Good morning, ladies and gentlemen, and welcome to Macquarie Group's 2020 Annual General Meeting. I note that the Commonwealth is present and now formally open the meeting. I hope you enjoyed hearing from Macquarie staff about Macquarie's purpose, and I will speak in more detail on that topic during my presentation today. I would like to acknowledge the traditional owners of the land from where I speak to you today, the Gadigal people of the Eora Nation, and pay my respects to elders past, present, and emerging. Although we are not able to meet in person, I am pleased that we can come together virtually to update you on your company, conduct formal business, listen to any comments you may have, and answer your questions. Those of us in the same room are practicing appropriate social distancing.
Joining me today are your board, Managing Director and CEO Shemara Wikramanayake, and non-executive directors Gary Banks, Jillian Broadbent, Gordon Cairns, Phil Coffey, Michael Coleman, Diane Grady, Michael Hawker, Glenn Stevens, and Nicola Wakefield Evans. Also joining me today are Chief Financial Officer Alex Harvey and Company Secretary Dennis Leong. In addition, we have some of Macquarie's executive committee in attendance, either in person or virtually, including Florian Herold, Nicole Cain, Mary Rempst, Michael Silverton, Nicole Sabara, Patrick Uphold, and Greg Ward. Also in attendance is Group General Counsel Michael Herring. As we do each year, today's meeting will be structured as follows. I will outline the key highlights of the past financial year. Shemara will take you through last year's financial result, update you on the first quarter of the current financial year, and discuss the outlook for the remainder of the year.
We'll then hear from the two directors who are standing for re-election, Diane Grady and Nicola Wakefield Evans. This year, we'll also hear from Mr. Stephen Main, who has offered himself for election as a voting director. I will then formally open the polls. As this is a virtual meeting, we will not break for refreshments. This year, we will be donating the budget allocated to refreshments to the food rescue organization OzHarvest, which will use the funds to distribute meals in regional and remote communities affected by bushfires, drought, and COVID-19. The final part of the meeting, we will be able to take questions and discuss the formal items of business. Although we are holding this year's meeting virtually, let me assure you there will be ample opportunity for you to address the meeting.
For those of you attending the meeting via the online platform, you are free to send in your questions from now by clicking on the speech icon on your screen. For those who have dialed into the meeting via the teleconference line, please press star and number one if you wish to ask a question. We will repeat these instructions later in the meeting. Please note that regardless of when you submit your question, we will address it during the formal business of the meeting, as is our customary practice. We will try to ensure that all topics of interest are addressed in our responses. Questions submitted online may be moderated or amalgamated if there are multiple questions on the same topic. If you wish to view the meeting again after its conclusion, a recording will be available on the Macquarie Group website from this evening.
The past seven months have been overshadowed by the COVID-19 pandemic, the effects of which have and will continue to be felt for some time to come. First and foremost, a global public health crisis, COVID-19, has had profound economic consequences for many countries and communities. Macquarie has felt the effects of this pandemic. However, the group has remained resilient because of our diversity of business mix and geography, strong capitalization, well-funded balance sheet, and conservative approach to risk management. As a result, Macquarie has been able to focus on addressing the immediate needs of our clients, communities, portfolio businesses, and staff, in addition to our ongoing commitment to our stakeholders, including our shareholders. More than 98% of Macquarie staff have been working remotely and were well equipped to do so, given flexible working was already well embedded in our work practices.
Existing systems have been resilient to large-scale remote working, reflecting a long-term investment in technology. The group is now in a gradual, phased, and voluntary return to the office in certain locations where it is safe to do so, and with the appropriate social distancing and hygiene measures in place. As clients respond to the pandemic, Macquarie has been there to support them. For example, a range of financial assistance measures have been available to personal banking, leasing, and business banking clients. Financial hardship assistance has been enhanced to help vulnerable customers. As clients have navigated market disruption arising from COVID-19, Macquarie has been there to provide expertise, advice, and financing solutions. Macquarie takes seriously its responsibilities to work with our portfolio companies to ensure that they too remain resilient throughout this period of economic disruption.
In addition to helping these businesses remain operational and provide essential services, capacity upgrades in our MIRA-managed digital infrastructure assets have enabled them to handle significant increases in customer demand from the move to remote working and learning. Macquarie has maintained its commitment to communities through the Macquarie Group Foundation and across direct operations and portfolio businesses. The Foundation was allocated an additional AUD 20 million specifically for COVID-19 support. I will provide more detail on that shortly. Banking and Financial Services has hired workers furloughed by other employers to meet short-term customer service demand, and Commodities and Global Markets have sourced computer equipment to help educators in North America. Our portfolio companies in Macquarie Asset Management and Macquarie Capital have actively supported frontline healthcare workers, medical researchers, and educators.
While we cannot predict how the pandemic will track around the world, Macquarie remains in a strong position to continue to respond and support our stakeholders. While COVID-19 was prominent in the last few months of the 2020 financial year, Macquarie delivered a strong performance with a profit result of $2.7 billion. This was down 8% on a record 2019 financial year. Shemara will take you through the group's performance in more detail during her presentation. The group has maintained a strong capital and funding position with a number of initiatives throughout the year. In total, $26 billion of term funding was raised, with 30% of that in the final three months of the year, despite the challenges of COVID-19. Funding from customer deposits grew by 20% in FY2020 and now represents 42% of the group's funding.
Macquarie's liquidity position remains strong, with cash, liquids, and self-securitised assets comprising 39% of total assets. Turning to the dividend, shareholders received a full-year dividend of $4.30 per ordinary share, which was franked at 40%. This was down on the FY2019 full-year dividend of $5.75 per share. 56% of earnings, or about $1.5 billion, was returned to shareholders in dividends. At the time the board resolved to pay the final dividend, we took into account APRA's guidance on capital management and the continuing uncertainty as to the impacts of COVID-19, together with Macquarie's strong capital position and our 2020 earnings. Delivering strong results involves balancing the empowerment of Macquarie staff to pursue opportunities with a corresponding accountability for managing risk and an expectation of integrity in all dealings. The core principles of opportunity, accountability, and integrity have underpinned Macquarie's track record of unbroken profitabilities for more than 50 years.
The board's key oversight role is to ensure that Macquarie's culture is aligned with its risk appetite. As a board, we spend considerable time and focus on this responsibility, supported by detailed metrics to assess the effectiveness of risk culture. Alongside risk culture are risk practices that include the following features. Primary responsibility resides at the individual and business level, including risk ownership. Strong independent oversight is provided by the Risk Management Group. Independent and objective risk-based assurance is provided by internal audit. Our remuneration framework and consequence management process promote accountability, encourage and reward appropriate behaviours, and discourage inappropriate behaviours. In FY2020, there were 164 matters involving conduct or policy breaches that led to formal consequences. Of these, 32 matters resulted in termination of employment. Formal warnings were issued in the remaining 132 matters, and in 19 of these, the individual subsequently left the organisation.
Importantly, the circumstances surrounding all of these matters were analysed, and it was found that these were isolated matters with no evidence of any broader systemic issues. While COVID-19 has resulted in different ways of working, Macquarie's risk approach and focus has remained constant throughout this period, with increased levels of senior management communications to staff to remind them of their ongoing expectations and responsibilities. In practice, Macquarie undertakes a range of risk culture and conduct initiatives each year, including learning and development with a focus on management and leadership of staff, enhancing risk monitoring and evaluation, and expanding risk culture review capability. Macquarie's Integrity Office is an independent function with a global footprint in recognition of the global presence of the group's staff and business activities. The Integrity Office undertook a number of training and other conduct and culture initiatives throughout the year.
The board and management recognize the importance of sound environmental, social, and governance practices as a part of our responsibilities to clients, shareholders, communities, and the environment in which we operate, and its increasing interest to all our stakeholder groups. Macquarie is active across each of these three ESG pillars in a range of activities, including investment, risk management, policy development and advocacy, and adopting reporting standards. ESG is also embedded within the group's policies and practices, operations, and stakeholder engagement. FY2020 was another active year in terms of ESG initiatives, and given the interest in this area shown by a number of stakeholders, we have provided some examples of the outcomes achieved by Macquarie staff. These outcomes span business activities, conduct, direct operations, and engagement with clients, staff, and communities.
As the board and management reviewed business activities over FY2020, we noted the ever-increasing number of transactions, investments, financings, and projects in both developed and developing countries that are contributing to lower emissions. These activities cover reduced emissions across energy, agriculture, transportation, and real estate. The activity levels reflect a number of thematics, including investor appetite, the role we play in advancing clean and renewable technologies, policy settings, and customer demand. In the energy sphere, beyond our long-standing global involvement in onshore and offshore wind, solar, and waste-to-energy projects, we have continued to step up our focus on the challenge of storage and emerging technologies. Shemara's role on the Global Commission for Adaptation has supported our work to increase the climate resilience of our infrastructure portfolio. Shemara's work with GCA and other advisory panels is supported by Macquarie staff through provision of data, research, and market and client perspectives.
Alongside our proactive approach to addressing the challenges of energy transition, we also note that global projections of power generation indicate an ongoing role for natural gas for some time to come in a managed transition as the source of large-scale base load and peak load power, complementing the intermittent delivery of renewable energy. In the U.S., we trade around 13 billion cubic feet of natural gas each day and remain North America's second-ranked physical gas marketer. Macquarie is in part characterised by the diversity of our business mix and geography, and these attributes have contributed to the group's growth and profitability over more than 50 years. As a business that is underpinned by expertise of its people, there is a strong connection between the depth, breadth, and scale of the group and the diversity of our staff and the range of perspectives they bring to our projects and decision-making.
Macquarie strives to be a diverse and inclusive workplace, and considerable investment has been made over a number of years. The types of initiatives undertaken include working with schools and universities to promote financial services as a fulfilling career path for women, ensuring diversity of recruitment in our intern and graduate programs, embedding flexible work practices which have been embraced by a range of demographics within our staff population and employee network groups. The work that goes into building a diverse and inclusive workplace is never complete. However, we wanted to take some time today to reflect on what we have achieved to date and recognize those organizations with whom we have partnered to support our efforts. As I indicated earlier, FY2020 and the first few months of the current financial year have been busier than usual for the Macquarie Group Foundation.
The foundation's regular program of supporting nonprofits has continued to grow through including a record financial contribution of $51 million through grants and staff matching to more than 1,600 nonprofits around the world. In addition to fundraising, staff have continued to contribute their time and expertise with more than 46,000 hours of volunteering and pro bono support. In FY2020, the foundation celebrated its 35th anniversary, coinciding with Macquarie's 50th anniversary. When we came together last year, I updated you on the shortlist of nominees for our 50th anniversary award, a $50 million award to five organizations that are addressing significant social need through bold projects that promise lasting community benefit. This award was in addition to the foundation's regular program of financial support. From almost 1,000 applications from 48 countries, the foundation and its board identified a shortlist of 12 nonprofits.
In FY20, we announced the five recipients, each receiving $10 million. These recipients will use their grants to tackle primary healthcare in sub-Saharan Africa, eradicate mosquito-borne diseases, eliminate scabies, address economic disadvantage, and support ocean conservation. You can read more about these projects on the Macquarie website. At the beginning of FY21, the foundation was allocated an additional $20 million to support nonprofits working to combat COVID-19 and provide relief to affected communities. To date, $7.3 million has been directed to a range of institutions to provide direct relief through bolstering food security, providing access to health services and medical supplies, and providing vital information to support refugee communities, migrant domestic workers, low-income families, and a range of other vulnerable groups affected by COVID-19 around the world.
A further AUD 2 million has been directed to research supporting the Burnett Institute's study into the benefits and impacts of isolation, quarantine, and physical distancing, and the Doherty Institute's Australasian COVID-19 clinical trial. The foundation will continue to deploy the allocated funding for activities, including supporting economic recovery for vulnerable communities. Over the course of the year, the organization has been reflecting on the articulation of Macquarie's purpose. Our core principles of opportunity, accountability, and integrity, while part of Macquarie's culture since inception, have undergone review and refresh at several points in the intervening years. The expression of Macquarie's purpose, which is the statement of what the organization does and why we exist, has also been reviewed. In FY2020, and with the CEO's sponsorship, Macquarie teams consulted extensively with colleagues and external stakeholders and analyzed the outcomes achieved for clients and communities.
