Macquarie Group Limited (MQG) Q3 FY2026 Earnings Call Transcript & Summary

Well, good morning, everyone, and thank you for joining us here today for Macquarie's Third Quarter and Third Quarter '26 and 2026 Operational Briefing. Before we begin today, I would like to acknowledge the traditional custodians of this land, the Gadigal of the Eora Nation and pay our respects to elders past, present and emerging. Today, we will have a third quarter update, which will be given by our CEO, Shemara Wikramanayake, followed by a Q&A session. We'll then hear from each of our operating groups, talking about Macquarie's presence here in ANZ and then we'll hear from Andrew Casey talking about risk and Nicole Sabara and team talking about technology. So with, I will hand over to Shemara. Thank you.

And good morning, everyone. Welcome from me and I should note before I get going that we have all our operating group heads here in the front row as well with Benoit Michael Silverton joining us from overseas. We've just got Greg Board traveling, but they're all here for questions, if needed. So turning to the third quarter. We'll start with this slide as we always do, that just notes are for footprint of our 4 operating groups and the 4 central service groups that support them and the mix of our income. This is no different to what you saw at the end of the first half. But turning to the third quarter results. As we mentioned, throughout this year, we expected the earnings to be weighted to the second half over this financial year. And we saw that play out in the results for the third quarter. being in line with what we expected. So Macquarie Asset Management was substantially up, both on the third comparable quarter and the year-to-date. And that was driven by in the third quarter. As you know, we had the completion of the divestment of the public investments in North America and Europe, and we also had increased performance fees for the year-to-date period. Then BFS is up slightly on the prior quarter and the year-to-date, and that's driven by ongoing growth in our volume in our loans and also in our deposits, offset to some extent by margin compression and that's competition, but also the runoff of the car lease portfolio, which was a higher-margin business. And then in CGM, the result in CGM is up on the prior comparable period, and it's in line with the year-to-date for last year. And the catch-up that we had in that third quarter was mostly driven by increase in our asset finance business. And then Macquarie Capital, also like Macquarie Asset Management, substantially up, both on the prior quarter last year and on the prior year-to-date. And that was driven by the ongoing growth of our credit book that's delivering consistent earnings realizations in our equity book, and in the fee and commission income, we were up on the full year-to-date versus last year, but the quarter we had a very big quarter last year. So looking in a bit more detail at each of our 4 operating groups and where they sit at the end of this quarter. Macquarie Asset Management, at the bottom there you can see, as I mentioned, we completed the divestment of our North American and European public investments, which is about $250 billion of assets that we've now transferred to Nora. But people may not be as aware that in Australia, we have now $314 billion of assets under management in public investments, and that is up 5%, and that's being driven by inflows mostly into fixed income, but also favorable market, and you'll get a bit more of a deep dive on that business today. In private markets, we're at about $227 billion of equity under management, which is up 1%, mostly driven by fundraising. We had a good fundraising period of $6.3 billion, investing of $7.7 million, and we're sitting with dry powder in the private markets business of about $25.9 million. Banking and Financial Services, again, strong growth in our home loans, up 7%. Our business banking also up 1%, and that was supported by deposits, which are up 6%. And the funds on platform were down 1%, and that was due to market movements in the composition of our funds on the platform. And then turning to Commodities and Global Markets. As I mentioned just now, the asset finance business is up with growing in our shipping and meters book. Financial markets are in line. And in the commodities business, we had an improved performance in the North American Gas and Power & Resources business, particularly. Now that performance was offset to some extent by the increase in cost as we talked about in the first half as we invest in the operating platform remediation programs, and there were some transaction costs as well in the third quarter as in the first half. And then Macquarie Capital, big contribution there was private credit is a big contributor, and the book was up $5.7 billion to $28.9 million. In this period, we also had equity realizations, which have, as you know, the book has been seasoning and we're getting into a period of more realizations, the parking eye and the Planet assets in Europe. And then, as I mentioned in relation to the fee and commission income, this year, activity levels, we had a strong year last year as well, but our activity levels are up, although the third quarter last year was very strong. Then turning to the balance sheet side of it on the funding, capital funding, liquidity, you can see our ratios up the top there, our SIPs leverage ratios, LCR and NSFR, all comfortably above the Ball 3 amendments. And the other thing I'd note on this page is our surplus capital is at $7.5 billion, which is down $1 billion and that's because we paid out the second half dividend. So that's slightly offset by the 3Q earnings, but also absorption of capital into the businesses. And in terms of that absorption, you can see in this last quarter, CGM, we had about $800 million in credit capital as we head into the Northern winter as well. We also had in Macquarie Capital, as I mentioned, the growth of the private credit book absorbing capital. But in Macquarie Asset Management, we released several hundred million of capital with the exit of the public investments business in North America and Europe. And BFS, even though the books were growing, it was flat because of the runoff of the car leasing. Then looking at update on regulatory and legal matters. And we regularly give or we always give an update on this. In terms of regulatory, the main thing I'd note there is that we had APRA recently announced the reduction of the add-ons in our LCR and NSFR, and we're continuing to work with APRA on the range of programs we've discussed with you before. And similarly, with ASIC, we -- between us have agreed in relation to the short sale transaction reporting matter that we will submit to the quarter $35 million penalty. So the last thing for me to cover really is a short-term outlook before moving on to questions. And in relation to that, again, taking it by operating group. Macquarie Asset Management, as we've been saying, we expect excluding the divestment of that public investments business that our base fees will be broadly in line, but we expect our net other operating income to be significantly up. And the big driver of that is the performance fees this year that we've been sharing with you. Banking and financial services, ongoing growth in volumes in our loan books, deposits and our funds on platform always subject to market competitive dynamics impacting margins and ongoing investment in our tech platform. And in Macquarie Capital, on the transaction activity side, we expect -- we continue to expect it to be in line with last year, which was a strong year. But on the capital investing side, we're continuing to see growth in the private credit book. And now we're starting to have realizations in the equity book, and we're continuing to deploy there. And then CGM, whilst we expect the continued contribution from asset finance and financial markets, we're now guiding that we expect the commodities income to be up for FY '26. And at the corporate level, we expect the compensation ratio to be in line with historical levels. And the tax rate, we expect to be consistent with the first half of this financial year, which is at the higher end of the broad range that we typically have for our expected tax rate, and that's because of the mix of our income. These short-term outlooks are always subject to the factors that we have shared with you previously that are noted on that page. And I'll hand over to Sam now for questions because I want to leave time for you to hear from our Australian teams. Thank you.

Great. Thanks, Mara. So we'll start with questions in the room, and then we'll go online. I'll start with Brendan and we'll move across to the root. We just get a microphone to you, Brendan, just 1 second.

Brendan Spares from Goldman Sachs. Just a question on the tax rate. You talked about the second half and the change in the mix of business. Just given the strong performance in commodities that you talked about in the third quarter and you've upgraded your guidance. What are some of the drivers of this mix change that's leading to the higher tax rate?

Yes. I'll let Frank answer that -- but I would just say, commodities, it was asset finance that drove the increase in the third quarter. So the winter would impact more the fourth quarter, but I'll let you.

Yes. Brendan, as you know, our tax rate is really a composition of the geographic composition of our income and also the nature of the income that we have. And as we're heading towards the end of the financial year, we thought it was prudent to give guidance to the market in relation to the tax rate being broadly in line with what we had in the first half. I think when you take into account the broad range of activities that we have across the globe, the nature of the income that we have and obviously, the different tax regimes that we have, we just thought it made more sense right now to give that guidance to the market.

We'll just go to John is Jon Mott?

Jon from Barrenjoey. Question on the commodities business. You said the third quarter is very good, mainly driven by the asset finance. But the fourth quarter, you've increased the guidance to up, which I think I've got to get my source out, but that usually means about 10% -- so does that include a stronger fourth quarter, given the weather conditions in the U.S. and the gas trading were seen some pretty wide spreads across the gas prices in the U.S. over the last few weeks. So are you expecting a much better North American gas performance in the fourth quarter in that guidance?

Yes. And I'll let Simon comment because he's sitting here in the front row. But as you saw in January, we had extreme cold weather for a very short period in North America, and our teams were able to respond to that in that very contained period, partly because of the insights on the market, but partly the infrastructure footprint that we have with the pipelines and the power lines is where we benefited quite a bit. Now that, weather -- it's bancaround, but it's the cold snap was quite short-lived, but that has driven our guidance in fourth quarter. I'll let Simon elaborate.

Sure. I think you've answered pretty well, Shimao, I'm standing up, I'll be told to stand up. So you're well aware, people follow the commodity prices that the third quarter prices in the initial part of winter for gas prices in the U.S. at least in June, most of December. -- we really saw that spike in 3 weeks in January. And if you follow NYMEX or Henry Hub, we saw the price rally up to sort of mid-70s from sort of mid-3s. Now tied, hasn't met. But what we've seen after the 3 weeks is those prices now collapsed back to, I think, this morning of about $3.20. So the good news is the optionality in the platform has kicked in. We've been able to take advantage of that, but it has been a reasonably short lived, but winter is still is a play. So that optionality does, as Simo mentioned, revolve around our physical assets. So we've been able to capitalize on those, not only in the gas markets, but also particularly in power and the movement of power around our financial transmission rights.

Just to follow up on that. You're still seeing some extremely cold weather in the Northeast. And I think the price of some of the gas is still over $20, $30 up in the Northeast corner. I think Southern California is down to $1.80. So you're seeing some big spreads across the country. Are you able to benefit from that? Or is it just the Henry Hub going up and down that we should be focused on?

No, obviously you're right. Location oil spreads are in play at the moment. As you'd all be well aware, we have about 19 pipe assets across North America and Canada. So it does allow us to participate in those location opportunities as they arise. And so we are still able to take advantage of that is, but those, I guess, Permian Basin spreads clicking around, particularly this morning. So the opportunity still prevails, but less than what we were seeing perhaps for those 3 weeks in January.

But I'll go to Ed just cost next to John, Ed Henning. Thanks.

Ed Henning from CLSA. Just following on the commodities business. Previously, you talked about moving it from the bank to the nonbank. Can you just touch on there about the ability or how you've gone so far and looking at long-dated contracts on the LNG business and the capital and willingness to use the balance sheet to grow that as it looks like that's a key area for growth in the market and the U.S. gas market and potentially your business.

Yes. You probably read that there's a couple of positions that we've taken on there. But in usual Macquarie style, it's patient adjacent growth. So we're taking on stuff that we have capacity to absorb the volatility that will come because you enter into long-term offtakes and you can have prices bound. And we want to know that we can absorb the sort of outcomes that may happen well within the earnings capacity of CGM -- so the volumes that we've taken on at this point, we think, are good amount for us to put a toe in the water and watch what develops. And there are a couple of good projects we think. We spent a lot of time, Simon analyzing the sector talking with participants looking at long-term as well as short-term volatility -- anything you want to elaborate on there in terms of LNG?

Yes. I think that's right. And the only thing I'd add is that over the period, as we've moved from bank to nonbank, we've also built out our trading team as well. So yes, -- we have engaged in 2 long-term offtakes, which still yet to go FID. But we have built out our trading team. So incrementally, we're growing our way into it. We are very aware of the projected oversupply or overhang of LNG supply up until about 20, 31, 32. So we're conscious of that. So as Shimao said, we're being cautious and incremental into our stack into this opportunity.

And I think you made a good point there about the timing for these 2 projects. So the impacts on us are not likely to come on for some years as well.

And just with those projects coming on and obviously growing at the trading team, does that allow you to trade more around it having the actual physical asset.

Yes, absolutely. The trading team basically gives them access to physical supply whilst those projects have to go FID as they do or do not, but as they do, that allows us to start trading more actively even before they come online because we actually do forward strips and trade out the curve as we see opportunities arise. So the physical side of it is important to us, but we've also started the trading side, both fiscal and financial at the moment.

And we should say the position you have across this in terms of coming into and coming out of the liquefication facilities is what we think will actually allow us to generate superior returns on taking these offtakes.

Great. We got Andrew Triggs in the second row there?

It's Andrew Triggs on JPMorgan. The recent week also have seen higher heightened interest and exposures in software within private credit businesses. Just interested to get your perspectives on exposures, both within the private credit book and also the MacCap equity book. I think the disclosure is 30% of private credit exposed in TMT, but a further breakdown of that would be useful. And then just had a follow-on question on product credit after that.

Yes, sure. And we -- obviously, with what's playing out in markets have been diving deeper into the exact nature. I should say we have little exposure in our asset manager, which is where the share prices of a lot of our peers have suffered, but it's not a business been wearing in the asset manager. So it's really, as you say, in the private credit and the private equity books, headline, we do have 25% to 30% in SaaS businesses. but Michael Silverton is here in the front row and his team have done a deep dive into it. We obviously will keep looking. Currently, we don't see any big issues, but the percentage that's exposed to the SaaS that could be replaced by AI and particularly seats-based revenue, we think, is small. But Michael, why don't you elaborate?

Thanks, Andrew. So clearly, we are watching this closely, and we've been focused on AI across the broader business, both on the equity side and the private credit side. You're right to say that around 25% of our book is software-based, and then we have in the broader team met space, we also have some exposures to managed services, marketplaces and government services. On the software side, we've got about 200 positions all up around -- to around 50 of the positions also in software. I think what's important to note is that we are lending against cash flow, free cash flow. So think of it sort of 4 to 8x free cash flow is what we're looking at. And in terms of the transactions that have taken place, we're also lending against value at about 30% to 40% of value that we determine. We're clearly watching this closely because the changes -- the headlines are coming every day, and we're learning about it at the same time the market is. But we are focused on enterprise software embedded in the business. And also, it's very aligned with the sectors that we have expertise in. So if you think about insurance broking, education, and the broader sort of services areas that we talk about, that's where most of our software is exposed. And I think it's very important to think about the regulatory considerations here. The proper ballistic models don't really work effectively in the enterprise yet. It's very important to get accurate results. And so we've been very focused on those areas that have sort of a regulatory moat. But we're looking at it very closely, and we're confident that our loss rates still hold as they have historically. On the equity side, we've been investing in AI. So as you've seen, we've got about $5.5 billion invested. We've been realizing assets, but about 30% of our portfolio is in sort of AI or software adjacent areas. We think that's an exciting opportunity for us, but we're also looking defensively at what the new software challenges may be as well. But we feel very good about the book.

