfinan Australia. She is a former member of the JP Morgan
Advisory Council. She has attended executive management
programmes at Harvard Business School, Cambridge
University and MIT in Boston.
Listed company directorships (last three years)
• Chair, OZ Minerals Limited (May 2017–May 2023); Director
(November 2010–May 2023)
• Director, Goodman Group (April 2012–February 2023)
• Director, Djerriwarrh Investments Limited (since
January 2024)
Other current directorships/appointments
• Chair, Investa Commercial Property Fund (ICPF)
• Chair, Investa Office Management Holdings Pty Limited
• Chair, Investa Wholesale Funds Management Limited
• Director, Melbourne Business School Limited
• Member, National Board, Australian Institute of
Company Directors
• Member, The Australian British Chamber of Commerce
• Advisory Council
• Member, ASIC Corporate Governance Consultative Panel
100
Mike
Roche
BSc (UQ), GAICD,
FIA (London), FIAA
Resides: New South Wales
Independent Voting Director
of MGL and MBL since
January 2021
Mr Roche is a member of the
BAC, BNC, BRC and BRiC
Experience
Mike Roche has over 40 years’ experience in the finance sector
as a highly skilled and experienced provider of strategic,
financial, mergers and acquisitions, and capital advice to major
corporate, private equity and government clients. He held
senior positions with AXA Australia as a qualified actuary and
Capel Court/ANZ Capel Court.
Mr Roche spent more than 20 years at Deutsche Bank and
was Head of Mergers and Acquisitions (Australia and New
Zealand) for 10 years where he advised on major takeovers,
acquisitions, privatisations, and divestments.
He stepped down as Deutsche Bank’s Chair of Mergers
and Acquisitions (Australia and New Zealand) in 2016. He
was a member of the Takeovers Panel for two terms from
2008 to 2014.
Listed company directorships (last three years)
• Director, Wesfarmers Limited (since February 2019)
Other current directorships/appointments
• Director, MaxCap Group Pty Ltd
• Director, Te Pahau Management Ltd
• Managing Director, M R Advisory Pty Ltd
• Co-founder and Director, Sally Foundation
Simone Kovacic
BBus LLB (Hons) (UTS), LLM (Sydney), FGIA
Company Secretary since December 2022
Experience
Simone Kovacic is a Division Director of Macquarie, having
joined in 2009. Simone has responsibility for Macquarie’s
company secretarial requirements and provides advice on
governance and certain corporate matters, including aspects
of Macquarie’s employee equity plans. She has over 20 years’
experience as a corporate lawyer with Macquarie and, prior
to Macquarie, worked in private practice at Skadden, Arps,
Slate, Meagher & Flom LLP in the US and Freehills, now
Herbert Smith Freehills.
Olivia Shepherd
BCM (UoW), BCom (UoW), MSc (LSBU), FGIA
Assistant Company Secretary since December 2022
Experience
Olivia Shepherd is a Division Director of Macquarie. Olivia
has company secretarial responsibilities and provides
corporate governance advice. She has over 15 years’ company
secretarial and governance experience with Macquarie and
Investec Bank plc in the UK.
Company secretaries’
qualifications and experience
Directors’ experience and special responsibilities
Continued
101
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102
Executive Committee
Shemara Wikramanayake
Managing Director
Chief Executive Officer of MGL
Chief Executive Officer of MGL since
August 2018
Member of Executive Committee since
1 August 2008
Experience
Shemara joined Macquarie in 1987 in
Macquarie Capital in Sydney. In her time
at Macquarie, Shemara has worked in six
countries and across several business
lines, establishing and leading Macquarie’s
corporate advisory offices in New
Zealand, Hong Kong and Malaysia, and
the infrastructure funds management
business in the US and Canada. Shemara
has also served as Chair of the Macquarie
Group Foundation.
As Head of Macquarie Asset Management
for 10 years before her appointment as
CEO, Shemara led a team of 1,600 staff in
24 markets. Macquarie Asset Management
grew to become a world-leading manager of
infrastructure and real assets and a top 50
global public securities manager. Shemara
sits on the World Bank’s Global Commission
on Adaptation and was a founding CEO
of the United Nations Climate Finance
Leadership Initiative (CFLI). She currently
leads emerging markets workstreams for
CFLI and the Glasgow Financial Alliance for
Net Zero (GFANZ).
Greg Ward
Deputy Managing Director
Head of Banking and Financial Services Group
Member of Executive Committee since
3 March 2005
Experience
Greg has been Head of Banking and
Financial Services Group since July 2013
and Deputy Managing Director of
Macquarie Group Limited since 2011.
Greg joined Macquarie in 1996, the year
the organisation became publicly listed,
and during his tenure has driven the growth
of Macquarie’s retail financial services
business. He has over 30 years’ experience
in finance and financial services.
Chief Financial Officer for 14 years before
being appointed Deputy Managing
Director of Macquarie Group, Greg was
also Chief Executive Officer of the Group’s
banking subsidiary, Macquarie Bank, from
2011 to 2013.
Evie Bruce
Group General Counsel
Head of Legal and Governance Group
Member of Executive Committee since
2 March 2022
Experience
Evie has been the Group General Counsel
and Head of the Legal and Governance
Group since March 2022.
Evie is a lawyer with nearly 30 years’
practice and management experience,
across ANZ, Asia and the US, specialising in
mergers and acquisitions, capital markets,
and the financial services sector.
Prior to joining Macquarie, Evie worked for
King & Wood Mallesons where she led the
law firm’s extensive global engagement
with Macquarie’s businesses for a
number of years.
Evie is a member of Corporations
Committee of the Law Council of Australia,
Law Society of New South Wales, and State
Bar of New York. Evie is also a member
of the Macquarie Group Foundation
Committee.
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Gender diversity
Male:
Female:
7
3
Committee tenure
0-3 years
6-9 years
9+ years
3-6 years
3
1
2
4
Committee members
Andrew Cassidy
Chief Risk Officer
Head of Risk Management Group
Member of Executive Committee since
1 January 2022
Experience
Andrew was appointed Chief Risk Officer
in early 2022.
After joining Macquarie in 2004, Andrew
spent over 15 years working in Macquarie
Capital, across various roles including
leadership of Macquarie’s principal
investment activity in Asia Pacific. He joined
the Risk Management Group in 2019 and
has overseen the continued strengthening
of Macquarie’s risk framework.
Andrew also manages the Internal
Audit function jointly with the Board
Audit Committee.
Stuart Green
Managing Director
Chief Executive Officer of MBL
Chief Executive Officer of MBL
since July 2021
Member of Executive Committee since
1 July 2021
Experience
Stuart has been Managing Director and
CEO of Macquarie Bank Ltd since July 2021.
Stuart joined Macquarie in 2001 and worked
in the Corporate & Asset Finance group,
responsible for originating asset financing
transactions for Macquarie. In 2002,
he assumed responsibility for investor
relations for Macquarie’s listed airport
fund, Macquarie Airports, before moving to
become Global Head of Investor Relations
for Macquarie’s portfolio of listed funds. In
2008, he was appointed Macquarie Group’s
Head of Corporate Communications
and Investor Relations, responsible for
managing Macquarie Group’s relationships
with investors and analysts, government
and media.
Stuart was appointed Group Treasurer in
August 2013, a role he held until July 2021,
when he became Managing Director and
CEO of Macquarie Bank Limited.
Prior to joining Macquarie Group,
Stuart worked in the UK as a Chartered
Accountant in public practice for BDO
Binder, where he obtained his professional
qualifications, and later in a number of
corporate roles as head of finance and
corporate strategy.
From 2010 to 2020, Stuart served on the
Board of the Juvenile Diabetes Research
Foundation where he was Treasurer and
Chair of the Finance & Audit Committee.
104
Alex Harvey
Chief Financial Officer
Head of Financial Management Group
Chair of the Macquarie Group Foundation
Member of Executive Committee since
1 January 2018
Experience
Alex has been Head of Financial
Management Group and the Chief Financial
Officer of Macquarie Group since 2018.
Alex joined Macquarie in 1998 and was the
CEO of Macquarie Group Asia from 2011 to
2014 and Executive Chair of the region until
this year.
Before being appointed CFO, Alex
was the Global Head of the Principal
Transaction Group in Macquarie Capital
and a member of Macquarie Capital’s
Management Committee.
Alex has more than 30 years’ experience
in the financial services industry across
Australia, Asia, Europe and the US.
In January 2022, Alex became Chair of the
Macquarie Group Foundation.
Michael Silverton
Head of Macquarie Capital Group
Member of Executive Committee since
1 June 2019
Experience
Michael is Head of Macquarie Capital,
a position he has held since 2019.
Michael leads a global team that provides
advisory, capital markets, investing,
development and equities capabilities
to clients, with a focus on infrastructure
and real assets; technology, software
and services; and resources, energy
and materials.
Since joining Macquarie Group in 1997,
Michael has built and led businesses across
the globe, with roles in Sydney, London
and Chicago before moving to New York in
2010. Prior to Macquarie Capital, Michael
held positions in Macquarie Group’s
Central Executive Strategy unit and Risk
Management Division. In 2013, he became
Head of Macquarie Capital in the Americas,
adding oversight of Europe and Asia
shortly after.
Nicole Sorbara
Chief Operating Officer
Head of Corporate Operations Group
Member of Executive Committee since
1 January 2013
Experience
Nicole is Head of Corporate Operations
Group and has been Global Chief Operating
Officer since 2013.
Nicole leads a global team across 25
countries covering Digital Transformation
& Data, Technology, Operations, Human
Resources, Business Services, Corporate
Strategy & Solutions, and the Macquarie
Group Foundation.
During her time at Macquarie, she has
worked across various roles in finance,
Macquarie Capital and was previously the
Head of Human Resources.
Nicole is a Chartered Accountant with more
than 30 years’ experience in accounting
and financial services. She joined
Macquarie in 1996.
Nicole is Chair of the Board of PCYC NSW.
Executive Committee
Continued
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Ben Way
Head of Macquarie Asset
Management Group
Member of Executive Committee since
1 April 2021
Experience
Ben has been Head of Macquarie Asset
Management since 2021.
Ben joined Macquarie in 2006 and has
held several senior positions in the Group,
including CEO of Macquarie Group in Asia.
He has more than 20 years’ experience
in asset management across Australia,
Asia, Europe, and the US. Prior to joining
Macquarie, he was Chair and CEO of
Taiwan Broadband Communications and
a management consultant with Bain
& Company.
Ben is a member of the Board of Directors
of Mothers Choice, a Hong Kong charity.
Ben is a Fellow of the 2017 class of the
Finance Leaders Fellowship and a member
of the Aspen Global Leadership Network.
He holds a Bachelor of Law and a Bachelor
of Arts from Macquarie University.
Simon Wright
Head of Commodities and
Global Markets Group
Member of Executive Committee since
1 April 2024
Experience
Simon was appointed Head of Commodities
and Global Markets in February 2024 and is
responsible for its global business offering
capital and financing, risk management,
market access, and physical execution and
logistics solutions across Commodities,
Financial Markets and Asset Finance.
He is also Head of the Financial Markets
division within Commodities and Global
Markets, which provides Fixed Income,
Currencies and Credit Market services to
corporate and institutional listed derivates.
Since joining Macquarie in 1989, Simon
has held a number of senior roles within
Commodities and Global Markets,
while leading the build and oversight of
Macquarie’s global Financial Markets
platform. He was appointed Head of CGM
Australia in 2012.
Simon holds a Bachelor of Economics from
Sydney University.
106
On behalf of the Board, as Chair of the Board
Remuneration Committee (BRC), I am pleased to
present the 2024 Remuneration Report.
Against a backdrop of challenging market conditions during the
2024 financial year (FY2024), Macquarie has continued to deliver
on its strategy. The fundamentals of our businesses remain sound,
as demonstrated by the strength and diversity of the underlying
franchises, strong and conservative balance sheet, proven risk
management framework and our distinct culture.
Macquarie remains well positioned to deliver long-term sustainable
value for shareholders, consistent with our track record. In less
supportive markets, financial results in FY2024 are down from a record
FY2023. Consistent with our established remuneration framework
that rewards performance across a range of financial and non-financial
measures and aligns outcomes for staff with those of our shareholders,
total profit share awarded to staff is substantially down on the
prior year.
Performance and remuneration outcomes
for FY2024
The Board remains focused on ensuring there is a robust and rigorous
process in place to determine remuneration outcomes. Significant
oversight and judgement are applied so that our remuneration
outcomes are aligned with both individual and company-wide financial
and non-financial performance and Macquarie’s ongoing success.
In considering Macquarie’s non-financial performance, the Board
recognises the importance of sound ESG practices as part of their
responsibility to clients, shareholders, employees and the communities
in which Macquarie operates.
Financial performance
Following record financial results in FY2023, Macquarie delivered:
• net profit after tax (NPAT) of $A3,522 million in FY2024 (down 32%
from FY2023)
• return on equity (ROE) of 10.8% (down compared to FY2023’s 16.9%)
• earnings per share (EPS) of 916.6 cents per share (down 32%
compared to FY2023)
• the FY2024 full-year dividend is down 15% compared to FY2023
Consistent with
our established
remuneration
framework that rewards
performance across a
range of financial and
non-financial measures
and aligns outcomes
for staff with those of
our shareholders, total
profit share awarded
to staff is substantially
down on the prior year.”
Letter from the
Chair of the Board
Remuneration Committee
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The total compensation expense is in line with the prior year, impacted
by the higher average number of staff during the year, wage inflation
and unfavourable foreign exchange movements. These factors, as
well as lower overall revenue, led to the significant increase in the
compensation expense to income ratio to 43.1%.
Non-financial performance
In addition to financial performance, the Board’s determination of
remuneration outcomes for FY2024 for the CEO and other Executive
KMP reflects the following non-financial factors which the Board sees
as essential drivers of long-term sustainable growth:
• the strong leadership of the Executive Committee, led by the CEO,
to effectively role model our purpose and principles and to embed a
strong risk culture
• Executive Committee collaboration to solve challenges and
maximise opportunities across Operating and Central
Service Groups
• the continued evolution of our businesses to remain well positioned
to deliver long-term sustainable value, including alignment
with areas of structural growth globally (e.g. energy transition,
infrastructure for digital and demographic shifts)
• the continued focus on non-financial risks, including in areas such
as climate, sustainability and technology, while also uplifting our
risk management frameworks across trading, technology, cyber
and data. While there were no systemic risk issues identified during
the year, a legacy risk matter in MAM was taken into account in
determining the MGL CEO’s remuneration
• a focus on streamlining investment programs and driving greater
returns on investment, following a period of significant investment
in our platform
• investment in renewable energy solutions at scale, supporting the
next wave of climate technologies
• maintaining strong engagement and focus on meeting regulator
expectations including progress against the remediation program
with APRA to ensure there is appropriate focus on Macquarie Bank
Limited (MBL)
• the refresh of our global employee value proposition to evolve in line
with shifts in talent expectations and ensure we accurately reflect
the career experience and distinct culture that Macquarie offers.
In addition to assessing the performance of the CEO and other
Executive KMP, the BRC is also very aware of competitive market
pressures when determining remuneration outcomes. The attraction
and retention of high-performing, diverse talent, with deep industry
expertise, is a key element of Macquarie’s strategy. Macquarie’s
remuneration framework plays an important role in achieving this.
As part of determining remuneration outcomes, the BRC considers
relativities in the global markets in which each business competes
for talent, including in industries that are not publicly listed with
undisclosed remuneration outcomes.
Remuneration outcomes
The Board and the BRC have given careful consideration to both
financial and non-financial factors, and we believe the following
outcomes for the year are appropriate:
• MGL CEO awarded profit share has decreased 26% on the prior year
to $A23.75 million, which reflects the decrease in financial results
while considering her strong leadership and ongoing commitment to
fostering a positive culture
• MBL CEO awarded profit share of $A3.75 million, reflecting efforts to
uplift the role of the MBL CEO
• total comparable Executive KMP awarded profit share of
$A80.20 million (down 15% on the prior year)(1)
(1) Comparable Executive KMP are KMP who are members of the Executive Committee for the full year in both FY2024 and FY2023.
• Performance Share Unit (PSU) allocations of $A4.0 million for the
MGL CEO and $A2.8 million for each Executive KMP, in line with the
prior year.
Changes to the remuneration framework
Changes to our remuneration framework, including those previously
announced in the 2022 and 2023 Remuneration Reports, have been
implemented for FY2024 to meet the requirements of APRA Prudential
Standard CPS 511 Remuneration (CPS 511). These changes are
referenced throughout the relevant sections of this report and include:
• fixed remuneration increases, effective 1 April 2023, the first
since 2010, other than adjustments made at the time of a new
appointment to the Executive Committee
• a reduction in retention rates and vesting periods (to reflect that
awards from FY2024 will no longer be accelerated over two years in
the case of retirement or redundancy and will instead vest on their
original vesting schedule).
These changes are reflected in the awarded pay outcomes for Executive
KMP set out on pages 130-139.
We engaged with APRA during the year in regard to our implementation
of CPS 511 and remain committed to ensuring our remuneration
framework complies with and considers the spirit and intent of CPS 511
and remains fit for purpose.
Culture, accountability and remuneration
Our approach to remuneration plays an important role in promoting
Macquarie’s culture. Our framework supports our purpose by
motivating staff to be innovative and build businesses but also be
accountable for their decisions, behaviours and associated risk
management, customer, economic and reputational consequences.
Our purpose and core principles of Opportunity, Accountability and
Integrity remain pivotal to our culture and effectively guide our staff
in balancing risk and reward when making decisions that realise
opportunities for the benefit of our clients, our shareholders, our
people and the communities in which we operate. The Board recognises
the importance of continually assessing Macquarie’s culture formally
through surveys and Board reporting and informally through direct
interactions with staff.
Risk management is a fundamental part of everyone’s role at
Macquarie. Staff understand that they are rewarded for their
performance, including the identification and management of risk,
and that there are consequences for non-compliance with Macquarie’s
behavioural expectations.
In FY2024, there were 131 (FY2023: 129) matters involving conduct or
policy breaches that resulted in formal consequences. Consistent with
prior years, further details regarding these matters are disclosed on
page 122.
The BRC assessed and determined that there were no instances that
required the application of malus or clawback during the year.
I look forward to receiving your views and support at the 2024 Annual
General Meeting.
Jillian Broadbent AC
Chair
Board Remuneration Committee
Sydney
3 May 2024
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Remuneration framework
This section explains the link between our purpose, our remuneration objectives and principles, and how these are reflected in the
remuneration framework.
Our purpose statement, ‘Empowering people to innovate and invest
for a better future,’ articulates why Macquarie exists and what we
do. It supports our What We Stand For principles of Opportunity,
Accountability and Integrity, which express how we do business. Our
longstanding and consistent approach to remuneration continues
to support this purpose and aligns with our What We Stand
For principles.
Our remuneration framework has been a key driver of our
sustained success as an international organisation. Staff are
motivated to grow businesses over the medium to long-term,
taking accountability for all decisions and their accompanying risk
management, customer, economic and reputational outcomes.
Their interests are aligned with shareholders to meet the needs of
clients and customers, while ensuring that the spirit and intent of
regulatory requirements are upheld.
This framework has been fundamental in ensuring we can continue
to attract, motivate and retain exceptional and entrepreneurial
people with deep industry expertise across the 34 markets in which
we operate. These people come from organisations that broadly
operate in the same markets and compete for the same people
as Macquarie in various industry sectors (including hedge funds,
private equity firms, global investment banks, fund managers,
advisory boutiques, commodity houses and other banks, as well
as industries that are not specific to banking or financial services,
for example, technology, accounting, and engineering) across
many jurisdictions.
This broad approach has been in place since Macquarie’s inception
and is reviewed regularly to ensure the framework continues to
meet our remuneration objectives and aligns with our remuneration
principles and the expectations of our stakeholders.
The table below shows the link between our purpose, What We Stand For principles and our remuneration objectives and principles.
Our purpose:
Empowering people to innovate and invest for a better future
Opportunity
Accountability
Integrity
Remuneration objectives
Remuneration principles
Macquarie’s remuneration framework is designed to:
• attract, motivate and retain exceptional people with deep
industry expertise
• deliver strong company performance over the short and
long-term whilst prudently managing risk
• promote effective management of financial and non-financial
risks, and Macquarie’s long-term soundness
• align the interests of staff and shareholders to deliver
sustained results for our customers, clients and community
• promote innovation and the building of sustainable businesses
• drive behaviours that reflect Macquarie’s culture and the
principles of What We Stand For and support the prevention
and mitigation of conduct risk
• foster a diverse, equitable and inclusive work environment.
These objectives are achieved by:
• emphasising performance-based remuneration
• determining an individual’s variable remuneration based on a
range of financial and non-financial factors
• having the ability to adjust performance-based remuneration
to reflect risk outcomes, where appropriate
• retaining a significant proportion of performance-based
remuneration to enable risk outcomes to be considered over a
longer period
• delivering retained profit share in equity to ensure the
interests of staff and shareholders are aligned over
the long-term
• remunerating high-performing staff appropriately, relative to
global peers
• providing consistent arrangements over time to give staff the
confidence to pursue multi-year initiatives.
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Remuneration Report
Continued
Remuneration framework for FY2024
The remuneration framework operates as an integrated whole. An individual’s remuneration comprises fixed remuneration, profit share and,
for Executive Committee members (our Executive KMP), Performance Share Units (PSUs).
The table below and diagram opposite summarise the framework for FY2024.
FY2024 remuneration framework
Fixed remuneration
• primarily comprises base salary, as well as superannuation contributions and standard country-specific benefits in line with local
market practice
• for Executive KMP, is set at a comparatively low level, relative to the industry, and is a low proportion of total remuneration but
sufficient to avoid inappropriate risk-taking
• is reviewed annually and reflects technical and functional expertise, role scope, market practice and regulatory requirements
• for risk and financial control staff, is generally a higher proportion of total remuneration than for revenue-generating staff.
Performance-based remuneration
Criteria
Profit share
Performance Share Units
Eligibility
• all permanent employees
• Executive Committee members
Determination
• allocations reflect an individual’s performance,
which is assessed against a range of financial and
non-financial factors including:
– financial/business results
– risk management and compliance
– business leadership including outcomes for
customers and the community
– people leadership and professional conduct
• individual allocations reflect their role as members
of the Executive Committee and their contribution
to driving the collective performance of Macquarie
• allocations are based on the face value of shares
on the grant date
• allocations are subject to Board discretion
Structure
• significant proportion is retained (70% for the
CEO, 60% for the MBL CEO and 50% for other
Executive KMP)
• long deferral periods (three to five years for
the CEO and other Executive KMP)
• retained profit share is invested in a combination
of Macquarie equity and Macquarie-managed
fund equity
• PSUs are structured as Deferred Share Units (DSUs)
with no exercise price(2)
• PSUs vest after five years for the CEO and MBL
CEO and four years for other Executive KMP,
subject to the achievement of two performance
hurdles (no retesting of hurdles) and, new from
FY2024, a pre-vest assessment (see page 117)
• PSU holders have no right to dividend
equivalent payments
Malus
and Clawback
• malus applies to all awards
• clawback applies to all Executive KMP and certain
employees identified under CPS 511 or UK and
European remuneration regulations
• malus and clawback apply to all awards
Forfeiture
• retained profit share is subject to forfeiture upon
leaving Macquarie except in certain circumstances
• unvested PSUs are subject to forfeiture upon
leaving Macquarie except in certain circumstances
(2) A DSU is a Deferred Share Unit and is an award type under the Macquarie Group Employee Retained Equity Plan (MEREP). For further details, refer to Note 32 Employee equity
participation to the financial statements in the Financial Report.
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The diagram below illustrates the long time horizons over which performance-based remuneration for Executive KMP is determined,
delivered and subject to risk adjustments.
For the CEO and MBL CEO
Financial Year
+ 1
+ 2
+ 3
+ 4
+ 5
+ 6
+ 7
Profit
Share
Available
CEO: 30%
MBL CEO: 40%
Retained (equity)
CEO: 70%
MBL CEO: 60%
One-third released
One-third released
One-third released
PSUs
PSU allocation
Hurdles tested after four years
PSUs released
subject to
pre-vest
assessment
For other Executive KMP
Financial Year
+ 1
+ 2
+ 3
+ 4
+ 5
+ 6
+ 7
Profit
Share
Available
50%
Retained (equity)
50%
One-third released
One-third released
One-third released
PSUs
PSU allocation
Hurdles tested after four years,
PSUs released subject to
pre-vest assessment
Key
Payment or vesting (shortly after the end of the relevant year)
Period subject to malus
Period subject to clawback
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Continued
Profit share
This section describes the way in which profit share is determined, structured and delivered.
Annual process to determine profit share outcomes
Profit share allocations are determined through a principles-based approach, which considers individual, business group and company-wide
performance. At all levels, profit share determinations take into account risk management, compliance and conduct.
Individual profit share allocations
Individual profit share allocations reflect an employee’s performance against their objectives, which are formally assessed annually. At the
beginning of the performance cycle, employees set performance objectives based on four factors (three non-financial and one financial),
as relevant to their role. At the end of the year, permanent employees are required to have a formal Year in Review conversation with their
manager. The Year in Review comprises two core components:
• What was achieved over the past 12 months, measured against their objectives under the four factors
• How the objectives were achieved, measured against Macquarie’s cultural/behavioural standards.
The below table outlines the areas considered under each factor when assessing performance and determining remuneration outcomes.
Areas considered
Financial/
business results
• for revenue-generating staff, based on individual contribution to business profitability (including consideration
of capital and risk-adjusted returns)
• for risk and financial control staff, primarily based on delivery of or contribution to high quality risk and control
functions, services and outcomes
• for other Central Service Group staff, delivery of or contribution to high quality services to support
the businesses
• for all staff, the management of costs and investment in people and technology to ensure the ongoing
robustness of the risk management framework.
Risk management
and compliance
• demonstrating and applying a strong understanding of relevant regulatory obligations
• the identification, escalation, ownership and successful management of financial and non-financial risks
• motivating a culture of disciplined risk management, and regulatory, policy and business compliance
• fostering an environment where staff feel comfortable to admit mistakes and raise issues or concerns.
Business leadership
• focuses on sustainable business growth and innovation by prioritising long-term and scalable solutions over
tactical fixes
• delivering appropriate solutions and services to our customers and the communities in which we operate
• maintaining and leveraging relationships with external and internal stakeholders (includes regulators,
customers, clients, communities and suppliers)
• seeking out and valuing collaboration and diverse perspectives (internally and externally), including
collaborating with others to solve issues and challenges across Operating and Central Service Groups.
People leadership
and professional
conduct
• upholding Macquarie’s What We Stand For values and complying with all operational requirements, regulatory
obligations, relevant laws, policies and procedures, including the Code of Conduct
• promoting institutional knowledge-sharing, talent development and succession planning
• fostering a diverse, equitable and inclusive work environment, including alignment with Macquarie’s
DEI strategy
• for all people managers, performance against a people management objective aligned to our purpose
and culture.
Three of these four factors are non-financial, with considerations given to each in varying proportions to reflect an individual’s role and
responsibilities. Individual profit share allocations also consider relativities in the markets in which each business competes for talent.
When determining individual profit share allocations, consideration is given to any matters raised in the independent reports provided to the
BRC by the Chief Risk Officer (CRO) and the Head of Internal Audit, or matters raised through the consequence management process, which
may result in downward adjustments to profit share allocations for relevant individuals (see page 122). Significant judgement is applied in
determining remuneration outcomes to ensure all factors that may potentially impact the quantum of profit share allocations are considered.
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Profit share pools
The initial business group profit share pools are determined through a combination of a top-down and bottom-up approach. The
company-wide profit share pool is an aggregate of the assessments conducted at both the business group and individual level.
The profit share pools reflect consideration of the factors below:
Operating/Central Service Group level
Financial performance
For Operating Groups:
• contribution to
company-wide profits
• returns on economic and
regulatory capital
• funding requirements
and usage.
For Central Service Groups,
based on the quality and
integrity of control functions
and support services and not
primarily determined with
reference to profitability.
Risk management
• risk profile of the business
(e.g. capital usage)
• extent and nature of financial
and non-financial risks
including any significant
reputational, cultural or
compliance matters
• regulatory environment
and regulatory risk
considerations.
Business-specific
considerations
• innovation, new business
development (including
acquisitions) and maturity of
the business
• reliance on intellectual versus
financial capital
• customer, client and
community outcomes
• impact of one-time
gains/losses.
Market position and trends
• overall remuneration levels
in the market in which each
business operates
• staff retention
considerations.
Macquarie Group/Macquarie Bank level
Additional considerations at a Macquarie Group and Macquarie Bank level include:
• profitability, including the balance of profit distribution between employees and shareholders
• capital metrics (including prudential ratios) and liquidity considerations
• impact of the profit share pool on Macquarie’s capital position and the ability to strengthen its capital base, as confirmed by the Chief
Financial Officer (CFO)
• reasonableness of the resultant estimated compensation expense to income ratio and how it compares to that of external comparators
• regulatory considerations, including any company-wide risk and conduct matters
• factors that impact the macro environment in which Macquarie operates, including those that may affect its ability to attract and
retain high-performing staff
• CRO and Head of Internal Audit confirmation as to whether there have been any matters of systemic concern during the year.
The Board retains discretion to amend the profit share pool as determined in accordance with the above process to ensure all relevant
factors, including risk and conduct matters, have been appropriately taken into consideration.
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Continued
Retained profit share: retention and vesting
A percentage of each individual’s annual profit share allocation is retained (retained profit share) above certain thresholds. While they
are employed, an individual’s retained profit share vests and is released over a period that reflects the scope and nature of their role and
responsibilities.(3) These arrangements ensure that Macquarie continues to retain high-performing staff, provide significant long-term
alignment to shareholders and customers, as well as enable risk outcomes to be considered over a longer period.
Retention and vesting arrangements are determined by the BRC according to prevailing market conditions, remuneration trends, and
regulatory requirements (including CPS 511, the Banking Executive Accountability Regime (BEAR) and the Financial Accountability Regime
(FAR)). For each year’s allocation, once the vesting period has been determined it remains fixed for that allocation.
As previously announced, there have been changes to the retention rates and vesting periods for certain senior employees (including the CEO,
Executive KMP and other roles specified under CPS 511) for profit share allocations made in respect of FY2024 onwards.
The table below summarises the standard retention and vesting arrangements applicable for FY2024. These vesting periods do not include
the performance year but begin following the date remuneration is awarded.
Standard profit share retention and vesting arrangements for FY2024
Role
Profit share retention (%)
Vesting and release of profit share
CEO
70
One-third in each of years 3–5
MBL CEO
60
Executive Committee members
50
Other Executive Directors(4),(5)
40
Staff other than Executive Directors(5),(6)
25–40
One-third in each of years 2–4
The Board’s discretion to change remuneration arrangements, as noted above, includes changes to profit share retention levels provided that
at least 30% of profit share is retained for all Executive Directors.
(3) Profit share that is not retained (available profit share) is delivered in cash except for certain staff subject to requirements under UK or European remuneration regulations, where
50% of available profit share is delivered in Macquarie equity and is subject to either a 6-month or 12-month hold period, as applicable.
(4) Other Executive Directors include staff other than the CEO and Executive KMP who are specified under CPS 511 as Senior Managers or Material Risk Takers.
(5) For certain staff subject to UK or European remuneration regulations, up to 60% may be retained. Retained profit share invested in Macquarie equity may be subject to a further
6-month or 12-month hold post the vesting period.
(6) Above certain monetary thresholds.
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Investment of retained profit share
An individual’s retained profit share is invested in a combination of MGL ordinary shares under the Macquarie Group Employee Retained
Equity Plan (MEREP) and Macquarie-managed fund equity notionally invested under the Directors’ Profit Share (DPS) Plan.(7) The allocation
reflects the nature of their role and responsibilities as set out in the table below.
Standard investment of retained profit share for FY2024
Retained profit share investment
Role
MEREP
(MGL ordinary shares) %
DPS Plan
(Macquarie-managed fund equity) %
CEO and MBL CEO
90
10
Executive Committee members
80–90
10–20
Executive Committee members with funds responsibilities
50
50
Other Executive Directors(8)
80–100
0–20
Other Executive Directors with funds responsibilities(9)
25
75
Staff other than Executive Directors(10)
100
0
In addition to the arrangements set out in the tables above, different arrangements may apply in certain circumstances:
• retention rates and vesting and release schedules may vary for certain groups of staff who have become employees as a result of
an acquisition, or for staff in certain jurisdictions, for example in the UK or European Union (EU), to ensure compliance with local
regulatory requirements
• in limited circumstances, and only with the approval of the BRC, retained profit share may be allocated under arrangements other than
the MEREP or the DPS Plan. For example, this may include investment in funds or products of a specific business group where there is a
need to directly align the interests of staff with those of their clients.
Forfeiture – malus and clawback
The Board has the ability to reduce or eliminate unvested retained profit share in certain circumstances (malus). In FY2024, the population
subject to malus was expanded to include all staff (previously malus applied to senior employees). For certain employees identified under CPS
511 or UK and European remuneration regulations, the Board also has the ability to recover (in whole or in part) vested profit share in certain
circumstances (clawback). For more details on Macquarie’s malus and clawback framework, see page 121.
Vesting and release of retained profit share upon departure from Macquarie
The standard policy is that staff who cease employment with Macquarie will forfeit their unvested retained profit share. The Board may
exercise discretion for the vesting and release of a departing employee’s retained profit share after their employment has ended including,
for example, in the case of retirement from Macquarie, redundancy, death, serious incapacitation, disability, or serious ill health. Where such
discretion is exercised, the release of any profit share may be subject to malus and/or clawback, as applicable, and the Board may impose
such other conditions as it considers appropriate. For Executive Directors, the Board’s discretion for the vesting and release of retained profit
share under these circumstances is subject to the conditions of release as set out below.
Discretion may be exercised in certain other limited exceptional circumstances on the grounds of business efficacy, in relation to strategic
business objectives, including in connection with the divestment or internalisation of Macquarie businesses, or when an employee resigns to
fulfil a public service role in a governmental organisation or agency. This year, such discretion has been exercised and retained profit share
was approved to be released for eight executives due to their transition during FY2024 to employment, engagement or appointment, with or
for an asset or a portfolio company of a Macquarie-managed fund or an operationally segregated subsidiary.
(7) Both the MEREP and DPS Plan are fundamental tools in Macquarie’s retention, alignment and risk management strategies, encompassing both long-term retention arrangements
and equity holding requirements. The MEREP has a flexible plan structure that offers different types of equity grants depending on the jurisdiction in which the participating
employees are based. In most cases, the equity grants are in the form of units comprising a beneficial interest in MGL ordinary shares held in a trust for the staff member
(Restricted Share Units or RSUs). For further details on the MEREP, refer to Note 32 Employee equity participation to the financial statements in the Financial Report. The DPS
Plan comprises exposure to a notional portfolio of Macquarie-managed funds. Retained amounts are notionally invested over the retention period. This investment is described as
‘notional’ because Executive Directors do not directly hold securities in relation to this investment.
(8) For certain Executive Directors subject to UK or European remuneration regulations, retained profit share is invested 60% in Macquarie equity and 40% in the DPS Plan.
(9) For certain Executive Directors with funds responsibilities subject to UK or European remuneration regulations, retained profit share is invested 50% in Macquarie equity and 50% in
the DPS Plan.
(10) For staff other than Executive Directors, retained profit share is generally 100% invested in Macquarie equity with the exception of those staff with funds responsibilities where
retained profit share is invested in a combination of Macquarie equity and Macquarie-managed fund equity.
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Conditions of release to departing Executive Directors – Post Employment Events
Where discretion has been exercised for the vesting and release of retained profit share to a departing Executive Director, the Board may
reduce or eliminate their retained profit share if it is determined that, at any time during their employment or the relevant release periods
after their employment, a Malus Event has occurred (as set out on page 121) or they have:
(a) taken staff to a competitor of Macquarie or been instrumental in causing staff to go to a competitor, or
(b) joined a competitor of Macquarie or otherwise participated in a business that competes with Macquarie.
Each of the above is a Post Employment Event.
For retained profit share awarded in respect of FY2023 and subsequent years, where the release relates to relevant circumstances other
than death or serious disability, the release will occur over the period from 12 months to 24 months after the Executive Director leaves, in
accordance with the table below.(11),(12)
For profit share allocations made to Executive KMP and other Executive Directors specified in CPS 511 (including those in risk and financial
control functions) in respect of FY2024 onwards, the release of unvested retained profit share will be kept in line with its original vesting
schedule (where it relates to relevant circumstances other than death or serious disability). This may result in final vesting being up to five
years from the end of employment. There is no change in the timeframe for application of the Post Employment Events set out below.
First Period
Second Period
Time post-departure
12 months
12 months to 24 months
Unvested retained
profit share released
From all but the last 24 months of employment
From the last 24 months of employment
Subject to malus
No Malus Event during employment or the First Period
No Malus Event during employment, the First Period or the
Second Period
Subject to Post
Employment Events
No Post Employment Event during employment or
during the period expiring 6 months following the end of
employment, and
No Post Employment Event during employment or
during the period expiring 6 months following the end of
employment, and
No Post Employment Event (a) during the period from 6
months to 12 months following the end of employment
No Post Employment Event (a) during the period from 6
months to 12 months following the end of employment
Where the release is by
reason of retirement
from Macquarie
As above and in addition, the release is subject to no Post
Employment Event (b) during the First Period
As above and in addition, the release is subject to no Post
Employment Event (b) during the First or Second Period
In addition to the above, for Accountable Persons under the FAR (Accountable Persons), the exercise of discretion for any release of retained
profit share following the end of employment will be subject to minimum deferral periods. Where an Executive Director has a tax liability
on termination of employment in respect of any unvested retained profit share, the Board has discretion to release unvested retained
profit share up to an amount equal to the Executive Director’s tax liability at an earlier time than noted above subject to any legal or
regulatory requirements.
(11) In the case of death or serious incapacitation, the Board will typically accelerate the vesting of retained profit share and immediately release it.
(12) Awards in respect of FY2022 and earlier will remain subject to their original conditions of release to a departing Executive Director, as previously disclosed.
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Performance Share Units
This section describes the way in which PSUs are determined, structured and delivered.
Allocation and structure
Executive Committee members are the only staff eligible to receive PSUs, which are determined with reference to Macquarie’s performance
as a whole. As such they provide an additional incentive to Executive Committee members to drive company-wide performance over the
long-term and beyond their Operating and Central Service Group responsibilities. PSU awards are a meaningful incentive but are generally not
the major element of an Executive Committee member’s total remuneration.
As previously announced, for awards in respect of FY2024 onwards, the vesting period for PSUs granted to the CEO and the MBL CEO has
been extended by a year, to five years. In addition, prior to the vesting of PSUs, the Board will conduct a pre-vest assessment of the Executive
Committee’s collective performance over the vesting period. The table below summarises the approach to PSU allocations in respect
of FY2024.
1. Pre-grant period (Financial Year (FY))
• Individual PSU allocations are based on performance over the financial year prior to grant (taking into consideration both financial and
non-financial factors). Considerations include their role as members of the Executive Committee and their contribution to driving
the collective performance of Macquarie, including their collaboration across businesses, progress on company-wide programs and
maintaining Macquarie’s risk culture.
• The face value of PSUs awarded to each Executive Committee member is approved by the Board as part of the annual remuneration
review process. Shareholder approval is also sought at MGL’s Annual General Meeting (AGM) to allocate PSU awards to the MGL CEO,
who is an Executive Voting Director.
• PSUs are granted in August each year, after MGL’s AGM, in respect of the previous financial year. The number of PSUs allocated is
calculated by dividing the face value of the award by the price of MGL ordinary shares on or around the date of grant.
• PSUs are structured as DSUs with no exercise price. Holders have no right to dividend equivalent payments.
2. Performance period (FY+1 to FY+4)
• PSUs will only become exercisable to the extent that two equally weighted ROE and EPS performance hurdles are achieved over a
four-year performance period. Details of, and the rationale for, the ROE and EPS hurdles are set out below.
• The ROE and EPS performance hurdles attached to PSUs are tested at the end of the performance period and the results are reported
to the BRC.
3. Additional vesting period (FY+5)
• For the CEO and the MBL CEO, an additional one-year period applies before PSUs may vest following the end of the four-year
performance period.
• For other Executive KMP, PSUs may vest on 1 July following the end of the four-year performance period.
4. Pre-vest assessment (At end of vesting period)
• Prior to vesting of PSU awards, the Board will conduct a holistic assessment of the Executive Committee’s collective contribution to
driving the performance of Macquarie over the vesting period, based on the extent to which the Executive Committee has:
– promoted behaviour that is consistent with and reflects Macquarie’s risk culture, Code of Conduct and the principles of
What We Stand For
– overseen the effectiveness of Macquarie’s risk management framework, regulatory compliance, policies and practices in managing
key financial and non-financial risks, and
– overseen funding, liquidity and capital management to ensure Macquarie’s financial soundness.
• Where the Board forms a negative overall assessment of the relevant Executive Committee’s collective performance, it will consider
whether an adjustment is appropriate, taking into account any mitigating and aggravating factors.
• To assist the Board with their determination of an adjustment to the PSU vesting outcome, and to ensure that the determination
encompasses all relevant considerations, the BRC will receive regular reporting over the vesting period.
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Performance hurdles
PSUs will only become exercisable to the extent that the following performance hurdles are achieved:
EPS CAGR hurdle
ROE hurdle
Application
50% of PSU award
50% of PSU award
Performance
measure
Compound annual growth rate (CAGR) in EPS over the
four-year performance period
Relative average annual ROE over the four-year
performance period compared to a reference group of
international financial institutions.
The reference group comprises Bank of America
Corporation, Barclays PLC, Citigroup Inc.,
Deutsche Bank AG, Goldman Sachs Group Inc.,
JP Morgan Chase & Co., Lazard Ltd, Morgan Stanley and
UBS AG.(13),(14)
Hurdle
Sliding scale applies:
• 50% becoming exercisable at EPS CAGR of 7.5%
• 100% at EPS CAGR of 12%
For example, if EPS CAGR was 9.75%, 75% of the
relevant awards would become exercisable
Sliding scale applies:
• 50% becoming exercisable above the 50th percentile
• 100% at the 75th percentile
For example, if ROE achievement was at the 60th
percentile, 70% of the relevant awards would become
exercisable
Rationale for hurdles
(13) Company comparator information is presented in the same order throughout the Remuneration Report
(14) For unvested PSU awards made prior to FY2023, the reference group included Bank of America Corporation, Barclays PLC, Credit Suisse, Deutsche Bank AG, Goldman Sachs Inc.,
JP Morgan Chase & Co., Lazard Ltd, Morgan Stanley and UBS AG.
The PSU hurdles are periodically reviewed by the BRC to ensure
they continue to align the interests of staff and shareholders
and provide a challenging but meaningful incentive to Executive
Committee members. The BRC’s review includes consideration
of the most relevant performance metrics to be used as hurdles
as well as the levels at which the hurdles are achieved. The
international reference group used for the ROE hurdle is also
reviewed to determine whether our comparators remain suitable for
Macquarie’s diversified business interests and global footprint. The
BRC also considers historical and forecast market data, the views of
corporate governance groups, shareholders and regulators, as well
as market practice.
In the FY2024 annual review, both the absolute EPS and relative
ROE hurdles were considered to still be appropriate for the
following reasons:
• EPS and ROE growth drive long-term shareholder value and are
appropriate as the Executive Committee can affect outcomes
on both measures. In contrast, Total Shareholder Return (TSR) is
influenced by many external factors over which executives have
limited control
• EPS and ROE can be substantiated using information that is
disclosed in Macquarie’s annual reports
• a sliding scale diversifies the risk of not achieving the hurdles and
provides rewards proportionate to performance for shareholders
and is preferable to an all-or-nothing test, which some have
argued could promote excessive risk-taking
• the hurdles are designed to reward sustained strong
performance and are relatively well-insulated from
short-term fluctuations
• the EPS targets are confirmed as rigorous when market
performance is considered, with the EPS threshold hurdle
exceeding the performance of most of the ASX20, the
international reference group and relevant indices over time
• for the EPS element to fully vest, Macquarie needs to achieve at
least 12% CAGR over the vesting period. Supporting the rigour
of the hurdle, cumulative EPS growth of 57% over four years is
required to achieve full vesting
• the ROE vesting thresholds and sliding scale are in line with
the domestic market and are particularly challenging when
compared to international practice.
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The charts below display Macquarie’s historical EPS and ROE PSU outcomes, highlighting that since their introduction in 2009, 48% of the EPS
tranches and 56% of the ROE tranches have resulted in full vesting.
Historical EPS tranche outcomes
Historical ROE tranche outcomes
Full vesting
48%
No vesting
44%
8%
Partial
vesting
No vesting
Full vesting
56%
16%
28%
Partial
vesting
(15) Headcount includes staff employed in certain operationally segregated subsidiaries (OSS).
Use of an international reference group
The BRC has given careful consideration to the appropriate
reference group to use for the relative ROE measure, recognising
that Macquarie’s combination of business activities, size and
global footprint means that there are few direct comparators.
The BRC’s view is that simplistic comparator groups based on a
company’s country of listing, broad industry categorisation and/or
market capitalisation do not accurately reflect the businesses and
competitive markets for talent in which we operate.
When assessing and determining the appropriate reference group,
the BRC considers the overall size of the reference group, the
degree of internationalisation (including the degree to which they
compete for shareholder capital, clients and talent in each market),
each comparator’s overlap with Macquarie’s revenue mix and
the resulting business mix when considered in aggregate. Taking
into account these factors, the BRC has selected an international
reference group that recognises the extent of Macquarie’s
diversification and internationalisation.
The BRC is mindful that some of Macquarie’s businesses compete
with other types of financial institutions, including asset managers,
retail banks, hedge funds and commodity trading houses. However,
given differences in business mix, regulatory environment, or
the unavailability of public financial information, it does not
consider these institutions appropriate for inclusion in the PSU
reference group.
The BRC considers the international reference group to be
appropriate on the basis that:
• total international income represented approximately
66% of Macquarie’s total income as at 31 March 2024,
with approximately 51% of Macquarie’s staff located
outside Australia(15)
• the international reference group is currently most
representative of Macquarie’s business operations and talent
pool. These firms broadly operate in the same markets and in
similar business segments and compete for the same people
as Macquarie
• the international reference group members share broadly
comparable risk, compliance and regulatory profiles
• Macquarie has no directly comparable Australian-listed peers.
While the BRC considers it important not to intervene reactively to
remove under-performers or over-performers in order to provide
relative stability and transparency across market cycles, it reviews
and adapts the reference group as companies, markets and other
situations evolve.
Risk adjustment, malus and clawback
The Board may determine that a downward adjustment to PSU
allocations prior to grant may be appropriate, including a collective
adjustment where there has been an adverse outcome for MGL,
MBL or their stakeholders. Risk considerations also form part of the
pre-vest assessment, as set out above.
In addition, Macquarie’s malus and (from FY2024) clawback
provisions apply to all PSUs granted, as set out on page 121.
Departure from Macquarie or change in control
The standard policy is that unvested PSUs will be forfeited upon
termination of employment. In the case of retirement from
Macquarie, redundancy, death, serious incapacitation, disability,
serious ill-health or other limited exceptional circumstances, the
Board or the BRC has the ability to accelerate the vesting of PSUs
(to the extent permitted by law or regulation, for example in the
case of death or serious incapacitation) or to take other action,
for example to permit the PSUs to continue to vest in accordance
with the original award schedule and remain subject to the same
performance hurdles.
Should a change of control occur, the Board or the BRC has
discretion to determine how unvested PSUs should be treated,
having regard to factors such as the length of time elapsed in the
performance and vesting periods, the level of performance to date,
the circumstances of the change in control and any relevant legal or
regulatory requirements.
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Continued
Culture, accountability and remuneration
This section describes how risk and conduct are considered throughout Macquarie’s remuneration approach.
Risk culture
Our purpose of ‘Empowering people to innovate and invest for a
better future’ and What We Stand For principles of Opportunity,
Accountability and Integrity remain pivotal to our culture. Our
purpose and principles effectively guide our staff in balancing risk
and reward and making decisions that realise opportunity for the
benefit of our clients, shareholders, partners, and the communities
in which we operate. Staff are continually made aware that these
principles must form the basis of all behaviours and actions. These
behavioural expectations are outlined in the Board approved
Code of Conduct, which is actively promoted by management and
cascaded through the organisation through multiple mechanisms.
We invest significant time and effort in communicating and
reinforcing our culture through communications from senior
management, policy reminders, training, and learning and
development activities. The Board is able to assess Macquarie’s
culture in a number of ways including through staff survey results,
human capital reporting, strategy presentations, risk culture
reports, consequence management reports as well as through
personal observation of management, and staff behaviour
and actions.
Prudent risk management is a fundamental part of everyone’s role
at Macquarie. Staff understand they are rewarded not just for their
contribution to financial results, but also for how those results are
achieved. This includes an assessment of an individual’s approach
to managing risk, and adherence with the What We Stand For
principles. Staff are aware of the consequences for non-compliance
with the risk management framework and Macquarie’s Code
of Conduct. Staff training and communications emphasise the
link between risk, conduct, policy breaches and consequence
management outcomes, including, where appropriate, adjustments
to performance-based remuneration.
Alignment of remuneration with risk outcomes
The Board considers that the effective alignment of remuneration
with prudent risk-taking is fundamental to Macquarie’s
remuneration approach. Risk considerations are embedded
throughout the remuneration process including through the
determination of individual profit share allocations, business group
and company-wide profit share pools as well as through the way in
which remuneration is structured and delivered.
The Board is aware of the increasing focus of regulators and
shareholders on ensuring risk-related matters that come to light
subsequent to remuneration being awarded are appropriately
factored into remuneration decisions. Macquarie’s retention and
vesting arrangements provide a mechanism for the Board to
consider risk outcomes over a longer period. Furthermore, where an
investigation has commenced into a risk or conduct-related matter
that may result in forfeiture, malus or clawback (where applicable
– see page 122), Macquarie may further defer the payment, vesting
and/or release of profit share to allow for the investigation to
be completed.
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Culture, accountability and remuneration continued
(16) A “Group within Macquarie” is a reference to any Operating Group or Central Service Group within MGL or MBL.
The following mechanisms exist to adjust FY2024 remuneration outcomes for risk and conduct outcomes:
In-year adjustments
Applies to all staff
• for profit share, determined as part of assessing an individual’s performance each year, which includes consideration of compliance
with the risk management framework and with the behavioural expectations outlined in the Code of Conduct
• for PSUs, determined as part of the assessment of Executive Committee members’ roles and their contribution to driving the collective
performance of Macquarie
• in addition, any outcomes from the consequence management process (such as a formal warning) or the independent reporting from
the CRO, Head of Internal Audit, and Group General Counsel (GGC) are also considered for both profit share and PSUs.
Forfeiture
Applies to all staff
• where an individual’s employment is terminated due to a compliance or conduct concern (or they resign), unvested remuneration is
forfeited, as per our standard policy.
Malus
Applies to all staff
Malus provisions provide the Board with the ability to reduce or eliminate in full unvested remuneration (including retained profit share,
and for Executive Committee members, unvested PSUs), where it is determined:
• there was a significant error in or a significant misstatement of criteria on which the remuneration determination was based, or
• the employee has at any time:
– engaged in misconduct leading to significant adverse outcomes
– acted dishonestly (including, but not limited to, misappropriating funds or deliberately concealing a transaction)
– significantly failed in or breached their compliance, accountability or fitness and propriety requirements, or
– acted or failed to act in a way that contributed to, and/or by virtue of their role or seniority is accountable for:
– a breach of a significant legal or significant regulatory requirement relevant to Macquarie
– MGL or MBL making a material financial restatement
– MGL, MBL or any Group within Macquarie incurring significant reputational harm(16)
– MGL, MBL or any Group within Macquarie incurring a significant unexpected financial loss, impairment charge, cost or provision
– a significant failure of financial or non-financial risk management, or
– a significant adverse outcome for customers, beneficiaries or other stakeholders.
Clawback
Applies to certain senior employees
Clawback provisions provide the Board with the ability to recover in exceptional circumstances (in part or whole) variable remuneration
that has already been paid or vested for up to two years from the point of payment or vesting, if it is determined that:
• there was a significant error in or a significant misstatement of criteria on which the remuneration determination was based
• the employee has at any time engaged in misconduct leading to significant adverse outcomes
• the employee has at any time significantly failed in or breached their compliance, accountability or fitness and propriety
requirements, or
• the employee has at any time acted or failed to act in a way that contributed to:
– a significant failure of financial or non-financial risk management, or
– a significant adverse outcome for customers, beneficiaries or other stakeholders.
Additional provisions may apply to staff in certain jurisdictions to ensure compliance with local regulations. This includes UK and European
staff who are subject to additional malus and clawback provisions under local regulatory requirements.
The BRC considers whether, and the extent to which, to apply malus or clawback, taking into account local employment laws, the nature and
circumstances of the event and any other redress that has been or may be applied.
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Risk adjustment processes
There are robust processes in place to ensure that all risk, reputation, and conduct-related matters are specifically considered when
determining remuneration outcomes. These processes may result in a downward adjustment to group and/or individual profit share
allocations where appropriate. A wide range of risks that could have a financial or non-financial impact on Macquarie are considered, including
any detriment to customers or impact on prudential standing.
To assist the Board and BRC when determining remuneration outcomes, independent control functions provide input as follows:
Independent control function input when determining remuneration outcomes
Risk Management Group
Internal Audit
Legal
The CRO provides the BRC with an
independent report detailing significant
risk matters (financial and non-financial)
including those relating to incidents, issues,
and regulatory and litigation matters.
The Head of Internal Audit provides the
BRC with an independent report detailing
notable internal audit issues and any trends
at company-wide or business group level.
The GGC provides a further source of
independent input and, in conjunction
with HR, considers whether there are any
incidents (including any breach of the
BEAR or FAR obligations) that should be
reviewed that might lead to a malus or
clawback determination.
Human Resources
The Global Head of HR discusses the reports from RMG and Internal Audit with the Group Heads to ensure any matters listed in the
reports are appropriately reflected in remuneration outcomes for relevant staff and provides a report to the joint committee meeting of
the BRC, Board Risk Committee (BRiC), Board Audit Committee (BAC) and Board Governance and Compliance Committee (BGCC) on how
this has been achieved.
The Global Head of HR also annually reports to the BRC on the outcomes from the consequence management process and confirms that
these matters have been considered in determining remuneration and promotion outcomes where appropriate.
Consequence management process
Incidents, breaches of policy and misconduct issues are regularly reported to senior management. There are a number of processes
in place to ensure consistency (across business groups and staff levels) in the application of consequences and the determination of
remuneration outcomes, including the review and challenge by senior management of consequence management outcomes at year end.
Where an investigation has commenced into a risk or conduct-related matter, vesting, payment and/or release of profit share (including
available and/or retained amounts) to an employee may be deferred to allow for the investigation to be completed.
Consequence management outcomes
Macquarie’s Consequence Management Guideline applies wherever a breach of internal policy or regulatory requirement is identified,
including where there has been a breach of FAR (or prior to 15 March 2024, BEAR) accountability obligations. Consequences may include
further training, removal of delegated authorities or permissions, adjustments to performance-based remuneration, impact on promotion,
formal warnings or termination.
Where an employee has received a formal warning, their performance-based remuneration will likely be impacted and in some cases, reduced
to zero. Promotion decisions may also be impacted. Impacts may also be applied where a formal warning has not been issued. In each case,
judgement is exercised as to the appropriate consequence(s) based on all the relevant circumstances.
In FY2024, there were 131 (FY2023: 129) matters involving conduct or policy breaches that resulted in formal consequences. These included
84 (FY2023: 71) Code of Conduct or appropriate workplace behaviour related matters and 47 (FY2023: 58) other policy matters including risk
management and technology breaches. Of the 131:
• for 48 matters, termination of employment was the outcome (FY2023: 49)
• for 83 matters, a formal warning was issued (FY2023: 80). Additional consequences were applied as appropriate including additional
training, adjustments to profit share and/or proposed fixed remuneration increases, and/or impact to promotion (22 individuals who
received a formal warning subsequently left Macquarie before year-end outcomes were applied and 60 individuals had their profit share
reduced by an average of 39%).
The 131 matters were considered isolated incidents and there was no evidence of broader systemic conduct issues.
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Further details on the remuneration framework
This section describes other key features of the remuneration framework and of the employment contracts for Executive
Committee members.
Other features of the remuneration framework
Role-based
allowances
• Role-based allowances are a component of fixed remuneration that may be awarded to certain employees,
including those identified as Material Risk Takers under UK or European regulatory requirements. These
allowances are determined based on the role and organisational responsibility of the individuals.
Minimum
shareholding
requirement
• Executive Directors are required to hold a relevant interest in MGL ordinary shares that have a value equal to
5% of an Executive Director’s aggregate profit share allocations for each of the past five years (10 years for
Executive Committee members), which can be satisfied by the profit share retention requirements
• For Executive Committee members with a minimum of 10 years of service at the Executive Director level,
compliance with this policy equates to a minimum shareholding requirement of between 70% to 620% of fixed
remuneration based on share values unadjusted for market price changes.
Promotion and
New Hire Awards
• Staff who are promoted to or hired at Associate Director, Division Director or Executive Director level receive an
allocation of MEREP awards set with reference to an Australian dollar value. Currently these awards range from
the equivalent of $A25,000 to $A175,000 depending on the Director level.
Performance fees
(carried interest)
• Under Macquarie Asset Management’s carried interest arrangements, certain individuals with funds
responsibilities may receive a portion of their deferred performance-based remuneration as a share of
performance fees paid by Macquarie-managed funds
• The company-wide profit share pool is adjusted downwards to reflect these deferred remuneration
arrangements, which are also taken into account in determining the individual’s profit share allocation
• Consistent with market practice, these individuals are allocated an entitlement to a share of performance fees
paid by a particular fund. This allocation is based on performance (including consideration of non-financial
factors), seniority and the extent of the individual’s involvement with and expected contribution to the
particular fund
• An individual will not receive their entitlement until Macquarie has received performance fees towards the end
of the fund’s life, which is typically upwards of 10 years. For arrangements implemented prior to September
2022, the entitlement will be forfeited if their employment ceases before five years from the date of allocation
For arrangements implemented from September 2022, vesting generally starts from 3 years from fund final
close. Entitlements are subject to similar forfeiture conditions as profit share
• Prior to joining the Executive Committee, Mr Way (who joined the Executive Committee on 1 April 2021)
participated in these arrangements for certain funds in his former role. Upon joining the Executive Committee,
he maintained his participation in these existing funds, but he has not been allocated any additional
entitlements. No other Executive Committee members currently participate in these arrangements.
Hedging
• Macquarie prohibits staff from hedging shares held to meet the minimum shareholding requirement and
unvested equity held in the MEREP.
Employment contracts
The following table summarises key features of the employment contracts for Executive Committee members including the CEO.
Length of contract
Permanent open-ended.
Remuneration
review period
1 April to 31 March annually.
Profit share
participation
Executive Committee members are eligible to be considered for a profit share allocation that ensures a large part
of their remuneration is ‘at risk’. Refer to pages 112-116 for details.
PSU participation
Executive Committee members are eligible to receive PSUs. Refer to pages 117-119 for details.
Termination of
employment
Requires no more than three months’ notice by Macquarie or the Executive Committee member (Post employment
restrictions apply).
Post employment
restrictions
Restrictions include non-solicitation provisions applicable for six months, and paid non-competition provisions
applicable, at Macquarie’s election, for up to three months post-termination.
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Continued
Pay for performance
(17) Headcount for both FY2024 and FY2023 includes staff employed in certain operationally segregated subsidiaries (OSS).
(18) Comparable Executive KMP are KMP who are members of the Executive Committee for the full year in both FY2024 and FY2023.
(19) TSR data reflects the reinvestment of gross dividends.
(20) Source: Bloomberg.
This section details Macquarie’s results and demonstrates the link between pay and performance.
Macquarie’s results
Compared to the exceptionally strong prior year, Macquarie’s NPAT and EPS both decreased by 32%, while ordinary dividends decreased
by 15%. Consistent with our established remuneration framework that rewards performance across a range of financial and non-financial
measures and aligns outcomes for staff with those of our shareholders, CEO awarded profit share decreased by 26% and total comparable
Executive KMP awarded profit share is down 15% on the prior year. The overall decline has not resulted in a corresponding decrease in
statutory remuneration, which is calculated on a different basis to awarded pay and includes the vesting of historical share-based awards
from prior years.
The total compensation expense is in line with the prior year, impacted by the higher average number of staff during the year, wage inflation
and unfavourable foreign exchange movements. These factors, as well as lower overall revenue, led to the significant increase in the
compensation expense to income ratio (compensation ratio) to 43.1%.
Comparison of performance measures and executive remuneration measures: FY2023–2024
Expressed as
FY2024
FY2023
Increase/(Decrease) %
Performance measures
NPAT
$Am
3,522
5,182
(32%)
Basic EPS
Cents per share
916.6
1,353.7
(32%)
Ordinary dividends
Cents per share
640.0
750.0
(15%)
Return on equity
Percent
10.8
16.9
Executive remuneration measures
Total compensation expense
$Am
7,273
7,278
-
Compensation expense to income ratio
Percent
43.1
38.1
Average staff headcount(17)
21,066
19,480
8%
Actual staff headcount(17)
20,666
20,509
1%
CEO awarded profit share
$Am
23.75
32.00
(26%)
Total Executive KMP awarded profit share
$Am
80.20
151.59
(47%)
Total comparable Executive KMP awarded profit share(18)
$Am
80.20
94.70
(15%)
CEO statutory remuneration
$Am
29.37
30.40
(3%)
Total Executive KMP statutory remuneration
$Am
67.19
150.47
(55%)
Total comparable Executive KMP statutory remuneration
$Am
109.51
107.78
2%
Performance over past 10 years: FY2015–2024
Year ended 31 March
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Income statement
NPAT ($Am)
1,604
2,063
2,217
2,557
2,982
2,731
3,015
4,706
5,182
3,522
Basic EPS (cents per share)
502.3
619.2
657.6
758.2
883.3
791.0
842.9
1,271.7
1,353.7
916.6
Shareholder returns
Return on equity (%)
14.0
14.7
15.2
16.8
18.0
14.5
14.3
18.7
16.9
10.8
Ordinary dividends (cents per share)
330
400
470
525
575
430
470
622
750
640
Share price as at 31 March ($A)
76.67
66.09
90.20
102.90
129.42
85.75
152.83
203.27
175.66
199.70
Annual TSR (%) to 31 March(19),(20)
40.0
(9.2)
46.0
21.3
32.8
(29.9)
83.9
38.6
(9.8)
19.3
10 year TSR (%) to 31 March(19),(20)
187.7
83.5
99.0
257.7
723.6
220.7
628.6
1,101.9
706.5
475.6
125
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Total shareholder return
Macquarie’s TSR over the long-term has been strong and continues to outperform both the MSCI World Capital Markets Index (MSCI Index)
and the All Ordinaries Accumulation Index (All Ords Index), as shown in the chart and table below.(21),(22) Macquarie’s NPAT over the same
period has been shown for reference.
Macquarie TSR versus the MSCI Index and All Ords Index: 31 Mar 2014 to 31 Mar 2024(23)
MQG NPAT ($Am)
Total Shareholder Return
Mar 14
Mar 15
Mar 16
Mar 17
Mar 18
Mar 19
Mar 20
Mar 21
Mar 22
Mar 23
Mar 24
All Ordinaries Index
MQG
MQG NPAT
MSCI Index
0
1,000
2,000
3,000
4,000
5,000
6,000
0
200
400
600
800
1,000
1,200
TSR Performance
MQG
All Ordinaries Index
MSCI World Capital Markets Index
Since listing(24)
13,955%
1,335%
220%
10 years(25)
476%
158%
122%
Source: Bloomberg.
Macquarie’s ROE performance compared with an international reference group
Macquarie’s ROE for FY2024 of 10.8% has decreased from 16.9% in the prior year but remains higher than the average of the international
reference group. In addition, Macquarie’s three, five and ten-year average annual ROE exceeds the majority of the reference group.
Reference group ROE over ten years FY2015–2024
1-year average
% p.a.
3-year average
% p.a.
5-year average
% p.a.
10-year average
% p.a.
Macquarie
10.8
15.0
14.4
14.3
Average of reference group
9.5
14.1
13.2
12.0
Company
9.8
10.9
10.0
8.3
Company
7.6
9.2
7.0
3.7
Company
4.2
7.7
7.8
6.2
Company
6.7
6.2
1.8
-0.3
Company
7.5
13.6
12.4
10.8
Company
16.9
16.3
15.0
12.9
Company
-15.4
29.1
35.5
44.4
Company
9.4
12.0
12.1
10.2
Company
39.0
21.5
16.8
11.9
Source: Bloomberg where available, otherwise company reported.
(21) The MSCI World Capital Markets Index comprises a basket of companies that provide capital markets activities (defined by MSCI as asset management, investment banking and
brokerage, and diversified capital markets activities).
(22) The All Ords Index comprises the 500 largest ASX listed companies by market capitalisation.
(23) All indexed to 100 on 31 March 2014.
(24) “Since listing” for MQG and All Ords Index refers to MQG listing date 29 July 1996. For MSCI, this refers to the date the MSCI World Capital Markets Index was first calculated, being
30 April 2003. Macquarie TSR calculations assume continuous listing. Therefore, they are based on Macquarie Bank Limited (ASX Code: MBL) data up to and including 2 November
2007 (the last day of trading of MBL shares), and MGL (ASX Code: MQG) data from the commencement of trading of MGL ordinary shares on 5 November 2007 onwards.
(25) For the period 31 March 2014 to 31 March 2024.
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Continued
Compensation expense to income ratio
In determining the reasonableness of the company-wide profit share pool, the Board considers Macquarie’s compensation ratio compared
with that of the international reference group as a broad guide to assess whether the share of profits distributed to staff and shareholders is
reasonable. The compensation ratio effectively adjusts for differences in size between organisations; however, some companies are or have
become part of larger organisations, often with large retail operations that can distort comparisons.
In the following chart, Macquarie’s compensation ratio is compared with that of the international reference group.(26) Macquarie’s FY2024
compensation ratio of 43.1% is higher than previous years, as explained above, but remains below the average of our international
reference group.
Compensation expense to income ratio: FY2022–2024 (%)
(26) The reference group comprises Bank of America Corporation, Barclays PLC, Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co., Lazard Ltd,
Morgan Stanley and UBS AG.
(27) This includes accumulated service at acquired companies, for example, Bankers Trust Investment Bank Australia.
(28) Excludes Simon Wright, Head of CGM, who was appointed to the Executive Committee on 1 April 2024.
(29) Data is based on active permanent staff only.
(30) Data is based on permanent regular staff only.