This work was distilled into a clear purpose statement that resonates with staff today. Empowering people to innovate and invest for a better future encapsulates what Macquarie sets out to do every day. At the start of the meeting, we showed you several short films, each a story told by a staff member about what Macquarie's purpose means to them. For each of those stories, there are countless others throughout the organisation. Over many years, the board has seen Macquarie's purpose at work in the briefings we receive from management and staff and the site visits we conduct. The purpose statement resonates as strongly with the board as it does with Macquarie staff. It reflects how Macquarie uses its expertise and resources to empower clients and how staff are empowered to deliver for their stakeholders.
Even the way in which the statement has been developed by staff demonstrates Macquarie's bottom-up culture. As previously advised, Gary Banks will be retiring from the Macquarie Board at the conclusion of this meeting. Gary has been a board member since 2013 and has fulfilled his responsibilities diligently, with valuable insight and great enthusiasm for the organization. Gary is a collaborative colleague, and on a personal note, I have valued his thorough and thoughtful approach. Macquarie has certainly benefited from Gary's particular experience and perspectives. Gary, thank you for your service to the board and shareholders, and we all wish you well for the future. I would also like to thank my board colleagues for their contributions over the past year. The board is a hardworking, active, and engaged one, with unique expertise for every board member underpins our ability to represent shareholders and support the growth of the company.
Finally, I would like to thank Macquarie's management and staff for their efforts, for the resilience they have shown in adapting to the rapidly changing circumstances we have all experienced in recent months, and for maintaining their focus on delivering for clients, shareholders, and the community. Now, that concludes my opening remarks. Thank you for listening and your ongoing support as Macquarie shareholders. I will now hand over to Shemara to discuss Macquarie's results in more detail and update you on our recent performance. Shemara.
Thank you, Peter, and welcome everyone, and thank you for joining even though we have to meet virtually this year. As Peter said, I'll start with looking at results from our most recently completed financial year, which was FY2020, and Peter mentioned we delivered a result of $2.7 billion. This was our 51st year of unbroken profitability going back to our inception in 1969. You'll see on those grey bars on that chart that FY2019 was a record profit for us, and as Peter mentioned, we were down in FY2020 by 8% on that result. You can see on this slide some of the reasons and drivers for that.
If you look at the second and third columns in from the right where we compare FY2019 and 2020, in the top line, that line that says net operating income, excluding credit and other impairment charges, is a broad proxy for our revenue figure. You can see that was slightly up in FY2020 versus FY2019, and three lines down, the total operating expenses were slightly down in FY2020 versus 2019. The big driver of that reduction on the previous financial year was driven by the credit impairment charges, which are shown in the second line there, that increased from $320 million in FY2019 to $805 million.
You see here in this next page the breakdown of what the big drivers were in that net operating income movement, and it shows that there was roughly a $500 million movement, again in the second and third column in from the right, in relation to credit impairment charges and other impairment charges in FY2020 versus FY2019. This was very much reflective of the environment that prevailed at that time, with the COVID pandemic already having global impact and the accounting standards requiring us to estimate what the outcomes may be for economies and markets and bring forward into our accounts through provisions the expected credit losses across our businesses from those impacts.
Putting those to aside, three of our operating groups were up in relation to what they delivered in FY2019, and only Macquarie Capital, you can see there, had a material drop in net operating income, which I will talk to as we look through each of the businesses. On a net profit contribution basis, you can see here that the operating businesses were down 11%, and that was because for all of them we had to take into account those provisions for expected credit losses, the credit and other impairment charges. The other drivers were, you'll see the annuity businesses were up 13%, and the market-facing businesses were down 35%. In the annuity businesses, starting with Macquarie Asset Management, we had a step up in base fees, and we had a particularly strong year in performance fees and investment-related income driving the result there.
Banking and Financial Services was also up, and that reflected the growth in loan values in our personal banking and our business banking, as well as growth in our deposits and our funds on platform on average over the year. That was offset partially by the investment we were making in realigning our wealth business and also the pressure we saw in margins on deposits. The last of our annuity-style businesses sits in the Commodities and Global Markets business, and there as well we saw growth in those annuity-style earnings coming from the specialised and asset finance business and also the lending and financing businesses in our commodities business. The market-facing businesses, as I said, were down 35% all up.
The material contributor there was in Macquarie Capital, as you saw on the previous slide as well, and it was mostly in the investment-related income where we hold a number of principal positions, and we realise them at the time when we can generate the best return on those principal positions. It just happened in the third quarter of FY2019 that we had three very large positions realised, one held for three years, one for five, one for seven, but it was the best time to generate best return on those. FY2020, we did not see a repeat of that, and that is why we were down significantly in terms of investment-related income in Macquarie Capital. Also, on the fee revenue side, we had lower debt capital markets business offset by higher M&A.
The Commodities and Global Markets business, in terms of their market-facing businesses, was slightly down, again because in the third quarter of FY2019 that business had very strong inventory management and trading revenue from our North American gas and power business, but that was offset by strong contributions across the client franchise, across all our products and sectors in that business. Certainly, the diversity of those products and sectors underpins the medium-term potential of that business. Speaking of diversity, across the whole of Macquarie Group, we have very good diversification of our income by region. You can see here decent contributions from North America, Europe, Middle East and Africa, Asia, and Australia. In this last year, particularly, we had a step up from Asia with all three operating groups increasing their contribution. Also, in terms of business mix, we have very good diversification.
At the bottom in the blue bars there, you can see the annuity-style businesses contributing very consistently over the last five years, and above that, in the grey bars, you can see the two market-facing businesses, Commodities and Global Markets and Macquarie Capital, whose results vary depending on the market conditions. Also, in the case of Macquarie Capital in FY2019, you can see a particular step up with three investment realisations. Now, looking in a little bit more detail at each of the businesses in FY2020, Macquarie Asset Management contributed 40% of our net profit, and they were up 16%, as I mentioned, in that year, nearly $600 billion of assets under management, and the MIRA business saw equity under management of almost $150 billion and the MIM business $382 billion plus. They were up 17% and 6% respectively.
Particularly, the MIRA business, we saw over $20 billion of equity raised over that year and over $21 billion invested, leaving us with $25 billion of dry powder to invest at the end of the year. In the MIM business, we mentioned we made the acquisition of the Foresters business, which helped grow our mutual fund franchise pleasingly in North America. In Banking and Financial Services business, we had that business contribute 14% of our income, and it was up 2%, 1.6 million customers in that business. As I mentioned, we had very good growth, double-digit percentage growth in our home loan portfolio, in our business banking portfolio, in our deposits, including the CMA, and also in the funds on platform over the year, although at the end of the year they ended lower because of market movements.
Our vehicle finance portfolio reduced a bit, but the ongoing growth in that franchise reflects the multi-years of investment we've made in really streamlined and tailored service to our customers, which is helping us continue to grow market share in a disciplined way there. In the Commodities and Global Markets business, it was our second biggest contributor, contributing 32% of net profit in FY2020. Its result was broadly in line with a very strong result in FY2019, and you can see there that it was really the client activity across all products and sectors, as I said, that drove the result in commodities, financial markets, and futures. Lastly, in Macquarie Capital, that was the one of the three groups whose earnings were down on FY2019.
They contributed 14% of our net profit contribution, down 57%, but we still continue to be a leading M&A advisor in Australia, and globally we are the leading infrastructure financial advisor and also the leading renewable financial advisor. On the principal side, we have 250 development and construction projects with over a 25-gigawatt pipeline of developments in renewable energy. Putting all the businesses together, the annuity-style businesses over the last 14 years have delivered an average return on ordinary equity of 22%, and in this last year delivered 24%. The market-facing businesses have delivered an average return on ordinary equity of 16% over the last 14 years, with 14% in this year. After taking into account our group surplus capital, we end up with a 14.5% provision for FY2020, even after taking into account those expected credit loss provisions that I mentioned.
A pleasing return on equity achieved while we are holding record surplus capital of AUD 7.1 billion at the group level and a record CET1 ratio of 12.2% at Macquarie Bank level. Also, with our term funding well exceeding our term assets and having maintained for well over two decades an A rating at the Macquarie Bank level with all three major rating agencies, and indeed getting a step up from S&P to an A plus at the end of last year. That was the FY2020 result. Looking now at how we've performed through this first quarter of FY2021, and starting with the trading conditions, we had mixed trading conditions. The operating group contribution was slightly down on the prior corresponding first quarter of FY2020, and that was made up of our annuity-style businesses being up, particularly in Macquarie Asset Management.
We had a gain from the sale of our rail operating lease business, partially offset by lower income in Banking and Financial Services, which included higher provisions that I will talk about in a moment when we go through each business. With the market-facing businesses, they were down on the prior comparable period in FY2020, and this was mostly driven by the investment-related income in Macquarie Capital, again being significantly down in this quarter versus the first quarter of last year, and that was partially offset by stronger contributions from some of the divisions in Commodities and Global Markets. Looking at each of the groups in this first quarter, Macquarie Asset Management ended the quarter with their assets under management down about 5%, but that was principally driven by the strong Australian dollar and the FX impacts offset slightly by market movements.
Despite that, given the flow of money now to alternatives in this very low return world we're in, the MIRA business managed to raise over $5 billion of equity in that quarter, and also with the good pipeline it had had coming into the quarter, invested more than $5 billion. In addition, as I mentioned, the sale of the rail operating lease business drove a good result in that quarter in MIRA, but in that transportation finance business, in our aircraft finance business, we have customers facing ongoing stress and near-term revenue challenges, and we're actively working with giving them some payment deferrals to help them through.
Similarly, in Banking and Financial Services, we had the ongoing good growth in the franchise, so growth in the loan portfolios in personal and business banking and growth in the deposits as well as the funds on platform while the vehicle leasing volumes were down. In terms of margin pressure, I mentioned we continue to see margin pressure. You can see some of the drivers there in that the deposit volumes were up 8%, but the home loan volumes only 4%, and the business banking 2%, showing the competitive tension in that area, coupled with the five interest rate increases we've had here in Australia since June last year, are putting pressure on margins. In addition to that, I mentioned that we had ongoing continuing provisioning in that business.
As we put on new loans, we're required to, under accounting standards, provide for expected credit losses in relation to those. Also, in relation to our existing book on a rolling basis, we have to keep rolling 12-month expected credit losses, so there's been another three months there, and then some deterioration, a small number in credits. In the Commodities and Global Markets business over this quarter, as I mentioned, we had a good quarter in that we saw increased activity as clients rebalanced portfolios across commodities and financial markets, but we saw that subdue a bit as we got to the end of the quarter. Macquarie Capital, the big change, as I mentioned, is investment-related income was down on the prior comparable quarter. You may recall we had a large realisation in the U.K. waste-to-energy Covanta partnership business in the first quarter of last year.
Despite that, we managed to make about $500 million of good ongoing investments into bespoke financial solutions in the credit area, even though we're not seeing huge dislocation yet. We managed to get well invested. On the fee revenue side, we had a particularly strong period here in Australia where we have a leading market presence and a strong franchise, and it was in equity capital markets. Across the rest of the global franchise, the fee revenue was down due to the much lower volume of transactions and value of transactions particularly. Now, underpinning those results, we continue to strengthen our financial position over the quarter given the external environment we face. We raised over $4 billion of long-term funding across the capital structure, and you can see we're ending this quarter with our term funding again even more comfortably exceeding term assets.
Also, in relation to our capital, we stepped up our capital strength. The CET1 ratio I mentioned at the bank level was at 12.2% record, it is now at 13.2%, and our group surplus capital has gone up from $7.1 billion to $8.1 billion, as you can see on that slide. We had the final dividend paid offset by issue of equity for the MIRA. We also had the DRP, which will come to account in July, so it is not shown there. We had a net hybrid issuance, and then the businesses released $1.6 billion of capital that was driven to a large extent by FX, and that was offset by a movement in the foreign currency translation reserve.