And the only thing I'd add is Andreas in the front row. We look at AI in every software credit or equity position we invest in. We've been doing this for some time on how obsolescence could happen I think we feel certainly in the credit book, very comfortable that we're forensically looking as we invest over a sort of a 5-, 7-year period, what could play out.

This 1 might be for Michael as well, but there's been a return to decent growth in the private credit book. I think all of that's on balance sheet. So could you just give us a status update on the JV with MAM.

Sure. So -- we saw a good opportunity in the year-to-date in the last quarter. So we've invested around $10 billion in the book. Good news is we've been able to preserve our spreads. -- find opportunity more so probably in Europe than we have in the U.S. of late. We also, as we've mentioned, the weighted average life of these loans is sort of 3 years. So we've grown the book -- and so you can do the math, we've had repayments and sell-downs to partners of the difference. The expansion of partnerships is going well. It takes time. We can't talk about fundraisings that are in the market, but the partnerships are growing well and expanding and we'll continue to sell down warehouse and sell down into those entities as they raise money.

And Ben, I don't think we can say how much we've raised in each of the ratings that we're doing so far. But what we can say is that it's broadly going well and usually the early funds are not big ones, even though we have a multi-decade track record on the balance sheet. These are viewed as first-time funds. We've been through this over and over, where people are cautious allocating and then in the second fund, you'll typically get pickup in momentum. Anything else you want to add from my side? No?

We'll go to Brian next to Andrew. Thank you.

Brian Johnson, MST. Probably a question for Michael as well. Michael, can we just confirm historically, the loss rate in the private finance book is about 10 basis points over 3 years. So today, am I right in thinking that you've just said that's still the right level to think about.

Thanks, Brian. The market convention 10 basis points per annum on the book is what, over the life of our investing, we've seen and the experience in the past year is consistent with that. We're under 10 basis points thus far.

And then the flip side on that, just based on Bloomberg stories, we can see there's a pretty heavy redemption cycle going for some of the very big global peers. Your private finance book in contrast for memory is actually wholesale funded on balance sheet. Are we starting to see an impact coming through on the forward funding costs for the book or not yet?

Not yet on the funding side. We do run a matched funded book. And obviously, people are responding to news headlines and making choices in terms of their investing approach for us. We're totally focused on risk-adjusted returns and we match fund everything. So we're looking to hold to maturity.

Costs that we give to the operating businesses, it is what the market is at the moment. And so as Michael was saying, we're still seeing margins at the 400 to 450, and that's based on whatever the margin over the funding cost. So I think that's the important thing to note that we transfer, whatever the funding cost is to the operating businesses.

So we run it basically to aim for transfer pricing of around 450 pass on funding.

And working with treasury, we're always looking at ways to diversify our funding sources as well. So we've got wholesale funding -- we've also been working on secured funding for certain parts of the book as well and other ways to improve the returns on the book and the risk.

And the final one, I feel we could have had this conversation down the pub. Just in the first half, MacCap kind of guidance was very second half skewed and it did rely on asset realizations. We can see some of the asset realizations coming through in the third quarter. Can we assume it's delivered? Or is there more expected between now and 31 March, which is rapidly approaching.

There's more expected. We're working hard on that and teams right now are deeply focused on those transactions across the world. We have a handful of transactions that are in the final stages of negotiation we feel comfortable with what we've said to the market in terms of expectations, and we're encouraged by the realizations that we saw in the third quarter.

The only thing I'd mention is we're very focused on getting the best return for the risk. So we're not going to rush things for a month to falling month financially or next, but we're starting, Michael, to see the seasoning now of the book. So we should have better equity realization over the next while.

Got to Matt in the third row there.

Thank you. Matt Dunger from Bank of America. I just wondered if I could follow up on the MacCap question about the equity realizations. And you've previously talked to a 23% IRR hurdle on that book. So just wondering if you could give any color around how close you're tracking how the price expectations are? Should we see -- how comfortable are you to see an elevated period of realization through into this fourth quarter?

Yes. And Michael, you can comment, but the -- it's lumpy, the realizations that we average out that 2 million -- and we've had a period where we've been investing a lot. We put another $2 billion to work in the books over the last couple of years. That's now starting to get to some realization. So over next year, the year after, we should see some of that.

We don't see changing our guidance in terms of the realization so far year-to-date. In 1 case, we saw a doubling of EBITDA, IRRs, probably a bit lower than the 23% on that asset, but a good result, and on the other one, well in excess of the 23%. So we still consider that to be our target, but there's different risks in these assets. Some of them are more pref based in return and certain, and we would accept lower returns in that case and others are shorter term. The multiple of money is around 1.6x in terms of thinking about it from that perspective as well. That's sort of life cycle that we're looking at on average for the assets.

Is this the main lever for capital release for you to restart the buyback? What else are you thinking about? Obviously, commodities a large consumer of capital in the quarter. What are you waiting for to kick off the rest.

I think, Frank, you should comment on that, but we are looking to -- as you would have said in the slides, the capital usage from the operating groups in the last quarter continue to increase. And that was despite the fact that we had the capital return from the sale of the Public Investments business in MAM and also the partial sale of the car loans portfolio in BFS. But despite that, we actually saw increased net usage from the operating businesses. So for us, it's always really a balance. What are the operating groups seeing? Are they meaning their return targets? If they are, our preference, obviously, is to give it to the operating groups to generate that return. But if we don't see those opportunities, we obviously have the buyback as an option. And we do like the flexibility of the buyback such that if we don't see those opportunities, if we do have that excess capital, which we can't see it being used over a reasonable period of time, then we can actually exercise that buyback.

If we don't have any other questions in the room for now, we've got a question on the line. So I might just go to the lines, please?

Thank you, answer your question today is from Matthew will leg ahead we question after. -- as we have not hoped from to you, there are no further questions in the rig in a moment. I'll throw back. All right. Thank you. Matt, if you want to send me a message, I can relay your question. Are there any further questions in the room? If not, then we'll conclude the third quarter update with the Q&A. We are going to show a short video before we move to the Macquarie and ANZ section. So we'll show that video we'll move the tables off and our team can start getting ready to come on stage. Thank you very much. [Presentation]

Thanks. And now we'll move on to the deep dive into Australia. And while our colleagues are working on. Let me just give you an overview of -- as you all know, our business started here in Australia in 1969 with 3 people. And it's impressive 56 years on today that we still have 3% of our income coming from this country and ANZ region. And as a proportion of World Capital Markets, it's pretty impressive that this region is still delivering such impressive numbers across all 4 of our operating businesses, which are delivering solutions to customers. We also -- on this slide, you can see have nearly 50% of our staff still based here, and I'll talk about that in a moment. But before handing over to the teams, what I wanted to do is just if you have a look at the right-hand side of the starting at the bottom with Macquarie Capital, just go through a little bit of the story of the 4 groups. -- as a sort of opening background. And at the bottom there with Macquarie Capital, you see in 1969 when 3 people started the business, that was a business we were in, the M&A advice and capital solutions business. And today, 56 years on, Tim Choice will talk to you about this a bit, but we are still on the logic table, the #1 M&A adviser by value and volume of deals. We're #1 in equities recently, we also in ECM have a number of active relationships. We have 50% of the top 100. I don't want to stay here under Tim. But the business has grown to scale and remains a leading business. But what we've also done now is gone into capital market solutions, bringing the debt and equity as Michael Silvano was talking about $5.5 billion alongside our partners, and we're engaging globally with our teams around the world in doing that. The next area we went into and Craig Ross is seated next to Tim Joyce, was the financial and commodity markets. And we were a pioneer here in Australia of options, markets, futures, markets and FX, you're going to particularly talk about -- so having developed those skills and market capabilities here, we've taken that global. It's now 25% of our operating income in CGM still comes out of Australia despite being in huge markets. And then as we went through the '70s and into the '80s, and by the way, Brendan Herta, who's sitting here has a couple of feature appearance in these sections where he's going to talk about energy with Craig. But Ben, Perham here as we went into the '80s, we launched the Cash Management Trust, which was helping retail savers, access wholesale returns. -- another innovative step. And so as we got our banking license in 1985, that capital, the multibillions, we had there positioned us then to grow a branchless leading digital banking business. which is award-winning today, and Ben will talk about the business he leads in there, which is the home lending, which is the biggest part of it, but we've also grown into business banking and wealth and have a long runway to go there. And then Macquarie Asset Management, as we move to the 90s, we, together with a few others pioneered infrastructure as an asset class in this country -- and it's still the world-leading infrastructure manager, but in Australia, any such grafts here, and we'll talk to you about how we're still cutting edge and taking the asset class to new areas for the savers whose money we're investing. And a little bit of why that business grew here was not just the investments available but the pools of capital. So we worked with partners. You heard them on the video talking about this -- we have $4.5 trillion here in pension savings, an incredible system starting in the early that's 2.5x our GDP, and we're partnering with those investors to not just invest here but globally. But what is also less known is our position in fixed income and equity. So Brett Luthra will talk to you about what we do in fixed income and Ben Long is going to talk Benjamin -- he's going to talk to you about what we do in systematic equities where in Australia, we manage about $326 billion of assets. So businesses that early innovation, as you heard from 4 of pioneering these lines and then growing now at scale and diversifying globally. And a couple of other things I'll mention about Australia that are greater, obviously, export-led economy. So Tim and team as well as infrastructure, digital leading in those areas. We're partnering a lot with resources companies. You heard critical minerals is a sector -- we've done a lot in -- we also have a banking housing sector that's growing a lot here, 6% CAGR historically. But we need a lot more housing developed here. So for our mortgage business, a good backdrop. But the other thing I'll mention as well as the stable robust economy is the pool for talent. So this is no accident that we have half our people still here as we are able to attract phenomenal talent in this country and have grown our global businesses by sending Aussies out over the decades and then hiring locals and taking that same culture. So with that, I think I've mentioned everyone here, I will hand over to Ben, who is going to talk to you about BFS first.