Macquarie
Reference group based on most recent statutory accounts/filings
Average 2023/2024 comp ratio of reference group
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
2023/2024
2022/2023
2021/2022
Source: Data has been calculated by Macquarie. The information is based on publicly available information for the reference group. In order to show more comparable compensation
ratios, impairments have been consistently netted against net revenue in the revised calculations for some organisations.
Tenure of Executive KMP(27)
One of the primary goals of our remuneration framework is to
attract, motivate and retain high-performing staff. The Board’s
view is that we continue to achieve this goal as demonstrated by
the following:
• Macquarie’s Executive KMP had an average tenure of 23 years
with Macquarie as at 31 March 2024.(28) Their strong leadership
and deep expertise have been integral to driving company and
business performance in FY2024
• as at 31 March 2024, 49% of Director-level staff had more than
ten years’ experience with Macquarie, while a further 24% had
between five and ten years’ experience with Macquarie(29)
• the 4% Director-level voluntary turnover rate in FY2024 is lower
than the prior year’s rate of 5% and well below the voluntary
turnover rate across Macquarie overall.(30)
0
5
10
15
20
25
30
35
40
B. Way
G.N. Bruce
A. Cassidy
S.D. Green
A.H. Harvey
M.J. Silverton
N. Sorbara
G.C. Ward
S.R. Wikramanayake
Number of years at Macquarie
127
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Executive KMP remuneration outcomes for FY2024
This section details the process for determining Executive KMP remuneration outcomes for FY2024 and demonstrates the link between
pay and performance.
(31) For US-based Executive KMP, this is equivalent to $US750,000.
Process to determine Executive KMP
remuneration outcomes
There is a consistent and comprehensive process for the Board and
the BRC to assess the performance of the CEO and each Executive
KMP during the year to enable them to determine remuneration
outcomes at the end of the year. The Board is always mindful of
the external focus on overall remuneration levels and has spent
considerable time determining remuneration outcomes. The BRC
recognises the range of expectations and has made decisions that
take into consideration the perspectives of all key stakeholders.
Significant judgement is applied to ensure that remuneration
outcomes are aligned both with individual and company-wide
performance and with outcomes delivered to our shareholders, our
clients and the communities in which we operate.
As part of the Board’s annual review of the Macquarie CEO’s
performance, the CEO meets with the Board towards the end of the
financial year to consider formal documentation that outlines her
views of Macquarie’s and her own performance. The presentation
includes a broad range of Macquarie’s activities covering the
following main areas:
• financial/business results
• risk management and compliance
• business leadership including customer and
community outcomes
• people leadership and professional conduct consistent with the
Code of Conduct and the principles of What We Stand For.
Over the course of the year the Board receives regular reports and
updates on many of these areas. These are summarised in the CEO’s
presentation, together with additional information on matters the
Board has identified for further discussion as a part of the review
process. The Non-Executive Directors (NEDs) of the Board then
consider the CEO’s performance and progress against all of these
topics in determining the CEO’s remuneration for the year. A similar
process is followed for the CEO of Macquarie Bank focused on
MBL-specific measures.
The MGL CEO annually evaluates the performance of the other
Executive KMP and considers the same factors set out above.
The Board and the BRC review formal performance assessment
documentation for each Executive KMP.
For the CRO and CFO, the Board and the BRC seek to ensure
that their performance and remuneration outcomes reflect the
independence and purpose of their functions and have not been
unduly influenced by the performance of wider business activities.
The BRC also considers risk-related matters raised in the
independent reports from the CRO and the Head of Internal Audit.
To ensure all matters are appropriately brought to the BRC’s
attention and to achieve an integrated approach to remuneration
that reflects prudent and appropriate risk management, there is a
joint meeting of the BRC, BRiC, BAC and the BGCC.
Finally, the BRC considers remuneration levels for organisations that
broadly operate in the same markets and compete for the same
people as Macquarie.
Annual remuneration outcomes reflect:
• achievements against a range of financial and
non-financial factors
• the recognition that our people are our greatest asset, and the
importance of retaining key people to encourage innovation and
pursue growth opportunities
• alignment to the outcomes delivered to shareholders
• risk management, compliance and conduct outcomes.
Details on specific factors for FY2024 are discussed below.
Executive KMP fixed remuneration outcomes
In line with our pay for performance approach to remuneration,
fixed remuneration for our Executive KMP in FY2024 comprised
approximately 13% of total awarded remuneration, with the balance
at risk and explicitly linked to performance.
As noted in the 2023 Remuneration Report, fixed remuneration for
Executive KMP in FY2024 increased for the first time since 2010,
other than adjustments made when they were first appointed
to the Executive Committee. The fixed remuneration levels in
the table below include salary and, for Australia-based Executive
KMP, superannuation.
Role
FY2023 ($Am)
FY2024 ($Am)
CEO
0.8
1.5
MBL CEO
0.7
1.3
Executive KMP
0.7-0.75
1.1(31)
Fixed remuneration remains set at a comparatively low level,
relative to the industry, and at a lower proportion of total
remuneration, but sufficient to avoid inappropriate risk-taking.
No increases are planned for FY2025.
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Remuneration Report
Continued
FY2024 Executive KMP profit share outcomes
The Board’s determination of remuneration outcomes for FY2024
for the CEO and Executive KMP reflect the following factors:
• lower overall financial results compared to the record FY2023,
reflective of the challenging market conditions during the year
• the financial performance of each Operating Group, which
reflected a period of transition for some businesses amid less
supportive markets
• the strong leadership of the Executive Committee, led by the
CEO, to effectively role model our purpose and principles and to
embed a strong risk culture
• Executive Committee collaboration to solve challenges
and maximise opportunities across Operating and Central
Service Groups
• the continued evolution of our businesses to remain well
positioned to deliver long-term sustainable value, including
alignment with areas of structural growth globally (e.g. energy
transition, infrastructure for digital and demographic shifts)
• the continued focus on non-financial risks, including in areas such
as climate, sustainability and technology, while also uplifting our
risk management frameworks across trading, technology, cyber
and data. While there were no systemic risk issues identified
during the year, a legacy risk matter in MAM was taken into
account in determining the MGL CEO’s remuneration
• a focus on streamlining investment programs and driving
greater returns on investment, following a period of significant
investment in our platform
• investment in renewable energy solutions at scale, supporting
the next wave of climate technologies
• maintaining strong engagement and focus on meeting regulator
expectations including progress against the remediation
program with APRA to ensure there is appropriate focus on MBL
• the refresh of our global employee value proposition to
evolve in line with shifts in talent expectations and ensure we
accurately reflect the career experience and distinct culture that
Macquarie offers.
Executive KMP remuneration outcomes have also been considered
in the context of the wider workforce. The BRC receives extensive
reporting on remuneration outcomes and individually reviews and
approves the remuneration of staff who hold regulated roles and
other senior staff and has reviewed overall total remuneration
levels across each business to ensure appropriate distribution of
remuneration across the organisation. The BRC has also considered
the compensation expense to income ratio as a guide as to
whether the share of profits distributed to staff and shareholders
is reasonable.
Through a challenging economic and market environment, we have
given careful consideration of all these factors and we believe the
following outcomes for the year are appropriate:
• CEO awarded profit share has decreased 26% on the prior year to
$A23.75 million
• total comparable Executive KMP awarded profit share of
$A80.20 million (down 15% on the prior year)
• PSU allocations of $A4.0 million for the CEO and $A2.8 million for
other Executive KMP.
Link between ESG considerations and
remuneration outcomes
The Board and management recognise the importance of
sound ESG practices as part of their responsibility to clients,
shareholders, employees and the communities in which
Macquarie operates. The Board’s and the BRC’s assessment
of each Executive KMP’s performance against the three
non-financial performance factors when determining
profit share outcomes includes progress on relevant
ESG initiatives.
For ESG considerations relevant to specific Executive KMP,
see the commentary on pages 130-139.
In addition to the process for Executive KMP, ESG
considerations are assessed as part of other employees’
individual performance and remuneration determinations
where relevant to the responsibilities of their role.
More detailed information on our ESG approach,
including our eight focus areas, is available on
pages 53-55 in the ESG section of this Annual
Report and at macquarie.com/esg.
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To demonstrate the alignment between pay and performance, the following graphs show the multi-year alignment between CEO and total
Executive KMP awarded profit share and Macquarie NPAT over a ten-year period.
CEO awarded profit share(32)
Total Executive KMP awarded profit share(33)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
2015
2023
2022
2021
2020
2019
2018
2017
2016
2024
NPAT ($Am)
CEO awarded profit share ($Am)
NPAT ($Am)
CEO awarded profit share ($Am)
0
5
10
15
20
25
30
35
40
45
50
55
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
0
15
30
45
60
75
90
105
120
135
150
165
NPAT ($Am)
Total Executive KMP awarded profit share ($Am)
2015
2023
2022
2021
2020
2019
2018
2017
2016
2024
NPAT ($Am)
Total Executive KMP awarded profit share ($Am)
(32) For 2019, the graph reflects awarded profit share for the CEO role for FY2019. This equates to the sum of awarded profit share for Mr Moore for the period 1 April 2018 to 30
November 2018 and awarded profit share for Ms Wikramanayake for the period 1 December 2018 to 31 March 2019.
(33) For 2024, the graph does not reflect any awarded profit share for the Head of Commodities and Global Markets role given Mr O’Kane stepped down as Head of CGM and from the
Executive Committee effective 27 February 2024 and resigned from Macquarie effective 18 March 2024.
130
Remuneration Report
Continued
Executive KMP awarded pay
To clearly demonstrate the link between pay and performance, we have included awarded remuneration disclosures for fixed remuneration
and profit share as well as highlights of each Executive KMP’s performance for the year. Details of PSUs awarded and vested in the year are
set out in the following sections. The tables on the following pages are additional disclosures that are prepared on a different basis to those
included in the statutory disclosures in Appendix 2 and are not additive. Remuneration relating to the portion of the relevant periods that
each person was an Executive KMP is disclosed.
Macquarie Group
S.R. Wikramanayake
Macquarie CEO
Awarded remuneration ($A)
FY2024
FY2023
Fixed remuneration
1,527,224
821,081
Available profit share
7,125,000
6,400,000
Retained profit share
16,625,000
25,600,000
Total
25,277,224
32,821,081
FY2024 Awarded remuneration
Available
profit share
28%
Fixed
remuneration
6%
Retained
profit share
66%
Financial/business results
• Delivered NPAT of $A3,522 million and ROE of 10.8%, down from a record
prior year which benefitted from exceptionally volatile commodity markets
and strong asset realisations
• Continued growing our underlying client franchises with consistent support
from capital and funding providers, while strengthening our platform
amidst more challenging macroeconomic conditions
• Maintained a strong balance sheet and raised diversified funding to support
business growth
• Achieved an upgrade to Macquarie’s credit rating.
Risk management and compliance
• Continued to embed a robust risk culture and enhanced the conduct
risk framework
• Enhanced Macquarie’s risk capabilities and frameworks to ensure they
remain fit for purpose and in line with changes in the external environment
• Strategically invested in building our data and technology capabilities,
including in Artificial Intelligence (AI)
• Maintained strong engagement and focus on meeting regulator
expectations, including making material progress on our regulatory and
remediation programs.
Business leadership (including customer and community outcomes)
• Streamlined our investment programmes after a period of heavy
investment and focused on driving greater return on investment
• Guided the evolution of our businesses to remain well positioned to deliver
long-term sustainable value and positive social impact, including alignment
with areas of structural growth globally (e.g. energy transition, digital
infrastructure and demographic shifts)
• Dedicated significant time to leadership of global climate initiatives,
including as a founding member of the World Bank Private Sector
Investment Lab and attendance at the COP28 climate summit in Dubai
• Participated in external forums including the Australian Treasurer’s
investor roundtable series and the ASEAN-Australia Summit where Ms
Wikramanayake was named as the Australian Government’s Business
Champion to progress economic opportunities with the Philippines.
People leadership and professional conduct
• Provided strong people leadership, reflected in consistently high
Macquarie Voice Survey results with voluntary turnover levels returning to
pre-pandemic levels
• Continued to drive collaboration amongst Executive Committee members
to solve challenges and maximise opportunities across Operating and
Central Service Groups
• Enhanced our ability to attract and retain top, diverse talent in line with
market expectations by refreshing our employee value proposition
• Supported key senior CGM leaders following the departure of Mr O’Kane to
ensure the senior team is positioned to build on CGM’s success.
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Macquarie Bank
S.D. Green
Macquarie Bank CEO
Awarded remuneration ($A)
FY2024
FY2023
Fixed remuneration
1,323,893
771,741
Available profit share
1,500,000
1,400,000
Retained profit share
2,250,000
2,100,000
Total
5,073,893
4,271,741
FY2024 Awarded remuneration
Available
profit share
30%
Fixed
remuneration
26%
Retained
profit share
44%
Financial/business results
• Strong management of Macquarie Bank’s balance sheet including
completing a range of initiatives to diversify funding
• Achieved upgrade to MBL’s Moody’s ratings from ‘A2’ to ‘Aa2’
• Moody’s upgrade of Macquarie International Finance Limited from A3 to A2
and short-term rating from P-2 to P-1.
Risk management and compliance
• Ongoing leadership and timely delivery of remediation plans for MBL
• Supported uplift of risk management and governance for Macquarie Bank
Europe DAC and MBL London branch
• Continued to focus on proactive and transparent engagement with
regulators, including through progress of key regulatory initiatives
• Enhanced the individual counterparty large exposure framework, credit
concentration risk and capital management frameworks
• Continued to monitor and strengthen risk culture to protect the interests
of MBL and deposit holders, including leading initiatives encouraging people
to speak-up.
Business leadership (including customer and community outcomes)
• Continued to evolve the MBL CEO role to protect MBL’s interests, including
by embedding the MBL CEO Office to provide further independent review
and challenge
• Supported the further evolution of the MBL Board, including the addition of
two Bank-only Non-Executive Directors (BONDs)
• Engaged with investors, peers and external counterparties to optimally
support our businesses from a funding and capital perspective, as well as
ensure we are compliant with regulatory requirements
• Participated actively in external forums including as an Australian Banking
Association Council member, the Hong Kong Monetary Authority / Bank for
International Settlements forum and at the Boao Forum for Asia
• Continued as a member of the Macquarie Group Foundation Committee
and the Social Impact Investment Advisory Committee.
People leadership and professional conduct
• Continued to lead the MBL CEO office to increase the level of review and
challenge that MBL provides on a range of matters
• Reinforced the privilege of holding a banking licence by representing the
interests of MBL at internal meetings and forums, including the annual
strategy process and staff engagements
• Remained committed to DEI initiatives, including sponsoring the global
Accessibility Action Plan and acting as an inaugural mentor for Generation
Valuable (a global business partnership working to end disability exclusion).
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Remuneration Report
Continued
Macquarie Asset
Management (MAM)
B.I. Way
Head of MAM
Awarded remuneration ($A)
FY2024
FY2023
Fixed remuneration
1,330,435
907,110
Available profit share
5,000,000
6,400,000
Retained profit share
5,000,000
9,600,000
Total
11,330,435
16,907,110
FY2024 Awarded remuneration
Available
profit share
44%
Fixed
remuneration
12%
Retained
profit share
44%
Financial/business results
• Delivered a net profit contribution of $A1,208 million, down 48% on the
prior year largely driven by delayed asset realisations in green investments
and higher funding costs
• Increased base fees across Private Markets businesses and delivered strong
Real Asset performance fees
• Despite difficult fundraising conditions, delivered Private Markets capital
fundraising of $A21.9 billion including record fundraising in private credit,
compared to record fundraising of $A38.2 billion in FY2023
• $A37.6 billion equity to deploy, up 8% on FY2023.
Risk management and compliance
• Promoted a fiduciary mindset and fostered a strong risk culture through
risk training, a strong emphasis on psychological safety and communicating
leadership behavioural standards
• Evolved risk frameworks to manage reputational, regulatory, ESG and
geopolitical risks
• Continued to prioritise Work Health and Safety (WHS) through various
initiatives such as establishing critical risk expectations for key industries.
Business leadership (including customer and community outcomes)
• Evolved our platform to position MAM as a global integrated manager
to better service clients and communities
• Combined private and public credit businesses into one division, MAM
Credit, to deliver an integrated offering for clients
• Launched new investment strategies, including in energy transition, fund
capital, and the first private markets alternatives capability in the US
wealth channel
• Uplifted data, technology and processes including build-out of
AI capabilities.
People leadership and professional conduct
• Invested in leadership capabilities in strategic growth areas
• Made progress on DEI with equal proportion of males and females
promoted during FY2024 and an increase in female representation
• Proactively managed workforce to create reinvestment capacity for talent
in strategic growth areas.
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Banking and Financial
Services (BFS)
G.C. Ward
Deputy Managing Director and Head of BFS
Awarded remuneration ($A)
FY2024
FY2023
Fixed remuneration
1,120,562
771,741
Available profit share
5,000,000
4,000,000
Retained profit share
5,000,000
6,000,000
Total
11,120,562
10,771,741
FY2024 Awarded remuneration
Available
profit share
45%
Fixed
remuneration
10%
Retained
profit share
45%
Financial/business results
• Delivered a net profit contribution of $A1,241 million, up 3% on the prior
year, despite market challenges
• Oversaw strong organic growth in key BFS products, with Macquarie now
the fifth largest household deposit holder in Australia, the home loan
book growing by 10%, and the Business Banking loan portfolio by 22% in a
slowing market.
Risk management and compliance
• Ongoing commitment to investing in and refining our risk management
approach to ensure it remains sustainable, efficient and fit for purpose
• Delivered a lower risk and loss profile for the home loan portfolio compared
to the industry average
• Continued investment in fraud detection capabilities which has resulted in
a higher detection rate compared to FY2023, despite the number of fraud
attempts increasing
• Continued to invest in our complaints management process, which reduced
the time to resolve a complaint.
Business leadership (including customer and community outcomes)
• Made investments in technology infrastructure to increase digital adoption
and improve the reliability of our systems
• Increased customer satisfaction, as measured by our Market Net
Promoter Score(34)
• Digitised onboarding and maintenance processes across our deposits,
banking and platform products to improve customer experience
and efficiency
• Added a physical carbon emissions intensity target for our residential
mortgages portfolio.
People leadership and professional conduct
• Maintained strong staff engagement
• Monitored key people risk indicators through leadership forums, including
employee wellbeing, health and safe work environment
• Made consistent progress in hiring and retaining diverse talent and driving
a strong culture of continuous learning.
(34) Based on the total market who have Any Financial Relationship
with the specified bank, and how likely the respondent would be to
recommend the specified bank to their friends and family, prepared
by RFI-DBM.
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Continued
Commodities and
Global Markets (CGM)
N. O’Kane
Former Head of CGM
Awarded remuneration ($A)
FY2024
FY2023
Fixed remuneration
1,019,528
723,419
Available profit share
–
17,067,000
Retained profit share
–
39,823,000
Total
1,019,528
57,613,419
Mr O’Kane stepped down as Head of CGM and from
the Executive Committee effective 27 February 2024.
He resigned from Macquarie effective 18 March 2024.
As such, he is not eligible for a FY2024 profit share
allocation. As a result of his resignation, Mr O’Kane
forfeited his unvested retained profit share and
unvested PSUs.
Simon Wright, who has been with Macquarie for
35 years, became Head of CGM on 28 February 2024
and joined the Executive Committee on 1 April 2024.
He will be disclosed as an Executive KMP in the FY2025
Remuneration Report.
Financial/business results
• CGM delivered a net profit contribution of $A3,213 million in FY2024,
down 47% on a record prior year that benefitted from unprecedented
market conditions
• CGM continued to focus on ensuring its capital and funding structure is
robust, efficient and able to support the growth of its businesses and
changing regulatory requirements.
Risk management and compliance
• Continued to demonstrate commitment in leading the team to uplift CGM’s
risk management framework and risk culture
• Evolved CGM’s approach to non-financial risk to provide the business with a
comprehensive end-to-end view of risk, with a strong focus on identifying
and resolving issues
• CGM focused on proactive engagement with regulators globally, as
part of both regular engagements as well as in response to specific
regulatory reviews.
Business leadership (including customer and community outcomes)
• CGM maintained strong market recognition including No.1 Futures broker
on the ASX;(35) awarded House of the Year for Oil and Products, Electricity
and Commodities Research at the Energy Risk Awards 2023; and awarded
House of the Year for Commodities Research, Derivatives, Environmental
Products, Commodity Trade Finance, Natural Gas/LNG and Emissions at the
Energy Risk Asia Awards 2023
• Continued to invest in our core client base by scaling existing businesses,
developing new products and growing through adjacencies
• Focused on collaborative initiatives to help better understand our clients’
perspectives to provide them with holistic solutions/opportunities
• Invested in projects and initiatives that support CGM’s growth, secure
our competitiveness in the market and strengthen our change project
management governance and capabilities.
People leadership and professional conduct
• Continued to develop leadership bench strength focusing on the optimal
organisational structure and leadership succession for CGM
• Focused on hiring, retaining and developing diverse and engaged people,
and cultivating improved wellbeing and workload sustainability
• Launched a refreshed FY2024-2026 People and Culture Strategy focused on
identifying and developing future leaders through targeted and effective
talent mapping, pipelining and capability development to secure long term
and sustained profitability of the business
• Embedded DEI considerations into all facets of the broader People and
Culture Strategy for the business.
(35) As at 31 March 2024.
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Macquarie Capital
M.J. Silverton
Head of Macquarie Capital
Awarded remuneration ($A)
FY2024
FY2023
Fixed remuneration
1,198,965
784,865
Available profit share
5,250,000
3,920,000
Retained profit share
5,250,000
5,880,000
Total
11,698,965
10,584,865
FY2024 Awarded remuneration
Available
profit share
45%
Fixed
remuneration
10%
Retained
profit share
45%
Financial/business results
• Delivered a net profit contribution of $A1,051 million, up 31% on FY2023
• Investment-related income increased from FY2023
• Fee and commission income down on FY2023, with challenging
market conditions for global mergers and acquisitions (M&A).
Risk management and compliance
• Continued commitment to risk culture across all activities and roles
• Pursued various initiatives to ensure appropriate funding to capitalise
on opportunity
• Continued to strengthen the regulatory reporting framework to
better manage complex and diverse regulatory requirements and
associated controls.
Business leadership (including customer and community outcomes)
• Continued progress on strategic priority areas such as private credit and
enhancing coverage niches with a focus on sell-side M&A
• Focused on delivering for clients and positioning the business for future
opportunities, with ongoing focus on deploying equity and credit principal,
and growing advisory in geographic and sector niches
• Maintained cost discipline of controllable costs
• Retained Macquarie Capital’s leading market position in ANZ across M&A
and capital markets in FY2024 (by deal count) and No.1 Global Financial
Adviser in Energy Transition on the Inspiratia FY2023 Energy Transition
League Table Report (by deal volume)
• Continued focus on delivering improved community outcomes, including an
announced commitment to the White House’s healthcare energy efficiency
initiative and the inaugural winner of the Macquarie Social Impact Award
for Pennsylvania Bridges project.
People leadership and professional conduct
• Despite challenging market conditions, staff engagement remains strong
• Maintained investment in core development programs and launched a
Global Learning Pathway to help clarify expectations and skills required at
each level, as well as to establish consistency and equity in development
and experience offered to staff.
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Corporate Operations
Group (COG)
N. Sorbara
COO and Head of COG
Awarded remuneration ($A)
FY2024
FY2023
Fixed remuneration
1,120,562
771,741
Available profit share
3,400,000
3,200,000
Retained profit share
3,400,000
4,800,000
Total
7,920,562
8,771,741
FY2024 Awarded remuneration
Available
profit share
43%
Fixed
remuneration
14%
Retained
profit share
43%
Financial/business results
• Provides specialist services in technology, operations, human resources,
workplace, data, digital, strategy, operational risk management, business
resilience and global security, and the Macquarie Group Foundation
• Delivered bottom line cost savings of $A195 million per annum by using
data, digitalisation and automation programs to build a more scalable and
resilient operating model
• Realised $A165 million in savings to Macquarie from direct costs
influenced by COG.
Risk management and compliance
• Maintained a strong risk culture, met regulatory obligations, and made
substantial progress across several risk reduction programs
• Invested in technology platforms, tools and technical expertise to continue
providing a safe and secure cyber environment, protecting our critical
assets and data against malicious action
• Hired an experienced Chief Data Officer and accelerated execution of
programs to reduce data risk
• Led the engagement with APRA and the Board in regard to the
implementation of CPS 511 and, in conjunction with RMG, leading the
implementation of CPS 230 across Macquarie.
Business leadership (including customer and community outcomes)
• Evolved our global workplaces including a leadership role on the successful
near-completion and delivery of the Sydney Metro Martin Place project and
New York office redevelopment
• Led pilots of Generative AI (GenAI) use-cases and built risk guardrails,
enabling businesses to capture productivity benefits
• Strong execution on digitalisation programs for Operating and Central
Service Groups, with substantial progress made on end-to-end
transformation project
• Refreshed the 2025 Sustainability Plan for Macquarie’s own business
operations and improved the methods used to measure and track
supplier emissions
• Sponsored a program of work to enhance enterprise change governance
• Launched new recruitment and digitalised remuneration platforms
• Supported 3,000 non-profit organisations with $A67 million contributed by
Macquarie employees and the Macquarie Group Foundation in FY2024.
People leadership and professional conduct
• Continued to invest in building strong leadership, technology and
digitalisation skills through strategic partnerships with thought-leaders in
leadership, innovation and purpose
• Optimised COG’s leadership structure through key senior leadership
appointments and a focus on succession planning and development
• Continued to embed a safety culture through targeted WHS initiatives,
including upholding a strong safety record across the Metro Martin
Place project
• Led the global rollout and embedding of Macquarie Standards across the
enterprise, clarifying the behaviours required of our employees to underpin
Macquarie’s success, now and for the future.
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Financial Management
Group (FMG)
A.H. Harvey
CFO and Head of FMG
Awarded remuneration ($A)
FY2024
FY2023
Fixed remuneration
1,120,562
771,741
Available profit share
3,400,000
3,200,000
Retained profit share
3,400,000
4,800,000
Total
7,920,562
8,771,741
FY2024 Awarded remuneration
Available
profit share
43%
Fixed
remuneration
14%
Retained
profit share
43%
Financial/business results
• Responsible for providing strategic analysis and advice related to capital,
funding, liquidity, tax and financial performance, ensuring Macquarie
meets financial, regulatory and tax reporting compliance obligations, and
maintaining relationships with key external stakeholders
• Advanced end-to-end transformation and Finance transformation
initiatives, which has enabled more timely and accurate outcomes that
enable business growth.
Risk management and compliance
• Reduced risk via transformation initiatives to improve data automation
and ongoing implementation of the Enterprise Data Management Policy
and framework
• Continued to mature FMG’s Non-Financial Risk (NFR) Division through key
senior hires and building the NFR operating model as an independent voice
of risk within FMG
• Progressed initiatives on the remediation program with APRA.
Business leadership (including customer and community outcomes)
• Supported the business and customers globally through uncertain market
conditions whilst maintaining a strong balance sheet through fundraising
• Maintained positive outlook based on analyst consensus and obtained
ratings upgrades to both MBL and MGL
• Led Macquarie’s engagement with equity and debt investors and analysts,
bank and other funders, rating agencies and governments
• Collaborated and strengthened partnerships across the Operating
Groups and other Central Service Groups to progress strategic initiatives,
deliver transformation to reduce complexity, increase transparency and
simplify structures
• Continued to Chair the Macquarie Group Foundation through an active year,
including significant progress on its social impact strategy. $A67 million
contributed to 3,000 non-profit organisations by Macquarie employees and
the Macquarie Group Foundation in FY2024.
People leadership and professional conduct
• Continued to make progress on FMG’s multi-year transformation strategy,
hiring in areas beyond ‘traditional’ finance roles and successfully retaining
key staff and redeploying some impacted staff at the completion of
change initiatives
• Strengthened risk culture through clear accountability, specific risk
management performance objectives implemented across FMG
and celebrating successes with FMG awards focused on positive risk
culture outcomes
• Continued to prioritise and invest in the FMG DEI action plan globally,
fostering a culture of inclusion and actively working towards increasing
representation of under-represented groups at senior leadership levels.
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Continued
Risk Management Group
(RMG)
A. Cassidy
CRO and Head of RMG
Awarded remuneration ($A)
FY2024
FY2023
Fixed remuneration
1,120,562
771,741
Available profit share
2,800,000
1,800,000
Retained profit share
2,800,000
2,700,000
Total
6,720,562
5,271,741
FY2024 Awarded remuneration
Available
profit share
42%
Fixed
remuneration
16%
Retained
profit share
42%
Financial/business results
• Responsible for providing independent review and challenge, oversight,
monitoring and reporting in relation to Macquarie’s material risks
• Investment in systems and capabilities to ensure regulatory and business
expectations are being met
• Enhanced the RMG operating model by continuing to invest in our people,
data and technology capabilities.
Risk management and compliance
• Continued to support and embed the remediation program with APRA
• Focused on ensuring that our engagement with regulators is open,
transparent and constructive in line with Macquarie’s Regulator
Engagement Framework
• Drove material initiatives to maintain the Risk Management Framework and
set effective guardrails for risk taking including in areas such as obligations
management, trade surveillance, anti-money laundering and financial
risk management
• Modelled and reinforced key risk behaviours including the importance of a
‘speak up culture’ and supervisory oversight.
Business leadership (including customer and community outcomes)
• Enhanced risk frameworks and capabilities including in areas such as
climate, sustainability and technology
• Invested in operational resilience frameworks to respond to changes in the
external operating environment (e.g. cyber security risk) and to support
regulatory expectations, noting the interconnectedness of the financial
system and greater reliance on third-party service providers
• Continued to lead the company-wide Net Zero and Climate Risk Program
and launched Macquarie’s Greenwashing Standard.
People leadership and professional conduct
• Introduced a refreshed RMG Strategy and continued to embed the RMG and
Macquarie purpose statements
• Developed succession plans for senior leadership across RMG, including a
focus on diverse talent.
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Legal and Governance
Group (LGG)
G.N. Bruce
GGC and Head of LGG
Awarded remuneration ($A)
FY2024
FY2023
Fixed remuneration
1,120,562
771,741
Available profit share
1,500,000
1,160,000
Retained profit share
1,500,000
1,740,000
Total
4,120,562
3,671,741
FY2024 Awarded remuneration
Available
profit share
36%
Fixed
remuneration
28%
Retained
profit share
36%
Financial/business results
• Responsible for providing legal and corporate governance services,
including strategic legal and governance advice and risk assessment
on corporate transactions, treasury and funding, insurance, regulatory
enquiries and litigation
• Implemented initiatives to enhance the LGG operating model by continuing
to invest in our people and processes.
Risk management and compliance
• Continued commitment and investment to ensure risk management
approach is sustainable, efficient and fit-for-purpose, particularly for legal
and governance risk types
• Played a central role in delivering the ongoing program of regulatory work,
which is important to maintain our social licence to operate, including good
progress on the remediation program with APRA
• Provided oversight and support for the delivery of the FAR.
Business leadership (including customer and community outcomes)
• Completed second full year as GGC, Head of LGG and as an Executive
Committee member
• Continued delivery of strategy to protect and represent the interests of
Macquarie as one community of legal and governance professionals
• Continued as a member of the Macquarie Group Foundation Committee.
People leadership and professional conduct
• Maintained strong staff engagement, and continued to emphasise a high
performing and inclusive culture, role-modelling advocacy for diverse talent
• Developed professional standards for LGG in support of Macquarie’s
purpose, and principles of What We Stand For, which are now embedded in
annual review feedback assessments
• Continued investment in staff capabilities through tailored skills programs
and partnerships, as well as pro bono opportunities.
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Continued
Executive KMP – Allocation of PSUs for FY2024
As set out on page 117, individual PSU allocations were determined based on their role as members of the Executive Committee and
contribution to driving the collective performance of Macquarie (taking into consideration both financial and non-financial factors), including
their collaboration across businesses.
The number of PSUs to be allocated will be calculated by dividing the face value of the PSU award by the price of MGL ordinary shares on or
around the date of grant.
Approval will be sought at Macquarie’s 2024 AGM to allocate PSU awards to the Macquarie CEO, who is also an Executive Voting Director.
The table below sets out PSU awards to current Executive KMP but does not include former Executive KMP who received PSU awards in the
prior year.
Executive KMP
Face value of the FY2024 PSU award ($A)
Face value of the FY2023 PSU award ($A)
S.R. Wikramanayake
4,000,000
4,000,000
G.N. Bruce
2,800,000
2,800,000
A. Cassidy
2,800,000
2,800,000
S.D. Green
2,800,000
2,800,000
A.H. Harvey
2,800,000
2,800,000
M.J. Silverton
2,800,000
2,800,000
N. Sorbara
2,800,000
2,800,000
G.C. Ward
2,800,000
2,800,000
B.I. Way
2,800,000
2,800,000
Page 118 sets out details of the performance hurdles and vesting periods applicable to these awards.
Executive KMP – PSUs vesting during FY2024
The PSUs that completed their performance period on 30 June 2023 comprised the second tranche of those awards granted in 2019.(36) The
performance hurdle tests were performed using data sourced from Bloomberg for all companies in the international reference group (as well
as Macquarie) and the calculations were reviewed independently.
The results showed that the performance hurdles:
• based on the EPS CAGR in Macquarie’s reported financial year was partially met, and
• based on Macquarie’s relative average annual ROE compared to the international reference group was fully met.
As a result, 96% of the awards became exercisable on 1 July 2023, as shown below:
PSU tranche
EPS CAGR Hurdle
ROE Hurdle
Macquarie result
(for vesting period)
Hurdle
Outcome
Macquarie result
(for vesting period)
Hurdle
Outcome
2019
Tranche 2
11.26%
50% at 7.5% CAGR
100% at 12% CAGR
92%
exercisable
15.34%
(88th percentile)
50% above the 50th
percentile(37)
100% at the 75th
percentile(37)
100%
exercisable
(36) PSUs awarded prior to FY2020 vested in two equal tranches after three and four years.
(37) International reference group ROE at 50th percentile 12.73% and international reference group ROE at 75th percentile 14.56%.
141
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Remuneration governance
Effective governance is central to Macquarie’s remuneration strategy and approach. The key elements of Macquarie’s remuneration
governance framework are described below.
BOARD
Board Remuneration Committee
Board Risk Committee, Board Audit Committee &
Board Governance and Compliance Committee
Oversees remuneration policies and practices,
and makes recommendations to the Board
Discusses any relevant matters that may impact remuneration in a
joint meeting with the Board Remuneration Committee
Strong Board oversight
The Board oversees Macquarie’s remuneration framework and
its effective application. The Board has a BRC whose objective is
to assist the Board with Macquarie’s remuneration policies and
practices. The BRC currently comprises three independent NEDs as
set out earlier in the Directors’ Report.
The BRC members have the required experience and expertise in
human resources, remuneration and risk to enable them to achieve
effective governance of the remuneration framework. The BRC
has a regular meeting cycle and met seven times during FY2024.
Attendance at meetings by the BRC members is set out on page
95. Strict processes are in place to ensure conflicts of interest are
appropriately managed.
The MBL BRC (established in 2022) works closely with the BRC to
assist the MBL Board with its oversight of remuneration policies and
practices applying to staff of Macquarie Bank.
BRC responsibilities
The BRC pays close attention to the design and operation of
remuneration practices for all Macquarie staff, not just for the most
senior executives. The responsibilities of the BRC are outlined in its
Charter, which is reviewed and approved annually by the Board.
The Charter is available at
macquarie.com/corporate-governance
Some of the responsibilities include:
• overseeing the process for the annual review by the Board of the
CEO’s, MBL CEO’s and other Executive KMPs’ performance
• recommending to the Board the remuneration outcomes for all
Executive KMP, other roles specified under CPS 511 and other
senior executives
• assessing the effectiveness of the Remuneration Policy to ensure
compliance with legal and regulatory requirements, as well as to
support the alignment of remuneration with prudent risk-taking
and professional conduct across the organisation
• recommending the Remuneration Policy to the Board
for approval.
Alignment to risk
The BRC liaises with the BRiC, BAC and BGCC to ensure there
is effective co-ordination between the Committees to assist in
producing an integrated approach to remuneration that reflects
prudent and appropriate risk management.
As set out on page 122, the CRO and the Head of Internal Audit
provide the BRC with independent reports detailing significant risk
and internal audit matters (financial and non-financial) including
those relating to incidents, issues, and regulatory and litigation
matters. A joint meeting of the BRC, BRiC, BAC and BGCC is held to
discuss these matters, with the CRO and the Head of Internal Audit
in attendance. The GGC attends as required to provide a further
source of independent input, including on matters that might lead
to a malus or clawback determination.
Engagement with external stakeholders
The Chair of the Board and the BRC Chair undertook a series of
meetings with investors and proxy advisors during the year to
communicate our remuneration approach and to hear any concerns
raised by the investor community.
They also engaged with APRA during the year regarding Macquarie’s
implementation of CPS 511.
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Continued
Independent remuneration review
The BRC has retained Pay Governance as its independent
remuneration consultant, for the use of the Board to obtain advice
on the appropriateness of Macquarie’s remuneration framework.
The only service that Pay Governance provides to Macquarie is
executive compensation consulting to the BRC. Pay Governance has
not made any remuneration recommendations, as defined by the
Corporations Act 2001 (Cth) (the Act). The BRC is responsible for
making decisions within the terms of its Charter. Pay Governance’s
terms of engagement set out their independence from members of
Macquarie’s management. This year, Pay Governance:
• provided information on global remuneration and
regulatory trends
• considered alignment with shareholder interests
• compared individual remuneration for Executive KMP where
relevant comparator company information was available
• considered Macquarie’s overall remuneration approach
compared to comparator company organisations.
Pay Governance’s findings included that:
• the objectives of Macquarie’s remuneration framework are
similar to those cited by other leading global investment banks
• Macquarie’s remuneration components support its remuneration
objectives and principles and are largely consistent with
practices at other leading global investment banks, including
that performance-based remuneration takes risk management
into account.
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Non-Executive Director remuneration
The Board seeks to appoint and appropriately remunerate high calibre NEDs. Reflecting the Board’s role, the remuneration arrangements
applicable to NEDs, as outlined in this section, differ significantly from the arrangements applicable to executives.
(38) MGL has five standing Board Committees.
(39) Where applicable, annual director fees include all fees payable by MGL to a NED for acting as a director of MGL and MBL, including attending and participating in any board
committee meetings.
(40) The Chair of the Board does not receive Board Committee membership fees.
Non-Executive Director remuneration
Non-Executive Director fees are set acknowledging the level
required to appropriately remunerate highly qualified NEDs who
have the relevant skills and experience to govern as a member of
the Board.
The NED remuneration framework seeks to remunerate high calibre
directors by:
• setting an overall fee that reflects the scale and complexity of
Macquarie including additional risk management and regulatory
responsibilities and the global financial nature of Macquarie’s
activities
• setting Board and Board Committee fees to reflect the time
commitment to meet the responsibilities involved in the annual
scheduled calendar, taking into account market rates for relevant
organisations and market trends
• paying separate fees for additional responsibilities that may arise
on an ad hoc basis
• delivering these fees in a form that is not contingent on
Macquarie’s performance
• setting a minimum shareholding requirement to align the
interests of NEDs with MGL shareholders.
The Board ensures that MGL NED remuneration does not exceed the
Macquarie shareholder approved maximum amount. Shareholders
approved the current limit ($A5.0 million per annum) at MGL’s 2019
AGM. Where MGL NEDs are also members of the MBL Board, their
fees include those payable for acting as a director of MBL.
Board and Board Committee fees are reviewed annually.(38) An
internal review of NED fees was completed during the year. The
Boards determined, following this review, that Board and Board
Committee fees would remain unchanged.
The CEO is not remunerated separately for acting as an Executive
Voting Director.
Unlike Macquarie executives, NEDs are not granted equity, nor are
they eligible to receive profit share payments. There are no
termination payments to NEDs on their retirement from office
other than payments relating to their accrued superannuation
contributions comprising part of their remuneration, if any.
NEDs may elect to receive their remuneration, in part, in the form of
superannuation contributions over and above the minimum level of
contribution required under applicable legislation.
Minimum shareholding requirement for
Non-Executive Directors
To align the interests of the Board with shareholders, the Board
has a minimum shareholding requirement for MGL NEDs to have a
meaningful direct shareholding in Macquarie.
The minimum shareholding requirement for:
• NEDs other than the Chair: an investment equivalent to one
times the average annual aggregate NED fee for the financial
year ending prior to their appointment. Where a MGL NED is also
on the MBL Board, this calculation will reflect the aggregate fee
for acting as a MGL NED and MBL NED
• the Chair: an investment equivalent to one times the annual
Chair fee. Where the Chair is also the MBL Chair, this calculation
will reflect the aggregate fee for the role of MGL Chair and
MBL Chair.
The above requirements are to be met within three years from
appointment with one third of the requirement to be held after one
year, two thirds after two years and in full after three years.
Under Macquarie’s Trading Policy, NEDs may only trade Macquarie
securities during designated trading windows and are prohibited
from hedging shares held to meet this minimum shareholding
requirement. Each NED’s current holding of MGL ordinary shares is
included on page 94.
The annual Board and Board Committee fees are set out in the
table below.
Annual Director Fees(39)
Chair
Member
$A(40)
$A
Board
935,000
275,000
Board Audit Committee (BAC)
80,000
37,000
Board Governance and Compliance
Committee (BGCC)
80,000
37,000
Board Remuneration Committee (BRC)
80,000
37,000
Board Risk Committee (BRiC)
80,000
37,000
Board Nominating Committee (BNC)
n/a
18,500
144
Remuneration Report
Continued
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145
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Appendix 1: Key Management Personnel (KMP) for FY2024
All the individuals listed below have been determined to be KMP for FY2024 for the purposes of the Act and as defined by AASB 124 Related
Party Disclosures. KMP include Executive Voting Directors and executives with authority and responsibility for planning, directing and
controlling the activities of MGL and its controlled entities (together making Executive KMP) and NEDs. MGL’s NEDs are required by the Act
to be included as KMP for the purposes of disclosures in the Remuneration Report. However, the NEDs do not consider themselves part
of management.
Name
Position
Term as KMP for FY2024
Executive Voting Director
S.R. Wikramanayake
CEO
Full year
Non-Executive Directors
J.R. Broadbent AC
Independent Director
Full year
P.M. Coffey
Independent Director
Full year
M.A. Hinchliffe
Independent Director
Full year
S.J. Lloyd-Hurwitz
Independent Director
Appointed to the Board effective from 1 June 2023
R.J. McGrath
Independent Director
Full year
M. Roche
Independent Director
Full year
G.R. Stevens AC
Independent Chair
Full year
N.M. Wakefield Evans AM
Independent Director
Ceased to be a member of the Board on 29 February 2024
Executives(41)
G.N. Bruce
GGC, Head of LGG
Full year
A. Cassidy
CRO, Head of RMG
Full year
S.D. Green
Macquarie Bank CEO
Full year
A.H. Harvey
CFO, Head of FMG
Full year
N. O’Kane
Former Head of CGM
Ceased to be a member of the Executive Committee on
27 February 2024
M.J. Silverton
Head of Macquarie Capital
Full year
N. Sorbara
COO, Head of COG
Full year
G.C. Ward
Deputy Managing Director and Head of BFS
Full year
B.I. Way
Head of MAM
Full year
(41) Except where otherwise indicated, all of the executives as well as the CEO were members of the Executive Committee as at 3 May 2024. Simon Wright, Head of CGM, was appointed
to the Executive Committee on 1 April 2024.
146
Remuneration Report
Continued
Appendix 2: Executive KMP remuneration disclosure
(in accordance with Australian Accounting Standards)
(42) Ms Bruce was hired by Macquarie on 1 January 2022 and appointed to the Executive Committee on 2 March 2022. To secure Ms Bruce’s appointment, the Board determined it was
necessary and appropriate to provide competitive remuneration arrangements. This included awarding a minimum profit share allocation of $A2.619 million for the performance
year ending 31 March 2023 (subject to Macquarie’s standard remuneration arrangements) and a minimum PSU allocation of face value $A2.0 million for FY2023 (subject to the
performance hurdles and other conditions applicable to the PSU allocations awarded to other Executive Committee members).
(43) Mr Silverton is paid in US dollars. As a US tax resident, Mr Silverton’s remuneration is subject to US social security and Medicare taxes, payable by Macquarie. Amounts of
$A217,665 and $A189,509 were paid during FY2023 and FY2024, respectively, and are not included in Mr Silverton’s statutory remuneration.
(44) Mr Way is paid in US dollars. As a US tax resident, Mr Way’s remuneration is subject to US social security and Medicare taxes, payable by Macquarie. An amount of $A18,843 and
$A132,130 was paid during FY2023 and FY2024, respectively, and are not included in Mr Way’s statutory remuneration.
(45) Mr O’Kane ceased to be a member of the Executive Committee on 27 February 2024 and resigned from Macquarie effective 18 March 2024. In compliance with Macquarie’s
standard remuneration arrangements and as a result of his resignation, Mr O’Kane forfeited his unvested retained profit share and unvested PSUs. In accordance with
accounting requirements this resulted in a net reversal of previously recognised remuneration expense consisting of $A10.3 million for forfeited retention notionally invested in
Macquarie-managed fund equity and $A33.4 million of amortisation for forfeited equity awards during FY2024.
SHORT-TERM EMPLOYEE BENEFITS
Salary (including
superannuation)
Performance related
remuneration
Total
short-term
employee benefits
Name
Position
Year
$A
$A
$A
Executive Voting Director
S.R. Wikramanayake
Macquarie Group CEO
2024
1,527,224
7,125,000
8,652,224
2023
821,081
6,400,000
7,221,081
Executives
G.N. Bruce(42)
GGC, Head of LGG
2024
1,120,562
1,500,000
2,620,562
2023
771,741
1,160,000
1,931,741
A. Cassidy
CRO, Head of RMG
2024
1,120,562
2,800,000
3,920,562
2023
771,741
1,800,000
2,571,741
S.D. Green
Macquarie Bank CEO
2024
1,323,893
1,500,000
2,823,893
2023
771,741
1,400,000
2,171,741
A.H. Harvey
CFO, Head of FMG
2024
1,120,562
3,400,000
4,520,562
2023
771,741
3,200,000
3,971,741
M.J. Silverton(43)
Head of Macquarie Capital
2024
1,198,965
5,250,000
6,448,965
2023
784,865
3,920,000
4,704,865
N. Sorbara
COO, Head of COG
2024
1,120,562
3,400,000
4,520,562
2023
771,741
3,200,000
3,971,741
G.C. Ward
Deputy Managing Director, Head of BFS
2024
1,120,562
5,000,000
6,120,562
2023
771,741
4,000,000
4,771,741
B.I. Way(44)
Head of MAM
2024
1,330,435
5,000,000
6,330,435
2023
907,110
6,400,000
7,307,110
Total Remuneration – Comparable Executive KMP
2024
10,983,327
34,975,000
45,958,327
2023
7,143,502
31,480,000
38,623,502
Former Executives
N. O’Kane(45)
Former Head of CGM
2024
1,019,528
-
1,019,528
2023
723,419
17,067,000
17,790,419
Total Remuneration - Executive KMP
2024
12,002,855
34,975,000
46,977,855
(including former Executives)
2023
7,866,921
48,547,000
56,413,921
147
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LONG-TERM EMPLOYEE BENEFITS
SHARE BASED PAYMENTS
Restricted
profit share
Earnings on prior
years’ restricted
profit share
Total long-term
employee
benefits
Equity awards
PSUs
Total
share-based
payments
Total
remuneration
Percentage of
remuneration
that
consists of PSUs
$A
$A
$A
$A
$A
$A
$A
%
1,662,500
1,785,358
3,447,858
16,179,390
1,091,832
17,271,222
29,371,304
4%
2,560,000
2,642,127
5,202,127
15,000,954
2,980,078
17,981,032
30,404,240
10%
150,000
21,083
171,083
680,276
1,168,968
1,849,244
4,640,889
25%
174,000
5,132
179,132
407,908
737,125
1,145,033
3,255,906
23%
280,000
57,094
337,094
1,323,780
1,363,717
2,687,497
6,945,153
20%
270,000
42,610
312,610
870,592
936,669
1,807,261
4,691,612
20%
225,000
69,930
294,930
1,295,980
1,276,407
2,572,387
5,691,210
22%
210,000
71,782
281,782
981,118
936,669
1,917,787
4,371,310
21%
340,000
275,651
615,651
3,895,780
1,100,275
4,996,055
10,132,268
11%
480,000
343,104
823,104
3,846,002
1,870,796
5,716,798
10,511,643
18%
525,000
342,859
867,859
5,098,054
830,053
5,928,107
13,244,931
6%
588,000
393,301
981,301
4,770,628
1,758,795
6,529,423
12,215,589
14%
340,000
276,976
616,976
3,907,448
1,100,275
5,007,723
10,145,261
11%
480,000
344,233
824,233
3,856,298
1,870,796
5,727,094
10,523,068
18%
1,000,000
741,822
1,741,822
4,684,026
838,734
5,522,760
13,385,144
6%
1,200,000
946,218
2,146,218
4,606,203
2,109,455
6,715,658
13,633,617
15%
2,500,000
2,971,001
5,471,001
2,787,411
1,363,717
4,151,128
15,952,564
9%
4,800,000
2,669,933
7,469,933
2,456,941
936,669
3,393,610
18,170,653
5%
7,022,500
6,541,774
13,564,274
39,852,145
10,133,978
49,986,123
109,508,724
10,762,000
7,458,440
18,220,440
36,796,644
14,137,052
50,933,696
107,777,638
(10,281,020)
297,845
(9,983,175)
(29,037,486)
(4,315,830)
(33,353,316)
(42,316,963)
10%
3,982,300
1,220,197
5,202,497
17,593,725
2,109,455
19,703,180
42,696,096
5%
(3,258,520)
6,839,619
3,581,099
10,814,659
5,818,148
16,632,807
67,191,761
14,744,300
8,678,637
23,422,937
54,390,369
16,246,507
70,636,876
150,473,734
148
Remuneration Report
Continued
Additional information regarding the statutory remuneration disclosures set out in this Appendix
The remuneration disclosures set out in this Appendix have been
prepared in accordance with Australian Accounting Standards
and differ to the additional disclosures set out on pages 130-139.
Under the requirements of AASB 124 Related Party Disclosures, the
remuneration disclosures for the years ended 31 March 2024 and
31 March 2023 only include remuneration relating to the portion of
the relevant periods that each person was an Executive KMP.
The following information provides more detail regarding some of
the column headings in this Appendix:
1. Short-term employee benefits:
(a) Salary: includes salary, superannuation, any accrual for long
service leave and other benefits.
(b) Performance-related remuneration: this represents the
cash portion of each person’s profit share allocation for the
reporting period as an Executive KMP.
2. Long-term employee benefits:
(a) Restricted profit share: this represents the amount of
retained profit share awarded for the current period that is
deferred to future periods and held as a notional investment
in Macquarie-managed fund equity (DPS Plan).
(b) Earnings on prior years’ restricted profit share: Profit
share amounts retained under the DPS Plan are notionally
invested in Macquarie-managed funds, providing Executive
Directors with an economic exposure to the underlying
investments. Executive Directors are each entitled to
amounts equivalent to the investment earnings (dividends/
distributions and security price appreciation) on the
underlying securities. The notional returns are calculated
based on Total Shareholder Return. Where these amounts
are positive, they may be paid to Executive Directors and
are included in these remuneration disclosures as part of
‘Earnings on prior years’ restricted profit share’. If there is
a notional loss, this loss will be offset against any future
notional income until the loss is completely offset and is
reported as a negative amount in the same column. These
earnings reflect the investment performance of the assets
in which prior years’ retained amounts have been notionally
invested. Their inclusion in the individual remuneration
disclosures on the previous pages may, therefore,
cause distortions when year-on-year remuneration
trends are examined. They do not reflect remuneration
review decisions made about the individual’s current
year performance.
3. Share-based payments:
(a) Equity awards including shares: This represents the current
year expense for retained profit share that is invested in
MGL ordinary shares under the MEREP as described on page
115. This is recognised as an expense over the respective
vesting periods, or service period if shorter, as described
on page 114 and includes amounts relating to prior years
equity awards that have been previously disclosed. Equity
awards in respect of FY2024 performance will be granted
during FY2025; however, Macquarie begins recognising an
expense for these awards (based on an initial estimate) from
1 April 2023. The expense is estimated using the price of
MGL ordinary shares as at 31 March 2024 and the number
of equity awards expected to vest. In the following financial
year, Macquarie will adjust the accumulated expense
recognised for the final determination of the accounting fair
value for each equity award when granted and will use this
validation for recognising the expense over the remaining
vesting period.
(b) PSUs: This represents the current year expense for PSUs
that is recognised over the vesting period as described on
page 117. This includes amounts relating to prior years’ PSU
awards. PSU awards in respect of FY2024 will be granted
during FY2025; however, Macquarie begins recognising an
expense for these awards (based on an initial estimate) from
1 April 2023. The expense is estimated using the price of
MGL ordinary shares as at 31 March 2024 and the number
of PSUs expected to vest. The estimate also incorporates
an interest rate to maturity of 3.97% per annum (3.99% for
grants to the CEO and the MBL CEO), expected vesting date
of 1 July 2028 (1 July 2029 for the CEO and the MBL CEO),
and a dividend yield of 3.76% per annum. In the following
financial year, Macquarie will adjust the accumulated
expense recognised for the final determination of the
accounting fair value for each PSU when granted and will
use this validation for recognising the expense over the
remaining vesting period. Performance hurdles attached to
the PSUs allow for PSUs to become exercisable upon vesting
only when the relevant performance hurdles are met. The
current year expense is reduced for previously recognised
remuneration expense where performance hurdles have
not been met, have been partially met or are not expected
to be met.
149
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Appendix 3: Non-Executive Director remuneration
The remuneration arrangements for all the persons listed below as NEDs are described on page 143 of the Remuneration Report. The fees
shown include fees paid as members of both the MGL and MBL Boards.
Fees
Other benefits(46)
Total compensation
Year
$A
$A
$A
J.R. Broadbent AC(47)
2024
398,565
-
398,565
2023
378,000
–
378,000
P.M. Coffey(48)
2024
410,500
-
410,500
2023
415,000
–
415,000
M.J. Coleman(49)
2024
-
-
-
2023
143,891
6,300
150,191
M.A. Hinchliffe(50)
2024
410,500
-
410,500
2023
388,979
6,300
395,279
S.J. Lloyd-Hurwitz(51)
2024
294,712
-
294,712
2023
-
-
-
R.J. McGrath(52)
2024
408,565
-
408,565
2023
396,667
–
396,667
M. Roche(53)
2024
404,500
-
404,500
2023
396,667
–
396,667
G.R. Stevens AC(54)
2024
935,000
-
935,000
2023
872,903
–
872,903
N.M. Wakefield Evans AM(55)
2024
340,700
-
340,700
2023
445,833
–
445,833
P.H. Warne(56)
2024
-
-
-
2023
100,538
-
100,538
Total Remuneration – Non-Executive KMP
2024
3,603,042
-
3,603,042
2023
3,538,478
12,600
3,551,078
(46) No other benefits were paid in FY2024 (FY2023: due diligence fees paid to Mr Coleman and Ms Hinchliffe of A$6,300 each).
(47) Ms Broadbent ceased to be a member of the BRiC on 1 June 2022, and was reappointed as a member of the BRiC on 28 July 2023.
(48) Mr Coffey ceased to be a member of the BAC and BRC and became a member of the BGCC on 1 June 2022.
(49) Mr Coleman ceased to be a member of the MGL Board on 28 July 2022, at which point he became a Bank-only Non-Executive Director (BOND). BOND fees are received from MBL
and are set out in the 2024 MBL Annual Report.
(50) Ms Hinchliffe ceased to be a member of the BRiC on 1 June 2022. She became a member of the BGCC and Chair of the BAC on 28 July 2022.
(51) Ms Lloyd-Hurwitz was appointed to the MGL and MBL Boards as an Independent Voting Director on 1 June 2023 and 28 July 2023, respectively. She became a member of the BNC
on 1 June 2023, and a member of the BAC and BRC on 28 July 2023.
(52) Ms McGrath became a member of the BRC on 1 June 2022. She ceased to be a member of the BRC and was appointed Chair of the BGCC on 28 July 2023.
(53) Mr Roche became a member of the BAC on 1 June 2022.
(54) Mr Stevens became Chair of the MGL and MBL Boards on 10 May 2022. He ceased to be a member of the BAC and BRiC on 1 June 2022.
(55) Ms Wakefield Evans ceased to be a member of the MGL and MBL Boards on 29 February 2024 and 27 July 2023, respectively. She ceased to be Chair of the BGCC and a member of
the BRiC on 27 July 2023.
(56) Mr Warne retired from his roles as Chair and Independent Voting Director of the MGL and MBL Boards on 9 May 2022.
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Remuneration Report
Continued
Appendix 4: Share disclosures
Shareholdings of KMP and their related parties
The following table sets out details of MGL ordinary shares held during the financial year by KMP including their related parties.
Name and position
Number of shares
held at 1 April 2023(57)
Shares received on
withdrawal from
the MEREP(58)
Other
changes(59)
Number of shares held
at 31 March 2024(60),(61)
Executive Voting Director
S.R. Wikramanayake
1,088,094
87,803
-
1,175,897
Non-Executive Directors
J.R. Broadbent AC
16,062
-
-
16,062
P.M. Coffey
8,895
-
-
8,895
M.A. Hinchliffe
2,127
-
673
2,800
S.J. Lloyd-Hurwitz
-
-
880
880
R.J. McGrath
2,750
-
1,067
3,817
M. Roche
3,504
-
3,496
7,000
G.R. Stevens AC
5,847
-
-
5,847
N.M. Wakefield Evans AM
7,267
-
-
7,267
Executives
G.N. Bruce
69
-
(69)
-
A. Cassidy
18
2,938
(2,938)
18
S.D. Green
232
6,164
(6,164)
232
A.H. Harvey
-
38,883
(8,175)
30,708
N. O’Kane
6,840
97,200
(82,712)
21,328
M.J. Silverton
4,662
26,865
(13,716)
17,811
N. Sorbara
9,384
38,303
(38,303)
9,384
G.C. Ward
-
50,700
(50,700)
-
B.I. Way
-
11,123
(5,680)
5,443
(57) Or date of appointment if later.
(58) For RSUs, this represents RSUs vesting during the current financial year. For PSUs, this represents vested PSUs exercised during the current financial year.
(59) Includes on market acquisitions and disposals.
(60) Or date of ceasing to be a KMP if earlier.
(61) In addition to the MGL ordinary shares set out in this table, Executive KMP also hold an interest in MGL ordinary shares through the MEREP, as set out in the table on page 155.
151
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RSU awards to KMP
(62) Or during the period that the individual was a KMP.
(63) For RSUs, this represents RSUs vesting during the current financial year in respect of grants made while a KMP. Grants made prior to individuals becoming a KMP are not disclosed.
The following table sets out details of the RSU awards associated
with Macquarie equity granted to Executive KMP. Grants made to
Executive KMP prior to their joining the Executive Committee are
not disclosed. PSUs are disclosed in a separate table.
A significant portion of an Executive KMP’s retained profit share
is invested in Macquarie equity, delivered as RSUs. RSUs are units
comprising a beneficial interest in MGL ordinary shares held in a
trust for the staff member. For further details, refer to Note 32
Employee equity participation to the financial statements in the
Financial Report. There have been no alterations to the terms or
conditions of the grants set out below since the grant date.
RSU awards are subject to forfeiture as set out on page 115.
The maximum potential value of unvested awards could vary
significantly and is dependent on the MGL ordinary share price at
the time of vesting. Retention rates, the vesting profiles and service
and performance criteria for the current year are set out on pages
114-115. RSUs are granted in the financial year following the year of
Macquarie’s performance to which the grant relates. For example,
RSUs granted to KMP in June 2023 relate to their performance in
FY2023. All awards that were eligible to vest, vested during the year.
No awards were forfeited during the year, other than 615,729 RSU
awards held by Mr O’Kane which were forfeited upon his resignation
from Macquarie.
Name and position
RSU awards granted to date(62)
Grant date
Number vested during the year(62),(63)
Executive Voting Director
S.R. Wikramanayake
128,592
01-Aug-23
-
106,628
02-Aug-22
-
94,193
03-Aug-21
-
139,266
04-Aug-20
27,853
65,003
15-Aug-19
13,000
49,162
21-Jun-18
9,832
49,025
22-Jun-17
9,805
54,473
17-Jun-16
10,897
Executives
G.N. Bruce
8,740
21-Jun-23
-
2,094
21-Jun-22
-
A. Cassidy
13,562
21-Jun-23
-
7,997
21-Jun-22
-
S.D. Green
10,548
21-Jun-23
-
7,837
21-Jun-22
-
A.H. Harvey
24,111
21-Jun-23
-
23,191
21-Jun-22
-
21,709
09-Jun-21
-
45,661
09-Jun-20
9,132
25,945
24-Jun-19
5,189
27,009
21-Jun-18
5,401
N. O’Kane
200,037
21-Jun-23
-
113,559
21-Jun-22
-
89,324
09-Jun-21
-
148,994
09-Jun-20
29,798
91,106
24-Jun-19
18,221
61,902
21-Jun-18
12,380
M.J. Silverton
29,912
21-Jun-23
-
54,263
21-Jun-22
-
21,836
09-Jun-21
-
37,375
09-Jun-20
7,475
37,138
24-Jun-19
7,427
152
Remuneration Report
Continued
Name and position
RSU awards granted to date(62)
Grant date
Number vested during the year(62),(63)
N. Sorbara
24,111
21-Jun-23
–
23,191
21-Jun-22
–
21,709
09-Jun-21
–
45,661
09-Jun-20
9,132
25,945
24-Jun-19
5,189
27,009
21-Jun-18
5,401
26,967
22-Jun-17
5,393
25,049
17-Jun-16
5,013
G.C. Ward
26,790
21-Jun-23
–
25,590
21-Jun-22
–
25,466
09-Jun-21
–
57,499
09-Jun-20
11,499
31,618
24-Jun-19
6,323
33,211
21-Jun-18
6,642
40,801
22-Jun-17
8,160
32,445
17-Jun-16
6,489
B.I. Way
27,155
21-Jun-23
–
26,863
21-Jun-22
–
8,877
09-Jun-21
–
153
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PSU awards to KMP
The following table sets out details of PSU awards granted to Executive KMP.
GRANTED TO DATE
FORFEITED/LAPSED DURING
THE FINANCIAL YEAR(64)
EXERCISED DURING THE
FINANCIAL YEAR(64)
Name and position
Number
Date
Accounting
Fair Value
$A(65)
Face Value
$A(66)
Number
%
Value $A(67)
Number
exercised
Value
$A(68)
Executive Voting Director
S.R. Wikramanayake
22,535
01-Aug-23
3,418,560
3,999,963
–
–
–
–
–
22,363
02-Aug-22
3,500,704
3,999,846
–
–
–
–
–
20,278
03-Aug-21
2,718,063
3,164,585
–
–
–
–
–
32,575
04-Aug-20
3,423,307
4,079,693
–
–
–
–
–
34,198
15-Aug-19
3,385,267
4,035,364
(683)
2%
(121,314)
16,416
2,913,840
Executives
G.N. Bruce
15,774
01-Aug-23
2,392,916
2,799,885
–
–
–
–
–
7,827
02-Aug-22
1,225,239
1,399,937
–
–
–
–
–
A. Cassidy
15,774
01-Aug-23
2,392,916
2,799,885
–
–
–
–
–
15,654
02-Aug-22
2,450,477
2,799,874
–
–
–
–
–
S.D. Green
15,774
01-Aug-23
2,392,916
2,799,885
–
–
–
–
–
15,654
02-Aug-22
2,450,477
2,799,874
–
–
–
–
–
A.H. Harvey
15,774
01-Aug-23
2,392,916
2,799,885
–
–
–
–
–
15,654
02-Aug-22
2,450,477
2,799,874
–
–
–
–
–
14,195
03-Aug-21
1,902,698
2,215,272
–
–
–
–
–
16,223
04-Aug-20
1,704,875
2,031,769
–
–
–
–
–
17,032
15-Aug-19
1,686,001
2,009,776
(341)
2%
(60,568)
8,175
1,433,656
N. O’Kane
15,774
01-Aug-23
2,392,916
2,799,885
–
–
–
–
–
15,654
02-Aug-22
2,450,477
2,799,874
–
–
–
–
–
14,195
03-Aug-21
1,902,698
2,215,272
–
–
–
–
–
22,994
04-Aug-20
2,416,439
2,879,769
–
–
–
–
–
24,139
15-Aug-19
2,389,524
2,848,402
(483)
2%
(85,790)
11,587
1,970,614
M.J. Silverton
15,774
01-Aug-23
2,392,916
2,799,885
–
–
–
–
–
15,654
02-Aug-22
2,450,477
2,799,874
–
–
–
–
–
14,195
03-Aug-21
1,902,698
2,215,272
–
–
–
–
–
22,994
04-Aug-20
2,416,439
2,879,769
–
–
–
–
–
N. Sorbara
15,774
01-Aug-23
2,392,916
2,799,885
–
–
–
–
–
15,654
02-Aug-22
2,450,477
2,799,874
–
–
–
–
–
14,195
03-Aug-21
1,902,698
2,215,272
–
–
–
–
–
16,223
04-Aug-20
1,704,875
2,031,769
–
–
–
–
–
17,032
15-Aug-19
1,686,001
2,009,776
(341)
2%
(60,568)
8,175
1,439,785
(64) Or during the period for which the individual was a KMP if shorter. Forfeitures exclude 68,617 PSU awards held by Mr O’Kane which were forfeited upon his resignation
from Macquarie.
(65) Based on the accounting fair value on the date of grant.
(66) Face value is calculated by multiplying the number of PSUs granted by the closing market price of MGL ordinary shares on the date of grant.
(67) Based on the closing share price at 30 June 2023, being the day the PSUs were forfeited.
(68) Based on the share price at the time of exercise.
154
Remuneration Report
Continued
GRANTED TO DATE
FORFEITED/LAPSED DURING
THE FINANCIAL YEAR(64)
EXERCISED DURING THE
FINANCIAL YEAR(64)
Name and position
Number
Date
Accounting
Fair Value
$A(65)
Face Value
$A(66)
Number
%
Value $A(67)
Number
exercised
Value
$A(68)
G.C. Ward
15,774
01-Aug-23
2,392,916
2,799,885
–
–
–
–
–
15,654
02-Aug-22
2,450,477
2,799,874
–
–
–
–
–
14,195
03-Aug-21
1,902,698
2,215,272
–
–
–
–
–
22,994
04-Aug-20
2,416,439
2,879,769
–
–
–
–
–
24,139
15-Aug-19
2,389,524
2,848,402
(483)
2%
(85,790)
11,587
2,027,572
B.I. Way
15,774
01-Aug-23
2,392,916
2,799,885
15,654
02-Aug-22
2,450,477
2,799,874
–
–
–
–
–
As required under the Act, Macquarie has adopted the fair value measurement provisions of AASB 2 Share-Based Payment for all PSUs
granted to KMP. The accounting fair value of such grants is being amortised and disclosed as part of each KMP’s remuneration on a
straight-line basis over the vesting period. The accounting fair value of $A151.70 at this date has been estimated using a discounted
cash flow method.