With the businesses, in terms of a little bit more detail, I mentioned in Macquarie Asset Management, we sold the rail operating lease business that released capital, and in Commodities and Global Markets, we had reductions in our derivatives and our loan exposures, which released capital. The big contributor was the $1.2 billion in relation to FX that resulted in a large business capital release offset by the foreign currency translation reserve. We also, as I mentioned, had the board elect to determine to have a 1.5% discount on the Dividend Reinvestment Plan. We had issuance for the Macquarie Group Employee Retained Equity Plan as well. We net grew our tier one capital through the repayment of the $400 million of Macquarie Income Securities, but the issuance of the Bank Capital Notes 2 where we raised just over $640 million.
We also did two tier two issuances, AUD 750 million and $750 million US dollars. I want to thank all shareholders for the great support that we were pleased to have and enjoy from all of you in those raisings. In terms of our regulatory ratios as a result of that, as I mentioned, the CET1 was at 13.2%, and all of our ratios ended stronger in terms of leverage ratios, LCR and NSFR. Lastly, regulatory update for the first quarter. The main two things I'd note there is our principal prudential regulator, APRA, on the 8th of July announced that it would extend the capital relief it's granting to help banks support the economy to now being the earlier of 10 months or the 31st of March. That basically is where we've allowed repayment deferrals that doesn't count as a period of arrears for capital adequacy.
In addition to that, this week APRA gave guidance in relation to capital management, which includes some comments on dividends and stress testing, and our board will no doubt factor that in as it looks at dividends over the 2020 calendar year, which is the period covered by that. That was the update on the first quarter. I'll finish with some comments on our outlook for the rest of FY21, and starting as we do with commenting on some of the factors that drive our business performance by each of the operating groups.
Macquarie Asset Management, as we said at the end of last financial year, we expect base fees to be broadly in line in this coming year of FY2021, but we expect performance fees and investment-related income to be significantly down due to the expected delays in the timing of asset sales given the environment in the market now. We also expect increased support for some of our airline clients in Macquarie Air Finance, as I mentioned. Banking and Financial Services, as you saw the higher deposit and loan volumes coming through, and that should drive results. The platform value volumes will depend on market movements, but the competitive dynamics we think will continue to drive market pressure, and we'll have ongoing provisioning for the reasons I explained due to the COVID-19 pandemic.
Turning to the market-facing businesses, in Macquarie Capital, we did see that very positive equity capital markets activity here in Australia, but we do not expect that to continue after this first quarter. Indeed, for transaction volumes and values across the business, we think the challenging market conditions will reduce the number of successful transactions and fee income. In relation to investment-related income, we expect that to be significantly down because, as I said, in relation to Macquarie Asset Management, we do not expect this environment will be one that is conducive to asset realisations. As I have mentioned previously, we have a good book of principal investments in Macquarie Capital that should give us benefit as the market recovers.
In commodity and financial markets, commodity and global markets, apologies, we saw that strong client activity in the first quarter, but we do not expect that to continue beyond the first quarter, albeit the volatility may be something that continues to create opportunities for that business. In the specialised asset and finance business, which is the annuity-style part of that business, given the stable balance sheet and annuity flows in that business, we expect consistent performance. Most importantly, in the commodities and global markets business, our product and client diversity should give us some support through the uncertain economic conditions of the first half. Looking overall at the Macquarie Group business, we think that market conditions are likely to remain challenging, especially given the significant and unprecedented uncertainty caused by this worldwide COVID pandemic and the uncertain speed of global economic recovery with it.
The extent to which these conditions adversely impact our overall FY21 profitability is uncertain, and that makes short-term forecasting extremely difficult for us. Accordingly, we're unable to provide meaningful earnings guidance for this year ahead. The range of factors that will influence our short-term outlook include, obviously, the duration and severity of this COVID-19 pandemic, the uncertain speed of global economic recovery, and global levels of support for economies from governments, central banks, etc. In addition to that, the usual factors of the completion rate of transactions and period end reviews, geographic composition of income, the impact of foreign exchange, potential regulatory changes and tax uncertainties, and market conditions and the impact today of geopolitical events will also drive the short-term outlook.
Given all of this, we continue to maintain our cautious stance with a very conservative approach to capital funding and liquidity, as you have seen, and we think that positions us well to respond in the current environment, even though the excess capital that we hold will impact our return on equity figures. Over the medium term, we think we remain well positioned to deliver superior performance, and that's because of our deep expertise across many sectors and geographies and a very diversified base of capability that we have, and that will be complemented by our ongoing program to identify cost-saving initiatives and efficiency, and by, as I mentioned, our strong and conservative balance sheet and our proven risk management framework over many years. With that, I'll hand back to Peter to take you through the formal business for the meeting. Thank you.
Thank you, Shemara.
We now move to the formal items of business for the meeting. The notice of meeting and accompanying explanatory notes have been circulated to shareholders and are proposed to take them as read. The items of business are shown on the slides you can see on the webcast. Agenda item one is to consider and receive the annual accounts. I now lay before the meeting the financial report, the director's report, and the annual report of Macquarie for the financial year ended 31 March 2020. Please note there is no formal resolution relating to the financial statements. Agenda items two A and two B are the reelections of Diane Grady and Nicola Wakefield Evans as voting directors. Agenda item three is the election of an external candidate, Mr. Stephen Main, as a voting director. Each director and the external candidate will address the meeting shortly.
Agenda item four is the non-binding vote on the remuneration report. The remuneration report is set out on pages 89 to 126 of our 2020 annual report. There is a summary of Macquarie's remuneration considerations and outcomes for the 2020 financial year in the explanatory notes to the notice of meeting. Our remuneration framework is longstanding and has been key to the success of Macquarie due to the alignment of interest of our staff and that of our shareholders. There have been no changes to our remuneration framework impacting 2020 financial year remuneration outcomes. However, in the light of the impact of COVID-19, the board considered a number of factors in determining the remuneration outcomes for the executive committee members to balance the solid financial results and the impact of COVID-19 with the expectations of APRA, our clients, shareholders, and the community.
In particular, 100% of the profit share allocated to the CEO and executive KMP will be retained and delivered in Macquarie equity and Macquarie managed fund equity. Thus, there will be no cash component of the profit share for any of the executive KMP in 2020. Overall, we have received consistently positive feedback about our approach to remuneration, and our framework has successfully delivered strong performance while prudently managing risk. Agenda item five is to approve the Managing Director's annual participation in the Macquarie Group Employee Retained Equity Plan, or MIREP, as we call it. The final item seeks approval for the agreement to issue Macquarie Group limited ordinary shares on exchange of the recently issued Macquarie Bank Capital Notes 2 for the purposes of refreshing our share placement capacity. I'll now ask the board members who are seeking reelection today to speak.
Agenda item two A is the reelection of Diane Grady, who has been an independent voting director of Macquarie since May 2011. Diane is a member of the board governance and compliance, board remuneration, board risk, and board nominating committees. Diane has been a valuable and insightful member of the board. We have greatly benefited from her substantive expertise in strategy and organizational issues, as well as her deep experience with Macquarie and other major listed Australian companies with international businesses. I have pleasure in now calling upon Diane to speak briefly for her reelection. Diane.
Thank you, Peter, and good morning, ladies and gentlemen. My name is Diane Grady, and I'm delighted to be able to offer myself for reelection to your board. In my nine years on the Macquarie board, I have developed a deep understanding of and appreciation for the company's businesses in Australia and around the world. I bring over 25 years of experience as a full-time non-executive director for a large range of public, private, and not-for-profit organizations, which have included Woolworths, BlueScope Steel, Lend Lease, MLC, Goodman Group, the Sydney Opera House Trust, as well as being president of Chief Executive Women. Currently, I am chair of the Hunger Project Australia and a director of Tennis Australia and Grant Thornton.
I am also a member of Heads Over Heels Advisory Board, a not-for-profit that supports women entrepreneurs seeking to scale up their businesses, and also a member of the AICD Chair's Not-for-Profit Forum. Previously, I had been a long-time consultant and partner with McKinsey & Company, where my clients included one of the Big Four banks and Australia's largest general insurer, as well as the largest retailer and telco in Australia and major consumer goods and manufacturing companies. During this time, I specialised in helping clients develop growth strategies through innovation, service improvement, and marketing. In addition, I was a global leader of the firm's organisation, culture, and change management practice.
Whilst I am not a financial services expert, I believe that I have brought some useful expertise to the Macquarie board in a few areas, including, first, my deep understanding of the importance of culture and values and what it takes to keep them alive as organizations grow internationally. Secondly, my knowledge of how organizations can foster ongoing multi-year innovation success based on a major global project I led that involved some of the world's leading innovative companies and, in particular, sought to understand what leaders of those innovative companies do differently. Thirdly, my experience in helping companies significantly improve results through enhancing customer experience has been useful. In addition to my professional credentials, I have a master's degree in Chinese studies and lived and worked in Taiwan for three years, and at one time, I was fluent in Mandarin. Skills and an understanding that are useful in today's world.
I hope to continue to utilise my breadth of experience, knowledge, and expertise to contribute to your board and would greatly appreciate your support for my reelection. Thank you.
Thank you, Diane. Now, agenda item two B is the reelection of Nicola Wakefield Evans. Nicola has been independent voting director of Macquarie since February 2014. She's currently chair of the Board Governance and Compliance Committee and a member of the Board Audit, Board Nominating, and Board Risk Committees. The Macquarie board has benefited greatly from her extensive experience as a non-executive director, senior executive, and corporate finance lawyer in Australia and overseas. In her role as chair of the Board Governance and Compliance Committee, Nicola has made a very valuable contribution by expanding the role of the committee to oversee a broad range of non-financial risk issues, including professional conduct, work health and safety, and customer satisfaction. I have pleasure on calling on Nicola to say a few words in support of her reelection as a director. Nicola.
Thank you, Peter. Good morning, ladies and gentlemen. As Peter mentioned, I'm Nicola Wakefield Evans. It is a privilege to be considered for reelection to the Macquarie board at this annual general meeting, and I'm delighted to speak in support of my reelection. I would like to make the following points about how I contribute to Macquarie. In addition to my role on the board, as Peter's mentioned, I am chair of the Board Governance and Compliance Committee, a member of the Board Audit, Board Risk, and Board Nominating Committees. I also participate in a number of internal and external events, panels, and industry events as a Macquarie director. This gives me a broad exposure to the Macquarie business and the industries in which it operates.
I'm also currently a non-executive director of Lend Lease, MetLife Insurance Australia, the Clean Energy Finance Corporation, the Australian Institute of Company Directors, the University of New South Wales Foundation, and the Goods O'Loughlin Foundation. I'm also a member of the Takeovers Panel and the chair of the 30% Club Australia. As an experienced non-executive director, I have deep technical knowledge across a number of sectors that are relevant to Macquarie, including financial services, resources, energy and infrastructure, transport and logistics, property and construction, and health services in Australia and globally. I also have over 30 years' experience as an experienced non-executive director, senior executive, and corporate finance lawyer, where I'm qualified to practice in Australia, Hong Kong, and the United Kingdom. I have also lived and worked in Asia and North America and have worked with a number of businesses globally in many sectors.
This experience allows me to have an appreciation of the complexity and diversity of the global operations of Macquarie and enables me to contribute effectively to the board's oversight of Macquarie's global operations. My exposure to many high-performing organizations during my legal career and as a non-executive director on other boards has enabled me to understand the importance of having a great culture, values, and organizational resilience. I believe that I can bring this experience from other successful organizations to my work on the Macquarie board. My experience as a non-executive director and as an advisor to boards brings a useful and relevant understanding of corporate governance and of how good boards should operate. I also have extensive financial services regulatory experience in Australia and overseas.
This experience assists me in my current role as Chair of the Board Governance and Compliance Committee and allows me to contribute to the business, strategic, regulatory, and governance aspects as a director of Macquarie, given its diverse operations globally. Macquarie has a great board with a broad mix of skills and experience, and I'm thrilled to be part of it and this very dynamic company. Thank you for considering my reelection. I can assure you that I will continue to dedicate both the time and commitment to fulfil my duties to Macquarie and its shareholders. I therefore offer myself for reelection to the board of Macquarie and very much appreciate your support. Thank you.