Well, thanks very much, Shemara, and good morning, everyone. As you know, BFS is our retail business with over 2 million customers across Australia. There are 3 parts to BFS, personal banking, business banking and wealth management. And today, I'll be focusing on personal banking. Looking back at Macquarie's history in retail banking, you can see at least 3 phases where our innovations have delivered significant value to Australian consumers. As Shemara just mentioned, in 1980, we launched Macquarie Cash Management Trust. -- paying Australian depositors a higher interest rate than was available from the other banks. The product was very successful with customers because they saw it provided them better value. All customers benefited from this, even customers who didn't open a CMT because the competitive pressure led to higher deposit rates for everyone. In 1993, we brought nonbank securitization to Australia, enabling the rise of the nonbank lenders. The value to customers was dramatic with home loan rates falling by around 2%. I Again, all customers benefited from this, even customers who didn't move to a nonbank lender because the competitive pressure led to lower home loan rates for everyone. More lenders in the market meant more choices for customers, and that gave rise to the mortgage broker channel, which has grown to assisting around 2/3 of Australians seeking a home loan. We're now in our third phase of delivering value to Australian consumers with our digital banking offering that you're all familiar with. As we've said before, the growth that we're seeing today is not an overnight success. It's the result of a strategy that we embarked on in 2012, and we've been executing on deliberately and patiently. We have built a culture that is truly customer-centric, evidenced by our product constructs and our digital capabilities being noticeably different from the rest of the market. We've listed a few of our many innovations on the slide here, the most recent of which is our AI-powered digital assistant called -- you can see on the slide that our digital banking offering is loved by customers across the country and across all ages. Our distribution of customers broadly aligns the Australian population by age and location. And that's not surprising because we designed our offering to be truly digital first, which means all Australians can access our offerings irrespective of where they are. Since we don't have the advantage of long-established national branch networks, we had to design our products to be able to do everything digitally, and that's what we've done. Our strong Net Promoter Scores tell us that our customers are very happy banking with us. Indeed, our Net Promoter Scores are even higher from our regional customers than our metro customers, which tells us we're able to serve them very well. Our customers have free access to over 23,000 ATMs across Australia because we refunded them the fees charged by the ATM operator on debit card withdrawals. We have brokers accredited and over 1,200 postcodes across Australia, which gives us excellent coverage. Looking at this overall picture, our business model innovation is delivering real value to all Australians across the whole country. This broad appeal gives us reasons to be -- to believe that we can continue to attract more customers. But we certainly don't take success for granted. It's a very competitive market and the standard of banking experiences in Australia is very high. The major banks are formidable competitors. And we're conscious that we're only 1/4 to half their size and a relative newcomer. We know that we'll need to keep working very hard to compete effectively. Regarding our technology in BFS, you'll hear more about that later from Ashwin Sinha, BFS' Chief Digital Data and AI Officer. I'll just briefly mention that we see our approach technology as a competitive advantage. Based on our architecture, the investments we've made, our cloud native approach and our single data platform. But what's harder to see from the outside and perhaps an even stronger competitive advantage is the technology culture that we've created. We operate as a tech business as much as a bank and we've embedded tech company ways of working as to achieve whole of business alignment through a common strategy, shared OKRs and a unified prioritization process. People who join us, tell us is quite different from what they experienced elsewhere. We've been investing in our tech culture for over a decade, and we see it as a significant contributor to the outcomes that you're seeing from BFS. I mentioned that we're a relative newcomer, and the major banks have a raft of natural advantages built over hundreds of years. So we are inherently a challenger -- but there are many different ways to be a challenger. And the language that we use is that we want to be a customer-obsessed game changer. That means we want our culture and our strategy to motivate our relentless focus on the customer experience. You can see that coming through in our digital experiences, which we think lead to market, evidenced by our Net Promoter Scores. On the slide here, we're showing you a few specific proof points of our digital capabilities. For example, someone who's not yet a customer can download our mobile banking app, become a customer, open a transaction account and a savings account receive money into those accounts, digitally provision a debit card and start spending all in a matter of a few minutes. Our approach to the deposits market is another tangible example of our customer-centric culture and strategy. In Personal Banking, we pay a proper interest rate to all our customers and we don't charge monthly account keeping fees. Most EBITDA banking products in the market pay 0 interest and many charge monthly fees. Most savings products in the market require customers to meet a raft of complex conditions before you earn the advertised interest rate. The ACCC founder 71% of customers don't meet the conditions. We take a different approach. Our savings account has never had a conditional bonus rate. We simply pay the interest rate that we advertise, no hoops and no catches. On the slide here, we're showing this visually, and it highlights that the different outcomes for customers are really quite stark. Similar to cash management -- this is another example of Macquarie thinking differently and delivering customers substantially more value. More and more customers are coming around to see this clearly. So when we look at the whole market and are still relatively small market share, we believe this opportunity to continue growing. As you can see on the slide, in the bottom left corner, we're still significantly underweight in term deposits. This slide demonstrates that customers do see superior value in our savings product as it's grown to become our largest source of deposit funding. Over a long time now, we've demonstrated our ability to fund our home loan growth with deposits, and we're confident that we can continue to do so. We have a low proportion of wholesale funding than the rest of the market. So we also have that funding source available to us if necessary. So turning to home loans. You see the same approach here of delivering value to customers through simple products, more transparent interest rates and digital excellence. We are loudly pro broker. We believe that brokers are good for customers and good for the market. And with 2/3 of customers using brokers, they seem to agree with us. We've invested heavily in technology to give customers and brokers the best experience. There are many dimensions to that, but 1 of them is the time it takes us to formally approve a life by loan application. We're considerably faster than the rest of the market. And that's important to customers because it gives them the confidence they need that they're set with the financing that they need. The market norm is a long and drawn-out period of uncertainty and anxiety. Most lenders find that as their volumes grow, the originations capacity can't keep up, and so their approval time slow down. In contrast, we keep innovating and investing to build more capacity so that we don't compromise on the excellent customer experience and broker experience that we're now known for. We've been slowly increasing our share of new business written in the broker channel, which is now around 14% to 15% of the whole market. We're achieving above that level with some aggregators in some states, which indicates we might be able to lift that further. As you can see in the chart, over the last 3 years, we have moved from fifth to third ranking in our share of broker home loan applications. We have a more conservative credit appetite than our competitors, and we've maintained that risk discipline even while we've grown strongly. You can see that clearly in our lower LVR profile, and we're showing you here 2 different ways to look at that. One is our composition of new business flow relative to the market. and the other is our market share split across different LVR bands. What's harder to communicate on the slide is the other aspects of our credit policy, which are conservative relative to the market. For example, in our credit assessments, we take a more conservative approach to disclose mispayments in the customers' credit bureau file. Another recent example is that we led the market in ceasing lending to trust and companies. We first implemented transparent DTI restrictions in our credit policy in 2019. and we maintain them throughout the COVID era of ultra-low interest rates. And you can see the positive result in the slide here. Overall, our disciplined credit appetite is leading to industry-leading arrears. The disciplined execution of our strategy is translating to strong and sustainable returns. We continue to invest in tools for process automation and customer self-service, which allows us to absorb significant volume growth with minimal incremental costs. Since August 2023, we reduced our head count by 24% in Personal Banking, whilst growing our home loan book by over 50%. We -- as a result, you can see our cost income ratio is improving dramatically. We're showing you here, and this is the first time that we've disclosed this, our CTI, including profit share and corporate costs. This is our CTI for Personal Banking comparing to the consumer divisions of the market. We've improved our CTI over the last 2 years, and we compare favorably to the market. We're still a long way from the market leader, and we'll keep investing to improve our CTI as we grow -- this competitive cost structure is also driving attractive returns. Our return on equity for BSS is approximately 13%. That's our ROE for BFS on a fully allocated basis including profit share and corporate costs and adjusting for funding from capital. Even at our current size, our ROE is competitive with the market and comfortably above our cost of capital for the retail business. In conclusion, we're going to keep working hard to deliver digital experiences that customers love. Australians can see that our different business model is delivering them value, higher deposit rates and competitive lending rates. So there's a credible case to believe that we can continue to grow from here. And we believe our investment in our cost structure will yield attractive returns to shareholders as we grow. Thanks very much for your attention, and I'm now handing over to Andy. Thank you.

Thanks very much, Ben. Good morning, everyone. My name is Annie Sakraft. I'm the Co-Head of Infrastructure, Asia Pacific for Macquarie Asset Management. I've been in the industry for over 20 years and joined Macquarie in 2016. Today, I'll begin by taking you through Man's operations in Australia and New Zealand, our home market where we've been operating for more than 45 years. MAM in Australia and New Zealand manages over $326 billion in assets. We employ over 400 staff with a further 14,000 people employed in our portfolio companies. And we have a strong commitment to clients. serving over 130 institutional investors, including almost all of Australia's 10 largest superannuation funds and 9,000 wealth advisers. Importantly, we have generated a gross realized IRR of 20% for all real assets divestments in Australia and New Zealand since inception. Man's journey in Australia and New Zealand is notable for the way we've grown, building our businesses by innovating, anticipating where communities are heading and using our expertise to connect these emerging needs with capital then exporting this innovation and capital internationally. As you can see from the time line, the Australian team has pioneered a lot of first for man, but also a lot of world firsts. Not least of all, creating infrastructure as an asset class in the early '90s. Other notable milestones include completing Australia's first toll road listing in 1994, and where we developed a new and innovative method of financing infrastructure. Executing what was then the world's largest airport privatization in 2002 with Sydney Airport, launching MAM's first Dynamic Bond Fund in 2017 and completing Australia's first agricultural tag private with Vital harvest in 2021, designing and implementing the world's first motor vehicle registry commercialization in 2022 and in 2024, exiting AirTrunk in what was then the world's largest data center transaction, only to be followed and amplified by our U.S. colleagues 12 months later with aligned. MAM in Australia and New Zealand is a leading asset manager that has been a local pioneer of growth and innovation. We have a long track record global reach and consistent alpha generation. Our culture of investment excellence positions us to continue delivering strong, resilient outcomes and to unlock opportunities for our clients. Over the next few minutes, I'm going to speak to you about our world-leading Real Assets business. Brett will discuss our fixed income business, and Benjamin will speak about systematic investments. Man's real asset business in Australia and New Zealand is focused on unlocking opportunity by identifying sectors early, driving value creation for our clients, and the community. So let's take each of these concepts in turn. Firstly, our Australian real assets team is focused on identifying, creating and defining sectors early. We do this by anticipating the evolving needs of growing communities and matching capital to these needs. The land and motor vehicle registry commercializations are great examples of this. Communities are increasingly seeking to interact with government agencies in a digital way. Working with key stakeholders, including the government, the communities they serve, regulators and corporate customers we have helped design, implement and fund an investment model, which has enabled these registries to modernize and provide data to the community in a more user-friendly and secure way. Second, we have focused on growth and value creation during our investment period. After investing in AirTrunk in early 2020, we helped the company grow from a largely Australian-based hyperscale data center into a regional one, expanding from 5 to 11 sites, including new sites in Japan and Malaysia and additional sites in Hong Kong and Singapore. While increasing contracted capacity across the platform by over 8x. We have done this in a way which has prioritized the safety of employees and contractors, sustainability in construction and operation. and strong corporate governance. Finally, as communities grow and their needs evolve, we're scaling infrastructure to support them. For example, by bringing 0.5 gigawatt of renewable energy into construction through Ola and advancing an 8.5 gigawatt pipeline across solar, battery energy storage systems and wind to expand access to clean, reliable energy and drive long-term economic opportunity. Let me conclude with 1 more case study which brings these 3 themes together. In 2021, our team completed the take private of Vocus Group, we had an investment thesis that as communities continue to digitize, fiber was and would increasingly become the backbone of the digital infrastructure ecosystem, enabling data to be moved across vast distances securely, reliably and quickly. Shortly thereafter in 2002, we reaffirmed this thesis when we spun out Vocus' New Zealand subsidiary and merged it with a newly acquired asset to form 2 degrees. Today, 1 of New Zealand's largest integrated telecommunications providers. Under man's ownership, both businesses have materially grown their network footprint across Australia and New Zealand. Organically, with large fiber builds across the north and west of Australia as well as the development of 5G cell sites in New Zealand and inorganically through the acquisition of complementary communication networks such as TPG Telecom's fixed business, a complex corporate carve-out and industrial partnership, which we completed last year as well as 2 degrees itself. This has resulted in an increase of over 30,000 kilometers of fiber coverage and 1,000 tower locations, generating a 21% gross IRR to date across both Vocus and 2 degrees for our underlying clients. And importantly, helping connect Australians and New Zealanders with each other and the rest of the world. And with that, I'd like to pass to Brett.

Thank you, Andy. Good morning. My name is Brett Lutha. I'm the Deputy Head of Credit and Insurance at Macquarie Asset Management. I've been at Macquarie for 23 years and lead our extensive fixed income and credit presence here in Australia. In the financial market environment, it is often defined by heightened uncertainty -- our approach has consistently focused on creating sustained success for our clients. That is ongoing success over a prolonged period. We have therefore made it a priority to understand what clients value and to build long-term partnerships, grounded in trust and alignment. Sustained success in asset management relies on delivering strong, repeatable performance year after year. This is underpinned by an investment culture built on discipline and a commitment to being the most credible asset manager and considered a highly regarded partner to our clients. The concept of credibility is reflected in every aspect of our work from our investment philosophy, approach to detailed research and investment processes, our high-performance team culture, our innovative investment strategy range all the way through to how we interact and connect with our clients. This focus on maximizing credibility has resulted in consistently strong performance across all of our flagship portfolios, all of which have outperformed their respective benchmarks for more than 15 years. As such, today, Macquarie is Australia's largest fixed income and credit manager with nearly $200 billion in assets under management. Our success stems from a highly experienced and very stable team. with our senior leaders averaging an impressive 18 years working together. This is an uncommon level of stability and continuity in the industry. This stability, combined with sustained performance and focus on being the most credible has supported significant and continuous growth over the past 2 decades. We now manage investments for more than 75 pension insurance and sovereign clients, including roughly 2/3 of the Australian superannuation funds. Many of these relationships spent decades with our longest 10 partnerships averaging incredible 25 years. Our reach also extends globally with major clients across Asia and Europe. In the Australian wealth channel, more than 7,500 financial advisers utilize our strategies. And our recent expansion into ETFs has been met with very strong interest and momentum we're already the fastest-growing active fixed income ETF provider. Based on our performance track record, our team stability and our growth experience today, looking ahead we are confident that our ongoing growth trajectory will continue, particularly as we build on our considerable ambitions with relation to ETFs, extend our relationships with global insurers and continue to expand both our domestic and global presence. Thank you.

Thank you, Brett. Good morning, everyone, and thank you for your time this morning. My name is Benjamin Long, and I lead the systematic investment business in MAM. In Macquarie -- I've been with Macquarie for nearly 25 years and have spent the last 2 decades developing this capability, which I'm excited to share with you. Our mission is to evolve the craft of investing into digital first world and industrialize how we generate alpha from the equity markets to deliver outcomes that are differentiated, consistent and dependable through market cycles. Sustainable alpha takes more than great stock ideas. It takes clarity to see how opportunities interact and precision in portfolio design to weather evolving market conditions. Systematic or quant, is well versed to tackle this challenge by bringing discipline, transparency, and repeatability to every decision that we make. And it really leverages our deep expertise with engineering principles, advanced risk tools and modern technology to help navigate the increasingly complex market. We've been fine-tuning this process for nearly 40 years, and our longest relationship they expect to 1988. The wall has changed a lot since then, and we've evolved with it. Today, we process more than 100 million pieces of dollar a week which will eventually include this transcript across 27,000 securities around the world to drive returns for our investors. And the outcomes are strong. 100% of our flagship capabilities are ahead of their benchmarks across multiple time horizons and all rank in the top quartile against leading Australian and international peers. This performance and track record has cemented trust and credibility. We've been entrusted with more than $90 billion of assets under management from investors all around the world. This platform has grown by $60 billion, threefold in the last 5 years. And we're confident about our momentum because it's underpinned by a long history of constant innovation, in talent, in design and also delivery. For our people, this platform leverages a nimble team of experts. There are only 16 of us. From diverse disciplines empowered by the best data, the best tools and most importantly, a community and a framework that actually fosters creativity and discovery. For our clients, they're looking to us for more than returns. They also value stability, transparency and stewardship. This platform allows us to embed these specifically into their product design. Creating customized yet scalable and adaptive solutions that are perfect for core allocations and long-term partnerships. And finally, we evolve with how our clients invest like ETF and innovate to demonstrate our fiduciary duty and conviction. A great example is our Australian and global active ETF launched 20 months ago. They were introduced with the lowest fixed fee in the market below passive pair with the performance fee, which hard codes our conviction and our alignment so that Macquarie only wins when our client wins. Our conviction set a new standard for the ETF market and 1 that has not been followed since disrupting both our active and our passive competitors. And this has resonated strongly with investors. The Australian vehicle was the fastest-growing active ETF and combine both vehicles have attracted more than $1 billion from investors. And pleasingly, if you refer to the performance that both delivered well above their objectives. We're very confident about our capability, and we're excited about what we can deliver in the ETF space, and we're well prepared to lead in the AI-enabled future. Thank you. I'll now hand over to Craig.