The following key assumptions were adopted in determining the value of the PSUs granted:
Interest rate to maturity
4.25% per annum
Expected vesting dates
1 July 2027
Dividend yield
3.54% per annum
PSUs have a nil exercise price. PSUs awarded from FY2020 vest in four years as set out on page 117 while PSUs awarded prior to FY2020 vest
on a pro-rata basis as set out on page 140, footnote 36. For the 2023 grant, PSUs will vest on 1 July 2027 and expire on 1 August 2032.
155
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MEREP awards of KMP and their related parties
The following tables set out details of the MEREP RSU and PSU awards held during the year for the KMP including their related parties.
Further details in relation to the MEREP RSU and PSU awards are disclosed in Note 32 Employee equity participation to the financial
statements in the Financial Report of this Annual Report.
Name and position
Type of
Award
Number of
Awards held at
1 April 2023
Awards granted
during the
financial year(69)
Awards vested/
exercised during the
financial year(70),(71)
Awards forfeited
or not able to be
exercised during the
financial year(72)
Number of
Awards held as at
31 March 2024(73)
Executive Voting Director
S.R. Wikramanayake
RSU
452,095
128,592
(71,387)
-
509,300
PSU
92,315
22,535
(16,416)
(683)
97,751
Executives
G.N. Bruce
RSU
3,041
8,740
-
-
11,781
PSU
7,827
15,774
-
-
23,601
A. Cassidy
RSU
16,682
13,562
(2,938)
-
27,306
PSU
15,654
15,774
-
-
31,428
S.D. Green
RSU
29,638
10,548
(6,164)
-
34,022
PSU
15,654
15,774
-
-
31,428
A.H. Harvey
RSU
142,814
24,111
(30,708)
-
136,217
PSU
54,588
15,774
(8,175)
(341)
61,846
N. O’Kane
RSU
501,305
200,037
(85,613)
-
615,729
PSU
64,913
15,774
(11,587)
(483)
68,617
M.J. Silverton
RSU
155,148
29,912
(26,865)
-
158,195
PSU
52,843
15,774
-
-
68,617
N. Sorbara
RSU
143,325
24,111
(30,128)
-
137,308
PSU
54,588
15,774
(8,175)
(341)
61,846
G.C. Ward
RSU
176,587
26,790
(39,113)
-
164,264
PSU
64,913
15,774
(11,587)
(483)
68,617
B.I. Way
RSU
68,343
27,155
(11,123)
-
84,375
PSU
15,654
15,774
-
-
31,428
(69) RSU awards are granted in the financial year following the year of the Company’s performance to which the grant relates. RSUs disclosed as granted above relate to FY2023. PSUs
are granted annually in August. RSU and PSU awards granted to the CEO, who is an Executive Voting Director, were approved by shareholders at the 2023 AGM as required under
ASX Listing Rule 10.14.
(70) For RSUs, this represents vested RSUs transferred to the Executive KMP’s shareholding and includes RSUs vesting during the current year in respect of all grants, including those
made prior to individuals becoming an Executive KMP.
(71) There were no PSUs that vested during the year that were not exercised.
(72) Or during the period for which the individual was a KMP if shorter. Forfeitures exclude 615,729 RSUs and 68,617 PSU awards held by Mr O’Kane which were forfeited upon his
resignation from Macquarie.
(73) Or date of ceasing to be a KMP if earlier.
156
Remuneration Report
Continued
Appendix 5: Loan disclosures
Loans to Key Management Personnel and their related parties
Details of loans provided by Macquarie to KMP and their related parties are disclosed in the following table.
Balance as at
1 April 2023(74)
Interest
charged
Write downs
Balance as at
31 March 2024(75)
Highest balance
during the year
Name and Position
$A’000
$A’000
$A’000
$A’000
$A’000
Non-Executive Directors
N.M. Wakefield Evans AM (related party)
4,489
97
-
4,347
4,489
Executives
A. Cassidy
3,568
157
-
3,428
3,568
A.H. Harvey
8,000
197
-
7,500
8,000
M.J. Silverton
172
2
-
-
172
Aggregate of KMP and related party loans(76)
16,230
453
-
15,276
16,230
This Remuneration Report has been prepared in accordance with the Act. The Remuneration Report contains disclosures as required by
AASB 124 Related Party Disclosures as permitted by Corporations Regulation 2M.3.03 Prescribed details.
Throughout this Remuneration Report financial information for Macquarie relating to the years ended 31 March 2015 through to 31 March
2024 has been presented in accordance with Australian Accounting Standards. Compliance with Australian Accounting Standards ensures
compliance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
(74) Or date of appointment if later.
(75) Or date of ceasing to be a KMP if earlier.
(76) The aggregate of KMP and related party loans includes all loans to KMP (including their related parties) and the table above details KMP (including their related parties) with loans
above $A100,000 during FY2024. All loans provided by Macquarie to KMP are made in the ordinary course of business on an arm’s length basis and are entered into under normal
terms and conditions consistent with other customers and employees. There have been no write-downs or allowances for doubtful debts.
157
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Non-audit services
Fees paid or payable to PwC, being the auditor of the Consolidated
Entity, for non-audit services during the year ended 31 March
2024 total $A14.3 million (2023: $A27.3 million). Further details
of amounts paid or payable to PwC and its related practices
are disclosed in Note 41 Audit and other services provided by
PricewaterhouseCoopers in the Financial Report.
The Voting Directors are satisfied that the provision of non-audit
services did not compromise the auditor independence
requirements of the Act for the following reasons:
• the operation of the Consolidated Entity’s Audit and Assurance
Independence Policy, restricts the external auditor from
providing non-audit services under which the auditor assumes
the role of management, becomes an advocate for the
Consolidated Entity, audits its own professional expertise, or
creates a mutual or conflicting interest between the auditor
and the Consolidated Entity. The policy also provides that
significant permissible non-audit assignments awarded to the
external auditor must be approved in advance by the Board Audit
Committee (BAC) or the BAC Chair, as appropriate
• the BAC has reviewed a summary of non-audit services provided
by PwC, including details of the amounts paid or payable, and
has provided written advice to the Board of Directors.
Consistent with the advice of the BAC, the Voting Directors are
satisfied that the provision of non-audit services during the year by
the auditor and its related practices is compatible with the general
standard of independence for auditors imposed by the Act.
This report is made in accordance with a resolution of the Directors.
Glenn Stevens AC
Independent Director and Chair
Shemara Wikramanayake
Managing Director and Chief Executive Officer
Sydney
3 May 2024
Auditor’s independence declaration
As lead auditor for the audit of Macquarie Group Limited for
the year ended 31 March 2024, I declare that to the best of my
knowledge and belief, there have been:
(i) no contraventions of the auditor independence requirements of
the Corporations Act 2001 (Cth) in relation to the audit, and
(ii) no contraventions of any applicable code of professional
conduct in relation to the audit.
This declaration is in respect of Macquarie Group Limited and the
entities it controlled during the financial year.
Voula Papageorgiou
Partner
PricewaterhouseCoopers
Sydney
3 May 2024
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo,
GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999
Liability limited by a scheme approved under
Professional Standards Legislation
Directors’ Report
For the financial year ended 31 March 2024 continued
158
04
660 Fifth, New York
Thirty years after Macquarie’s
first office opened in New York,
our new Americas headquarters at
660 Fifth Avenue, in the heart of
Manhattan, will open in late 2024.
This next‑generation, interconnected
workplace reflects a focus on
innovation and our ongoing investment
in the Americas, supporting our
ability to deliver for clients and
communities across the region.
Financial
Report
159
Further Information
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Macquarie Group Limited and its subsidiaries 2024 Annual Report
160
Contents
The Financial Report was authorised for issue by the Board of Directors on 3 May 2024.
The Board of Directors has the power to amend and reissue the Financial Report.
Financial statements
Income statements
161
Statements of comprehensive income
162
Statements of financial position
163
Statements of changes in equity
164
Statements of cash flows
166
Notes to the financial statements
167
1.
Basis of preparation
167
2.
Operating profit before income tax
170
3.
Segment reporting
173
4.
Income tax expense
180
5.
Dividends
181
6.
Earnings per share
182
7.
Trading assets
183
8.
Margin money and settlement assets
183
9.
Derivative assets
183
10. Financial investments
184
11. Other assets
184
12. Loan assets
185
13. Expected credit losses
186
14. Interests in associates and joint ventures
192
15. Property, plant and equipment and right-of-use assets
193
16. Intangible assets
196
17. Investment in subsidiaries
197
18. Deferred tax assets/(liabilities)
199
19. Trading liabilities
200
20. Margin money and settlement liabilities
200
21. Derivative liabilities
200
22. Deposits
200
23. Other liabilities
201
24. Issued debt securities and other borrowings
202
25. Capital management
203
26. Loan capital
204
27. Contributed equity
207
28. Reserves, retained earnings and non-controlling interests
209
29. Notes to the statements of cash flows
210
30. Related party information
212
31. Key management personnel disclosure
214
32. Employee equity participation
218
33. Contingent liabilities and commitments
223
34. Structured entities
224
35. Hedge accounting
226
36. Financial risk management
233
37. Measurement categories of financial instruments
254
38. Fair value of assets and liabilities
258
39. Offsetting financial assets and financial liabilities
266
40. Pledged assets and transfers of financial assets
268
41. Audit and other services provided by PricewaterhouseCoopers
271
42. Acquisitions and disposals of subsidiaries and businesses
272
43. Events after the reporting date
272
44. Material accounting policies
273
Statutory statements and other information
Directors’ declaration
292
Independent auditor’s report
293
Ten year history
299
161
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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Income statements
For the financial year ended 31 March 2024
CONSOLIDATED
COMPANY
2024
2023
2024
2023
Notes
$m
$m
$m
$m
Interest and similar income
Effective interest rate method
2
15,751
9,751
1,650
1,217
Other
2
741
388
267
186
Interest and similar expense
2
(13,033)
(7,111)
(1,883)
(1,366)
Net interest income
3,459
3,028
34
37
Fee and commission income
2
6,249
6,400
7
13
Net trading income/(loss)
2
5,448
7,573
(305)
(223)
Share of net losses from associates and joint ventures
2
(49)
(113)
–
–
Net credit impairment reversals/(charges)
2
134
(388)
4
(15)
Net other impairment reversals/(charges)
2
235
(66)
–
–
Net other operating income
2
1,411
2,688
2,089
2,749
Net operating income
16,887
19,122
1,829
2,561
Employment expenses
2
(7,723)
(7,703)
(4)
(4)
Brokerage, commission and fee expenses
2
(1,071)
(1,028)
–
–
Non-salary technology expenses
2
(1,163)
(1,092)
–
–
Other operating expenses
2
(2,104)
(2,307)
(2)
(24)
Total operating expenses
(12,061)
(12,130)
(6)
(28)
Operating profit before income tax
4,826
6,992
1,823
2,533
Income tax (expense)/benefit
4
(1,291)
(1,824)
76
91
Profit after income tax
3,535
5,168
1,899
2,624
(Profit)/loss attributable to non-controlling interests
(13)
14
–
–
Profit attributable to the ordinary equity holders of Macquarie Group
Limited
3,522
5,182
1,899
2,624
Cents
Cents
Cents
Cents
Basic earnings per share
6
916.6
1,353.7
–
–
Diluted earnings per share
6
911.4
1,316.3
–
–
The above income statements should be read in conjunction with the accompanying notes.
162
Statements of comprehensive income
For the financial year ended 31 March 2024
CONSOLIDATED
COMPANY
2024
2023
2024
2023
Notes
$m
$m
$m
$m
Profit after income tax
3,535
5,168
1,899
2,624
Other comprehensive income/(loss):1
Movements in items that may be subsequently reclassified to the
income statement:
Fair value through other comprehensive income (FVOCI) reserve:
Revaluation movement
28
(8)
(15)
1
–
Changes in expected credit losses (ECL) allowance
28
(24)
29
–
–
Cash flow hedges reserves:
Revaluation movement
28
(41)
14
(14)
(13)
Transferred to income statement on realisation
28
42
110
14
–
Cost of hedging reserves:
Revaluation movement
28
(55)
(28)
–
–
Transferred to income statement on realisation
28
13
14
–
–
Share of other comprehensive income from associates and joint ventures
28
22
138
–
–
Foreign exchange movement on translation and hedge accounting of
foreign operations
447
1,338
–
–
Movements in item that will not be subsequently reclassified to the
income statement:
Fair value changes attributable to own credit risk on debt designated at fair
value through profit or loss (DFVTPL)
28
(44)
11
(35)
10
Others
(2)
12
–
–
Total other comprehensive income/(loss)
350
1,623
(34)
(3)
Total comprehensive income
3,885
6,791
1,865
2,621
Total comprehensive loss attributable to non-controlling interests
(20)
(4)
–
–
Total comprehensive income attributable to the ordinary equity holders of
Macquarie Group Limited
3,865
6,787
1,865
2,621
The above statements of comprehensive income should be read in conjunction with the accompanying notes.
1 All items are net of tax, where applicable.
163
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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Statements of financial position
As at 31 March 2024
CONSOLIDATED
COMPANY
2024
2023
2024
2023
Notes
$m
$m
$m
$m
Assets
Cash and bank balances
31,855
45,656
–
–
Cash collateralised lending and reverse repurchase agreements
58,416
54,323
–
–
Trading assets
7
27,924
16,881
–
–
Margin money and settlement assets
8
24,117
25,256
–
–
Derivative assets
9
24,067
36,114
1
3
Financial investments
10
24,378
21,874
1,763
–
Held for sale assets
2,204
921
–
–
Other assets
11
12,638
10,438
22
30
Loan assets
12
176,371
158,572
–
–
Due from subsidiaries
30
–
–
49,712
48,817
Interests in associates and joint ventures
14
6,969
5,574
–
–
Property, plant and equipment and right-of-use assets
15
8,134
6,639
–
–
Intangible assets
16
4,254
3,827
–
–
Investments in subsidiaries
17
–
–
33,805
32,604
Deferred tax assets
18
2,077
1,797
41
3
Total assets
403,404
387,872
85,344
81,457
Liabilities
Cash collateralised borrowing and repurchase agreements
12,599
18,737
–
–
Trading liabilities
19
5,044
4,810
–
–
Margin money and settlement liabilities
20
28,423
27,482
–
–
Derivative liabilities
21
25,585
32,790
5
5
Deposits
22
148,416
134,714
–
–
Held for sale liabilities
407
173
–
–
Other liabilities
23
14,472
12,512
169
241
Due to subsidiaries
30
–
–
7,257
5,686
Issued debt securities and other borrowings
24
119,878
109,461
43,135
39,055
Deferred tax liabilities
18
383
196
–
–
Total liabilities excluding loan capital
355,207
340,875
50,566
44,987
Loan capital
26
14,201
12,891
3,371
3,362
Total liabilities
369,408
353,766
53,937
48,349
Net assets
33,996
34,106
31,407
33,108
Equity
Contributed equity
27
11,372
12,407
13,809
14,872
Reserves
28
3,891
3,302
1,744
1,559
Retained earnings
28
18,218
17,446
15,854
16,677
Total capital and reserves attributable to the ordinary equity holders of
Macquarie Group Limited
33,481
33,155
31,407
33,108
Non-controlling interests
28
515
951
–
–
Total equity
33,996
34,106
31,407
33,108
The above statements of financial position should be read in conjunction with the accompanying notes.
164
Statements of changes in equity
For the financial year ended 31 March 2024
Contributed
equity
Reserves
Retained
earnings
Total
Non-controlling
interests
Total
equity
Notes
$m
$m
$m
$m
$m
$m
CONSOLIDATED
Balance as at 1 Apr 2022
12,298
1,523
14,740
28,561
245
28,806
Profit/(loss) after income tax
–
–
5,182
5,182
(14)
5,168
Other comprehensive income, net of
tax
–
1,582
23
1,605
18
1,623
Total comprehensive income
–
1,582
5,205
6,787
4
6,791
Transactions with equity holders in
their capacity as ordinary equity
holders:
Issue of shares
27
485
–
–
485
–
485
Dividends paid
5, 28
–
–
(2,495)
(2,495)
–
(2,495)
Purchase of shares by MEREP Trust
27
(923)
–
–
(923)
–
(923)
Movement in non-controlling interests
–
–
(4)
(4)
702
698
Other equity movements:
MEREP share-based payment
arrangements
27, 28
512
239
–
751
–
751
Deferred tax benefit/(expense) on
MEREP share-based payment
arrangements
27, 28
35
(42)
–
(7)
–
(7)
109
197
(2,499)
(2,193)
702
(1,491)
Balance as at 31 Mar 2023
12,407
3,302
17,446
33,155
951
34,106
Profit after income tax
–
–
3,522
3,522
13
3,535
Other comprehensive income/(loss),
net of tax
–
389
(46)
343
7
350
Total comprehensive income
–
389
3,476
3,865
20
3,885
Transactions with equity holders in
their capacity as ordinary equity
holders:
Dividends paid
5, 28
–
–
(2,716)
(2,716)
–
(2,716)
Purchase of shares by MEREP Trust
27
(1,028)
–
–
(1,028)
–
(1,028)
On-market share buyback1
27
(644)
–
–
(644)
–
(644)
Movement in non-controlling interests
–
–
4
4
(456)
(452)
Other equity movements:
MEREP share-based payment
arrangements
27, 28
607
184
8
799
–
799
Deferred tax benefit on MEREP
share-based payment arrangements
27, 28
30
16
–
46
–
46
(1,035)
200
(2,704)
(3,539)
(456)
(3,995)
Balance as at 31 Mar 2024
11,372
3,891
18,218
33,481
515
33,996
1 On 2 November 2023, the Macquarie Group Limited ("MGL") Board approved an on-market share buyback of up to $2 billion of MGL shares. During the financial year, 3,514,221 ordinary
shares were bought back at an average price of $183.26 per share. The shares bought back were subsequently cancelled.
165
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Contributed
equity
Reserves
Retained
earnings
Total
equity
Notes
$m
$m
$m
$m
COMPANY
Balance as at 1 Apr 2022
14,781
1,332
16,521
32,634
Profit after income tax
–
–
2,624
2,624
Other comprehensive (loss)/ income, net of tax
–
(13)
10
(3)
Total comprehensive (loss)/income
–
(13)
2,634
2,621
Transactions with equity holders in their capacity as ordinary equity
holders:
Issue of shares
27
502
–
–
502
Dividends paid
5, 28
–
–
(2,478)
(2,478)
Purchase of shares by MEREP Trust
27
(923)
–
–
(923)
Other equity movements:
MEREP share-based payment arrangements
27, 28
512
239
–
751
Deferred tax benefit on MEREP share-based payment arrangements
28
–
1
–
1
91
240
(2,478)
(2,147)
Balance as at 31 Mar 2023
14,872
1,559
16,677
33,108
Profit after income tax
–
–
1,899
1,899
Other comprehensive income/(loss), net of tax
–
1
(35)
(34)
Total comprehensive (loss)/income
–
1
1,864
1,865
Transactions with equity holders in their capacity as ordinary equity
holders:
Dividends paid
5, 28
–
–
(2,695)
(2,695)
Purchase of shares by MEREP Trust
27
(1,028)
–
–
(1,028)
On-market share buyback, including transaction costs2
27
(644)
–
–
(644)
Other equity movements:
MEREP share-based payment arrangements
27, 28
607
184
8
799
Deferred tax benefit on MEREP share-based payment arrangements
28
2
–
–
2
(1,063)
184
(2,687)
(3,566)
Balance as at 31 Mar 2024
13,809
1,744
15,854
31,407
The above statements of changes in equity should be read in conjunction with the accompanying notes.
2 On 2 November 2023, the Macquarie Group Limited ("MGL") Board approved an on-market share buyback of up to $2 billion of MGL shares. During the financial year, 3,514,221 ordinary
shares were bought back at an average price of $183.26 per share. The shares bought back were subsequently cancelled.
166
Statements of cash flows
For the financial year ended 31 March 2024
CONSOLIDATED
COMPANY
2024
2023
2024
2023
Notes
$m
$m
$m
$m
Cash flows (utilised in)/generated from operating activities
Interest income and expense:
Received
16,217
9,807
1,910
1,403
Paid
(12,601)
(6,279)
(1,804)
(1,220)
Fees, commissions and other income and charges:
Received
6,060
6,498
24
13
Paid
(1,099)
(1,091)
–
–
Operating lease income received
908
883
–
–
Dividends and distributions received
218
632
2,079
2,749
Operating expenses paid:
Employment expenses
(7,549)
(6,532)
(4)
(4)
Other operating expenses including brokerage, commission and fee expenses
(3,022)
(3,267)
(3)
(6)
Income tax paid
(1,633)
(2,035)
(356)
(414)
Changes in operating assets:
Loan assets and balances with subsidiaries
(17,031)
(21,856)
2,244
(3,517)
Trading and related assets, and collateralised lending
balances (net of liabilities)
(5,431)
(5,939)
–
–
Assets under operating lease
(960)
(1,042)
–
–
Other assets (net of liabilities)
(78)
(32)
15
(7)
Liquid asset holdings
1,845
(2,021)
(1,271)
–
Changes in operating liabilities:
Issued debt securities, borrowings and other funding
6,586
(12,138)
3,217
3,345
Deposits
13,480
33,032
–
(31)
Net cash flows (utilised in)/generated from operating activities
29
(4,090)
(11,380)
6,051
2,311
Cash flows (utilised in)/generated from investing activities
Net payments for financial investments
(83)
(1,828)
–
–
Associates, joint ventures, subsidiaries and businesses:
Proceeds from distribution or disposal, net of cash deconsolidated
958
4,105
–
1,000
Payments for additional contribution or acquisitions, net of cash acquired
(2,797)
(2,753)
(1,200)
(1,136)
Property, plant and equipment and right-of-use assets, investment property
and intangible assets:
Payments for acquisitions
(1,957)
(824)
–
–
Proceeds from disposals
–
70
–
–
Net cash flows utilised in investing activities
(3,879)
(1,230)
(1,200)
(136)
Cash flows (utilised in)/generated from financing activities
Dividends and distributions paid
(2,662)
(2,010)
(2,695)
(1,991)
Payments for acquisition of treasury shares
(1,084)
(923)
(1,028)
(923)
Payments for on-market share buyback
(644)
–
(644)
–
Receipts from non-controlling interests
153
305
–
–
Proceeds from the issuance of loan capital
1,246
3,078
–
739
Net cash flows (utilised in)/generated from financing activities
(2,991)
450
(4,367)
(2,175)
Net (decrease)/increase in cash and cash equivalents
(10,960)
(12,160)
484
–
Cash and cash equivalents at the beginning of the financial year
77,214
84,323
–
–
Effect of exchange rate movements on cash and cash equivalents
513
5,051
–
–
Cash and cash equivalents at the end of the financial year
29
66,767
77,214
484
–
The above statements of cash flows should be read in conjunction with the accompanying notes.
167
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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Notes to the financial statements
For the financial year ended 31 March 2024
Note 1
Basis of preparation
This Financial Report is a General Purpose Financial Report which
has been prepared in accordance with Australian Accounting
Standards and the Corporations Act 2001 (Cth). Macquarie Group
Limited is a for-profit company for the purposes of preparing this
Financial Report.
The principal accounting policies adopted in the preparation of this
Financial Report are set out in Note 44 Material accounting
policies. These policies have been consistently applied to all the
financial years presented and are applicable to both the
Consolidated Entity (Macquarie Group Limited and its subsidiaries)
as well as the Company (Macquarie Group Limited), unless
otherwise stated.
(i) Compliance with IFRS as issued by the IASB
Compliance with Australian Accounting Standards ensures that
this Financial Report complies with International Financial
Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB). Consequently, this Financial
Report is compliant with IFRS.
(ii) Basis of measurement
This Financial Report has been prepared on a going concern basis
using the historical cost convention except for the following items,
as disclosed in the respective accounting policy:
•
financial instruments (including derivatives) required to be
measured at fair value through profit or loss (FVTPL); financial
assets classified as fair value through other comprehensive
income (FVOCI) and financial instruments that have been
designated as FVTPL (DFVTPL)
•
financial assets and liabilities that are otherwise measured on
an amortised cost basis but adjusted for changes in fair value
attributable to the risk being hedged in qualifying fair value
hedge relationships
•
non-current assets and disposal groups that have been
classified as held for sale and where a disposal group has been
impaired to its fair value less costs to sell
•
commodity inventories that are measured at fair value less
costs to sell in accordance with the broker-trader exemption
•
certain other non-financial assets and liabilities that are
measured at fair value, such as investment property.
(iii) Critical accounting estimates and significant judgements
The preparation of this Financial Report in compliance with
Australian Accounting Standards requires the use of certain critical
accounting estimates. It also requires management to exercise
judgement in the process of applying the accounting policies. The
notes to the financial statements set out areas involving a higher
degree of judgement or complexity, or areas where assumptions
are significant to the consolidated Financial Report such as:
•
determining the appropriate business model for a group of
financial assets which includes determining the level at which
the business model condition is applied and whether past or
expected sales activity is consistent with a held to collect
business model (Note 44(vii))
•
assessing whether the cash flows generated by a financial asset
constitute solely payments of principal and interest (SPPI) may
require the application of judgement, particularly for certain
subordinated or non-recourse positions, and in the
determination of whether compensation for early termination
of a contract is reasonable (Note 44(vii))
•
choice of inputs, estimates and assumptions used in the
measurement of Expected Credit Loss, including the
determination of significant increase in credit risk (SICR),
forecasts of economic conditions and the weightings assigned
thereto (Note 44(xxii) and Note 13)
•
timing and amount of impairment of interests in associates and
joint ventures and investment in subsidiaries, including the
reversal thereof (Note 44(i), Note 44(xxii), Note 14 and Note 17)
•
timing and amount of impairment of goodwill and other
identifiable intangible assets and, where applicable, the reversal
thereof (Note 44(xxii) and Note 16)
•
determining fair value of assets and liabilities where
market-observable inputs are not available including the
determination of non-recurring fair values and accounting for
day 1 profits or losses for financial instruments (Note 44(vii),
Note 44(x) and Note 38)
•
distinguishing between whether assets or a business is acquired
under a business combination, particularly the determination of
whether a substantive process exists that, together with an
integrated set of activities and assets, significantly contributes
to the ability to create an output (Note 44(ii))
•
determination of significant influence over associates, joint
control over arrangements and control over subsidiaries,
including the assessment of whether certain rights are
protective or substantive in nature, whether these rights are
held in the capacity as agent or principal, and whether the level
of involvement in an investee’s relevant activities is sufficient
to significantly affect the returns generated (Note 44(i))
•
recoverability of tax receivables, deferred tax assets and
measurement of current and deferred tax liabilities can require
significant judgement, particularly where the recoverability of
such tax balances relies on the estimation of future taxable
profits and management’s determination of the likelihood that
uncertain tax positions will be accepted by the relevant
taxation authority (Note 44(vi), Note 4 and Note 18)
•
recognition and measurement of certain revenue streams
including performance fees from Macquarie-managed funds
and other capital market investments and transactions
(Note 44(iv))
•
recognition and measurement of provisions related to actual
and potential claims, and the determination of contingent
liabilities (Note 44(iv), Note 44(xvii) and Note 33)
•
application of hedge accounting principles, including the
assessment that a forecast transaction is highly probable
(Note 44(x) and Note 35)
•
determination of the loss of control of a subsidiary, joint
control over a joint arrangement or loss of significant influence
over an associate including the timing of derecognition of
assets and liabilities following the disposal of an investment
and, the measurement of the associated gain or loss
(Note 44(i)).
168
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 1
Basis of preparation continued
(iii) Critical accounting estimates and significant
judgements continued
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including reasonable
expectations of future events.
Management believes that the estimates used in preparing this
Financial Report are reasonable. Notwithstanding, it is possible
that outcomes within the next financial year differ from
management’s assumptions and estimates, which may result in an
adjustment to the carrying amounts of the reported assets and
liabilities in future reporting periods.
(iv) New Australian Accounting Standards and amendments to
Australian Accounting Standards and interpretations that are
effective in the current financial year
(a) AASB 17 Insurance Contracts (AASB 17)
AASB 17 amends the accounting for insurance contracts and
replaces AASB 4 Insurance Contracts, AASB 1023 General
Insurance Contracts and AASB 1038 Life Insurance Contracts.
The adoption of AASB 17, mandatorily effective for the current
annual reporting period did not have a material impact on this
Financial Report.
(b) AASB 2023-2 Amendments to Australian Accounting
Standards - International Tax Reform - Pillar Two Model Rules
(AASB 2023-2)
The Pillar Two Model Rules are part of the Organisation for
Economic Co-operation and Development’s inclusive framework
designed to address the tax challenges arising from the
digitalisation of the economy. The Pillar Two Model Rules:
•
aim to ensure that large multinational groups pay a minimum
amount of tax on income arising in each jurisdiction in which
they operate; and
•
would achieve that aim by applying a system of top-up taxes
that results in the total amount of taxes payable on Global
Anti-Base Erosion Rules (GloBE) income in each jurisdiction
representing at least the minimum rate of 15%.
The Consolidated Entity’s Pillar Two Project
During 2022, the Consolidated Entity initiated a project to manage
the impact of the Pillar Two rules globally. The project’s scope is to
ensure the Consolidated Entity and its subsidiaries can meet their
Pillar Two compliance obligations.
As part of the project, the Consolidated Entity is monitoring the
progress of the implementation of the model rules into domestic
legislation and certain jurisdictions in which the Consolidated
Entity has operations and have started to enact the rules generally
with operational effect from the Consolidated Entity's 31 March
2025 financial year.
Impacts on financial reporting
In June 2023, the AASB issued AASB 2023-2 which makes
amendments to AASB 112 Income Taxes with immediate effect.
The standard provides a mandatory temporary exception to
accounting for deferred taxes arising from the implementation of
the Pillar Two Model Rules published by the Organisation for
Economic Co-operation and Development. The Consolidated Entity
has applied this exception in preparing its annual Financial Report.
The Consolidated Entity will ultimately be subject to Pillar Two
legislation in various jurisdictions. Applicable Pillar Two legislation
was not effective at the reporting date and as a result the
Consolidated Entity has no related current tax exposure as at
31 March 2024.
Due to the complexities in applying the legislation and calculating
GloBE income and covered taxes, the quantitative impact of the
enacted or substantively enacted legislation has to date been
estimated using historical data over a number of years. Based on
this assessment it is not anticipated that there will be a material
impact to current tax expense of the Consolidated Entity or the
Company on implementation of the changes. The impact of the
Pillar Two income taxes legislation on future financial performance
will continue to be assessed.
(c) Other amendments made to existing standards
The amendments made to other existing standards that were
mandatorily effective for the annual reporting period beginning on
1 April 2023 did not result in a material impact on this Financial
Report.
(v) New Australian Accounting Standards and amendments to
Australian Accounting Standards and Interpretations that are
not yet effective for the financial year
(i) IFRS 18 Presentation and Disclosure in Financial Statements
In April 2024, the International Accounting Standards Board issued
IFRS 18 Presentation and Disclosure in Financial Statements
(IFRS 18) which sets out requirements for the presentation and
disclosure of information in general purpose financial statements.
IFRS 18 is effective for annual reporting periods beginning on or
after 1 January 2027. The transition provisions of IFRS 18 require
retrospective application. The AASB is expected to issue the
Australian equivalent of the standard in June 2024. The
Consolidated Entity is continuing to assess the full impact of
adopting IFRS 18.
(ii) Other amendments made to existing standards
Other amendments to existing standards that are not mandatorily
effective for the annual reporting period beginning on 1 April 2023
and have not been early adopted, are not likely to result in a
material impact to the Consolidated Entity’s financial statements.
169
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Note 1
Basis of preparation continued
(vi) Other developments
(a) ISSB sustainability reporting standards
During the year, the International Sustainability Standards Board
(ISSB) published the following sustainability reporting standards:
•
IFRS S1 General Requirements for Disclosure of Sustainability-
related Financial Information (IFRS S1), which sets out the
overall requirements for sustainability-related financial
disclosures, and
•
IFRS S2 Climate-related Disclosures (IFRS S2), which will
require the disclosure of information that enables the users of
financial statements to understand the reporting entity's
governance, strategy, risk management, and metrics and
targets in relation to climate-related risks and opportunities.
In Australia, the proposed sustainability standards have been
issued for exposure and comment while proposed legislation has
been tabled in Parliament under the Treasury Laws Amendment
(Financial Market Infrastructure and Other Measures) Bill 2024
(Cth). In the present form, these requirements would have the
Consolidated Entity commence reporting for its financial year
commencing on 1 April 2025. The Consolidated Entity
acknowledges the growing importance of sustainability-related
disclosures and continues to progress its established project to
assess and prepare for future sustainability and climate-related
reporting obligations.
(b) IBOR reform: Transition from interbank offered rates (IBOR) to
alternative reference rates (ARRs)
IBOR interest rate benchmarks that are used in a wide variety
of financial instruments (such as derivatives and lending
arrangements) have undergone, or are undergoing, reform. The
nature of such reforms varies by benchmark and jurisdiction.
IBOR including the GBP, JPY, EUR, CHF and USD London Interbank
Offered Rate (‘LIBOR’), as well as IBOR for certain other minor
currencies, have ceased publication. The Consolidated Entity’s
IBOR reform project oversaw the transition of such exposures and
the Consolidated Entity ceased the use of LIBOR in new products in
accordance with industry and regulatory guidance.
The Consolidated Entity continues to have certain exposures
referencing IBOR undergoing reform (including the Canadian Dollar
Offer Rate (CDOR) and Mexican Interbank Equilibrium Interest Rate
(TIIE)). Information regarding these exposures is disclosed in
Note 36.3 Market Risk.
170
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 2
Operating profit before income tax
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
Net interest income
Interest and similar income:1
Effective interest rate method - Amortised cost
12,961
8,349
1,598
1,217
Effective interest rate method - FVOCI
2,790
1,402
52
–
Other - FVTPL
741
388
267
186
Interest and similar expense:
Effective interest rate method - Amortised cost
(12,988)
(7,075)
(1,880)
(1,366)
Other - FVTPL
(45)
(36)
(3)
–
Net interest income
3,459
3,028
34
37
Fee and commission income
Base, portfolio administration and other asset management fees:
Base fees
2,895
2,804
–
–
Portfolio administration fees
298
271
–
–
Other asset management fees
200
198
–
–
Mergers and acquisitions, advisory and underwriting fees
743
991
–
–
Brokerage and other trading-related fees
791
715
–
–
Performance fees
632
692
–
–
Other fee and commission income
690
729
7
13
Total fee and commission income
6,249
6,400
7
13
Net trading income2
Commodities3
4,099
6,443
–
–
Credit, interest rate and foreign exchange products
712
666
(305)
(227)
Equities
637
464
–
4
Net trading income/(loss)
5,448
7,573
(305)
(223)
Share of net losses from associates and joint ventures
(49)
(113)
–
–
1 Prior year comparatives for interest income have been re-presented between Effective Interest rate and Other to conform with the presentation in the current year in alignment with
the accounting policy.
2 Includes gains/losses for Trading Assets, Derivatives and Other Financial Assets and Financial Liabilities held at fair value including any ineffectiveness recorded on hedging
transactions.
3 Includes $859 million (2023: $684 million) of transportation, storage and certain other trading-related costs and $25 million (2023: $20 million) depreciation on right-of-use (ROU)
assets held for trading-related business.
171
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Note 2
Operating profit before income tax continued
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
Credit and other impairment reversals/(charges)
Credit impairment (charges)/reversals
Loan assets
107
(343)
–
–
Off balance sheet exposures
11
(72)
–
(4)
Financial investments and other assets4
(27)
(25)
4
(11)
Margin money and settlement assets
16
42
–
–
Loans to associates and joint ventures
27
5
–
–
Gross credit impairment reversals/(charges)
134
(393)
4
(15)
Recovery of amounts previously written off
–
5
–
–
Net credit impairment reversals/(charges)
134
(388)
4
(15)
Other impairment reversals/(charges)
Interests in associates and joint ventures
263
(47)
–
–
Intangible and other non-financial assets
(28)
(19)
–
–
Net other impairment reversals/(charges)
235
(66)
–
–
Net other operating income
Investment income
Net gain/(loss) from:
Interests in associates and joint ventures
284
1,806
–
–
Interests in businesses and subsidiaries5
303
407
–
–
Non-financial assets
18
8
–
–
Financial investments
505
(53)
–
–
Dividends from subsidiaries (Note 30)
–
–
2,079
2,749
Net investment income
1,110
2,168
2,079
2,749
Operating lease income
Rental income
1,023
860
–
–
Depreciation
(470)
(395)
–
–
Net operating lease income
553
465
–
–
Subsidiaries and businesses held for investment purposes:6
Net operating revenue7
749
421
–
–
Expenses8
(1,131)
(608)
–
–
Net loss from subsidiaries and businesses held for investment purposes
(382)
(187)
–
–
Other income
130
242
10
–
Total net other operating income
1,411
2,688
2,089
2,749
Net operating income
16,887
19,122
1,829
2,561
4 Balance under Company represents ECL reversals/(charges) on amounts Due from subsidiaries.
5 Includes any gain/(loss) recognised on deconsolidation of subsidiaries due to a loss of control. For certain investments where the Consolidated Entity exercises significant influence over
its retained investment (including instances when the Consolidated Entity holds greater than 50% ownership interest), an investment in associate has been recognised.
6 Subsidiaries and business held for investment purposes are consolidated entities that are held with the ultimate intention to sell as part of Macquarie’s investment activities.
7 Includes revenue of $1,064 million (2023: $628 million) before deduction of $315 million (2023: $207 million) related to cost of goods sold and other direct costs.
8 Includes employment expenses, depreciation, amortisation expenses and other operating expenses.
172
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 2
Operating profit before income tax continued
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
Employment expenses
Salary and related costs including commissions, superannuation and
performance-related profit share
(6,394)
(6,456)
(4)
(4)
Share-based payments9
(833)
(762)
–
–
Provision for long service leave and annual leave
(46)
(60)
–
–
Total compensation expenses
(7,273)
(7,278)
(4)
(4)
Other employment expenses including on-costs, staff procurement and
staff training
(450)
(425)
–
–
Total employment expenses
(7,723)
(7,703)
(4)
(4)
Brokerage, commission and fee expenses
Brokerage and other trading-related fee expenses
(770)
(740)
–
–
Other fee and commission expenses
(301)
(288)
–
–
Total brokerage, commission and fee expenses
(1,071)
(1,028)
–
–
Non-salary technology expenses
Information services
(286)
(256)
–
–
Depreciation on own use assets: equipment (Note 15)
(28)
(25)
–
–
Service provider and other non-salary technology expenses
(849)
(811)
–
–
Total non-salary technology expenses
(1,163)
(1,092)
–
–
Other operating expenses
Occupancy expenses
Lease expenses
(173)
(151)
–
–
Depreciation on own use assets: buildings, furniture, fittings and leasehold
improvements (Note 15)
(61)
(57)
–
–
Other occupancy expenses
(160)
(164)
–
–
Total occupancy expenses
(394)
(372)
–
–
Other expenses
Professional fees
(468)
(537)
–
–
Advertising and promotional expenses
(177)
(196)
–
–
Travel and entertainment expenses
(168)
(171)
–
–
Amortisation of intangible assets
(164)
(181)
–
–
Indirect and other taxes
(186)
(155)
–
–
Fees for audit and other services
(70)
(83)
–
–
Other
(477)
(612)
(2)
(24)
Total other expenses
(1,710)
(1,935)
(2)
(24)
Total other operating expenses
(2,104)
(2,307)
(2)
(24)
Total operating expenses
(12,061)
(12,130)
(6)
(28)
Operating profit before income tax
4,826
6,992
1,823
2,533
9 Includes share-based payment related expenses of $34 million (2023: $11 million) for cash settled awards.
173
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Note 3
Segment reporting
(i) Operating segments
AASB 8 Operating Segments requires the ‘management approach’
to disclosing information about the Consolidated Entity’s
reportable segments. The financial information is reported on the
same basis as used internally by Senior Management for evaluating
Operating Segment performance and for deciding how to allocate
resources to Operating Segments. Such information may be
produced using different measures to that used in preparing the
statutory income statement.
For internal reporting, performance measurement and risk
management purposes, the Consolidated Entity is divided
into Operating Groups and a Corporate segment
(reportable segments).
The financial information disclosed relates to the Consolidated
Entity’s ordinary activities.
These segments have been set up based on the different core
products and services offered. The Operating Groups comprise:
•
MAM which provides investment solutions to clients across a
range of capabilities including real assets, real estate, credit,
equities & multi-asset and secondaries
•
BFS which provides a diverse range of personal banking, wealth
management and business banking products and services to
retail clients, advisers, brokers and business clients
•
CGM which is a global business offering capital and financing,
risk management, market access, physical execution and
logistics solutions to its diverse client base across
Commodities, Financial Markets and Asset Finance
•
Macquarie Capital which has global capability in advisory and
capital raising services, providing clients with specialist
expertise and flexible capital solutions across a range of
sectors. It also has global capability in specialist investing
across private credit, private equity, real estate, growth equity,
venture capital, and in infrastructure and energy projects and
companies. Macquarie Capital’s Equities brokerage business
provides clients with access to equity research, sales, execution
capabilities and corporate access.
The Corporate segment, which is not considered an Operating
Group, comprises head office and Central Service Groups, and
holds certain legacy and strategic investments, assets and
businesses that are not allocated to any of the Operating Groups.
Items of income and expense within the Corporate segment
include the net result of managing Macquarie’s liquidity and
funding requirements, earnings on capital and the residual
accounting volatility relating to economically hedged positions
where hedge accounting is applied, as well as accounting volatility
for other economically hedged positions where hedge accounting
is not applicable.
Other items of income and expense within the Corporate segment
include earnings from investments, changes in central overlays to
credit and other impairments or valuation of assets, provisions for
legacy matters, unallocated head office costs and costs of Central
Service Groups. The Corporate segment also includes
performance-related profit share and share-based payments
expense and income tax expense.
Below is a selection of key policies applied in determining the
Operating Segment results.
Internal funding arrangements
Group Treasury has the responsibility for managing wholesale
funding for the Consolidated Entity, and Operating Groups obtain
their required funding from Group Treasury. The Operating Groups
are assumed to be fully debt funded for the purposes of internal
funding charges. The interest rates charged by Group Treasury are
determined by the currency and term of the funding.
Generally, with the exception of deposit funding, Operating Groups
may only source funding directly from external sources where the
funding is secured by the Operating Group’s assets. In such cases,
Operating Groups bear the funding costs directly and Group
Treasury may levy additional charges, where appropriate.
Transactions between Operating Segments
Operating Segments that enter into arrangements with other
Operating Segments must do so on commercial terms or as agreed
by the Consolidated Entity’s Chief Executive Officer or Chief
Financial Officer.
Internal transactions are recognised in each of the relevant
categories of income and expense and eliminated on consolidation
as appropriate.
174
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 3
Segment reporting continued
(i) Operating segments continued
Accounting for derivatives that economically hedge interest rate
risk
With respect to businesses that predominantly earn income from
lending activities, derivatives that hedge interest rate risk are
measured at fair value through profit or loss (FVTPL). Changes in
the fair value are presented in net trading income and give rise to
income statement volatility unless designated in hedge accounting
relationships. If designated in fair value hedge accounting
relationships, the carrying value of the hedged items are adjusted
for changes in fair value attributable to the hedged risks to reduce
volatility in the income statement. If designated in cash flow
hedge accounting relationships, the effective portion of the
derivatives' fair value gains or losses are deferred in the cash flow
hedge reserve as part of Other Comprehensive Income (OCI), and
subsequently recognised in the income statement at the time at
which the hedged items affect the income statement for the
hedged risks. For segment reporting, derivatives are accounted for
on an accrual basis in the results of the Operating Groups to the
extent that the Corporate segment manages the derivative
volatility, either through the application of hedge accounting or
where the derivative volatility may offset the volatility of other
positions managed within the Corporate segment.
Central Service Groups
The Central Service Groups provide a range of functions
supporting MGL’s Operating Groups, ensuring they have the
appropriate workplace support and systems to operate effectively
and the necessary resources to meet their regulatory, compliance,
financial, legal and risk management requirements.
Central Service Groups recover their costs from Operating Groups
generally on either a time and effort allocation basis or a fee for
service basis. Central Service Groups include the Corporate
Operations Group (COG), Financial Management Group (FMG), Risk
Management Group (RMG), Legal and Governance Group (LGG) and
Central Executive.
Performance-related profit share and share-based payments
expense
Performance-related profit share and share-based payments
expense relating to the Macquarie Group Employee Retained
Equity Plan (MEREP) are recognised in the Corporate segment and
are not allocated to Operating Groups.
Income tax
The income tax expense and benefit is recognised in the Corporate
segment and are not allocated to the Operating Groups. However,
to recognise an Operating Group’s contribution to permanent
income tax differences, the internal management revenue/charge
category is used.
This internal management revenue/charge category, which is
primarily used for permanent income tax differences generated by
the Operating Groups, is offset by an equal and opposite amount
recognised in the Corporate segment such that they are
eliminated on consolidation.
Presentation of segment income statements
The income statements on the following pages for each of the
reported segments are in some cases summarised by grouping
non-material balances together. Where appropriate, all material or
key balances have been reported separately to provide users with
information relevant to the understanding of the Consolidated
Entity’s financial performance. The financial information disclosed
relates to the Consolidated Entity’s ordinary activities.
Reportable segment assets
Segment assets are the external operating assets that are
employed by a segment in its operating activities.
175
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This page has been intentionally left blank.
176
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 3
Segment reporting continued
(i) Operating segments continued
The following is an analysis of the Consolidated Entity’s revenue and results by reportable segment.
Macquarie Asset
Management
Banking and
Financial Services
$m
$m
Full year ended 31 March 2024
Net interest and trading (expense)/income
(557)
2,645
Fee and commission income/(expense)
3,941
554
Share of net profits/(losses) from associates and joint ventures
54
–
Other operating income and charges
Net credit and other impairment reversals
122
15
Net other operating income and charges
196
(6)
Internal management (charge)/revenue
(2)
1
Net operating income
3,754
3,209
Total operating expenses
(2,559)
(1,968)
Operating profit/(loss) before income tax
1,195
1,241
Income tax expense
–
–
Loss/(profit) attributable to non-controlling interests
13
–
Net profit/(loss) contribution
1,208
1,241
Reportable segment assets
15,523
141,975
Full year ended 31 March 2023
Net interest and trading (expense)/income
(396)
2,520
Fee and commission income/(expense)
4,029
504
Share of net (losses)/profits from associates and joint ventures
(1)
(7)
Other operating income and charges
Net credit and other impairment charges
(14)
(34)
Net other operating income and charges
1,241
(13)
Internal management revenue/(charge)
92
(10)
Net operating income
4,951
2,960
Total operating expenses
(2,595)
(1,759)
Operating profit/(loss) before income tax
2,356
1,201
Income tax expense
–
–
(Profit)/loss attributable to non-controlling interests
(14)
–
Net profit/(loss) contribution
2,342
1,201
Reportable segment assets
14,328
129,046
177
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Commodities and
Global Markets
Macquarie Capital
Corporate
Total
$m
$m
$m
$m
5,156
690
973
8,907
586
1,201
(33)
6,249
42
(144)
(1)
(49)
11
164
57
369
508
680
33
1,411
19
21
(39)
–
6,322
2,612
990
16,887
(3,108)
(1,538)
(2,888)
(12,061)
3,214
1,074
(1,898)
4,826
–
–
(1,291)
(1,291)
(1)
(23)
(2)
(13)
3,213
1,051
(3,191)
3,522
135,640
33,636
76,626
403,404
7,639
410
428
10,601
539
1,356
(28)
6,400
32
(137)
–
(113)
(57)
(294)
(55)
(454)
535
903
22
2,688
29
(11)
(100)
–
8,717
2,227
267
19,122
(2,710)
(1,456)
(3,610)
(12,130)
6,007
771
(3,343)
6,992
–
–
(1,824)
(1,824)
–
30
(2)
14
6,007
801
(5,169)
5,182
141,453
28,481
74,564
387,872
178
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 3
Segment reporting continued
(ii) Fee and commission income/(expense) relating to contracts with customers
The following is an analysis of the Consolidated Entity’s fee and commission income/(expense) by reportable segment.
Macquarie
Asset
Management
Banking and
Financial
Services
Commodities
and Global
Markets
Macquarie
Capital
Corporate
Total
$m
$m
$m
$m
$m
$m
CONSOLIDATED 2024
Fee and commission income
Base, portfolio administration and other asset management
fees:
Base fees
2,874
19
2
–
–
2,895
Portfolio administration fees
3
295
–
–
–
298
Other asset management fees
200
–
–
–
–
200
Mergers and acquisitions, advisory and underwriting fees
11
–
8
726
(2)
743
Brokerage and other trading-related fees
2
39
296
454
–
791
Performance fees
631
–
–
1
–
632
Other fee and commission income
220
201
280
20
(31)
690
Total fee and commission income
3,941
554
586
1,201
(33)
6,249
CONSOLIDATED 2023
Fee and commission income
Base, portfolio administration and other asset management
fees:
Base fees
2,782
20
2
–
–
2,804
Portfolio administration fees
–
271
–
–
–
271
Other asset management fees
198
–
–
–
–
198
Mergers and acquisitions, advisory and underwriting fees
75
–
6
912
(2)
991
Brokerage and other trading-related fees
3
39
252
421
–
715
Performance fees
692
–
–
–
–
692
Other fee and commission income
279
174
279
23
(26)
729
Total fee and commission income
4,029
504
539
1,356
(28)
6,400
179
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Note 3
Segment reporting continued
(iii) Products and services
The Consolidated Entity’s Operating Segments reflect different core products and services offered by the Group. Refer to Note 3(i) Operating
segments for net operating income contribution by various Operating Segments.
(iv) Geographical areas
Geographical segments have been determined based on the tax domicile of the entity where the transactions have been recorded.
The operations of the Consolidated Entity are headquartered in Australia.
CONSOLIDATED 2024
CONSOLIDATED 2023
Income1
Non-current assets2
Income1
Non-current assets2
$m
$m
$m
$m
Americas3
5,969
5,383
7,612
4,447
Australia
5,353
4,036
5,066
2,329
Europe, Middle East and Africa4
4,278
10,156
4,956
9,156
Asia Pacific
1,287
710
1,488
893
Total
16,887
20,285
19,122
16,825
(v) Major customers
The Consolidated Entity does not rely on any major customers.
1 Income represents net operating income disclosed in the income statement, prior period comparatives have been re-presented to conform to changes in the current period.
2 Non-current assets consists of intangible assets, interests in associates and joint ventures, property, plant and equipment and right-of-use assets and investment properties.
3 Includes income from the United States of $5,647 million (2023: $7,408 million).
4 Includes income from the United Kingdom of $2,828 million (2023: $3,917 million).
180
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 4
Income tax expense
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
(i) Income tax (expense)/benefit
Current tax (expense)/benefit
(1,318)
(2,110)
56
68
Deferred tax benefit/ (expense)
27
286
20
23
Total income tax (expense)/benefit
(1,291)
(1,824)
76
91
(ii) Reconciliation of income tax expense to prima facie tax
expense
Prima facie income tax expense on operating profit @30% (2023: 30%)
(1,448)
(2,098)
(547)
(760)
Tax effect of amounts which are (non-deductible)/non-assessable in
calculating taxable income:
Rate differential on offshore income
229
346
(8)
28
Intra-group dividends
–
–
624
825
Other items
(72)
(72)
7
(2)
Total income tax (expense)/ benefit
(1,291)
(1,824)
76
91
(iii) Tax benefit/(expense) relating to OCI
FVOCI reserve
16
(8)
–
–
Own credit risk
19
(10)
15
(4)
Cash flow hedges and cost of hedging
17
(4)
–
6
Foreign currency translation reserve
3
–
–
–
Share of other comprehensive expense of associates and joint ventures
(14)
(33)
–
–
Total tax benefit/(expense) relating to items of other comprehensive
income
41
(55)
15
2
(iv) Deferred tax benefit/(expense) represents movements in
deferred tax assets and liabilities
Property, plant and equipment
15
(16)
–
–
Intangible assets
85
67
–
–
Financial investments and interests in associates and joint ventures
(206)
(108)
–
15
Tax losses
147
147
–
–
Operating and finance leases
58
(22)
–
–
Loan assets and derivatives
19
42
(6)
(6)
Other assets and liabilities
(91)
176
26
14
Deferred tax benefit
27
286
20
23
Revenue authorities undertake risk reviews and audits as part of their normal activities. The Consolidated Entity has assessed these and other
taxation claims and litigation, including seeking external advice where appropriate, and considers that it holds appropriate provisions.
181
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Note 5
Dividends
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
(i) Dividends paid
Ordinary share capital
Final dividend paid (2023: $4.50 (2022: $3.50) per share)
1,734
1,339
1,721
1,331
Interim dividend paid (2024: $2.55 (2023: $3.00) per share)
982
1,156
974
1,147
Total dividends paid (Note 28)1
2,716
2,495
2,695
2,478
The 2024 interim and 2023 final dividends paid during the year were franked at 40%, based on tax paid at 30% (2023 interim dividend and 2022
final dividends were franked at 40%, based on tax paid at 30%).
The Company’s Dividend Reinvestment Plan (DRP) remains active. The DRP is optional and offers ordinary shareholders in Australia and
New Zealand the opportunity to acquire fully paid ordinary shares without transaction costs. A shareholder can elect to participate in or
terminate their involvement in the DRP at any time. Ordinary shares purchased on the market or issued by the Consolidated Entity under
the DRP in the current and prior year were allocated as fully paid ordinary shares pursuant to the DRP, details of which are included in
Note 27 Contributed equity.
(ii) Dividends not recognised at the end of the financial year
Since the end of the financial year, the Directors have resolved to pay a final dividend of $3.85 per fully paid ordinary share, 40% franked based
on tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on 2 July 2024 from retained profits, but not
recognised as a liability at the end of the financial year is $1,471 million. This amount has been estimated based on the number of shares and
MEREP awards eligible to participate as at 31 March 2024.
CONSOLIDATED
COMPANY
2024
2023
2024
2023
Cash dividend (distribution of current year profits) ($ per share)
6.40
7.50
6.40
7.50
Franking credits available for the subsequent financial year at a corporate
tax rate of 30% (2023: 30%) ($m)2
224
462
224
462
1 The Consolidated Entity included an additional $21 million (2023: $17 million) of dividend equivalent amount paid to Deferred Share Unit (DSU) holders as described in Note 32
Employee equity participation.
2 Amount represents balances for franking accounts adjusted for franking credits/debits that will arise from the payment/receipt of income tax payables/receivables as at the end of the
financial year respectively.
182
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 6
Earnings per share
Basic earnings per share is calculated by dividing the Consolidated Entity’s profit attributable to ordinary equity holders (adjusted by profit
attributable to participating unvested MEREP awards) by the weighted average number of ordinary shares outstanding during the financial year
(adjusted for vested MEREP awards).
Diluted earnings per share is calculated by dividing the Consolidated Entity’s profit attributable to ordinary equity holders (adjusted by profit
attributable to all the dilutive potential ordinary shares) by the weighted average number of ordinary shares and potential ordinary shares that
would be issued on the exchange of all the dilutive potential ordinary shares into ordinary shares.
CONSOLIDATED
2024
2023
CENTS
Basic earnings per share
916.6
1,353.7
Diluted earnings per share
911.4
1,316.3
$m
$m
Reconciliation of earnings used in the calculation of basic and diluted earnings per share
Profit after income tax
3,535
5,168
Loss/(profit) attributable to non-controlling interests
(13)
14
Profit attributable to the ordinary equity holders of MGL
3,522
5,182
Less: profit attributable to participating unvested MEREP awards
(137)
(167)
Earnings used in the calculation of basic earnings per share
3,385
5,015
Add back:
Profit attributable to dilutive participating unvested MEREP awards
84
104
Interest on convertible subordinated debt1
–
233
Earnings used in the calculation of diluted earnings per share
3,469
5,352
NUMBER OF SHARES
Reconciliation of weighted average number of equity shares used in the calculation of basic and diluted
earnings per share
Weighted average number of equity shares (net of treasury shares) adjusted for vested MEREP awards used in
the calculation of basic earnings per share
369,315,116
370,473,587
Add: weighted average number of dilutive potential ordinary shares:
Unvested MEREP awards
11,305,877
10,784,377
Convertible subordinated debt1
–
25,333,746
Weighted average number of equity shares (net of treasury shares) and potential equity shares used in
the calculation of diluted earnings per share
380,620,993
406,591,710
1 The Consolidated Entity has issued loan capital which may convert into ordinary shares in the future (refer to Note 26 Loan capital for further details). These loan capital instruments
are potentially dilutive instruments, and diluted EPS is therefore calculated as if the instruments had been converted at the beginning of the year or, if later, the instruments’ issue
dates. For the year ended 31 March 2024, all loan capital instruments were antidilutive (31 March 2023: dilutive).
183
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Note 7
Trading assets
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
Equity securities
19,271
7,830
–
–
Commodity contracts
2,980
3,612
–
–
Debt securities
3,147
3,033
–
–
Commodity inventories
2,526
2,406
–
–
Total trading assets
27,924
16,881
–
–
The majority of the above amounts are expected to be materially recovered within 12 months of the balance date by the Consolidated Entity.
Note 8
Margin money and settlement assets
Margin money
13,148
14,397
–
–
Security settlement assets
6,875
6,476
–
–
Commodity settlement assets
4,094
4,383
–
–
Total margin money and settlement assets
24,117
25,256
–
–
The majority of above amounts are expected to be materially recovered within 12 months of the balance date by the Consolidated Entity.
Note 9
Derivative assets
Held for trading
23,064
34,906
1
3
Designated in hedge relationships
1,003
1,208
–
–
Total derivative assets
24,067
36,114
1
3
The above amounts under held for trading category are expected to be materially recovered within 12 months of the balance date by the
Consolidated Entity.
184
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 10
Financial investments
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
Equity securities:
Listed
171
135
–
–
Unlisted
2,047
2,035
–
–
Debt securities:
Liquid asset holdings
18,729
16,421
1,763
–
Bonds, money market and other securities
3,431
3,283
–
–
Total financial investments
24,378
21,874
1,763
–
Of the above amounts, $2,897 million (2023: $4,417 million) is expected to be recovered more than 12 months after the balance date by the
Consolidated Entity and $nil (2023: $nil) by the Company.
Note 11
Other assets
Other financial assets
Commodity-related receivables
4,869
3,264
–
–
Trade debtors and other receivables
2,524
2,495
–
7
Fee and commission receivables
1,011
1,051
–
–
Total other financial assets
8,404
6,810
–
7
Other non-financial assets
Contract assets
1,144
960
–
–
Investment properties
927
917
–
–
Income tax receivables
651
631
15
8
Inventories
564
228
–
–
Prepayments
502
420
–
–
Indirect tax receivables
198
271
7
15
Other
248
201
–
–
Total other non-financial assets
4,234
3,628
22
23
Total other assets
12,638
10,438
22
30
Of the above amounts, $1,442 million (2023: $2,901 million) is expected to be recovered more than 12 months after the balance date by the
Consolidated Entity and $nil (2023: $1 million) by the Company.
185
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Note 12
Loan assets
CONSOLIDATED 2024
CONSOLIDATED 2023
Gross
ECL allowance1
Net
Gross
ECL allowance1
Net
$m
$m
$m
$m
$m
$m
Home loans2
120,890
(106)
120,784
109,538
(121)
109,417
Corporate, commercial and other
lending2
48,647
(1,002)
47,645
40,871
(1,036)
39,835
Asset financing2,3
8,049
(107)
7,942
9,479
(159)
9,320
Total loan assets
177,586
(1,215)
176,371
159,888
(1,316)
158,572
Of the above amounts, $148,368 million (2023: $107,950 million) is expected to be recovered more than 12 months after the balance date by
the Consolidated Entity.
Finance lease receivables
Finance lease receivables are included within loan assets. The Consolidated Entity provides finance leases to a broad range of clients to support
financing needs in acquiring movable assets such as motor vehicles, small plant and equipment, electronic and IT equipment. The following table
represents the maturity profile of the contractual undiscounted cash flows of the Consolidated Entity.
CONSOLIDATED 2024
CONSOLIDATED 2023
Gross
investment in
finance lease
receivables Unearned income
Present value of
minimum lease
payments
receivable
Gross investment
in finance lease
receivables
Unearned income
Present value of
minimum lease
payments
receivable
$m
$m
$m
$m
$m
$m
Within one year
1,065
(97)
968
999
(84)
915
Between one to two years
712
(69)
643
656
(59)
597
Between two to three years
498
(54)
444
422
(39)
383
Between three to four years
193
(18)
175
237
(24)
213
Between four to five years
110
(11)
99
182
(11)
171
Later than five years
14
–
14
22
(1)
21
Total
2,592
(249)
2,343
2,518
(218)
2,300
1 The ECL allowance carried against loan assets measured at FVOCI is not presented in the table as the allowance is included in reserves. Refer Note 13 Expected credit losses.
2 Prior period comparative information has been re-presented, or additional information provided, to conform to changes in the current period
3 Includes $4,534 million (2023: $5,986 million) of car loan portfolio, for which in April 2024 it was announced new car lending will cease.
186
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 13
Expected credit losses
The Consolidated Entity models the Expected Credit Losses (ECL)
for on-balance sheet financial assets measured at amortised cost
or FVOCI such as loans, debt securities and lease receivables,
as well as off-balance sheet items such as undrawn loan
commitments, certain financial guarantee contracts and letters
of credit.
Model inputs
The Consolidated Entity segments its credit portfolio between
retail and wholesale exposures, and further splits these portfolios
into representative groupings which are typically based on shared
risk characteristics.
The Consolidated Entity has developed several models to predict
the ECL. These models incorporate a range of components
notably that of Exposure at Default (EAD), Probability of Default
(PD) and Loss Given Default (LGD) (‘credit inputs’) as well as
Forward-Looking Information (FLI).
For retail portfolios, behavioural variables are also considered in
the determination of inputs for ECL modelling.
The key model inputs used in measuring the ECL include:
•
Exposure at Default (EAD): The EAD represents the estimated
exposure in the event of a default
•
Probability of Default (PD): The calculation of PDs for retail
and wholesale exposures is generally performed at a facility
level. Retail exposures are segmented based on product type
and shared characteristics that are highly correlated to
credit risk such as region, product, counterparty groupings,
loan-to-value ratio and other similar criteria. Wholesale
portfolio PDs are a function of industry type, internal credit
ratings and transition matrices used to determine a point in
time PD estimate. PD estimates for both retail and wholesale
portfolios are also adjusted for FLI
•
Loss Given Default (LGD): The LGD associated with the PD
used is the magnitude of the ECL in a default event. The LGD is
estimated using historical loss rates considering relevant
factors for individual exposures or portfolios.
Significant increase in credit risk (SICR)
The Consolidated Entity periodically assesses exposures to
determine whether there has been a SICR, which may be evidenced
by either qualitative or quantitative factors. Qualitative factors
include, but are not limited to material change in internal credit
rating or whether an exposure has been identified and placed on
CreditWatch, an internal credit monitoring mechanism supervised
by Senior Management to closely monitor exposures showing signs
of stress. All exposures on CreditWatch are classified as Stage II or,
if defaulted, as Stage III.
SICR thresholds, which require judgement, are used to determine
whether an exposure’s credit risk has increased significantly. The
SICR methodology is based on a relative credit risk approach which
considers changes in an underlying exposure’s credit risk since
origination. This may result in exposures being classified in Stage II
that are of a higher credit quality than other similar exposures that
are classified as Stage I. Accordingly, while similar increases in the
quantum of Stage II exposures will suggest a relative deterioration
of credit quality, it should not necessarily be inferred that the
assets are of a lower credit quality.
Retail exposures
Exposures are assigned a behavioural score which considers the
exposures’ lifetime PD on initial recognition. This behavioural score
is periodically assessed and updated to reflect changes in the
underlying exposures’ credit behaviour. SICR movement thresholds
between origination and reporting date of behavioural score
movements have been established that, where exceeded, result in
the exposure being categorised as Stage II.
Wholesale exposures
The Consolidated Entity assigns an internal credit rating to each
exposure at origination based on information available at that
date. These internal ratings are broadly aligned to external credit
rating agencies such as Standard & Poor’s and Moody’s.
Where an exposures’ assigned credit rating deteriorates beyond
pre-defined thresholds per credit rating at origination, the
exposure is categorised as Stage II. The methodology has been
calibrated so that a larger change in rating is required for higher
quality credit rated exposures than for lower quality credit rated
exposures to be classified as Stage II.
For both retail and wholesale portfolios:
•
the AASB 9 ‘low credit risk’ exemption is not applied by the
Consolidated Entity to material portfolios
•
for material retail portfolios, the credit risk for an exposure or
portfolio is generally deemed to have increased significantly if
the exposure is more than 30 days past due, unless there are
product specific characteristics that indicate that this
threshold should be rebutted.
Definition of default
The Consolidated Entity’s definition of default determines the
reference point for the calculation of the ECL components, and in
particular the PD. Default is generally defined as the point when
the borrower is unlikely to pay its credit obligations in full, without
recourse by the Consolidated Entity to actions such as realisation
of available security; or the borrower is 90 days or more past due
on an obligation to the Consolidated Entity.
187
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Note 13
Expected credit losses continued
The Consolidated Entity periodically monitors its exposures for
potential indicators of default such as significant financial
difficulty of the borrower including breaches of lending covenants;
it is probable that the borrower will enter bankruptcy or other
financial reorganisation; the disappearance of an active market for
that financial asset because of financial difficulties; or the
purchase or origination of a financial asset at a deep discount that
reflects the incurred credit losses.
Forward-looking information (FLI)
The inclusion of FLI in calculating ECL allowances adjusts the PD,
the determination of SICR in retail portfolios as well as the LGD
(that is relevant to the determination of the recovery rates on
collateral). The predicted relationships between these key
indicators and the key model components (EAD, PD and LGD) in
measuring the ECL have been developed by analysing historical
data as part of the development of internal models, and the
calibration and validation process.
The Consolidated Entity applies its professional judgement in
determining whether there are any inherent risks in the models’
predictive outcomes. The overlays primarily reflect management’s
assessment of the current economic and credit environment
relative to the FLI credit cycle model. These overlays account for
the risk that underlying credit risk events have occurred, but
observable modelled inputs are yet to reflect those events, as well
as risks that are specific to regions, counterparties or industries
which are difficult to account for within the modelled outcomes.