Thank you, Nicola. Agenda item three is the election of an external candidate, Stephen Mayne, to the board. Mr. Mayne has offered himself for election as a voting director of Macquarie Group Limited. The board has not endorsed his nomination. As Mr. Main is in Melbourne, he has pre-recorded this short address in support of his election as a director.
Good morning, everyone, and thanks for the opportunity to address the shareholders' chair. I am running for the board primarily on a platform of fixing up Australia's anything goes capital raising system, which has seen retail shareholders diluted out of more than $20 billion of value since the GFC. Now, Macquarie has been the single biggest advisor to listed companies over that period and continues to be extremely prominent in the market, advising corporates to structure capital raisings which systematically dilute retail shareholders. Those who attended last year's AGM would remember I asked the board if they could do an SPP first ahead of any placement if they were to raise capital, and unfortunately, they ignored that request and went ahead and did a $1 billion institutional placement, which was followed by an SPP.
We really need in the market companies doing SPPs first to make up for the systematic dilution that retail shareholders have suffered, or doing Patriot capital raisings, which are renounceable and pro rata and are the fairest way to treat all classes of shareholders. Now, I've had a lot of experience over the years in politics, in journalism, local government council, and sitting on boards, and a couple of comments that have been made by people over the years. The former Lord Mayor Robert Doyle in Victoria, now disgraced, said, "Stephen Mayne's done a terrific job bringing a fresh perspective, transparency, and good governance practices to the city of Melbourne." Carol Schwartz, who's a Reserve Bank director, said, "Stephen Mayne has always been a vocal advocate for equality for women in the context of power sharing and decision-making at all levels.
We need more individuals like Stephen in the Australian Parliament." Tim Costello, the prominent anti-gambling campaigner, said, "Stephen is a man of great integrity. He's never been afraid to stand up to the powerful and does not shy away from the truth." After four years serving on the city of Manningham, the Liberal Mayor Jeff Gough at the time when I departed said, "The councillor Main has been an outstanding and innovative contributor during this term of council, and his input and opinions will be missed." I'm pitching myself as someone who would bring diversity to the board. It's a fairly old board at the moment, average age of 66, and when Gary Banks retires at the end of the AGM, all of the non-executive directors will be based in Sydney.
It's a very white, elderly Sydney, and I would be the youngest director at 51 as opposed to the current average age of 66. I'd be the only Melbourne-based or Victorian-based director because Gary Banks at the moment is the only one of those, and I'd be younger than the existing directors. I think I would bring some diversity. I'd be happy to answer any questions that shareholders have got. Finally, I think there'd be some sort of an irony if the person who gave Macquarie Bank its nickname, the Millionaire Factory, actually got on the board.
The history of that is that when I was the business editor of The Herald Sun in Melbourne back in 1997, I coined the phrase Millionaire Factory for Macquarie after reading an article in The Times newspaper in London describing Goldman Sachs as a Millionaire Factory, and I thought, "What could I come up with in Australia?" Macquarie, and I think it's helped Macquarie attract thousands of new staff over the years because every smart graduate aspires to be a millionaire, so why wouldn't you go and work for the Millionaire Factory? That is one reason to put the person who came up with the nickname on the board. Thanks for the opportunity.
I would have liked for the six resolutions to be dealt with separately today, but we're only having an all-in question and answer session starting shortly, so I'll be a bit curious trying to ask questions about resolutions at the same time as shareholders are being invited to ask me questions. I would hope that in future the board would move to a model of dealing with resolutions one at a time. I'm not expecting to win today. Last time I ran in 2015, I got less than 2%. The time before that, I got around 15%, but the board's not supporting me. The proxy advisor's not supporting me. Even my old employees at the ASA, unfortunately, have gone again.
No misconceptions that I'm going to get elected, but any extra support that can maybe get me sneaking up towards 2% by shareholders voting today after listening to this would be much appreciated, and I'd be happy to answer any questions that you've got. Thanks very much for the opportunity and enjoy the rest of the meeting.
I understand Stephen Mayne is on the teleconference line. Having regard to the nature and scale of the group's businesses, the board believes that Mr. Mayne does not have the experience required of a voting director. Macquarie also considers that his concerns about Macquarie and its clients' treatment of retail shareholders are not justified. In September 2019, Macquarie raised $1 billion of ordinary share capital through an institutional placement, and then accepted all applications from retail shareholders in the following share purchase plan, raising a further $700 million at the same price as the institutional placement. In addition, institutions were required to respond to their placement offer within a few hours. Retail shareholders had a period of approximately six weeks to decide whether they wished to participate. This raising approach represented a roughly proportionate mix of our share register at that time.
In March this year, Macquarie Bank Limited withdrew its Bank Capital Notes 2 offer directed at retail shareholders in light of the significantly changed market conditions due to the spread of the COVID-19 virus. The bank returned to the market in May when market conditions had stabilized, offering a higher margin on the BCN2, raising AUD 641 million. Applications under the Macquarie security holder offer were scaled in line with the average scaling applied under the broker firm offer. More recently, Macquarie has issued shares through the Dividend Reinvestment Plan at a 1.5% discount to market, allowing issuance to all shareholders on a proportional basis. Macquarie has acted on 23 equity raising transactions for Australian clients during the COVID-19 pandemic to date. Under each raising, the offer structuring was determined by the individual companies and their boards. The Macquarie board has no involvement in such decisions.
Macquarie provided advice on all transactions with consideration of the interest of the issuers, including the treatment of their retail shareholders. Now, to allow everyone attending our virtual meeting an opportunity to vote, I open the polls in respect of all motions that shareholders will vote on today. Shareholders and proxy holders attending via the Loomi platform can vote online by clicking on the bar chart icon. Select the option corresponding to the way you wish to vote. Once the option has been selected, the vote you selected will appear in blue. To change your vote, press a different option to override. Votes can be changed up until the time I close the polls. Proxy holders with directed votes will have those votes automatically voted as directed. All open votes held by a shareholder or proxy holder will be voted in accordance with the option you select via Loomi.
Shareholders and proxy holders participating in this meeting via teleconference cannot vote using the teleconference facility. Let's now move to take questions and comments. It is my duty as Chairman to ensure that shareholders as a whole have a reasonable opportunity to ask questions about or comment on the management of the company, the remuneration report, and other items of business before the meeting today. To achieve this, I have adopted the procedures for this meeting as set out on this slide. I'm committed to ensuring that people attending the meeting feel safe and respected at all times, and this includes ensuring the meeting is conducted in an orderly fashion. Shareholders have attended today's meeting to discuss matters of interest to shareholders as a group.
We will read out and seek to answer the relevant questions received in writing prior to the meeting or during the meeting via the Loomi platform. You may submit a question via the Loomi platform at any time during the meeting until the end of the Q&A session. To submit a question or comment, select the question icon, which looks like a speech bubble. Compose your question or comment, noting the maximum character limit of 1,000 per question or comment. You may submit more than one question. To submit, select the send icon, which looks like an arrow. You'll receive confirmation that your question has been submitted. Questions may be moderated or amalgamated if there are multiple questions on the same topic. We'll also respond to questions from shareholders calling in on the teleconference line. You'll have a limit of asking two questions at a time.
Dial into the teleconference using your pre-registration information provided to you by Boardroom and follow the prompts to ask a question. You'll be instructed to press star one if you wish to ask a question. We will start with questions submitted in advance and then turn to questions on the teleconference line, followed by the questions submitted online during the meeting. Following investor feedback after prior AGMs, in order to address a broader range of topics of interest to shareholders as possible, I may defer to later in the meeting further questions on a particular topic or subject area if there have already been a number of questions asked on that topic. If you have an individual customer issue or other matters that don't relate to the items of business in today's meeting, our investor relations staff would be happy to take your query. Please email them to macquarie.shareholders@macquarie.com.
I also note that Ms. Kristen Stubbins from PricewaterhouseCoopers, the external auditor, is present at today's meeting. She is available to respond to any questions relevant to the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the company in relation to the preparation of the financial statements, and the independence of the auditor in relation to the conduct of the audit. The external auditor did not receive any written questions from shareholders prior to the meeting. I'll now take questions that have been submitted in advance.
Thank you, Mr. Chair. We have received a number of questions from shareholders in advance of the meeting. The first question is from Darena Proprietary Limited. Why am I not given the opportunity to select my proxy? I have many shareholdings where this option is simpler.
You are entitled to nominate whoever you would like to nominate as proxy. On the proxy form and on the voting site, there is a capacity to nominate whoever you want your proxy holder to be.
The next question is from Mr. Robert Simpson. Is the board willing to allow shareholders a binding vote on the remuneration report? If not, why not?
In Australia, there is no requirement to have a binding vote on the remuneration report. There is the capacity that while the remuneration report vote is not binding, if shareholders vote against the remuneration report, and that's a 25% limit, if they vote more than 25% against the remuneration report in two consecutive years, then there is a vote for a board spill, and that spill can bring around board change if that's required. I would note, though, in addition to that, that if there is a requirement, and certainly we engage with shareholders, so if there is a significant negative vote against the remuneration report, our automatic response is to engage with those shareholders that have voted in a negative to find out what those issues are and explore them.
The next question is from Ms. Lorica Kubella. How many Indigenous people are in positions of decision-making or other authority?
We certainly have a number of Indigenous members of staff across all our operating and support groups, including in decision-making roles. We also have an active Indigenous employee network group. I'd like to say, as an organization, diversity and inclusion is a business priority for us, and we are closely committed to diversity. We have a Career Trackers program running where we recruit Indigenous interns. This has provided us with an Indigenous talent pipeline, and last year, we had 26 people through that program. As part of Macquarie's D&I strategy, we continue to review our people and talent processes to ensure that the processes and structures are inclusive.
The next question is from Mr. Peter Rohn. Does the current managing director need to be paid the enormous amount being sought to do the role of CEO?
Macquarie, I think we need to remember, is a global company and a market leader in many of its businesses. Last year, we generated two-thirds of our income and profit from overseas jurisdictions, only one-third from Australia. We're rated by external agencies as the number one infrastructure manager globally, the number one global renewables advisor, the number one global infrastructure financial advisor, the number two physical gas marketer in North America, and number one in Australia for completed M&A transactions, so a market leader in many of our businesses. To do that, we need to attract and retain the best quality people in each of our international markets in which we operate. Now, we have a pay-for-performance model, and we are delighted with the performance of our CEO.
The board assesses the CEO and our senior management across a number of criteria, including financial performance, risk management and compliance, our business leadership, and people leadership, including professional conduct consistent with our code of conduct and what we stand for. Our remuneration approach is very longstanding and has been overwhelmingly supported by shareholders consistently. I think we do need to remember that we are employing our staff in many jurisdictions, including the major financial centres of the world, and to maintain those market positions, we need to be able to attract and retain the highest quality people, and I think our pay-for-performance remuneration structure has demonstrated that we do that.
The next question is from Mrs. Katarzyna Capera. What are Macquarie's plans once the COVID-19 crisis is over?
I think that we are still very much. Macquarie's strong fundamentals have enabled the group to be resilient and continue to be there for our clients, shareholders, staff, to changing external conditions, and I fully expect that that will continue to be the case.
The next question is from Dr. Colin Busby. Why do you give preferential treatment to institutional investors over retail investors? Many of your retail investors are sophisticated investors who believe they have not been treated fairly.
I don't believe that we do show preferential treatment to our institutional shareholders. In deciding which institutional shareholders and which are retail investors, that's a distinction which is applied by the corporations law. In relation to the raisings which we did last year, I think, as we already explained, we had an institutional placement, and that was initially conducted and raised $1 billion, and then it was followed up by a share purchase plan to our retail investors. It was done at the exact same price, and as I said in my earlier remarks, our retail investors had a period of many weeks to make a decision about whether they wished to participate or not, so that they were given an advantage that our institutional shareholders don't get. I would say that, in fact, our retail shareholders have all been treated very fairly.
The next question is from Ms. Sarah Chow. How will you better incorporate climate risk and screen out stranded assets?