Thanks, Benjamin, and hi, everyone. I'm Craig Ross, Head of CGM for ANZ in the region and Global Head of Fixed Income and Currencies. I've been with the business now for over 30 years, having joined in 1994 in the FX desk as a graduate I met some of you in London last year during the EMEA tour. And at that time, we focused on the FIC business within EMEA. Today, I'd like to share with you what we're doing here in CGM and FICC in ANZ. Starting with our broader CGM business in the region. As you've heard probably many times, CGM is a diversified client-led business with a strong franchise that's been built up over 45 years. It's a business that started here in Australia in 1978. Our capabilities span across 4 key areas: providing capital and financing, risk management, market access in physical execution and logistics solutions. We provide these across our 3 business lines: commodities, financial markets and asset finance. We're active in all these areas here in ANZ, but we tailor our offering to meet the unique needs of our clients here in the region. Now in terms of regional significance, the ANZ region contributes about 1/4 of CGM's total operating income it's important to the overall diversity of our global business. We have over 625 staff, which is again broadly 1/4 of our global headcount. Like our global business, our teams in the region brings significant diversity and skills backgrounds and technical expertise, enabling us to deliver tailored solutions to our growing client base. I'd also like to highlight that we have a significant representation of our core CGM central functions and capability here in the region. This includes some of our key senior leaders who are based in Sydney, our Global CFO, Uma But; and our global COO, Lisa Soneban, who is sitting here in the audience with us today. Our client base in ANZ now exceeds over 440 individual clients, continuing to grow and evolve our offering alongside this client base sits at the heart of our growth strategy. I'd like now to focus on our business footprint and some highlights here in the ANZ region. Starting with commodities. Our focus is on the key thematics in the Australian market and the niche areas where we can bring our expertise to deliver value. So markets like energy, carbon, agriculture, metals and bulks as well as end-to-end physical execution and logistics services. Byron will come up shortly to share a case study from our Australian gas power and carbon business. Turning to financial markets. We have a strong presence here in Australia. We've been delivering trading, hedging and financing solutions to corporates and institutions for a long time. That's across fixed income, currencies, futures, equities and credit markets. I'll talk in more depth about FIC in the next slide. So I'll start with a brief overview of our futures offering and how that has evolved into the market leader that it is today. Hill Samuel Australia, our predecessor firm was the first merchant bank to be granted a member status to the Sydney Futures Exchange back in 1979. Fast forward almost 50 years, and our presence in the region is stronger than ever. We provide a full range of execution, clearing and financing solutions to corporate and institutional clients. And for many years, we've been ranked the #1 futures broker on the ASX. Our equity derivatives and trading business has grown from its origins in Sydney in the -- it now offers a much broader set of capabilities, providing financing, market access, portfolio optimization and hedging solutions across all major markets. And finally, looking at asset finance, the business provides specialized finance and asset management solutions across a range of industries globally. But here in Australia, we currently manage approximately $1.3 billion asset-backed lending book, primarily for clients in the resources, energy and telco markets. So moving on to FIC. We've come a long way from the Hill family days of an FX single FX trading desk in Hill Samuel was indeed a pioneer not only in the future space but also was a forerunner in the development of the foreign exchange market here in Australia. By the mid-1980s, and now named Macquarie Bank offered corporate clients 24-hour foreign exchange trading, something that we continue to do today from Sydney. A spirit of innovation and entrepreneurship has been a hallmark of the way we operate over the last 40 years, and it has enabled us to build a global presence by expanding into new markets in introducing new products to our client base. But 1 thing that has not changed is our client-centric approach. This is at the core of our strategy. We are a client-first business, and we like to grow alongside our clients. From pension funds through to SMEs, our client base is rather broad. However, our offering resonates most with 2 main client types, that's private capital and corporates. We continue -- with those 2 client types, we continue to meet their needs across risk management and financing solutions. As the market has evolved, we've had to adapt -- we've integrated our funds finance teams in 2021 and Credit Markets Group in 2023, allowing us to present a broader suite of capabilities through a simpler interface to our client base. We find ourselves now in a strong position where 25% of fixed global operating income sits in the ANZ region. And as you can see from the chart, we've continued to see steady growth here, which has been underpinned by enhanced structuring capability and a strong focus on client acquisition. Our headcount has grown in the region over the last couple of years, reflecting our ongoing commitment to this region and the opportunities that exist to grow and evolve in the market. As we look forward, we're seeing solid growth in our financing books with good momentum in our securitization book and a strong forward pipeline. Many of you would have heard us talk about Aurora. So Macquarie Aware is our digital trading platform. It provides clients with real-time electronic access to select CGM products and solutions for their trading, hedging and operational requirements. The platform is now rapidly evolving as we add commodity-related products, such as metals, agriculture, with energy to follow. Looking ahead, as we expand our products and add new clients, the outlook for Aurora is extremely exciting. Aurora is just 1 part of the FIC offering. And as a client-led business, we have placed an increased focus on collaboration so that when we go and see clients, we present all of FICC. This increased collaboration is not only happening within FIC, but also across CGM, but also other parts of Macquarie, including our colleagues in MacCap, MAM and BFS. It's very important for our teams to be working alongside the bankers and asset managers within the Macquarie Group. We will continue to evolve our product offering and focus on capturing higher value opportunities. We pride ourselves on being solution providers, not liquidity providers, we like to get paid for our efforts and expertise. And as we look to the future, we will continue to focus on growing our share of wallet with compatible clients. And finally, we are transforming our business by working faster smarter and better with AI. Our goal is to reduce manual processes to increase efficiency, agility and reduce operational risk. We want to empower our sales teams to spend more time with our clients. We want to give our trading and deal management teams the tools to reduce booking friction, and this will help us scale the business in line with our aspirations. My colleague Grove who leads our transformation function is going to tell you more about how CGM is investing in AI later this morning. And with that, I thank you for your time. I'll now pass to Byron to tell you about how we're evolving the commodities offering here in the battery storage space. Thank you.

Thanks, Craig, and hi, everyone. I am Byron Dan Herzog, Co-Head of our EMEA, APAC Gas Power and Carbon business within our Commodities division. I've been in Macquarie for 15 years, actually 15 years this week, and has nearly 25 years experience in power, energy and carbon markets, focusing on things like commodity price risk management, structured products and working capital solutions for our clients. My day-to-day focus is sends it on growing our Asia Pacific footprint in these underlying commodities. A particularly exciting area as trading marks continue to open up opportunity, the management of international energy linkage becomes more important for our clients. And the energy transition obviously continues to evolve through this part of the world. Our Australian power desk was established back in 2011. And during the last 15 years, we've been developing a well-established trading, risk management and financing capability within the Australian energy market. This deep and proven experience with multiple decades of collective team expertise means we are well placed to identify emerging opportunities and meeting the evolving needs of our clients. And back in 2011, we started with baseload power hedging contracts. And through the years, we've innovated to the highly structured multi-laid portfolio of risk management solutions that we have for our clients now. Today, I'd like to tell you about some of the work we've been doing in flexible battery storage and how we're integrating this into our Australian energy portfolio. And this is, of course, 1 of the many innovative things that we're focused on in the commodities business, but it is a good example of how we're responding to emerging trends and adding solutions that complement our existing capabilities and offerings. Now all electricity markets are volatile by nature, and Australia's national electricity market is no different. We see significant price fluctuations, especially during periods of peak demand or supply shortfalls. The rapid expansion of variable renewable energy sources, such as solar or wind, it increases the market's risk sensitivity to weather conditions, and it certainly amplifies intraday price volatility. And this is further complicated by more frequent unplanned generation outages or transmission constraints. And these, in fact, exacerbate those price swings. The rapid growth of renewables, particularly both wholesale and consumer solar is also leading to periods of oversupply and significantly more complex needs for our client portfolios, and highlights the need for more flexible energy management solutions. Storage assets are emerging as a critical tool for market participants to navigate this heightened volatility by storing surplus renewable energy and providing flexible power, batteries enable more efficient energy management in relation to supply and demand. Now within CGM, we've been patiently building our flexible and storage asset capability so that we can further innovate our client offerings, tailoring solutions that assist them in managing the significant intraday price and electricity load exposure that they have. Our strategy has been and continues to be about building battery portfolios without owning the physical assets. That is, we don't directly own or operate batteries within CGM. But rather, we create a virtual battery model, whereby CGM receives the associated financial outcomes, but which allows the battery asset owners to receive the fixed revenue and retain operational flexibility. This capability extends CGM's existing offerings -- it's adding diversification of new tools to deliver bespoke solutions for our clients, particularly as the energy transition continues to play out. I'd like to wrap up by reiterating the deep experience we built in energy markets in Australia and indeed, all over the globe over the last 15-plus years. Indeed, this positions us to not only continue to grow the business here in the region, but also continue to build our franchise offerings globally. Clearly, the themes we are addressing here in Australia, volatility integration of renewables and battery capability are relevant across the globe. The infrastructure and expertise we have built here in the region is able to be replicated and scaled for targeted opportunities that we see in other markets facing similar challenges. Thank you. And I'd like to pass you to Tim Joyce, who'll tell you about Macquarie Capital in ANZ.

Good morning. My name is Tim Joyce. I'm the Head of Macquarie Capital for Asia Pacific. I've been with the group for 21 years, and I've led the Australian business for the last 9 years. As Samara noted earlier, Macquarie Capital's origins date back to the beginning of Macquarie Group in 1969 when the business was established to provide international standard financial advisory services to Australian businesses. Today, we are Australia's most active firm. We operate globally across M&A advisory, equity capital markets, principal investing, equities research and full-service institutional broking, nearly 500 of our staff are based in our 5 locations in ANZ. And so the region represents approximately 1/3 of the overall Macquarie Capital team. Our leadership bench is deep the transaction teams led by approximately 50 directors and our executive directors having an average tenure of 22 years. Of course, integral to our success is the deep and long-standing relationships that we have with our clients. We own to our clients' first call for their M&A and capital markets requirements, particularly in complex situations. As an example of this, we are currently active with 50% of the ASX 100. Turning to some recent highlights. 2025 saw a global recovery in M&A with volumes up nearly 50%. Whilst in Australia, market activity was really -- was flat on the last 3 years. Our performance was strong with the first 3 quarters being the best results we've seen since the covered boom. In 2025, we were #1 for M&A by volume and value and advised on 50% more transactions than any other firm. Across M&A, ECM and DCM this year-to-date, we've completed 60 transactions valued at $64 billion. I'm joined today, of course, by Michael Silverton, our Global Head and cross-border activity is a priority for both of us as we continue to expand in this area, and we see it as an important growth opportunity for the business. We have a dynamic global platform and operator is a truly integrated team. For example, on the Adriatic Metals transaction with Dundee Precious Metals, we mobilized experts from across Australia, EMEA and candidate to navigate the U.K. takeover code, manage ASX and LSC stakeholders and lead critical negotiations, which led to the establishment of the merged business with an enlarged and more diversified portfolio. As you heard from Annie, Australia is an attractive investment destination, and we're active in providing global clients with access to inbound investment opportunities. We're also active in facilitating the exploitation of Australia's capital seeking diversification through international investment opportunities across M&A, project development and equities. And in support of these efforts, we are sponsoring the Australian Superannuation Summit in the U.S. next month along with our colleagues in MAM and in the U.S., of course. Our ECM team has had a very strong start to the year. In what is typically acquired a period before reporting season, we've already launched 5 transactions and raised over $900 million in equity. This means we've been responsible for over $0.40 in every dollar raised on the ASX so far in 2026, which is a really pleasing result, of course. We're also seeing encouraging signs in the IPO market, where we are confident there is investor support for new issuance, and we are actively identifying suitable opportunities for businesses that are looking to partner with a listed market. Our advisory and equity capital market capabilities are enhanced to our Strategic Equity Solutions business, which is a joint venture with CGM. We provide share financing, stake building and convertible bond solutions for clients. Of course, our equities business is a very important part of Matt Cap and Kristen Edman, who leads our team here has joined us today. Fortunately, we are seeing a distinct uplift in activity as a result of heightened market volatility and a resurgence of offshore interest in Australian equities. We are also well aware of the market shift towards index tracking and quant strategies, and our portfolio trading desk has become a critical partner for managing complex large-scale rebalances. This is demonstrated by progress this year. Year-to-date, the team has managed more than $42 billion in combined transition and index rebalancing, which represents over 50% of all transitions in the market, reinforcing our position as the region's leading liquidity hub. Our quant research team has held the #1 ranking for over a decade providing data-driven insights that are particularly valuable in today's market. This is the case for both our institutional and our corporate clients. We also aim to be the leading advocate for Australian businesses offshore as they seek international capital with this effort supported by our dedicated Australian desks in every major global market, which is quite a distinguishing feature that our CEO clients regularly commented upon. We also of Australia's largest equities conference in May each year. Principal Investing is a critical part of MacCap strategy and value proposition. We continue to grow our principal investing capability across a range of strategies, and we currently have $1.9 billion committed. This also remains a key differentiator for us more broadly within ANZ as we look to act as a catalyst for transactions, a partner with clients and generate recurring revenues for the group. Total capital deployed across debt and equity over the past decade now exceeds $5.5 billion. Over the long term, we seek to develop capability in relation to structural themes where capital flows are large and growing. As these themes emerge, we have moved quickly to build expertise in areas such as the energy transition, digitization and more recently, resilience. We've certainly seen the benefits of this approach as we've delivered market-leading results across areas such as technology, critical minerals and infrastructure, leveraging the expertise of our globally connected platform. Turning first to technology. We've been the most active adviser in the ANZ market and been involved in 4 of the 6 largest transactions in the sector last year. Activity is being driven by global strategics, consolidating technology and product capabilities across markets, as we saw with CoStar's acquisition of Domain, where our team advised CoStar through digital connectivity and the ways in which Andy identified in her presentation and of course, the demand and opportunity presented by AI. We're very pleased to be part of Australia's tech ecosystem, which has grown at a remarkable pace over the past decade, mirroring the global tech evolution, fostered by top-tier talent and market-leading innovators. Our venture capital team is deeply engaged with this dynamic, investing in innovative early-stage companies partnering with founders to help build global businesses. A couple of great examples of this. Firstly, BioCatch, a developer of AI-driven behavioral biometrics technology whose largest market is Australia. The product is being utilized by a range of financial institutions, including by -- as Ben may be aware, our colleagues in BFS, to collaborate real-time on fraud detection. We're also invested in a business known as Forward safety, and you heard about them in the earlier video presentation. This business is a leader in workplace fatality prevention technology and is widely used by our critical minerals and energy clients in high-risk settings. Further, whilst we are supporting our clients and partners in this space, we're also embedding AI into our own business to amplify our impact as advisers and investors. We're using industry-specific AI tools to facilitate more efficient research, financial analysis and modeling and to support automation of documentation. Critical minerals, of course, especially from an Australian perspective, remains a very important business for us and 1 of our strongest teams, underpinned by mostly supportive commodity prices, and long-term themes of decarbonization and sovereign supply security. We continue to advise on landmark transactions in this area including last year advising what group of Mitsui's $5 billion investment in the Roads Ridge -- on project and Northern Star on its $5 billion acquisition of DeGraMining. While 2025 was dominated by gold, copper and rare earth, early this year, we're seeing broader momentum, including in uranium and lithium as well as access -- sorry, businesses in these areas seeking capital through our equities business. and we expect to see elevated activity across these areas. Finally, consistent with our long heritage, Macquarie Capital remains a permanent infrastructure adviser globally and -- we have a strong pipeline, where the focus is on capital deployment across transport decarbonization, energy transition and operationally intensive value-add sectors. Recent examples include advising on the sale of Kinetic as it seeks to achieve 0 emissions transport and advising aware super on the sale of pro to KKR. Our Renewables team is also a leader in innovator in structuring and arranging portfolio financing for Australian renewable energy owners where market conditions remain favorable, thanks to strong liquidity and type margins. However, in my view, our edge is our integrated offering that combines strategic advice investment opportunities with access to capital markets as well as Macquarie's balance sheet. A fantastic example of this is the partnership that Macquarie Capital has had with invest. Our team first invested in the business in 2020 when EBITDA was only $8 million. Amvest has now grown to be Australia's leading and largest private insurance distributor with EBITDA of over $300 million. Through that journey, we've acted as an early-stage growth shareholder, a sell-side adviser, a lead financier a buy-side adviser on the acquisition of PSC and in total deployed over $450 million in debt and equity capital. We remain a shareholder today through our Principal Finance business. MacCap also seeks to leverage the full strength of the group to deliver for clients. For example, our team last year advised Don and a bell on its fertilizer divestment and introduced our colleagues in CGM to provide an offtake solution for the Permania plant, which was a critical component of achieving Dyno's transaction. Likewise, we offer clients access to significant savings on insurance products through the insurance facility within MAM, and we regularly partner with BFS to provide acquisition, finance and with CGM on hedging solutions. While our Australian base remains a competitive advantage, we believe our global reach, solutions mindset and ability to evolve as a business through cycle is what our clients value and what drives our enduring leadership in our home market and in our global sectors that retain a strong nexus to Australia. Thank you. It's my pleasure now to hand back to Shemara. Thank you.