Over time the credit models are recalibrated to enhance the
predictive capability. At the reporting date this overlay was
approximately $175 million (2023: $475 million). These
judgements are reviewed by FMG and RMG at each reporting date.
RMG is responsible for the FLI including the development of
scenarios and recommending the range of probability weights to
apply to those scenarios. For this purpose, four possible economic
scenarios have been developed for this period, being an upside,
downside, severe downside and baseline scenario. In calculating
the ECL, each of the scenarios is probability weighted and then
applied to the exposures’ PDs and LGDs.
The scenarios have been developed using a combination of publicly
available data, internal forecasts and third-party information to
form the initial baseline. Internal specialists within the
Consolidated Entity are consulted to assist in refining and
challenging the baseline and the alternative scenarios. For the
current reporting period, the Consolidated Entity has generated
three alternative scenarios in addition to the baseline scenario,
where the alternative scenarios are anchored to the baseline on a
relative basis.
Refinement of the scenarios includes benchmarking to external
data from reputable sources. These sources include, forecasts
published from a range of market economists and official data
sources, including major central banks, where available.
Where there are limited official data sources against which to
benchmark key economic indicators on a forward-looking basis,
management exercises judgement when determining the duration,
severity and impact of the macroeconomic scenarios used by the
Consolidated Entity.
Assigning probabilities to these scenarios requires professional
judgement. This judgement draws on internal risk and economics
specialist input, comparison to general market outlooks and
publicly available market commentary.
The scenarios and the associated probabilities are ultimately
approved by senior risk and finance executives.
The scenarios for each of the key regions where the Consolidated
Entity’s ECL is derived have been set out on the following pages.
Noting the diversity of possible scenarios and macroeconomic
outcomes, and the continuing uncertainty regarding the
implications of geopolitical events, broader inflationary pressures
and the path of monetary policy, these scenarios represent
plausible forward-looking views as at the reporting date.
These scenarios impact the modelled ECL provisioning levels
through determination of probabilities of default and
determination of losses that may be incurred should a default
occur. The ability of borrowers to service their obligations through
personal or business income is generally estimated using
unemployment rates, GDP, commodity prices and interest rates.
The losses that the Consolidated Entity may incur should a default
occur, and the collateral utilised is generally estimated through
property price and share price index outlooks.
Future economic conditions may differ to the scenarios outlined,
the impact of which will be accounted for in future reporting
periods.
188
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 13
Expected credit losses continued
Forward-looking information (FLI) continued
Scenario
Weighting
Expectation
Baseline
A 100% weighting to this scenario
would result in a total expected credit
loss provision on balance sheet at the
reporting date of ~$1,600 million1
Probable
Global: The baseline scenario forecasts a 2.6% year-on-year expansion in global GDP in 2024 as
global recession fears recede. Interest rates cuts are expected in the second half of 2024,
supporting an acceleration in real GDP growth to 3.1% year-on-year in 2025.
Australia: GDP growth is anticipated to slow to 1.3% year-on-year in 2024 before picking up to
2.4% in 2025. Unemployment rates are forecast to increase moderately, peaking at 4.4% in the
first quarter of 2025. The Reserve Bank of Australia (RBA) is expected to start lowering the
cash rate in the second half of 2024, cutting by 125 basis points from current levels by
end-2025. House prices are projected to continue their upward trend, rising by 9% by end of
2025, supported by a policy of monetary loosening.
United States: Real GDP growth is projected to moderate to 2.1% by December 2024 and
remain stable at 2.2% through to December 2025. The unemployment rate is expected to
remain at 3.8% in 2025. The first policy rate cut from the Federal Reserve is expected in the
second half of 2024.
Europe: The scenario projects a modest growth of 0.9% until late 2024, followed by a 1.8%
year-on-year expansion in 2025. Unemployment is forecast to increase throughout 2024 and
peak at 7.0% through the first half of 2025.
Downside
A 100% weighting to this scenario
would result in a total expected credit
loss provision on balance sheet at the
reporting date of ~$1,950 million1
Possible
Global: The downside scenario projects annual GDP growth that is approximately 1 percentage
point lower than the baseline until mid 2025.
Australia: The scenario forecasts GDP to grow by 0.4% by the first quarter of 2025 and rise to
2.8% by mid-2026. Unemployment will trend upwards peaking at 5.6% in first quarter of 2025.
The RBA cash rate is forecast to rise by a further 25 basis points in the first half of 2024,
followed by 250 basis points of cuts by mid-2026. House prices are projected to fall 15% by
mid-2026.
United States: The scenario projects GDP growth of 0.4% by the end of 2024 followed by a
modest 1.1% growth in mid-2026. High inflation is expected to force the US Federal Reserve to
increase interest rates by 50 basis points in 2024, before a cut in Q2 2025 as the economy
slows. The unemployment rate is projected to peak at 5.2% in mid 2025.
Europe: The scenario projects sequential real GDP contraction through to the first quarter of
2025, declining to 0.5% followed by growth of 1.8% in mid 2026. Unemployment rates are
projected to peak at 8.7% in mid-2025.
1 This number provides ECL provision information as at the reporting date assuming the scenarios outlined, but does not reflect changes in the credit rating of the counterparties that
may occur if these scenarios were to occur. Changes in credit ratings may have a material impact on these ECL provisions.
189
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Note 13
Expected credit losses continued
Forward-looking information (FLI) continued
Scenario
Weighting
Expectation
Severe Downside
A 100% weighting to this scenario
would result in a total expected credit
loss provision on balance sheet at the
reporting date of ~$2,450 million2
Unlikely
Global: The scenario projects a sharp slowdown in annual GDP growth, around 3 to 3.5
percentage points lower than the baseline.
Australia: The scenario projects four consecutive quarters of contraction in real GDP, followed
by 1.8% growth in mid 2026. Unemployment rises sharply, peaking at 6.9% in mid-2025 and
remaining elevated throughout the forecast period. The RBA cash rate is cut sharply, though
house prices still fall 19% in the two years to mid-2026.
United States: The scenario projects three consecutive quarters of contraction in real GDP
followed by 0.8% growth in mid-2026. High inflation drives 100 basis points in rate increases in
2024, followed by significant cuts in 2025 as the US Federal Reserve attempts to stimulate the
economy. Unemployment rises sharply to 7.2% in mid-2025 and falls slowly thereafter.
Europe: The scenario projects GDP to decline by 2.3% in 2024, with quarterly growth not
returning until mid-2026. Unemployment peaks at 9.9% in the second quarter of 2025.
Upside
A 100% weighting to this scenario
would result in a total expected credit
loss provision on balance sheet at the
reporting date of ~$1,425 million2
Possible
Global: The upside scenario projects annual GDP growth that is approximately 1 percentage
point higher than the baseline in 2024 and into 2025.
Australia: The scenario forecasts GDP to grow by 1.7% year-on-year in 2024 and 3.2% in
mid-2025. Interest rate cuts start in the second quarter of 2024. Unemployment rises only
modestly and peaks at 4.3% in late 2024. House prices rise 14% to the end of 2025.
United States: The scenario projects real GDP growth of 3.7% year-on-year in 2024 and 3.6% in
mid-2025. The US Federal Reserve is able to cut interest rates by 50 basis points in 2024,
holding the target rate at 4.75-5.00% until 2026. Unemployment drops to 3.2% in the first
quarter of 2025.
Europe: The scenario projects a return to growth in the third quarter of 2024. Annual growth in
2024 remains flat before recovering to 1.9% in mid-2025. Unemployment increases slowly,
peaking at around 7.2% by mid-2026.
2 This number provides ECL provision information as at the reporting date assuming the scenarios outlined, but does not reflect changes in the credit rating of the counterparties that
may occur if these scenarios were to occur. Changes in credit ratings may have a material impact on these ECL provisions.
190
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 13
Expected credit losses continued
The table below presents the gross exposure and related ECL allowance for assets measured at amortised cost or FVOCI and off balance sheet
exposures subject to the impairment requirements of AASB 9 Financial Instruments.
GROSS EXPOSURE FOR
FINANCIAL ASSETS
CARRIED AT
ECL ALLOWANCE ON
FINANCIAL ASSETS
CARRIED AT
Amortised
cost
FVOCI
Other
Gross
exposure
Amortised
cost
FVOCI
Other
Total ECL
allowance
$m
$m
$m
$m
$m
$m
$m
$m
CONSOLIDATED 2024
Cash and bank balances
31,856
–
–
31,856
1
–
–
1
Cash collateralised lending and reverse repurchase
agreements
11,728
34,915
–
46,643
1
–
–
1
Margin money and settlement assets
23,885
–
–
23,885
43
–
–
43
Financial investments
1,920
19,508
–
21,428
–
1
–
1
Held for sale and other assets3
4,270
255
1,144
5,669
141
–
–
141
Loan assets
174,953
625
–
175,578
1,215
100
–
1,315
Loans to associates and joint ventures
513
–
–
513
35
–
–
35
Off balance sheet exposures
–
–
31,308
31,308
–
–
125
125
Total
249,125
55,303
32,452
336,880
1,436
101
125
1,662
CONSOLIDATED 2023
Cash and bank balances
45,659
–
–
45,659
3
–
–
3
Cash collateralised lending and reverse repurchase
agreements
15,903
33,463
–
49,366
6
2
–
8
Margin money and settlement assets
24,738
–
–
24,738
58
–
–
58
Financial investments
1,721
17,269
–
18,990
–
4
–
4
Held for sale and other assets3
4,613
4
960
5,577
120
–
–
120
Loan assets
158,295
643
–
158,938
1,316
128
–
1,444
Loans to associates and joint ventures
480
–
–
480
60
–
–
60
Off balance sheet exposures
–
–
28,510
28,510
–
–
134
134
Total
251,409
51,379
29,470
332,258
1,563
134
134
1,831
Loan assets continue to represent the Consolidated Entity’s most significant component of credit exposures on which ECL allowances are
carried. The credit quality of the Consolidated Entity’s loan assets, is monitored through its credit policies, as set out in Note 36.1 Credit risk.
The Company’s ECL provision of $47 million (2023: $50 million) primarily relates to related party loans of $45,928 million (2023: $44,993 million)
that are presented as Due from subsidiaries in the Statements of financial position and certain off balance sheet exposures of $7,327 million
(2023: $5,239 million).
3 Other exposures included in other assets represent fee-related contract assets.
191
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Note 13
Expected credit losses continued
The table below provides a reconciliation between the opening and closing balance of the ECL allowance.
Cash and
bank
balances
Cash
collateralised
lending and
repurchase
agreements
Margin
money and
settlement
assets
Financial
investments
Held for
sale and
other
assets
Loan
assets
Loans to
associates
and joint
ventures
Off balance
sheet
exposures
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
Balance as at 1 Apr 2022
4
8
97
3
159
1,090
96
56
1,513
Credit impairment charges/
(reversals) (Note 2)
(1)
–
(42)
1
25
343
(5)
72
393
Amount written off,
previously provided for
–
–
–
–
(64)
(74)
–
–
(138)
Reclassifications, foreign
exchange and other
movements
–
–
3
–
–
85
(31)
6
63
Balance as at 31 Mar 2023
3
8
58
4
120
1,444
60
134
1,831
Credit impairment charges/
(reversals) (Note 2)
(2)
(3)
(16)
(4)
36
(107)
(27)
(11)
(134)
Amount written off,
previously provided for
–
–
–
–
(36)
(30)
–
–
(66)
Reclassifications, foreign
exchange and other
movements
–
(4)
1
1
21
8
2
2
31
Balance as at 31 Mar 2024
1
1
43
1
141
1,315
35
125
1,662
The table below provides a reconciliation of the ECL allowance on loan assets to which the impairment requirements under AASB 9 Financial
Instruments are applied.
LIFETIME ECL
Stage I
12 month ECL
Stage II
Not credit
impaired
Stage III
Credit impaired
Total
$m
$m
$m
$m
Balance as at 1 Apr 2022
486
285
319
1,090
Transfers during the year
(5)
8
(3)
–
Credit impairment charges (Note 2)
93
145
105
343
Amount written off, previously provided for
–
–
(74)
(74)
Reclassifications, foreign exchange and other movements
51
(13)
47
85
Balance as at 31 Mar 2023
625
425
394
1,444
Transfers during the year
165
(119)
(46)
–
Credit impairment charges/(reversals) (Note 2)
(346)
43
196
(107)
Amount written off, previously provided for
–
–
(30)
(30)
Reclassifications, foreign exchange and other movements
4
6
(2)
8
Balance as at 31 Mar 2024
448
355
512
1,315
192
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 14
Interests in associates and joint ventures
CONSOLIDATED
2024
2023
$m
$m
Equity investments with no provisions for impairment
5,653
3,877
Equity investments with provisions for impairment:
Gross carrying value1
398
1,304
Less: provisions for impairment
(210)
(571)
Equity investments with provisions for impairment
188
733
Total equity investments in associates and joint ventures2
5,841
4,610
Loans to associates and joint ventures
1,163
1,024
Less: credit impairment charges
(35)
(60)
Total loans to associates and joint ventures
1,128
964
Total interests in associates and joint ventures3,4
6,969
5,574
The majority of the above amounts are expected to be recovered more than 12 months after the balance date by the Consolidated Entity.
Principal associates
The Consolidated Entity’s principal associates at the balance date are:
Associates
Carrying value 2024
$m
Carrying value 2023
$m
Ownership interest
Nature of activities
Financial
reporting date
Macquarie AirFinance Limited
1,058
868
50%
Aircraft leasing
31 March
Macquarie AirFinance Limited
The Consolidated Entity holds 50% interest in Macquarie AirFinance Limited (MAF) under the MAM operating group and accounts for it as an
equity-accounted associate due to having significant influence.
During the current year, MAF acquired a portfolio of aircraft and committed to acquire an additional portfolio of aircraft, funded through debt
and equity. As at balance date, the Consolidated Entity has an undrawn equity commitment of $230 million to MAF to fund the acquisition of
the aircraft portfolio.
1 Represents the carrying value after equity-accounted gains and losses, if any.
2 Includes investments in Macquarie-managed funds of $2,059 million (2023: $1,597 million). In some instances, the Consolidated Entity holds less than 20% ownership interest in these
investments, yet classifies its investments in these funds as equity-accounted associates on the basis of its ability to participate in the financial and operating policy decisions through
its role as general partner or manager.
3 Comprises $4,467 million (2023: $3,596 million) relating to interests in associates and $2,502 million (2023: $1,978 million) relating to interests in joint ventures.
4 Financial statements of associates and joint ventures have been adjusted to align with the Consolidated Entity's reporting date, where the reporting date differs.
193
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Note 15
Property, plant and equipment and right-of-use assets
CONSOLIDATED 2024
CONSOLIDATED 2023
Cost
Accumulated
depreciation
and impairment
Carrying Value
Cost
Accumulated
depreciation and
impairment
Carrying Value
$m
$m
$m
$m
$m
$m
Assets for own use
Land and buildings
1,396
(49)
1,347
879
(44)
835
Furniture, fittings and leasehold improvements
1,141
(576)
565
843
(614)
229
Infrastructure assets and equipment
845
(190)
655
760
(182)
578
Total assets for own use
3,382
(815)
2,567
2,482
(840)
1,642
Assets under operating lease
Meters
2,807
(1,260)
1,547
2,558
(1,082)
1,476
Aviation
1,604
(259)
1,345
1,274
(217)
1,057
Telecommunications
1,620
(699)
921
1,699
(666)
1,033
Equipment and others
1,189
(266)
923
1,073
(239)
834
Total assets under operating lease
7,220
(2,484)
4,736
6,604
(2,204)
4,400
Right-of-use assets
Office premises
1,435
(693)
742
1,050
(554)
496
Others
124
(35)
89
176
(75)
101
Total right-of-use assets
1,559
(728)
831
1,226
(629)
597
Total property, plant and equipment
and right-of-use assets1
12,161
(4,027)
8,134
10,312
(3,673)
6,639
The majority of the above amounts have expected useful lives longer than 12 months after the balance date.
The future minimum lease payments expected to be received under non-cancellable operating leases are as follows.
CONSOLIDATED
2024
2023
$m
$m
Assets under operating lease
Within one year
480
438
Between one to two years
331
333
Between two to three years
251
170
Between three to four years
200
103
Between four to five years
129
82
Later than five years
262
243
Total future minimum lease payments receivable
1,653
1,369
1 Includes carrying value of $7,308 million (2023: $5,943 million) related to the Consolidated Entity's integrated consolidated businesses and $826 million (2023: $696 million) related to
the Consolidated Entity’s subsidiaries held for investment purposes with the ultimate intention to sell as part of Macquarie’s investment activities.
194
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 15
Property, plant and equipment and right-of-use assets continued
The movement in the carrying value of the Consolidated Entity’s property, plant and equipment was as follows.
Land and buildings
Furniture, fittings
and leasehold
improvements
Infrastructure assets
and equipment
Total
$m
$m
$m
$m
CONSOLIDATED
Assets for own use
Balance as at 1 Apr 2022
614
293
203
1,110
Acquisitions and additions
233
137
360
730
Disposals
–
(2)
(79)
(81)
Depreciation expense2
(5)
(53)
(55)
(113)
Impairments
–
–
(1)
(1)
Reclassification and other adjustments
(9)
(156)
125
(40)
Foreign exchange movements
2
10
25
37
Balance as at 31 Mar 20233
835
229
578
1,642
Acquisitions and additions
531
394
633
1,558
Disposals
(1)
(1)
(129)
(131)
Depreciation expense2
(5)
(60)
(48)
(113)
Impairments
–
–
(15)
(15)
Reclassification and other adjustments4
(13)
–
(384)
(397)
Foreign exchange movements
–
3
20
23
Balance as at 31 Mar 20243
1,347
565
655
2,567
Meters
Aviation
Telecommunications
Equipment
and others
Total
$m
$m
$m
$m
$m
CONSOLIDATED
Assets under operating lease
Balance as at 1 Apr 2022
1,364
865
809
537
3,575
Acquisitions and additions
262
146
265
462
1,135
Disposals
–
(21)
–
(55)
(76)
Depreciation expense
(190)
(34)
(35)
(141)
(400)
Impairments
–
(4)
–
–
(4)
Reclassification and other adjustments5
(33)
–
(51)
(10)
(94)
Foreign exchange movements
73
105
45
41
264
Balance as at 31 Mar 2023
1,476
1,057
1,033
834
4,400
Acquisitions and additions
254
323
33
392
1,002
Disposals
–
(9)
(2)
(63)
(74)
Depreciation expense
(213)
(40)
(34)
(187)
(474)
Impairments
–
(3)
–
–
(3)
Reclassification and other adjustments5
(41)
(13)
(148)
(62)
(264)
Foreign exchange movements
71
30
39
9
149
Balance as at 31 Mar 2024
1,547
1,345
921
923
4,736
2 Includes depreciation expense of $20 million (2023: $30 million) on infrastructure assets and equipment, and $4 million (2023: $1 million) on buildings, furniture, fittings and leasehold
improvements relating to subsidiaries held for investment purposes and presented under other operating income and charges in Note 2 Operating profit before income tax.
3 Includes $1,988 million (2023: $1,011 million) for capital work in progress.
4 Includes assets reclassified as held for sale in the current year.
5 Includes $70 million loss (2023: $51 million) on fair value hedge adjustments. Refer to Note 35 Hedge accounting.
195
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Note 15
Property, plant and equipment and right-of-use assets continued
The movement in the carrying value of the Consolidated Entity’s Right-of-use assets was as follows.
Office premises
Others
Total
$m
$m
$m
CONSOLIDATED
Right-of-use assets
Balance as at 1 Apr 2022
404
54
458
Acquisitions and additions
216
69
285
Disposals
(12)
(6)
(18)
Depreciation expense6
(145)
(26)
(171)
Impairments
(3)
–
(3)
Reclassification and other adjustments
7
5
12
Foreign exchange movements
29
5
34
Balance as at 31 Mar 2023
496
101
597
Acquisitions and additions
429
87
516
Disposals
(32)
(64)
(96)
Depreciation expense5
(173)
(36)
(209)
Reclassification and other adjustments
1
(1)
–
Foreign exchange movements
21
2
23
Balance as at 31 Mar 2024
742
89
831
6 Includes depreciation expense of $165 million (2023: $140 million) on office premise leases presented under other operating expenses, $25 million (2023: $20 million) on assets held for
trading-related business presented under net trading income and $5 million (2023: $4 million) on technology leases presented under non-salary technology expenses in Note 2
Operating profit before income tax.
196
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 16
Intangible assets
CONSOLIDATED 2024
CONSOLIDATED 2023
Cost
Accumulated
amortisation
and impairment
Carrying value
Cost
Accumulated
amortisation
and impairment
Carrying value
$m
$m
$m
$m
$m
$m
Intangible assets with indefinite useful lives
Goodwill
2,408
(30)
2,378
2,037
(33)
2,004
Management rights
295
–
295
308
–
308
Intangible assets with finite useful lives
Management rights and licenses
1,320
(518)
802
1,313
(393)
920
Customer and servicing contracts
848
(362)
486
729
(308)
421
Software and other intangibles
509
(216)
293
391
(217)
174
Total intangible assets1
5,380
(1,126)
4,254
4,778
(951)
3,827
The above amounts are expected to be recovered after 12 months of the balance date by the Consolidated Entity.
In accordance with the Consolidated Entity’s accounting policies, assets with an indefinite useful life are tested on an annual basis for
impairment, and additionally, along with assets with a finite useful life, whenever an indication of impairment exists. An impairment loss is
recognised for the amount by which the carrying amount of an asset or cash generating unit (CGU) exceeds its recoverable amount, which is the
higher of its fair value less costs of disposal or its value-in-use. Where required, the recoverable amount is determined either with reference to
external valuations or estimated using discounted cash flow techniques. In this case, estimates specific to the asset or CGU are required to be
determined, including forecast cash flows, long-term growth rates and discount rates (ranged from 10.5%–13.0%). There was no material
impairment or reversal of existing impairment recognised during the year.
The movement in the carrying value of the Consolidated Entity’s intangible assets is as follows.
INTANGIBLE ASSETS WITH
INDEFINITE USEFUL LIVES
INTANGIBLE ASSETS WITH FINITE USEFUL LIVES
Goodwill
Management
rights
Management
rights and
licenses
Customer and
servicing
contracts
Software and
other
Intangibles
Total
$m
$m
$m
$m
$m
$m
Balance as at 1 Apr 2022
1,863
276
1,167
387
87
3,780
Acquisitions2
161
–
2
21
146
330
Impairments
(12)
–
–
–
–
(12)
Amortisation3
–
–
(153)
(44)
(31)
(228)
Disposals and reclassifications
(111)
(2)
(196)
(6)
(118)
(433)
Foreign exchange movements and other
adjustments
103
34
100
63
90
390
Balance as at 31 March 2023
2,004
308
920
421
174
3,827
Acquisitions2
559
–
2
95
391
1,047
Impairments
(8)
–
(2)
–
–
(10)
Amortisation3
–
–
(134)
(46)
(25)
(205)
Disposals and reclassifications
(250)
(21)
–
–
(260)
(530)
Foreign exchange movements and other
adjustments
73
7
16
16
13
125
Balance as at 31 March 2024
2,378
294
802
486
293
4,254
1 Includes $2,832 million (2023: $2,959 million) related to the Consolidated Entity’s core business operations and $1,422 million (2023: $868 million) related to the Consolidated Entity’s
subsidiaries held for investment purposes with the ultimate intention to sell as part of Macquarie’s investment activities.
2 Includes intangible assets acquired as part of business combinations and otherwise.
3 Includes amortisation of $41 million (2023: $47 million) related to the Consolidated Entity’s subsidiaries held for investment purposes, presented under other operating income and
charges and $164 million (2023: $181 million) under other operating expenses in Note 2 Operating profit before income tax.
197
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Note 17
Investment in subsidiaries
COMPANY
2024
2023
$m
$m
Investment at cost with no provisions for impairment1
33,805
32,604
Total investment in subsidiaries
33,805
32,604
The above amounts are expected to be recovered after 12 months of the balance date by the Company.
The following are the Company’s notable subsidiaries:
BANK GROUP
NON-BANK GROUP
Macquarie B.H. Pty Ltd (MBHPL)
Macquarie Financial Holdings Pty
Limited (MFHPL)
Macquarie Asset Management Holdings Pty
Limited (MAMH)
Australia
•
Macquarie B.H. Pty Ltd
•
Macquarie Bank Limited
•
Macquarie Group Services Australia Pty Ltd
•
Macquarie International Finance Limited
•
Macquarie Offshore Services Pty Ltd
•
Macquarie Equities Limited
•
Macquarie Investment Management Ltd
•
Macquarie Financial Holdings Pty Limited
•
Macquarie Corporate Holdings
Pty Limited
•
Macquarie Securities (Australia) Limited
•
Macquarie Capital (Australia) Limited
•
Macquarie Asset Management Holdings Pty
Limited
•
Macquarie Investment Management Global
Limited
•
Macquarie Investment Management Australia
Limited
•
Macquarie Infrastructure Management (Asia) Pty
Limited
•
Macquarie Specialised Asset
Management Ltd
Asia Pacific
•
Macquarie Global Services Private
Limited (India)
•
Macquarie Group Services (Philippines), Inc.
(Philippines)
•
Macquarie Capital Limited (Hong Kong)
•
Macquarie Korea Asset Management Co Ltd
(South Korea)
Europe, Middle East and Africa
•
Macquarie Bank Europe Designated Activity
Company (Ireland)
•
Macquarie Investment Management Europe
Limited (United Kingdom)
•
Macquarie Asset Management Europe S.à r.l.
(Luxembourg)
•
Macquarie Capital France Société Anonyme
(Reporting date 31 December) (France)
•
Macquarie Capital (Europe) Limited (United
Kingdom)
•
Infinity UK Borrower 1 Limited
(United Kingdom)
•
Macquarie Infrastructure and Real Assets
Investments Limited (United Kingdom)
•
Macquarie Infrastructure and Real Assets
(Europe) Limited (United Kingdom)
1 In accordance with its accounting policies, the Company reviewed its investments in subsidiaries for indicators of impairment. Where its investments had indicators of impairment, the
investment's carrying value was compared to its recoverable value which was determined as the higher of value-in-use and fair value less cost to sell (valuation). The valuations, which
are classified as Level 3 in the fair value hierarchy (as defined in Note 38 Fair value of assets and liabilities), have been calculated using a valuation technique with significant
unobservable inputs including the subsidiary's maintainable earnings, growth rates and relevant earnings multiples. A range of valuations of the investments in the subsidiaries, under
different scenarios, was used that demonstrated that the recoverable value was either equivalent to or exceeded the current carrying value.
198
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 17
Investment in subsidiaries continued
BANK GROUP
NON-BANK GROUP
Macquarie B.H. Pty Ltd (MBHPL)
Macquarie Financial Holdings Pty
Limited (MFHPL)
Macquarie Asset Management Holdings Pty
Limited (MAMH)
Americas
•
Macquarie Energy LLC (United States)
•
Macquarie Global Services (USA) LLC (United
States)
•
Macquarie Futures USA LLC (United States)
•
Macquarie Capital (USA) Inc.
(United States)
•
Macquarie Holdings (U.S.A.) Inc.
(United States)
•
Macquarie PF Inc. (United States)
•
Infinity US Borrower 1 LLC
(United States)
•
Macquarie PF LLC (United States)
•
MIP III (ECI) GP LLC (United States)
•
Macquarie Capital Funding LLC (United States)
•
Delaware Management Company
(United States)
•
Delaware Distributors, L.P. (United States)
•
Macquarie Management Holdings, Inc. (United
States)
The subsidiaries included in the notable subsidiaries list above are identified on the basis of their ongoing contribution to the Consolidated
Entity’s external assets and operating profit. Additionally, these include the major employing entities, entities that are key providers of funding
to other subsidiaries and other operating entities considered key for each Operating Group and region.
The list of notable subsidiaries has been categorised based on the geographic region of their incorporation. The country of incorporation has
been stated in brackets. For entities in the Australia region, the country of incorporation is Australia. Overseas subsidiaries and their branches
conduct business predominantly in the place of incorporation and location of their branches. Notable subsidiaries may conduct business in other
geographic regions through branches. The branches have not been separately included in the list of notable subsidiaries.
All notable subsidiaries have a 31 March reporting date, except for specific cases covered above.
Significant restrictions
During the year, the Company’s subsidiaries did not experience any significant restrictions on paying dividends, accessing or using assets and
settling liabilities of the Group. There are no foreseen restrictions envisaged with regard to planned dividends or payments. However, the ability
of subsidiaries to pay dividends or advance monies to the Group depends on, among other things, their respective local regulatory capital and
banking requirements, exchange controls, statutory reserves, and financial and operating performance.
Non-controlling interest
Details of non-controlling interest are covered in Note 28 Reserves, retained earnings and non-controlling interests.
199
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Note 18
Deferred tax assets/(liabilities)
The balance comprises temporary differences attributable to:
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
Other assets and liabilities
1,743
1,800
43
3
Financial investments and interests in associates and joint ventures
461
475
–
–
Tax losses
506
358
–
–
Intangible assets
304
283
–
–
Property, plant and equipment
144
112
–
–
Loan assets and derivatives
176
268
4
–
Operating and finance leases
31
43
–
–
Set-off of deferred tax liabilities
(1,288)
(1,542)
(6)
–
Net deferred tax assets
2,077
1,797
41
3
Intangible assets
(391)
(419)
–
–
Operating and finance leases
(289)
(359)
–
–
Financial investments and interests in associates and joint ventures
(647)
(444)
–
–
Loan assets and derivatives
(112)
(274)
(6)
–
Other assets and liabilities
(181)
(205)
–
–
Property, plant and equipment
(51)
(37)
–
–
Set-off of deferred tax assets
1,288
1,542
6
–
Net deferred tax liabilities
(383)
(196)
–
–
The above amounts are expected to be recovered more than 12 months after the balance date by the Consolidated Entity and the Company.
Potential tax assets of approximately $517 million (2023: $533 million) attributable to tax losses carried forward by subsidiaries and other
timing differences have not been brought to account in the Consolidated Entity as Management do not believe that the realisation of the tax
assets is probable. Included in this amount are gross losses of $142 million (2023: $57 million) that will expire within two years, $200 million
(2023: $207 million) that will expire in 2–5 years, $231 million (2023: $280 million) that will expire in 5–10 years and $547 million
(2023: $543 million) that will expire in 10–20 years. $1,276 million (2023: $1,260 million) of gross tax losses do not expire and can be carried
forward indefinitely.
200
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 19
Trading liabilities
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
Equity securities
4,991
4,770
–
–
Debt securities
53
40
–
–
Total trading liabilities
5,044
4,810
–
–
Note 20
Margin money and settlement liabilities
Margin money
17,793
17,109
–
–
Security settlement liabilities
6,253
6,408
–
–
Commodity settlement liabilities
4,377
3,965
–
–
Total margin money and settlement liabilities
28,423
27,482
–
–
Note 21
Derivative liabilities
Held for trading
21,808
29,055
5
5
Designated in hedge relationships
3,777
3,735
–
–
Total derivative liabilities
25,585
32,790
5
5
Note 22
Deposits
Interest bearing deposits:
Call
102,764
89,917
–
–
Term
21,893
23,367
–
–
Non-interest bearing deposits - repayable on demand
23,759
21,430
–
–
Total deposits
148,416
134,714
–
–
201
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Note 23
Other liabilities
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
Other financial liabilities
Commodity-related payables
3,848
1,371
–
–
Creditors
1,831
1,929
36
20
Lease liabilities
918
702
–
–
Total other financial liabilities
6,597
4,002
36
20
Other non-financial liabilities
Employment-related liabilities
3,485
4,065
95
83
Provisions1
1,782
1,620
10
20
Accrued charges and other payables
867
841
3
2
Income tax provision2
785
1,087
24
112
Income received in advance
504
600
–
–
Indirect taxes payables
260
138
1
4
Other
192
159
–
–
Total other non-financial liabilities
7,875
8,510
133
221
Total other liabilities
14,472
12,512
169
241
1 In the ordinary course of its business, the Consolidated Entity and the Company may be subject to actual and potential civil claims and regulatory enforcement actions. During the
current year, these include matters in the Commonwealth of Australia, the United States of America, the United Kingdom, and the Federal Republic of Germany. The civil claims may
result in settlements or damages awards. The regulatory enforcement actions may result in outcomes such as penalties, fines, disgorgement of profits and non‑monetary sanctions.
This amount includes provisions for such outcomes. The amount and timing of the outcomes are uncertain and may differ from the provisions recognised. Based on existing
information, the range of likely outcomes, the matters did not have and are not currently expected to have a material impact on the Consolidated Entity. The Consolidated Entity and
the Company consider the risk of there being a material adverse effect in respect of claims and actions that have not been provided for to be remote.
2 Revenue authorities undertake risk reviews and audits as part of their normal activities. The Consolidated Entity has assessed these and other taxation claims and litigation, including
seeking external advice where appropriate, and considers that it holds appropriate provisions.
202
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 24
Issued debt securities and other borrowings
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
Bonds
57,233
50,972
35,242
31,050
Commercial paper
26,025
23,466
–
–
Securitised notes1
11,621
11,424
–
–
Structured notes2,3
2,550
2,413
1,470
1,063
Certificates of deposits
1,333
2,274
–
–
Total issued debt securities
98,762
90,549
36,712
32,113
Borrowings
21,116
18,912
6,423
6,942
Total issued debt securities and other borrowings
119,878
109,461
43,135
39,055
The Consolidated Entity and the Company have not had any defaults of principal, interest or other breaches with respect to its issued debt
securities and other borrowings during the financial years reported.
Reconciliation of issued debt securities and other borrowings by major currency
(In Australian dollar equivalent)
United States dollar
74,384
67,194
29,103
25,573
Australian dollar
19,660
20,523
253
252
Euro
13,179
8,635
5,803
5,225
Pound sterling
6,891
5,960
3,291
3,135
Japanese yen
2,286
2,429
1,971
2,181
Other
3,478
4,720
2,714
2,689
Total issued debt securities and other borrowings
119,878
109,461
43,135
39,055
1 Represents payable to note holders and debt holders of instruments issued by consolidated Structured Entities (SEs) for which loan assets are available as security. Refer Note 40
Pledged assets and transfers of financial assets for the details of assets pledged for the liabilities of the Consolidated Entity.
2 The amount that would be contractually required to be paid at maturity to the holders of issued debt securities measured at DFVTPL for the Consolidated Entity is $3,868 million (2023:
$3,696 million) and for the Company is $2,470 million (2023: $2,037 million). This amount is based on the final notional amount rather than the fair value. Refer to Note 37
Measurement categories of financial instruments for the carrying value of issued debt securities measured at DFVTPL.
3 The Consolidated Entity includes a cumulative fair value gain recognised in OCI of $14 million (2023: $49 million) and the Company includes a cumulative fair value gain recognised in
OCI of $15 million (2023: $34 million) due to changes in own credit risk on issued debt securities measured at DFVTPL.
203
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Note 25
Capital management
Capital management strategy
The Consolidated Entity’s and the Company’s capital management
strategy is to maximise shareholder value through optimising the
mix, level and use of capital resources, whilst also providing the
flexibility to take advantage of opportunities as they may arise.
The Consolidated Entity’s capital management objectives are to
maintain sufficient capital resources to:
•
support the Consolidated Entity’s business and operational
requirements;
•
safeguard interest of depositors’ and the Consolidated Entity’s
ability to continue as a going concern;
•
exceed regulatory capital requirements; and
•
support the Consolidated Entity’s credit ratings.
The Consolidated Entity’s capital management strategy uses
both internal and external measures of capital. Internally, the
Consolidated Entity has developed an Economic Capital Adequacy
Model (ECAM) that complements the management of specific risk
types such as equity, credit, market and operational risk by
providing an aggregate view of the Consolidated Entity’s risk
profile. Externally, the Consolidated Entity is subject to minimum
capital requirements imposed by APRA.
Measures of capital used to support business decision-making
include:
•
capital adequacy assessment
•
risk appetite setting
•
risk-adjusted performance measurement
Regulatory capital framework
Regulatory capital requirements are imposed and measured at
three levels of consolidation within the Consolidated Entity:
•
Level 1: MBL and certain subsidiaries which meet the APRA
definition of Extended Licensed Entities.
•
Level 2: MBL, its subsidiaries and its immediate parent less
certain subsidiaries of MBL which are deconsolidated for APRA
reporting purposes. These include entities conducting
insurance, funds management and non-financial operations.
•
Level 3: The Level 2 group, other bank entities excluded from
Level 2 plus the Non-Bank Group. In determining the capital
requirements, transactions internal to the Consolidated Entity
are eliminated.
MBL, a wholly owned subsidiary of the Company, is an APRA
regulated ADI and is subject to the prevailing APRA ADI Prudential
Standard requirements. MBL is accredited by APRA to apply the
Basel III Foundation Internal Ratings Based Approach for credit risk
and the Internal Model Approach for market risk and interest rate
risk in the banking book.
The Company and Consolidated Entity, as an APRA authorised and
regulated NOHC, is regulated on a Level 3 basis and is required to
maintain minimum regulatory capital calculated as the sum of:
•
MBL’s minimum Tier 1 capital requirement, based on a
percentage of risk-weighted assets (RWAs) plus Tier 1
deductions per the prevailing APRA ADI Prudential Standards.
•
The Non-Bank Group capital requirement, per the Consolidated
Entity’s ECAM.
The Consolidated Entity’s Level 3 eligible capital consists of
ordinary equity, retained earnings, certain reserves and
hybrid instruments. The overall Level 3 capital position is
reported as an excess over the regulatory minimum capital
adequacy requirement.
The Consolidated Entity has complied with minimum capital
requirements at Level 1, Level 2 and Level 3 throughout the
financial year.
204
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 26
Loan capital
Subordinated debt
Subordinated debt comprises of agreements between the Consolidated Entity and its lenders that provide that, in the event of liquidation,
entitlement of such lenders to repayment of the principal sum and interest thereon is and shall at all times be and remain subordinated to the
rights of all other present and future creditors of the Consolidated Entity.
The table below highlights key capital instruments with conditional repayment obligations (Tier 1 loan capital) issued by the Consolidated Entity.
Contract feature
Macquarie Group
Capital Notes 3
Macquarie Group
Capital Notes 4
Macquarie Group
Capital Notes 5
Code
MCN3
MCN4
MCN5
Issuer
Macquarie Group Limited
Macquarie Group Limited
Macquarie Group Limited
Par value
$100
$100
$100
Currency
AUD
AUD
AUD
Carrying value at reporting date
$1,000 million
$905 million
$725 million
Accounting measurement basis
Financial liability at amortised cost
Financial liability at amortised cost
Financial liability at amortised cost
Issue date
7 June 2018
27 March 2019
17 March 2021
Interest rate
90-day BBSW plus a fixed margin of
4.00% per annum, adjusted for
franking credits
90-day BBSW plus a fixed margin of
4.15% per annum, adjusted for
franking credits
90-day BBSW plus a fixed margin of
2.90% per annum, adjusted for
franking credits
Interest payment frequency
Quarterly in arrears
Quarterly in arrears
Quarterly in arrears
Interest payment
Discretionary, non-cumulative
Discretionary, non-cumulative
Discretionary, non-cumulative
Dividend stopper
Yes
Yes
Yes
Outstanding notes at reporting date
10 million
9.05 million
7.25 million
Maturity
Perpetual unless redeemed, resold,
converted, exchanged or written-off
earlier in accordance with the terms of
the instrument
Perpetual unless redeemed, resold,
converted, exchanged or written-off
earlier in accordance with the terms of
the instrument
Perpetual unless redeemed, resold,
converted, exchanged or written-off
earlier in accordance with the terms of
the instrument
Convertible into ordinary shares
Yes
Yes
Yes
Convertible into issuer shares
MGL
MGL
MGL
Mandatory conversion date
15 December 2027
10 September 2029
18 September 2030
Maximum number of shares
on conversion
43,798,178
35,439,961
24,641,304
Optional exchange dates
•
16 December 2024
•
16 June 2025
•
15 December 2025 earlier in
specified circumstances at the
discretion of MGL subject to APRA
approval
•
10 September 2026
•
10 March 2027
•
10 September 2027 earlier in
specified circumstances at the
discretion of MGL subject to APRA
approval
•
18 September 2027
•
18 March 2028
•
18 September 2028 earlier in
specified circumstances at the
discretion of MGL subject to APRA
approval
Other exchange events
•
acquisition date (where a party
acquires control of MGL)
•
where APRA determines MGL
would be non-viable without an
exchange or a public sector
injection of capital (or equivalent
support)
•
acquisition date (where a party
acquires control of MGL)
•
where APRA determines MGL
would be non-viable without an
exchange or a public sector
injection of capital (or equivalent
support)
•
acquisition date (where a party
acquires control of MGL)
•
where APRA determines MGL
would be non-viable without an
exchange or a public sector
injection of capital (or equivalent
support)
EPS Dilution1
Anti-Dilutive
Anti-Dilutive
Anti-Dilutive
Capital treatment
Eligible hybrid capital
Eligible hybrid capital
Eligible hybrid capital
1 The Consolidated Entity has issued loan capital which may convert into ordinary shares in the future. These loan capital instruments are potentially dilutive instruments, and diluted EPS
is therefore calculated as if the instruments had been converted at the beginning of the year or, if later, the instruments’ issue dates. For the year ended 31 March 2024, all loan capital
instruments were antidilutive (31 March 2023: dilutive).
205
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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Macquarie Group
Capital Notes 6
Macquarie Additional
Capital Securities
Macquarie Bank
Capital Notes 2
Macquarie Bank
Capital Notes 3
MCN6
MACS
BCN2
BCN3
Macquarie Group Limited
Macquarie Bank Limited
Macquarie Bank Limited
Macquarie Bank Limited
$100
n/a
$100
$100
AUD
USD
AUD
AUD
$750 million
$US750 million/($A1,085 million)
$641 million
$655 million
Financial liability at amortised cost
Financial liability at amortised cost
Financial liability at amortised cost
Financial liability at amortised cost
15 July 2022
8 March 2017
2 June 2020
27 August 2021
90-day BBSW plus a fixed margin of
3.70% per annum, adjusted for
franking credits
6.125% per annum
90-day BBSW plus a fixed margin of
4.70% per annum, adjusted for
franking credits
90-day BBSW plus a fixed margin of
2.90% per annum, adjusted for
franking credits
Quarterly in arrears
Semi-annually in arrears
Quarterly in arrears
Quarterly in arrears
Discretionary, non-cumulative
Discretionary, non-cumulative
Discretionary, non-cumulative
Discretionary, non-cumulative
Yes
MBL only
MBL only
MBL only
7.5 million
—2
6.41 million
6.55 million
Perpetual unless redeemed, resold,
converted, exchanged or written-off
earlier in accordance with the terms of
the instrument
Perpetual, redeemed subject to
APRA’s written approval, and at the
discretion of MBL in limited
circumstances
Perpetual unless redeemed, resold,
converted, exchanged or written-off
earlier in accordance with the terms of
the instrument
Perpetual unless redeemed, resold,
converted, exchanged or written-off
earlier in accordance with the terms of
the instrument
Yes
Yes
Yes
Yes
MGL
MGL
MGL
MGL
12 September 2032
n/a
21 December 2028
8 September 2031
22,525,190
56,947,286
30,532,190
20,316,704
•
12 September 2029
•
12 March 2030
•
12 September 2030
earlier in specified circumstances at
the discretion of MGL subject to APRA
approval
No optional exchange dates
•
21 December 2025
•
21 June 2026
•
21 December 2026
earlier in specified circumstances at
the discretion of MBL subject to
APRA approval
•
7 September 2028
•
7 March 2029
•
7 September 2029
earlier in specified circumstances at
the discretion of MBL subject to
APRA approval
•
acquisition date (where a party
acquires control of MGL)
•
where APRA determines MGL
would be non-viable without an
exchange or a public sector
injection of capital (or equivalent
support)
•
acquisition date (where a party
acquires control of MBL or MGL)
•
where APRA determines MBL
would be non-viable without an
exchange or a public sector
injection of capital (or equivalent
support)
•
where MBL’s common equity Tier 1
capital ratio falls below 5.125%
•
acquisition date (where a party
acquires control of MBL or MGL)
•
where APRA determines MBL
would be non-viable without an
exchange or conversion or write
off, of other Relevant Tier 1
securities is necessary or a public
sector injection of capital (or
equivalent support)
•
where MBL’s common equity Tier 1
Capital ratio falls below 5.125%
•
acquisition date (where a party
acquires control of MBL or MGL)
•
where APRA determines MBL
would be non-viable without an
exchange or conversion or write
off, of other Relevant Tier 1
securities is necessary or a public
sector injection of capital
(or equivalent support)
•
where MBL’s common equity Tier 1
Capital ratio falls below 5.125%
Anti-Dilutive
n/a
Anti-Dilutive
Anti-Dilutive
Eligible hybrid capital
Additional Tier 1 capital
Additional Tier 1 capital
Additional Tier 1 capital
2 As at 31 March 2024, the $US750 million of MACS were held by an authorised representative for the Depository Trust Company being the common depository for the MACS
global security.
206
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 26
Loan capital continued
In addition to the subordinated debt with conditional repayment obligations, the Consolidated Entity has also issued certain capital instruments
with fixed repayment obligations, denominated in United States dollars and Australian dollars which are eligible Tier 2 capital under APRA’s
capital standards.
The table below discloses the carrying value of Loan capital at the balance date. Where these instruments are designated in fair value hedge
accounting relationships, the carrying value includes the fair value hedge adjustment (refer to Note 35 Hedge accounting). The contractual
undiscounted cash flows are disclosed in Note 36.2 Liquidity risk.
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
Subordinated debt with fixed repayment obligations (Tier 2 loan capital) by
contractual maturity dates:
10 June 2025
1,112
1,075
–
–
28 May 2030
750
750
–
–
3 June 2030
935
921
–
–
17 June 2031
750
750
–
–
7 June 2032
843
849
–
–
18 January 2033
1,460
1,497
–
–
1 March 2034
1,256
–
–
–
3 March 2036
1,285
1,282
–
–
Instruments with conditional repayment obligations (Tier 1 loan capital):
MCN3
1,000
1,000
1,000
1,000
MCN4
905
905
905
905
MCN5
725
725
725
725
MCN6
750
750
750
750
MACS
1,085
1,064
–
–
BCN2
641
641
–
–
BCN3
655
655
–
–
Accrued interest payable as per terms of instruments:
Less than 12 months
101
89
12
11
14,253
12,953
3,392
3,391
Less: directly attributable issuance costs
(52)
(62)
(21)
(29)
Total loan capital
14,201
12,891
3,371
3,362
Reconciliation of loan capital by major currency
(In Australian dollar equivalent)
Australian dollar
8,315
7,057
3,392
3,391
United States dollar
5,938
5,896
–
–
14,253
12,953
3,392
3,391
Less: directly attributable issuance costs
(52)
(62)
(21)
(29)
Total loan capital
14,201
12,891
3,371
3,362
The Consolidated Entity and the Company have not had any defaults of principal, interest or other breaches with respect to their loan capital
during the financial years reported.
207
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Note 27
Contributed equity
CONSOLIDATED
COMPANY
2024
2023
2024
2023
Notes
$m
$m
$m
$m
Ordinary share capital
14,156
14,735
16,593
17,200
Treasury shares
(2,784)
(2,328)
(2,784)
(2,328)
Total contributed equity
11,372
12,407
13,809
14,872
CONSOLIDATED
COMPANY
Number
of shares
Total
$m
Number
of shares
Total
$m
(i) Ordinary share capital1
Balance as at 1 Apr 2022
383,647,637
14,156
383,647,637
16,639
Issued fully paid shares pursuant to the DRP on 4 July 2022 @ 177.11 per share
2,736,737
485
2,736,737
485
Issued shares on retraction of exchangeable shares on 27 May 2022
and 1 June 2022
92,380
–
92,380
17
For employee MEREP awards:
Transfer from share-based payments reserve on vesting of MEREP awards
28
–
512
–
512
Transfer of deferred tax benefit on MEREP from share-based payments
reserve on vesting of MEREP awards
28
–
35
–
–
Transfer from treasury shares for MEREP awards exercised
–
(453)
–
(453)
Balance as at 31 Mar 2023
386,476,754
14,735
386,476,754
17,200
For employee MEREP awards:
Transfer from share-based payments reserve on vesting of MEREP awards
28
–
607
–
607
Transfer of deferred tax benefit on MEREP from share-based payments
reserve on vesting of MEREP awards
28
–
30
–
2
Transfer from treasury shares for MEREP awards exercised
–
(572)
–
(572)
On-market share buyback2
(3,514,221)
(644)
(3,514,221)
(644)
Balance as at 31 Mar 2024
382,962,533
14,156
382,962,533
16,593
1 Ordinary shares have no par value.
2 On 2 November 2023, the Macquarie Group Limited ("MGL") Board approved an on-market share buyback of up to $2 billion of MGL shares. During the financial year, 3,514,221 ordinary
shares were bought back at an average price of $183.26 per share. The shares bought back were subsequently cancelled.
208
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 27
Contributed equity continued
CONSOLIDATED
COMPANY
Number
of shares
Total
$m
Number
of shares
Total
$m
(ii) Treasury shares3
Balance as at 1 Apr 2022
(15,234,983)
(1,858)
(15,234,983)
(1,858)
Acquisition of shares for employee MEREP awards
(5,470,493)
(923)
(5,470,493)
(923)
Transfer to ordinary share capital for MEREP awards exercised
3,981,423
453
3,981,423
453
Acquisition of shares for allocation under DRP scheme
(571,655)
(102)
–
–
Allocation of shares under DRP scheme
571,655
102
–
–
Acquisition of shares for allocation under ESP scheme
(10,975)
(2)
–
–
Allocation of shares under ESP scheme
10,975
2
–
–
Balance as at 31 Mar 2023
(16,724,053)
(2,328)
(16,724,053)
(2,328)
Acquisition of shares for employee MEREP awards
(5,737,537)
(1,028)
(5,737,537)
(1,028)
Transfer to ordinary share capital for MEREP awards exercised
4,548,969
572
4,548,969
572
Acquisition of shares for allocation under DRP scheme
(322,890)
(54)
–
–
Allocation of shares under DRP scheme
322,890
54
–
–
Acquisition of shares for allocation under ESP scheme
(14,346)
(2)
–
–
Allocation of shares under ESP scheme
14,346
2
–
–
Balance as at 31 Mar 2024
(17,912,621)
(2,784)
(17,912,621)
(2,784)
3 Under MEREP, a portion of staff retained profit share is held in MGL ordinary shares by the MEREP Trust and is presented as Treasury shares. The Consolidated Entity has resolved to
purchase additional Treasury shares to satisfy MEREP requirements of approximately $696 million, commencing on 13 May 2024. Ordinary shares will be issued if purchasing becomes
impractical or inadvisable. For further information regarding terms and conditions of MEREP refer to Note 32 Employee equity participation.
209
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Note 28
Reserves, retained earnings and non-controlling interests
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
(i) Reserves
Foreign currency translation reserve
Balance at the beginning of the financial year
1,632
312
–
–
Foreign exchange movement on translation and hedge accounting
of foreign operations, net of tax
440
1,320
–
–
Balance at the end of the financial year
2,072
1,632
–
–
FVOCI and other reserves
Balance at the beginning of the financial year
30
16
–
–
Revaluation movement, net of tax
(8)
(15)
1
–
Changes in ECL allowance, net of tax
(24)
29
–
–
Balance at the end of the financial year
(2)
30
1
–
Share-based payments reserve
Balance at the beginning of the financial year
1,621
1,424
1,572
1,332
MEREP share-based payment arrangements1
799
751
799
751
Deferred tax on MEREP share-based payment arrangements
46
(7)
2
1
Transfer to ordinary share capital on vesting of MEREP awards
(607)
(512)
(607)
(512)
Transfer of deferred tax benefit to ordinary share capital on vesting
of MEREP awards
(30)
(35)
(2)
–
Transfer to retained earnings for forfeited awards
(8)
–
(8)
–
Balance at the end of the financial year
1,821
1,621
1,756
1,572
Cash flow hedge reserve
Balance at the beginning of the financial year
21
(103)
(13)
–
Revaluation movement, net of tax
(41)
14
(14)
(13)
Transferred to income statement on realisation, net of tax
42
110
14
–
Balance at the end of the financial year
22
21
(13)
(13)
Share of reserves in associates and joint ventures
Balance at the beginning of the financial year
28
(110)
–
–
Share of other comprehensive income of associates and joint ventures, net
of tax
22
138
–
–
Balance at the end of the financial year
50
28
–
–
Cost of hedging reserves
Balance at the beginning of the financial year
(30)
(16)
–
–
Revaluation movement, net of tax
(55)
(28)
–
–
Transferred to income statement on realisation, net of tax
13
14
–
–
Balance at the end of the financial year
(72)
(30)
–
–
Total reserves at the end of the financial year
3,891
3,302
1,744
1,559
1 Represents MEREP issued to employees of the Company's subsidiaries (Note 32 Employee equity participation).
210
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 28
Reserves, retained earnings and non-controlling interests continued
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
(ii) Retained earnings
Balance at the beginning of the financial year
17,446
14,740
16,677
16,521
Profit attributable to the ordinary equity holders of MGL
3,522
5,182
1,899
2,624
Dividends paid on ordinary share capital (Note 5)
(2,716)
(2,495)
(2,695)
(2,478)
Movement due to change in non-controlling ownership interest
4
(4)
–
–
Actuarial (loss)/gain on defined benefit plans
(2)
12
–
–
Fair value changes attributable to own credit risk on debt classified as
DFVTPL, net of tax
(44)
11
(35)
10
Transfer from share-based payment reserve for forfeited MEREP awards
8
–
8
–
Balance at the end of the financial year
18,218
17,446
15,854
16,677
(iii) Non-controlling interests
Share capital
748
1,161
–
–
Reserves
(56)
(51)
–
–
Accumulated losses
(177)
(159)
–
–
Total non-controlling interests
515
951
–
–
Note 29
Notes to the statements of cash flows
(i) Reconciliation of cash and cash equivalents
Cash and cash equivalents at the end of the financial year are reflected in the relevant items in the Statements of financial position as follows.
Cash and bank balances1,2
23,232
39,379
–
–
Cash collateralised lending and reverse repurchase agreements
33,291
31,149
–
–
Financial investments
10,084
6,651
484
–
Held for sale assets
160
35
–
–
Cash and cash equivalents at the end of the financial year
66,767
77,214
484
–
1 Amounts excluded from cash and cash equivalents but presented in the Statements of financial position as Cash and bank balances primarily relates to $8,021 million (2023: $5,317
million) of funds received from clients which are segregated from the Consolidated Entity’s own funds and other balances of $602 million (2023: $960 million), not readily available to
meet the Consolidated Entity’s short-term cash commitments.
2 Includes $2,004 million (2023: $1,461 million) of balances held by consolidated SEs that are restricted from use by the Consolidated Entity, balances required to be maintained with
central banks and other regulatory authorities and balances held in countries where remittance of cash outside the country is subject to certain restrictions.
211
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Note 29
Notes to the statements of cash flows continued
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
(ii) Reconciliation of profit after income tax to net cash flows
generated from/(utilised in) operating activities
Profit after income tax
3,535
5,168
1,899
2,624
Adjustments to profit after income tax:
Depreciation and amortisation
997
899
(4)
15
Credit and other impairment (reversal)/charges
(369)
459
–
–
Investment and other income
(1,022)
(2,102)
–
–
Share-based payments expense
799
751
–
–
Share of net profits of associates and joint ventures
49
113
–
–
Changes in assets and liabilities:
Issued debt securities, borrowings and other funding
6,586
(12,138)
3,217
3,345
Deposits
13,480
33,032
–
(31)
Trading and related assets and collateralised lending balances (net of
liabilities)
(10,903)
(13,463)
–
–
Liquid asset holdings
1,845
(2,021)
(1,271)
–
Debtors, prepayments, accrued charges and creditors
(880)
228
3
18
Carrying values of associates due to dividends received
185
569
–
–
Other assets and liabilities
(78)
(32)
15
(7)
Tax balances
(341)
(210)
(432)
(505)
Interest, fee and commission receivable and payable
18
265
75
141
Assets under operating lease
(960)
(1,042)
–
–
Loan assets and balances with subsidiaries
(17,031)
(21,856)
2,549
(3,289)
Net cash flows (utilised in)/generated from operating activities
(4,090)
(11,380)
6,051
2,311
(iii) Non-cash financing activities
Non-cash transactions included $nil (2023: $485 million) relating to issue of shares to shareholders under the DRP and ESP for settlement of the
dividend liability. Refer to Note 27 Contributed equity for further details.
(iv) Reconciliation of loan capital
Balance at the beginning of the financial year
12,891
9,513
3,362
2,612
Cash flows:3,4
Issuance
1,246
3,078
–
739
Non-cash changes:
Foreign currency translation and other movements
64
300
11
11
Balance at the end of the financial year
14,201
12,891
3,373
3,362
3 During the year ended 31 March 2023, the Consolidated Entity issued MCN6 for $740 million. These are perpetual securities which are eligible for conversion into a variable number of
Consolidated Entity’s ordinary shares on the scheduled mandatory exchange date, provided the exchange conditions are satisfied, unless redeemed, resold or written off earlier. Refer
to Note 26 Loan capital for details.
4 During the year ended 31 Mar 2024, the Consolidated Entity raised $1,246 million (2023: $2,338 million) net of cost of issuance through the issue of Tier 2 loan capital under fixed
repayment obligations.
212
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 30
Related party information
Transactions between the Company and its subsidiaries principally arise from the provision and repayment of funding arrangements which are
repayable on demand or may be extended on a term basis and where appropriate may be either subordinated or collateralised, provision of
banking and other financial services, provision of management and administration services, the provision of guarantees, capital, distribution and
trading activities including derivative transactions for managing and hedging market risks that are governed by standard market practices and
arrangements under ISDA Master Agreement, Global Master Repurchase Agreement (GMRA) and other brokerage agreements.
The Master Loan Agreement (MLA) governs the funding and netting arrangements between various subsidiaries which are under the common
control of MGL and which have acceded to the MLA.
The Tripartite Outsourcing Major Services Agreement (TOMSA) governs the provision of intra‑group services between subsidiaries other than
certain excluded entities.
The Company, as the ultimate parent entity of the Consolidated Entity, is the head entity of the Australian tax consolidated group and has
entered into a tax funding agreement with its eligible Australian resident subsidiaries. The terms and conditions of this agreement are set out in
Note 44(vi) Taxation.
Subsidiaries
Amounts due from and due to subsidiaries are presented separately in the Statements of financial position of the Company except when the
parties have the legal enforceable right and the intention to offset. Due from and due to subsidiaries balance primarily represents loans,
receivables and payables presented net as per the terms of the funding arrangements under the MLA, amounts in respect of MEREP awards
offered to its subsidiaries’ employees, bespoke funding agreements and trading-related balances including derivatives designated in hedge
accounting relationships.
A list of notable subsidiaries is set out in Note 17 Investment in subsidiaries.
The following represents transactions with subsidiaries during the financial year:
COMPANY
2024
2023
$'000
$'000
The following represents transaction balances with subsidiaries during the financial year:
Interest income
1,864,059
1,403,250
Interest expense
(100,939)
(59,700)
Fee and commission income
7,762
12,587
Investment income:
Dividend (Note 2)
2,079,000
2,749,000
Other charges1
(57,903)
(137,670)
Share based payments
798,464
750,659
The following represents outstanding balances and off balance sheet arrangements with subsidiaries as at
the reporting date:
On Balance Sheet
Due from subsidiaries
49,711,648
48,817,719
Due to subsidiaries
(7,257,460)
(5,686,232)
Off Balance Sheet
Guarantees provided2
(7,327,080)
(5,239,240)
1 Includes expense charged by a subsidiary for an asset development contract which the Company recovers from external parties.
2 Includes guarantees to counterparties with respect to their exposures from certain trading subsidiaries having notional value of $12,295,858 thousand (2023: $10,070,095 thousand)
with the amount disclosed in the table above being the component of that guarantee value equivalent to the fair value of the underlying risk position at the reporting date. Guarantee
exposures reported in table above are also included under Off balance sheet exposures in Note 36.1 Credit risk.
213
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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Note 30
Related party information continued
Associates and joint ventures
The Consolidated Entity provides a range of services to its associates and joint ventures, including the provision of corporate advisory,
management services, lending and borrowing activities. Other transactions with associates and joint ventures may involve the sale of the
Consolidated Entity’s interest in subsidiaries, associates or joint ventures or financial investments as part of fund management activities,
disclosed in Note 42 Acquisitions and disposals of subsidiaries and businesses.
Balances may arise between the Consolidated Entity and its associates and joint ventures from lending and borrowing activities, with loans
generally extended on a term basis and, where appropriate, are either subordinated or collateralised.
During the financial year, the following amounts of income/(expense) resulted from transactions with associates and joint ventures:
CONSOLIDATED
2024
2023
$'000
$'000
Interest income
87,174
92,810
Net fee and commission income3
1,891,811
1,997,604
Other income
8,909
7,193
Dividends and distributions of $217,905 thousand (2023: $215,602 thousand) received from associates were recorded as a reduction from the
carrying amount of the investment.
The following represents the outstanding balances and off balance sheet arrangements with associates and joint ventures were outstanding at
the reporting date (these exclude amounts which in substance form part of the Consolidated Entity’s net investment in associates and joint
ventures, disclosed in Note 14 Interests in associates and joint ventures).
On Balance Sheet
Amounts receivable4
1,509,862
1,476,983
Amounts payable
(270,069)
(327,738)
Off Balance Sheet
Undrawn commitments
(1,954,475)
(2,191,749)
Guarantees
(10,667)
(41,931)
Letters of credit
(53,452)
(49)
3 Includes $622,307 thousand (2023: $682,863 thousand) of performance fees.
4 Includes $1,047,649 thousand (2023: $903,328 thousand) of fee and commission receivable and fee-related contract assets from Macquarie-managed funds.
214
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 31
Key management personnel disclosure
Key management personnel (KMP)
The following persons were Directors of the Company during the financial years ended 31 March 2024 and 31 March 2023, unless
indicated otherwise.
Executive Voting Director
S.R. Wikramanayake
CEO
Non-Executive Directors
G.R. Stevens AC
Chair (became Chair on 10 May 2022)
J.R. Broadbent AC
P.M. Coffey
M.A. Hinchliffe
S.J. Lloyd-Hurwitz 1
(appointed to the MGL Board effective from 1 June 2023)
R.J. McGrath
M. Roche
Former Non-Executive Directors
M.J. Coleman2
(ceased to be a member of the MGL Board on 28 July 2022)
N.M. Wakefield Evans AM3
(ceased to be a member of the MGL Board on 29 February 2024)
P.H. Warne4
(retired from his role as Chair on 9 May 2022)
In addition to the Executive Voting Director listed above, the following persons also had authority and responsibility for planning, directing and
controlling the activities of MGL during the financial years ended 31 March 2024 and 31 March 2023, unless indicated otherwise.
Current Executives5
G.N. Bruce
GGC, Head of LGG
A. Cassidy
CRO, Head of RMG
S.D. Green
Macquarie Bank CEO
A.H. Harvey
CFO, Head of FMG
M.J. Silverton
Head of Macquarie Capital
N. Sorbara
COO, Head of COG
G.C. Ward
Deputy Managing Director and Head of BFS
B.I. Way
Head of MAM
Former Executive Director
N. O’Kane6
Former Head of CGM (ceased to be a member of the Executive Committee on 27 February 2024)
The remuneration arrangements for all of the persons listed above are described on pages 106 to 156 of the Remuneration Report, contained in
the Directors’ Report.
1 Ms Lloyd-Hurwitz was appointed to the MGL Board effective 1 June 2023 and MBL Board effective 28 July 2023.
2 Mr Coleman retired as a Non-Executive Director of the MGL Board effective 28 July 2022. Mr Coleman remains on the MBL Board as a MBL Bank-only Non-Executive Director (BOND).
3 Ms Wakefield Evans ceased to be a member of the MGL Board on 29 February 2024 and the MBL Board on 27 July 2023.
4 Mr Warne retired from his roles as Independent Voting Director and Chair of the MGL and MBL Boards on 9 May 2022.
5 Except where indicated otherwise, all of the Executives as well as the CEO were members of the Executive Committee as at 3 May 2024.
6 Mr O'Kane ceased to be a member of the Executive Committee on 27 February 2024. Mr Wright became Group Head of CGM on 28 February 2024 and joined the Executive Committee
on 1 April 2024.
215
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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Note 31
Key management personnel disclosure continued
Key management personnel remuneration
The following table details the aggregate remuneration for KMP:
SHORT-TERM EMPLOYEE BENEFITS
LONG-TERM
EMPLOYEE
BENEFITS
SHARE-BASED PAYMENTS
Salary and fees
(including
superannuation)
Performance-related
remuneration7
Other
benefits
Total
short-term
employee
benefits
Restricted profit
share including
earnings on
restricted
profit share8
Equity
awards9
PSUs10
Total
remuneration11
$
$
$
$
$
$
$
$
Executive Remuneration
202412
12,002,855
34,975,000
–
46,977,855
3,581,099 10,814,659 5,818,148
67,191,761
2023
7,866,921
48,547,000
–
56,413,921
23,422,937 54,390,369 16,246,507
150,473,734
Non-Executive Remuneration
2024
3,603,042
–
–
3,603,042
–
–
–
3,603,042
2023
3,538,478
–
12,600
3,551,078
–
–
–
3,551,078
Equity holdings of KMP and their related parties
The following table sets out details of MGL ordinary shares held during the financial year by KMP, including their related parties, on a
Consolidated Entity basis.
Number of shares
held by current KMP
as at 1 Apr
Number of shares
held by new KMP at
appointment date
(after 1 Apr)
Shares received on
withdrawal
from MEREP
Other changes13
Number of shares
held by KMP at date
of resignation/
retirement (prior
to 31 Mar)
Number of shares
held as at 31 Mar
2024
1,155,751
–
359,979
(202,341)
(28,595)
1,284,794
2023
1,165,290
–
367,799
(328,829)
(48,509)
1,155,751
7 The cash portion of each KMP’s profit share allocation for the reporting period when they were a KMP.
8 The amount of retained profit share held via the DPS plan including earnings on notional investments from retained profit share in prior financial years. This includes reversal of
amounts previously accrued for retained DPS forfeited by Mr. O’Kane upon his resignation.
9 The current year amortisation for equity awards calculated as described in Note 44(xxiii) Performance based remuneration. This includes reversal of amounts previously accrued for RSU
awards (net of dividends paid during the vesting period) forfeited by Mr. O’Kane upon his resignation.
10 The current year amortisation for PSUs calculated as described in Note 44(xxiii) Performance based remuneration. The current year expense is reduced for previously recognised
remuneration expense where performance hurdles have not been met, have been partially met or are not expected to be met. This includes reversal of amounts previously accrued for
PSU awards forfeited by Mr. O’Kane upon his resignation.