The risk of investing in stranded assets is something we're well and truly aware of and is certainly taken into account in our very comprehensive risk management framework. Where we're relying on the value of an asset to return our capital at some point in the future, the risk of that is fully analyzed, and if there is a significant risk of that, that would certainly affect our investment decision.
The next question is from Dr. Terence Dwyer. Are you going to join the FAD for virtue signalling or stick to making profits and paying dividends?
We have always fully recognized our responsibility to all our stakeholder groups. We believe this is simply good business and in our shareholders' long-term interests. We conduct our business in line with our longstanding core principles of opportunity, accountability, and integrity, and, as I mentioned earlier, our purpose statement in my opening address, which is empowering people to innovate and invest for a better future. I do not think these are virtue signaling statements. These are very practical business rationales and a real reflection of the Macquarie culture and way of doing business. I think we have demonstrated to our shareholders with a long, strong track record of financial and operating performance over the long term, which has demonstrated our strong corporate responsibility.
The next question is from Ms. Ma Stephanie Flores. What changes are going to happen in 2020-2021?
That's a difficult call. It certainly requires a strong crystal ball, and I'm not sure we can answer it accurately, but we've certainly asked Shemara to give us her views on what we might do there.
Thanks very much for the question, and I agree with you completely, Peter, that it's very difficult at the moment, more difficult than other times of our history, to forecast how things could play out, both with this health pandemic, which continues to have increasing second and third waves, and also how governments and central banks respond and what that means for economies and markets. Each of our businesses, as usual, will respond as they see the environment evolve, and as I mentioned briefly in our asset management business, we're thinking that this lower return world we'll be in is going to drive flow of more assets to alternates, and that should position us well being a leading alternate asset manager, and also in our fixed income and equities business where we're a strong active manager.
Banking and Financial Services, the needs of our customers in Australia will continue across both the personal and the business banking clients, and we hope with all the investment we have made in systems, processes, tailored solutions, we will continue to grow those businesses servicing them. Our global Commodities and Global Markets business also has built very valuable franchises, and we are seeing in the commodity businesses increased volatility in the shorter term create extra demand for their services, but medium-term structural changes. Lastly, in our investment bank, where we have a strong franchise built here in Australia and we are growing globally, and we support that with principal investment both in infrastructure, energy, and in the advisory and capital solutions, we will continue to see opportunities.
Currently, not meaningful dislocation in markets, even though we have strong capital surpluses to invest, but we'll continue to monitor changes as they happen and respond.
Thank you, Shemara.
The next question is from Ms. Paula Piccinini. After Gary Banks retires, the entire Macquarie Group board will comprise residents of Sydney. When are you going to embrace geographic diversity with your board, particularly by appointing a resident of Melbourne?
The criteria for selecting board members to the Macquarie board is really about focus on their previous experience and track record and their broad skills that they have developed in their professional lives. In particular, one broad criteria is that we want a diverse range of people on the board with a broad range of skills and experience. We also really require people that have a global outlook, people that have focused on global activity. The majority of our board, in fact, have worked for global organizations, and many of them have lived and worked overseas during their professional lives. That's the broad level of experience. The actual place of residence within Australia is really not considered to be a relevant characteristic, even though over time we certainly have had a number of directors from Melbourne.
The next question is from Yondal Proprietary Limited. Mr. Warne, as you announced last year that you were in your last term as chairman, a new one will be appointed within the next year. Is the new chairman currently on the board, and if not, why not?
The board has already begun a process to determine the next chairman. That process is underway but not yet completed, so we do not really have anything else to announce at this point.
The next question is also from Yondal Proprietary Limited and is directed to Ms. Grady and Ms. Wakefield Evans. Understanding that decisions are made in a collective manner, nevertheless, what action that the board has taken for which you are a lead advocate gave you the greatest satisfaction over the last three years?
Diane, I might ask you to comment on that.
Okay, thank you, Peter, and thank you for the question. As you indicate, directors contribute across a range of topics based on their experience and their interests. That said, one of the topics I've been a lead advocate for for some time is encouraging our groups to be more proactive in seeking and measuring client feedback and providing more fulsome reporting on client experience to the board. This has been a natural evolution out of my longstanding interest in customer service that I mentioned in my earlier comments. BFS, which is our group focused on retail clients, has advanced customer feedback systems, which the whole board and the board governance committee now gets detailed reporting on. Other groups who serve more institutional and wholesale clients have more recently initiated formal client feedback processes and are reporting on their progress.
I believe that this reporting to the board on client experience has helped groups in their efforts to assess and improve their performance, and that's something I'm pleased about.
Nikki, would you like to make a comment on that?
Thank you, Peter, and thank you also very much for the question. One of the areas that I've been the lead advocate for is in relation to the ongoing development and maturity of the work health and safety framework at Macquarie. This has arisen out of my role as Chair of the Board Governance and Compliance Committee and also my extensive experience in this area, both from being a non-executive director on the boards of Toll Holdings and the Lend Lease Group and in my previous career as a corporate lawyer where I advised many companies on work health and safety issues. We've worked closely with the Risk Management Group and the business units to ensure that Macquarie has an appropriate world-class work health and safety framework that takes into account the breadth of its activities.
Thanks, Nikki.
The next question is from Mr. Sean Smith. Could you comment on the board's workload given that your directors sit on boards across multiple organizations?
Certainly. One of the core factors considered by the board nominating committee in the selection and appointment of new directors is the candidate's time availability to meet the commitment required as a director. As I said earlier, Macquarie is a hardworking board. In accepting their appointment and before any election or re-election, directors are required to acknowledge that they do have sufficient time to fulfill their responsibilities as a director. In the annual report, I think it's on page 79 of the annual report, it indicates the directors were exemplary in their attendance at board and committee meetings, which I think, again, demonstrates that our directors do have the time to attend meetings. I would confirm that the time availability is a very critical point.
We certainly take that into account, and our directors have demonstrated that they certainly do have the time and certainly have the ability to attend all meetings. The other point I'd actually make is that we do go through an annual board performance review, and one of the questions that we do ask of all our directors is to comment on their peers and to the commitment and the contribution that each of their colleagues makes, and certainly if people were not contributing the time required, that would certainly come out of that review.
Thank you, Mr. Chairman. That concludes questions received in advance. We will now proceed to the teleconference.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. You are able to ask two questions. If you wish to ask additional questions, you'll need to press star one to rejoin the queue. If you are on a speakerphone, please pick up the handset to ask your question, and if you wish to cancel your request, please press star two. The first question comes from William Vandepoel, private investor. Please go ahead.
Yeah, thanks for the opportunity. Just a quick question from me. Macquarie's TCFD report states that our lending exposures to the coal sector are limited, and we expect them to run off over the next few years. Now, over 130 globally significant financial institutions have policies in place to exit the coal sector, including three of Australia's big four banks. Can Macquarie commit to providing no further banking or financing activity to the coal sector and set a date by which existing exposure will fall to zero?
I would say that we, as our previous discussions have shown over recent years, our exposure to the coal area is a very minor one. I'd reiterate that our exposures are very short-dated and that we do expect them to run off over the near term. I think that's the position we've taken, that our exposures to the coal industry are absolutely tiny when compared to our exposures to renewable energy.
That's understood, but I'm just looking for a set date by which that expectation can be clearly articulated to shareholders. Just a quick follow-up, if I may. Given the transition risk assessment in that TCFD report demonstrates risk profiles for high carbon power generation and oil and gas exploration and production are similar to that of coal under a Paris Alliance scenario, does Macquarie expect exposures to these sectors to fall over coming years as well? Will Macquarie put in place any policies to guide these exposures down in order to reduce the climate transition risk facing this company?
Our balance sheet exposures to the oil and natural gas industries are, again, small relative to our balance sheet. I think our 1.3% of our total funded loan assets and 2.2% of our equity investment. Again, small, and the tenor of those exposures is also very short. We have not made a policy decision to have a final date where we would exit coal. I would say in the bigger picture, if we look at our exposures generally, our exposures to fossil fuels are short-dated and are in the nature of more trading-type activities where we're purchasing from suppliers and selling to consumers, whereas our major balance sheet commitments in terms of long-term investments are all in the renewable energy sphere and are multiples, many multiples of the size of our fossil fuel exposures.
Thanks.
Thank you. The next question comes from Rachael Deans, private investor. Please go ahead.
Mr. Warne, in your address earlier, you spoke of an ongoing role for natural gas for some time. Macquarie's TCFD report released last week shows gas demand falling by around 70% between now and 2050 under each of the 1.5 degree scenarios modelled, with a drop of around 20% by 2030 in the orderly transition scenario. Does Macquarie see the role for gas declining significantly from now on in line with its modelling of the energy transition required to meet the Paris climate targets? How will Macquarie ensure its involvement in the gas industry does not expose the company to avoidable transition risk?
I think you could refer back to my last answer that our major exposures in the natural gas world are in the nature of supply and inventory from producers to consumers. So that by its own nature means that that exposure runs off if consumption slows down or reduces, that our exposure there automatically reduces as part of that. I think that the models that we look at and that we refer to in our TCFD report show the current levels of gas consumption for at least the next 10 years, whereas our exposures to that market are much, much shorter than that within only two or three years.
Thank you.
Thank you. The next question comes from Stephen Main, private investor. Please go ahead.
Thanks, Chair. Two questions. The first one on board and the second one on capital raising. I'll just ask the first one first. Chair, are you confirming that you will definitely be retiring at the end of your current term? Does that mean you'll chair next year's AGM and then retire at the end of the AGM? In terms of the process for selecting your successor, is it extending to external candidates or is your successor likely to be one of the current directors?
I think I said in one of those earlier answers, Stephen, that we have a process underway. That process has not yet been completed, so we do not have much more we can update you with at this point.
Okay. Just on the capital raising issue, I appreciate your comments earlier in the meeting about your own record with Macquarie with capital raisings and also what has happened with your 23 clients over the last few months. I just want to raise an issue about the question of renounceability, which is very important for retail shareholders given that the majority of retail shareholders do not participate in capital raisings. They get diluted and they need to be compensated. Why has Macquarie never done a renounceable capital raising? It has always been the placement SPP model. To give you some specifics, in the recent capital raisings, these five companies, Australian Finance Group, Super Retail, Southern Cross Media, Downer EDI, and OMedia, have all done non-renounceable entitlement offers advised and underwritten by Macquarie.
All of them banned retail shareholders from applying for additional shares, which is a normal feature designed to minimize dilution of retail because those that do participate can apply for the shortfall shares left on the table by those who do not participate. Why is Macquarie the common underwriter and advisor on all of those raisings which have left retail shortfalls ranging between 20%, 30%, and as high as 34% for OMedia and Southern Cross? Cannot you get the message out both when you do your own raisings and through your equity capital markets teams to structure capital raisings to look after retail shareholders, particularly by looking after those who do not participate by adding the feature of renounceability?
First, in relation to the clients of Macquarie, that's again, we don't comment on client transactions, other than to say the decisions made in regard to their issues are decisions made by those companies and their boards, and they're making them in the best interests of those companies and their shareholders. Other than that, I can't comment because again, as I said earlier, it's not something that the Macquarie board even discusses in terms of client transactions. In terms of our own issue, the reason that we haven't recently done a renounceable offer is that it makes the whole process a very much more lengthy process to be engaged with.
The aim, I think, of the placement and SPP approach is to make at least the placement approach as quickly as possible and then leave it as to the option of shareholders about whether they wish to participate or not. The extent to say that a non-participating shareholder is diluted or is disadvantaged, they do have six weeks to decide whether they wish to participate. Structuring it the way it is, the current structure means that the discount to the current market price by having the placement process and the SPP minimizes that discount as much as possible. I think when we did our placement last year, it was a discount of around 2.8%. I did the arithmetic on that process, and the discount for an average shareholder for Macquarie, an average shareholder has something like 270 shares. It's worth about AUD 30,000 at the time.
The discount for someone that did not take up their entitlement or participate in the SPP to the extent of their pro-rata amount, it meant that the discount that they forwent was worth about $40 per shareholder. That's $40 compared to a shareholding worth 30,000. The daily volatility on the price on that holding is something like about $600, and the dividends are something like $1,200. It is a relatively small amount. The benefit for shareholders as a whole is that it enables the issue to be done quickly and to keep that discount as small as possible.