Thanks, everybody. That was great. And hopefully, you've seen some of the common themes here that every 1 of these 4 businesses started with Macquarie taking a very innovative step in the Australian market. And even though we've grown to scale now in all 4, 1 of the beauties of this market is, it's very competitive. We're facing strong capable competitors everywhere, and it forces us to keep being innovative as you've seen. So all 4 businesses continuing to push the boundaries on whether it's digital banking, asset classes for infrastructure, systematic equity, fixed income, what we're doing in commodities and go markets, energy and financial markets, and then balance sheet to our advisory. And we're taking that globally for our clients from here but also for global clients to come here. So huge thanks to all of you in terms of the operating businesses. And so now we're going to have this team head off and bring on 2 of our central service groups because the other thing about Australia is it is the platform for our global business, our operating platform and all our central support comes out of this country. As I mentioned, we've been able to source great talent. So there are 2 things we're going to cover now Andrew Casey will talk about our risk management approach, which has again been in place since we started in 1969. A huge part of while we're innovating and being entrepreneurial, how we're able to manage risk and have discipline and have consistent earnings and earnings growth. And Byron is going to make another appearance with Andrew to talk about how the operating groups work with the risk management team; and then Nicole Sabara, who's our Head of Corporate Operations, is going to talk about our operating platform in technology and she will have David Tuff to talk about cybersecurity, cloud, et cetera, and Pier Luigi talk about what we're doing in data from her teams. And again, a couple of operating group partners, Ashwin is going to talk about how these teams work together for the BFS Digital Bank and Gravis going to talk about CGM. As you know, we're investing heavily in the platform there and what we're delivering together. After that, we'll have time for questions. But for now, I'll hand over to Andrew Cassidy.

Well, thank you, Shemara. For those who don't know me, I'm Andrew Cassidy, the group the group Chief Risk Officer. I've been in the role now for 4 years, and I've been in RMG, our risk management group since 2020. However, I have spent the bulk of my 22 years at Macquarie in the first line, predominantly investing the balance sheet in debt and equity in the principal finance business. And I guess I mentioned my journey because it's not unique at Macquarie. And I can see Michael Silverton here in the front row as well. We often look for opportunities to move people through their careers through the 3 lines of defense. We think bringing people from the business into risk provides a real deep business understanding a business alignment, a degree of commerciality to our risk functions and of course, moving people from risk into the business, provides a more holistic and some of that deep risk expertise that we hold dear here at Macquarie. But jumping in, I do think our long-standing risk management framework has been a key to our success and stability over many economic cycles and are constantly changing external environment. Indeed, as the businesses continue to innovate and invest. Our risk management framework has been unchanged for a long period of time now, but it is something that we don't take for granted. We are continuously evolving and we need to evolve because the markets we operate in, the countries we operate in, the products we provide to clients and customers change. And so we need to meet the needs of the businesses, the stakeholders and the communities in which we operate. I thought I'd start with this presentation on the left-hand side there, some of our core principles for risk management. And these really we've been with us right from the start, 56 years ago. Firstly, all staff have a role in managing risk from the most senior to the most junior person in this organization, whether your middle office, front office or back office, everybody is accountable for risk management. And everybody is accountable for fostering a strong risk culture. Really, really importantly, ownership of risk at the business level, and this has been 1 of our core principles for today. Group heads own the risk that they generate. They're responsible for identifying that risk. They're responsible for monitoring that risk. They're responsible for assessing and reporting on that risk. We don't outsource risk management at Macquarie. We're really focused on worst-case outcomes. This comes through and how we think about downside scenario. This comes through and how seriously we take our stress testing capability. An example is in our market risk framework. We focus less on recent outcomes driving statistical models. We like to look at long-term movements in prices and commodities and see where correlations break down, look at extreme moves and try and manage our business on the back of those. And then finally, independent sign-off from the risk management group from my group. People need to involve RMG early in whether you're looking at a new business, whether you're looking at a new product, a new technology provider, a new supplier. RNG needs to sign off independently on any new business or product and have a view on risk return. And we, in R&D, invest in capability experience across our staff to ensure we're bringing a different perspective, a more holistic perspective to those conversations. And finally, before I finish this slide, now replicated by lots of our peers, but we've had a long-standing 3 lines of defense model. And I will call out just at the bottom there, Line 3, who not only provide a risk-based assurance over our central service groups and our businesses, but they also provide assurance over the risk management group and our risk management frameworks more broadly. I thought I'd try and bring to life some of the principles that we live and breathe from a risk management perspective on a day-to-day basis. Firstly, independent centralized risk management is core to what we do. We apply the same level of rigor to how we assess risk, monitor risk and report on risk across CGM across MAM, across BFS here in Australia and across Macquarie Capital. I think that's important because, therefore, I guess that gives you confidence that when we allocate capital across those 4 businesses, we're doing that with a degree of consistency and our risk-based risk-adjusted approach that's consistent across all the businesses. I will call out continuous assessment. As I mentioned earlier, our markets change, our products change regulatory obligations and expectations change constantly. So the businesses are accountable for continually assessing that. RMG plays a really strong role in that and tries to bring that holistic perspective. We have what's called risk and control self-assessment across the organization, which the business owns. And that means for every product that we offer at Macquarie on a semi-regular basis. People are sitting down and really assessing how that -- how the risk and control landscape might have changed for that product and what that might mean for us from a risk basis. Over on the right-hand side, I'd call out how we operationalize some of these things setting and monitoring risk appetite. This is a really important role that the Macquarie Group and Macquarie Bank Boards in ensuring that our top-down risk appetite links with the business strategies. And the Board has a really important role of working with management to ensure that we're comfortable with the total amount of a particular country risk we might take, for example, sector concentration that we're happy with as another example. Stress testing and capital adequacy. I'll call this out again. As I said, we are really focused on downside scenarios, really focused on our stress testing we, as an organization, want to ensure that we remain viable in any extreme but plausible scenario. And that links really tightly then to how we think about capital funding and liquidity to ensure that we can operate through many cycles. I thought also to do a quick deep dive on risk culture. It is core to everything we do. It's the foundation of how staff behave, make decisions and approach work every day. Indeed, it guides how we treat our customers and clients, how we conduct ourselves in markets where we operate in, how we engage with our important regulators and, of course, how we treat each other. We're all accountable for fostering that strong risk culture. And importantly, we like to see it live and breathe on a day-to-day basis, opportunity, accountability, integrity. We talk a lot about that accountability concept. We're all accountable for risk. We don't outsource risk, and we like to see things from cradle to grave, in particular when things go wrong and things will go wrong. We've got a risk culture framework that talks to how we reflect set promote and then monitor our risk culture. The code of conduct plays a really important role in how we set that risk conduct -- sorry, that risk culture. We monitor through qualitative and quantitative indicators, we reflect -- we understand that things evolve, expectations evolve. And as I said, things do go wrong, and it's important how we respond to that, how we reflect on that as an organization and ensure that we're thinking holistically with how we remediate issues when they occur. I'd also reference that we've had a long-standing performance-based remuneration framework and a consequence management framework, which we think structurally underpin some of these really important components to our risk culture. And you will have seen that we provided more detail recently in some of our reporting disclosures around our CPS 511 framework. A quick deep dive on the group or specifically line 2. Firstly, we're structured by risk type. So we have credit professionals. We have market risk professionals were structured through our nonfinancial risk disciplines. And then secondly, we are global, which is really important. I want people in my group that have deep experience. We have people who've been doing commodities credit for 25 years at Macquarie. And before that, they were doing that for our oil majors as an example. So these people are really experienced -- and when they engage with the business, they're doing that from both a product and product and business context. They're also doing that from a market context. I want them on the ground alongside the businesses because that's where the businesses are generating risk, and I want them alongside the business, assessing that risk. We have been investing in RMG. So I think when we spoke about the group in 2019, we were close to 900 staff at the time. Today, we are 1,200 staff. Some of that growth will reflect necessary growth as the businesses have grown, more clients, more products, more markets, more counterparties. Some of that growth indeed has reflected our focus on nonfinancial risk and regulatory and compliance over the last number of years as we've really looked to uplift some of the capability. We have in RMG and some of the frameworks that underpin our nonfinancial risk management. One statistic I thought was useful for this group maybe to bring sort of some of that evolution and maturity to life. When we last spoke to you about RMG. There were 2 to 3 approvals below the head of credit that could approve large investment-grade credit deals as an example. And most of those approvals were based in Sydney. Today, we have 9 to 10 of those approvals that are approved large investment-grade credit deals and the bulk of those approvals now are based in our regions. They're in Singapore. They're in Houston. They're in New York. They're in London. They're in Dublin. They're sitting alongside our businesses, engaging in those high-quality risk conversations. What I also wanted to do and I thought, as Shemara said, I'd still barring because I heard he was speaking earlier, is try and bring some of these more esoteric concepts to life with a real-life example. Before I do, and I'll invite Byron up to the stage. What we do have is a -- we do think about from a risk perspective when we're engaging in business and transaction activity, you can see there some of the material risk that we typically generate as an organization. I'd comment that on the left-hand side, we really have had a long track record of how we manage financial risk as an organization. All our 4 businesses take credit and equity risk. And we have really capable risk SMEs in RMG that understand how to think about that risk and understand the businesses. And indeed, the businesses have been doing this for a long period of time and have a really track record of owning and being accountable for that risk. And we saw Ben earlier talk as an example of how passionate the BFS business is around how they think about their credit risk and the processes that underpin that. We're very deliberate with where we take market risk. We will have spoken to you previously. We don't take market risk everywhere and across all our businesses. We're very focused when we do that, that we have an edge, and we're doing that on the back of a track record and deep experience in those markets. And then on the right-hand side, some of our really important nonfinancial risks. And as I said, many of these, we have been investing in operational risk, in particular. Financial crime is a risk type that has seeing lots of evolution over the last number of years, in particular, in the sanction space, and we need to remain really agile as an example, both in the first line and the second line as how do we think about our sanctions risk across the organization. Regulatory and conduct risk is really important. We are a home -- we're an Australian regulated institution. And so we take our obligations here incredibly importantly. And we also need to think about what our obligations are in the markets in which we operate. And then we've talked a lot about the integrity component of our opportunity, accountability and integrity, which just heightens the focus we have as a risk function, and I know the businesses have on our environmental and social risk. And we do consider that as part of every transaction. But with that, Byron, I thought you might talk through an example and I can give -- I can give some context to that as you go.