11 For KMP residing in US, their remuneration is subject to US social security and Medicare taxes, payable by Macquarie. Tax amounts of $237 thousand and $322 thousand were paid
during FY2023 and FY2024, respectively, and are not included in statutory remuneration.
12 For further detail on the impact of changes to KMP composition and forfeitures during the period refer to pages 146 and 147 of the Director’s Remuneration Report.
13 Includes on-market acquisitions and disposals.
216
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 31
Key management personnel disclosure continued
MEREP RSU Awards of KMP and their related parties
The following table sets out details of the MEREP RSU awards held during the financial year for the KMP including their related parties, on
a Consolidated Entity basis. Further details of the particulars of the grants can be found in Appendix 4 of the Remuneration Report, contained in
the Directors’ Report from pages 150 to 155. Further details in relation to the MEREP RSU awards are disclosed in Note 32 Employee equity
participation.
Number of RSU
awards held by
current KMP at 1 Apr
Number of RSU
awards held by new
KMP at appointment
date (after 1 Apr)
RSU awards granted
during the
financial year14
Vested RSU awards
transferred to the
KMP’s shareholding
during the
financial year
Number of RSU
awards held by KMP
at the date of
resignation/
retirement
(prior to 31 Mar)15
Number of RSU
awards held as
at 31 Mar
2024
1,688,978
–
493,558
(304,039)
(615,729)
1,262,768
2023
1,554,210
–
391,213
(256,445)
–
1,688,978
MEREP PSU Awards of KMP and their related parties
The following table sets out details of MEREP PSU awards held during the financial year for the KMP including their related parties, on a
Consolidated Entity basis. Further details of the particulars of the grants can be found in the Directors’ Report on page 150 to 155. Further
details in relation to the MEREP PSU awards are disclosed in Note 32 Employee equity participation.
Number of PSU
awards held by
current KMPs
at 1 Apr
Number of PSU
awards held by
new KMP at
appointment
date
PSU awards
granted during the
financial year16
Vested PSU
awards
transferred to
KMP
shareholding
during the
financial year
PSU awards
for which
performance
hurdles were
not met
PSU awards
cancelled on
termination
Number of PSU
awards held by
KMP at date of
resignation/
retirement17
Number of PSU
awards held as
at 31 Mar
2024
438,949
–
164,501
(55,940)
(2,331)
–
(68,617)
476,562
2023
393,763
–
155,422
(110,236)
–
–
–
438,949
14 RSUs are granted in the financial year following the year of the Company’s performance to which the grant relates. RSUs disclosed as granted above for 2024 relate to the
Consolidated Entity’s performance in 2023.
15 Includes 615,729 RSU awards held by Mr O'Kane which were forfeited upon his resignation from Macquarie.
16 PSUs are granted in the financial year following the year of the Company’s performance to which the grant relates. PSUs disclosed as granted above for 2024 relate to the
Consolidated Entity’s performance in 2023.
17 Includes 68,617 PSU awards held by Mr O'Kane which were forfeited upon his resignation from Macquarie.
217
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Key management personnel disclosure continued
Details of share-based payment grant dates whose vesting periods affected compensation for the financial years ended 31 March 2024 and
31 March 2023.
GRANT DATE
Financial year grant relates to
Type of grant
Managing Director
All other KMP
2015
Retained DPS
17 August 2015
6 July 2015
2016
Retained DPS
15 August 2016
17 June 2016
PSUs
15 August 2016
15 August 2016
2017
Retained DPS
15 August 2017
22 June 2017
PSUs
15 August 2017
15 August 2017
2018
Retained DPS
15 August 2018
21 June 2018
PSUs
15 August 2018
15 August 2018
2019
Retained DPS
15 August 2019
24 June 2019
PSUs
15 August 2019
15 August 2019
2020
Retained DPS
4 August 2020
9 June 2020
PSUs
4 August 2020
4 August 2020
2021
Retained DPS
3 August 2021
9 June 2021
PSUs
3 August 2021
3 August 2021
2022
Retained DPS
2 August 2022
21 June 2022
PSUs
2 August 2022
2 August 2022
2023
Retained DPS
1 August 2023
21 June 2023
PSUs
1 August 2023
1 August 2023
Loans to KMP and their related parties
Details of loans provided by the Consolidated Entity to KMP and their related parties are disclosed in aggregate in the following tables.
Total for KMP and their
related parties18
Opening balance as
at 1 Apr
$’000
Additions during
the year
$’00019
Interest Charged
$’000
Repayments
during the year
$’00020
Write-downs
$’000
Closing balance as
at 31 Mar
$’00021
2024
16,230
–
453
(5,755)
–
10,928
2023
17,402
61
344
(1,577)
–
16,230
18 All loans provided by Macquarie to KMP are made in the ordinary course of business on an arm’s length basis and are entered into under normal terms and conditions consistent with
other customers and employees. There have been no write-downs during the financial years reported.
19 Or loan held as at date of appointment of new KMP.
20 Or loan held as at date ceased to be a KMP.
21 The aggregate balance included loans to 2 persons (31 March 2023: 5).
218
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 32
Employee equity participation
MEREP
The Consolidated Entity continues to operate the MEREP in conjunction with other remuneration arrangements.
Award types under the MEREP
Restricted Share Units (RSUs)
A RSU is a beneficial interest in a MGL ordinary share held on behalf of a MEREP participant by the plan trustee (Trustee).
The participant is entitled to receive dividends on the share and direct the Trustee how to exercise voting rights of the share. The participant
also has the right to request the release of the share from the MEREP Trust, subject to the vesting and forfeiture provisions of the MEREP.
NUMBER OF RSU AWARDS
2024
2023
RSUs on issue at the beginning of the financial year
12,721,894
11,503,940
Granted during the financial year
4,635,847
4,731,329
Vested RSUs withdrawn or sold from the MEREP during the financial year
(3,440,514)
(3,252,760)
Forfeited during the financial year
(888,954)
(260,615)
RSUs on issue at the end of the financial year
13,028,273
12,721,894
RSUs vested and not withdrawn from the MEREP at the end of the financial year
53,291
1,262
The weighted average fair value of the RSU awards granted during the financial year was $180.17 (2023: $165.57).
Deferred Share Units (DSUs)
A DSU represents the right to receive on exercise of the DSU either a share held in the Trust or a newly issued share (as determined by the
Company in its absolute discretion) for no cash payment, subject to the vesting and forfeiture provisions of the MEREP. A MEREP participant
holding a DSU has no right or interest in any share until the DSU is exercised. The Company may issue shares to the Trustee or direct the Trustee
to acquire shares on-market, or via a share acquisition arrangement for potential future allocations to holders of DSUs.
Generally, where permitted by law, DSUs will provide for cash payments in lieu of dividends paid on MGL ordinary shares before the DSU is
exercised. Further, the number of shares underlying a DSU will be adjusted upon any bonus issue or other capital reconstruction of the Company
in accordance with the ASX Listing Rules, so that the holder of a DSU does not receive a benefit that holders of the Company’s shares do not
generally receive. These provisions are intended to provide the holders of DSUs, as far as possible, with the same benefits and risks as holders of
RSUs. However, holders of DSUs will have no voting rights with respect to any underlying MGL ordinary shares.
DSUs will only be offered in jurisdictions where legal or tax rules make the grant of RSUs impractical, or where PSUs are structured as DSUs (see
PSUs). DSUs have been granted with an expiry period of up to nine years.
NUMBER OF DSU AWARDS
2024
2023
DSUs on issue at the beginning of the financial year
4,178,466
3,471,835
Granted during the financial year
1,391,808
1,379,684
Exercised during the financial year
(1,121,323)
(609,485)
Forfeited during the financial year
(113,925)
(63,568)
DSUs on issue at the end of the financial year
4,335,026
4,178,466
DSUs exercisable at the end of the financial year
1,290,695
1,373,742
The weighted average fair value of the DSU awards granted during the financial year was $171.68 (2023: $159.14).
219
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
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Financial Report
Note 32
Employee equity participation continued
Award types under the MEREP continued
Performance Share Units (PSUs)
All PSUs currently on issue are structured as DSUs with performance hurdles that must be met before the underlying share or cash equivalent
(as the case may be) will be delivered. PSU holders have no right to dividend equivalent payments before the PSUs vest.
NUMBER OF PSU AWARDS
2024
2023
PSUs on issue at the beginning of the financial year
604,043
682,751
Granted during the financial year
164,501
155,422
Exercised during the financial year
(112,361)
(234,130)
Expired during the year
(4,180)
–
Forfeited during the financial year
(68,617)
–
PSUs on issue at the end of the financial year
583,386
604,043
PSUs exercisable at the end of the financial year
–
12,069
The weighted average fair value of the PSU awards granted during the financial year was $151.70 (2023: $156.54).
Restricted Shares
A Restricted Share is an MGL ordinary share transferred from the MEREP Trust and held by a MEREP participant subject to restrictions on
disposal, vesting and forfeiture rules. The participant is entitled to receive dividends on, and to exercise the voting rights of, the Restricted
Shares. Restricted Shares are only offered in jurisdictions where legal or tax rules make RSU/DSU awards impractical.
NUMBER OF RESTRICTED SHARE AWARDS
2024
2023
Restricted shares on issue at the beginning of the financial year
251,208
212,002
Transfer from MEREP Trust during the financial year
193,642
340,606
Released during the financial year
(204,242)
(301,400)
Restricted shares on issue at the end of the financial year
240,608
251,208
The weighted average fair value of the Restricted Shares granted during the financial year was $nil (2023: $nil).
Participation in the MEREP is currently provided to the following Eligible Employees:
•
Executive Directors with retained Directors’ Profit Share (DPS), a proportion of which is allocated in the form of MEREP awards (Retained
DPS Awards)
•
staff other than Executive Directors with retained profit share above a threshold amount (Retained Profit Share Awards) and staff who were
promoted to Associate Director, Division Director or Executive Director, who received a fixed Australian dollar value allocation of MEREP
awards (Promotion Awards)
•
Macquarie staff with retained commission (Commission Awards)
•
new Macquarie staff who commence at Associate Director, Division Director or Executive Director level and are awarded a fixed Australian
dollar value (New Hire Awards)
•
members of the MGL and MBL Executive Committees who are eligible for PSUs (PSU awards)
•
in limited circumstances, Macquarie staff may receive an equity grant instead of a remuneration or consideration payment in cash. Current
examples include individuals who become employees of the Consolidated Entity upon the acquisition of their employer by a Macquarie entity
or who receive an additional award at the time of joining Macquarie (also referred to above as New Hire Awards).
220
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 32
Employee equity participation continued
Award types under the MEREP continued
Vesting periods are as follows:
Award type
Level
Vesting
Retained Profit Share Awards
and Promotion Awards
Below Executive Director
1/3rd in the 2nd, 3rd and 4th year following the year of grant1
Retained DPS Awards granted in
relation to years 2013 to 2023
Executive Committee members
and Designated Executive Directors
1/5th in the 3rd, 4th, 5th, 6th and 7th year following the year of grant2
Retained DPS Awards granted in
relation to years 2013 to 2023
All other Executive Directors
1/3rd in the 3rd, 4th and 5th year following the year of grant2
Retained DPS Awards granted in
relation to 2024 and following
years
Executive Committee members and
other Executive Directors
1/3rd in the 3rd, 4th and 5th year following the year of grant2
PSU Awards granted in relation to
years 2017 to 2019
Executive Committee members
(including CEO and MBL CEO)
50% in the 3rd and 4th years following the year of grant3
PSU Awards granted in relation to
2020 and following years
Executive Committee members
(excluding CEO and MBL CEO)
100% in the 4th year following the year of grant3
PSU Awards granted in relation to
years 2020 to 2023
CEO and MBL CEO
100% in the 4th year following the year of grant3
PSU Awards granted in relation to
2024 and following years
CEO and MBL CEO
100% in the 5th year following the year of grant3
Commission Awards
Below Executive Director
1/3rd in the 2nd, 3rd and 4th year following the year of grant1
New Hire Awards
All Director-level staff
1/3rd in the 2nd, 3rd and 4th year following the year of grant1
In limited cases, the invitation or application form for awards may set out a different vesting period, in which case that period will be the vesting
period for the award. For example, staff in certain jurisdictions may have a different vesting period due to local regulatory requirements.
For Retained Profit Share awards representing 2023 retention, the allocation price was the weighted average price of the shares acquired for
the 2023 purchase period, which was 15 May 2023 to 21 June 2023. That price was calculated to be $179.17 (2022 retention: $168.81).
1 Vesting will occur during an eligible staff trading window.
2 Vesting will occur during an eligible staff trading window. If an Executive Director has been on leave without pay (excluding leave to which the Executive Director may be eligible under
local laws) for 12 months or more, the vesting period may be extended accordingly.
3 Subject to achieving certain performance hurdles.
221
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
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Governance
About
Financial Report
Note 32
Employee equity participation continued
Performance Share Units (PSUs)
PSUs will only be released or become exercisable upon the achievement of certain pre-vest assessment4 and performance hurdles. Only
members of the MGL and MBL Executive Committees are eligible to receive PSUs. For the PSUs allocated to Executive Committee Members,
two performance hurdles have been determined and each will apply individually to 50% of the total number of PSUs awarded. Hurdles are
periodically reviewed by the Board Remuneration Committee (BRC) to ensure they continue to align the interests of staff and shareholders and
provide a challenging but meaningful incentive to Executive Committee members. The BRC considers historical and forecast market data, the
views of corporate governance groups, shareholders and regulators as well as market practice. No change has been made to the hurdles for this
financial year.
The hurdles are outlined below.
Performance hurdle 1
Hurdle
Reference group
50% of the PSUs based solely on the relative average annual return on
ordinary equity (ROE) over the vesting period compared to a reference group
of global financial institutions.
A sliding scale applies with 50% becoming exercisable above the 50th
percentile and 100% vesting at the 75th percentile.
The current reference group comprises Bank of America Corporation, Barclays
PLC, Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan
Chase & Co., Lazard Limited, Morgan Stanley and UBS AG.5
Performance hurdle 2
Hurdle
Required result
50% of the PSUs based solely on the compound annual growth rate (CAGR) in
earnings per share (EPS) over the vesting period.
A sliding scale applies with 50% becoming exercisable at EPS CAGR of 7.5% and
100% at EPS CAGR of 12%. For example, if EPS CAGR were 9.75%, 75% of the
relevant awards would become exercisable.
Under both performance hurdles, the condition is examined once only. Testing occurs annually on 30 June immediately before vesting on 1 July,
based on the most recent financial year-end results available. To the extent that a condition is not met when examined, the PSUs due to vest
will not be exercisable upon vesting, resulting in no benefit to Executive Committee members.
Pre-vest assessment (At end of vesting period)4
Prior to vesting of PSU awards, the Board will conduct a holistic assessment of the Executive Committee's collective contribution to driving the
performance of Macquarie over the vesting period, based on the extent to which the Executive Committee has:
1. promoted behaviour that is consistent with and reflects Macquarie’s risk culture and Code of Conduct and the principles of What We
Stand For
2. overseen the effectiveness of Macquarie’s risk management framework, policies and practices in managing key financial and
non-financial risks
3. overseen funding, liquidity and capital management to ensure Macquarie’s financial soundness.
Where the Board forms a negative overall assessment of the relevant Executive Committee’s collective contribution, it may consider whether
an adjustment is appropriate, taking into account any mitigating and aggravating factors.
To assist the Board with their determination of an adjustment to the PSU vesting outcome, and to ensure that the determination encompasses
all relevant considerations, the BRC will receive reporting over the vesting period.
4 Pre-vest assessment applicable for awards to be granted in relation to 2024 and following years.
5 For unvested PSU awards made prior to 2023, the reference group included Bank of America Corporation, Barclays PLC, Credit Suisse, Deutsche Bank AG, Goldman Sachs Inc., JP
Morgan Chase & Co., Lazard Ltd, Morgan Stanley and UBS AG.
222
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 32
Employee equity participation continued
Assumptions used to determine fair value of MEREP awards
RSUs and DSUs are measured at their grant dates based on their
fair value6 and for each PSU, the awards expected to vest are
measured on the basis of the assumptions below. This amount is
recognised as an expense over the respective vesting periods.
RSUs, DSUs and PSUs relating to the MEREP plan for Executive
Committee members have been granted in the current financial
year in respect of the 2023 performance. The accounting fair value
of each of these grants is estimated using the Company’s share
price on the date of grant and for each PSU also incorporates a
discounted cash flow method using the following key assumptions:
•
interest rate to maturity: 4.25% per annum
•
expected vesting dates of PSUs: 1 July 2027
•
dividend yield: 3.54% per annum.
While RSUs, DSUs and PSUs (for Executive Committee members)
for FY2024 will be granted during FY2025, the Company begins
recognising an expense for these awards (based on an initial
estimate) from 1 April 2023 related to these future grants.
The expense is estimated using the estimated MEREP retention
for FY2024 and applying the amortisation profile to the retained
amount.
For PSU, the estimate also incorporates an interest rate to
maturity of 3.97% per annum (3.99% for grants to the CEO and the
MBL CEO), expected vesting date of 1 July 2028 (1 July 2029 for
the CEO and the MBL CEO), and a dividend yield of 3.76% per
annum. In the following financial year, the Consolidated Entity will
adjust the accumulated expense recognised for the final
determination of fair value for each RSU, DSU and PSU when
granted and will use this valuation for recognising the expense
over the remaining vesting period. The Consolidated Entity
annually reviews its estimates of the number of awards (including
those delivered through MEREP) that are expected to vest. It
recognises the impact of the revision to original estimates, if any,
in the employment expenses in the income statement, with a
corresponding adjustment to equity (for equity settled awards), or
a corresponding adjustment to liabilities (for cash settled awards).
For the financial year ended 31 March 2024, compensation
expense relating to the MEREP totalled $831,043 thousand
(2023: $760,289 thousand).
For the equity settled awards, the estimated future withholding
tax outflow is $642,312 thousand (2023: $534,218 thousand).
Employee Share Plan
The Consolidated Entity continues to operate the Macquarie Group
Employee Share Plan (ESP) whereby each financial year eligible
employees are offered up to $1,000 worth of fully paid MGL
ordinary shares for no cash consideration.
Shares allocated under the ESP cannot be sold until the earlier of
three years after allocation or the time when the participant is no
longer employed by the Consolidated Entity. In all other respects,
shares allocated rank equally with all other fully paid ordinary
shares then on issue.
The latest offer under the ESP was made during November 2023.
A total of 2,391 (2023: 2,195) staff participated in this offer.
On 1 December 2023, the participants were each allocated 6
(2023: 5) fully paid ordinary shares based on the offer amount of
$1,000 and the average market share price of $166.34
(2023: $178.23), resulting in a total of 14,346 (2023: 10,975)
shares being allocated. The shares were allocated to staff for no
cash consideration. The aggregate value of the shares allocated
was deducted from staff profit share and commissions.
For the financial year ended 31 March 2024, compensation
expense relating to the ESP totalled $2,388 thousand
(2023: $1,968 thousand).
Other plans
The Consolidated Entity operates other local share-based
compensation plans, none of which, individually or in aggregate
are material.
Shares purchased on-market/issued for the purpose of an
employee incentive scheme
During the financial year ended 31 March 2024, the Consolidated
Entity purchased 3,180,994 (2023: 3,600,455) shares on-market
and 2,556,543 (2023: 1,870,038) shares via off-market transfer
from its employees during the Staff Trading window for MEREP. A
further 14,346 (2023: 10,975) shares were purchased on-market
for the ESP. The average price of all shares purchased during the
financial year was $179.14 (2023: $168.83) and the average price
of the purchases made on-market was $182.84 (2023: $162.70).
6 For employees categorised as Material Risk Takers who are required to comply with the European Banking Authority Guidelines on the CRD IV and CRD V remuneration requirements,
the fair value of the awards granted for performance periods after 1 April 2019 has been adjusted to take into account the prohibition of dividends on unvested awards.
223
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Contingent liabilities and commitments
CONSOLIDATED
COMPANY
2024
2023
2024
2023
$m
$m
$m
$m
Credit risk related exposures
Undrawn credit facilities and debt commitments1,2
30,880
26,703
–
–
Letters of credit and guarantees3
2,453
2,057
7,327
5,239
Total credit risk related exposures
33,333
28,760
7,327
5,239
Other contingencies and commitments
Equity investment commitments
2,090
2,531
–
–
Asset development and purchase commitments4
706
2,358
249
1,225
Performance-related contingencies3
260
469
–
–
Total other contingencies and commitments
3,056
5,358
249
1,225
Total contingent liabilities and commitments
36,389
34,118
7,576
6,464
1 Undrawn credit facilities include fully or partially undrawn commitments against which clients can borrow money under defined terms and conditions. Balance includes revocable
undrawn commitments for certain retail banking products of $14,839 million (2023: $13,723 million) which are considered to be exposed to credit risk.
2 Includes $1,101 million (2023: $1,066 million) of revolving credit facilities wherein loan positions have been sub-participated to a third party and will be transferred if and when
drawdown.
3 It is not practicable to ascertain the timing of any outflow and the possibility of any reimbursement related to these contingent liabilities. Certain contingent liabilities are collateralised
and any cash collateral (any related liability to return the collateral) is recognised in the Statement of financial position.
4 Includes asset development commitments to third parties of $249 million (2023: $1,225 million) for which the Consolidated Entity and the Company have entered into sales agreement
to divest off certain assets upon development completion.
224
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 34
Structured entities
A Structured Entity (SE) is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls
the entity. SEs are generally established with restrictions on their ongoing activities in order to achieve narrow and well-defined objectives. SEs
are classified as subsidiaries and are consolidated when control exists.
The Consolidated Entity engages with SEs for securitisation, asset-backed financing and structured financing arrangements in order to diversify
its sources of funding for asset origination and capital efficiency purposes. The Consolidated Entity also engages with SEs when providing
investment management and other fiduciary activities. The Consolidated Entity’s involvement with SEs is primarily of the following nature.
Type
Details
Securitisations
Securitisations involve transferring assets into a vehicle that sells beneficial interests to investors through the issue
of debt and equity notes with varying levels of subordination. The notes are collateralised by the assets transferred
to these vehicles and pay a return based on the returns of those assets, with residual returns paid to the most
subordinated investor.
These vehicles are created for securitising assets, including mortgages, and finance leases.
The Consolidated Entity also establishes SEs on behalf of customers to securitise their loans or receivables and may
manage these securitisation vehicles or provide liquidity or other support.
The Consolidated Entity may serve as a sponsor, servicer, underwriter, liquidity provider, derivative counterparty,
purchaser of notes and/or purchaser of residual income units. The Consolidated Entity may also provide redraw
facilities or loan commitments to securitisation vehicles.
Asset-backed financing
Asset-backed vehicles are used to provide tailored lending for the purchase or lease of assets transferred by the
Consolidated Entity or its clients. The assets are normally pledged as collateral to the lenders. The Consolidated
Entity engages in raising finance for assets such as vessels, electronic and IT equipment.
Structured financing and
other arrangements
Includes:
•
financing for prepaid commodity delivery contracts. The Consolidated Entity has contractually guaranteed the
performance obligation under these arrangements
•
financing through loans and reverse repurchase agreements for short-term term funding requirements of SEs
which are sponsored by third parties.
Funds management and
administration activities
The Group conducts investment management and other fiduciary activities as responsible entity, trustee, custodian,
advisor or manager of investment funds or trusts, including superannuation and approved deposit funds, wholesale
and retail trusts. Certain funds meet the definition of a structured entity.
The Consolidated Entity’s interests in these funds includes holding units in funds, receiving fees for services,
providing lending facilities and derivative.
225
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Structured entities continued
The following table presents the carrying value and maximum exposure to loss (before the benefit of collateral and credit enhancements) of the
Consolidated Entity’s interests in unconsolidated SEs.
CONSOLIDATED 2024
CONSOLIDATED 2023
Securitisations
Asset-backed
financing
Structured
Financing and
other
arrangements
Total
Securitisations
Asset-backed
financing
Structured
Financing and
other
arrangements
Total
$m
$m
$m
$m
$m
$m
$m
$m
Maximum exposure to loss
Carrying value of assets:
Loan assets
1,319
1,895
5,011
8,225
1,145
1,895
3,869
6,909
Financial investments
3,582
–
–
3,582
2,904
–
–
2,904
Margin money and
settlement assets
14
–
–
14
251
–
–
251
Derivative assets
121
–
–
121
229
–
–
229
Trading assets
249
–
–
249
132
4
–
136
Reverse repurchase
agreements1
–
–
3,212
3,212
–
–
5,015
5,015
Total carrying value of
assets2
5,285
1,895
8,223 15,403
4,661
1,899
8,884 15,444
Undrawn commitments3
70
21
275
366
12
193
276
481
Total maximum
exposure to loss
5,355
1,916
8,498 15,769
4,673
2,092
9,160 15,925
The Consolidated Entity’s exposure to securitisation entities in the nature of financial investments, margin money, derivatives, trading assets
and reverse repurchase agreements are acquired for the purpose of trading and liquidity management. These exposures are typically managed
under credit and market risk limits described in Note 36.1 Credit risk and Note 36.3 Market risk. For these reasons, information on the size and
structure for these SEs is not considered meaningful for understanding the related risks, and have not been presented in the table above.
In respect of the Consolidated Entity’s loan assets exposure in securitisation, asset-backed financing entities and structured financing, the total
size of the unconsolidated SEs is $74,580 million (2023: $44,114 million). Size is based on the latest available information representing either
the total assets of the SE (measured either at amortised cost excluding impairments or fair values if readily available), outstanding notional of
issued notes or the principal amount of liabilities if there is nominal equity.
For the above exposures, the Consolidated Entity does not sponsor or control these SEs, nor is it a significant user of the services of these SEs.
Additionally, as part of its funds management and administration activities the Consolidated Entity has interests in certain funds including
investments, receivables, contract assets and undrawn commitments which represent the Consolidated Entity’s maximum exposure to loss. In
certain cases the Consolidated Entity invests alongside its own managed funds to demonstrate further alignment with investors. The carrying
value of the Consolidated Entity’s investments in funds is disclosed in Note 14 Interests in associates and joint ventures. Interests in the nature
of receivables, contract assets and undrawn commitments are disclosed in Note 30 Related party information and Note 11 Other assets. The
Assets Under Management (AUM) of $938.3 billion (2023: $878.6 billion) represent the indicative size of these funds and is measured as the
proportional ownership interest in the underlying assets of funds and mandated assets that Macquarie actively manages or advises on. Private
Markets AUM includes equity yet to deploy.
1 Prior period comparative information has been re-presented, or additional information provided, to conform to changes in the current period
2 Includes non-investment grade interests of $829 million (2023: $544 million) in securitisation activities, $1,269 million (2023: $1,267 million) in asset-backed financing activities and
$886 million (2023: $474 million) in structured financing and other arrangements.
3 Excludes $3,039 million (2023: $3,074 million) of guarantees provided by the Company in respect of a subsidiary to fulfil its obligations for certain prepaid commodity contracts
towards unconsolidated structured entities. On consolidation, these guarantees are accounted for as part of borrowings that represent the subsidiary obligations in terms of these
commodity contracts.
226
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 35
Hedge accounting
Hedging strategy
The use of derivative and non-derivative instruments to
economically hedge non-traded positions potentially gives rise to
income statement volatility as a result of mismatches in the
accounting treatment between the derivative and non-derivative
instruments and the related exposure. The Consolidated Entity’s
objective is to reduce the risk of volatility in earnings, within
pre-defined thresholds. This volatility is managed through
designation of hedge accounting relationships and the use of
naturally offsetting positions in the income statement.
Hedging instruments
Detail on hedging instruments, the nature of hedged risks, as well
as the notional and the carrying amount of derivative financial
instruments and, in the case of hedges of net investment in
foreign operations, the notional of foreign currency denominated
borrowings and other balance sheet items, for each type of hedge
relationship, is shown in the respective sections. The maturity
profile for the hedging instruments’ notional amounts are
reported based on their contractual maturity. Where a cross
currency swap has been dual designated in both a cash flow and a
fair value hedge, the notional is shown more than once. Increases
in notional profiles of hedging instruments are presented as
negative figures, with decreases and maturities presented as
positive figures.
Hedging ineffectiveness
In the case of a fair value hedge, hedge ineffectiveness is the
extent to which the changes in the fair value of the hedging
instrument differ to that of the hedged item for the hedged risk. In
the case of a cash flow hedge, hedge ineffectiveness is the extent
to which the change in the fair value of the hedging instrument
exceeds, in absolute terms, that of the hedged item. In the case of
hedges of net investment in foreign operations, hedge
ineffectiveness is the extent to which the change in the carrying
amount of foreign currency denominated borrowings and other
balance sheet items attributable to the change in exchange rates
exceeds, in absolute terms, that of the hedged item. Sources of
hedge ineffectiveness primarily arise from basis and timing
differences between the hedged items and hedging instruments,
and designating existing derivatives with a non-zero fair value as
hedging instruments. Hedge ineffectiveness is reported in net
trading income in the income statement.
227
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Note 35
Hedge accounting continued
Cash flow hedges
The cash flow hedge reserve, representing the effective portion of the movements in the hedging instrument, is disclosed in
Note 28(i) Reserves. Changes in this reserve are reported in the Consolidated Entity’s statements of comprehensive income. The cumulative
gains and losses remaining in the cash flow hedge reserve for hedging relationships that have ceased, but for which the hedged cash flows are
still expected to occur is $1 million gain (2023: $2 million gain) for the Consolidated Entity and $nil (2023: $nil) for the Company. This amount
will be transferred to the income statement when the hedged item affects profit and loss.
Hedging instruments
MATURITY ANALYSIS PER NOTIONAL
Less than 3
months
3 to 12
months
1 to 5 years
Over 5 years
Total
Instrument type
Risk category
$m
$m
$m
$m
$m
CONSOLIDATED 2024
Derivative assets
Cross currency swaps
Foreign exchange
31
91
1,371
1,245
2,738
Interest rate swaps and options
Interest rate
10
140
3,702
824
4,676
Derivative liabilities
Cross currency swaps
Foreign exchange
–
141
749
1,187
2,077
Interest rate swaps and options
Interest rate
533
1,279
7,834
67
9,713
Commodity derivatives
Commodity price
–
–
–
163
163
Borrowings
Foreign currency denominated borrowings
Foreign exchange
11
–
187
–
198
CONSOLIDATED 2023
Derivative assets
Cross currency swaps
Foreign exchange
(8)
832
1,828
2,811
5,463
Interest rate swaps and options
Interest rate
145
544
1,771
1,037
3,497
Derivative liabilities
Cross currency swaps
Foreign exchange
–
–
143
143
286
Interest rate swaps and options
Interest rate
123
1,026
3,292
354
4,795
Commodity derivatives
Commodity price
8
20
142
114
284
Borrowings
Foreign currency denominated borrowings
Foreign exchange
–
–
254
–
254
CONSOLIDATED CARRYING AMOUNT
2024
2023
Instrument type
Risk category
Asset
$m
Liability
$m
Asset
$m
Liability
$m
Cross currency swaps
Foreign exchange
384
189
612
49
Interest rate swaps and options
Interest rate
191
166
204
191
Commodity derivatives
Commodity price
–
7
–
15
Foreign currency denominated borrowings
Foreign exchange
–
120
–
188
228
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 35
Hedge accounting continued
MATURITY ANALYSIS PER NOTIONAL
Less than 3
months
3 to 12
months
1 to 5 years
Over 5 years
Total
Instrument type
Risk category
$m
$m
$m
$m
$m
COMPANY 2024
Derivative liabilities
Interest rate swaps
Interest rate
54
161
519
–
734
COMPANY 2023
Derivative liabilities
Interest rate swaps
Interest rate
52
157
716
–
925
COMPANY CARRYING AMOUNT
2024
2023
Instrument type
Risk category
Asset
$m
Liability
$m
Asset
$m
Liability
$m
Interest rate swaps1
Interest rate
–
19
–
19
Hedge ineffectiveness
In the case of cash flow hedge relationships, hedge ineffectiveness is the extent to which the change in the fair value of the hedging instrument
exceeds, in absolute terms, that of the hedged item.
GAIN/(LOSS) ON
HEDGING INSTRUMENT
GAIN/(LOSS) ON
HEDGED ITEM
HEDGE INEFFECTIVENESS
GAIN/(LOSS)
2024
2023
2024
2023
2024
2023
Hedging instruments
Risk category
$m
$m
$m
$m
$m
$m
CONSOLIDATED
Cross currency swaps
Foreign exchange
(53)
19
54
(16)
1
3
Foreign currency denominated borrowings
Foreign exchange
2
(9)
(2)
9
–
–
Interest rate swaps and options
Interest rate
24
44
(31)
(49)
(7)
(5)
Commodity derivatives
Commodity price
–
88
–
(88)
–
–
Total
(27)
142
21
(144)
(6)
(2)
COMPANY
Interest rate swaps
Interest rate
–
(19)
–
19
–
–
Total
–
(19)
–
19
–
–
1 The carrying amount of hedging instrument derivative liabilities is disclosed in the Company’s Statement of financial position as ‘Due to other Macquarie Group entities’.
229
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Note 35
Hedge accounting continued
Hedge accounting executed rates
The following table shows the executed rates for the most significant hedging instruments designated in cash flow hedges, which represent the
contractual rates when the hedging instruments were traded.
CONSOLIDATED
COMPANY
Hedging instruments
Currency pair/currency
2024
2023
2024
2023
Cross currency swaps
AUD/EUR
0.68
0.68
–
–
USD/GBP
0.66
0.66
–
–
AUD/CHF
0.66
0.66-0.72
–
–
GBP/CHF
–
1.46
–
–
AUD/NOK
5.88-6.31
5.88-6.31
–
–
AUD/JPY
92.93-94.21
92.93-94.21
–
–
Interest rate swaps
GBP
0.97%-4.65%
0.97%-3.48%
–
–
USD
0.46%-4.60%
0.99%-3.57%
2.90%
2.90%
AUD
0.56%-5.96%
3.64%-4.07%
–
–
230
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 35
Hedge accounting continued
Net investment in foreign operation hedges
The Consolidated Entity’s net investment in foreign operations (NIFO) changes as a result of earnings, dividends, other capital-related events
and changes in the Consolidated Entity’s group structure as a result of internal restructures. The risk of changes in the NIFO for movements in
foreign exchange rates may be hedged by the Consolidated Entity using a combination of derivatives, foreign currency denominated borrowings
and other balance sheet items. Refer to Note 36 Financial risk management: Non-traded risk for further information on the Consolidated
Entity’s risk management strategy.
In order to reflect the Consolidated Entity’s risk management strategy, hedge accounting is applied where changes in the derivatives and
foreign denominated borrowings and other balance sheet items are recognised, together with the related foreign currency translation reserve,
in the Consolidated Entity’s other comprehensive income and is subsequently reclassified to the income statement or re-attributed within
equity as defined in Note 44(iii) Foreign currency translation: Subsidiaries and other equities. Hedge ineffectiveness, if any, is recognised in the
income statement. Given that the Consolidated Entity’s NIFO frequently changes, the hedge designations are reviewed on a monthly basis or
more frequently where required.
CONSOLIDATED CARRYING AMOUNT
ASSET
LIABILITY
2024
2023
2024
2023
Hedging instrument
Risk category
$m
$m
$m
$m
Foreign exchange contracts and other foreign
currency denominated balance sheet items2
Foreign exchange
386
989
98
128
Foreign currency denominated borrowings
Foreign exchange
–
–
24,105
22,282
CONSOLIDATED NOTIONAL
ASSET
LIABILITY
2024
2023
2024
2023
Hedging instrument
Risk category
$m
$m
$m
$m
Foreign exchange contracts and other foreign
currency denominated balance sheet items
Foreign exchange
4,949
4,437
2,541
2,966
Foreign currency denominated borrowings
Foreign exchange
–
–
23,958
22,155
In order to hedge the currency exposure of certain net investments in foreign operations, the Consolidated Entity jointly designates hedging
instruments from the currency of the underlying foreign operation to USD and then the hedging instruments from USD to AUD. As a result, the
notional value of hedging instruments presented in the table above of $31,448 million (2023: $29,558 million) represents the notional of
Foreign currency denominated borrowings, Foreign exchange contracts and other foreign currency denominated balance sheet items. The
notional of the underlying hedged component of the Consolidated Entity’s net investment in foreign operations is $24,486 million
(2023: $23,001 million).
Hedge ineffectiveness is the extent to which the absolute change in either the fair value of the derivative or the carrying amount of foreign
currency denominated borrowings attributable to the change in exchange rates exceeds that of the hedged item. There was no ineffectiveness
recognised in the income statement by the Consolidated Entity in the current year (2023: $nil).
2 Where the fair value of the derivative is positive/(negative), the notional of the derivative has been similarly included in the table as an asset/(liability).
231
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Note 35
Hedge accounting continued
Fair value hedges
The fair value attributable to the hedged risk is recognised as a fair value adjustment to the hedged item on the balance sheet. In an effective
fair value hedge relationship, movements in this fair value adjustment are largely offset by movements in the fair value of the hedging
instrument. Any residual is recognised as ineffectiveness in net trading income in the income statement. Executed rates for fair value hedges of
interest rate risk and commodity price risk have not been shown as these would represent the market reference rates at the time
of designation.
Hedging instruments
MATURITY ANALYSIS PER NOTIONAL
Less than 3
months
3 to 12
months
1 to 5 years
Over 5 years
Total
Instrument type
Risk category
$m
$m
$m
$m
$m
CONSOLIDATED 2024
Derivative assets
Interest rate swaps
Interest rate
–
2,933
5,744
3,531
12,208
Basis swaps
Interest rate
–
–
993
–
993
Commodity derivatives
Commodity price
–
174
446
–
620
Foreign exchange forwards
Foreign exchange
21
41
361
–
423
Derivative liabilities
Cross currency swaps
Interest rate
–
141
1,236
175
1,552
Interest rate swaps
Interest rate
564
8,466
20,843
16,083
45,956
Commodity derivatives
Commodity price
21
131
598
–
750
Foreign exchange forwards
Foreign exchange
–
273
675
–
948
CONSOLIDATED 2023
Derivative assets
Interest rate swaps
Interest rate
244
1,790
2,147
2,300
6,481
Commodity derivatives
Commodity price
–
35
688
–
723
Foreign exchange forwards
Foreign exchange
27
41
369
–
437
Derivative liabilities
Cross currency swaps
Interest rate
–
491
143
330
964
Interest rate swaps
Interest rate
26
2,506
22,694
16,802
42,028
Commodity derivatives
Commodity price
27
42
605
–
674
Foreign exchange forwards
Foreign exchange
–
36
929
–
965
CONSOLIDATED CARRYING AMOUNT
2024
2023
Asset
Liability
Asset
Liability
Instrument type
Risk category
$m
$m
$m
$m
Cross currency swaps
Interest rate
–
52
–
26
Interest rate swaps
Interest rate
231
3,202
158
3,219
Basis swaps
Interest rate
6
–
–
–
Commodity derivatives
Commodity price
11
38
17
41
Foreign exchange forwards
Foreign exchange
13
44
10
67
232
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 35
Hedge accounting continued
Hedged item
As the hedged item is adjusted only for the hedged risk, the hedged item’s carrying value disclosed in the following table will not be equivalent
to its fair value as disclosed in other notes to these financial statements. The accumulated amount of the fair value hedge adjustments
remaining in the Statements of financial positions for hedged items that have ceased to be adjusted for hedging gains and losses is $10 million
loss (2023: $8 million gain) for the Consolidated Entity and have been included in the fair value hedge adjustment in the table below. These
amounts will be amortised to the income statement on an effective interest rate basis.
CONSOLIDATED 2024
CONSOLIDATED 2023
Gross amount
Fair value hedge
adjustment
Carrying amount3
Gross amount
Fair value hedge
adjustment
Carrying amount3
$m
$m
$m
$m
$m
Assets
Financial investments4
1,232
–
1,232
1,996
–
1,996
Loan assets
1,214
(16)
1,198
294
(67)
227
Property, plant and equipment
961
(67)
894
967
3
970
Liabilities
Issued debt securities
49,201
(2,728)
46,473
41,802
(2,881)
38,921
Loan capital
7,619
(642)
6,977
5,364
(523)
4,841
Bank borrowings
767
–
767
–
–
–
Hedge ineffectiveness
In the case of a fair value hedge, hedge ineffectiveness is the extent to which the changes in the fair value of the hedging instrument differ to
that of the hedged item.
GAIN/(LOSS) ON
HEDGING INSTRUMENT
GAIN/(LOSS) ON
HEDGED ITEM
HEDGE INEFFECTIVENESS
GAIN/(LOSS)
2024
2023
2024
2023
2024
2023
Hedging instruments
Risk category
$m
$m
$m
$m
$m
$m
CONSOLIDATED
Cross currency swaps
Interest rate
10
(47)
(10)
47
–
–
Interest rate swaps
Interest rate
(18)
(2,052)
4
2,061
(14)
9
Basis swaps
Interest rate
–
–
–
–
–
–
Commodity derivatives
Commodity price
48
101
(48)
(101)
–
–
Foreign exchange forwards
Foreign exchange
22
(50)
(22)
50
–
–
Total
62
(2,048)
(76)
2,057
(14)
9
3 The carrying amounts in the table above exclude accrued interest and include fair value hedge adjustments.
4 The carrying amount includes debt instruments classified at fair value through other comprehensive income. Where this applies, the fair value hedge adjustment for interest rate risk is
recognised in the income statement together with changes in the fair value of the hedging instrument.
233
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Note 36
Financial risk management
Risk Management Group
Risk is an integral part of the Consolidated Entity’s businesses.
The material risks faced by the Consolidated Entity include
aggregate, asset, conduct, credit, environmental and social, equity,
financial crime, legal, liquidity, market, operational (including cyber
and information security), regulatory and compliance,
reputational, strategic, tax, and work health and safety risks.
The primary responsibility for risk management lies with the
business. An important part of the role of all staff throughout
Macquarie is to ensure they manage risks appropriately.
RMG is independent of other areas of the Consolidated Entity.
RMG approval is required for all material risk acceptance decisions.
RMG reviews and assesses risks and sets limits. Where appropriate,
these limits are approved by the Executive Committee and the
Board. The Head of RMG, as Macquarie’s CRO, is a member of the
Executive Committee of MGL and MBL and reports directly to the
CEO with a secondary reporting line to the Board Risk Committee.
Further details on the Risk Management Framework in the
Consolidated Entity can be found in the Risk Management Report
of this Annual Report.
Note 36.1 Credit risk
Credit risk is the risk that a counterparty will fail to complete its
contractual obligations when they fall due. The consequential loss
is the amount of the financial obligation not paid back, or the loss
incurred in replicating a trading contract with a new counterparty.
Credit risk assessment and approval
Exercise of credit authority within Macquarie is undertaken under
authority delegated by the MGL and MBL Boards directly.
Credit risk assessment includes a comprehensive review of the
creditworthiness of the counterparty and related entities, key risk
and mitigants, and that the downside risk is properly understood
and acceptable.
After this analysis is undertaken, limits are set for an acceptable
level of potential exposure. All wholesale limits and ratings are
reviewed at least once a year or more frequently if required.
Retail credit exposures are monitored by the business units and
overseen by RMG Credit on a portfolio basis.
All credit exposures are monitored regularly against limits. For
limit monitoring, credit exposures for loan assets are reported at
amortised cost. Derivative exposures are measured using high
confidence potential future underlying asset prices.
To mitigate credit risk, where appropriate, the Consolidated Entity
makes use of margining and other forms of collateral or credit
enhancement techniques (including guarantees, letters of credit
and the purchase of credit default swaps).
Ratings and reviews
Refer to Note 13 Expected credit losses for details regarding the
manner in which the Consolidated Entity has adopted and applied
AASB 9’s expected credit loss impairment requirements.
For the purpose of presenting the credit risk associated with
assets on the Consolidated Entity’s Statements of financial
position in accordance with the requirements of AASB 9, the
following methodology has been adopted.
Wholesale rating
Macquarie wholesale ratings broadly correspond to Standard &
Poor’s credit ratings as follows.
Credit
Profile
Internal
Rating
Standard & Poor’s
Equivalent
Investment grade
MQ1 to MQ8
AAA to BBB-
Non-investment grade
MQ9 to MQ16
BB+ to C
Default
MQ99
Default
Retail rating
Retail pools are mapped to the credit quality grades based on
their PDs.
Mapping retail portfolios to the credit grades has been done for
comparability of the overall portfolio presentation and does not
reflect the way that the retail portfolio is segmented for
management purposes. Management reviews a range of
information, including past due status for the portfolio, to assess
the credit quality of these assets.
Due from subsidiaries
Balances with subsidiaries are mapped to the rating grades
assigned internally to these counterparties for the pricing of
internal funding arrangements on an arm’s length basis.
Portfolio and country risk
A review of the credit portfolio analysing credit concentrations by
counterparty, geography, risk type, industry and credit quality is
carried out quarterly and reported to the Board semi-annually.
Policies are in place to regulate large exposures to single
counterparties or groups of counterparties.
The Consolidated Entity has a country risk management
framework which covers the assessment of country risk and the
approval of country risk limits. Where appropriate the country risk
may be mitigated or transferred by parent company guarantees,
bank letters of credit, or political risk insurance.
234
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 36
Financial risk management continued
Note 36.1 Credit risk continued
Credit quality of financial assets
The table below discloses, by credit rating grades and ECL impairment stage, the gross carrying amount1 of assets measured at amortised cost
or FVOCI and off balance sheet exposures of the Consolidated Entity subject to the impairment requirements of AASB 9 Financial Instruments.
The credit quality is based on the counterparty’s credit rating using the Consolidated Entity’s credit rating system and excludes the benefit of
collateral and credit enhancements.
Stage I2
Stage II2
Stage III2
Total
$m
$m
$m
$m
CONSOLIDATED 2024
Investment grade
Cash and bank balances
31,343
–
–
31,343
Cash collateralised lending and reverse repurchase agreements
38,884
–
–
38,884
Margin money and settlement assets
18,858
–
–
18,858
Financial investments
21,387
–
–
21,387
Held for sale and other assets
3,323
–
–
3,323
Loan assets
66,710
1,913
–
68,623
Off balance sheet exposures
14,081
198
–
14,279
Total investment grade
194,586
2,111
–
196,697
Non-investment grade
Cash and bank balances
513
–
–
513
Cash collateralised lending and reverse repurchase agreements
7,687
–
–
7,687
Margin money and settlement assets
4,989
–
–
4,989
Financial investments
41
–
–
41
Held for sale and other assets
2,082
169
–
2,251
Loan assets
85,287
18,906
–
104,193
Loans to associates and joint ventures
449
64
–
513
Off balance sheet exposures
16,420
475
–
16,895
Total non-investment grade
117,468
19,614
–
137,082
Default
Cash collateralised lending and reverse repurchase agreements
–
–
72
72
Margin money and settlement assets
–
–
38
38
Held for sale and other assets
–
–
95
95
Loan assets
–
–
2,762
2,762
Off balance sheet exposures
–
–
134
134
Total default
–
–
3,101
3,101
Total gross credit risk by ECL stage
312,054
21,725
3,101
336,880
Loan assets under investment grade ($68,623 million) and non-investment grade ($104,193 million) includes $1,816 million past due up to 30
days and $449 million past due between 31 and 90 days.
1 The gross exposure for financial assets measured at amortised cost represents the amortised cost before the ECL allowance, for financial assets measured at FVOCI represents carrying
value before fair value adjustments and ECL allowance and for financial assets measured at FVTPL represents carrying value before fair value adjustments. Accordingly, these exposures
will not be equal to the amount as presented in the Statements of financial position.
2 For definitions of Stage I, II and III, refer to Note 13 Expected credit losses. Whilst exposures may have migrated to Stage II it should not be inferred that such exposures are of a lower
credit quality. The ECL for the Stage III assets includes the benefit of collateral and other credit enhancements.
235
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
Directors’ Report
Governance
About
Financial Report
Note 36
Financial risk management continued
Note 36.1 Credit risk continued
Credit quality of financial assets
The table below discloses, by credit rating grades and ECL impairment stage, the gross carrying amount3 of assets measured at amortised cost
or FVOCI and off balance sheet exposures of the Consolidated Entity subject to the impairment requirements of AASB 9 Financial Instruments.
The credit quality is based on the counterparty’s credit rating using the Consolidated Entity’s credit rating system and excludes the benefit of
collateral and credit enhancements.
Stage I4
Stage II4
Stage III4
Total
$m
$m
$m
$m
CONSOLIDATED 2023
Investment grade
Cash and bank balances
45,402
–
–
45,402
Cash collateralised lending and reverse repurchase agreements
41,189
–
–
41,189
Margin money and settlement assets
20,705
–
–
20,705
Financial investments
18,941
–
–
18,941
Held for sale and other assets
4,030
–
–
4,030
Loan assets
60,538
1,655
–
62,193
Off balance sheet exposures
10,395
75
–
10,470
Total investment grade
201,200
1,730
–
202,930
Non-investment grade
Cash and bank balances
257
–
–
257
Cash collateralised lending and reverse repurchase agreements
8,090
–
–
8,090
Margin money and settlement assets
3,991
1
–
3,992
Financial investments
49
–
–
49
Held for sale and other assets
1,474
10
–
1,484
Loan assets
76,450
18,270
–
94,720
Loans to associates and joint ventures
21
459
–
480
Off balance sheet exposures
17,394
492
–
17,886
Total non-investment grade
107,726
19,232
–
126,958
Default
Cash collateralised lending and reverse repurchase agreements
–
–
87
87
Margin money and settlement assets
–
–
41
41
Held for sale and other assets
–
–
63
63
Loan assets
–
–
2,025
2,025
Off balance sheet exposures
–
–
154
154
Total default
–
–
2,370
2,370
Total gross credit risk by ECL stage
308,926
20,962
2,370
332,258
Loan assets under investment grade ($62,193 million) and non-investment grade ($94,720 million) includes $1,124 million past due up to 30
days and $342 million past due between 31 and 90 days.
3 The gross exposure of financial assets measured at amortised cost represents the amortised cost before the ECL allowance and the gross exposure of financial assets measured at
FVOCI represents carrying value before fair value adjustments and ECL allowance. Accordingly, these exposure values will not equal the amount presented in the Statement of financial
position.
4 For definitions of Stage I, II and III, refer to Note 13 Expected credit losses. Whilst exposures may have migrated to Stage II it should not be inferred that such exposures are of a lower
credit quality. The ECL for the Stage III assets includes the benefit of collateral and other credit enhancements.
236
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 36
Financial risk management continued
Note 36.1 Credit risk continued
The following table below discloses, by credit rating grades, the gross carrying amount of assets measured at amortised cost or FVOCI and off
balance sheet exposures of the Company subject to the impairment requirements of AASB 9 Financial Instruments. The credit quality is based
on the rating grades assigned internally to these counterparties for the pricing of internal funding arrangements on an arm’s length basis.
COMPANY 2024
COMPANY 2023
Stage I
Total
Stage I
Total
$m
$m
$m
$m
Investment grade
Financial investments
1,763
1,763
–
–
Due from subsidiaries
45,928
45,928
44,993
44,993
Off balance sheet exposures5
7,327
7,327
5,239
5,239
Total investment grade
55,018
55,018
50,232
50,232
Total gross credit risk by ECL stage
55,018
55,018
50,232
50,232
5 The Company includes guarantees to counterparties with respect to their exposures to certain subsidiaries. These guarantees have a maximum value of $12,296 million (2023: $10,071
million) with the amount disclosed in the table above being the component of that guarantee value equivalent to the fair value of the underlying risk position at the reporting date.
237
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
Directors’ Report
Governance
About
Financial Report
Note 36
Financial risk management continued
Note 36.1 Credit risk continued
Credit risk concentration
The table below details the concentration of credit risk by significant geographical location and counterparty type of the Consolidated Entity’s
financial assets and off-balance sheet exposures. The geographical location is determined by the country of risk. Counterparty type is based on
Standard Economic Sector Classifications of Australia (SESCA) used by the Australian Bureau of Statistics. Financial assets that are subject to
risks other than credit risk, such as equity investments, commodities, bank notes and coins are excluded from the table below.
GROSS EXPOSURE FOR FINANCIAL ASSETS
GROSS EXPOSURE FOR FINANCIAL ASSETS
SUBJECT TO IMPAIRMENT REQUIREMENT OF AASB9
NOT SUBJECT TO IMPAIRMENT REQUIREMENT OF AASB9
Governments
Financial
institutions6
Other
Total Governments
Financial
institutions6
Other
Total
$m
$m
$m
$m
$m
$m
$m
$m
CONSOLIDATED 2024
Australia
Cash and bank balances
–
19,129
–
19,129
–
–
–
–
Cash collateralised lending and
reverse repurchase agreements
–
10,819
–
10,819
–
1,234
–
1,234
Trading assets
–
–
–
–
–
159
–
159
Margin money and settlement
assets
72
2,668
8
2,748
–
–
–
–
Derivative assets
–
–
–
–
–
1,126
1,422
2,548
Financial investments
8,408
8,780
106
17,294
–
–
4
4
Held for sale and other assets
14
304
789
1,107
–
54
35
89
Loan assets7
33
3,277
144,513
147,823
–
33
93
126
Loans to associates and joint
ventures
–
–
1
1
–
–
9
9
Off balance sheet exposures
37
934
20,449
21,420
–
–
3
3
Total Australia
8,564
45,911
165,866
220,341
–
2,606
1,566
4,172
Asia Pacific
Cash and bank balances
–
2,602
1
2,603
–
–
–
–
Cash collateralised lending and
reverse repurchase agreements
–
5,044
–
5,044
–
2,233
–
2,233
Trading assets
–
–
–
–
–
307
150
457
Margin money and settlement
assets
160
3,156
–
3,316
–
–
–
–
Derivative assets
–
–
–
–
35
1,010
529
1,574
Financial investments
113
451
–
564
–
88
5
93
Held for sale and other assets
2
55
86
143
–
–
912
912
Loan assets
–
–
585
585
–
–
–
–
Loans to associates and joint
ventures
–
–
–
–
–
–
195
195
Off balance sheet exposures
–
96
265
361
–
–
138
138
Total Asia Pacific
275
11,404
937
12,616
35
3,638
1,929
5,602
6 Financial institutions represents banks, financial intermediaries and auxiliaries.
7 Loan assets in the Australia region includes home loans of $119,734 million, asset financing of $6,674 million and Corporate, commercial and other lending of $21,416 million.
238
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 36
Financial risk management continued
Note 36.1 Credit risk continued
GROSS EXPOSURE FOR FINANCIAL ASSETS
GROSS EXPOSURE FOR FINANCIAL ASSETS
SUBJECT TO IMPAIRMENT REQUIREMENT OF AASB9
NOT SUBJECT TO IMPAIRMENT REQUIREMENT OF AASB9
Governments
Financial
institutions8
Other
Total Governments
Financial
institutions8
Other
Total
$m
$m
$m
$m
$m
$m
$m
$m
CONSOLIDATED 2024
Europe, Middle East and Africa
Cash and bank balances
–
6,091
–
6,091
–
–
–
–
Cash collateralised lending and
reverse repurchase agreements
–
19,053
–
19,053
–
2,945
–
2,945
Trading assets
–
–
–
–
–
44
1,765
1,809
Margin money and settlement
assets
5
11,729
12
11,746
–
–
–
–
Derivative assets
–
–
–
–
–
4,589
6,608
11,198
Financial investments
10
583
–
593
–
355
–
355
Held for sale and other assets
86
751
1,917
2,754
–
–
1,489
1,489
Loan assets
–
2,085
8,695
10,780
–
46
734
780
Loans to associates and joint
ventures
–
447
65
512
–
69
338
407
Off balance sheet exposures
–
504
2,432
2,936
–
2
206
208
Total Europe, Middle East and
Africa
101
41,243
13,121
54,465
–
8,050
11,140
19,191
Americas
Cash and bank balances
–
4,033
–
4,033
–
–
–
–
Cash collateralised lending and
reverse repurchase agreements
–
11,727
–
11,727
–
5,361
–
5,361
Trading assets
–
–
–
–
2,168
39
1,495
3,702
Margin money and settlement
assets
311
5,749
15
6,075
–
–
275
275
Derivative assets
–
–
–
–
114
6,331
2,302
8,747
Financial investments
305
2,672
–
2,977
–
71
262
333
Held for sale and other assets
3
956
706
1,665
24
–
1,444
1,468
Loan assets
133
4,778
11,479
16,390
–
157
248
405
Loans to associates and joint
ventures
–
–
–
–
–
–
50
50
Off balance sheet exposures
31
745
5,815
6,591
–
–
1,676
1,676
Total Americas
783
30,660
18,015
49,458
2,306
11,959
7,752
22,017
Total gross credit risk9
9,723
129,218
197,939
336,880
2,341
26,253
22,387
50,982
8 Financial institutions represents banks, financial intermediaries and auxiliaries.
9 The gross exposure for financial assets measured at amortised cost represents the amortised cost before the ECL allowance, for financial assets measured at FVOCI represents carrying
value before fair value adjustments and ECL allowance and for financial assets measured at FVTPL represents carrying value before fair value adjustments. Accordingly, these exposures
will not be equal to the amount as presented in the Statements of financial position.
239
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
Directors’ Report
Governance
About
Financial Report
Note 36
Financial risk management continued
Note 36.1 Credit risk continued
Credit risk concentration
The table below details the concentration of credit risk by significant geographical location and counterparty type of the Consolidated Entity’s
financial assets and off-balance sheet exposures. The geographical location is determined by the country of risk. Counterparty type is based on
Standard Economic Sector Classifications of Australia (SESCA) as per the Australian Bureau of Statistics. Financial assets that are subject to
risks other than credit risk, such as equity investments, commodities, bank notes and coins are excluded from the table below.
GROSS EXPOSURE FOR FINANCIAL ASSETS
GROSS EXPOSURE FOR FINANCIAL ASSETS
SUBJECT TO IMPAIRMENT REQUIREMENT OF AASB9
NOT SUBJECT TO IMPAIRMENT REQUIREMENT OF AASB9
Governments
Financial
institutions10
Other
Total
Governments
Financial
institutions10
Other
Total
$m
$m
$m
$m
$m
$m
$m
$m
CONSOLIDATED 2023
Australia
Cash and bank balances
–
33,049
2
33,051
–
–
–
–
Cash collateralised lending and
reverse repurchase agreements
–
7,719
–
7,719
–
462
–
462
Trading assets
–
–
–
–
988
127
5
1,120
Margin money and settlement
assets
329
3,151
743
4,223
–
–
–
–
Derivative assets
–
–
–
–
2
742
2,218
2,962
Financial investments
5,296
9,512
–
14,808
–
–
–
–
Held for sale and other assets
25
264
881
1,170
–
–
45
45
Loan assets11
36
2,992
131,842
134,870
–
50
91
141
Loans to associates and joint
ventures
–
–
2
2
–
–
–
–
Off balance sheet exposures
28
313
20,273
20,614
–
–
–
–
Total Australia
5,714
57,000
153,743
216,457
990
1,381
2,359
4,730
Asia Pacific
Cash and bank balances
–
2,081
1
2,082
–
–
–
–
Cash collateralised lending and
reverse repurchase agreements
–
3,774
–
3,774
–
666
–
666
Trading assets
–
–
–
–
43
14
560
617
Margin money and settlement
assets
133
3,190
188
3,511
–
–
2
2
Derivative assets
–
–
–
–
38
1,673
1,063
2,774
Financial investments
–
220
5
225
–
39
8
47
Held for sale and other assets
2
94
257
353
–
–
600
600
Loan assets
–
111
370
481
–
–
3
3
Loans to associates and joint
ventures
–
–
–
–
–
–
161
161
Off balance sheet exposures
–
–
46
46
–
–
–
–
Total Asia Pacific
135
9,470
867
10,472
81
2,392
2,397
4,870
10 Financial institutions represents banks, financial intermediaries and auxiliaries.
11 Loan assets in the Australia region includes home loans of $114,020 million, asset financing of $6,427 million and Corporate, commercial and other lending of $14,423 million.
240
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 36
Financial risk management continued
Note 36.1 Credit risk continued
GROSS EXPOSURE FOR FINANCIAL ASSETS
GROSS EXPOSURE FOR FINANCIAL ASSETS
SUBJECT TO IMPAIRMENT REQUIREMENT OF AASB9
NOT SUBJECT TO IMPAIRMENT REQUIREMENT OF AASB9
Governments
Financial
institutions12
Other
Total
Governments
Financial
institutions12
Other
Total
$m
$m
$m
$m
$m
$m
$m
$m
CONSOLIDATED 2023
Europe, Middle East and Africa
Cash and bank balances
–
6,048
–
6,048
–
–
–
–
Cash collateralised lending and
reverse repurchase agreements
–
20,743
–
20,743
–
1,441
–
1,441
Trading assets
–
–
–
–
–
10
2,039
2,049
Margin money and settlement
assets
41
8,983
2,938
11,962
–
–
–
–
Derivative assets
–
–
–
–
–
6,737
13,775
20,512
Financial investments
2,315
318
–
2,633
–
57
–
57
Held for sale and other assets
163
394
1,631
2,188
–
–
979
979
Loan assets
–
1,269
8,319
9,588
–
46
505
551
Loans to associates and joint
ventures
–
406
72
478
–
137
173
310
Off balance sheet exposures
30
62
2,340
2,432
–
–
–
–
Total Europe, Middle East and
Africa
2,549
38,223
15,300
56,072
–
8,428
17,471
25,899
Americas
Cash and bank balances
–
4,478
–
4,478
–
–
–
–
Cash collateralised lending and
reverse repurchase agreements
–
17,130
–
17,130
–
2,394
–
2,394
Trading assets
–
–
–
–
1,044
11
1,803
2,858
Margin money and settlement
assets
37
3,584
1,421
5,042
1
114
459
574
Derivative assets
–
–
–
–
46
7,472
2,904
10,422
Financial investments
1,118
206
–
1,324
–
419
198
617
Held for sale and other assets
3
1,457
406
1,866
–
4
836
840
Loan assets
136
4,211
9,652
13,999
–
96
319
415
Loans to associates and joint
ventures
–
–
–
–
–
–
73
73
Off balance sheet exposures
–
397
5,021
5,418
–
–
250
250
Total Americas
1,294
31,463
16,500
49,257
1,091
10,510
6,842
18,443
Total gross credit risk13
9,692
136,156
186,410
332,258
2,162
22,711
29,069
53,942
12 Financial institutions represents banks, financial intermediaries and auxiliaries.
13 The gross exposure for financial assets measured at amortised cost represents the amortised cost before the ECL allowance, for financial assets measured at FVOCI represents
carrying value before fair value adjustments and ECL allowance and for financial assets measured at FVTPL represents carrying value before fair value adjustments. Accordingly, these
exposures will not be equal to the amount as presented in the Statements of financial position.
241
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
Directors’ Report
Governance
About
Financial Report
Note 36
Financial risk management continued
Note 36.1 Credit risk continued
Credit risk concentration
The table below details the concentration of credit risk by significant geographical location and counterparty type of the Company’s financial
assets and off-balance sheet exposures. The geographical location is determined by the country of risk. Counterparty type is based on Standard
Economic Sector Classifications of Australia (SESCA) as per the Australian Bureau of Statistics. Financial assets that are subject to risks other
than credit risk, such as equity investments, commodities, bank notes and coins are excluded from the table below.
GROSS EXPOSURE FOR FINANCIAL ASSETS
GROSS EXPOSURE FOR FINANCIAL ASSETS
SUBJECT TO IMPAIRMENT REQUIREMENT OF AASB9
NOT SUBJECT TO IMPAIRMENT REQUIREMENT OF AASB9
Financial
institutions14
Other
Total
Financial
institutions14
Other
Total
$m
$m
$m
$m
$m
$m
COMPANY 2024
Australia
Financial investments
1,335
40
1,375
–
–
–
Due from subsidiaries
42,215
3,706
45,921
2,720
754
3,474
Off balance sheet exposures
151
232
383
–
–
–
Total Australia
43,701
3,978
47,679
2,720
754
3,474
Asia Pacific
Financial investments
141
–
141
–
–
–
Due from subsidiaries
1
–
1
–
–
–
Off balance sheet exposures
–
358
358
–
–
–
Total Asia Pacific
142
358
500
–
–
–
Europe, Middle East and Africa
Off balance sheet exposures
–
832
832
–
–
–
Total Europe, Middle East and Africa
–
832
832
–
–
–
Americas
Due from subsidiaries
6
–
6
–
–
–
Off balance sheet exposures
187
5,567
5,754
–
–
–
Total Americas
193
5,567
5,760
–
–
–
Total gross credit risk
44,036
10,735
54,771
2,720
754
3,474
COMPANY 2023
Australia
Due from subsidiaries
41,233
3,758
44,991
2,787
763
3,550
Off balance sheet exposures
197
122
319
–
–
–
Total Australia
41,430
3,880
45,310
2,787
763
3,550
Asia Pacific
Due from subsidiaries
1
1
2
–
–
–
Off balance sheet exposures
–
239
239
–
–
–
Total Asia Pacific
1
240
241
–
–
–
Europe, Middle East and Africa
Off balance sheet exposures
–
205
205
–
–
–
Total Europe, Middle East and Africa
–
205
205
–
–
–
Americas
Off balance sheet exposures
213
4,263
4,476
–
–
–
Total Americas
213
4,263
4,476
–
–
–
Total gross credit risk
41,644
8,588
50,232
2,787
763
3,550
14 Financial institutions represents banks, financial intermediaries and auxiliaries.
242
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 36
Financial risk management continued
Note 36.1 Credit risk continued
Maximum exposure to credit risk
For on-balance sheet instruments, the maximum exposure to
credit risk is the carrying amount reported on the balance sheet
(refer to Note 37 Measurement categories of financial
instruments). For off balance sheet instruments, the maximum
exposure to credit risk is a function of the contractual notional
amount, except for certain usage-based guarantees in which case
the maximum exposure is determined with respect to the fair
value of the underlying exposure and is disclosed in Note 13
Expected credit losses.
Collateral and credit enhancements held
Cash collateralised lending and reverse repurchase agreements
The Consolidated Entity enters into securities and commodities
borrowing and reverse repurchase transactions with
counterparties which require lodgement of collateral. These
arrangements include:
•
securities and commodities borrowed in return for cash,
for which the fair value of the securities and commodities
borrowed is equal to or less than the cash deposited with
the counterparty
•
reverse repurchase agreements (collateralised financing
arrangements), for which the fair value of the securities and
commodities received as collateral is generally in excess of the
principal amount
•
securities received as collateral in return for the transfer of
other securities; and
•
securities borrowed on an unsecured basis in return for a fee.
The non-cash collateral received is not recognised by the
Consolidated Entity in the Statements of financial position, as the
risks and rewards of ownership remain with the counterparty. The
Consolidated Entity is permitted to sell or repledge the securities
and commodities received. In the absence of default by the
counterparty, the Consolidated Entity has an obligation to return
the non-cash collateral received to the counterparty.