Thank you. The nex`t question comes from Eduardo Villarrio Sforza, private investor. Please go ahead.
Thank you. My question is about Macquarie's major stake in Marsh & McLennan MMC, the parent company of Marsh, which is currently providing insurance brokerage services for the Botanica Michael Coal Project. I understand our company has engaged with MMC in the lead-up to their AGM earlier this year. I was pleased to read in the Australian Financial Review that due to this engagement, Marsh was working on a climate policy to be released at their AGM. Unfortunately, what Marsh released was a 180-word motherhood statement containing only vague and general comments on sustainability with no mention or any commitment to limit its involvement with the Thermo Coal Project. Given that the result of our company's engagement is only such a meaningless document, I'm wondering what our next steps will be.
I have read that Betta Shares and Australian Ethical have divested from MMC because of this same issue. Will we follow suit? If not, why not? I'm only asking this question, Chair, because our company has done some good work on climate and renewables. For example, our CEO, Shemara, has done good things. Why do we want to let all these efforts be tainted by associating ourselves in any way, shape, or form with the Carmichael Coal Project, the most toxic and reputation-damaging project in the country? I just don't understand. It would throw all our hard work down the drain. It would damage our brand, our image, our credibility, impair recruitment with younger generations. I mean, for what? I'm sure there are other companies we can invest in. Wouldn't you agree?
Just to be clear, Macquarie is not involved in the Carmichael Coal Project. The MMC, or Marsh & McLennan, as you quite rightly said, is a listed financial services company in the US. Any shareholding that we have in that company is held by our funds management business in the US. That is a portfolio company that our fund managers have chosen to invest in. They have engagement with their investee companies that they undertake. They have made a decision about the business of that company. It is a global company and provides services across a broad range of activities for a broad range of clients. We do not talk in detail about the conversations we have with investee companies, but can say that our asset management businesses certainly are committed to evaluating ESG factors in their investment decision-making. We will have taken that into account as an investment.
Thank you.
Thank you. The next question comes from Maggie McEwen with Market Forces. Please go ahead.
Our company is the third-largest shareholder of Stifel, an investment bank that has been enlisted to arrange financing for Adani's Abbot Point terminal, the coal port that will ship Adani's Carmichael Coal to be burnt in India and Bangladesh. Earlier, Mr. Warne mentioned that our company is wary of stranded assets, and I hope the board are aware that Adani's Abbot Point has widely been labelled by economists as a stranded asset. Our company has committed to investing in line with the goals of the Paris Climate Agreement. This commitment is undermined by our investment in Stifel, the bank helping Adani raise capital to finance its struggling coal port. This would free up funds to open up a massive new thermal coal basin, releasing billions of tons of greenhouse gas emissions that must be kept in the ground if we want a chance at keeping global warming below 1.5 degrees.
As part of our company's commitment to the Paris Climate Goals and to protect shareholders from the financial and reputational risk of our company's connection to Adani's globally controversial coal mine, will our company and the board at least use its power as a top three shareholder of Stifel to urge Stifel to terminate its services to arrange finance for Adani Abbot Point Coal Port? If Stifel does not terminate its servicing for the Adani Coal Project, will our company consider reviewing our investment in Stifel in line with our commitment to the Paris Climate Goals of keeping warming well below 1.5 degrees?
I'll just again reiterate firstly that Macquarie is not involved in the Carmichael Coal Mine Project. In terms of Stifel, I'm actually not aware of that as an investment. Shamara, are you?
No. Not aware of it.
We'll have to take that question on notice. I'm afraid we're not aware of any investment that Macquarie has in Stifel.
According to our information, our company has a 5% stake in Stifel. The board is risking our company's reputation and is exposing shareholders to financial risk. If it refuses to act on our company's connection to the hugely controversial Adani Coal Mine, what will the board do to protect shareholders from this risk?
As I just said, I'm unaware. No one in the room here is aware. We'll have to take that question on notice and get back to you about that.
Thank you.
Maybe a portfolio investment in one of the.
I'll assume that's what it is, but I'll.
Balance sheet run.
Thank you. The next question comes from Josette Cruz, private investor. Please go ahead.
Hello?
Hello.
Hello. Hi. I am Josette Cruz from Brownsville, Texas, in the United States. Macquarie Bank is a private equity investor for the Rio Grande LNG export terminal proposed for my community. If built, this terminal would pollute our marginalized community with toxic air pollution. It would hurt our local economy that depends on fishing from our pristine ecosystem, and it would destroy the endangered ocelot habitat. The Rio Grande LNG terminal would liquefy and export fracked gas and drive the expansion of fracking in Texas, which would worsen global climate change. Why is Macquarie supporting the Rio Grande LNG project that is facing massive public opposition and lawsuits when the bank has committed to supporting the transition to a low-carbon economy?
I think firstly just like to clarify that that particular transaction, that Macquarie is not an investor in that particular transaction and has a minor advisory role, and it has had for some time. I think it is, however, we don't usually comment on specific transactions, but it is a matter of public record that this project has been scaled back and has been delayed. As far as I know, it is not currently active.
Okay. It is not active then.
Thank you. The next question comes from Juan Mancias, private investor. Please go ahead.
Hello. Day up, Lemoe. I'm Juan Mancer, chairman of the Istokgna Carrizo Comecrudo Tribe of Texas. Macquarie Bank is the private equity investor for the proposed Rio Grande LNG export terminal that would destroy pristine lands that are sacred to the Carrizo Comecrudo Tribe. This project is tremendously opposed by local communities, and the NextDec Company has never consulted with our tribe about the Rio Grande LNG project, which would be a systemic racist environmental disaster for South Texas. The inadequate consultation is a violation of our rights as the native original people of the Rio Grande Valley region of South Texas. What message do you have for our communities who are against the LNG terminal and have not been properly consulted by this project?
I think you just referred to the question of the last question and my response to that. That firstly, Macquarie is not an equity investor in that project. It has a minor advisory role to that particular project. Since that issue was raised last year at our AGM, we have requested that discussions are held with the local people in regard to that transaction. As I said earlier, it's a matter of public record that that project has been scaled back and been delayed.
Thank you. The next question comes from Craig Caulfield, private investor. Please go ahead.
Good afternoon, Mr. Warne. Craig Caulfield, private investor, but I'm also the founder of Bank Warriors and member of Bank Reform Now. We've all seen at the Royal Commission a lot of outlandish and very poor treatment of customers across banks throughout Australia. In that respect, I campaigned for several items, some of which I raised at last year's AGM, and I'm thankful to you, Mr. Warne, because you did initiate some conversations around that. I've met with five Macquarie executives: Mr. Mark Elw, the customer advocate before the AGM; Ms. Sabara at last year's AGM; Mr. Ward; and more recently with Ms. Rempst, the CEO of Macquarie Bank; and Ms. Brevard. My observations are that whilst I have my own personal case and grievances with Macquarie Bank on a micro level, the failures are matching the failures on a macro level.
The macro level items, I would like Ms. Wakefield Evans perhaps to address this, given that she's the Chairman of the Board Governance Committee, but four of those issues model litigant is one, I just can't see why ANZ, now CBA and Westpac, can say, "Yes, we'll act as model litigant when we're in a legal dispute with a customer." They're very basic fairness principles. The second is the banking and finance oath. Correct me if I'm wrong, but Macquarie might have 14,000 employees. I searched the banking and finance oath database live this morning before this AGM. Only seven people came up as labelled at Macquarie that are members. Something like the Bank of Queensland that has half of the number of employees has between 100 and 200 members that have made a very basic commitment to standards of honesty and integrity.
I also looked at the bare maps of accountability, just a simplified version in the APRA governance report. They're still not published. That confirms to me on a macro level that on a micro level, I have to have 31 case managers go through my case. Two years of my records have gone missing. I see a big disconnect between what comes up through the Macquarie business, perhaps through the executives, and to the directors. I heard Ms. Grady talking about having the accountability and customer oversight, but when the rubber hits the road in cases like mine and on the macro scale of items, it's just not there. I would like Ms. Wakefield Evans' comments, please. Thank you.
I'm not sure Nicola's been briefed on that. Mr. Caulfield, we certainly have met at last year's AGM, and we have communicated since then. I think the two issues there are about the banking oath and the model litigant matters. The banking oath is not a matter for banks per se. The banking oath is something which individuals who may be employees of banks can take up if they wish to and subscribe to. I'd say that, in fact, Macquarie has a range of other policies which are certainly compulsory for our employees, and they would certainly cover all those areas, whereas we certainly have no problem with our individual employees signing up to the banking oath if they wish to, but our own policies and procedures, I think, are more important as far as we're concerned.
In relation to the model litigant issue, Greg, what are you aware of that issue? Could you speak to that?
Thank you, Chair. Yeah, in terms of the model litigant, we have very limited litigations with our clients, and we do not want to be in a legal dispute with our clients. We have a range of other measures culminating with our customer advocate to come to appropriate resolutions with clients. We do have a conflict resolution statement which basically adopts the protocol set out in the model litigant guidance that Mr. Caulfield has indicated. We think we have that covered. In terms of the code of the banking oath, we have our code of conduct which is compulsory for our staff, which governs all things, including honesty and integrity and so forth, and picks up all of the matters, as you say, that are in the banking oath.
That's a personal choice for staff, but they are compulsorily required to comply with our code of conduct, which I think covers that. Lastly, I would just say that we've had lots of staff, including myself, look at Mr. Caulfield's personal situation, and we can't comment on that here, of course. There were a couple of failings there which we deeply regret, and that isn't how things normally work.
Thanks, Greg. I'll just.
I'll just comment back there, Chairman.
Mr. Caulfield, just one point in relation to our own code of conduct. That is on our website, and anyone can go to our website and read and see what's involved in our own code of conduct, which is incredibly comprehensive. Sorry, you had another comment?
Oh, just in response to those, yes, I do. I would accept that your own code of conduct would be very good, but that is drafted from a point of view of protecting Macquarie. Something like the banking and finance oath and the model litigant is a public statement to let the public know. Now, of course, we all know that the banking and finance oath is a voluntary commitment by individual staff, but 7 out of 14,000 is just infinitesimally small. For all the reasons that you've given and Mr. Ward has given, Bank of Queensland is in the same situation, and they still garner 100-200. They've actively recommended and espoused the values there. I understood that that's what you would be doing, that Macquarie would be circulating that to the staff to take up.
There's something seriously wrong if there is only seven that is identified as Macquarie. Even if there's some unidentified and it's 20, it's very poor form. One of your directors, Glenn Stevens, is a very strong advocate of the banking and finance oath, so I'm certainly not happy with the explanations, nor am I happy with the numbers. In terms of model litigant, Mr. Ward talks of, "We don't like to have litigation, and we have very small amounts of litigation, and therefore we don't require that." If you have such small amounts of litigation, there will be no problem signing up to the model litigant principles, which the other major banks have. He then further spoke of going to the customer advocate. I've been to the customer advocate at Macquarie, and that failed. That is a failed resource. Thank you.
Thanks, Mr. Caulfield.
Thank you. The next question comes from Stephen Main, private investor. Please go ahead.
Thanks, Chair. Look, I just want to commend you firstly for allowing the three platforms of questions. The written beforehand, we had 12 of them. The unscripted oral verbal questions where I think we've had 10 so far, and it's been very interesting, and you've done very well with handling the diversity of it. I just want two questions on process. In future years, can we go back to the conventional system of having debate on each item of business? Because what this sort of all-in approach means is that we don't really get to discuss remuneration much because it's just one all-in session. I'd also like you, given the complexity and the diversity of what's being covered during this Q&A, and I think we mentioned this in our private discussion, but could you provide a transcript of the full debate on your website?
Because it's very complex, it's very diverse, and it's quite difficult to scroll back through a webcast archive. Other companies like Transurban and Tabcorp have provided this. It's just part of the record of proceedings. I would appreciate it if you could do that. Just to throw in a REM question because you haven't had one, and Macquarie's got the best paid people in the country. Has there been any concerns expressed by any of the proxy advisors this year on your REM structures? Has there been any meaningful protest vote in terms of the proxies? If there has been, what was the issue that was raised expressing any concern about your remuneration structures? Thank you.