Thanks, Andrew. And given our global capabilities in power risk and related energy complex, that really means that Japan's power market is an active focus area of growth for CGM. Indeed, Dan is, our CGM Regional Head of Asia, touched on this in operational briefing a couple of years ago. If we think about Japan, it's a significant consumer of power, given its population and industrial base. But most sources of power generation rely on imported fuels. These fuels can be things such as gas linked to international benchmarks such as Henry Hub or the Japan Korea Marker or JKM is known or various oil indices. And often that can mean that consumers of power or indeed, producers of power or exposed to electricity price risk that is directly linked to international fuel prices and the associated volatility. So tapping into our breadth of commodity capabilities. CGM is well positioned to help large consumers in Japan, utilities and other Japanese clients convert fuel price risk into delivered fixed price power and help them manage either revenues or costs given -- depending on their circumstances. Now often this will entail a lower utilization of market risk with hedges placed on various exchanges. However, there are several other risk elements that these -- that the business will need to work through with our key internal partner as we assess those client opportunities. So our -- in reality, our collaboration with the risk management group, on the ground and in those major centers is essential to enable us to assess and manage these risks. Thanks, Byron. So actually a really good example.

And I'll try to think about that in the context of maybe a life cycle of a transaction, you have the sort of the beginning of a transaction or a new business you have before you're going to trade, you have execution and then post trade. So firstly, the new product and business approval, for example, if we were looking to go into a new business providing risk management activity to clients, in Japan. First thing we would look for, which is, again, a good example of is that patient adjacent growth. Does the team have expertise? Does the team have capability in providing risk management services for these types of commodities. And as Byron said, that's something they've been doing here in Australia and in other parts of the globe for a long period of time. We have business in Japan. So we have capability there. We export in some capability when we start those new businesses. We look to hire external expertise on the ground, and then we look to leverage our existing operations, which is certainly what we did when Byron started this business. And that's all wrapped up in how we think about our new product and business approval pre-trade. Oren said, we're really focused on our -- on credit, taking credit risk here. So we'd work with business ahead of the trade to understand the types of counterparties that they want to trade with the limit framework that we're happy to think about for those counterparties. We're involved what we are in the rating process, for example, in Line 2. And so that will determine how much capital we hold behind those counterparties. And then we think about the stress testing scenarios that we're going to run over those counterparties. AML obligations. So as you onboard the know your client. We're an Australian designated business group. So we need to think about both our Australian AML obligations as we're offering these services to Japanese clients. But of course, the local financial crime regulations as we do that. As you move into trade execution, as an example, Byron said that they're typically very focused on credit risk, which I guess that's kind of consistent with we don't -- where we take market risk -- we want that to be really deliberate and we typically do that in markets that we have been around for a long period of time, and we feel like we do have an edge to be able to take that market risk. So to the extent that we're left with any residual market risk from these activities, we need to ensure that we've hedge that market risk out with exchanges that we're managing any capital and liquidity implications that might come from that hedging process. And then post trade is really about how we monitor and report on those counterparties, and that would feed up the reporting that we get at senior management and then ultimately to the Board around has this generated a new shape of country risk profile, for example, because we're growing in Japan. Is it creating a new sector concentration for us because we're predominantly as an example, dealing with utilities in the Japanese market as 1 example. So these are all context that Certainly, Line 1, we'll own that identification, we'll own that monitoring, we'll own that reporting, but we'll be involved every step of the way from a risk perspective. Have I missed anything there, by -- no, I think the only thing I'd add is that obviously, when it comes to physical commodity risk, understanding and appreciation of the operational risk aspects of that to make sure we have the teams, the procedures, the policies in place to be able to make sure that we can deliver where we need to. And indeed, we can react to sudden market changes as they may come.

Of course. Thank you, Byron. You can get out of jail now, and I'll -- you can definitely get out of job before this slide. So I wanted to talk about some of our recent learnings from regulatory matters. Certainly, RMG and through its ongoing partnership across Macquarie, we're really focused on reflection and learnings as things do and will go wrong across the organization. It's really important from a risk perspective that we're not just narrow in how we think about the identification and remediation of those issues. And we have -- you've seen recently, and it was up on the regulatory slide earlier that Chimera had up had some regulatory issues in particular here in Australia, whether it's our new license conditions as part of our MBL Australian Financial Services License, which relates to our futures business in CGM or some of the misreporting we've had in the Macquarie Equities business here in Australia. These are issues we take incredibly seriously. And we need to ensure that when we remediate those issues, we're thinking strategically, we're thinking holistically where we're not just fixing that report, but we're thinking about what other reports look like that. And we're putting the right preventative and detective control framework around it. But I guess from a CRO perspective, and I know from the Executive Committee and Board, what's incredibly important is we don't just fix the problem at hand. We apply those broader learnings across the organization. And that's 1 of the things we've really reflected on of late. Are we going deep enough with how we think about our root cause and where else something might occur in an organization? Really strengthening the -- our clarity and transparency of risk across the life cycle of a trade. And so as I talked about the life cycle of a trade earlier, it may be that there are some controls that are coal going, there may be some controls that FPE owned, indeed, there may be some controls that I own. And so ensuring we've got transparency and clarity over that end-to-end process is increasingly important for global businesses. like ourselves. And then lastly, really proactively engaging with our regulators. Regulators expectations rightly change over time. And so we want to really try and understand those expectations. We want to really understand our regulatory perspectives so that we can be really proactive with how we're thinking about managing obligations, how we're thinking about our risk and control frameworks, how we're thinking about ensuring that our businesses and products are fit for purpose. And then I guess finally, looking ahead, you talked to any risk professional. And look, they are just absolutely passionate about tech and the opportunity that AI brings. They want to be using latest tools. They want to be incorporating these tools into how they think about assessing risk and how they assure a risk. Tech digital AI is incredibly important for ensuring that we have a future proof risk platform for the future. And I guess now is a really good segue to hand over to Nicole and the team to talk a little bit about what we're doing that from a what we're doing on data and AI from an enterprise-wide perspective, and then with some really interesting case studies across each of the businesses.

Thanks, Andrew, and good morning, everyone. Today, I will provide you with an update on the corporate operations group with a particular focus on technology, data and AI. COG is a global and diverse team with deep expertise in technology, data, AI, operations, operational resilience, corporate real estate and procurement. In deep partnerships with all groups, we have built and we continue to invest in a platform for growth with high integrity of data at source. A focus on front-to-back automation, leveraging AI and providing all groups with the benefits of a scalable platform. Now this is, of course, enabled by our people and by their deep skills, mindsets, behaviors and culture. The main takeaway from today's presentation is we have built a platform for growth. Since I last presented 5 years ago in 2021, we have been investing considerably. We've been building scalable platforms and services across the group. We've hired deep expertise. We've invested in our people. We have matured our capabilities in data and AI. And we've also partnered with each group to deliver significant programs. Now I'm not going to call out anything on this slide from a tech data and AI perspective because we are about to do a deeper dive. But I do want to call out the significant achievement by the COG team of delivering the Sydney Metro Martin Place precinct, and we sit here today in on Elizabeth Street. So as you are aware, this was our largest ever balance sheet undertaking, a 6-year -- over 6-year period, -- we have delivered a fantastic outcome for the City of Sydney, but also for our people, delivering them a state-of-the-art global headquarters. Now you can see on the right-hand side of the page here, all of our programs of work are aligned and they prioritized according to delivering 3 outcomes around improving quality, improving velocity and scalability. Now while we saw a material increase in the overall technology spend across the group, reflecting an investment in core systems, building new business capabilities, and also regulatory programs. Costs have stabilized at $2.3 billion. Within COG itself, we generate material efficiencies each year. which we reinvest into improving our services. Each year, a growing proportion of our spend is on change or transformational activity versus business as usual activity. I now want to focus on the right-hand side of the page. And as I mentioned, we provide the common foundations being the platforms and the services that are leveraged by all groups across Macquarie, and having consistency at the core is really important. Now these are highly secure, resilient, scalable, available and automated. Our business aligned teams are embedded within each group. They work in partnership with each group to leverage these common foundations and they deliver differentiated platforms and services for their customers. And a key element of this is ensuring we have high integrity of data at source. I'm shortly going to hand over to David Touff, who is our Chief Technology Officer, and he will take us through how we embed security in the platform, which reduces risk, but it also enables speed. He's also going to take us through our cloud-based infrastructure. We were an early mover to the cloud over a decade ago. And this means we have a very modern, resilient, agile and scalable platform. Pierre Loigicalatso, who is our Chief Data and AI Officer. He's going to take us through the journey we've been on to improve our data governance and also how we're building out and we think about our data platform ecosystem. This underpins our AI platform ecosystem and then leveraging the foundations that I've spoken about means we are enabling the entire organization to capture the benefits of automation and AI. So bringing this to life, we're going to then hear from 2 of our business partners. So Ashwin Sinha, the Chief Digital Data AI Officer in BFS, and Gurov Sing, the Head of Transformation in CGM. And they're going to take us through the business outcomes they're achieving by leveraging our platform. So I'll now hand over to David.

Thank you, Nicole. Good morning, everyone. My name is David Tuff. I'm the Chief Technology Officer, and I've been at Macquarie for the last 9 years. Our focus on cybersecurity is on embedded security controls that let our teams move faster and with confidence. And that is what we've been building into the Macquarie platform. This is showing up in many outcomes, including 100% of our assets protected against advanced threats and no reportable cyber incidents in 2025. We've invested heavily in our people with over 7,500 hours of capability uplift and our teams now sit in the top 3% globally for phishing. We have reduced fragility across our enterprise stack with a 50% reduction in technology obsolescence -- and for more than a year, 100% of our server assets have been protected against very high vulnerabilities. Let me draw out some of the highlights on the right-hand side. We've embedded multifactor authentication, materially increased our third-party cyber risk controls and deployed AI-driven e-mail data loss prevention, which is closing key attack vectors across the enterprise. In addition, AI-driven controls are reducing manual effort and improving detection and speed. The impact of this is fewer disruptions, lower operational risk and more freedom for product and delivery teams to innovate. Security is built in. The impact of this is fewer operational disruptions, lower operational risk, and we'll continue to strengthen this core as we modernize so the organization can move faster and with trust. With that foundation in place, let's move to see how this supports our platform scale out. Over the past several years, we have continued to mature our technology foundations to ensure Macquarie is positioned for future growth. As a result, our cloud-based core systems provide the agility and scalability required to adopt market-leading capabilities at pace and continue to meet our high standards for risk management and resilience. Since 2021, we've seen a fivefold increase in cloud storage, and we've doubled our production applications running on the cloud. We've exited 7 global data centers contributing to a 20% reduction in physical data center costs, lowering our technical obsolescence and operational risk. About 91% of our applications currently run on cloud and SaaS and we've achieved a 750% uplift in critical applications running natively on the cloud. This environment is enabling faster and safer adoption of new technologies across the group. Last year, we onboarded 85 new cloud services and our governance and security frameworks mean we can deploy new a models within hours of release. This gives our business access to world cloud capabilities quickly while maintaining the controls expected of a global financial institution. You can see the impact of this investment through our businesses. Group Treasury is leveraging cloud-based compute to accelerate capital management calculations and reporting. CGM's modernized trading and risk platform is using public cloud for elastic cost-efficient scalability. MAM is embedding AI to deliver personalized and efficient customer and client experiences. In addition, a major milestone was reached last year with the closure of our largest data center, moving a significant share of our remaining on-premise workloads to cloud, reducing operational risk and removing legacy infrastructure. Taken together, these investments for Macquarie on a strong footing to continue to scale, innovate and respond to market opportunities with greater speed and confidence. I'll now hand over to Pierluigi.

Thank you, David. Good afternoon, everyone. My name is Pierre Luigi clazo. I'm the Group Chief Data and AI Officer of Macquarie being with the firm for just over 2 years. We are very aware that market-leading use of AI requires 2 things: mature data foundation and modern technology. To capture the benefit of a robust data governance and the strategic data platform architecture are essential. Over the last 2 years, we made considerable progress improving data integrity and reducing risk. We've implemented enterprise data governance tooling to build oversight capability and support compliance across the organization. We'll leverage 2 strategic platform partners, AWS and Google, providing scalable cloud services and consistent data controls. Key investments include data platform with scalable cloud infrastructure, data governance and classification tools and data exchange capabilities, enabling governed data products to be published and consumed securely across Macquarie. In summary, this robust foundation and our long-term investment in public cloud enable us to deliver the i platform ecosystem for the group. We're partnering with our businesses to increase competitiveness and create disruption in an accelerating market. Each part of an acquirer requires leading capabilities to maintain competitive advantage, maximize productivity and leverage data for decision-making. We are transitioning from experimentation towards demonstrating high-value use cases. With business impact and being deliberate in how we apply eye across our ecosystem and existing processes. I would like to focus on our fundamental approach to optimize the process first. Then apply automation where appropriate and use AI for remaining analytical and decision-making tasks. We have enabled foundational AI services for everyone, as you heard from our colleagues before, general AI assistance, intelligent analytics and embedded AI plus vertical services tailored to specific business needs. Very importantly, we established responsible AI practices and strong governance, recognizing is a huge opportunity, but we are very serious about using it safely and ethically through robust framework and key partnership. The focus is to do more things faster and better, challenging processes, eliminating operational overhead and using AI sensibly where there is business impacting growth, capacity creation, cost optimization and improve scalability. Measuring business impact from AI can be challenging, but we are seeing tangible results from all the groups. CGM is automating trader analysis is delivered in real-time consumer insight and next-generation digital experiences. Mackup is acceleration research with advanced AI tools. And mom is doubling down on productivity leveraging AI. BFS CGM will now take us through some specific use cases, demonstrating this approach in practice. That's it for me. I now hand over to my colleague, Ashwin Sina from BFS.