For securities and commodities borrowed in return for cash and
reverse repurchase arrangements, the fair value of non-cash
collateral received is $60,082 million (2023: $55,834 million). For
securities borrowed in return for other securities, the fair value of
the securities received is $19,012 million (2023: $11,807million).
For securities borrowed on an unsecured basis, the fair value of the
securities received is $7,530 million (2023: $7,899 million).
Out of the above, the fair value of securities repledged is
$22,320 million (2023: $20,933 million).
The fair value attributed to non-cash collateral held is judgmental
and measured with reference to quoted prices in active markets
where available (for example, listed securities). If quoted prices in
active markets are not available, the fair value are estimated using
pricing models or other recognised valuation techniques that
maximise the use of quoted prices and observable market inputs.
The fair value of these securities and commodities were
determined when last assessed and have been determined
periodically.
243
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Note 36
Financial risk management continued
Note 36.1 Credit risk continued
Loan assets
Home loans
Macquarie purchases risk protection for its home loans portfolio consistent with the risk appetite. Macquarie has diversified its risk protection
coverage to a global panel of reinsurers with diverse lines of business coverage and ratings ranging from AA+ to A– from external rating
agencies. The length of risk protection cover is up to 10 years from the year of origination with the type of cover including excess of loss and
quota share.
The following table provides information on the loan to collateral value ratio as determined using loan carrying values and the most recent
valuation of the home loan collateral.
2024
2023
Australia
EMEA
Total
Australia
EMEA
Total
$m
$m
$m
$m
$m
$m
CONSOLIDATED
<=25%
4,171
5
4,176
3,623
5
3,628
>25% to 50%
25,719
30
25,749
23,146
34
23,180
>50% to 70%
48,572
96
48,668
45,395
130
45,525
>70% to 80%
38,834
73
38,907
33,775
78
33,853
>80% to 90%
2,950
24
2,974
2,819
18
2,837
>90% to 100%
280
7
287
375
2
377
Partly collateralised
20
3
23
14
3
17
Total home loans
120,546
238
120,784
109,147
270
109,417
Corporate, commercial and other lending
Collateral held against corporate, commercial and other lending consists of secured positions over assets of the counterparty, often in the form
of corporate assets. Of the term lending of $47,645 million (2023: $39,835 million), the credit exposure after considering the estimated value of
collateral and credit enhancements is $7,123 million (2023: $6,129 million).
Asset financing
The Consolidated Entity leases assets and provides asset-related financing to corporate and retail clients. Titles to the underlying assets are
held by the Consolidated Entity as collateral. Of the asset finance portfolio of $7,942 million (2023: $9,320 million), the credit exposure after
considering the depreciated value of collateral is $2,820 million (2023: $3,661 million).
Derivative instruments
Derivatives may be traded on an exchange (exchange traded) or they may be privately negotiated contracts, which are referred to as
Over-the-Counter (OTC) derivatives. The Consolidated Entity’s and the Company’s OTC derivatives are cleared and settled either through central
clearing counterparties (OTC-cleared), or bilateral contracts between two counterparties.
The Consolidated Entity’s approach to financial risk management includes entering into margining and collateralisation arrangements and
enforceable master netting arrangements (MNA) with counterparties. The MNAs allow for net settlement with counterparties in the event of
default or other pre-determined events, such that their potential effects on the Consolidated Entity’s financial position in that circumstance is
to settle these contracts as one arrangement.
The Consolidated Entity receives both cash and non-cash collateral in relation to margining arrangements. Refer to Note 39 Offsetting financial
assets and financial liabilities for impact of master netting arrangements, cash margins and other financial collateral held against the positions
as at balance date.
Refer Note 40 Pledged assets and transfers of financial assets for non-cash collateral received and repledged as part of derivative margining
arrangements.
244
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 36
Financial risk management continued
Note 36.1 Credit risk continued
Financial investments
Debt securities held by the Consolidated Entity carrying a credit
risk are primarily in the nature of bonds, NCDs, floating rate notes
(FRN), commercial paper and other debt securities for liquidity
management purposes and other securities for short-term gains.
Settlement assets
Security and commodity settlements of $6,875 million
(2023: $6,476 million) and $4,094 million (2023: $4,383 million)
respectively presented in Note 8 Margin money and settlement
assets, represent amounts owed by an exchange (or a client) for
equities, commodities and other securities sold. These assets are
secured with the underlying securities, commodities or cash held
by the Consolidated Entity until the date of settlement. The period
between trade and settlement date varies as per regional
regulatory and business norms.
Other financial assets
Commodity related receivables under other financial assets are
typically either collateralised with the underlying commodity
held by the Consolidated Entity until the date of settlement or
short-term receivables with standard credit terms which would be
backed by a bank guarantee where required to remain within
credit limits.
Credit commitments
Undrawn facilities and lending securities commitments of
$33,333 million (2023: $28,760 million) are secured through
collateral and credit enhancement. The remaining credit exposure
after considering the estimated value of collateral is $9,931 million
(2023: $5,877 million).
Additional collateral
Apart from collateral details disclosed above, the Consolidated
Entity also holds other types of collateral, such as unsupported
guarantees. While such mitigants have value as a credit risk
mitigant often providing rights in insolvency, their assignable
values are uncertain and therefore are assigned no value for
disclosure purposes.
For all collateral, in the event of default realised collateral values
may be lower than the value of collateral as at the reporting date.
Repossessed collateral
In the event of a customer default, the Consolidated Entity may
either take possession of the underlying collateral held as security
and/or exercise its right to dispose of the customer’s asset. At the
reporting date, the Consolidated Entity did not have any material
amounts of such collateral recognised in its Statements of
financial position.
Note 36.2 Liquidity risk
Governance and oversight
Macquarie’s liquidity risk management framework is designed to
ensure that it is able to meet its obligations as they fall due under
a range of market conditions.
Liquidity management is performed centrally by Group Treasury,
with oversight from the MGL and MBL Asset and Liability
Committees (ALCO), the MGL and MBL Boards and RMG.
Macquarie’s liquidity policies are approved by the MGL and MBL
Boards after endorsement by the respective ALCO and liquidity
reporting is provided to the Boards on a regular basis. The MGL
and MBL ALCOs include the MGL CEO, MBL CEO, CFO, CRO, COO,
Group General Counsel, Co-Heads of Group Treasury and relevant
Operating Group Heads.
RMG provides independent oversight of liquidity risk management,
including ownership of liquidity policies and key limits and approval
of material liquidity scenario assumptions.
Liquidity policy and risk appetite
The MGL and MBL liquidity policies are designed so that each of
Macquarie, the Bank Group and the Non-Bank Group maintains
sufficient liquidity to meet their obligations as they fall due. The
MBL Liquidity Policy outlines the standalone framework for the
Bank Group and its principles are consistent with the
MGL Liquidity Policy. Macquarie’s liquidity risk appetite is intended
to ensure that Macquarie is able to meet all of its liquidity
obligations during a period of liquidity stress: a twelve month
period with constrained access to funding markets for MBL, no
access to funding markets for MGL and with only a limited
reduction in Macquarie’s franchise businesses.
Reflecting the longer-term nature of the Non-Bank Group asset
profile, MGL is funded predominantly with a mixture of capital and
long-term wholesale funding. MBL is an authorised deposit-taking
institution and is funded mainly with deposits, long-term liabilities
and capital.
Liquidity contingency plan
Group Treasury maintains a Liquidity Contingency Plan for MGL
and a Liquidity Contingency Plan for MBL, which outline how a
liquidity crisis would be managed for the Group and Bank,
respectively. The plans define roles and responsibilities and actions
to be taken in a liquidity event, including identifying key
information requirements and appropriate communication plans
with both internal and external parties.
245
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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Governance
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Note 36
Financial risk management continued
Note 36.2 Liquidity risk continued
Specifically, the plans detail:
•
factors that may constitute a crisis
•
the officers responsible for invoking each plan
•
a committee of senior executives responsible for managing
a crisis
•
the information required to effectively manage a crisis
•
a communications strategy
•
a high level checklist of possible actions to conserve or raise
additional liquidity for the Group or Bank; and
•
contact lists to facilitate prompt communication with all key
internal and external stakeholders.
In addition, Macquarie monitors a range of early warning indicators
on a daily basis that might assist in identifying emerging risks in
Macquarie’s liquidity position. These indicators are reviewed by
Senior Management and are used to inform any decisions
regarding invoking the plan.
The Liquidity Contingency Plans are subject to regular review by
both Group Treasury and RMG. They are submitted annually to the
MGL and MBL ALCO and respective Boards for approval.
Macquarie is a global financial institution, with branches and
subsidiaries in a variety of countries. Regulations in certain
countries may require some branches or subsidiaries to have
specific local contingency plans. Where that is the case, the
Liquidity Contingency Plans contain either a supplement or a
reference to a separate document providing the specific
information required for those branches or subsidiaries.
Funding strategy
Macquarie prepares a Funding Strategy for MGL and a Funding
Strategy for MBL on an annual basis and monitors progress
against the strategies throughout the year.
The Funding Strategies aim to maintain diversity of funding
sources for MGL and MBL, ensure ongoing compliance with all
liquidity requirements and facilitate forecast asset growth.
The Funding Strategies are reviewed by the MGL and MBL ALCO
and approved by the respective Boards.
Scenario analysis
Scenario analysis is central to Macquarie’s liquidity risk
management framework. In addition to regulatory defined
scenarios, Group Treasury models additional liquidity scenarios
covering both market-wide and Macquarie name-specific crises.
These scenarios use a range of assumptions, which Macquarie
intends to be conservative, regarding the level of access to capital
markets, deposit outflows, contingent funding requirements and
asset sales.
As an example, one internal scenario projects the expected cash
and liquid asset position during a combined market-wide and
Macquarie name-specific crisis over a twelve month time frame.
This scenario assumes no access to wholesale funding markets, a
significant loss of customer deposits and contingent funding
outflows resulting from undrawn commitments, market moves
impacting derivatives and other margined positions combined with
a multiple notch credit rating downgrade. Macquarie’s cash and
liquid asset portfolio must exceed the minimum requirement as
calculated in this scenario at all times.
Liquid asset holdings
Group Treasury centrally maintains a portfolio of highly liquid
unencumbered assets which are intended to ensure adequate
liquidity is available under a range of market conditions. The
minimum level of cash and liquid assets is calculated with
reference to internal scenario analysis and regulatory
requirements.
The cash and liquid asset portfolio contains only unencumbered
assets that can be relied on to maintain their liquidity in a crisis
scenario. Specifically, cash and liquid assets held to meet minimum
internal and regulatory requirements must be cash balances
(including central bank reserves and overnight lending to financial
institutions), qualifying High-Quality Liquid Assets and other
Reserve Bank of Australia (RBA) repo eligible securities.
Composition constraints are also applied to ensure appropriate
diversity and quality of the assets in the portfolio. The cash and
liquid asset portfolio is held in a range of currencies consistent
with the distribution of liquidity needs by currency, allowing for an
acceptable level of currency mismatches.
Funds transfer pricing
An internal funds transfer pricing framework is in place that has
been designed to produce appropriate incentives for business
decision-making by reflecting the funding costs arising from
business actions and the separate funding tasks and liquidity
requirements of the Bank and Non-Bank Groups. Under this
framework, each business is allocated the appropriate cost of the
funding required to support its products and business lines,
recognising the actual and contingent funding-related exposures
their activities create. The Operating Groups are assumed to be
fully debt funded for the purposes of internal funding charges.
246
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 36
Financial risk management continued
Note 36.2 Liquidity risk continued
Contractual undiscounted cash flows
The following tables summarise the maturity profile of the Consolidated Entity’s financial liabilities as at 31 March based on a contractual
undiscounted repayment basis and hence would vary from the carrying value as reported on the Statements of financial position at the balance
date. Repayments subject to notice are treated as if notice were given immediately. This does not reflect the behaviour of the expected cash
flows as indicated by the Consolidated Entity’s deposit retention history since the Consolidated Entity expects that many customers will not
request repayment on the earliest date the Consolidated Entity could be required to pay.
Statement of
financial position
0 to 3 months
3 to 12 months
1 to 5 years
Over 5 years
Total
$m
$m
$m
$m
$m
$m
CONSOLIDATED 2024
Cash collateralised borrowing and
repurchase agreements1
12,599
12,655
13
5
–
12,673
Trading liabilities2
5,044
5,053
–
–
–
5,053
Margin money and settlement
liabilities
28,423
28,461
–
–
–
28,461
Derivative liabilities (trading)2
21,808
21,811
–
–
–
21,811
Derivative liabilities (Hedge
Accounting Relationships)3
3,777
Contractual amounts payable
946
2,761
4,067
1,799
9,573
Contractual amounts receivable
(459)
(1,625)
(1,774)
(1,229)
(5,087)
Deposits
148,416
138,855
9,370
555
12
148,792
Held for sale and other liabilities
6,994
3,180
2,415
1,207
497
7,299
Issued debt securities and other
borrowings4
119,878
11,507
36,148
59,910
27,137
134,702
Loan capital5
14,201
190
1,681
10,902
5,568
18,341
Total
361,140
222,199
50,763
74,872
33,784
381,618
Total undiscounted contingent
liabilities and commitments6
–
16,483
1,047
4,070
14,789
36,389
1 Includes $9,556 million of RBA Term Funding Facility due to be repaid by June 2024.
2 Derivative liabilities (trading) and trading liabilities are included in the ‘0 to 3 months’ at their fair value. Liquidity risk on these items is not managed on the basis of contractual
maturity, as they are frequently traded.
3 Where multiple derivatives are combined in order to form a single hedge instrument designated in a hedge accounting relationship, each derivative is considered independently for the
purposes of assessing liquidity risk and for the disclosure’s requirements.
4 Includes $11,621 million payables to SE note holders which is disclosed on the basis of expected maturity of the notes which are dependent on the repayment maturity of the
underlying loans that the SE holds.
5 Includes securities with conditional repayment obligations. The cash outflow on the principal component on these securities is disclosed using the earliest optional exchange dates and
the cash outflow of the interest component is disclosed using coupon dates instead of the contractual maturity. For contractual maturity of these securities refer to Note 26 Loan
capital, further these instruments may be converted into ordinary shares on the occurrence of an other exchange event, and this may impact their maturity profile.
6 Cash flows on contingent liabilities and commitments are dependent on the occurrence of various future events and conditions and may or may not result in an outflow of resources.
247
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
Directors’ Report
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Note 36
Financial risk management continued
Note 36.2 Liquidity risk continued
Statement of financial
position
0 to 3 months
3 to 12 months
1 to 5 years
Over 5 years
Total
$m
$m
$m
$m
$m
$m
CONSOLIDATED 2023
Cash collateralised borrowing and
repurchase agreements
18,737
7,345
1,759
9,657
–
18,761
Trading liabilities7
4,810
4,810
–
–
–
4,810
Margin money and settlement
liabilities
27,482
27,482
–
–
–
27,482
Derivative liabilities (trading)7
29,055
29,055
–
–
–
29,055
Derivative liabilities (Hedge
Accounting Relationships)8
3,735
Contractual amounts payable
543
1,202
3,877
870
6,492
Contractual amounts receivable
(169)
(252)
(1,756)
(266)
(2,443)
Deposits
134,714
123,760
10,672
731
11
135,174
Held for sale and other liabilities
4,422
2,647
706
1,000
221
4,574
Issued debt securities and other
borrowings9
109,461
19,722
22,995
51,349
32,831
126,897
Loan capital10
12,891
210
645
9,377
7,146
17,378
Total
345,307
215,405
37,727
74,235
40,813
368,180
Total undiscounted contingent
liabilities and commitments11
–
27,097
1,951
2,303
2,767
34,118
7 Derivative liabilities (trading) and trading liabilities are included in the ‘0 to 3 months’ at their fair value. Liquidity risk on these items is not managed on the basis of contractual
maturity, as they are frequently traded.
8 Where multiple derivatives are combined in order to form a single hedge instrument designated in a hedge accounting relationship, each derivative is considered independently for the
purposes of assessing liquidity risk and for the disclosure’s requirements.
9 Includes $11,424 million payables to SE note holders which is disclosed on the basis of expected maturity of the notes which are dependent on the repayment maturity of the
underlying loans that the SE holds.
10 Includes securities with conditional repayment obligations. The cash outflow on the principal component on these securities is disclosed using the earliest optional exchange dates and
the cash outflow of the interest component is disclosed using coupon dates instead of the contractual maturity. For contractual maturity of these securities refer to Note 26 Loan
capital, further these instruments may be converted into ordinary shares on the occurrence of an other exchange event, and this may impact their maturity profile.
11 Cash flows on contingent liabilities and commitments are dependent on the occurrence of various future events and conditions and may or may not result in an outflow of resources.
248
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 36
Financial risk management continued
Note 36.2 Liquidity risk continued
Statement of
financial position
0 to 3 months
3 to 12 months
1 to 5 years
Over 5 years
Total
$m
$m
$m
$m
$m
$m
COMPANY 2024
Derivative liabilities (trading)12
5
5
–
–
–
5
Other liabilities
36
36
–
–
–
36
Due to subsidiaries
6,112
5,056
131
588
337
6,112
Issued debt securities and other
borrowings
43,135
451
2,587
28,891
19,335
51,264
Loan capital13
3,371
60
1,160
2,055
776
4,051
Total
52,659
5,608
3,878
31,534
20,448
61,468
Total undiscounted contingent
liabilities and commitments14
–
7,576
–
–
–
7,576
COMPANY 2023
Derivative liabilities (trading)11
5
5
–
–
–
5
Other liabilities
20
20
–
–
–
20
Due to subsidiaries
4,698
4,698
–
–
–
4,698
Issued debt securities and other
borrowings
39,055
420
1,146
22,758
22,756
47,080
Loan capital13
3,362
55
160
2,257
1,726
4,198
Total
47,140
5,198
1,306
25,015
24,482
56,001
Total undiscounted contingent
liabilities and commitments14
–
5,496
965
1
2
6,464
12 Derivative liabilities (trading) and trading liabilities are included in the ‘0 to 3 months’ at their fair value. Liquidity risk on these items is not managed on the basis of contractual
maturity, as they are frequently traded.
13 Includes securities with conditional repayment obligations. The cash outflow on the principal component on these securities is disclosed using the earliest optional exchange dates and
the cash outflow of the interest component is disclosed using coupon dates instead of the contractual maturity. For contractual maturity of these securities refer to Note 26 Loan
capital, further these instruments may be converted into ordinary shares on the occurrence of an other exchange event, and this may impact their maturity profile.
14 Cash flows on contingent liabilities and commitments are dependent on the occurrence of various future events and conditions and may or may not result in an outflow of resources.
249
Macquarie Group Limited and its subsidiaries 2024 Annual Report
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Note 36
Financial risk management continued
Note 36.3 Market risk
Macquarie’s balance sheet includes a ‘trading book’, which is
defined in accordance with APRA’s traded market risk prudential
statement (APS116), and subject to the traded market risk
framework. Any position not deemed to be trading book is
considered to be ‘banking book’, and covered by either the
non-traded market risk or equity risk frameworks.
Traded market risk
Market risk is the risk of adverse changes in the value of the
Consolidated Entity’s trading positions as a result of changes in
market conditions. The Consolidated Entity is exposed to the
following risks:
•
price: The risk of loss due to changes in price of a risk factor
(interest rates, foreign exchange, commodities etc.)
•
volatility: The risk of loss due to changes in the volatility of
a risk factor
•
basis: The risk of imperfect correlation between offsetting
investments in a hedging strategy
•
correlation: The risk that the actual correlation between two
assets or variables is different from the assumed correlation
•
illiquid market: The risk of inability to sell assets or close out
positions in thinly-traded markets at close to the last market
prices
•
concentration: The risk of over concentration of trading
exposures in certain markets and products
•
valuation adjustments: The risk of actual valuation
adjustments to derivative positions; specifically Credit
Valuation Adjustment (CVA), Debit Valuation Adjustment (DVA)
and Funding Valuation Adjustment (FVA).
It is recognised that all trading activities contain calculated
elements of risk taking. The Consolidated Entity is prepared to
accept such risks provided they are within agreed limits,
independently and correctly identified, calculated and monitored
by RMG, and reported to Senior Management on a regular basis.
RMG monitors positions within the Consolidated Entity according
to a limit structure which sets limits for all exposures in all
markets. Limits are for both individual trading desks and divisions
as well as in aggregate.
RMG sets three complementary limit structures:
•
contingent loss limits: Worst-case scenarios that shock prices
and volatilities by more than that which has occurred
historically. Multiple scenarios are set for each market to
capture the non-linearity and complexity of exposures arising
from derivatives. A wide range of assumptions about the
correlation between markets is applied
•
position limits: Volume, maturity and open position limits are
set on a large number of market instruments and securities in
order to constrain concentration risk and to avoid the
accumulation of risky, illiquid positions
•
Value-at-Risk (VaR) limits: A statistical measure based on a
10-day holding period and a 99% confidence level, as stipulated
by the APRA capital adequacy standard. The model is validated
daily by back testing a one-day VaR against hypothetical and
actual daily trading profit or loss.
250
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 36
Financial risk management continued
Note 36.3 Market risk continued
Value-at-Risk figures (1-day, 99% confidence level)
The table below shows the average, maximum and minimum VaR over the financial year for the major markets in which the Consolidated Entity
operates. The VaR shown in the table is based on a one-day holding period being the mark-to-market loss that could be incurred over that
period. The aggregated VaR includes the effects of correlation between risk factors.
2024
2023
Average
Maximum
Minimum
Average
Maximum
Minimum
$m
$m
$m
$m
$m
$m
Equities
5.74
8.04
3.59
4.15
7.75
1.91
Interest rates
5.21
8.00
3.56
6.57
11.24
2.98
Foreign exchange
3.37
8.05
1.41
3.71
9.07
0.89
Commodities and commodity contracts
32.02
50.26
17.18
54.71
118.42
33.99
Aggregate
33.26
53.17
20.36
55.51
115.88
34.48
Value-at-Risk
The VaR model uses a Monte Carlo simulation where price and volatility risk factors are derived from multiple normal distributions, based on
three years of historical data. The following factors can limit the effectiveness of VaR in predicting future price moves:
•
the use of historical data means that the current model parameters may not reflect future market conditions especially when entering a
period of heightened volatility. The model utilises exponential weighting to place emphasis on the most recent market movements to more
accurately reflect current conditions
•
VaR is calculated at the 99% level of confidence and does not account for losses that could occur beyond this point.
For capital adequacy purposes, debt-specific risk is measured using APRA’s standard method, whilst all other exposures are captured by the VaR
model. This combined approach has been approved by APRA.
Non-traded market risk
The Consolidated Entity has exposure to non-traded market risks arising from transactions entered into during its normal course of business
and as a result of its investments in foreign operations. These risks include:
•
interest rate: changes in the level, shape and volatility of yield curves, and/or client behaviour given these changes
•
foreign exchange: changes in the spot exchange rates.
The Consolidated Entity has limited appetite for non-traded market risks. Where commercially feasible, these risks are transferred into the
trading books of CGM and Group Treasury and governed within the traded market risk framework described above. Responsibility for managing
exposures rests with individual businesses, with independent monitoring performed by RMG and FMG.
Accounting considerations arising from hedging activities
The use of derivative and other financial instruments to hedge non-traded positions potentially gives rise to income statement volatility due to
difference in accounting treatments. The Consolidated entity manages this volatility through hedge accounting and use of naturally offsetting
positions in the income statement as set out in Note 44(x) Derivative instruments and hedging activities and Note 35 Hedge accounting.
251
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
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Note 36
Financial risk management continued
Note 36.3 Market risk continued
Interest rate risk in the banking book (IRRBB)
Macquarie measures and monitors interest rate risk on both an economic value and earnings basis, which are modelled as the worst-case
contingent loss from a set of six severe interest rate shocks, including both parallel and non-parallel shocks. Aggregate IRRBB exposures for the
Consolidated Entity are constrained on both measures:
•
Economic Value Sensitivity (EVS): the EVS metric measures the change in net present value of the interest-bearing portfolios in the
banking book as a result of changes in interest rates.
•
Earnings at Risk (EaR): the EaR model constrains the impact on reported net income over 12 months for a change in interest rates.
A central objective of the Consolidated Entity’s Non-traded Market Risk Policy is to reduce earnings volatility to interest rate movements. A key
component of this arises where shareholders' equity invested in interest bearing assets are managed by holding a portfolio of ‘receive fixed’
interest rate swaps. The duration of this hedging program is constrained by Board-approved limits, and subject to independent oversight
by RMG.
Foreign exchange risk
The Consolidated Entity is active in various currencies globally. A key objective of the Consolidated Entity’s Non-traded Market Risk Policy is to
reduce this sensitivity of regulatory capital ratios to foreign currency movements.
This is achieved by leaving specific investments in foreign operations exposed to foreign currency translation movements and captured in the
foreign currency translation reserve, a component of regulatory capital, which aligns the foreign exchange sensitivity of capital supply with that
of foreign currency capital requirements.
The table below presents the sensitivity of the Consolidated Entity’s net investment in foreign operations to the most material currencies. As a
result of the policy described above, these movements will not have a material impact on the capital ratios.
2024
2023
Movement in exchange
rates
Sensitivity of other
comprehensive income
after tax
Movement in exchange
rates
Sensitivity of other
comprehensive income
after tax
%
$m
%
$m
CONSOLIDATED
United States dollar
+10
(1,312)
+10
(1,254)
Pound sterling
+10
(220)
+10
(201)
Euro
+10
(145)
+10
(111)
Total
(1,677)
(1,566)
United States dollar
-10
1,312
-10
1,254
Pound sterling
-10
220
-10
201
Euro
-10
145
-10
111
Total
1,677
1,566
252
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 36
Financial risk management continued
Note 36.3 Market risk continued
Interest rate risk – Interest Rate Benchmark Reform (IBOR)
During 2018, the Consolidated Entity initiated a group-wide
project to manage the impacts of IBOR reform, including
overseeing the transition from LIBOR to ARRs.
The Consolidated Entity’s reform project oversaw the successful
transition of contracts referencing LIBORs that ceased publication
on 30 June 2023 and 31 December 2021 in accordance with
industry and regulatory guidance. This included the transition of
the Consolidated Entity's exposures in GBP, JPY, EUR, CHF and USD
LIBOR, as well as IBOR for other minor currencies.
The remaining transition focus is on the Canadian Dollar Offered
Rate (CDOR) which will cease publication on 28 June 2024. The
Consolidated Entity has actively begun to engage with clients to
support them through the transition from CDOR to the Canadian
Overnight Repo Rate Average (CORRA).
The Consolidated Entity also continues to have exposures to the
28-day term Mexican Interbank Equilibrium Interest Rate (TIIE).
The transition risk for these contracts is low, given that the TIIE
will be calculated synthetically from 1 January 2025 and
amendments to existing contracts are not required.
Whilst the transition of contracts referencing CDOR and other
minor IBORs continues to expose the Consolidated Entity to
inherent risks, the remaining IBOR transition efforts and risk has
significantly reduced. The operating groups manage remaining
IBOR transition risks within the Consolidated Entity’s existing risk
management framework.
Exposure yet to be transitioned to ARRs: The notional value of
the Consolidated Entity’s financial instruments which are yet to
transition to ARRs as at the reporting date includes:
•
derivatives: gross exposure of $19,342 million in MXN TIIE,
$3,942 million in CDOR and $884 million in other currencies
(2023: $79,673 million in USD LIBOR, $14,886 million in MXN
TIIE, $3,573 million in CDOR and $618 million in other
currencies)
•
non-derivative financial assets: exposure of $470 million
in CDOR and $103 million in other currencies (2023:
$5,231 million in USD LIBOR, $704 million in CDOR and
$152 million in other currencies).
•
non-derivative financial liabilities: $nil exposure (2023:
$3,637 million in USD LIBOR).
The scope of the above-mentioned exposures has been
determined as follows:
•
the benchmark will be replaced, and the replacement date is
known. Only exposures with contractual maturities extending
beyond the replacement date have been included
•
the gross notional values for derivatives and both on-balance
sheet and off-balance sheet exposures have been included
•
for contracts that reference more than one benchmark, such as
a cross currency swap, the exposure includes both benchmarks
to reflect the absolute exposure to different reference rates
•
derivative contracts of $nil (2023: $9,664 million) designated in
hedge accounting relationships have synthetically transitioned
and have been excluded, primarily relating to the USD LIBOR to
SOFR transition.
253
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
Directors’ Report
Governance
About
Financial Report
Note 36
Financial risk management continued
Note 36.3 Market risk continued
Equity price risk
The below table indicates the income statement effect of the Consolidated Entity’s equity exposures held as part of its non-trading investment
portfolio, due to a reasonably possible change in equity prices, with all other variables held constant. Equity exposures exclude interest in
associate and joint ventures.
2024
2023
Movement in equity price
Sensitivity of profit
after tax
Movement in equity price
Sensitivity of profit
after tax
%
$m
%
$m
CONSOLIDATED
Listed
+10
13
+10
10
Unlisted
+10
137
+10
144
Increase in equity prices
+10
150
+10
154
Listed
-10
(13)
-10
(10)
Unlisted
-10
(137)
-10
(144)
Decrease in equity prices
-10
(150)
-10
(154)
254
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 37
Measurement categories of financial instruments
The following table contains information relating to the measurement categories (i.e. Held for trading (HFT), FVTPL, DFVTPL, FVOCI or
Amortised cost) of assets and liabilities of the Consolidated Entity. The description of measurement categories are included in Note 44(vii)
Financial instruments.
The methods and significant assumptions that have been applied in determining the fair values of assets and liabilities are disclosed in Note 38
Fair value of assets and liabilities.
FINANCIAL INSTRUMENTS CARRIED AT
Statements of
financial
position total
FAIR VALUE OF ITEMS
CARRIED AT
FAIR VALUE
Amortised
Cost
Non-financial
instruments
Fair Value
Amortised
Cost
HFT
DFVTPL
FVTPL
FVOCI
$m
$m
$m
$m
$m
$m
$m
$m
$m
CONSOLIDATED 2024
Assets
Cash and bank balances
–
–
–
–
31,855
–
31,855
–
31,855
Cash collateralised lending and reverse
repurchase agreements
–
–
11,774
34,915
11,727
–
58,416
46,689
11,727
Trading assets1
25,398
–
–
–
–
2,526
27,924
27,924
–
Margin money and settlement assets
–
–
275
–
23,842
–
24,117
275
23,842
Derivative assets
23,064
–
1,003
–
–
–
24,067
24,067
–
Financial investments:
Equity
–
–
2,218
–
–
–
2,218
2,218
–
Debt2
–
–
787
19,453
1,920
–
22,160
20,240
1,920
Held for sale assets
–
–
352
–
–
1,852
2,204
352
–
Other assets3
–
–
3,976
255
4,173
4,234
12,638
5,157
4,173
Loan assets2
–
–
1,310
559
174,502
–
176,371
1,869
175,019
interests in associates and joint
ventures:
Equity interests
–
–
9
–
–
5,833
5,842
9
–
Loans to associates and joint
ventures2
–
–
649
–
478
–
1,127
649
478
Property, plant and equipment and
right-of-use assets2
–
–
–
–
–
8,134
8,134
–
–
Intangible assets
–
–
–
–
–
4,254
4,254
–
–
Deferred tax assets
–
–
–
–
–
2,077
2,077
–
–
Total assets
48,462
–
22,353
55,182
248,497
28,910
403,404
129,449
249,014
Liabilities
Cash collateralised borrowing and
repurchase agreements
–
82
–
–
12,517
–
12,599
82
12,517
Trading liabilities
5,044
–
–
–
–
–
5,044
5,044
–
Margin money and settlement
liabilities
–
–
–
–
28,423
–
28,423
–
28,423
Derivative liabilities
21,808
–
3,777
–
–
–
25,585
25,585
–
Deposits
–
–
–
–
148,416
–
148,416
–
148,375
Held for sale liabilities
–
–
–
–
397
10
407
–
397
Other liabilities4
–
3,885
–
–
2,712
7,875
14,472
3,885
2,712
Issued debt securities and other
borrowings2
–
2,792
–
–
117,086
–
119,878
2,792
118,276
Deferred tax liabilities
–
–
–
–
–
383
383
–
–
Loan capital
–
–
–
–
14,201
–
14,201
–
14,688
Total liabilities
26,852
6,759
3,777
–
323,752
8,268
369,408
37,388
325,388
1 Non-financial assets under ‘Trading assets’ represent commodities carried at fair value less costs to sell.
2 Items measured at amortised cost or cost includes, where applicable, fair value hedge accounting adjustments for the designated hedged risks.
3 Non-financial assets under 'Other assets' include investment properties carried at fair value.
4 The fair value of other liabilities carried at amortised cost excludes lease liabilities.
255
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
Directors’ Report
Governance
About
Financial Report
Note 37
Measurement categories of financial instruments continued
FINANCIAL INSTRUMENTS CARRIED AT
Statements of
financial
position total
FAIR VALUE OF ITEMS
CARRIED AT
FAIR VALUE
Amortised
Cost
Non-financial
instruments
Fair Value
Amortised
Cost
HFT
DFVTPL
FVTPL
FVOCI
$m
$m
$m
$m
$m
$m
$m
$m
$m
CONSOLIDATED 2023
Assets
Cash and bank balances
–
–
–
–
45,656
–
45,656
–
45,656
Cash collateralised lending and reverse
repurchase agreements
–
–
4,963
33,463
15,897
–
54,323
38,426
15,897
Trading assets5
14,475
–
–
–
–
2,406
16,881
16,881
–
Margin money and settlement assets
–
–
576
–
24,680
–
25,256
576
24,680
Derivative assets
34,906
–
1,208
–
–
–
36,114
36,114
–
Financial investments:
Equity
–
–
2,170
–
–
–
2,170
2,170
–
Debt6
–
–
721
17,262
1,721
–
19,704
17,983
1,721
Held for sale assets
–
59
–
82
780
921
59
82
Other assets7
–
2,394
4
4,411
3,629
10,438
3,327
4,411
Loan assets
–
–
1,110
549
156,913
–
158,572
1,659
156,364
interests in associates and joint
ventures:
Equity interests
–
–
–
–
–
4,610
4,610
–
–
Loans to associates and joint
ventures6
–
–
544
–
420
–
964
544
420
Property, plant and equipment and
right-of-use assets6
–
–
–
–
–
6,639
6,639
–
–
Intangible assets
–
–
–
–
–
3,827
3,827
–
–
Deferred tax assets
–
–
–
–
–
1,797
1,797
–
–
Total assets
49,381
–
13,745
51,278
249,780
23,688
387,872
117,739
249,231
Liabilities
Cash collateralised borrowing and
repurchase agreements
–
277
–
–
18,460
–
18,737
277
18,460
Trading liabilities
4,810
–
–
–
–
–
4,810
4,810
–
Margin money and settlement
liabilities
–
–
–
–
27,482
–
27,482
–
27,482
Derivative liabilities
29,055
–
3,735
–
–
–
32,790
32,790
–
Deposits
–
–
–
–
134,714
–
134,714
–
134,598
Held for sale liabilities
–
–
–
–
145
28
173
–
145
Other liabilities8
–
1,330
–
–
2,947
8,235
12,512
1,330
2,245
Issued debt securities and other
borrowings6
–
2,583
–
–
106,878
–
109,461
2,583
106,496
Deferred tax liabilities
–
–
–
–
–
196
196
–
–
Loan capital
–
–
–
–
12,891
–
12,891
–
12,806
Total liabilities
33,865
4,190
3,735
–
303,517
8,459
353,766
41,790
302,232
5 Non-financial assets under ‘Trading assets’ represent commodities carried at fair value less costs to sell.
6 Items measured at amortised cost or cost includes, where applicable, fair value hedge accounting adjustments for the designated hedged risks.
7 Non-financial assets under 'Other assets' include investment properties carried at fair value.
8 The fair value of other liabilities carried at amortised cost excludes lease liabilities.
256
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 37
Measurement categories of financial instruments continued
The following table contains information relating to the measurement categories of assets and liabilities of the Company. The description of
measurement categories are included in Note 44(vii) Financial instruments.
The methods and significant assumptions that have been applied in determining the fair values of assets and liabilities are disclosed in Note 38
Fair value of assets and liabilities.
FINANCIAL INSTRUMENTS CARRIED AT
Statements of
financial
position total
FAIR VALUE OF ITEMS
CARRIED AT
FAIR VALUE
Amortised
Cost
Non-financial
instruments
Fair Value
Amortised
Cost
HFT
DFVTPL
FVTPL
FVOCI
$m
$m
$m
$m
$m
$m
$m
$m
$m
COMPANY 2024
Assets
Derivative assets
1
–
–
–
–
–
1
1
–
Financial investments:
Debt
–
–
–
1,763
–
–
1,763
1,763
–
Other assets
–
–
–
–
–
22
22
–
–
Due from subsidiaries9
82
–
3,394
–
45,891
345
49,712
3,476
43,514
Investments in subsidiaries
–
–
–
–
–
33,805
33,805
–
–
Deferred tax assets
–
–
–
–
–
41
41
–
–
Total assets
83
–
3,394
1,763
45,891
34,213
85,344
5,240
43,514
Liabilities
Derivative liabilities
5
–
–
–
–
–
5
5
–
Other liabilities10
–
–
–
–
36
133
169
–
36
Due to subsidiaries11
768
–
–
–
5,344
1,145
7,257
768
5,344
Issued debt securities and other
borrowings
–
1,377
–
–
41,758
–
43,135
1,377
40,211
Loan capital
–
–
–
–
3,371
–
3,371
–
3,530
Total liabilities
773
1,377
–
–
50,509
1,278
53,937
2,150
49,121
9 Due from subsidiaries includes derivatives and trading positions classified as HFT and subordinated loan to subsidiaries classified as FVTPL. All other intercompany receivables are
carried at amortised cost. Non-financial receivables primarily represent internal tax balances.
10 Non-financial liabilities primarily represents provisions for tax payable and MEREP related obligations.
11 Due to subsidiaries includes derivatives and trading positions classified as held for trading; employee stock option related obligations and tax payables classified as non-financial
liabilities. All other intercompany payables are carried at amortised cost.
257
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
Directors’ Report
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Financial Report
Note 37
Measurement categories of financial instruments continued
FINANCIAL INSTRUMENTS CARRIED AT
Statements of
financial
position total
FAIR VALUE OF ITEMS
CARRIED AT
FAIR VALUE
Amortised
Cost
Non-financial
instruments
Fair Value
Amortised
Cost
HFT
DFVTPL
FVTPL
FVOCI
$m
$m
$m
$m
$m
$m
$m
$m
$m
COMPANY 2023
Assets
Derivative assets
3
–
–
–
–
–
3
3
–
Other assets
–
–
–
–
7
23
30
–
7
Due from subsidiaries12
112
–
3,438
–
44,952
315
48,817
3,550
42,121
Investments in subsidiaries
–
–
–
–
–
32,604
32,604
–
–
Deferred tax assets
–
–
–
–
–
3
3
–
–
Total assets
115
–
3,438
–
44,959
32,945
81,457
3,553
42,128
Liabilities
Derivative liabilities
5
–
–
–
–
–
5
5
–
Other liabilities13
–
–
–
–
20
221
241
–
20
Due to subsidiaries14
823
–
–
–
3,875
988
5,686
823
3,875
Issued debt securities and other
borrowings
–
973
–
–
38,082
–
39,055
973
35,425
Loan capital
–
–
–
–
3,362
–
3,362
–
3,451
Total liabilities
828
973
–
–
45,339
1,209
48,349
1,801
42,771
12 Due from subsidiaries includes derivatives and trading positions classified as HFT and subordinated loan to subsidiaries classified as FVTPL. All other intercompany receivables are
carried at amortised cost. Non-financial receivables primarily represent internal tax balances.
13 Non-financial liabilities primarily represents provisions for tax payable and MEREP related obligations.
14 Due to subsidiaries includes derivatives and trading positions classified as held for trading; employee stock option related obligations and tax payables classified as non-financial
liabilities. All other intercompany payables are carried at amortised cost.
258
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 38
Fair value of assets and liabilities
Fair value reflects the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
Quoted prices or rates are used to determine fair value where an active market exists. If the market for a financial and non-financial instrument
is not active, fair values are estimated using present value or other valuation techniques, using inputs based on market conditions prevailing at
the measurement date.
The values derived from applying these techniques are affected by the choice of valuation model used and the underlying assumptions made
regarding such inputs.
Items measured at fair value are categorised in their entirety, in accordance with the levels of the fair value hierarchy as outlined below.
Level 1:
unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2:
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
Level 3:
inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The appropriate fair value hierarchy level for an item is determined on the basis of the lowest level input that is significant to the fair value
measurement.
AASB 13 Fair Value Measurement requires the use of the price within the bid-offer spread that is most representative of fair value. Valuation
systems will typically generate mid-market prices. The bid-offer adjustment reflects the extent to which bid-offer costs would be incurred if
substantially all of the residual net exposure to market risks were closed, on a portfolio basis, using available hedging instruments.
The following methods and significant assumptions have been applied in determining the fair values of the following items carried at amortised
cost in the Statements of financial position.
Asset or liability
Valuation techniques, inputs and other significant assumptions
Cash and bank balances, Cash
collateralised lending and reverse
repurchase agreements, Cash
collateralised borrowing and repurchase
agreements
The fair value of cash and bank balance, cash collateralised lending and reverse repurchase agreements, cash
collateralised borrowing and repurchase agreements approximates their carrying amounts as these are highly
liquid and short-term in nature.
Loan assets and Deposits
The fair value of fixed rate loan assets and term deposits is determined with reference to changes in interest
rates and credit spreads.
The fair value of variable rate loan assets and deposits approximates their carrying amounts, subject to any
adjustment for changes in the credit spreads.
The fair value of demand deposits with no fixed maturity approximates their carrying amount as they are short-
term in nature or are payable on demand.
Financial investments
The fair value of liquid assets and other instruments maturing within three months are approximate to their
carrying amounts.
The fair value of fixed rate debt investments is estimated by reference to current market rates offered on similar
securities and the creditworthiness of the borrower.
The fair value of variable rate investments approximate their carrying amounts, subject to any adjustment for
changes in credit spreads.
Issued debt securities and other
borrowings, and Loan capital
The fair value of issued debt securities, borrowings and loan capital is based on quoted prices in active markets,
where available. Where quoted prices are not available the fair value is based on discounted cash flows using
rates appropriate to the term and incorporates changes in the Consolidated Entity’s own credit spread.
Margin money, settlement assets and
settlement liabilities, Other financial
assets and financial liabilities
The fair value of margin money, settlement assets, settlement liabilities, other financial assets and financial
liabilities approximate their carrying amounts.
259
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Note 38
Fair value of assets and liabilities continued
The following methods and significant assumptions have been applied in determining the fair values of following items carried at fair value in
the Statements of financial position.
Asset or liability
Valuation techniques, inputs and other significant assumptions
Trading assets, Trading liabilities
and Derivatives
Trading assets, including commodities and commodity contracts, trading liabilities, derivative financial
instruments and other transactions undertaken for trading purposes are measured at fair value by reference to
quoted prices in active markets, where available (for example, listed securities). If quoted prices in active markets
are not available, then fair values are estimated on the basis of other recognised valuation techniques.
The Consolidated Entity has incorporated the market implied funding costs for uncollateralised derivative
positions as a Funding Valuation Adjustment (FVA). FVA is determined by calculating the net expected exposures
at a counterparty level and applying the Consolidated Entity’s internal Treasury lending rates as an input into the
calculation.
Reverse repurchase and
repurchase agreements
Reverse repurchase and repurchase agreements, being collateralised financing arrangements, are measured at
fair value with reference to current market rates and giving considerations to the fair value of securities held or
provided as the collateral.
Financial investments
Financial investments classified as FVTPL or FVOCI are measured at fair value by reference to quoted prices in
active markets, where available (for example, listed securities). If quoted prices in active markets are not
available, the fair values are estimated on the basis of other recognised valuation techniques that maximise the
use of quoted prices and observable market inputs.
Loan assets and Issued debt securities and
other borrowings
Fair values of loans and issued debt securities are measured by reference to quoted prices in active markets,
where available. If quoted prices are not available in active markets, the fair values are estimated with reference
to current market rates.
Investment property
Investment property is measured at fair value based on the discounted future cash flow approach or the
capitalisation approach and is supported by recent market transactions, where available. The adopted discount
rates and capitalisation rates are determined based on industry expertise.
Other financial assets and financial
liabilities
Fair values of other financial assets and financial liabilities are based upon data or valuation techniques
appropriate to the nature and type of the underlying instruments.
For financial assets carried at fair value, in order to measure counterparty credit risk, an adjustment is incorporated into the valuation. Where
exposures are managed on a portfolio basis, the adjustment is calculated on a counterparty basis for those exposures. For financial liabilities
carried at fair value, in order to measure the Consolidated Entity’s own credit risk, an adjustment is incorporated into the valuations.
Where valuation techniques are used to determine fair values, they are validated and periodically reviewed by qualified personnel independent
of the area that created them. The output of a valuation technique is always an estimate of a fair value that cannot be measured with complete
certainty. Models are reviewed and calibrated periodically to test the outputs and reflect the prices from observable current market
transactions in same instrument or other available observable market data.
To the extent possible, models use only observable market data, however management is required to make assumptions for certain inputs that
are not supported by prices from observable current market transactions in the same instrument such as volatility and correlation.
260
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 38
Fair value of assets and liabilities continued
Assets and liabilities measured at amortised cost
The fair values calculated for financial instruments which are carried in the Statements of financial position at amortised cost are for disclosure
purposes only. The methods and assumptions applied to derive these fair values can require significant judgement by management and
therefore may not necessarily be comparable to other financial institutions. Where information on the significance of unobservable inputs to
the fair value measurement is not readily available, financial assets and financial liabilities measured at amortised cost are presented on the
basis that unobservable inputs are significant to the position.
The following table summarises the levels of the fair value hierarchy of financial assets and financial liabilities measured at amortised cost
except where the carrying value is approximately equal to the fair value.
Level 1
Level 2
Level 3
Total
$m
$m
$m
$m
CONSOLIDATED 2024
Assets
Loan assets
–
7,134
167,885
175,019
Total assets
–
7,134
168,363
175,019
Liabilities
Deposits
107,085
21,675
19,616
148,376
Issued debt securities and other borrowings
–
106,752
11,525
118,277
Loan capital
5,979
8,709
–
14,688
Total liabilities
113,064
137,136
31,141
281,341
CONSOLIDATED 2023
Assets
Loan assets
–
5,847
150,459
156,306
Total assets
–
5,847
150,459
156,306
Liabilities
Deposits
94,700
18,259
21,689
134,648
Issued debt securities and other borrowings
476
95,270
10,750
106,496
Loan capital
4,779
8,027
–
12,806
Total liabilities
99,955
121,556
32,439
253,950
The financial assets and liabilities measured at amortised cost in the Company as at 31 March 2024 and 31 March 2023 are predominantly
categorised as Level 2 in the fair value hierarchy except for loan capital which is classified as Level 1.
261
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Note 38
Fair value of assets and liabilities continued
Assets and liabilities measured at fair value
The following table summarises the levels of the fair value hierarchy for assets and liabilities that are recognised and measured at fair value in
the financial statements.
Level 1
Level 2
Level 3
Total
$m
$m
$m
$m
CONSOLIDATED 2024
Assets
Cash collateralised lending and reverse repurchase agreements
–
46,689
–
46,689
Trading assets
19,959
7,146
819
27,924
Margin money and settlement assets
–
275
–
275
Derivative assets
1
23,652
414
24,067
Financial investments
300
20,042
2,116
22,458
Held for sale and other assets1
–
4,269
1,240
5,509
Loan assets
–
427
1,442
1,869
Interests in associates and joint ventures
–
–
658
658
Total assets
20,260
102,500
6,689
129,449
Liabilities
Cash collateralised borrowing and repurchase agreements
–
82
–
82
Trading liabilities
4,835
209
–
5,044
Derivative liabilities
–
25,002
583
25,585
Held for sale and other liabilities
–
3,785
100
3,885
Issued debt securities and other borrowings
–
2,792
–
2,792
Total liabilities
4,835
31,870
683
37,388
CONSOLIDATED 2023
Assets
Cash collateralised lending and reverse repurchase agreements
–
38,426
–
38,426
Trading assets
8,296
7,781
804
16,881
Margin money and settlement assets
–
576
–
576
Derivative assets
13
35,305
796
36,114
Financial investments
5,373
12,918
1,862
20,153
Held for sale and other assets1
–
2,313
1,073
3,386
Loan assets
–
418
1,241
1,659
Loans to associates and joint ventures
–
–
544
544
Total assets
13,682
97,737
6,320
117,739
Liabilities
Cash collateralised borrowing and repurchase agreements
–
277
–
277
Trading liabilities
4,671
139
–
4,810
Derivative liabilities
8
31,998
784
32,790
Held for sale and other liabilities
–
1,330
–
1,330
Issued debt securities and other borrowings
–
2,583
–
2,583
Total liabilities
4,679
36,327
784
41,790
The Company does not hold financial instruments measured at fair value except for:
•
$1,763 million (2023: $nil million) financial investments which are Level 2 financial instruments,
•
$3,394 million (2023: $3,438 million) loan capital securities held in subsidiaries which are Level 3 financial instruments
•
$82 million (2023: $112 million) derivative assets and $768 million (2023: $823 million) derivative liabilities with subsidiaries and
•
$1,377 million (2023: $973 million) structured notes issued which are Level 2 financial instruments.
Fair value sensitivity of these intercompany balances to alternate assumptions and valuation inputs is not significant and hence not covered
under the sensitivity analysis disclosures.
1 Includes $927 million (2023: $917 million) of investment properties measured at fair value.
262
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 38
Fair value of assets and liabilities continued
Reconciliation of balances in Level 3 of the fair value hierarchy
The following table summarises the movements in Level 3 of the fair value hierarchy for assets and liabilities, measured at fair value on a
recurring basis by the Consolidated Entity.
Trading
assets
Financial
investments
Held for sale
and other
assets
Loan
assets
Interests in
associates and
joint ventures
Derivative financial
instruments (net
fair values)2
Held for sale
and other
liabilities
Total
$m
$m
$m
$m
$m
$m
$m
Balance as at 1 Apr 2022
535
2,047
1,016
566
359
(769)
–
3,754
Purchases, originations,
issuances and other additions
272
1,130
204
1,127
298
329
–
3,360
Sales, settlements and
repayments
(23)
(152)
(333)
(281)
(53)
219
–
(623)
Reclassification
–
–
86
–
(86)
–
–
–
Transfers into Level 33
222
57
56
2
–
158
–
495
Transfers out of Level 33
(180)
(1,295)
(5)
(65)
(85)
37
–
(1,593)
Fair value movements
recognised in the
income statement:
Net trading income/(loss)4
(22)
190
63
(62)
31
4
–
204
Other income/(loss)
–
(50)
(14)
(38)
(19)
12
–
(109)
Fair value movements
recognised in OCI
–
(65)
–
(8)
99
22
–
48
Balance as at 31 Mar 2023
804
1,862
1,073
1,241
544
12
–
5,536
Fair value gain/(loss) for the
financial year included in the
income statement for assets
and liabilities held at the end
of the financial year4
(16)
164
16
36
39
(22)
–
217
Balance as at 1 Apr 2023
804
1,862
1,073
1,241
544
12
–
5,536
Purchases, originations,
issuances and other additions
712
500
259
675
512
42
(126)
2,574
Sales, settlements and
repayments
(617)
(91)
(191)
(558)
(35)
(226)
21
(1,697)
Reclassification
–
(9)
201
–
(192)
–
–
–
Transfers into Level 33
10
36
–
4
69
30
–
149
Transfers out of Level 33
(182)
(653)
(169)
–
(106)
(64)
5
(1,169)
Fair value movements
recognised in the
income statement:
Net trading income/(loss)4
92
68
23
35
8
47
–
273
Other income/(loss)
–
368
44
50
(127)
–
–
335
Fair value movements
recognised in OCI
–
35
–
(5)
(15)
(10)
–
5
Balance as at 31 Mar 2024
819
2,116
1,240
1,442
658
(169)
(100)
6,006
Fair value gain/(loss) for the
financial year included in the
income statement for assets
and liabilities held at the end
of the financial year4
91
416
(1)
57
(95)
48
–
516
2 The derivative financial instruments in the table above are presented on a net basis. On a gross basis, derivative assets are $414 million (2023: $796 million) and derivative liabilities are
$583 million (2023: $784 million).
3 Assets and liabilities transferred in or out of Level 3 are presented as if the assets or liabilities were transferred at the beginning of the financial year.
4 The Consolidated Entity employs various hedging techniques in order to manage risks including foreign exchange risks in Level 3 positions. The gains and losses relating to such hedging
techniques, may include the purchase or sale of financial instruments measured at fair value that are classified as Level 1 or 2 positions or foreign currency denominated financial
instruments that are measured at amortised cost, that are not presented in the table above.
263
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Note 38
Fair value of assets and liabilities continued
Significant transfers between levels of the fair value hierarchy
During the financial year, the Consolidated Entity did not have significant transfers between Level 1 and Level 2.
Transfers into Level 3 were due to the lack of observable valuation inputs for certain investments and trading balances. Transfers out of Level 3
were principally due to valuation inputs becoming observable during the financial year. Financial assets reclassified into/out of the fair value
hierarchy disclosure due to recognition and measurement category changes, or where there have been changes in significant influence or
control but some form of interest in the assets are still retained, are also presented as transfers into/out of Level 3.
Unrecognised gains or losses
The best evidence of fair value at initial recognition is its transaction price, unless its fair value is evidenced by comparison with other
observable current market transactions in the same instrument or based on a valuation technique for which variables include only data from
observable markets (or when inputs from unobservable markets are insignificant). Where such alternative evidence exists, the Consolidated
Entity recognises profit or loss immediately when the asset or liability is recognised (‘day 1 profit or loss’). When significant unobservable inputs
are used to determine fair value, the day 1 profit or loss is deferred and is recognised in the income statement over the life of the transaction or
when the inputs become observable.
The table below summarises the deferral and recognition of profit or loss where a valuation technique has been applied in which significant
unobservable inputs are used.
CONSOLIDATED
2024
2023
$m
$m
Balance at the beginning of the financial year
272
76
Deferred gain on new transactions and other adjustments
190
231
Foreign exchange movements
(2)
23
Recognised in net trading income during the year
(172)
(58)
Balance at the end of the financial year
288
272
264
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 38
Fair value of assets and liabilities continued
Significant unobservable inputs
The following table contains information about the significant unobservable inputs used in Level 3 valuations, and the valuation techniques used
to measure fair value. The range of values represent the highest and lowest input used in the valuation techniques. The range does not reflect
the level of uncertainty regarding a particular input, but rather the different underlying characteristics of the relevant assets and liabilities.
RANGE OF INPUTS
Fair value of
assets
Fair value of
liabilities Valuation
technique(s)
Significant
unobservable inputs
Minimum
value
Maximum
value
$m
$m
CONSOLIDATED 2024
Interest rate and other products
3,661
69 Discounted cash flows
Discount rate – Credit spreads
5.7%
10.0%
Comparable transactions
Price in %
40.0
94.9
Commodities
1,203
608 Pricing model
Commodity margin curves
(230.9)
958.7
Pricing model
Correlation
(50.0%)
100.0%
Pricing model
Volatility and related variables
0.0%
212.1%
Equity and equity-linked products
1,825
6 Net Asset Value (NAV)
Fund’s NAV5
Pricing model
Earnings multiples
7.0x
16.7x
Total
6,689
683
CONSOLIDATED 2023
Interest rate and other products
3,268
16 Discounted cash flows
Discount rate – Credit spreads
5.5%
10.0%
Comparable transactions
Price in %
24.1%
95.4%
Commodities
1,523
759 Pricing model
Commodity margin curves
(242.0)
2,243.0
Pricing model
Correlation
(72.0%)
100.0%
Pricing model
Volatility and related variables
6.0%
600.0%
Equity and equity-linked products
1,529
9 Net Asset Value (NAV)
Fund’s NAV5
Pricing model
Earnings multiples
3.0x
14.8x
Total
6,320
784
The following information contains details around the significant unobservable inputs which are utilised to fair value the Level 3 assets
and liabilities.
Interest rate and other products
Discount rate – Credit spreads: Loans are generally valued using discount rates. Significant unobservable inputs may include interest rates and
credit spreads of counterparties and original issue discounts on primary debt issuances. Credit spread is the premium over a benchmark interest
rate required by the market to accept lower credit quality which increase the discount factor applied to future cash flows thereby reducing the
value of the asset. Credit spreads may be implied from the market prices and may not be observable in more illiquid markets.
Price in %: Comparable transactions are leveraged to price the fair value of the assets and liabilities and a percentage is applied to ascertain the
proportion of the transaction price that is comparable with the specific asset/liability. This price percentage is an unobservable input and
judgemental depending on the characteristics of the asset/liability.
5 The range of inputs in NAV is not disclosed as the diverse nature of the underlying investments results in a wide range of inputs.
265
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Note 38
Fair value of assets and liabilities continued
Commodities
Commodity margin curves: Certain commodities are valued using related observable products from the market and a margin is applied to the
observable market inputs to mitigate the impact of differences in the products. Judgement is involved in the calculation of these margin curves
depending on the quality of the commodity or delivery location and other economic conditions.
Correlation: Correlation is a measure of the relationship between the movements of input variables (i.e. how the change in one variable
influences a change in the other variable). It is expressed as a percentage between –100% and +100%, where 100% represents perfectly
correlated variables and –100% represents inversely correlated variables. Correlation is a key input into the valuation of derivatives with more
than one underlying (e.g. interest rates, credit spreads, foreign exchanges rates, inflation rates or equity prices) and is generally used to value
hybrid and exotic instruments.
Volatility: Volatility is a measure of the variability or uncertainty in returns for a given underlying input and is generally expressed as a
percentage, which represents an estimate of the amount a particular underlying instrument, parameter or index will change in value over time.
Volatility is an input in the valuation of derivatives containing optionality. Volatility is impacted by the underlying risk, term and strike price of
a derivative.
Correlations and volatilities are derived through the extrapolation of observable volatilities, recent transaction prices, quotes from other market
participants and historical data adjusted for current conditions.
Equity and equity-linked products
Unlisted equity securities are generally valued based on earnings or revenue multiples, referencing market transactions which are not directly
comparable or quantifiable and are adjusted as appropriate for current economic conditions. Other significant unobservable inputs may include
NAV and discount rates determined using inputs specific to the underlying investment and forecast cash flows and earnings/revenues of
investee entities.
Sensitivity analysis of valuations using unobservable inputs
The table below shows the sensitivity to reasonably possible alternative assumptions for Level 3 instruments whose fair values are determined
in whole, or in part, using unobservable inputs. The impact of the sensitivity of instruments which hedge the Level 3 positions but are classified
as Level 1 or 2 is not included in the table below.
FAVOURABLE CHANGES
UNFAVOURABLE CHANGES
Profit or loss
OCI
Profit or loss
OCI
$m
$m
$m
$m
CONSOLIDATED 2024
Product type
Commodities
214
–
(181)
–
Interest rate and other products
153
18
(172)
(23)
Equity and equity-linked products
174
–
(121)
–
Total
541
18
(474)
(23)
CONSOLIDATED 2023
Product type
Commodities
115
–
(104)
–
Interest rate and other products
122
11
(114)
–
Equity and equity-linked products
126
1
(93)
–
Total
363
12
(311)
–
The favourable and unfavourable changes from using reasonable possible alternative assumptions for the valuation of above product types
have been calculated by recalibrating the valuation model using stressed significant unobservable inputs of the Consolidated Entity’s range of
reasonably possible estimates.
266
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 39
Offsetting financial assets and financial liabilities
The Consolidated Entity and the Company presents financial assets and financial liabilities on a net basis in the Statements of financial position
when they meet the criteria described in Note 44(vii) Financial instruments. The following tables provide information on the impact of
offsetting of financial instruments in the Statements of financial position, as well as amounts subject to enforceable netting arrangements that
do not meet all the criteria for offsetting and therefore presented gross in the Statements of financial position. Enforceable netting
arrangements may allow for net settlement of specified contracts with a counterparty only in the event of default or other pre-determined
events, such that their potential effects on the Consolidated Entity’s and the Company’s financial position in that circumstance is to settle
these contracts as one arrangement.
The Consolidated Entity uses a variety of credit risk mitigation strategies in addition to netting and collateral arrangements, therefore amounts
presented in this note are not intended to represent the credit risk exposure of the entity. Refer to Note 36.1 Credit risk for information on
credit risk management.
EFFECT OF OFFSETTING ON THE STATEMENT OF
FINANCIAL POSITION
RELATED AMOUNTS
SUBJECT TO ENFORCEABLE
NETTING ARRANGEMENTS1
Net exposure
Gross amount2
Amounts
offset on the
Statements of
financial
position
Net amounts
reported on the
Statements of
financial position
Other
recognised
financial
instruments
Cash and
other
financial
collateral
Other collateral for
exposures not
subject to
enforceable netting
arrangements
$m
$m
$m
$m
$m
$m
$m
CONSOLIDATED 2024
Cash collateralised lending and reverse
repurchase agreements
58,728
(312)
58,416
(16)
(54,405)
(3,947)
48
Settlement assets3
17,157
(6,188)
10,969
(2,782)
–
–
8,187
Derivative assets
29,845
(5,778)
24,067
(12,593)
(4,059)
(60)
7,355
Other assets4
5,329
(460)
4,869
(211)
(127)
(29)
4,502
Total Assets
111,059
(12,738)
98,321
(15,602)
(58,591)
(4,036)
20,092
Cash collateralised borrowing and
repurchase agreements
(12,911)
312
(12,599)
16
10,357
59
(2,167)
Settlement liabilities3
(16,818)
6,188
(10,630)
2,777
(3)
–
(7,856)
Derivative liabilities
(31,363)
5,778
(25,585)
12,598
6,076
70
(6,841)
Other liabilities4
(4,308)
460
(3,848)
211
–
–
(3,637)
Total Liabilities
(65,400)
12,738
(52,662)
15,602
16,430
129
(20,501)
CONSOLIDATED 2023
Cash collateralised lending and reverse
repurchase agreements
54,632
(309)
54,323
(166)
(48,275)
(5,831)
51
Settlement assets3
18,872
(8,013)
10,859
(3,685)
–
–
7,174
Derivative assets
45,304
(9,190)
36,114
(19,919)
(6,397)
(94)
9,704
Other assets4
4,411
(1,147)
3,264
(106)
(42)
(50)
3,066
Total Assets
123,219
(18,659)
104,560
(23,876)
(54,714)
(5,975)
19,995
Cash collateralised borrowing and
repurchase agreements
(19,046)
309
(18,737)
166
14,707
249
(3,615)
Settlement liabilities3
(18,386)
8,013
(10,373)
3,843
–
–
(6,530)
Derivative liabilities
(41,980)
9,190
(32,790)
19,761
6,330
149
(6,550)
Other liabilities4
(2,518)
1,147
(1,371)
106
–
–
(1,265)
Total Liabilities
(81,930)
18,659
(63,271)
23,876
21,037
398
(17,960)
1 Related amounts not offset have been limited to the net amount presented in the Statements of financial position so as not to include the effect of over-collateralisation.
2 Gross amounts for assets include $3,947 million (2023: $5,831 million) of cash collateralised lending and reverse repurchase agreements, $2,201 million (2023: $1,408 million) of
settlement assets, $907 million (2023: $1,804 million) of derivative assets, and $4,455 million (2023: $3,054 million) of commodity related receivables not subject to enforceable
netting arrangements. Gross amounts for liabilities include $59 million (2023: $249 million) of cash collateralised borrowing and repurchase agreements, $2,027 million (2023: $1,675
million) of settlements liabilities, $1,165 million (2023: $1,522 million) of derivative liabilities, and $3,264 million (2023: $1,001 million) of commodity related payables not subject to
enforceable netting arrangements.
Amounts not subject to enforceable netting arrangements are where there are no master netting agreements or enforeceability of agreement is uncertain under bankruptcy laws in
some countries or industries.
3 Excludes margin money assets and liabilities presented under Note 8 Margin money and settlement assets and Note 20 Margin money and settlement liabilities respectively on the
Statements of financial position.
4 Other assets and liabilities are comprised of commodity related receivables and payables, respectively.
267
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Note 39
Offsetting financial assets and financial liabilities continued
EFFECT OF OFFSETTING ON THE STATEMENT OF
FINANCIAL POSITION
RELATED AMOUNTS
SUBJECT TO ENFORCEABLE
NETTING ARRANGEMENTS5
Net
exposure
Gross amount
Amounts
offset on the
Statements
of financial
position
Net amounts
reported on the
Statements of
financial
position
Other
recognised
financial
instruments
Cash and
other
financial
collateral
Other collateral for
exposures not
subject to
enforceable
netting
arrangements
$m
$m
$m
$m
$m
$m
$m
COMPANY 2024
Due from subsidiaries6
49,644
(925)
48,719
(2,717)
–
–
46,002
Due to subsidiaries6
(7,038)
925
(6,113)
2,717
675
–
(2,721)
COMPANY 2023
Due from subsidiaries6
50,088
(2,247)
47,841
(2,335)
–
–
45,506
Due to subsidiaries6
(6,945)
2,247
(4,698)
2,335
696
–
(1,667)
5 Related amounts not offset have been limited to the net amount presented in the Statements of financial position so as not to include the effect of over-collateralisation.
6 Excludes margin money and non-financial assets of $993 million (2023: $976 million) and liabilities of $1,144 million (2023: $988 million) presented under Due from subsidiaries and Due
to subsidiaries respectively on the Statements of financial position.
268
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 40
Pledged assets and transfers of financial assets
Pledged assets
Assets pledged as security for liabilities include the following:
•
securities and commodities included under trading assets and off balance sheet collateral securities pledged for repurchase transactions,
stock lending arrangements, trading liabilities and derivative margining. These transactions are governed by standard industry agreements
•
loan assets held by the Consolidated SEs provided as collateral against issued debt securities and other borrowings or repurchase
transactions
•
other types of financial and non-financial assets provided as collateral for borrowings and issued debt securities.
The table below represents assets that have been pledged as security for liabilities.
CONSOLIDATED
2024
2023
$m
$m
On Balance Sheet assets
Cash and bank balances1
556
657
Trading assets
9,102
3,728
Financial investments
305
947
Loan assets2
31,507
33,950
Margin money and settlement assets
594
403
Property, plant and equipment1
1,181
781
Intangible assets
1,193
1,006
Other assets1
1,640
610
Total On Balance Sheet assets pledged for liabilities
46,078
42,082
Off Balance Sheet assets
Securities and commodities3
25,050
23,454
Total On and Off Balance Sheet assets pledged for liabilities
71,128
65,536
1 Certain balances available for immediate sale have been presented as held for sale on Statement of Financial Position.
2 Includes $19,252 million (2023: $19,862 million) held by Consolidated SEs, which are available as security to holders of notes issued by consolidated securitisation vehicles. Additionally,
includes $11,870 million (2023: $13,972 million) held by Consolidated securitisation vehicles wherein internally held bonds have been pledged against repurchase agreement liabilities.