Dealing with your last question first. No, in our meetings with the proxy advisors, there were no negative issues raised. In their written reports, there have been no negative issues raised. We usually receive lots of compliments about the remuneration framework itself, its alignment with shareholders, and the disclosures in our remuneration report. No, there has not been. Consistent with that, we're unaware of any significant negative vote in relation or negative views expressed by shareholders. Certainly, I've met with a number of our major shareholders over recent weeks and have had no negative comment regarding our remuneration framework in general or our FY2020 outcomes in particular. I think that is answering your remuneration question.
In relation to the style of questions that we have at the AGM, we embarked on this format four or five years ago in response to complaints from shareholders that doing the previous structured questions relating to each agenda item was very unsatisfactory and very frustrating for a whole range of shareholders. We have moved to this particular format. We believe it's actually been very successful, and we've been complimented on it by a whole range of shareholders. I think we're very pleased with it. Certainly, if we were to get feedback that shareholders generally were uncomfortable with it, we'd certainly have another look. To date, in fact, you're the only shareholder who hasn't been happy with it as far as I'm aware. In relation to your other point, which was, can you remind me?
Providing a transcript.
Oh, the transcript. Again, you're the only person that's ever asked us for a transcript of our meeting. Certainly, the full video copy of the meeting is available on the website. No one else has actually asked us for a transcript to take us to the time and expense of not only getting a transcript, but then making 100% sure that it's totally accurate is something we'd prefer not to do, to be quite frank. Again, if there was other demand for it, then that would be different.
Thank you. I will now hand questions back to the room.
Thank you, Jess. We have a number of online questions submitted by shareholders during the meeting. The first question is from Mr. Stephen Leong. With technology causing disruption, what outside businesses are causing Macquarie the most disruption with regard to technology, and which divisions are most impacted by this? How are you countering this disruption?
I think when it comes to individual businesses, those sorts of issues are dealt with by each of our individual businesses, and they all respond to them in their own way. I might ask Shemara, does she have a response to that question?
Yes, thank you, Peter, and thank you for the question, Mr. Leong. The disruption from technology obviously creates a lot of challenges, but also a lot of opportunities for us. We are constantly trying to stay across the latest technologies, learn from them, and adapt to them in all of our businesses. As Peter said, it is generally driven business by business. Banking and Financial Services, where you heard from Greg Ward, who runs that business, has been a leader in terms of digital banking offering here in Australia with world-class e-banking and contactless payments. We also, in terms of technology across the business, are investing a lot in terms of cloud technologies. Our equity markets business, our commodities business, they are also trying to look at where the best technological options are to help them deliver service to their customers and communities.
It's certainly an area where we're looking at things like collaboration tools. Cybersecurity is another area we focus on a lot in terms of detecting and combating threats there. I think across our business, and the technology team sits inside Nicole Sabara, our Head of Operations team, we continue to look at opportunities as well as challenges. The other thing we do in terms of technology is we try to invest as well in disruptive technology businesses. You'll have seen in 2019, we exited our investment in PEXA, which was a disruptive business in terms of real estate transactions, and now we're investing in NUIX, which is a due diligence system technology business. We're very alive to not just the challenges, but the huge opportunities from disruptive technology and try to respond.
The next question is from Mr. Peter Caluero. Would the full meeting, including questions and answers, be available on the company site and YouTube channel? I'd like to see the full meeting and not just the chair and CEO presentations.
I'll have to take some advice on that. I think the—sorry, the full meeting will certainly be available. It will be including the Q&A. It will certainly be on the website this afternoon, in addition to the chair and CEO presentations. It will just be the—what you have seen on the screen will be what will be available on the website.
Thank you, Mr. Chair. The next question is from HebbyLex, number 124, Proprietary Limited. Could you please explain the likely impact on the second-half dividend given the latest APRA recommendations? Many SMS shareholders rely on this income and have been devastated by APRA's instructions on the banking sector. Thank you.
Our second-half dividend for FY2020 has been declared and paid, so that has happened, and there will be no change to that. When we look forward to our future dividends, the half-year as at the end of September and in the full year, we will be going through our normal process of looking at the performance of the company and then looking at the capital requirements of the company. In terms of a broad policy statement, we have retained or still have in place our standard payout ratio of 60-80%. What we actually do this year will, of course, be subject to APRA's view on capital management and dividends. As you said, APRA has just announced an update to their views on dividend policy. Our dividend ratio for the whole of FY2020 was 56%, and in FY2019 was 66%.
All of this, of course, will be a function of the capital requirements for the company and will be conditional on our outlook as well as our performance over this coming year. I think the letter that has been posted on the APRA website talks about a 50% payout ratio as the policy for the next few months or towards the end of the year. What will be at the full year, it still remains to be seen. We are obviously very cautious, as Shemara went through in her presentation. We are very cautious about the outlook for the coming year. When we come to decide a dividend, we will be again taking that outlook into account.
Thank you, Chair. The next question is from the Australian Shareholders Association, Proxy Holder. At the end of the financial year, your impairment, including looking forward amounts, was calculated at AUD 1.04 billion. Do you still stand by that?
That's become quite a technical question, so I might hand that to our CFO, Alex Harvey.
Thanks, Peter. Yes, at the end of the year, as you say, we had impairment provisions going through of just over $1 billion. We went through a very thorough process at the time and feel like the impairments that we took at that time reflect the conditions that we saw at the time and anticipated going forward. As you're aware, the accounting standards require us to take a forward-looking view of the economic circumstances. We developed quite a detailed profile of the economic outlook, both under a baseline scenario, a downside scenario, and an upside scenario. We weighted those scenarios and applied those scenarios to our loan assets. We feel we continue to feel like the provision we took at the time was appropriate given the circumstances that we were faced with.
I think you might comment on what Shemara mentioned in her answer, though, that we have to keep taking further provisions with the growth in the books.
Yeah, so going forward, as Shemara mentioned in her 1Q update and then outlook, we have to continue to review the level of our provisioning across the group. That takes into consideration changes in the size of our loan exposures across the organization, together with things like the payment pause arrangements that apply here in Australia and that have been extended recently to the sooner of 10 months or the 31st of March 2021. We also see, as we expected, that as the outlook for the economy rolls through, we continue to look at the performance of our underlying clients and, in some cases, have had to downgrade particular circumstances which require us to take some additional provisions. We see that coming through the first quarter.
As we noted, in particular in relation to the Banking and Financial Services business, we see that as an ongoing provision exercise through the balance of the year. Thank you.
Thank you. The next question is from the Australian Shareholders Association, Proxy Holder. What are the two greatest financial risks that Macquarie faces in this current financial year?
Shemara, I might ask you to deal with that one as well.
All right. Thank you for that question. It's a fair question given that we're in a particularly uncertain time in terms of real world and in terms of economies. One of the great things about our business is that it's very diversified. We face different risks in different business lines. For example, the Banking and Financial Services business that Greg Ward heads is exposed a lot to Australian GDP and unemployment levels, but not to foreign exchange, for example. Equity markets are an important factor in businesses like our fixed income equities asset management business. Whilst drops in equity markets might be challenging there, they're positive for the principal investing businesses and the infrastructure fund investing business.
We're a very diversified set of risks by regions, by markets: credit markets, equity markets, short-term funding markets, energy markets, commodity markets, and also transaction activity levels and economic activity. If I had to pick a single risk that would be big for us, it's preserving the approach and the culture and the philosophy we have to doing business, which is one that, as Peter mentioned in our purpose statement, is all about empowering people on the ground to innovate and invest for where they see a better future, where they see unmet need in community, and they can deliver solutions. We do that with our three core cultural principles of opportunity, accountability, and integrity.
If we can't maintain the culture and attract people who live to that culture of going out and pursuing opportunity where they have deep expertise and they see unmet need, but always being accountable for the disciplined execution of their ideas and acting with long-term integrity to preserve our brand and our reputation and our license to be involved in communities, to me, that is the biggest risk. I think that we, as a leadership team, work the hardest to preserve is that culture that we've built over five decades. Thanks.
Thank you. The next question is from the Australian Shareholders Association, Proxy Holder. A question for Mr. Main, if we may. This regarding capital raising. If you had been on the board, what other actions that did not happen would you have advocated for, and how would this have benefited retail shareholders?
Thank you. I think I'd have advocated for a pro-rata capital raising. I think I'd probably have pushed for a bit more diversity on the board. I think that, as I mentioned in my pre-record, very white board, average age 66, all Sydney. I think that I'd have been advocating for some more diversity. Look, overall, I think the performance has been very good. Without being inside the boardroom, it's tricky to sort of say what you do specifically differently. I mean, I guess the single biggest thing is that whole respect for retail shareholders in the ECM division. It has been disappointing that Macquarie has been involved in so many transactions which have been structured to dilute retail shareholders.
Shimara's comments just then about culture and reputation and preserving that, I mean, I would love if there was a culture and a reputation within the equity capital markets division whereby they always promote fair treatment of retail shareholders. They always promote protection of property rights. They always promote pro-rata where possible and avoidance of dilution of retail shareholders. Unfortunately, the track record is that Macquarie is involved in many, many transactions where that does not happen. I am disappointed that the culture within the ECM division of fairness for retail and the little guy has not been looked after. That is probably the biggest thing I would have been advocating for if I was on the board. Thank you for the question.
I think I do have to make a statement at that point. I think Stephen is using some very extreme language there that I know, having spoken to our ECM team, that our people do promote fairness in relation to institutional and retail shareholders. They have gone out of their way to ensure that shareholders do get at least a pro-rata allocation so that they are not diluted in their activities in the capital raising activities we have. In fact, have gone over recent months to move that to for large retail shareholders who may not—who the SPP may, in fact, have diluted—have made sure that they can now get access to their true pro-rata allocated via their participating broker. We have gone to great lengths to assure people that they are treated fairly.
In addition to that, I would say that as a result of the changes made to the SPP arrangements done at the beginning of the COVID pandemic period back in April and May, that ASIC and the ASX are very careful to ensure that all shareholders, including retail shareholders, get at least a pro-rata allocation. I think Stephen has made some excessive statements there about the current situation.
Thank you, Mr. Chair. The next question is from Mirobar Proprietary Limited. What is Macquarie's view on how COVID-19 is impacting the global economy, duration, and the economic stimulus from governments? How is that view changing MAM's investment strategy?
Okay. Shemara, I'll leave that to you.
Yeah. Look, it's very difficult to forecast at this time. Alex Harvey, our CFO, at the time of our results, took the market through the assumptions we'd made or the scenarios we'd factored into calculating our expected credit loss provision at the end of last financial year. We had a scenario for Australia and the US that he shared, and also we had our own scenario for the European markets. We are finding that broadly those scenarios are playing out. I think Australia went a little bit deeper than we had forecast but has recovered at this stage quite well. There are second and third waves coming around the world that are difficult to predict. Europe has come out also in line with what we expected. The US, obviously, we're seeing less control of the pandemic there, but with a lot of stimulus from central banks and governments.
The economy at this stage is playing out as we'd forecast. Very hard to say how it'll play out from here. For our asset management business, as I mentioned briefly when I was presenting, the move to lower for longer in terms of returns and risk-free rates continues, and this pandemic is probably going to exacerbate that with the fiscal and monetary responses we've seen. The need for the growing amounts of savings in the world to find investment opportunities that are driving real return is becoming even greater.
We think that positions our asset management business, which is involved, as I said, in infrastructure and real assets, infrastructure, real estate, agriculture, private credit and transportation, and also in active management in fixed income and equities, positions it well because we're really looking to deliver alpha, superior return compared to the underlying return of each asset class. Hopefully, medium term, it's a good thing for the asset management business, despite obviously very challenging for real world and economies over the shorter term. Thank you.
The next question is from Ms. Tammy Chan. Well done on the personal banking products. Has there been continuing relief provided to customers affected by the bushfires?
I might ask Greg Ward to answer that question, if you could please, Greg.
Of course, Chairman. Yes, there is ongoing support provided to customers affected by bushfires.
Thank you.