Thanks, Per. Good morning, everyone. At BFS, we have been focused on building safer, better and easier banking experience for all Australians. We have been deliberate about how digital, data and AI capabilities, strengthen our retail franchise in terms of customer outcomes, risk discipline and operating leverage. I've been at Macquarie Group for the last 7 years, leading the data an transformation at BFS. Today, I'm here with core colleagues to share with you how we are building the bank of future, leveraging the core capabilities that Pierre, Nicole and David spoke about. Our progress until they interest on interconnected foundations across culture, technology platforms and data and AI. It starts with culture. As Ben said, we operate as a technology company, which means outcome for technology initiatives is deeply embedded in business and we operate as 1 team, not as 2 separate teams. We were the first organization in Australia to roll out Gemini Enterprise to all our staff, and we backed that with extensive training of all our staff in prompt engineering and generative AI. 96% of BFS leaders are certified in general. And this culture is backed by our modern technology platforms. We are 99% on Cloud and soon to be 100%. But we have not done this as a lift and shift exercise. We have simplified, rearchitected and move to cloud native platforms, as David spoke about. This means we are able to provide our clients a level of resilience, which is very different to the rest of the industry, and it increases the pace of delivery, thereby lowering the marginal cost as we scale. And finally, data and AI is the fuel for all of this. We are 1 of the few banks globally to operate a single data platform. We have eliminated 90% manual adjustment in the last 2 years, and we run 50 artificial intelligence solution in production to deliver customer outcomes on a day-to-day basis. That is agility of a startup with the discipline and scale of a large financial services organization. Now let me take you through what this means in practice on a day-to-day basis. First, reliability. Reliability is our #1 feature, and we measure reliability as how customers experience banking not as a system uptime. And while rest of the industry excludes planned outages from their availability metrics, we have gone 1 step forward, and we do not have any planned outages. We are an always on bank. This discipline and a dedicated reliability engineering team means we are able to achieve an availability metrics of 99.95%. That equates to 4 hours and 22 minutes of downtime in an entire year. To put that in perspective, last quarter, when we moved our API Gateway, most of the other organizations would have experienced minimum, a full weekend of outage and the associated customer impact. For us, we had 0 impact last quarter, and the total downtime was only 24 minutes. That is reliability by design, and it compounds customer trust over time. These same foundations have allowed us to reimagine customer service and experience. Let me introduce you to queue our AI-powered customer service agent. What started as an idea 12 months ago is now a sophisticated solution in production, delivering personalized support 24/7 to all our customers. And we have been able to do this so rapidly because of the cloud native AI capabilities and because we designed the control and monitoring architecture from day 1, and we did not retrofit it. This means we are putting AI safely enhance of our customers, and we are being responsible about it. It has delivered impact on 3 strategic fronts. First, an iconic customer experience; second, sustainable skill and finally, an operating leverage by freeing our highly trained staff to focus on more human-centric complex tasks. We continue to expand capabilities of for all our customers. And finally, reliability -- sorry, client protection. We decided several years ago to move away from SMS-based verification to our own Macquarie Authenticator to provide our customers with a real-time and secured way of improving customer transactions. Today, 95% of customer transactions are approved using Macquarie authenticate that require multifactor authentication. Behind the scenes, the AI engines are continuously at work, we use a technology called behavioral biometrics. Tim spoke about BioCatch, that is the technology which we are using here. And that is able to understand how our customer swipes types or holes the phone so that we can distinguish a genuine customer from a bot, a fraudster or when the customer may be acting under Dures. Now the results have been clear and measurable from this -- we have reduced client losses by 55% over the last 2 years. We have reduced false positives across AML and fraud by more than 80% in the last 3 years while our deposits grew by 50%. Another great example of how we are improving the risk discipline while maintaining customer or delivering customer outcomes and creating operating leverage for our staff to focus on more reliable threats and looking at those. In conclusion, I would like to say digital and AI are no more just initiatives at BFS, it is about -- it is what drives how we scale safely, protect our clients and build trust with our customers. And we are doing this consistently and with a very clear line of sight towards customer value and shareholder value. That's all from me. I'll hand over to Gaurav Singh from CGM.

Thanks, Ashwin. A few long faces. I'll join be brief. I'm Graig. I had transformation at CGM, which means I look after all our data technology investments and outcomes. I've been with Macquarie for 20 years, leading engineering, operations and large-scale change programs globally. I want to build on what Nicole shared and talk briefly about CGM's investment in technology and data, what we've achieved through our focus and how it positions the business for the future. CGM operates in 20 markets globally and has a substantial data and technology footprint. That scale creates significant opportunity but requires a deliberate and disciplined investment approach, a consistent operating model, getting data right at source and then infrastructure that scales. At the core of every investment decision is a simple framework. We ask ourselves 3 questions: Does it reduce risk? Does it enable growth? Does it drive efficiency at scale? By applying these 3 principles, we ensure our investments are targeted, aligned to business outcomes and focused on where we need to be in the long term. From a risk management perspective, our initial focus has been on automating and embedding controls and improving our detection systems, shifting from a reactive model to 1 that prevents issues before they occur. We've laid strong foundations through investments in our strategic data platform, focusing on end-to-end completeness and accuracy of our onboarded data sets. This has led to some tangible outcomes that you can see on the screen. We've eliminated over 90% manual adjustments across all our financial regulatory reporting. And specific to this domain, we've had 2 clean independent and external assurances. A strong signal that our control and minis maturing. For a trading business like CGM, we need to respond quickly to changing market conditions, which makes system stability and scalability essential. We were the early adopters of the cloud movement, and now we've migrated our entire trading and risk infrastructure onto the cloud platform. This elasticity helps our systems match the differing demands of our trading desks everywhere around the globe. This means we're available in all the regions all the time, but more importantly, we are scaling up and down, which optimizes our cost base and the infrastructure cost. Through test automation, we're seeing faster -- 50% faster deployment times and 65% reduction in change incidents. Predictable -- improving our predictability of our systems, and time to market is being reduced for our outcomes. Looking ahead, CGM continues to invest across data and emerging technologies with a commercial business-led approach, reflective of our entrepreneurial culture. We've anchored our regulatory remediation responses that Andrew touched upon strategically. We are onboarding our order and trade data sets onto our data platform, which enforces completeness and accuracy by design. This helps respond not only to our regulatory obligations in a robust way, but leverages data as a strategic asset for origination and pricing signals and data-led commercial decision-making. We're starting to deploy AI use cases, which you can see on the slide up there. Across CGM, around 70% of our developers are using AI to accelerate delivery. An application we recently developed would normally have taken us 4 to 6 months. We went from proof of concept to production in under a month. Today, we have 20 such use cases being deployed and many more in the pipeline. But what's encouraging is it's across the entire CGM value chain, from trading and risk optimization to control automation and finally, converting processes to Agentic. So in closing, the investments we made have positioned CGM with a resilient and scalable foundation. Our disciplined approach to technology investment, our focus on high-quality data, adoption of cloud and AI enable us to reduce risk, seek out efficiencies and scale opportunities, which are critical to CGM's growing strategy. Thank you.

Thank you, team, and as you heard earlier from the operating businesses innovation has been key to getting our businesses started and also allowing them to grow in a competitive world. But what we want is not just growth, but disciplined growth. And as you can see, our risk management platform and our technology platform are key to delivering that. And as Andrew was saying, in terms of risk management, we get the business to be the first line of owning the risk in terms of looking for how they can drive patient adjacent growth from their deep expertise and insights, but having the second and third line has been critical in terms of really expert people bringing independent review and challenge and constantly evolving as the external environment changes, and we need to adapt. And also having our capabilities in technology and data and at the moment, AI as well to help support this growth that's happening and partnering with the business has been key. So thank you all as well for giving us a couple of hours of your time to get a deeper dive into our businesses. We'll take questions now, and I think Sam, we missed Matt Wilson at the end of the broader question because we also have you taken.

We'll start with questions on the line, and we'll go back to the room to the extent there are questions. So if I can get Matt on the line, so we'll have 1 from the third quarter update, I think.

That's good. And we're worried about AI. Following the Risk Management Group presentation, could we get Andrew Casey to address the questions at the beginning of the presentation of Macquarie's exposure to SaaS equity and debt through his risk management lens and scenario analysis approach?

Thank you, Matt. Look, the first thing I will say, and Samara mentioned this, it's obviously been topical in the press for the last of last week or so, we've been very focused on AI, both as an opportunity from a risk perspective, but of course, defensively around how that might impact the business models of all -- across all our businesses, in particular, as we originate new credit and new equity from the Principal Finance business and then other parts of the equity investing business in Macquarie Capital. I think it was called out that, for example, in Principal Finance, we have about 25% of that portfolio in software. The types of questions we ask ourselves from a line 2 perspective is, what's the criticality of the software that's been provided? How many features is that software required to be able to deliver for a client, how critical and how much proprietary data is associated with that software as an example. So we think through the business model and the susceptibility of those risks on a business model by business model perspective. But then, of course, we step back importantly, I guess, from a stress testing and a concentration perspective. And we look at both the historical loss rates, but of course, we then try and stress what has happened in sectors that have been disrupted before and apply that type of lens to concentrations that may emerge across both our credit and equity books. And so as part of that stress testing process, we will look at different components of our credit book and our equity book, different sectors, different products. We will stress those in a more severe fashion than we've ever seen in the historical data generate. We'll look at where sectors, as I said, have been disrupted and try and apply that lens, and then think about that holistically across the organization, how does that impact our capital settings, our funding settings and importantly, the profitability of each business. And I think Shemara spoke about before. We only really want to ever risk the earnings associated with the particular business. And so we look at the -- both the earnings of, say, our principal finance business, we look at how much ECL that they might have already provided. We look at how much initial issue discount that exists across their book. And then we look at what the NIM is on the rest of the book that, for example, is not software attached and then we run that to ensure that, that concentration doesn't impact the underlying earnings of the Principal Finance business and the broader Macquarie Capital business in that case.

And Andrew is briefly also going to say Michael mentioned this that we do cash flow lending instead of ARR lending. So we've got real cash flows and we look at the resilience of those cash flows in terms of the specialist expertise that they're providing for the regulatory environment or provide some barriers around the resilience of that cash flow as AI comes in. So there's a bunch of things having looked at some of these with your team that the features that we've made sure we enforce to make sure we get the best quality lending. Plus also, the other thing I'd say -- sorry, Matt, you go ahead...

No, no, you go ahead.

I was just going to say, our book is not that big, that we are able to pick the eyes out of areas in which we have deep expertise and confidence and get really good return for the risk because it's a pretty small book all up, so we can pick the eyes out of the best credits.

That's very comprehensive. If I could then just squeeze in 1 more question for Ben. Our deposit offering is compelling and clearly market-leading. We should all have a transaction account paying 2.25% in the savings account paying 4.5 all the strategy, while this strategy has supported growth in returns, is there another longer-term strategic aspiration that this positioning is actually pursuing.

Well, thanks, Matt, and thanks for being a customer and for the advocacy. I mean, look, we think that over the long term, that our savings book is going to be a big source of growth. But I've mentioned when we showed the market that there's a number of areas where we're still quite a small market share player. And so I think there's a range of things that can play out there. I mentioned the term deposit market where we're underweight, particularly. And we still see strong growth in our savings product because as you've highlighted, it's really compelling value for shareholders. I'm not sure I'm quite addressing the question that you had and something else that's going on.

Well, I'm just thinking more broadly, like we're seeing tokenization, we're seeing the Genius Act, stable coins, other opportunities to broaden deposits and payments outside of financial ecosystem.

Yes. Matt, I didn't realize you're referring to that, sorry. I mean at this stage, I'd say that in Australia, really more of an R&D focus. I mean, we're paying attention to it, but it's not something that we're spending a lot of time on at the moment.

Thanks, Matt. So we'll start in the room. I'll start with John, the row from the back.

Jon Mott from Barrenjoey. Question Prisma, if you could. BFS has been hugely successful as we've been talking about, especially the retail and the mortgage product. If you look at the mortgage business, 6.8% market share, it's utilizing $7.6 billion worth of group capital. And if you go -- the current run rate that you're going out with 15% of the flow, you're going to be at 10% share of the system of the book within about 3 years. But to achieve that, they're going to chew up to about $12 billion of capital, which will show up again about 50% to 60% of the group's retained earnings over that period post dividends, if you do it. So are you comfortable with the amount of capital if they hit all the targets that they're going to use that so much the group's capital is going to be required to fund this great growth opportunity in the retail BFS area. Or do you have to look at either pulling that back eventually? Or do you have to look at other capital providers?

Yes. No, I mean I think we have 4 really excellent franchises, as you've heard the team talking about, and we see a huge runway to grow all 4 of them, and we want to empower all of them to grow if they're delivering appropriate return for the risk we see in that particular business line. So to the extent BFS has capability to keep growing and delivering the sort of returns it is which are market-leading in Australia and also really good return for the risk globally. We're very happy to support that our weighting of businesses may change from time to time, but frankly, been sitting in the front row, we have massive runway to grow in asset management. We're very small. There are 1 trillion asset managers around in the world in private markets. We also have the long runway to grow in investment banking and JPMorgan, the biggest investment bank is a trillion market cap. -- business and in commodities and global markets again, where we're competing not just against trading houses and hedge funds with the big energy players. We are a small player, and we've got many more sectors and regions to go into. So we see scope for all 4 of our operating businesses just to keep growing. And the mix will depend on which of MC's better opportunity return for and the combined ROE will be a blend of whatever that delivers. But ultimately, our view is, we're happy to back BFS if they can keep delivering what they've delivered.

Okay. So there's no rationing. It will continue to grow based on the current economics, you think you can continue to fund huge growth in this business over the next couple of years.

Yes. I mean my hope is that the market will continue to fund us for each of these businesses if we are delivering the sort of return to market once for the risk. And then the house return will be a blend of that. But our expectation and hope is that the market will give us capital to put into a BFS business. It's earning its cost of capital and then some. So we should be able to raise both funding and capital. And to Matt's question, I mean the deposit side is a key part of it. We call it a liability-led business. But our presence in the deposit pool is still small. And the way this really well tightly disciplined regulated market works, deposit-taking institutions are the ones that are trusted to take those savings -- and so while other innovations grow in terms of the investing side, ultimately, there's a limit in how much they can grow, I can't access to deposit pool. So we see long runway in both funding and capital.

Why don't we just keep on that row. So we'll go to -- I'll come back to you, Ed.