3 Represents fair value of securities and commodities repledged by the Consolidated Entity out of the non-cash collateral received of $86,624 million (2023: $75,540 million) as part of
Cash collateralised lending and reverse repurchase agreements and of $2,730 million (2023: $2,521 million) as part of derivative margining arrangements. Refer Cash collateralised
lending and reverse repurchase agreements and Derivative instruments under Note 36.1 Credit risk – Collateral and credit enhancements held for further details.
269
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Note 40
Pledged assets and transfers of financial assets
continued
Transfer of financial assets
The Consolidated Entity may enter into transactions in the normal
course of business that transfer risks and rewards of financial
assets recognised in the Consolidated Entity’s Statements of
financial position to other entities. Depending on the criteria
discussed in Note 44(vii) Financial instruments, the Consolidated
Entity may be unable to derecognise the transferred asset, be able
to derecognise the transferred assets in full or continue to
recognise the asset to the extent of its continuing involvement.
Transferred financial assets that are derecognised
When financial assets are derecognised, some continuing
involvement may be retained in the assets in the form of liquidity
support, financial guarantees, certain derivatives or retention of
part of securitisation interests. For the financial years ended 31
March 2024 and 31 March 2023, there were no material transfers
of financial assets where the Consolidated Entity has had
continuing involvement.
Transferred financial assets that are not derecognised
The Consolidated Entity did not derecognise any financial assets to
the extent of continuing involvement in the years ended 31 March
2024 and 31 March 2023. The following transactions typically
result in the transferred assets continuing to be recognised
in full.
Repurchase and securities lending agreements
Securities and commodities sold under an agreement to
repurchase and securities subject to lending agreements continue
to be recognised in the Statements of financial position and an
associated liability is recognised for the consideration received.
Where securities are transferred in return for the loan of other
securities or on an unsecured basis in return for a fee, the
transferred asset continues to be recognised in full. There is no
associated liability as the securities received are not recognised on
the balance sheet. The Consolidated Entity is unable to use, sell or
pledge the transferred assets for the duration of the transaction
and remains exposed to interest rate risk and credit risk on
these assets.
In certain arrangements the transferee cannot otherwise sell or
pledge the transferred securities, however, the assets may be
substituted if the required collateral is maintained.
Other financial transfers not derecognised
Includes loans and leases sold or lent to an external funder where
the Consolidated Entity retains full economic exposure. In such
instances, the Consolidated Entity has a right to receive cash from
the lessee and an obligation to pay those cash flows to the
external funder.
Also, includes trading assets and financial investments that have
been transferred as margin against future trades. The
Consolidated Entity is unable to use, sell or pledge the transferred
assets for the duration of open position and remains exposed to
interest rate risk and credit risk on these assets.
270
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 40
Pledged assets and transfers of financial assets continued
The following tables provide a summary of financial assets that have been transferred in such a way that part or all of the transferred financial
assets do not qualify for derecognition, together with the associated liabilities.
FOR THOSE LIABILITIES THAT ONLY HAVE RECOURSE
TO THE TRANSFERRED ASSETS
Carrying amount
of transferred
assets
Carrying amount
of associated
liabilities
Fair value of
transferred assets
Fair value of
associated
liabilities
Net
fair value
$m
$m
$m
$m
$m
CONSOLIDATED 2024
Financial assets not derecognised due to
repurchase and securities lending agreements:
Trading assets4
7,407
(247)
–
–
–
Loan assets5
11,870
(9,556)
–
–
–
Other financial assets not derecognised:
Trading assets
831
–
–
–
–
Financial investments
305
–
–
–
–
Loan assets
369
(369)
369
(369)
–
Total financial assets not derecognised
20,782
(10,172)
369
(369)
–
CONSOLIDATED 2023
Financial assets not derecognised due to
repurchase and securities lending agreements:
Trading assets4
2,122
(459)
–
–
–
Financial investments
742
(740)
–
–
–
Loan assets5
13,972
(11,280)
–
–
–
Financial assets not derecognised due to total
return/asset swaps:
Financial investments
205
(189)
–
–
–
Other financial assets not derecognised:
Trading assets
308
–
–
–
–
Loan assets
116
(116)
116
(116)
–
Total financial assets not derecognised
17,465
(12,784)
116
(116)
–
There were no material transfers of financial assets for the Company during the financial years ended 31 March 2024 and 31 March 2023.
4 Includes $7,140 million (2023: $1,622 million) assets transferred under return for the loan of other securities where there is no associated liability on the Consolidated Entity's
statement of financial position. The transferee has the right to sell or re-pledge the entire value of securities received.
5 Represents the fair value of the SEs securitised bonds internally held by the Company which are pledged against repurchase agreement liabilities.
271
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Note 41
Audit and other services provided by PricewaterhouseCoopers
During the financial year, PricewaterhouseCoopers (PwC) and its network firms, the auditor of the Consolidated Entity and the Company, earned
the following remuneration.
CONSOLIDATED
2024
20231
$’000
$’000
Audit of the Group and controlled entities:2
PwC – Australia
29,088
30,007
Network firms of PwC Australia
25,215
23,719
Total audit services
54,303
53,726
Audit-related services:3
PwC – Australia
10,806
22,405
Network firms of PwC Australia
1,070
1,142
Total audit-related services
11,876
23,547
Total audit and audit-related services
66,179
77,273
Taxation services:
PwC – Australia
210
584
Network firms of PwC Australia
966
1,372
Total taxation services
1,176
1,956
Other services:
PwC – Australia
1,179
1,331
Network firms of PwC Australia
44
468
Total other services
1,223
1,799
Total other non-audit services
2,399
3,755
Total remuneration paid to PwC for audit, audit-related and other non-audit services4
68,578
81,028
Use of PwC’s services for engagements other than audit is restricted in accordance with the Consolidated Entity’s Audit and Assurance
Independence Policy.
1 Comparative information has been restated to conform to the presentation in the current year.
2 Prior period includes additional fees of $809 thousand (2022: $1,955 thousand) for PwC Australia and $966 thousand (2022: $2,187 thousand) for network firms of PwC Australia that
related to the year ended 31 March 2023 but were incurred during the 2024 financial year.
3 Audit related services consist of assurance and related services traditionally performed by the independent external auditor of the Consolidated Entity. While in addition to their
statutory audit role, these services are consistent with the role of the external auditor and include statutory assurance and other assurance services such as engagements required
under regulatory, prudential, legislative or financing programmes as well as reviews requested by regulators and other agreed upon procedures.
4 An additional amount of $24,472 thousand in 2023 (2022: $21,295 thousand) was paid or payable to PricewaterhouseCoopers as fees for audit services for Macquarie-managed funds
that are not a part of the Consolidated Entity.
272
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 42
Acquisitions and disposals of subsidiaries and
businesses
Acquisitions of subsidiaries and businesses
The Consolidated Entity's acquisitions include subsidiaries and
businesses acquired as part of core business operations as well
as subsidiaries and businesses held for investment and resell
purposes.
Core business operations
During the current year and prior financial year, there were no
material business or subsidiaries held for core business operations
were acquired.
Held for investment purposes
During the year ended 31 March 2024, subsidiaries and businesses
acquired or consolidated primarily includes Camin Cargo Control
Holdings, Inc., Adept Technology Group, Fidus Information Security
Limited, Treglown Topco Limited, Insight Analytics Solutions
Holdings Limited, Net Technical Solutions Limited and Excel
Telesonic India Private Limited for a total consideration of
$761 million.
On acquisition, net assets of $216 million, non-controlling
interests of $14 million and goodwill of $559 million were
recognised in the Statement of Financial Position. The purchase
price allocations for the business combinations are provisional as
at 31 March 2024.
During the year ended 31 March 2023, subsidiaries and businesses
acquired or consolidated primarily includes Macquarie Real Estate
Partners SCSp, Treaty Oak Clean Energy, LLC, Cowal Agriculture
Unit Trust, Victorium Consortium Trust and OGL Computer
Support Holdings for a total consideration of $674 million.
On acquisition, net assets of $1,877 million, non-controlling
interests of $1,364 million and goodwill of $161 million were
recognised in the Statement of Financial Position.
Disposals of subsidiaries and businesses
The Consolidated Entity's disposal include subsidiaries and
businesses which form part of core business operations as well as
subsidiaries and businesses held for investment and resell
purposes.
Core business operations
During the current year and prior financial year, there were no
material business or subsidiaries held for core business operations
were disposed of or deconsolidated.
Held for investment purposes
During the year ended 31 March 2024, subsidiaries and businesses
disposed of or deconsolidated primarily includes MPF Vision
HoldCo LLC, MPF Vision Parent LLC & Camin Cargo Control
Holdings, Inc., Fibreconnect Italian Holding S.P.A., FibreConnect
S.P.A, MAM Alliance Partners Infrastructure Fund L.P., Blue Leaf
Energy Asia Pte Ltd, Treaty Oak Clean Energy HoldCo, LLC, Aula
Energy Assets Hold Trust, Cowal Agriculture Unit Trust, Altius
Bidco GmbH, Telemachus Holdings limited, Gana Energy Co. Ltd,
Excel Telesonic India Private Limited, Macquarie Real Estate
Partners SCSp and Macquarie Sustainable Global Listed
Infrastructure Fund for a total transaction value of $1,833 million.
Loss of control resulted in deconsolidation of net assets of $2,240
million and non-controlling interest of $710 million, resulting in
the recognition of investment income (gain on interests in
business and subsidiaries) of $303 million in the income
statement.
During the year ended 31 March 2023, subsidiaries and businesses
disposed of or deconsolidated primarily includes Collfield
Investments sp. Z.o.o, Nordic Renewable Power (Holdings) AB,
Nordic Renewable Power AB, Lake Wind AB, Tysvaer Vindpark AS,
Buheii Vindkraft AS and Victorium Consortium Trust for a total
transaction value of $1,002 million.
Loss of control resulted in deconsolidation of net assets of $1,692
million and non-controlling interest of $1,071 million, resulting in
the recognition of investment income (gain on interests in
business and subsidiaries) of $381 million in the income
statement.
Note 43
Events after the reporting date
There were no material events subsequent to 31 March 2024 and
up until the authorisation of the financial statements for issue,
that have not been disclosed elsewhere in the financial
statements.
273
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Note 44
Material accounting policies
(i) Principles of consolidation
Subsidiaries
The consolidated Financial Report reflects the financial
performance and financial position of the Consolidated Entity.
Subsidiaries are all those entities (including structured entities)
which the Consolidated Entity controls. The Consolidated Entity
controls an entity where it has:
•
power to direct the relevant activities
•
exposure, or rights, to variable returns, and
•
the ability to utilise power to affect the entity’s returns.
The determination of control is based on current facts and
circumstances and is continuously assessed. The Consolidated
Entity has power over an entity when it has existing substantive
rights that provide it with the current ability to direct the entity’s
relevant activities, being those activities that significantly affect
the entity’s returns. The Consolidated Entity also considers the
entity’s purpose and design. If the Consolidated Entity determines
that it has power over an entity, the Consolidated Entity then
evaluates its exposure, or rights, to variable returns by considering
the magnitude and variability associated with its economic
interests.
All variable returns are considered in making that assessment
including, but not limited to, returns from debt or equity
investments, guarantees, liquidity arrangements, variable fees and
certain derivative contracts. In certain instances, the Consolidated
Entity has determined that it controls entities that it has less than
half of the voting rights on the basis of its ability to direct the
relevant activities of those entities.
Structured entities
Structured Entities (SEs) are those entities that have been
designed so that voting or similar rights are not the dominant
factor in deciding who controls the entity, such as when voting
rights relate to administrative tasks only and the relevant activities
of the SE are directed by means of contractual arrangements.
When assessing whether the Consolidated Entity controls (and
therefore consolidates) a SE, judgement is required as to whether
the Consolidated Entity has power over the relevant activities as
well as exposure, or rights, to variable returns of the SE.
Where the Consolidated Entity has power over the SE’s relevant
activities, has assessed that its exposure to variable returns
(including through the residual risk associated with its involvement
in SEs) is sufficient, and is able to affect its returns, the SE is
consolidated. Refer to Note 34 Structured entities for further
information related to both consolidated and unconsolidated SE's.
Consolidation
The effects of all transactions between subsidiaries in the
Consolidated Entity are eliminated in full. Unrealised losses are
eliminated in the same manner as unrealised gains but only to the
extent that there is no evidence of impairment.
Non-controlling interests (NCI) in the results and equity of
subsidiaries are shown separately in the consolidated Income
statements, consolidated Statements of comprehensive income,
consolidated Statements of changes in equity and consolidated
Statements of financial position and are determined on the
basis of the Consolidated Entity’s present ownership interest in
the entity.
Where control of an entity was obtained during the financial year,
its results are included in the consolidated Income statements
from the date on which control was obtained. Where control of an
entity ceased during the financial year, its results are included for
that part of the financial year during which control existed.
The Consolidated Entity determines the dates of obtaining control
(i.e. acquisition date) and losing control (i.e. disposal date) of
another entity based on an assessment of all pertinent facts and
circumstances that affect the ability to direct the relevant
activities and the extent of the Consolidated Entity’s exposure to
the entity’s variable returns. Facts and circumstances that have
the most impact include the contractual arrangements agreed
with the counterparty, the manner in which those arrangements
are expected to operate in practice and whether regulatory
approval is required (including the nature of such approval). The
acquisition or disposal date does not necessarily occur when the
transaction is closed or finalised under law.
Subsidiaries held by the Company are carried in its financial
statements at cost less accumulated impairment.
Interests in associates and joint ventures
Associates and joint ventures are entities over which the
Consolidated Entity has significant influence or joint control.
Existing ownership interests (including in substance ownership
interests) in associates and joint ventures are accounted for under
the equity method. In-substance ownership interests are interests
that are substantially similar to an investee’s ordinary shares.
Equity accounting of the ownership interests is applied from the
date that the Consolidated Entity has significant influence or joint
control and ceases when the Consolidated Entity no longer has
significant influence or joint control.
The Consolidated Entity determines the dates of obtaining or
losing significant influence or joint control of another entity based
on an assessment of all pertinent facts and circumstances that
affect the ability to significantly influence the financial and
operating policies or jointly control the relevant activities of that
entity. Facts and circumstances that have the most impact include
the contractual arrangements agreed with the counterparty, the
manner in which those arrangements are expected to operate in
practice, and whether regulatory approval is required (including the
nature of such approval). The acquisition or disposal date does
not necessarily occur when the transaction is closed or finalised
under law.
274
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 44
Material accounting policies continued
(i) Principles of consolidation continued
The equity method of accounting is applied in the consolidated
Financial Report and requires the recognition of the Consolidated
Entity’s share of its associates’ and joint ventures’ post acquisition
profits or loss (including impairments of the associates’ or joint
ventures’ assets) in the consolidated income statement, and the
share of the post-acquisition movements in other comprehensive
income in the consolidated statement of comprehensive income.
Dividends received by the Consolidated Entity from associates and
joint ventures are recognised as a reduction in the carrying amount
of the investment. Transactions reported directly in equity
(besides those reflected in other comprehensive income) are
accounted for by the Consolidated Entity in accordance with the
substance of the transaction and whether the transaction is
dilutive to the Consolidated Entity’s ownership interest. Where the
transaction is dilutive, the impact is recorded as part of the
Consolidated Entity’s share of profits or losses of associates and
joint ventures.
Equity accounting of losses is restricted to the Consolidated
Entity’s interests in its associate or joint venture, unless the
Consolidated Entity has an obligation or has made payment on
behalf of the entity.
Long-term interests in an associate or joint venture, to which the
equity method is not applied but in-substance form part of the net
investment in the associate or joint venture, are accounted for in
accordance with the Consolidated Entity’s financial instruments’
accounting policies, which includes accounting for expected credit
losses, where applicable. Subsequently, the loss allocation and
impairment requirements in AASB 128 Investments in Associates
and Joint Ventures are applied to long-term interests.
Where necessary, accounting policies of associates and joint
ventures have been changed to ensure consistency with those
adopted by the Consolidated Entity.
At the end of each reporting period, management reviews the
Consolidated Entity’s investments in associates and joint ventures
for indicators of impairment. Where there is an indicator of
impairment, the carrying amount of the investment is tested for
impairment by comparing its recoverable amount with its carrying
value. Impairment losses and reversals are recognised in other
impairment charges/reversals. A reversal of a previously
recognised impairment loss is recognised only to the extent that
the investment’s carrying value does not exceed the carrying
amount that would have been determined (including consideration
of any equity accounted losses) if no impairment loss had been
recognised.
Interests in associates and joint ventures are classified as held for
sale when the Consolidated Entity determines that the interest will
be recovered principally through a sale transaction rather than
through continuing use. Equity accounting is suspended when the
interest is classified as held for sale.
On disposal of an investment in an associate or a joint venture, the
difference between the sales consideration, any retained interest
and the carrying value is recognised as a gain or loss in investment
income as part of other operating income and charges together
with any gains and losses in OCI that is related to the associate or
joint venture.
Changes in ownership interests
When acquiring additional interests:
•
of a financial asset (such that it becomes an associate, joint
venture or subsidiary), or
•
in an investment in an associate or joint venture (such that it
becomes a subsidiary), where the underlying entity constitutes
a business,
previously held interests are revalued to their fair value and any
gain or loss is recognised in investment income as part other
operating income and charges.
Similarly, when selling ownership interests of a subsidiary, where
the underlying constitutes a business (such that control is lost), or
an investment in an associate or joint venture (such that it
becomes a financial asset), retained ownership interests are
revalued to their fair value and any gain or loss is recognised in
investment income as part of other operating income and charges.
Retained ownership interests are not revalued where the sale
represents a contribution to an associate or joint venture, nor in
certain circumstances where the partial sale of an investment in
associate or joint venture, which continues to be equity accounted
post the sale, is affected through a holding company subsidiary.
Increases and decreases in the Consolidated Entity’s interest in a
subsidiary (that do not result in the loss of control) are accounted
for directly within equity. Increases in the Consolidated Entity’s
ownership interest in an associate or joint venture are accounted
for as an increase in the carrying value of the interest in associate
or joint venture. The difference between the reduction in the
Consolidated Entity’s interest in an associate or joint venture that
remains an associate or joint venture and the fair value of
consideration received is accounted for as a gain or loss within
investment income as part of other operating income and charges.
A proportionate amount of associated OCI is reclassified to profit
or loss, or reclassified within equity, as would otherwise be
required on disposal of the underlying position.
(ii) Business combinations
Distinguishing between whether assets or a business is acquired
involves judgement. The Consolidated Entity identifies a business
where an acquired integrated set of activities and assets includes
an economic resource (input) and a substantive process that
together significantly contribute to the ability to provide goods or
services to customers, generate investment income or other
income from ordinary activities (outputs).
On a transaction-by-transaction basis, the Consolidated Entity
may use a practical expedient to determine that an acquired set of
activities is not a business. Under this assessment, the transaction
is accounted for as an asset acquisition if substantially all of the
fair value of the gross assets acquired is concentrated in a single
identifiable asset or group of similar identifiable assets.
275
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Material accounting policies continued
(ii) Business combinations continued
Business combinations are accounted for using the acquisition
method. The consideration exchanged is measured as the
aggregate of the acquisition-date fair values of assets transferred,
equity instruments issued, and liabilities incurred. Transaction
costs of a business combination are recognised directly in the
consolidated income statement as part of other operating
expenses.
Identifiable assets acquired, and liabilities and contingent liabilities
assumed in a business combination are measured at fair value on
the acquisition date. The Consolidated Entity elects, on a
transaction-by-transaction basis, to initially measure NCI either at
fair value or at the NCI’s proportionate share of the fair values of
the identifiable assets and liabilities.
Goodwill is measured as the excess of the consideration
exchanged, recognised NCI, and the fair value of previously held
equity interests over the fair value of the identifiable net assets of
the business acquired and is recognised as part of Intangible assets
in the Statements of financial position. Goodwill is subsequently
measured at cost less accumulated impairment.
If the consideration is less than the Consolidated Entity’s share of
the fair value of the identifiable net assets of the business
acquired, the difference is recognised in investment income as
part of other operating income and charges, but only after a
reassessment of the identification and measurement of the net
assets acquired.
Contingent consideration that is dependent on any subsequent
event is measured at fair value with changes in its fair value
recognised in investment income as part of other operating
income and charges.
Where settlement of any part of cash consideration is deferred,
the amounts payable in the future are discounted to their present
values as at the acquisition date. The discount rate used is the
Consolidated Entity’s incremental borrowing rate, being the rate at
which a similar borrowing could be obtained from an independent
financier under comparable terms and conditions.
(iii) Foreign currency translation
Functional and presentation currency
The functional currency of each entity (including branches) in the
Consolidated Entity is determined as the currency of the primary
economic environment in which the entity operates. The
Consolidated Entity and the Company’s financial statements are
presented in Australian dollars (the presentation currency), which
is also the Company’s functional currency.
Transactions and balances
At initial recognition, a foreign currency transaction is translated
into the entity’s functional currency using the spot exchange rate
between the functional currency and the foreign currency at the
date of the transaction.
At the end of each reporting period:
•
foreign currency monetary assets and liabilities are translated
using the closing exchange rate
•
non-monetary items (including equity) measured in terms of
historical cost in a foreign currency remain translated using the
spot exchange rate at the date of the transaction, and
•
non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date
that the fair value was measured.
Foreign exchange gains and losses arising from the settlement or
translation of monetary items, or non-monetary items measured
at fair value, are recognised in net trading income with one
exception being where such monetary items are designated as
hedging instruments in qualifying cash flow hedge or net
investment hedge relationships. In such circumstances, the foreign
exchange gains and losses may be deferred in OCI to the extent
the hedge is effective (refer to Note 35 Hedge accounting and
Note 44(x) Derivative instruments and hedging activities).
Subsidiaries and other entities
The results and financial position of all entities that have a
functional currency other than Australian dollars are translated
into Australian dollars as follows:
•
assets and liabilities for each Statements of financial position
presented are translated at the closing exchange rate at the
date of that Statements of financial position. Goodwill and fair
value adjustments arising on the acquisition of a foreign
operation are treated as assets and liabilities of the foreign
operation and are translated at the closing exchange rate
•
income and expenses for each income statement are
translated at actual or average exchange rates at the dates of
the transactions
•
all resulting exchange differences are recognised in OCI within a
separate component of reserves, being the foreign currency
translation reserve (FCTR).
Foreign currency gains and losses on intragroup loans are
recognised in the income statement except where the loan is in
substance part of the Consolidated Entity’s net investment in the
foreign operation, in which case the foreign currency gains and
losses are recognised in the Consolidated Entity’s FCTR.
The exchange gains or losses recognised in FCTR are reclassified to
the income statement or reattributed within equity as follows:
•
if there is a disposal of a foreign operation, then the
accumulated FCTR is reclassified from OCI to investment
income within other operating income and charges
•
if there is a partial disposal of a foreign operation that is an
associate or joint arrangement, without loss of significant
influence or joint control, then a proportionate share of the
accumulated FCTR is reclassified to investment income
•
if there is a partial disposal of a foreign operation that is a
subsidiary, without loss of control, then a proportionate share
of the accumulated FCTR is reattributed within equity to non-
controlling interests.
276
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 44
Material accounting policies continued
(iv) Revenue and expense recognition
Net interest income
Interest income and interest expense (with the exception of
borrowing costs that are capitalised on a qualifying asset which is
not measured at fair value) are recognised using the effective
interest rate (EIR) method for financial assets and financial
liabilities carried at amortised cost, and debt financial assets
classified as at fair value through OCI. The EIR method calculates
the amortised cost of a financial instrument at a rate that
discounts estimated future cash receipts or payments through the
expected life of the financial instrument to the gross carrying
amount of the financial asset or liability. Fees and transaction
costs that are integral to the lending arrangement are recognised
in interest income or interest expense, as applicable, over the
expected life (or, when appropriate, a shorter period) of the
instrument in accordance with the EIR method.
When the estimates of payments or receipts of a financial
instrument are subsequently revised, the carrying amount is
adjusted to reflect the actual or revised cash flows with the
remeasurement recognised as part of interest income (financial
assets) or interest expense (financial liabilities).
The calculation of the EIR does not include ECL, except for financial
assets which on initial recognition are classified as purchased or
originated credit impaired (POCI). Interest income on these assets
is determined using a credit adjusted EIR by discounting the
estimated future cash receipts, including credit losses expected at
initial recognition, through the expected life of the financial
instrument to the net carrying amount of the financial asset.
Interest income on financial assets that are subsequently classified
as credit-impaired (Stage III), is recognised by applying the EIR to
the amortised cost carrying value (being the gross carrying value
after deducting the impairment loss). Interest income and expense
on financial assets and liabilities that are classified as FVTPL is
accounted for on a contractual rate basis and included in Other
Interest Income.
Fee and commission income
Revenue earned by the Consolidated Entity from its contracts with
customers primarily consists of the following categories of fee and
commission income:
Base and other asset management fees, and performance fees
The Consolidated Entity earns base and other asset management
and performance fees for providing asset management services
for listed and unlisted funds, managed accounts and co-
investments arrangements. It has been determined that the
provision of asset management services is typically a single
performance obligation.
Base management fees are recognised over the life of the contract
as the asset management services are provided. Any associated
performance fees are deemed to be a variable component of the
same asset management service and are recognised only when it is
highly probable that the performance hurdles are met, and a
significant reversal of cumulative fees recognised to date will not
occur. Determining the amount and timing of performance fees to
be recognised involves judgement, the use of estimates (including
management estimates of underlying asset values) and
consideration of a number of criteria relating to both the fund or
managed account in which the asset(s) are held, as well as the
underlying asset(s), such as:
•
the extent to which performance fee liabilities have been
accrued by the fund or managed account to date or
consideration of the current valuation case of the assets in
relation to the related performance fee hurdle rate
•
the proportion of assets realised and returns on those assets
•
nature of remaining underlying fund or managed account’s
assets and potential downside valuation risks on each
•
time remaining until realisation of the assets and the fund’s life
or asset management services’ timeline
•
consideration of the ability to dispose of the asset, including
any barriers to divest.
Mergers and acquisitions, advisory and underwriting fees
The Consolidated Entity earns revenue through its role as advisor
on corporate transactions as well as through its role as manager
and underwriter of equity and debt issuances. The revenue from
these arrangements is recognised at a point in time, and when it
has been established that the customer has received the benefit of
the service such that the performance obligation is satisfied. For
advisory services this is typically at the time of closing the
transaction.
Where mandates contain rights to invoice upon reaching certain
milestones, the Consolidated Entity assesses whether distinct
services have been transferred at these milestones and
accordingly recognises revenue. If not, the fee recognition will be
deferred until such time as the performance obligation has been
completed. Management of capital raisings and underwriting of
debt or equity capital raisings are each considered distinct
performance obligations that are typically satisfied on the
allocation date of the underwritten securities.
Brokerage and other trading-related fee income
The Consolidated Entity enters into contracts with customers to
act as an agent to buy and sell securities. The brokerage and
commission income related to this service is recognised on trade
date and is presented net of any rebates.
Other fee and commission income
Other fee and commission income includes fees earned on a range
of banking products and services platforms, wealth services, credit
cards, structuring fees, lending services, stock borrow and lending
activities and income on structured products which is recognised
when the performance obligation is satisfied.
277
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Material accounting policies continued
(iv) Revenue and expense recognition continued
Net operating lease income
Operating lease income is recognised on a straight-line basis over
the lease term and is presented net of the related depreciation
expense.
Other operating income and charges
Other operating income and charges includes investment income,
and other income/charges.
Investment income includes gains and losses arising from
subsequent changes in the fair values of equity and debt
investment securities that are classified as FVTPL and dividends or
distributions on these securities which represent the return on
such investments.
Gains or losses on the change of control, joint control and/or
significant influence and reclassifications to/from held for sale also
forms part of investment income. Refer to Note 44(i) Principles of
consolidation for details on the timing of recognition of such gains
or losses.
Dividends
Dividends or distributions are recognised when the right to receive
a dividend or distribution is established, it is probable the
economic benefits associated with the dividend will flow to the
Company and/or Consolidated Entity and the dividend can be
measured reliably.
Dividends or distributions from HFT assets are recognised in net
trading income, as investment income as part of other operating
income and charges for other financial assets measured at FVTPL
or FVOCI, or as a reduction to the carrying amount of the
investment in associates and joint ventures in the Consolidated
Entity’s Statements of financial position. Where associates and
joint ventures are classified as held for sale, dividends or
distributions are recognised within other income as part of other
operating income and charges.
In the Company's financial statements, judgement may be applied
in determining whether distributions from subsidiaries, associates
and joint ventures are to be recognised as dividend income or as a
return of capital. Distributions that represent a return of capital
are accounted for by the Company as a reduction to the cost of its
investment and are otherwise recognised by the Company within
investment income as part of other operating income and charges
when the recognition criteria are met.
Expenses
Expenses are recognised in the income statement as and when the
provision of services is received.
(v) Segment reporting
Operating Segments are identified on the basis of internal reports
to Senior Management about components of the Consolidated
Entity that are regularly reviewed by Senior Management who have
been identified as the chief operating decision makers, in order to
allocate resources to the segment and to assess its performance.
Information reported to Senior Management for the purposes of
resource allocation and assessment of performance is specifically
focused on core products and services offered, comprising five
reportable segments as disclosed in Note 3 Segment reporting.
Information about products and services is based on the financial
information used to produce the Consolidated Entity’s financial
statements. Information about geographical segments is based on
the jurisdiction of the respective entities.
(vi) Taxation
The balance sheet approach to tax effect accounting has been
adopted whereby the income tax expense for the financial year is
the tax payable on the current year’s taxable income adjusted for
changes in deferred tax assets and liabilities attributable to
temporary differences between the tax bases of assets and
liabilities and their carrying amounts in the financial statements,
and unused tax losses.
Deferred tax assets are recognised when temporary differences
arise between the tax bases of assets and liabilities and their
respective carrying amounts which give rise to a future tax benefit,
or when a benefit arises due to unused tax losses. In both cases,
deferred tax assets are recognised only to the extent that it is
probable that future taxable amounts will be available against
which to utilise those temporary differences or tax losses.
Deferred tax liabilities are recognised when such temporary
differences give rise to taxable amounts that are payable in future
periods. Deferred tax assets and liabilities are recognised at the
tax rates expected to apply when the assets are recovered, or
the liabilities are settled under enacted or substantively enacted
tax law.
Deferred tax assets and deferred tax liabilities that would
otherwise arise following the enactment or substantive enactment
of Pillar Two legislation are not recognised in the financial
statements in accordance with a mandatory exception to the
Accounting Standards, as disclosed in Note 1(iv) New Australian
Accounting Standards and amendments to Australian Accounting
Standards and interpretation that are effective in the current
financial year.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets and liabilities and
when the deferred tax balances relate to the same
taxation authority.
Current tax assets and liabilities are offset when there is a legally
enforceable right to offset and an intention to either settle on a
net basis or realise the asset and settle the liability simultaneously.
Current and deferred taxes attributable to amounts recognised in
OCI are also recognised in OCI.
The Consolidated Entity exercises judgement in determining
whether deferred tax assets, particularly in relation to tax losses,
are probable of recovery.
278
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 44
Material accounting policies continued
(vi) Taxation continued
Factors considered include the ability to offset tax losses within
the tax consolidated group in Australia or groups of entities in
overseas jurisdictions, the nature of the tax loss, the length of
time that tax losses are eligible for carry forward to offset against
future taxable profits and whether future taxable profits are
expected to be sufficient to allow recovery of deferred tax assets.
The Consolidated Entity undertakes transactions in the ordinary
course of business where the income tax treatment requires the
exercise of judgement. The Consolidated Entity estimates the
amount expected to be paid to/(recovered from) tax authorities
based on its understanding and interpretation of the law.
Uncertain tax positions are presented as current or deferred tax
assets or liabilities with reference to the nature of the underlying
uncertainty.
Tax consolidation
The Consolidated Entity’s Australian tax liabilities are determined
according to tax consolidation legislation.
The Company, together with all eligible Australian resident wholly
owned subsidiaries, comprise a tax consolidated group (TCG) with
the Company as the head entity. As a consequence, the relevant
subsidiaries are not liable to make income tax payments and do
not recognise any current tax balances or any deferred tax assets
arising from unused tax losses or credits.
The TCG recognises its current and deferred taxes using the ‘group
allocation approach’ detailed in AASB UIG Interpretation 1052
Tax Consolidation Accounting. Under the terms and conditions of
a tax funding agreement, the Company charges each subsidiary for
all current tax liabilities incurred in respect of their activities and
reimburses each subsidiary for any tax assets arising from unused
tax losses.
Should the Company be in default of its tax payment obligations,
or a default is probable, the current tax balances of its subsidiaries
will be determined in accordance with the terms and conditions of
a tax sharing agreement between the Company and entities in
the TCG.
Goods and Services tax (GST)
Where an amount of GST (or other value added tax) is not
recoverable from global tax authorities, it is either capitalised to
the Statements of financial position as part of the cost of the
related asset or is recognised as part of other operating expenses.
Where GST (or other value added tax) is recoverable from or
payable to global tax authorities, the net amount is recorded as a
separate asset or liability in the Statements of financial position.
(vii) Financial instruments
Recognition of financial instruments
Financial instruments are recognised when the Consolidated Entity
becomes a party to the contractual provisions of the instrument.
A financial instrument is initially recognised at fair value and is
adjusted (in the case of instruments not classified at FVTPL) for
transaction costs that are incremental and directly attributable to
the acquisition or issuance of the financial instrument, and fees
that are an integral part of the effective interest rate. Transaction
costs and fees paid or received relating to financial instruments
carried at FVTPL are recorded in the income statement.
The best evidence of a financial instrument’s fair value at initial
recognition is its transaction price, unless its fair value is evidenced
by comparison with other observable current market transactions
in the same instrument or based on a valuation technique for
which variables include only inputs from observable markets
(or when inputs from unobservable markets are insignificant).
Where such alternative evidence exists, the Consolidated Entity
recognises profit or loss immediately when the instrument is
recognised (day 1 profit or loss). When significant unobservable
inputs are used to determine fair value, the day 1 profit or loss is
deferred and is recognised in net trading income over the life of
the transaction or when the inputs become observable.
Financial instruments arising in multiple transactions are
accounted for as a single arrangement if this best reflects the
substance of the arrangement. Factors considered in this
assessment include whether the financial instruments:
•
are entered into at the same time and in contemplation of
one another
•
have the same counterparty
•
relate to the same risk
•
there is no apparent economic need or substantive business
purpose for structuring the transactions separately that could
not also have been accomplished in a single transaction, or
•
whether each of the financial instruments has its own terms
and conditions and may be transferred or settled separately.
Derecognition of financial instruments
Financial assets
Financial assets are derecognised from the Statements of financial
position when:
•
the contractual rights to cash flows have expired, or
•
the Consolidated Entity has transferred the financial asset such
that it has transferred substantially all the risks and rewards of
ownership of the financial asset.
A financial asset is transferred if, and only if, the
Consolidated Entity:
(i) transfers the contractual rights to receive the cash flows of the
financial asset, or
(ii) retains the contractual rights to receive the cash flows of the
financial asset, but assumes a contractual obligation to pay the
cash flows to one or more recipients in an arrangement where
the Consolidated Entity is:
•
not obligated to pay amounts to the eventual recipients
unless it collects equivalent amounts from the original asset
•
prohibited from selling or pledging the original asset other
than as security to the eventual recipients, and
•
obligated to remit any cash flows it collects on behalf of the
eventual recipients without material delay, generally
considered to be within 1 to 3 months.
279
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Note 44
Material accounting policies continued
(vii) Financial instruments continued
In transactions where the Consolidated Entity neither retains nor
transfers substantially all the risks and rewards of ownership of a
financial asset, the asset is derecognised if control over the asset
is lost. Any interest in the transferred and derecognised financial
asset that is created or retained by the Consolidated Entity is
recognised as a separate asset or liability.
In transfers where control over the asset is retained, the
Consolidated Entity continues to recognise the asset to the extent
of its continuing involvement as determined by the extent to
which it is exposed to changes in the value of the transferred
asset.
Financial liabilities
Financial liabilities are derecognised from the Statements of
financial position when the Consolidated Entity’s obligation has
been discharged, cancelled or has expired.
Gains and losses on the derecognition of debt financial assets and
liabilities
Gains and losses arising from the derecognition of debt financial
assets or financial liabilities are recognised in:
•
net trading income in respect of trading-related balances that
are subsequently measured at amortised cost
•
investment income within other operating income and charges
in respect of financial investments and loans to associates
•
other income and charges as part of other operating income
and charges for all other financial assets and financial liabilities.
Financial guarantee contracts issued
Financial guarantee contracts are recognised as a financial liability
at the time the guarantee is issued. The liability is initially
measured at fair value and subsequently at the higher of:
•
the amount determined in accordance with the expected credit
loss model under AASB 9, or
•
the amount initially recognised less, where appropriate, the
cumulative amount of income recognised in accordance with
the principles of AASB 15 Revenue from Contracts with
Customers.
Modification of financial instruments
A financial instrument is modified when its original contractual
cash flows are renegotiated or modified. A financial asset that is
renegotiated is derecognised if the rights to receive cash flows
from the existing agreement have expired, either through
replacement by a new agreement or the existing terms are
substantially modified. To determine whether the existing terms
are substantially modified, both qualitative and quantitative
factors may be considered. Qualitative factors would, for example,
include a consideration of whether and to what extent the
modification is driven by financial difficulties of the borrower or
where the terms are modified such that the instrument no longer
meets the SPPI requirements.
A financial liability that is renegotiated is derecognised if the
existing agreement is cancelled and a new agreement is made on
substantially different terms or if the existing terms are modified
such that the renegotiated financial instrument is a substantially
different financial instrument. The assessment on whether the
terms are substantially different consider both quantitative and
qualitative factors. Where the modification results in
derecognition of the original financial instrument, the new
financial instrument is recorded initially at its fair value and the
resulting difference is recognised in the income statement in
accordance with the nature of the financial instrument as
described in the derecognition of financial instruments policy.
For financial instruments measured at amortised cost, and for
debt financial assets measured at FVOCI, when the modification
does not result in derecognition, the gross carrying amount of the
financial instrument is recalculated and a modification gain or loss
is recognised in the income statement. The gain or loss is
measured as the adjustment of the gross carrying amount to
reflect the renegotiated or modified contractual cash flows,
discounted at the instrument’s original EIR.
Classification and subsequent measurement
Financial assets
Financial assets are classified based on the business model within
which the asset is held and on the basis of the financial asset’s
contractual cash flow characteristics.
Business model assessment
The Consolidated Entity uses judgement in determining the
business model at the level that reflects how groups of financial
assets are managed together to achieve a particular business
objective. In determining the business model, all relevant evidence
that is available at the date of the assessment is used including:
•
how the performance of the business model and the financial
assets held within that business model is evaluated and
reported to the Consolidated Entity’s Senior Management
personnel and senior executives
•
the risks that affect the performance of the business model
(and the financial assets held within that business model) and,
in particular, the way in which those risks are managed
•
how managers of the business are compensated (for example,
whether the compensation is based on the fair value of
the assets managed or on the contractual cash flows
collected), and
•
Frequency, value, timing of and reasons for sales of assets in
the portfolio and expectations about future sales activity.
Solely payment of principal and interest (SPPI)
The contractual cash flows of a financial asset are assessed to
determine whether these represent SPPI on the principal amount
outstanding, consistent with a basic lending arrangement. This
includes an assessment of whether the cash flows primarily reflect
consideration for the time value of money and credit risk of the
principal outstanding. Interest may also include consideration for
other basic lending risks and costs including a reasonable profit
margin.
280
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 44
Material accounting policies continued
(vii) Financial instruments continued
In assessing whether the contractual cash flows are SPPI, the
Consolidated Entity considers the contractual terms of the
instrument. This includes assessing whether the financial asset
contains contractual terms that could change the timing or
amount of contractual cash flows such that it would not meet the
SPPI criteria. Such an assessment would consider, for example, the
impact of any of the following features:
•
Contingent events that could change the amount and/or timing
of cash flows;
•
Leverage features that could change the economic
characteristics of principal and interest cash flows introducing
volatility inconsistent with a basic lending arrangement;
•
Prepayment features, to determine whether the amount due
on early repayment substantially represents unpaid amounts of
principal and accrued interest which may include reasonable
compensation for the early termination of the contract;
•
Terms that limit the Consolidated Entity's claim to cash flows
from specified assets - for example, through non-recourse or
limited recourse arrangements - in a way that is inconsistent
with a basic lending arrangement.
Amortised cost
A financial asset is subsequently measured at amortised cost using
the EIR method where:
•
the financial asset is held within a business model whose
objective is to hold financial assets in order to collect
contractual cash flows
•
the contractual terms of the financial asset give rise on
specified dates to cash flows that meet the SPPI
requirements, and
•
the financial asset has not been classified as DFVTPL.
Interest income is determined in accordance with the EIR method
and recognised as part of interest and similar income.
Fair value through other comprehensive income
A financial asset is subsequently measured at FVOCI if the
following conditions are met:
•
the financial asset is held within a business model whose
objective is to both collect contractual cash flows and to sell
the financial assets
•
the contractual terms of the financial asset give rise on
specified dates to cash flows that meet the SPPI requirements
•
the financial asset has not been classified as DFVTPL.
Subsequent changes in fair value are recognised in OCI, with the
exception of interest (which is recognised as part of interest
income), ECL (which is recognised in credit and other impairment
charges/reversal) and foreign exchange gains and losses (which are
recognised in net trading income) and is net of any related hedge
accounting adjustments. When debt financial assets classified as
at FVOCI are derecognised, the cumulative gain or loss previously
recognised in OCI is reclassified from OCI to investment income in
respect of debt financial investments and loans to associates, or
to other income and charges as part of other operating income
and charges for all other financial assets.
Fair value through profit or loss
Financial assets that do not meet the criteria to be measured at
amortised cost or FVOCI are subsequently measured at FVTPL.
For the purposes of the Consolidated Entity’s financial statements,
the FVTPL classification consists of the following:
•
financial assets that are held for active trading (held for trading
(HFT)). This classification includes all derivative financial assets,
except those that are designated as hedging instruments in
qualifying hedge relationships and are classified as FVTPL
•
financial assets in a business model whose objective is achieved
by managing the financial assets on a fair value basis in order to
realise gains and losses as opposed to a business model in
which the objective is to collect contractual cash flows (FVTPL)
•
financial assets that fail the SPPI test (FVTPL), and
•
financial assets that have been designated to be measured at
fair value through profit or loss to eliminate or significantly
reduce an accounting mismatch (DFVTPL).
Equity financial assets that are not held for active trading are
measured at FVTPL. Subsequent changes in fair value are
recognised as investment income within other operating income
and charges.
Subsequent changes in the fair value of debt financial assets
measured at FVTPL are presented as follows:
•
changes in the fair value of financial assets that are classified
as HFT and financial assets managed on a fair value basis are
recognised in net trading income
•
changes in the fair value of debt financial investments and
loans to associates and joint ventures that fail SPPI are
recognised in investment income as part of other operating
income and charges
•
changes in the fair value of all other FVTPL and DFVTPL
financial assets are recognised as part of other income and
charges within other operating income and charges.
Where applicable, the interest component of these financial assets
is recognised as interest and similar income.
Reclassification of financial instruments
The Consolidated Entity reclassifies debt financial assets when and
only when its business model for managing those assets changes.
Financial assets that are reclassified are subsequently measured
based on the financial asset’s new measurement category.
The Consolidated Entity does not reclassify financial liabilities after
initial recognition.
Financial liabilities
Financial liabilities are subsequently measured at amortised cost,
unless they are either HFT, or have been designated to be
measured at FVTPL (DFVTPL). A financial liability may be
DFVTPL if:
•
such a designation eliminates or significantly reduces an
accounting mismatch that would otherwise have arisen
•
a group of financial liabilities, or financial assets and financial
liabilities, is managed and its performance is evaluated on a fair
value basis, in accordance with a documented risk management
or investment strategy, or
281
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Note 44
Material accounting policies continued
(vii) Financial instruments continued
•
the liability contains embedded derivatives which must
otherwise be separated and carried at fair value.
All derivative financial liabilities are classified as HFT, except those
that are designated as hedging instruments in qualifying hedge
relationships and are classified as FVTPL. Refer to Note 44(x)
Derivative instruments and hedging activities for the detailed
hedge accounting policy.
Changes in the fair value of financial liabilities that are not
classified as HFT, with the exception of changes relating to the
Consolidated Entity’s own credit risk, are recognised in net trading
income, or other income and charges as part of other operating
income and charges, depending on the nature of the underlying
transaction. Changes in fair value relating to changes in the
Consolidated Entity’s own credit risk are presented separately in
OCI and are not subsequently reclassified to profit or loss.
Where applicable, the interest component of these financial
liabilities is recognised as interest and similar expense.
Offsetting of financial instruments
Financial assets and financial liabilities are offset, and the net
amount reported in the Statements of financial position, when
there is a current legally enforceable right to offset the amounts
and either there is an intention to settle on a net basis or realise
the financial asset and settle the financial liability simultaneously.
(viii) Cash collateral on securities borrowed and lent and
repurchase and reverse repurchase agreements
As part of its trading, financing and liquidity management
activities, the Consolidated Entity borrows and lends securities,
commodities and other assets (the underlying) on a collateralised
basis. The underlying that is subject to the arrangement is not
derecognised from the Statements of financial position of the
relevant parties, as the risks and rewards of ownership remain with
the initial holder.
These transactions include:
•
reverse repurchase transactions, where the Consolidated Entity
purchases an underlying under an agreement to resell
•
repurchase transactions, where the Consolidated Entity sells
an underlying under an agreement to repurchase.
The Consolidated Entity continually reviews the fair values of the
underlying on which the above transactions are based and where
appropriate, requests or provides additional collateral to support
the transactions, in accordance with the terms of the
respective agreements.
Reverse repurchase agreements are subsequently measured as
follows by the Consolidated Entity:
•
agreements that are collateralised with commodities are
measured at amortised cost when they are held in a business
model to collect contractual cash flows and AASB 9’s SPPI
criteria are met
•
agreements that are held within the Consolidated Entity’s cash
and liquid assets portfolio are measured at FVOCI as they are
held in a business model to both collect contractual cash flows
and with the intention to sell
•
all other reverse repurchase agreements are measured at
FVTPL to reflect the Consolidated Entity’s business model to
realise fair value gains and losses as opposed to a business
model in which the objective is to collect contractual
cash flows.
Also refer to Note 37 Measurement categories of financial
instruments.
Repurchase agreements are subsequently measured at amortised
cost, except where they are DFVTPL to eliminate an accounting
mismatch created by managing the agreements together with the
associated reverse repurchase agreements that are measured
at FVTPL.
(ix) Trading assets and liabilities
Trading assets and liabilities are those assets and liabilities that
the Consolidated Entity acquires or incurs principally for the
purpose of selling or repurchasing in the near term, or held as part
of a portfolio that is managed together with short-term profit or
position taking.
The Consolidated Entity uses trade date accounting when
recording regular way purchases and sales of financial assets and
liabilities that are classified as HFT. At the date a purchase
transaction is entered into (trade date), the Consolidated Entity
recognises the resulting financial asset or liability and any
subsequent unrealised gain or loss arising from revaluing that
contract to fair value as part of net trading income, except for
interest income on HFT debt financial assets which is recognised in
interest income. Refer to Note 44(vii) Financial instruments.
Trading assets (long positions) comprise financial instruments such
as debt and equity securities, bank bills, treasury notes, and loans,
commodity contracts and commodities purchased with the intent
of being actively traded either individually or as part of a portfolio.
Trading liabilities comprise obligations to deliver assets (short
positions) across the same trading categories and which the
Consolidated Entity intends to actively trade.
Commodity inventory is recognised when the Consolidated Entity
controls the commodity, the determination of which includes
consideration of price risk. Commodity inventory is measured at
fair value less costs to sell in accordance with the broker-trader
exemption, on the basis that such assets are held with the purpose
of selling in the near future and generating a profit from
fluctuations in price or broker traders’ margin. Commodity
contracts reflect agreements for the purchase and sale of
commodities where, despite the Consolidated Entity having
control over the commodity, the Consolidated Entity has no
intention to exercise its control, and where the expected outcome
is that the commodity will be sold back to the initial holder or sold
on to the intended acquirer (in the case of intermediary trades).
Such contracts are measured at FVTPL.
282
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 44
Material accounting policies continued
(ix) Trading assets and liabilities continued
When the Consolidated Entity becomes party to a sale contract,
and the derecognition criteria are met (refer to Note 44(vii)
Financial instruments), it derecognises the trading asset or liability
and recognises a trade receivable or trade payable from trade date
until settlement date.
(x) Derivative instruments and hedging activities
Derivative instruments entered into by the Consolidated Entity
include futures, forwards and forward rate agreements, swaps and
options in the interest rate, foreign exchange, commodity, credit
and equity markets. These derivative instruments are principally
used by the Consolidated Entity for the purposes of risk
management of existing assets and liabilities and forecast
transactions and are also entered into for client trading purposes.
Derivatives are recognised in the Statements of financial position
as an asset where they have a positive fair value at the reporting
date or as a liability where they have a negative fair value at the
reporting date.
Derivatives that may have both positive or negative values must
meet both the asset and liability derecognition tests before being
derecognised from the Statements of financial position.
Fair values are obtained from quoted prices in active markets
where available, or valuation techniques including discounted cash
flow models and option pricing models, as appropriate. The
accounting for derivatives is subject to the application of the day 1
profit or loss policy as described in Note 44(vii) Financial
instruments).
The Consolidated Entity applies trade date accounting to the
recognition and derecognition of derivative financial instruments.
Hedge accounting
As part of its ongoing business, the Consolidated Entity is exposed
to several financial risks, principally that of interest rate, foreign
exchange and commodity price risks (collectively referred to as the
hedged risk or exposure). The Consolidated Entity has limited
appetite for such risks and has policies and practices in place to
ensure that these risks are effectively managed. The Consolidated
Entity mitigates these risks through the use of derivative
financial instruments, and, in the case of foreign exchange risk,
foreign-denominated debt issued (collectively referred to as
hedging instruments). The Consolidated Entity applies hedge
accounting to manage accounting mismatches arising from the
difference in measurement bases or location of the gains and
losses recognised between the exposure that is being hedged and
the hedging instrument. Refer to details provided in the table on
the following page.
283
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Note 44
Material accounting policies continued
(x) Derivative instruments and hedging activities continued
1
Fair value hedge
Cash flow hedge
Net investment hedge
Nature of hedge
The hedge of the change in fair value of a
recognised asset or liability.
The hedge of the change in cash flows of a
financial asset or liability or a highly
probable forecast transaction.
The hedge of changes in the Consolidated
Entity’s foreign denominated net assets
for changes in foreign currency rates.
Nature of material
hedged risks
•
Interest rate risk
•
Foreign exchange risk
•
Commodity price risk.
•
Interest rate risk1
•
Foreign exchange risk
•
Commodity price risk.
•
Foreign exchange risk.
Material hedged items
•
Fixed interest rate financial assets
and liabilities
•
Property, plant and equipment.
•
Floating interest rate financial assets
or liabilities
•
Highly probable forecast floating
interest rate financial assets
and liabilities
•
Highly probable forecast foreign
currency payments and receipts
•
Highly probable forecast
commodity sales
•
Foreign currency denominated interest
bearing financial liabilities.
•
Net investment in foreign operations.
Material hedging
instruments
•
Interest rate swaps
•
Basis swaps
•
Cross currency swaps
•
Commodity derivatives
•
Foreign exchange forwards.
•
Interest rate swaps and options
•
Cross currency swaps
•
Foreign currency denominated
borrowings
•
Commodity derivatives.
•
Foreign exchange contracts
•
Foreign currency denominated
issued debt.
Designation and
documentation
At inception of the hedge relationship, documentation is required of the risk management objective and strategy for the hedge, the
hedging instrument, hedged item, hedged risk and how the hedge relationship will meet the hedge effectiveness requirements.
Hedge effectiveness
method
All hedge relationships are assessed for prospective hedge effectiveness both at the inception of the hedge, at each reporting period
and following any significant change in circumstances affecting the hedge, by demonstrating that:
•
an economic relationship exists between the hedged item and the hedging instrument
•
credit risk does not dominate the changes in value of either the hedged item or the hedging instrument
•
the hedge ratio is reflective of the Consolidated Entity’s risk management approach.
The hedge effectiveness assessment is performed by a combination of qualitative and, where applicable, quantitative assessments.
Changes in the hedge ratio, or rebalancing, may be required to adjust the designated quantities of either the hedged item or the
hedging instrument.
Accounting treatment
for the hedging
instrument
Fair value through the income statement,
aligned to the presentation of the
hedged item.
Fair value through the cash flow hedge
reserve as part of OCI, and then recognised
in the income statement at the time at
which the hedged item affects the income
statement for the hedged risk.
Foreign exchange gains and losses are
recognised in the Net Investment Hedge
Reserve (NIHR), a separate component of
FCTR in OCI.
Accounting treatment
for the hedged item
Adjustments to the carrying value are
recognised in the income statement for
changes in fair value attributable to the
hedged risk.
Accounted for on an amortised cost basis,
FVOCI, or under other accounting
standards as appropriate (such as
executory contracts for the sale of
commodities).
Foreign exchange gains and losses are
recognised in the Consolidated Entity’s
foreign currency translation reserve as
part of OCI.
1 The Company designates selected hedge accounting relationships that only meet the qualifying criteria for hedge accounting in the Company financial statements (but not the
Consolidated Entity).
284
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 44
Material accounting policies continued
(x) Derivative instruments and hedging activities continued
Fair value hedge
Cash flow hedge
Net investment hedge
Accounting treatment
for hedge
ineffectiveness
Recognised as part of net trading income
in the income statement to the extent
that changes in fair value of the hedged
item attributable to the hedged risk are
not offset by changes in fair value of the
hedging instrument.
Recognised as part of net trading income in the income statement to the extent to
which changes in the fair value of the hedging instrument exceed, in absolute terms,
the change in the fair value of the hedged item.
Accounting treatment if
the hedge relationship
is discontinued
Where the hedged item still exists and is a
financial instrument carried at amortised
cost, adjustments to the hedged item are
amortised to the income statement on an
EIR basis. For non-financial items, the
adjustment continues as part of the
carrying value of the asset up until it is
recovered through use or sale, or the item
becomes impaired.
The gain or loss remains in the cash flow
hedge reserve to the extent that the
hedged cash flows are still expected to
take place and subsequently recognised in
the income statement at the time at which
the hedged item affects the income
statement for the hedged risk.
Where the hedged cash flows are no
longer expected to take place, the gain or
loss in the cash flow hedge reserve is
recognised immediately in the
income statement.
The exchange gains or losses recognised
in the NIHR within FCTR are reclassified to
the income statement or reattributed
within equity as follows:
•
if the hedge is discontinued due to a
disposal of the hedged foreign
operation, then the accumulated NIHR
is reclassified from OCI to investment
income within other operating income
and charges
•
if there is a partial disposal of a
foreign operation that is an associate
or joint arrangement, without loss of
significant influence or joint control,
then a proportionate share of the
accumulated NIHR is reclassified to
investment income
•
if there is a partial disposal of a
foreign operation that is a subsidiary,
without loss of control, then a
proportionate share of the
accumulated NIHR is reattributed
within equity to non-controlling
interests.
Other
accounting policies
Certain components of the hedging instrument such as the forward element of a forward contract, the time value of an option and
the foreign currency basis spread (being the liquidity charge for exchanging different currencies), may be excluded from the hedge
designation. These elements are deferred in the cost of hedging reserve and released to the income statement either at the time at
which the hedged exposure affects the income statement, or on a systematic basis over the life of the hedge.
285
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Material accounting policies continued
(xi) Margin money and settlement assets and liabilities
Margin money and settlement assets and liabilities includes trade
settlement balances, margin monies and balances with clearing
houses. Margin monies primarily represent deposits placed with
clearing houses in relation to futures trading and other derivatives
transactions. The balance includes both initial and variation margin
which varies based on trading activities. The balance also includes
client margin calls which are funded by the Consolidated Entity.
Settlement balances represent outstanding trade timing balances
as at the reporting date due to the timing difference between
trade and settlement date. Balances are carried at amortised cost
except for certain margin money and certain settlement balances
which are carried at FVTPL.
(xii) Financial investments
Investment securities in this category include investments in
equity or debt securities which are not actively traded by the
Consolidated Entity.
Debt investment securities in this category comprise liquid asset
holdings, bonds, money markets and other debt securities.
Financial investments are initially recognised on trade date at fair
value (adjusted for directly attributable transaction costs for debt
investments subsequently measured at amortised cost or FVOCI)
and subsequently measured in accordance with Note 44(vii)
Financial instruments).
(xiii) Loan assets
This category includes loans that are not held for trading purposes
and typically includes the Consolidated Entity’s lending activities
to its customers.
Loan assets are initially recognised on settlement date at fair value
(adjusted for directly attributable transaction costs for loan assets
subsequently measured at amortised cost or FVOCI) and
subsequently measured in accordance with Note 44(vii) Financial
instruments).
Certain finance lease receivables are also presented as part of
asset financing within loan assets. For the detailed policy on
financial instruments, including treatment of derecognition, refer
to Note 44(vii) Financial instruments).
(xiv) Property, plant and equipment and right-of-use assets
Property, plant and equipment are stated at historical cost (which
includes, where applicable, directly attributable borrowing costs
and expenditure directly attributable to the acquisition of the
asset) less, accumulated depreciation and, where applicable,
accumulated impairment losses.
Right-of-use (ROU) assets are initially measured at cost and
comprise of the amount that corresponds to the amount
recognised for the lease liability on initial recognition together
with any lease payments made at or before the commencement
date (less any lease incentives received), initial direct costs and
restoration-related costs. Subsequently, it is stated at historical
cost less accumulated depreciation and, where applicable,
impairment losses, and adjusted for remeasurement of lease
liabilities.
Property, plant and equipment and right-of-use assets includes
assets leased out under operating leases.
Depreciation is the process to allocate the difference between
cost and residual values over the estimated useful life. Where the
residual value exceeds the carrying value, no depreciation is
charged. Depreciation is calculated on the following bases:
•
unit of production method for certain infrastructure assets
•
straight-line basis for all other assets.
A ROU asset is depreciated on a straight-line basis over the shorter
of the asset’s useful life and the lease term.
Annual depreciation rates are summarised below:
Property, plant and equipment
Depreciation rates
Buildings
2.5 to 3.3%
Furniture, fittings and leasehold improvements2
10 to 20%
Infrastructure assets and equipment3
2.5 to 33%
Aviation
4%
Meters
5 to 55%
Telecommunications
24 %
Equipment and other operating lease assets
2.5 to 30%
Useful lives, residual values and depreciation methods are reviewed
annually and reassessed in the light of commercial and
technological developments. Gains and losses on disposal are
determined by comparing the proceeds with the asset’s carrying
amount and are recognised in other income as part of other
operating income and charges.
The depreciation charge is recognised as part of:
•
net operating lease income for assets given on operating lease
•
occupancy expenses for corporate buildings, furniture, fittings
and leasehold improvements
•
non-salary technology expenses for technology assets
•
net trading income for depreciation relating to leased assets
held by trading-related businesses for the purpose of
facilitating trading activities
•
other operating expenses for all other assets.
The Consolidated Entity does not recognise a ROU asset for
short-term or low value leases, instead the expense is recognised
over the lease term as appropriate as part of operating expenses.
2 Where remaining lease terms are less than five years, leasehold improvements are depreciated over the remaining lease term.
3 Includes infrastructure assets, for which depreciation is calculated on a unit of production basis.
286
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 44
Material accounting policies continued
(xv) Goodwill and other identifiable intangible assets
Goodwill
Goodwill is measured as the excess of consideration, recognised
NCI, and the fair value of previously held equity interests over the
fair value of the identifiable net assets of the business acquired.
Goodwill arising from business combinations is included in
intangible assets.
Other acquired identifiable intangible assets
At the time at which the Consolidated Entity determines that it
has acquired a business, the Consolidated Entity identifies
intangible assets that are required to be initially recognised at fair
value. An intangible asset is considered to have an indefinite useful
life where it is expected to contribute to the Consolidated Entity’s
net cash inflows indefinitely.
The following intangible assets are typically identified and
recognised by the Consolidated Entity:
•
licences and trading rights: generally carried at cost less
accumulated impairment loss. Where no contractual or legal
limitation exists, these assets are not amortised because they
are considered to have an indefinite useful life
•
management rights: carried at cost less accumulated
amortisation and accumulated impairment loss. Certain
management right intangible assets, which have indefinite
useful lives as the underlying income stream is related to the
management of funds that have no defined end date and are
expected to operate perpetually, are not amortised. For
management rights that have a finite useful life, amortisation is
calculated using the straight-line method to allocate the cost
of management rights over the estimated useful life usually
being a period not exceeding 20 years
•
customer and servicing contracts acquired with a finite useful
life: carried at cost less accumulated amortisation and
accumulated impairment loss. Amortisation is calculated over
the period for which the customer relationship is expected
to exist
•
customer and servicing contracts with an indefinite useful life:
carried at cost less accumulated impairment loss.
Certain other intangible assets held for trading, including emission
certificates, are measured at fair value less costs to sell in
accordance with the broker-trader exemption (on the basis that
such assets are held with the purpose of selling in the near future
and generating a profit from fluctuations in price or broker
traders’ margin).
Amortisation of intangible assets held by trading related business
is recorded in net trading income and for others is recognised in
other operating expenses. Impairments (reversal of impairments)
of intangible assets are recognised in other impairment charges/
reversal.
Development expenditure
Development expenditure is recognised as an asset when the
Consolidated Entity is able to demonstrate that the project is
technically feasible, it is probable the asset will generate future
economic benefits, the Consolidated Entity has the intention and
ability to complete the development of the project or sell it, and
the costs incurred can be reliably measured. All other costs are
expensed in the period incurred.
Software
Certain internal and external costs directly incurred in acquiring
and developing certain computer software programmes are
capitalised and amortised over the estimated useful life, usually a
period of three to seven years on a straight-line basis. The
capitalised software asset is subject to impairment testing on an
annual basis.
Costs incurred on the maintenance of software is expensed as
incurred and recognised in other operating expenses.
(xvi) Deposits
Deposits include customer deposits, business banking and home
loan related deposits, deposits from financial institutions and
other balances such as client monies. These deposits are initially
recognised at fair value less directly attributable transaction costs
and are subsequently measured at amortised cost.
(xvii) Other assets and liabilities
Contract assets, contract liabilities and capitalised expenses
Where the Consolidated Entity provides services to clients and the
consideration is unconditional, a receivable is recognised. Where
the consideration is conditional on something other than the
passage of time, such as performance fees, these are recorded as
contract assets. Both receivables and contract assets are assessed
for impairment in accordance with AASB 9. Commodity-related
receivables are accounted for in accordance with Note (vii)
Financial Instruments.
The Consolidated Entity, as permitted by AASB 15, has applied the
practical expedient that allows for costs incurred to obtain a
contract to be expensed as incurred where the amortisation period
for any asset recognised would be less than 12 months. The
Consolidated Entity also applies the practical expedient not to
adjust consideration for the effects of a significant financing
component, where the period between transferring a good or
service and when the customer pays for that good or service is
expected to be one year or less.
Contract liabilities relate to prepayments received from
customers where the Consolidated Entity is yet to satisfy its
performance obligation.
287
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(xvii) Other assets and liabilities continued
Non-current assets and liabilities of disposal groups classified as
held for sale
This category includes non-current assets and disposal groups
(groups of assets and directly associated liabilities to be disposed
in a single transaction) for which the carrying amount will be
recovered principally through a sale or distribution transaction
rather than continuing use. This line includes assets and liabilities
of businesses and subsidiaries, investments in associates and joint
ventures, other assets and liabilities, and subsidiaries that are
acquired exclusively with a view to sell or distribute.
These assets and disposal groups are classified as held for sale
when they are available for immediate sale in their present
condition, the sale or distribution is highly probable and is
expected to occur within 12 months. Where there is a planned
partial disposal of a subsidiary resulting in loss of control, but the
Consolidated Entity retains an interest in the disposed subsidiary,
the entire disposal group is classified as held for sale.
Non-current assets and disposal groups classified as held for sale
are measured at the lower of their carrying amount and fair value
less costs to sell. Equity accounting, depreciation and amortisation
is suspended when the held for sale criteria are met.
An impairment loss is recognised for any initial or subsequent
write down of the asset to fair value less costs to sell and is
recognised in other impairment charges/reversal. A gain is
recognised for any subsequent increase in fair value less costs to
sell, limited to the cumulative impairment loss previously
recognised. A gain or loss not previously recognised by the date of
sale is recognised at the date of sale.
Financial assets and liabilities that are classified as held for sale are
measured in accordance with the Consolidated Entity’s financial
instruments’ policies.
Provisions, contingent liabilities and commitments
A provision is a liability of uncertain timing or amount. Provisions
are recognised when it is probable that an outflow of economic
benefits will be required to settle a present legal or constructive
obligation that has arisen as a result of past events and for which a
reliable estimate can be made.
Contingent liabilities are either possible obligations whose
existence will be confirmed only by uncertain future events not
wholly within the control of the Consolidated Entity, or are present
obligations where an outflow of economic resources is not
probable or cannot be reliably measured. Contingent liabilities are
not recognised on the balance sheet but are disclosed unless an
outflow of economic resources is remote. Contingent liabilities
generally include performance-related contingents and certain
types of letters of credit and guarantees.
Credit related commitments are the Consolidated Entity's firm
commitments to provide credit facilities under pre-specified terms
and conditions. These generally include loan commitments,
financial guarantee contracts and certain types of letters of credit.
Such contracts are recognised in the Statements of financial
position only when drawn upon, and may expire without being
called. Credit related commitments are subject to expected credit
loss requirements disclosed in Note 13 Expected Credit Loss.
Contingent liabilities and commitments are disclosed in Note 33
Contingent liabilities and commitments.
Employee benefit provisions
Employee benefit provisions are recognised by the Consolidated
Entity as and when the service has been rendered after deducting
amounts already paid. The Consolidated Entity accrues for costs
arising under applicable staff carry plans based on the expected
cash outflows.
Liabilities for unpaid salaries, salary-related costs and provisions
for annual leave are recorded in the Statements of financial
position at the salary rates which are expected to be paid when the
liability is settled. Provisions for long service leave and other long-
term benefits are recognised at the present value of expected
future payments to be made.
In determining this amount, consideration is given to expected
future salary levels and employee service histories. Expected
future payments are discounted to their net present value using
discount rates on high quality corporate bonds, except where
there is no deep market, in which case rates on Government
securities are used. Such discount rates have terms that match as
closely as possible the expected future cash flows.
