Investor Presentaiton
Macquarie FY20 result announcement I macquarie.com
Introduction
Overview of Result
Result Analysis and Financial Management
Outlook
Appendices
•
Credit and other impairment charge considerations
In assessing Macquarie's expected credit loss provisioning on the loan portfolio, current and future
macroeconomic conditions are taken into account
O
MACQUARIE
Under the AASB 9 credit impairment model, losses are recognised on an Expected Credit Loss (ECL) basis. ECLS are required to incorporate Forward-Looking Information (FLI), reflecting Macquarie's view of potential
future economic scenarios including a weighted baseline, downside case and upside case
Baseline: Updated for impact of COVID-19 through key indicators used in modelling: gross domestic product (GDP), the unemployment rate and the level of house prices, interest rates and commodity prices. Our
expectations for Australia and the US are as follows:
Australia - unemployment to rise to -9% in mid-2020, GDP contracts -9% year on year to mid-2020 and house prices decline -15% by mid-2020 with a recovery in 2H 2020
US unemployment to rise to ~14% by mid-2020, GDP contracts -9% year on year by mid-2020
Downside: a more severe and protracted COVID-19 scenario resulting from the virus taking longer to be contained. Our expectations for Australia and the US are as follows:
Australia - unemployment rate to rise to -11% in early 2021, GDP contracts -9% year on year by the end of 2020 and house prices decline -29% by Mar 2021
US - unemployment to rise to -17% by mid-2020 and GDP contracts by ~10% year on year by late 2020
The total ECL provision on balance sheet at 31 Mar 20 is $A1,541m. A 100% weighting to the baseline scenario would result in a ECL provision on balance sheet of -$A1,400m. A 100% weighting to the downside
scenario would result in a ECL provision on balance sheet of ~$A1,900m and a 100% weighting to the upside scenario would result in a ECL provision on balance sheet of -$A1,200m
Australia - Real GDP Indexed Dec 19
US Real GDP Indexed Dec 19
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MQG Downside
IMF Baseline¹
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Further detail on the scenarios used for the Expected Credit Loss are contained in note 12 of the financial statements. Australia and Americas cover 77% of Macquarie's total credit risk exposures. 1. IMF GDP profiles are implied/estimated based on IMF year-ended and year-average GDP forecasts.
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