Ed Henning from Slade. Just want clarity in the presentation today. It was talked about technology costs have been about $2.3 billion and being stable. Was that stable at $2.3 billion or stable at 25% of the cost base. And within that, thinking about technology costs and moving more to the cloud, which we heard a lot today, those technology costs aren't going and they're growing above inflation. Are you able to get enough cost out and savings to offset that increase in cost growth.

Yes. I think, Nicole, you can comment, but we're stabilizing around the absolute dollar level is what we're saying. We've had to put in massive investment -- and it's a little bit capitalizing on what we've been able to do in base technology and in the data side. but it's also our businesses. We are really uplifting our operating platform materially as we grow scale globally and also as our social license becomes a bigger issue and we have less tolerance for risk, at some point, we expect that to start delivering returns. We're stabilizing the spend now, but it's the outcomes and the return on that spend that we're focused on, Nicole.

I think you've answered it actually. Yes. So the $2.3 billion is forecast remain about the same for the next few years. As David mentioned, we have swapped out some of the fixed costs with closing data centers, we take a very disciplined approach to how we manage our technology spend, particularly around cloud consumption. So as Gaurav mentioned, the benefits of having a cloud-native platform is we can scale up, we can scale down. So we have full transparency around cloud consumption. So we're quite disciplined around the spend there. What we're seeing for businesses like CGM, while we have been ramping up the investment, there are a number of programs we've been investing in, as Gaurav said, in a strategic way to address some of the regulatory programs of work over the next 12 months, they are starting to tail off. And so we combined with the efficiencies we've spoken about, we are redirecting a lot of that spend, but we must continue to invest as technology matures as we drive more front-to-back automation.

Andrea Stadnik from Morgan Stanley. If I can ask my first question around MAM. You highlighted the excellent systematic strategy that's been running ahead of Australia. Going forward, now that MAM has been reshaped with the sale, are you going to be more assertive in terms of thinking how some of the strain based strategies and it can be exported its, and what are the strategy changes could we expect from MAM?

Yes. And I'll let Ben comment. We're heavily a private markets business, but we really saw ability to deliver alpha in fixed income and systematic equities here in Australia, which is why we maintain that business and been systematic equities, Benjamin was talking about. We do have the scope. We've kept evolving the indices against which we offer solutions, et cetera, and can go more global. But what are your thoughts?

Thank you for that question. Good afternoon, everyone. Nice to finally get a question. I think the first thing, as we've discussed before, is that we're focused on doing 2 things in MAM, being a full-service asset manager here in Australia in our home market. You probably got a sense of why that is today because we have big businesses here, including in the public side and those businesses generate very good results for our clients, but also very good returns for shareholders. So it makes sense Chris to operate there. And with the slim down global platform, we're really focused on private markets. There will be some things that we do outside of Australia, but also here in Australia that we can always move across different geographies. And Benjamin's business is 1 of those. So that already has a global client base. Can we do more with that business to provide more solutions, not just say so many Australian clients around the world and can we expand that offering, that's something certainly that we're doing, and we'll continue to invest in that technology. And I suppose that's part of having that more focused business, it allows us to work out where are we really driving great results for clients and then how do we really scale that up where it makes most sense.

And if I can ask my second question. Around AI and MAM, particularly from the point of view, there are many, many portfolio companies within MAM. So how are you using AI in terms of capturing the data insights coming from those companies, particularly given some of your big American and European peer has been quite aggressive in using that data for some time. So how are you using your portfolio companies to further enhance your data and AI?

Yes. It's something the MAM team are very passionate about. So again, I'm happy to throw to Ben. But we are -- there's a whole lot of insights we can grab from a few hundred portfolio companies that will help us. You can talk about the people and the investments you make.

Yes. So we've got 192 portfolio companies, and we've also got a long heritage of investing. And if you think about when we make investment decisions going into the future, what we want to be able to do is, first of all, call on all of that investing experience over the last 30 years, couple that with what we're currently seeing in the marketplace across our 12 portfolio companies and then look at further external data and make a decision on an investment committee on that data so that going forward, the best IC members are likely to be AI IC members. And that's really the state we want to get Moto. And that's a lot of the discussion in the asset management industry is around, is that how do we actually take that expertise and rather it be about key people and continuity of key people, really capture that data and make the best informed fact-based decisions. And so what we're doing besides bringing people into MAM who have the right data and AI background to really investing in that people talent, we're rolling out things like chronograph. And so chronograph is a tool that all of our portfolio companies input data in a real-time basis. That allows our asset managers to look in and see what's happening in their portfolio companies. It allows them to compare across regions, across different funds, across different sectors. And then as you can imagine, as the technology becomes more proficient, we then overlay an AI solution to that, something like cord and that allows us then to upgrade further our investment decisions. And that is exactly the path that we're currently on, and a lot of that has already been rolled out. I think the second part of your question, Andre, is really then when we think about what we can then do to our portfolio company, so there's the information and there's the AI of investing and then there's the actual value creation in the portfolio of companies. And so we've invested in a variety of coworker AI type businesses that allows us to bring that skill set in, which really means that we can either reduce costs or in some cases, really be better at capturing revenues in industrial businesses. So in every investment case we put together now, we're thinking about the opportunities and how we better make that investment, we're also thinking about the risk that AI might obviously cause for that portfolio company or sector. And thirdly, we're then thinking in terms of the investment case, well, what technologies, what investments do we need to bring into this business to modernize it and really capture that technology dividend.

And the other area without going into detail now, where you're using it a lot is engaging with the investors into the funds as well. So understanding their needs, shaping, reporting to them, all of that using MAM, I should say. The bulk of our $2.3 billion tech spend is recovered in the operationally complex areas of BFS, CGM, particularly and also in FPE with the regulatory and financial reporting but and MacCap does have the equities, which is a more operationally complex business, but MAM and MacCap still are using technology a lot, even though it's not the biggest of the $2.3 billion spend to drive outcomes in the businesses.

Great. Thanks. We go to Brendan just crossing.

Brennan Strand from Goldman Sachs. Just got a couple of questions on BFS. You showed us a little bit around the cost to income today. Just thinking as you move your market share towards double-digit mortgages and in deposits, should you have a structurally lower cost to income than say, the major banks because you just don't have that legacy infrastructure that they have, but also you've made quite a bit of investment in technology in over the last 3 years.

Yes. Definitely, Ben, I'll hand straight to you on that one.

Yes, thank you. I mean, I think the competing forces are that we do have some advantages in the investments we've made. But on the other hand, we lack scale, which is the key point we've been trying to address today. So -- we clearly need to build scale. I don't see that we'll get to you said a double-digit market share in that we've got some sort of competitive advantages that the others can't meet. I mean I think they will still be significantly larger than us even at that sort of market share. We said today, we're between 1/5 of their size. And that does give them significant advantage. Just in terms of sort of the share P&L firepower and the investment budgets that creates. So I think in that respect, we're doing well. As we said, they're formidable competitors, and they have a raft of natural advantages that built up, and I think it will remain the case for some time.

Yes. And we're investing back in a lot of things as well to keep moving the needle, but you saw where our CTIs are now with the scale that we have. So we probably can bring them down. But will they drop to the level of the biggest competitor just at 10%? That's not necessarily the case. Yes, I doubt that would be the case. That's right. Yes.

And just a second question on revenue streams, like you've got quite good share in mortgages and deposits. But what's the ability to expand into advice or into unsecured lending or into payments or markets type activity effect as you look forward?

Yes, thank you. I mean, look, we -- 1 of the reasons we've been successful, I think, have been very focused. And we say no to a lot of opportunities. So Part of our success is about having simple products and simple processes and achieving scale on those things rather than sort of spinning out into new things. I think that's sometimes tempting but being not a not the right strategic choice, certainly for us. And so as we go into the future, I mean, I think my hope is that you'll see us continue to build a much bigger business, but with the same sort of relatively narrow, simple product offerings that we have today continue to give customers value in those products, not looking to try and move into adjacent areas at this stage. I don't think that's going to be the right path for us.

And I think, Renan, overall, as I was saying, our approach to managing risk is we operate from deep expertise and then have patient growth. We've got a long runway to grow in Personal Banking than into business banking and also in wealth -- so I think the prospects of our doing something that landing the golf ball on the moon is unlikely. There's plenty to do in the areas in which we've built decades of expertise.

Right. We've got Andrew in the second row, just at the front here.

Andrew Triggs on JPMorgan. Just a couple of questions. Firstly, the 13% ROE that Ben mentioned earlier, just checking that, that's based on the Tier 1 requirement of 10.5% of risk-weighted assets that's mentioned in the pack. So if you were to hold it to a higher capital requirement not quite akin to a major bank level, but somewhere between that level and the major bank level, it would bring the ROE down somewhat, but still well above the cost of capital.

Frank, do you want to take that.

All right, then you go -- well, the 13% I talked about is at a higher cost of capital, that's the internal cost of capital charge to BS -- and -- but you are right that if we were held to the capital standards of the big 4 banks, then they have slightly higher capital. And so it would bring that ROE down a little, but would still be comfortably above our cost of capital and compare very favorably with the market even at those levels.

And just a second question, just -- I mean, one, probably not for you but just in terms of the sorry, the broader BPS division, there was plans to invest significantly in the platform within the wealth space. Is that still on the agenda, given there's been some changes to the permit of the business recently?

No, we've certainly still got commitment to investing in our wealth platform. And that is the main thing we offer in -- well, we have the private bank actually that's a much higher service, higher touch service for the private bank clients. But in the general financial wealth channel, what we do is offer a piece of architecture that is top quality technology for financial advisers and planners, et cetera. I think the things you're referring to are just understanding more the nature of the savers whose money is being invested through those platforms and making sure we protect that money. So certainly with retirees, we this is supposed to fund their retirements, we need to have much more control on where that money can be invested and we're stepping up what we do on onboarding, monitoring, et cetera. But in terms of technology, we want to keep investing, and we think there's a lot more room to grow in terms of what we offer there in the basic well. Do you agree BFS.

Brian Johnson, MST. Ben, you theater. But I think this might be a question for Frank. So Frank, if we have a little Macquarie, it is a nonoperating holding company. There's about $4 billion in hybrid capital raised in the NOK, which miraculously becomes capital in the bank, the 13% ROE, you guys have said it. So we've got $7.5 billion in surplus capital thereabouts. You're -- so I don't think the market would like to see the core equity allocated below what it is for the other DSPs, which is the major banks. The 13%, is it premised on still being able to cycle down the $3.9 billion of capital. Is it based on running the capital at the bear minimum as opposed to the 11.25% ex-dividend core equity Tier 1 that a bank should run at.

Thanks for that quite detailed question. In relation to the count, as Ben said, it's based on what he outlined is at that 10.5%, right? And so this is something that we're kind of -- sorry -- yes, higher than that at the moment. So it's something that we obviously will continue to evolve. And obviously, in relation to what's happening with nonbank hybrids as well, that was something that we'll continue to assess, and then work out what the required return requirements are in relation to all of the businesses, not just the BFS home loans business.

Okay. And then a more specific question for Ben. Ben, if we have a look at the deposit market, a deposit at call in theory, that's priced at a really hot rate gets captured by the liquidity coverage ratio as an outflow, that's what those conditions that they tack on to the accounts is really about. Could you explain to us what makes these deposits so much stickier than you can actually lend them out, they seem to be originated at a higher rate. That doesn't seem to be the bells and whistles. Could you just explain to us what makes these deposits so stable from -- not from a real world thing because it's the rate. Well, could explain to us how you managed to pull off that magic where, from a regulatory perspective, the sticky as well.

Yes, I mean, I think the other thing I'll just add to your first question, Brian, is that, of course, and it goes to the question earlier on, we're generating capital, of course, with the earnings of the business as well. So it's not like -- I don't think we -- sort of taking capital away from the group. I think we look at BFS as contributing capital to the group and we're using that capital for our own growth. In relation to the deposits market, I mean, obviously, we comply with the rotor rules around liquidity coverage and so forth. But I think when the major banks have their conditional savings rates, that's not really about trying to optimize for liquidity coverage because -- those conditions aren't about the tenor or the time frame within which the customer can withdraw the funds. I mean, there are products like that in the market, notice savers and so forth, which look to address the reentry rules around runoff and the net cash outflow calculation. But in relation to the conditions that you see on savings accounts, I think they're more about our profit optimization through, I guess, trying to look at the fact that as -- is found, by far, the bulk of customers don't meet the conditions. And so I imagine that people with those products in the market are thinking about their effective payout rate on the deposit rather than the rate that the customer actually earns. And obviously, that's attractive to them as a funding source, but not a great customer outcome, which is why we think our approach is a better approach, it's more a customer-centric approach. And as I said, I think customers are seeing that and hopefully over time, more and more will. Does that address your question?

More or less. Thank you.

Just last thing I was going to do is make a comment on capital that we as a bank do hold very high levels of capital as an Australian bank -- and that's because of things like the unquestionably strong regime, the way we have applied standardized approach to kind of party credit risk in Australia and amounts that we're holding because of the CTM business. And I think it's quite public that our capital has doubled over the last few years from about $17 billion to $34 billion. I don't know, Andrew and Frank, how public we've made it, how much of that is because of the regulatory changes that have gone on. But it's a meaningful proportion. So we hold a lot of rent cap in our business as a future resilience. And I think in BFS, if you look at the risk versus the capital invested, I think we're feeling like we're really well capitalized for the risk in -- credit quality is phenomenal. We're at like a 58% dynamic LVR. So we're able to pick super quality credits, probably a better book than all of our peers but holding very strong capital behind that, which we're comfortable is a market we want to operate in and comply with all the regulatory requirements. But it is 1 of the features of this market is very disciplined in terms of risk protection and capital requirements.

Great. I think we're done with questions in the room. There's no questions on the line. So thank you for giving us almost 3 hours of your time, and thanks for your ongoing support. Thank you very much.

Thank you.