Provisions for unpaid employee benefits are derecognised when
the benefit is settled or is transferred to another entity and the
Company and Consolidated Entity are legally released from the
obligation and do not retain a constructive obligation.
Dividends
Where a dividend is determined or resolved by the Company’s
Board of Directors, consideration is given to the record date when
determining the date on which the provision for the dividend is
recognised in the Statements of financial position as a liability,
with a corresponding reduction in retained earnings.
288
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 44
Material accounting policies continued
(xviii) Borrowings
Borrowings include loans and other payables to banks and financial
and non-financial institutions. These balances are:
•
initially recognised at fair value less directly attributable
transaction costs and subsequently measured at amortised
cost, or
•
when DFVTPL, initially recognised and subsequently measured
at fair value.
(xix) Due to/from subsidiaries
Transactions between the Company and its subsidiaries principally
arise from the provision of lending arrangements, acceptance of
funds on deposit, intercompany services and transactions and the
provision of financial guarantees. Intercompany services and
transactions are accounted for in accordance with Note 44(iv)
Revenue and expense recognition where they are transacted in a
principal capacity. Financial assets, financial liabilities and financial
guarantee contracts are accounted for in accordance with
Note 44(vii) Financial instruments. Financial assets and financial
liabilities are presented net where the offsetting requirements are
met, such that the net amount is reported in the Statements of
financial position.
(xx) Debt issued
Debt issued includes debt securities issued by the Consolidated
Entity. These balances are:
•
initially recognised at fair value less directly attributable
transaction costs and subsequently measured at amortised
cost, or
•
when DFVTPL, initially recognised and subsequently measured
at fair value in accordance with the Consolidated Entity’s
accounting policy for financial instruments, refer to Note 44(vii)
Financial instruments.
(xxi) Loan capital
Loan capital represents issued debt with terms and conditions that
qualify for inclusion as capital under Australian Prudential
Regulation Authority (APRA) Standards.
Capital instruments are first assessed to determine whether the
Consolidated Entity is required to deliver cash or another financial
asset on the occurrence of a contingent event that is considered
genuine and beyond the control of both the issuer and the holder
(such as Common Equity Tier 1 Trigger Events or Non-Viability
Trigger Events). Where such a contingent event exists, then the
Consolidated Entity does not have the unconditional right to avoid
delivering cash or another financial asset and the capital
instrument is classified as a financial liability. The financial liability
is initially measured at fair value plus directly attributable
transaction costs and is subsequently measured at amortised cost.
For compound instruments that have both equity and liability
features, the liability component is initially measured at fair value
plus directly attributable transaction costs (and is thereafter
measured at amortised cost using the EIR method), with the
residual being accounted for within the Consolidated Entity’s
equity.
(xxii) Impairment
Expected credit losses
The ECL requirements apply to financial assets measured at
amortised cost or FVOCI, lease receivables, amounts receivable
from contracts with customers, loan commitments, certain letters
of credit and financial guarantee contracts issued that are not
DFVTPL. The Consolidated Entity applies a three-stage approach
to measuring the ECL based on changes in the financial asset’s
underlying credit risk and includes forward looking information
(FLI).
ECL is measured as the product of probability of default (PD), the
loss given default (LGD) and the exposure at default (EAD). The
calculation of ECL requires judgement and the choice of inputs,
estimates and assumptions. Refer to Note 13 Expected credit
losses for further information. Outcomes within the next financial
period that are different from management’s assumptions and
estimates could result in changes to the timing and amount of ECL
to be recognised.
The ECL is determined with reference to the following stages:
(i) Stage I—12 month ECL
At initial recognition, and for financial assets for which there has
not been a significant increase in credit risk (SICR) since initial
recognition, ECL is determined based on the probability of default
(PD) over the next 12 months adjusted for FLI. Stage I also includes
financial assets where the credit risk has improved and has been
reclassified from Stage II.
(ii) Stage II—Not credit-impaired
When there has been a SICR since initial recognition, the ECL is
determined with reference to the financial asset’s lifetime PD
adjusted for FLI. The Consolidated Entity exercises judgement in
determining whether there has been a SICR since initial recognition
based on qualitative, quantitative, and reasonable and supportable
information that includes FLI. Detail on the Consolidated Entity’s
process to determine whether there has been a SICR is provided in
Note 13 Expected credit losses.
Use of alternative criteria could result in significant changes to the
timing and amount of ECL to be recognised. Lifetime ECL is
generally determined based upon the contractual maturity
adjusted, where appropriate, for prepayments, extension, call and
similar options, of the financial asset. For revolving facilities, the
Consolidated Entity exercises judgement based on the behavioural,
rather than contractual characteristics of the facility type. Stage II
may include financial assets where the credit risk has improved
and has been reclassified from Stage III.
289
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Material accounting policies continued
(xxii) Impairment continued
(iii) Stage III—Credit-impaired
Financial assets are classified as Stage III where they are
determined to be credit impaired, which generally matches the
APRA definition of default. This includes exposures that are at
least 90 days past due and where the obligor is unlikely to pay
without recourse against available collateral.
The ECL for credit impaired financial assets is generally measured
as the difference between the contractual and expected cash
flows from the individual exposure, discounted using the EIR for
that exposure.
Presentation of ECL allowances
The ECL allowances are presented in the Statements of financial
position as follows:
•
loan assets, loans to related body corporate entities and
subsidiaries, associates and joint ventures measured at
amortised cost – as a deduction to the gross carrying amount
•
loan assets, loans to associates and joint ventures, and debt
financial investments measured at FVOCI – as a reduction in the
FVOCI reserve within equity. The carrying amount of the asset
is not adjusted as it is measured at fair value
•
lease receivables, contract receivables and other assets
measured at amortised cost – as a deduction to the gross
carrying amount
•
undrawn credit commitments and financial guarantees issued
(not measured at FVTPL) – as a provision included in other
liabilities.
When the Consolidated Entity concludes that there is no
reasonable expectation of recovering cash flows from the financial
asset, and all possible collateral has been realised, the financial
asset is written off, either partially or in full, against the related
provision. Recoveries of loans previously written off are recorded
based on the cash received.
Impairment of interests in associates and joint ventures
The Consolidated Entity performs an assessment at each reporting
date to determine whether there is any objective evidence that its
interests in associates or joint ventures are impaired. The main
indicators of impairment are significant changes with an adverse
effect that have taken place in the technological market, economic
or legal environment and a significant or prolonged decline in fair
value below cost.
In making this judgement, the Consolidated Entity evaluates,
among other factors, the normal volatility in share price and the
period of time for which fair value has been below cost. If there is
an indication that an investment in an associate or joint venture
may be impaired, then the entire carrying amount of the
investment in the associate or joint venture is tested for
impairment by comparing the recoverable amount, being the
higher of fair value less costs to sell and value-in-use, with its
carrying amount.
Impairment losses recognised in the income statement for
investments in associates and joint ventures are subsequently
reversed through the income statement if there has been a change
in the estimates used to determine the recoverable amount since
the impairment loss was recognised. The impairment losses
(reversal of impairments) on investments in associates and joint
ventures are recognised in the income statement as part of other
impairment charges/reversal.
Fair value less costs to sell is estimated using market-based
approaches using revenues, earnings and assets under
management and multiples based on companies deemed
comparable as well as other publicly available information relevant
to the business.
Value-in-use is calculated using pre-tax cashflow projections of
operating revenue and expenses. Forecasts are extrapolated using
a growth rate and discounted using a pre-tax discount rate
incorporating market risk determinants, adjusted for specific risks
related to the cash generating units, if any, and the environment in
which it operates.
Impairment of investments in subsidiaries
Investments in subsidiaries in the Company’s financial statements
are reviewed annually for indicators of impairment or more
frequently if events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment is
recognised in other impairment charges/reversal, for the amount
by which the investment’s carrying amount exceeds its recoverable
amount, being the higher of fair value less costs to sell and value-
in-use. At each reporting date, investments in subsidiaries that
have been impaired are reviewed for possible reversal of
impairment. The amount of any reversal of impairment recognised
must not cause the investment’s carrying value to exceed its
original cost.
Impairment of other non-financial assets including
cash-generating units
Intangible assets with indefinite lives (goodwill and certain
intangible assets) are not subject to amortisation but are tested
annually for impairment, or more frequently if events or changes in
circumstances indicate that the carrying amount may not
be recoverable.
For intangible assets that have a finite useful life and property,
plant and equipment and ROU assets, an assessment is made at
each reporting date for indications of impairment.
Impairment losses are recognised in other impairment charges as
part of other operating income and charges for the amount by
which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of the asset’s fair value less
costs to sell and value-in-use.
290
Notes to the financial statements
For the financial year ended 31 March 2024 continued
Note 44
Material accounting policies continued
(xxii) Impairment continued
For the purposes of assessing impairment, non-financial assets are
grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash
inflows from other assets or groups of assets (cash-generating
units). Intangible assets (other than goodwill) for which an
impairment loss has been recognised are reviewed for possible
reversal of the impairment at each reporting date. A reversal is
recognised only to the extent that the asset’s carrying amount
does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment
loss had been recognised for the asset in prior years.
(xxiii) Performance based remuneration
Employee equity participation
The Consolidated Entity operates share-based compensation
plans, which include awards (including those delivered through the
Macquarie Group Employee Retained Equity Plan (MEREP)) granted
to employees under share acquisition plans. Information relating
to these schemes is set out in Note 32 Employee equity
participation.
The Consolidated Entity accounts for its share-based payments as
follows:
Equity settled awards: The awards are measured at their grant
date fair value and based on the number of equity instruments
expected to vest. Expenses are recognised as part of employment
expenses with a corresponding increase in equity with reference to
the vesting period of those awards. Performance hurdles attached
to Performance Share Units (PSUs) under the MEREP are not taken
into account when determining the fair value of the PSUs at the
grant date. Instead, these vesting conditions are taken into
account by adjusting the number of equity instruments expected
to vest. For the Company, the accounting is dependent on whether
the Company is compensated for its obligations under the MEREP
award. To the extent that employing subsidiaries compensate the
Company for the MEREP offered to their employees, a recharge
liability due to subsidiaries is recognised by the Company at grant
date representing the payment received in advance of the award
being settled. This liability reduces over the vesting period with a
corresponding increase in the share-based payments reserve.
MEREP liabilities are recognised and disclosed in Note 30 Related
party information. To the extent that employing subsidiaries do
not compensate the Company for the MEREP offered to their
employees’, the Company reflects the provision of the equity
settled award as a contribution to its subsidiary and as a result
increases its investment in the subsidiary with a corresponding
increase in the share-based payments reserve. On vesting,
amounts recognised in the share-based payments reserve are
transferred to contributed equity.
Cash settled awards: The awards are measured at their grant
date fair value and based on the number of instruments expected
to vest. Expenses are recognised as part of employment expenses
with reference to vesting period of those awards which are settled
in cash. The award liability is measured with reference to the
number of awards and the fair value of those awards at each
reporting date. Changes in the fair value of the liability are
recognised in employment expenses.
Profit share remuneration
The Consolidated Entity recognises a liability and an expense for
profit share remuneration to be paid in cash with reference to the
performance period to which the profit share relates.
(xxiv) Leases
At the inception of a contract, the Consolidated Entity assesses
whether a contract is, or contains, a lease. At inception, or on
reassessment of a contract that contains a lease component, the
Consolidated Entity allocates the consideration in the contract to
each lease component unless an election is made to account for
the lease and non lease components as a single lease component.
(i) Accounting where the Consolidated Entity is the lessee
The Consolidated Entity leases office premises, commodity
storage facilities, technology and other equipment for which
contracts are typically entered into for fixed periods of 12 months
to 15 years and may include extension options. Leases are
recognised as an ROU asset (as explained in Note 44(xiv) Property,
plant and equipment and right-of-use assets) and a corresponding
liability at the commencement date, being the date the leased
asset is available for use by the Consolidated Entity.
Lease liability
Lease liabilities are initially measured at the present value of the
future lease payments at the commencement date, discounted
using the interest rate implicit in the lease (or if that rate cannot
be readily determined, the lessee’s incremental borrowing rate).
Lease payments are allocated between principal and interest
expense.
Interest expense is, unless capitalised on a qualifying asset which is
not measured at fair value, recognised as part of interest and
similar expense over the lease period on the remaining lease
liability balance for each period. Any variable lease payments not
included in the measurement of the lease liability are also
recognised in the income statement in the period in which the
event or condition that triggers those payments occurs.
Lease liabilities are remeasured when there is a change in future
lease payments arising from a change in lease term, an assessment
of an option to purchase the underlying asset, an index or rate, or
a change in the estimated amount payable under a residual
value guarantee.
When the lease liability is remeasured, a corresponding adjustment
is made to the carrying value of the ROU asset, or, in the income
statement, where the carrying value of the ROU asset has been
reduced to zero.
291
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Note 44
Material accounting policies continued
(xxiv) Leases continued
Presentation
The Consolidated Entity presents ROU assets in Property, plant
and equipment and right-of-use assets (refer to Note 15) and lease
liabilities in Other liabilities (refer to Note 23) in the Statements of
financial position.
(ii) Accounting where the Consolidated Entity is a lessor
Leases where the lessee has substantially all the risks and rewards
incidental to ownership of the leased assets are classified as
finance leases. All other leases are classified as operating leases.
Finance lease
Where finance leases are granted to third parties, the present
value of the minimum lease payments plus an estimate of the
value of any unguaranteed residual value is recognised as a
receivable and included in loan assets.
Interest income is recognised over the term of the lease using the
EIR method, which reflects a constant rate of return. Finance lease
income is presented within interest and similar income in the
income statement.
Operating lease
Where the Consolidated Entity is the lessor under an operating
lease, the underlying asset is carried at cost and depreciated over
its useful life in accordance with the rates specified in Note 44(xiv)
Property, plant and equipment and right-of-use assets. Operating
lease income is recognised on a straight-line basis over the period
of the lease unless another systematic basis is more appropriate.
Assets leased out under operating leases are included in property,
plant and equipment and right of-use assets. Certain right-of-use
assets are disclosed as investment property, as applicable.
When the Consolidated Entity is an intermediate lessor, it
accounts for its interests in the head lease and the sub lease
separately. The lease classification of the sublease is determined
with reference to the ROU asset arising from the head lease.
(xxv) Contributed equity
Ordinary shares and other similar instruments are classified as
equity. Incremental costs directly attributable to the issue of new
shares are recorded in equity as a deduction, net of tax, from the
issue proceeds.
If the Consolidated Entity reacquires its own equity instruments,
those instruments (treasury shares) are recorded at cost and
deducted from contributed equity. In cases where treasury shares
are acquired and held by the Consolidated Entity, the
consideration paid, including any directly attributable transactions
costs net of tax, is deducted from contributed equity. Where the
instruments are no longer held as treasury shares, any net
consideration received is included in contributed equity, after
deducting directly attributable transaction costs net of tax.
(xxvi) Fiduciary assets and client money
The Consolidated Entity engages in trust, fund or other fiduciary
activities as well as certain brokerage and other trading-related
activities that result in the holding or placing of assets on behalf of
third parties. Where such assets are controlled, and future
economic benefits are expected to be realised by the Consolidated
Entity, such assets and the income thereon are reflected in the
Statements of financial position and income statement
respectively.
Where this is not the case, these assets and the income thereon
are excluded from the Consolidated Entity’s financial statements
as they are not the assets of the Consolidated Entity. Fee income
earned by the Consolidated Entity relating to its responsibilities
from fiduciary and brokerage and other trading-related activities is
included as part of fee and commission income.
(xxvii) Cash and bank balances
Cash and bank balances includes currency on hand, demand
deposits and short-term balances with Central and other banks
including unallocated precious metal balances. These balances are
subsequently measured at amortised cost except unallocated
precious metals which are held at FVTPL.
(xxviii) Cash and cash equivalents
Cash and cash equivalents comprise of cash and bank balances
(except unallocated precious metal balances) as well as certain
liquid financial investments and non trading reverse repurchase
agreements that have a contractual maturity of three months or
less from the date of acquisition and which are readily convertible
to known amounts of cash, are subject to an insignificant risk of
changes in value, and are available to meet the Consolidated
Entity’s short-term cash commitments. Cash and cash equivalents
exclude margin money balances, trading assets and certain
client-related balances which are segregated from the
Consolidated Entity’s own funds and are thus restricted from use.
(xxix) Investment property
Investment properties are initially recognised at cost and
subsequently stated at fair value at each reporting date. Any
change in fair value, in addition to any lease income generated,
is recognised in other income as part of other operating income
and charges.
(xxx) Comparatives
Where necessary, comparative information has been re-presented
to conform to changes in presentation in the current year.
(xxxi) Rounding of amounts
In accordance with ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191, amounts in the
Directors’ Report and Financial Report have been rounded off to
the nearest million Australian dollars unless otherwise indicated.
292
Directors’ declaration
Macquarie Group Limited
In the Directors’ opinion:
(a) the financial statements and notes set out on pages 161 to 291
are in accordance with the Corporations Act 2001 (Cth)
including:
(i) complying with Australian Accounting Standards, and
(ii) giving a true and fair view of the Company’s and the
Consolidated Entity’s financial positions as at 31 March
2024 and their performance for the financial year ended
on that date, and
(b) there are reasonable grounds to believe that the Company will
be able to pay its debts as and when they become due and
payable.
Note 1(i) includes a statement that the Financial Report complies
with International Financial Reporting Standards.
The Directors have been given the declarations by the CEO and
CFO required by section 295A of the Corporations Act 2001 (Cth).
This declaration is made in accordance with a resolution of the
Directors.
Glenn Stevens AC
Independent Director and Chair
Shemara Wikramanayake
Managing Director and Chief Executive Officer
Sydney
3 May 2024
Glenn Stevens AC
Independent Director and Chair
Shemara Wikramanayake
Managing Director and Chief Executive Officer
Sydney
3 May 2024
293
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About
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Independent auditor’s report
To the members of Macquarie Group Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Macquarie Group Limited
(the Company) and its controlled entities (together the
Consolidated Entity) is in accordance with the Corporations Act
2001 (Cth), including
(a) giving a true and fair view of the Company's and Consolidated
Entity's financial positions as at 31 March 2024 and of their
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the
Corporations Regulations 2001 (Cth).
What we have audited
The Consolidated Entity and Company financial report comprises:
•
the Consolidated and Company statements of financial position
as at 31 March 2024
•
the Consolidated and Company statements of comprehensive
income for the year then ended
•
the Consolidated and Company statements of changes in
equity for the year then ended
•
the Consolidated and Company statements of cash flows for
the year then ended
•
the Consolidated and Company income statements for the year
then ended
•
the notes to the financial statements, including material
accounting policy information and other explanatory
information
•
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing
Standards. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of the
financial report section of our report.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Independence
We are independent of the Company and the Consolidated Entity
in accordance with the auditor independence requirements of the
Corporations Act 2001 (Cth) and the ethical requirements of the
Accounting Professional & Ethical Standards Board’s APES 110
Code of Ethics for Professional Accountants (including
Independence Standards) (the Code) that are relevant to our audit
of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
Our audit approach for the Consolidated Entity
An audit is designed to provide reasonable assurance about
whether the financial report is free from material misstatement.
Misstatements may arise due to fraud or error. They are
considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial report
as a whole, taking into account the geographic and management
structure of the Consolidated Entity, its accounting processes and
controls and the industry in which it operates.
The Consolidated Entity is structured into four Operating Groups
and a Corporate segment, which includes Group Treasury. It
undertakes operational activities that are important to the
financial reporting process in multiple locations overseas, including
sites in Gurugram in India, Jacksonville in the United States of
America and Manila in the Philippines.
294
Independent auditor’s report
To the members of Macquarie Group Limited continued
Consolidated Entity Audit scope
Key audit matters
Our audit focused on where the Consolidated Entity made subjective
judgements; for example, significant accounting estimates involving
assumptions and inherently uncertain future events.
We aligned our audit to the Consolidated Entity's structure by instructing a
component audit team for each of the four Operating Groups, Group Treasury
and the remainder of the Corporate segment. These component audit teams,
in consultation with the group audit team, established an audit strategy
tailored for each Operating Group, Group Treasury and the Corporate segment.
Given the extent of the overseas operations of the Consolidated Entity, the
component audit teams instructed a number of other member firms of the
PwC global network to perform audit procedures. The group audit team
determined the level of supervision and direction needed over the audit work
performed by component audit teams, including the component audit teams'
review and supervision of the overseas audit teams they, in turn, instructed.
The work performed by the component audit teams, together with additional
audit procedures performed by the group audit team, such as procedures over
the Consolidated Entity's consolidation and the financial report disclosures,
provided us with the evidence we needed for our opinion on the Consolidated
Entity's financial report as a whole.
Amongst other relevant topics, we communicated the following key audit
matters to the Board Audit Committee:
•
Provision for expected credit losses on loan assets
•
Valuation of complex or illiquid financial instruments carried at fair value
through profit and loss which are based on significant unobservable inputs
(level 3 financial instruments)
•
Valuation of interests in associates and joint ventures
•
IT systems and controls over financial reporting
•
Estimation of tax payable relating to tax uncertainties
•
Recognition of performance fees and fee income.
These are further described in the Key audit matters section of our report.
295
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About
Financial Report
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the
current period. The key audit matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular audit procedure
is made in that context. The key audit matters identified below relate only to the audit of the Consolidated Entity, unless otherwise noted.
Key audit matter
How our audit addressed the key audit matter
Provision for expected credit losses on loan assets (Refer to Note 13)
Under the credit impairment model required by AASB 9: Financial
Instruments (AASB 9), losses are recognised on an Expected Credit
Loss (ECL) basis. ECLs are required to incorporate forward-looking
information, reflecting the Consolidated Entity’s view of potential
future economic scenarios.
The level of estimation uncertainty and judgement has remained
high during the year ended 31 March 2024 as a result of
uncertainties in the macroeconomic and geopolitical environment
and persistently high levels of inflation in some territories, as well
as developments in the economy more broadly.
In order to meet the ECL requirements of AASB 9, the
Consolidated Entity has developed models that involve judgement
including determining assumptions such as defining a significant
increase in credit risk (SICR). The ECL models of the Consolidated
Entity rely on numerous data elements and certain post model
overlays are applied based on the Consolidated Entity’s judgement.
Given the extent of judgement involved, we consider this to be a
key audit matter.
Our procedures included assessing the design and testing the operating effectiveness of
certain controls supporting the Consolidated Entity’s estimate of the ECL including
controls relating to:
•
review, challenge and approval of certain forward-looking macroeconomic assumptions
and scenario weightings, including specifically the consideration of impacts of rising
inflation and interest rates
•
monitoring the effectiveness of models used to support ECL estimates, and the
validation of new and revised models
•
assessing the credit quality of counterparties
•
accuracy of certain critical data elements used in key ECL models, and
•
review and challenge forums to assess the ECL output and post model overlays.
In addition to controls testing, we performed substantive procedures including:
•
together with PwC credit modelling experts, assessing the appropriateness of relevant
conclusions reached by the Consolidated Entity from monitoring performed on key
models. This included assessing key model components such as SICR and reperforming
certain tests carried out as part of the model monitoring
•
together with PwC credit modelling experts, testing the appropriateness of a selection
of changes to key models
•
together with PwC credit modelling experts, assessing whether the list of critical data
elements identified by the Consolidated Entity was appropriate for key models
•
together with PwC economics experts, assessing the appropriateness of relevant
macroeconomic scenarios and certain forward-looking economic data developed by the
Consolidated Entity
•
testing the completeness and accuracy of certain critical data elements used in key ECL
models
•
assessing a selection of post model overlays identified by the Consolidated Entity,
including developing an understanding of the methodology used for overlay derivation
and testing the underlying datasets used for the calculations, and
•
considering the impacts on the ECL events occurring subsequent to balance date.
For credit impaired loan (stage III) provisions, we examined a sample of individual loan
exposures to consider the appropriateness of provisions recognised.
We assessed the reasonableness of the Consolidated Entity’s disclosures in the financial
report against the Australian Accounting Standards.
296
Key audit matter
How our audit addressed the key audit matter
Valuation of complex or illiquid financial instruments carried at fair value through profit and loss which are based on significant unobservable inputs
(level 3 financial instruments) (Refer to Note 38)
The Consolidated Entity exercises judgement in valuing certain
financial assets and liabilities at fair value where there are
significant unobservable inputs for the valuation of these assets
and liabilities. These assets and liabilities are known as Level 3
financial instruments.
For the Consolidated Entity, these Level 3 financial instruments
predominantly consist of derivative financial instruments, trading
assets, financial investments and loan assets. Judgement is
required in estimating the fair value of these financial instruments
in determining appropriate models, assumptions and inputs.
Given the extent of judgement involved in valuing these Level 3
financial instruments, we considered this to be a key audit matter.
Our procedures included assessing the design and testing the operating effectiveness of
certain controls relating to Level 3 financial instruments, including controls over:
•
approval and validation of the models adopted
•
accuracy of inputs to models
•
the price verification process performed by the Consolidated Entity using prices and
model inputs sourced from third parties
•
calculation and approval of key valuation adjustments, and
•
governance, review and challenge forums.
Together with PwC valuation experts, we tested the Consolidated Entity’s estimate for a
sample of level 3 derivative financial instruments and trading assets. We considered a
sample of collateral disputes, gains and losses on disposals and other events to help assess
the reasonableness of the valuations. We tested a sample of valuation adjustments at
period end, including evaluating the methodology applied and underlying assumptions.
For a sample of level 3 financial investments and loan assets, together with PwC valuation
experts, we assessed the appropriateness of the valuation methodologies applied, as well
as the appropriateness of significant inputs used such as forecasts and comparable market
information.
We assessed the reasonableness of the Consolidated Entity’s disclosures in the financial
report against the requirements of Australian Accounting Standards.
Valuation of interests in associates and joint ventures (Refer to Note 14)
In accordance with Australian Accounting Standards, interests in
associates and joint ventures need to be assessed by the
Consolidated Entity for indicators of impairment or reversal of
impairment at the reporting date. If indicators of impairment or
reversal of impairment exist, the recoverable amount for each
asset needs to be estimated. These assessments involve
significant judgements such as estimating future cash flows,
discount rates applied to future cash flows and evaluating fair
value less costs to sell.
Given the financial significance of the Consolidated Entity’s
recorded interests in associates and joint ventures, and the
judgement and subjectivity involved in determining assumptions,
we considered this to be a key audit matter.
We evaluated the Consolidated Entity’s valuation methodologies used to estimate the
recoverable amount of a sample of interests in associates and joint ventures and the
process by which they were developed. Assisted where relevant by PwC Valuation experts,
for a sample of interests in associates and joint ventures, our procedures included:
•
evaluating the Consolidated Entity’s assessment of whether there were any indicators
of impairment or whether impairment losses recognised in prior periods should be
reversed
•
evaluating the appropriateness of the impairment assessment methodology and
significant assumptions applied in calculating the recoverable amount, where indicators
of impairment or reversal of impairment have been identified
•
comparing previous cashflow forecasts to actual results, or comparing previous net
asset values to underlying investment values, to assess the ability of the Consolidated
Entity to forecast accurately
•
assessing the appropriateness of discount rates used in valuations
•
assessing certain underlying data used in determining the carrying value and
recoverable amount, and
•
testing the mathematical accuracy of the Consolidated Entity’s discounted cashflow
models which were used to determine the recoverable amount of the asset.
We assessed the reasonableness of the Consolidated Entity’s disclosures in the financial
report against the requirements of the Australian Accounting Standards.
Independent auditor’s report
To the members of Macquarie Group Limited continued
297
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Key audit matter
How our audit addressed the key audit matter
IT systems and controls over financial reporting (Consolidated Entity and Company)
The Consolidated Entity's and Company’s operations and financial
reporting processes are heavily dependent on IT systems for the
processing and recording of a significant volume of transactions.
A fundamental component of these IT systems and controls is
ensuring that risks in relation to inappropriate user access
management, unauthorised program changes and IT operating
protocols are managed.
Due to this, we consider the operation of IT systems and controls
over financial reporting to be a key audit matter.
For material financial statement balances we developed an understanding of the business
processes, IT systems used to generate and support those balances and associated IT
application controls and IT dependencies in manual controls. Our procedures included
evaluating the design and, where relevant, testing the operating effectiveness of certain
controls over the continued integrity of the IT systems that are relevant to financial
reporting. This involved assessing, where relevant to the audit:
•
change management: the processes and controls used to develop, test and authorise
changes to the functionality and configurations within systems
•
system development: the project disciplines which ensure that significant
developments or implementations are appropriately tested before implementation and
that data is migrated/converted and transferred completely and accurately
•
security: the access controls designed to enforce segregation of duties, govern the use
of generic and privileged accounts or ensure that data is only changed through
authorised means, and
•
IT operations: the controls over operations are used to ensure that any issues that arise
are managed appropriately.
Within the scope of our audit where technology services are provided by a third party, we
obtained assurance through independent testing or, where available, considered assurance
reports from the third party’s auditor on the design and operating effectiveness of relevant
controls for the reporting period.
We also carried out tests, on a sample basis, of IT application controls and IT dependencies
in manual controls that were key to our audit testing in order to assess the accuracy of
certain system calculations, the generation of certain reports and the operation of certain
system enforced access controls.
Where we identified design or operating effectiveness matters relating to IT systems or
application controls relevant to our audit, we performed alternative or additional audit
procedures, which included considering mitigating controls in order to respond to the
impact on our overall audit approach.
Estimation of tax payable relating to tax uncertainties (Refer to Note 23)
The Consolidated Entity is subject to taxation in a number of
jurisdictions. The assessment of the amounts expected to be paid
to tax authorities is considered initially by the Consolidated Entity
in each local territory, and then reviewed centrally, with
consideration given to particular tax positions in certain
jurisdictions.
In some cases, the treatment of tax positions requires judgement
to estimate the ultimate amounts of tax that will be paid, which
resulted in this being considered a key audit matter.
Our procedures included evaluating the analysis conducted by the Consolidated Entity
which sets out the basis for judgements made in respect of the ultimate amounts expected
to be paid to tax authorities.
Assisted by PwC tax experts, we read a risk focused selection of correspondence with tax
authorities and external advice obtained by the Consolidated Entity and used our
understanding of the business to assess the completeness and quantum of the provisions
for tax. We considered the likelihood of additional tax exposures occurring based on our
knowledge of tax legislation, applicable precedent and industry developments, noting the
level of judgement involved.
We assessed the reasonableness of the Consolidated Entity’s disclosures in the financial
report against the requirements of the Australian Accounting Standards.
Recognition of performance fees and fee income (Refer to Note 2)
In some cases, judgement is required by the Consolidated Entity to
estimate the timing and amount of fee income and performance
fees recognised in accordance with the requirements of Australian
Accounting Standards.
Given the extent of the judgement involved, we considered this to
be a key audit matter.
Our audit procedures included evaluating the design of relevant controls relating to the
recognition and measurement of fee income and performance fees.
In assessing the appropriateness of the recognition of fee income and performance fees,
we tested the Consolidated Entity’s estimate for a sample of fee income based on relevant
information in supporting documents including contracts, fund constitutions and
management agreements.
Specifically for performance fees, we also considered the nature of the underlying fund
assets, the proportion of assets already realised, the returns on the assets realised to date
and the potential for volatility in the valuation of the remaining unrealised assets.
We assessed the reasonableness of the Consolidated Entity’s disclosures in the financial
report against the requirements of the Australian Accounting Standards.
298
Independent auditor’s report
To the members of Macquarie Group Limited continued
Other information
The directors are responsible for the other information. The other
information comprises the information included in the annual
report for the year ended 31 March 2024, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other
information and accordingly we do not express any form of
assurance conclusion thereon through our opinion on the financial
report. We have issued a separate opinion on the remuneration
report.
In connection with our audit of the financial report, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed on the other information
that we obtained prior to the date of this auditor’s report, we
conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing
to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation
of the financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act
2001 (Cth) and for such internal control as the directors determine
is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement,
whether due to fraud or error.
In preparing the financial report, the directors are responsible for
assessing the ability of the Company and the Consolidated Entity
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Company or the Consolidated Entity or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial
report
Our objectives are to obtain reasonable assurance about whether
the financial report as a whole is free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in
accordance with the Australian Auditing Standards will always
detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the
financial report.
A further description of our responsibilities for the audit of the
financial report is located at the Auditing and Assurance Standards
Board website at: https://www.auasb.gov.au/admin/file/
content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in the directors’
report for the year ended 31 March 2024.
In our opinion, the remuneration report of Macquarie Group
Limited for the year ended 31 March 2024 complies with section
300A of the Corporations Act 2001 (Cth).
Responsibilities
The directors of the Company are responsible for the preparation
and presentation of the remuneration report in accordance with
section 300A of the Corporations Act 2001 (Cth). Our
responsibility is to express an opinion on the remuneration report,
based on our audit conducted in accordance with Australian
Auditing Standards.
PricewaterhouseCoopers
Voula Papageorgiou
Partner
Sydney
3 May 2024
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo,
GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999
Liability limited by a scheme approved under
Professional Standards Legislation.
PricewaterhouseCoopers
Voula Papageorgiou
Partner
Sydney
3 May 2024
299
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Further Information
Directors’ Report
Governance
About
Financial Report
Ten year history
The financial information for the full years ended 31 March 2015–2024 are based on the reported results using the Australian Accounting
Standards that were effective and adopted by the Consolidated Entity at the reporting dates, which also comply with IFRS as issued by the
IASB. Income Statements and Statements of Financial Position metrics for previous reporting periods have been restated only to the extent as
required by the accounting standards. The financial reporting periods may hence not be fully comparable with one another as a result of
changes in accounting standards’ requirements.
YEAR ENDED 31 MARCH
Particulars
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
Income Statement ($ million)
Net operating income
16,887
19,122
17,324
12,774
12,325
12,754
10,920
10,364
10,158
9,262
Total operating expenses
(12,061) (12,130) (10,785)
(8,867)
(8,871)
(8,887)
(7,456)
(7,260)
(7,143)
(6,740)
Operating profit before income tax
4,826
6,992
6,539
3,907
3,454
3,867
3,464
3,104
3,015
2,522
Income tax expense
(1,291)
(1,824)
(1,586)
(899)
(728)
(879)
(883)
(868)
(927)
(899)
Profit after income tax
3,535
5,168
4,953
3,008
2,726
2,988
2,581
2,236
2,088
1,623
(Profit)/loss attributable to non-controlling
interests1
(13)
14
(247)
7
5
(6)
(24)
(19)
(25)
(19)
Profit attributable to the ordinary equity
holders of Macquarie Group Limited
3,522
5,182
4,706
3,015
2,731
2,982
2,557
2,217
2,063
1,604
Statement of financial position ($ million)
Total assets
403,404 387,872 399,176 245,653 255,802 197,757 191,325 182,877 196,755 187,976
Total liabilities
369,408 353,766 370,370 223,302 234,018 179,393 173,145 165,607 181,091 173,580
Net assets
33,996
34,106
28,806
22,351
21,784
18,364
18,180
17,270
15,664
14,396
Loan assets
176,371 158,572 134,744 105,026
94,117
77,811
73,509
69,288
72,393
67,663
Shareholders' equity2
33,481
33,155
28,561
22,048
21,063
17,761
16,357
15,563
15,116
13,909
Impaired loan assets (net of provisions)3
2,250
1,689
1,325
1,544
1,528
1,674
351
547
418
594
Share information
Dividends per share (cents)
Interim
255
300
272
135
250
215
205
190
160
130
Final
385
450
350
335
180
360
320
280
240
200
Total
640
750
622
470
430
575
525
470
400
330
Basic earnings per share (cents per share)
916.6 1,353.7 1,271.7
842.9
791.0
883.3
758.2
657.6
619.2
502.3
Share price at reporting date ($)
199.70
175.66
203.27
152.83
85.75
129.42
102.90
90.20
66.09
76.67
Ordinary shares (million shares)
383.0
386.5
383.6
361.8
354.4
340.4
340.4
340.4
340.3
333.5
Market capitalisation as at reporting date
(fully paid ordinary shares) ($ million)
76,478
67,889
77,984
55,297
30,388
44,052
35,024
30,700
22,491
25,569
Net tangible assets per ordinary share ($)
76.32
75.89
64.59
53.91
50.21
46.21
45.12
42.74
41.23
38.19
Ratios (%)
Annualised return on equity (%)
10.8
16.9
18.7
14.3
14.5
18.0
16.8
15.2
14.7
14.0
Ordinary dividend payout ratio4
69.7
55.9
50.2
56.4
55.8
65.6
69.8
72.0
65.7
67.6
Expense/income ratio
71.4
63.4
62.3
69.4
72.0
69.7
68.3
70.1
70.3
72.8
Net loan (reversal)/losses as % of loan assets
(excluding securitisation SPVs)
(0.1)
0.2
0.1
0.4
0.8
0.4
0.3
0.5
1.0
0.7
Assets under management ($ billion)5
938.3
878.6
802.4
598.1
631.0
582.3
516.0
494.5
488.9
497.6
Staff numbers
20,666
20,509
18,133
16,459
15,849
15,602
14,810
13,925
14,660
14,373
1 For financial years ended 31 March 2015–2020, includes Macquarie Income Securities distributions and Macquarie Income Preferred Securities distributions.
2 Represents capital and reserves attributable to the ordinary equity holders of Macquarie Group Limited.
3 Represents the net exposure in credit impaired loan assets.
4 The ordinary dividend payout ratio is calculated as the estimated number of eligible shares on the record date multiplied by the dividend per share, divided by the profit attributable to
MGL shareholders.
5 MAM Private Markets Assets under Management (AUM) includes equity yet to deploy and equity committed to assets but not yet deployed.
300
05
12-14 Rond Point des
Champs‑Élysées, Paris
Located centrally in one of the most
historical parts of the city, Macquarie’s
new Paris office opened in 2022 and
provides a unique hybrid-enabled
working environment for our people
and clients, supporting our ongoing
growth across continental Europe.
Further
Information
301
Financial Report
Directors’ Report
Governance
About
Further Information
Macquarie Group Limited and its subsidiaries 2024 Annual Report
302
Additional investor information
Shareholder calendar
2024
Date
Event
3 May
Full-year result announcement
13 May
Ex-dividend date for final ordinary dividend
14 May
Record date for final ordinary dividend
7 June
Payment date for BCN3 distribution
11 June
Payment date for MCN4 distribution
12 June
Payment date for MCN6 distribution
17 June
Payment date for MCN3 distribution
18 June
Payment date for MCN5 distribution
21 June
Payment date for BCN2 distribution
2 July
Payment date for final ordinary dividend
25 July
AGM
9 September
Payment date for BCN3 distribution
10 September
Payment date for MCN4 distribution
12 September
Payment date for MCN6 distribution
16 September
Payment date for MCN3 distribution
18 September
Payment date for MCN5 distribution
23 September
Payment date for BCN2 distribution
30 September
Financial half-year end
1 November(1)
Half-year result announcement
11 November(1)
Ex-dividend date for interim ordinary dividend
12 November(1)
Record date for interim ordinary dividend
9 December
Payment date for BCN3 distribution
10 December
Payment date for MCN4 distribution
12 December
Payment date for MCN6 distribution
16 December
Payment date for MCN3 distribution
17 December(1)
Payment date for interim ordinary dividend
18 December
Payment date for MCN5 distribution
23 December
Payment date for BCN2 distribution
2025
Date
Event
7 March
Payment date for BCN3 distribution
10 March
Payment date for MCN4 distribution
12 March
Payment date for MCN6 distribution
17 March
Payment date for MCN3 distribution
18 March
Payment date for MCN5 distribution
21 March
Payment date for BCN2 distribution
31 March
Financial year end
(1) These dates are subject to change.
2024 Annual General Meeting
Macquarie Group Limited’s 2024 AGM will be held at 10:30am
on Thursday, 25 July 2024. Details of the meeting will be sent to
shareholders separately.
The closing date for the receipt of nominations from
persons wishing to be considered for election as a director
is Wednesday, 22 May 2024.
Dividend details
MGL generally pays a dividend on its fully paid ordinary shares
twice a year following the interim and final results announcements.
The proposed dates for the 2024 calendar year are in the
calendar opposite.
Dividend Reinvestment Plan (DRP)
The DRP allows shareholders to apply their dividends to acquire new
MGL ordinary shares rather than receiving dividends in cash.
Stock exchange listing
Equity or hybrid security
Stock exchange listing
Trading code
Macquarie Group Limited Securities
MGL ordinary shares
ASX
MQG
Macquarie Group Capital
Notes 3 (MCN3)
ASX
MQGPC
Macquarie Group Capital
Notes 4 (MCN4)
ASX
MQGPD
Macquarie Group Capital
Notes 5 (MCN5)
ASX
MQGPE
Macquarie Group Capital
Notes 6 (MCN6)
ASX
MQGPF
Macquarie Bank Limited Convertible Securities
Macquarie Bank Capital
Notes 2 (BCN2)
ASX
MBLPC
Macquarie Bank Capital
Notes 3 (BCN3)
ASX
MBLPD
Macquarie Additional Capital
Securities (MACS)
SGX
6F6B
MGL also has debt securities quoted on the London Stock Exchange,
SGX, SIX Swiss Exchange Ltd and Taipei Exchange.
On-market buy-back
As announced to ASX on 3 November 2023, Macquarie intends to
buy-back up to $A2.0 billion of its ordinary shares under the current
on-market buy-back. As of 31 March 2024, Macquarie has purchased
$A644 million of ordinary shares under the buy-back.
Equity and hybrid securities
The following information is correct as at 31 March 2024.
303
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Financial Report
Directors’ Report
Governance
About
Further Information
Macquarie Group Limited securities
Fully paid ordinary shares
Voting rights
At meetings of members or classes of members, each member holding ordinary shares may vote in person or by proxy, attorney or (if the
member is a body corporate) corporate representative. On a show of hands, every person present who is a member or a proxy, attorney
or corporate representative of a member has one vote and on a poll every member present in person or by proxy, attorney or corporate
representative has:
• one vote for each fully paid share held by the member, and
• that proportion of a vote for any partly paid ordinary share calculated in accordance with article 8.18 of the MGL Constitution.
A copy of the MGL Constitution is available at macquarie.com/corporate‑governance
20 largest holders
Registered holder
Number of ordinary shares held
% of ordinary shares
HSBC Custody Nominees (Australia) Limited
108,038,640
28.21
J P Morgan Nominees Australia Pty Limited
66,204,408
17.29
Citicorp Nominees Pty Limited
30,508,613
7.97
Bond Street Custodians Limited
13,137,398
3.43
BNP Paribas Nominees Pty Ltd
8,755,516
2.29
National Nominees Limited
8,172,990
2.13
Bond Street Custodians Limited
4,882,785
1.28
BNP Paribas Noms Pty Ltd
4,408,522
1.15
BNPP Noms Pty Ltd HUB24 Custodial Serv Ltd
2,855,818
0.75
Argo Investments Limited
2,613,905
0.68
Bond Street Custodians Limited
2,564,914
0.67
HSBC Custody Nominees (Australia) Limited
2,539,492
0.66
Netwealth Investments Limited
2,100,716
0.55
Citicorp Nominees Pty Limited
900,695
0.24
Custodial Services Limited
838,693
0.22
Nicholas Moore
698,417
0.18
Washington H Soul Pattinson and Company Limited
678,129
0.18
Total
264,828,110
69.15
Substantial shareholders
The following holders are registered by MGL as a substantial shareholder, having declared a relevant interest in accordance with the Act, in
the voting shares:
Registered holder
Number of ordinary shares held
Macquarie Group Limited
27,719,351
State Street Corp
22,990,911
Blackrock Group
22,929,594
Vanguard
19,483,841
Spread of shareholdings
Range
Number of shareholders
Number of shares
% of shares
1–1,000
204,024
43,768,122
11.43
1,001–5,000
21,468
40,576,690
10.60
5,001–10,000
1,358
9,165,309
2.39
10,001–100,000
625
14,441,873
3.77
100,001 shares and over
58
275,010,539
71.81
Total
227,533
382,962,533
100.00
There were 1,969 shareholders (representing 2,551 shares) who held less than a marketable parcel.
304
Additional investor information
Continued
Macquarie Group Capital Notes 3 (MCN3)
Voting rights
MCN3 are unsecured, subordinated notes issued by MGL that may be exchanged for MGL ordinary shares in certain limited circumstances.
They are non-cumulative and mandatorily convertible. MCN3 holders have no voting rights in respect of meetings of members of MGL in the
absence of such an exchange.
20 largest holders
Registered holder
Number of MCN3 held
% of MCN3
HSBC Custody Nominees (Australia) Limited
743,364
7.43
Citicorp Nominees Pty Limited <143212 NMMT Ltd A/C>
342,910
3.43
Netwealth Investments Limited
216,788
2.17
HSBC Custody Nominees (Australia) Limited – A/C 2
143,196
1.43
Diocese Development Fund – Catholic Diocese of Parramatta
115,000
1.15
Mutual Trust Pty Ltd
111,342
1.11
National Nominees Limited
108,127
1.08
IOOF Investments Services Limited
86,209
0.86
J P Morgan Nominees Australia Pty Limited
82,573
0.83
Citicorp Nominees Pty Limited
74,842
0.75
BNP Paribas Nominees Pty Ltd
63,479
0.63
Nulis Nominees (Australia) Limited
52,986
0.53
Netwealth Investments Limited
50,412
0.50
Invia Custodian Pty Limited
42,395
0.42
Dimbulu Pty Ltd
40,000
0.40
Federation University Australia
30,158
0.30
Ranch Enterprises Pty Ltd
26,500
0.27
Invia Custodian Pty Limited
22,600
0.23
Total
2,825,678
28.26
Spread of noteholdings
Range
Number of MCN3 holders
Number of MCN3
% of MCN3
1–1,000
10,494
3,582,121
35.82
1,001–5,000
1,202
2,520,623
25.21
5,001–10,000
79
604,349
6.04
10,001–100,000
40
1,039,383
10.39
100,001 notes and over
9
2,253,524
22.54
Total
11,824
10,000,000
100.00
There were 4 noteholders (representing 10 notes) who held less than a marketable parcel.
305
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Financial Report
Directors’ Report
Governance
About
Further Information
Macquarie Group Capital Notes 4 (MCN4)
Voting rights
MCN4 are unsecured, subordinated notes issued by MGL that may be exchanged for MGL ordinary shares in certain limited circumstances.
They are non-cumulative and mandatorily convertible. MCN4 holders have no voting rights in respect of meetings of members of MGL in the
absence of such an exchange.
20 largest holders
Registered holder
Number of MCN4 held
% of MCN4
HSBC Custody Nominees (Australia) Limited
498,065
5.50
Netwealth Investments Limited
293,052
3.24
BNPP Noms Pty Ltd HUB24 Custodial Serv Ltd
244,342
2.70
Citicorp Nominees Pty Limited
129,986
1.44
J P Morgan Nominees Australia Pty Limited
101,963
1.13
Dimbulu Pty Ltd
100,000
1.10
HSBC Custody Nominees (Australia) Limited – A/C 2
81,207
0.90
Mutual Trust Pty Ltd
76,717
0.85
BNP Paribas Nominees Pty Ltd
70,247
0.78
John E Gill Trading Pty Ltd
65,000
0.72
National Nominees Limited
60,780
0.67
IOOF Investment Services Limited
54,274
0.60
Netwealth Investments Limited
53,976
0.60
Invia Custodian Pty Limited
42,840
0.47
IOOF Investment Services Limited
39,480
0.44
JDB Services Pty Ltd
32,967
0.36
BNP Paribas Nominees Pty Ltd
27,761
0.31
Nulis Nominees (Australia) Limited
25,627
0.28
Baird Group Pty Limited
25,300
0.28
Pendant Realty Pty Ltd
25,000
0.28
Total
2,048,584
22.62
Spread of noteholdings
Range
Number of MCN4 holders
Number of MCN4
% of MCN4
1–1,000
10,200
3,593,554
39.69
1,001–5,000
1,121
2,310,988
25.52
5,001–10,000
93
686,676
7.58
10,001–100,000
43
1,196,284
13.21
100,001 notes and over
5
1,267,408
14.00
Total
11,462
9,054,910
100.00
There were 3 noteholders (representing 9 notes) who held less than a marketable parcel.
306
Additional investor information
Continued
Macquarie Group Capital Notes 5 (MCN5)
Voting rights
MCN5 are unsecured, subordinated notes issued by MGL that may be exchanged for MGL ordinary shares in certain limited circumstances.
They are non-cumulative and mandatorily convertible. MCN5 holders have no voting rights in respect of meetings of members of MGL in the
absence of such an exchange.
20 largest holders
Registered holder
Number of MCN5 held
% of MCN5
HSBC Custody Nominees (Australia) Limited
427,644
5.89
BNPP Noms Pty Ltd HUB24 Custodial Serv Ltd
326,137
4.50
Netwealth Investments Limited
173,808
2.40
BNP Paribas Nominees Pty Ltd
94,426
1.30
National Nominees Limited
70,871
0.98
Mutual Trust Pty Ltd
66,134
0.91
J P Morgan Nominees Australia Pty Limited
61,697
0.85
Dimbulu Pty Ltd
55,000
0.76
BNP Paribas Nominees Pty Ltd
53,695
0.74
IOOF Investment Services Limited
50,557
0.70
IOOF Investment Services Limited
48,859
0.67
HSBC Custody Nominees (Australia) Limited – A/C 2
47,320
0.65
Citicorp Nominees Pty Limited
47,034
0.65
Nulis Nominees (Australia) Limited
42,982
0.59
Netwealth Investments Limited
41,304
0.57
Federation University Australia
37,276
0.51
HSBC Custody Nominees (Australia) Limited – GSI EDA
30,000
0.41
Australian Grain Tech Pty Ltd
27,585
0.38
Kogarah Golf Club Ltd
25,424
0.35
Corp of the Tstees of The Roman Cath Arc
25,000
0.34
Total
1,752,753
24.61
Spread of noteholdings
Range
Number of MCN5 holders
Number of MCN5
% of MCN5
1–1,000
8,624
2,941,081
40.54
1,001–5,000
952
1,998,130
27.54
5,001–10,000
51
378,630
5.22
10,001–100,000
30
1,008,970
13.91
100,001 notes and over
3
927,589
12.79
Total
9,660
7,254,400
100.00
There was 1 noteholder (representing 1 note) who held less than a marketable parcel.
307
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Financial Report
Directors’ Report
Governance
About
Further Information
Macquarie Group Capital Notes 6 (MCN6)
Voting rights
MCN6 are unsecured, subordinated notes issued by MGL that may be exchanged for MGL ordinary shares in certain limited circumstances.
They are non-cumulative and mandatorily convertible. MCN6 holders have no voting rights in respect of meetings of members of MGL in the
absence of such an exchange.
20 largest holders
Registered holder
Number of MCN6 held
% of MCN6
HSBC Custody Nominees (Australia) Limited
777,684
10.37
Netwealth Investments Limited
365,874
4.88
BNPP Noms Pty Ltd HUB24 Custodial Serv Ltd
325,926
4.35
Citicorp Nominees Pty Limited
125,796
1.68
BNP Paribas Nominees Pty Ltd
109,074
1.45
J P Morgan Nominees Australia Pty Limited
108,165
1.44
Netwealth Investments Limited
92,199
1.23
Dimbulu Pty Ltd
60,000
0.80
John E Gill Trading Pty Ltd
50,000
0.67
National Nominees Limited
47,122
0.63
HSBC Custody Nominees (Australia) Limited – A/C 2
41,085
0.55
Nora Goodridge Investments Pty Ltd
32,062
0.43
IOOF Investment Services Limited
29,441
0.39
Nulis Nominees (Australia) Limited
24,718
0.33
D F 4 Pty Ltd
23,790
0.32
Berne No 132 Nominees Pty Ltd <684168 A/C>
20,000
0.27
Farrar Superannuation Pty Ltd
20,000
0.27
Bardavis Pty Limited
18,990
0.25
Uuro Pty Ltd
18,900
0.25
Gainsdale Pty Ltd
18,001
0.24
Total
2,308,827
30.78
Spread of noteholdings
Range
Number of MCN6 holders
Number of MCN6
% of MCN6
1–1,000
7,066
2,659,214
35.46
1,001–5,000
938
1,953,004
26.04
5,001–10,000
59
396,905
5.29
10,001–100,000
27
678,358
9.05
100,001 notes and over
6
1,812,519
24.17
Total
8,096
7,500,000
100.00
There were no noteholders who held less than a marketable parcel.
308
Additional investor information
Continued
Macquarie Bank Limited convertible securities
Macquarie Additional Capital Securities (MACS)
Voting rights
MACS are unsecured subordinated notes issued by MBL, acting
through its London Branch, that may be exchanged for MGL
ordinary shares in certain limited circumstances. MACS holders have
no voting rights in respect of meetings of members of MBL and
have no voting rights in respect of meetings of members of MGL in
the absence of such an exchange.
Single Shareholder
As at 31 March 2024, the $US750 million of MACS were held by one
holder, Cede & Co, as authorised representative for the Depository
Trust Company being the common depository for the MACS global
security. The Bank of New York Mellon as Registrar keeps the
register in respect of MACS.
Macquarie Bank Capital Notes 2 (BCN2)
BCN2 are unsecured, subordinated notes issued by MBL that may be
exchanged for MGL ordinary shares in certain limited circumstances.
They are non-cumulative and mandatorily convertible. BCN2 holders
have no voting rights in respect of MBL and have no voting rights in
respect of meetings of members of MGL in the absence of such an
exchange. As at 31 March 2024, there were 6,410,270 BCN2 on issue
held by 10,293 registered holders.
Macquarie Bank Capital Notes 3 (BCN3)
BCN3 are unsecured, subordinated notes issued by MBL that may be
exchanged for MGL ordinary shares in certain limited circumstances.
They are non-cumulative and mandatorily convertible. BCN3 holders
have no voting rights in respect of MBL and have no voting rights in
respect of meetings of members of MGL in the absence of such an
exchange. As at 31 March 2024, there were 6,548,480 BCN3 on issue
held by 8,225 registered holders.
Unlisted securities
The following information is correct as at 31 March 2024.
MEREP
4,335,026 DSUs are held by 708 participants and 583,386 PSUs are
held by 13 participants in the MEREP.
American Depository Receipt (ADR) program
Macquarie ADRs are negotiable certificates issued by BNY Mellon,
with one ADR representing one MGL ordinary share. They are traded
under the symbol MQBKY and are classified as Level 1. They are
not listed on any exchange and are only traded over-the-counter
via brokers.
BNY Mellon:
BNY Mellon Shareowner Services
PO Box 358516
Pittsburgh, PA 15252-8516 USA
Toll-free telephone number for domestic callers:
1 888 BNY ADRs
Telephone number for international callers:
+1 201 680 6825
Further information can be found at:
adrbnymellon.com/resources/individual‑investors
Enquiries
Investors who wish to enquire about any administrative matter
relating to their MGL shareholding, MCN3, MCN4, MCN5, MCN6,
BCN2 or BCN3 security holding are invited to contact the Share
Registry at:
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000 Australia
Telephone:
1300 554 096 (within Australia)
+61 1300 554 096 (international)
Email:
macquarie@linkmarketservices.com.au
Website:
linkmarketservices.com.au
All other enquiries relating to an MGL share investment can be
directed to:
Investor relations
Macquarie Group Limited
Level 6, 50 Martin Place
Sydney NSW 2000 Australia
Telephone:
+61 2 8232 3333
Email:
macquarie.shareholders@macquarie.com
Website:
macquarie.com/investors
Macquarie’s Company Secretary, Simone Kovacic, may be contacted
on the above number and email address.
Website
The Interim and Annual Reports, presentations, dividend
information and other investor information is available at
macquarie.com/investors
309
Macquarie Group Limited and its subsidiaries 2024 Annual Report
Financial Report
Directors’ Report
Governance
About
Further Information
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310
Defined term
Definition
A
AASB
Australian Accounting Standards Board
Accountable Person
Accountable Person under the Financial
Accountability Regime (FAR)
the Act
Corporations Act 2001 (Cth)
ADI
Authorised Deposit-taking Institution
ADR
American Depository Receipt
AEC
Australian Electoral Commission
AGM
Annual General Meeting
All Ords Index
All Ordinaries Accumulation Index
ALCO
Asset and Liability Committee
Annual Report
MGL’s 2024 Annual Report
ANZ
Australia and New Zealand
APRA
Australian Prudential Regulation Authority
ARRs
alternative reference rates
ASIC
Australian Securities and
Investments Commission
ASX
Australian Securities Exchange or ASX Limited
ABN 98 008 624 691 and the market operated
by ASX Limited
AUM
assets under management
B
BAC
Board Audit Committee
Bank Group
MBL and its subsidiaries
Banking Activities
comprises BFS and most business activities
of CGM
BBSW
Australian Financial Markets Association’s
bank-bill rate published daily on AAP Reuters
website. The Australian equivalent of LIBOR,
SIBOR, etc.
BCBS
Basel Committee on Banking Supervision
BCN2
Macquarie Bank Capital Notes 2
BCN3
Macquarie Bank Capital Notes 3
BEAR
Banking Executive Accountability Regime
BFS
Banking and Financial Services Group
BGCC
Board Governance and
Compliance Committee
BNC
Board Nominating Committee
the Board,
Macquarie Board
the Board of Voting Directors of Macquarie
Group Limited
BONDs
Bank-only Non-Executive Directors
BRC
Board Remuneration Committee
BRiC
Board Risk Committee
Businesses
the areas within the Operating Groups
carrying out various operations
C
CAGR
compound annual growth rate
CCB
capital conservation buffer
CCUS
carbon capture, utilisation and storage
Defined term
Definition
Central Service Groups
the Central Service Groups consist of RMG,
LGG, FMG and COG
CEO
Managing Director and Chief Executive Officer
CFLI
Climate Finance Leadership Initiative
CFO
Chief Financial Officer
CGM
Commodities and Global Markets Group
Clawback
the Board’s ability to recover (in whole or in
part) vested profit share
COG
Corporate Operations Group
the Collection
the Macquarie Group Collection
the Company, MGL
Macquarie Group Limited
ABN 94 122 169 279
Comparable Executive
Key Management
Personnel (Comparable
Executive KMP)
Executive KMP who were members of the
Executive Committee for the full year in both
FY2024 and FY2023
Conduct Risk
the risk of behaviour, action or omission
by individuals employed by, or on behalf
of, Macquarie or taken collectively in
representing Macquarie that may have
a negative outcome for our clients,
counterparties, the communities and markets
in which we operate, our staff, or Macquarie
The Consolidated
Entity, Macquarie
MGL and its subsidiaries
COP
United Nations Climate Change Conference of
the Parties
Corporate
Head office and Central Service Groups
including Group Treasury
CPS 511
APRA Prudential Standard CPS 511
Remuneration
CRO
Chief Risk Officer
D
Deed
Deed of Access, Indemnity, Insurance
and Disclosure
Deed Poll
Indemnity and Insurance Deed Poll dated
12 September 2007
DEI
Diversity, Equity & Inclusion
DFVTPL
designated as FVTPL
Directors
the Voting Directors of MGL (unless the
context indicates otherwise)
Divisions
named divisions within Macquarie
DLP
Director Leadership Program
DPS Plan
Directors’ Profit Share Plan
DRP
Dividend Reinvestment Plan
DSU
Deferred Share Unit issued under the MEREP
E
EAD
exposure at default
ECAM
Economic Capital Adequacy Model
ECL
expected credit loss
EDLP
Executive Director Leadership Program
Glossary
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Macquarie Group Limited and its subsidiaries 2024 Annual Report
Financial Report
Directors’ Report
Governance
About
Further Information
Defined term
Definition
EIR
effective interest rate
EMEA
Europe, Middle East and Africa
ENGs
Employee Network Groups
EPS
earnings per share
ESP
Macquarie Group Employee Share Plan
ESG
Environmental, Social and Governance
ESR
Environmental and Social Risk
EU
the European Union
EURIBOR
Euro Inter-bank Offered Rate
EV
electric vehicle
Executive Committee
the committee typically comprises the CEO
and heads of the Operating Groups and
Central Service Groups
Executive Director, EDs
Macquarie’s most senior level of employee
including Group Heads, Division Heads and
senior business unit managers
Executive Key
Management Personnel
(Executive KMP)
members of the Executive Committee of MGL
Executive
Voting Director
an executive Board member
F
FAR
Financial Accountability Regime
FCTR
foreign currency translation reserve
FLI
forward looking information
FMG
Financial Management Group
the Foundation
Macquarie Group Foundation
FRN
floating rate notes
FVA
funding valuation adjustment
FVOCI
fair value through other
comprehensive income
FVTPL
fair value through profit or loss
G
GDP
gross domestic product
GFANZ
Glasgow Financial Alliance for Net Zero
GGC
Group General Counsel
GHG
greenhouse gas
GIG
Green Investment Group
GRI
Global Reporting Initiative
Group Head
the Head of a particular Operating or Central
Service Group
GST
Goods and Services Tax
GRESB assessment
captures information regarding ESG
performance and sustainability best practices
for real estate and infrastructure funds,
companies and assets worldwide
GW
gigawatt
GWh
gigawatt hours
Defined term
Definition
H–J
HFT
held for trading
HyCC
Hydrogen Chemistry Company
IAD
Internal Audit Division
IASB
International Accounting Standards Board
IBOR
Interbank-offered rates
IFRS
International Financial Reporting Standards
ILO
International Labour Organisation
Independent Directors
independent Voting Directors of the Board
ISSB
International Sustainability Standards Board
K
Key Management
Personnel (KMP)
all Voting Directors and members of the
Executive Committee of MGL
L
LGBTQ+
Lesbian Gay Bisexual Transgender and Queer
LGG
Legal and Governance Group
LIBOR
London Inter-bank Offered Rate
LMI
lenders mortgage insurance
LNG
liquid natural gas
Loss Given Default
(LGD) Estimate
Macquarie’s estimated economic loss should a
counterparty default occur
LTI
Lost Time Injury
LTIFR
Lost Time Injury Frequency Rate
M
M&A
mergers and acquisitions
Macquarie Bank, MBL
Macquarie Bank Limited ABN 46 008 583 542
Macquarie, the
Consolidated Entity
MGL and its subsidiaries
Macquarie
Nominee Director
a person who is appointed by a member of the
Macquarie Group as a director to a board or
board committee of a company
MACS
Macquarie Additional Capital Securities
MAF
Macquarie AirFinance
Malus
the ability of the Board or its delegate to
reduce or eliminate unvested profit share
for certain senior employees in certain
circumstances
MAM
Macquarie Asset Management Group
Management
Division Directors and Executive Directors
who have management or risk responsibility
for a Division or business area
MCN2
Macquarie Group Capital Notes 2
MCN3
Macquarie Group Capital Notes 3
MCN4
Macquarie Group Capital Notes 4
MCN5
Macquarie Group Capital Notes 5
MCN6
Macquarie Group Capital Notes 6
MEREP
Macquarie Group Employee Retained
Equity Plan
312
Glossary
Continued
Defined term
Definition
MFHPL
Macquarie Financial Holdings Pty Limited
MGL ordinary
shares, MQG
MGL fully paid ordinary shares
MGL, the Company
Macquarie Group Limited ABN 94 122 169 279
MRTs
Material Risk Takers under UK or EU
regulatory requirements
MSCI Index
Morgan Stanley Capital International World
Capital Markets Index
N
NCD
negotiable certificates of deposit
NCI
non‑controlling interests
NED
Non‑Executive Director
NIFO
net investment in foreign operations
NOHC
Non‑Operating Holding Company
Non‑Bank Group
MGL, MFHPL and its subsidiaries, MAMHPL
and its subsidiaries
Non‑Banking Activities
comprises Macquarie Capital, MAM and some
business activities of CGM
NPAT
net profit after tax
NZAM
Net Zero Asset Managers initiative
NZBA
Net Zero Banking Alliance
O
OCI
other comprehensive income
Operating Groups
the Operating Groups consist of BFS, CGM,
Macquarie Capital and MAM
Operationally
Segregated
Subsidiaries, OSS
the operations of some controlled subsidiaries
are “segregated” from the rest of Macquarie,
and a tailored Risk Management Framework
may be adopted
OTC
over‑the‑counter
P
PD
probability of default
Probability of Default
(PD) Estimate
an estimate of the likelihood of the rated
entity defaulting on its financial obligations
to Macquarie over the period of a year and
should look ‘through the cycle’ – i.e. represent
the probability of default in natural economic
conditions
PSU
Performance Share Unit issued
under the MEREP
PwC
PricewaterhouseCoopers
Q–R
RAP
Reconciliation Action Plan
RAS
Risk Appetite Statement
RBA
Reserve Bank of Australia
RE100
global corporate renewable energy initiative
bringing together hundreds of large and
ambitious businesses committed to 100%
renewable electricity
RMG
Risk Management Group
RNG
renewable natural gas
Defined term
Definition
ROE
return on equity
ROU
right‑of‑use
RSU
Restricted Share Unit issued under
the MEREP
RSG
responsibly sourced gas
S
SASB
Sustainability Accounting Standards Board
Senior Executive
Macquarie’s combined Division Director and
Executive Director population
Scope 1
emissions released to the atmosphere as
a direct result of an activity, or series of
activities controlled by an organisation. For
example, emissions from natural gas and
diesel usage in corporate offices
Scope 2
indirect emissions released to the atmosphere
associated with the generation of purchased
or acquired electricity, heating and cooling
consumed by the organisation
Scope 3
indirect emissions, other than Scope 2
emissions, that are a consequence of the
activities of the company but occur from
sources not owned or controlled by the
company. For example, emissions associated
with employee travel
Senior Management
members of the Executive Committee of
MGL and Executive Directors (as relevant)
who have a significant management or risk
responsibility in the organisation
SEs
structured entities
SGX
Singapore Stock Exchange
SICR
significant increase in credit risk
SPPI
solely payment of principal and interest
T
TCFD
Financial Stability Board’s Task Force on
Climate‑related Financial Disclosures
tCO2‑e (Carbon dioxide
equivalent in tonnes)
metric measure used to compare the
emissions from various greenhouse gases
based upon their global warming potential
(US Environment Protection Agency)
TFF
Term Funding Facility
TJ
terajoules
TNFD
Taskforce on Nature-related Financial
Disclosures
TSR
total shareholder return
U–V
UN PRI
UN‑supported Principles for
Responsible Investment
VaR
Value‑at‑Risk
Voting Directors
the Voting Directors of MGL as defined in the
MGL Constitution
W–Z
WHS
Work Health and Safety
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Financial Report
Directors’ Report
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About
Further Information
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Contact details
Macquarie Group Limited
Principal Administrative Office
50 Martin Place
Sydney NSW 2000
Australia
Tel: +61 2 8232 3333
Registered Office
Macquarie Group Limited
Level 6, 50 Martin Place
Sydney NSW 2000
Australia
Tel: +61 2 8232 3333
macquarie.com