The next question is from Mr. Benjamin Revick. As engagement with shareholders and cost control is important to shareholders, did the board consider the impossibility of reading six-point font in its presentation via the chosen meeting platform prior to engaging that platform for the shareholder meeting? Is the board aware that the chosen meeting webcast technology is merely a rebadged $95 Vimeo service? How does that compare to the actual cost paid? What other alternatives that do not pay large and undisclosed commissions to share registry resellers were considered?
All I can say is that we did examine all the available technologies, proven technologies that have actually worked in various AGMs. We have tried to put together the broadest range, so both not only the LUMI technology but also the telephone technology, to ensure as wide a group as possible can access today's online AGM. To the extent that you have unfortunately not been happy with that, I'm sorry about that. This is the best available that we have been able to discover.
The next question is from Kiel Holdings, PTY Limited. For Nicola Wakefield Evans, as an experienced non-executive director with many other positions aside from the Macquarie Group board and subcommittees, how do you ensure you spend sufficient time and commitment in fulfilling your role in the Macquarie Group board and its subcommittees?
Nicola, can you take that question, please?
Sure. Thank you, Peter. Thank you for the question. I had a professional career as a mergers and acquisitions, capital markets lawyer, and partner at a major Australian law firm. I'd start off by saying that I'm actually used to hard work. I think it is a question that comes up from time to time for a lot of non-executive directors. Part of our role is to make sure that we allocate the time that we need to each of our individual obligations. That's something that I pride myself on doing. I think Peter's already mentioned that the workload of this board is quite large and that every director has attended every meeting and subcommittee meeting that they're required to.
Thanks, Nicholas. I'd just like to reiterate that point. I can assure you that Nicholas arrives at all board and committee meetings fully read and well prepared and fully thought about the issues that we're discussing. I'd also say that the extra work she puts in in her role as Chair of the Board Governance and Compliance Committee demonstrates a great commitment in terms of effort and time to Macquarie.
Mr. Chairman, we have a comment from Ms. Tammy Chan. Proud to be a shareholder of a company with such strong female representation. Thank you.
Thank you.
The next question is from Fuzzo Leto, PTY Limited. Regarding the proposal for election of Stephen Main as a director, please explain whether or not his proposal for SPP ahead of institutional share placement is viable, i.e., whether the risks and consequences of failure in a capital raising attempt in that fashion outweigh the advantages he espouses.
I can't see that there are any advantages in going with the SPP first. I'm assuming Stephen says that as a desired approach so that we can determine how much the SPP raises and then decide what we would need to issue via the placement to make up the balance of the capital that we would be seeking. However, I think circumstances have moved past that point to the extent that all shareholders, both retail and institutional, can get at least their pro-rata allocation via the SPP and placement mechanisms. That for retail, they get the benefit, as I said earlier, of subscribing at the same price as the institutions. Or if, in fact, the price has fallen, they would get a benefit of a lower market price.
They get the benefit of a considerable period of time to consider whether they wish to participate and to organize their finances. I can't see any advantage to either retail or wholesale to the company at large at all by having the SPP first.
The next question is from Mr. Aston Aronson. What was the thought process behind raising funds via a relatively high-interest capital note versus the potentially lower interest on secured bonds?
That's a question I can pass to our CFO.
Sure. Thanks.
Thanks, Alex.
We obviously, as part of the overall funding strategy for the group, are looking for a diverse source of funding across the capital structure. We have been very active in capital markets through the years. Shemara mentioned in her presentation. I think Peter did as well. We raised $26 billion through the year across a range of debt investments. As part of the overall strategy, we are looking to make sure that we tap a broad range of sources of that capital. It made sense in the context of that to look to raise capital via the hybrid issue, the BCN2 issue that we did just a couple of months ago. Apart from that, obviously, we have regulatory obligations in terms of hybrid capital as part of the bank capital structure. We need to issue that BCN2 to satisfy those regulatory obligations as well.
There is both the, I guess, the commercial imperative in terms of making sure we have a diverse range of funding as well as, of course, meeting our regulatory obligations. Thanks for the question.
The next question is from Mrs. Esther Hockridge. Pandemic times is tricky for all businesses where many economic research and predictions can be derailed when we depend on historical data for projections. Has Macquarie invested enough to grow a sophisticated data analytics team and to focus on agility for all areas of the business?
Shemara, would you like to comment?
I was actually going to suggest that Nicole Sabara, Head of Corporate Operations, answer that question because we have a material enterprise data management team that Nicole leads.
Sure. Thank you. As Shemara mentioned, we do have a comprehensive enterprise data management program of work across the entire group. This is to ensure that we have a framework in place so our data is complete, timely, and accurate from source right through to reporting. In addition, each group has and continues to develop their own data analytics team. This is supported by some of the latest technologies like Alteryx and Microsoft Power BI. We also use cloud data analytics in a number of our customer services. All of these teams provide insights for us into everything from operational efficiencies also to provide customer insights as well. Thank you.
Thank you, Nicole.
The next question is from Mr. Terry Lee. Over two-thirds of Macquarie's profit comes from overseas. The Australian dollar has gone up 30% recently. Has the CEO forecast for 2021 accounted for the rising Australian dollar? Does Macquarie use currency hedging to cover foreign profits?
Nicole? Sorry, Shemara. Alex?
Yeah. Thanks for the question, Mr. Lee. Indeed, you're right. Obviously, two-thirds of your income does come from offshore markets. We are exposed to foreign currency fluctuations. In relation to your first comment, as we think about the business performance going forward, we update when we're talking to the businesses for currency movements. As they produce their forecasts, we take those updated views on currency movements into account. One of the observations I think we'd make is that, and we've talked about this before today, is the strength of the diversity that comes through the group. The currency diversity is also, I think, one of the strengths of Macquarie. We do update for currency movements in relation to the operating profit that is exposed to those movements that happen throughout the year.
We do have a program of hedging our capital in foreign currency markets to make sure that we can manage the volatility as it affects our capital ratios. Thank you.
The next question is from Ms. Tracy Funekane. I currently volunteer at Western Sydney Community Center who run a food parcel program that is self-funded. With COVID-19, we are struggling to feed everybody who are now in need because of unemployment. Is there some way we can apply to be considered under any future revenue Macquarie may donate to not-for-profit to assist with COVID-19 recovery?
Yes, there certainly is. Certainly, I make an application to the Macquarie Foundation. In terms of exactly how to get that, be able to contact the Macquarie Foundation via their website. That should be available via our website. If you have any difficulty finding access to how to contact the foundation, please contact me. I'll certainly organize that.
The next question is from Dr. Kim Kilpatrick. In reference to an earlier question, as at 31 March 2020, Macquarie was the third largest shareholder of Stifel with a 5.27% holding. Stifel has been enlisted to arrange finance for Adani's Abbot Point Coalport, which will ship Carmichael Coal. Despite the chair and board being unaware of this investment, can the board enlighten shareholders as to what it would do to protect shareholders from the risks of connection to the hugely controversial Adani Coal project?
I think I've already answered that question. It's not something that any of the board here are aware of. We're assuming that it's.
Peter, I can comment because we've managed to speak to some of our teams around the world and find out about the Stifel investment. It's held in our funds across a few funds in the US, in the Delaware US Equity Funds, in which we hold obviously many tens of billions of investments. This company, it turns out, is a financial services brokerage business which has about a $3 billion market cap. The shareholding is listed as being Macquarie Group, but it's actually held through various funds. I'm told that the investment in that company was made before they had a role with Adani. This will be something that they'll take into account under the ESG policies of the various funds that hold the position now that the Adani role has been taken on.
The funds have their fiduciary duty to the investors in those funds, develop ESG policies within the mandates under which they're given money and entrusted with money to invest. In accordance with those mandates and policies, they'll be reviewing their involvement, their investment in Stifel. It's a liquid position, obviously. It's up to the funds to take into account how they manage that investment given their ESG structures and policies.
The next question is from Mr. Aston Aronson. Currently, MQG has a dividend payout ratio for the most part above those of similar US companies such as JP Morgan and Citigroup. These companies reinvest the majority of their profits into their company, fostering greater future growth. This seems to be a common theme between Australian and US-listed companies. What is the company's justification for not reinvesting their profits at the same extent as their US competitors?
I think when it comes to capital management, because we are listed in Australia with a large degree of Australian shareholding, Australian shareholders like to receive dividends. That is a feature of the Australian market. The US market is a different sort of market where they pay much lower dividends and return cash to shareholders by doing buybacks on a far more frequent basis. It is a different feature of the two markets. When it comes to driving enough capital to invest in our business, that is a separate but related decision that we are continually looking at our capital base. We have found that our shareholders are very happy to support investing additional capital into the company when we see that there is a need to do so. Alex, would you like to add anything to that?
I think you probably covered it, Chair.
Thank you, Mr. Chair. The next question is from the Australian Shareholders Association as proxy holder. In relation to the answer to Mr. Main's remuneration question, the ASA and its voting intentions raised three issues: the method of calculating profit for profit share being different to that for shareholders, reward being based on profit measures alone, and using fair value when calculating PSU and avoiding undirected proxies against the remuneration report. Could you comment on this in light of your previous comments?
Yes, certainly. I must admit I had forgotten that the Shareholders Association had not quite put you in the box of proxy advisors, so I apologize for that. The issues that the ASA have raised, as they have raised in past years, have been the issue of not calculating or publishing realized pay. We have discussed that again with the ASA. The ASA is the only body that asks about that question. That being the amount of cash that is realized in a particular year for our management, the reason we do not calculate that is that that particular amount results from the vesting of awards which were made up to seven years ago. It is certainly not reflective of the performance of the individual in this current year. It is certainly not something that the board takes into account in establishing this year's remuneration.
This year's remuneration is established for the performance of the company and the individuals in this current year. That is why we do not publish that. In fact, we do not even calculate that. In terms of the other issues in relation to the other points being raised.
It was not a financial component.
Oh, it was only a financial component. As we've discussed with the ASA, that is not true. The Macquarie is a major element which goes into our remuneration structure is the financial performance of the company and the contribution of the individual to the financial performance of the company. There are a whole range of other issues which are taken into account in establishing that amount. They include the business leadership demonstrated by our executives, the outcomes for customers, the regulatory performance of that business, the leadership in terms of investing for the future for those businesses. There is a whole range of other issues which are taken into account, which are in addition to the financial performance.
The next question is from the Australian Shareholders Association as proxy holder and is in relation to item four. APRA has suggested that the financial element of bonuses, which your profit share would be classified as, should be limited to 50%. Why have you not started modifying your bonus profit share to clearly take non-financial matters into account?
I would just reiterate to say that we certainly do take non-financial matters into account. In fact, we have had discussions with APRA about this arrangement of 50% financial and 50% non-financial. Our remuneration structure works on the basis that no one measure guarantees a profit share incentive payment in a particular year. Certainly, performance in the non-financial matters, if that was poor enough, then that would be sufficient to reduce any profit share to zero. Certainly, to get a profit share element, there must be satisfactory performance on a whole range of non-financial matters measures which I indicated earlier.
The next question is from the Australian Shareholders Association as proxy holder, also in relation to item four. Can you name five other companies in the ASX 50 who still use fair value in calculating their bonuses?
No, I can't. I haven't looked, so I'm not sure about that. I would point out that we use and publish the value of our PSUs on fair value and at face value. It is there for shareholders to see and choose whichever valuation they like to choose.
Thank you, Chair. The next question is from Anderson Pender Family Pty Ltd. Of MIRA's $140 billion EUM, how much is invested in fossil fuel infrastructure?
Shemara, do you have that question in your head?
Yeah. Again, the MIRA business, like the MIM business we just talked about, it has fiduciary duties to its investors in its funds. Being an investor in long-term assets, climate change is one of the factors that it has to take into account and what could play out over the 10-12 years that it owns some of its investments. Some time ago, MIRA made a statement saying that it would not invest in standalone coal generation projects or ones that have material exposure to coal. It has less than 1% of its portfolio today in standalone coal generation assets. It does have exposure to gas assets in transmission, distribution, etc.
It obviously, as it makes each investment, takes into account over the duration of the time it may hold that investment how climate impacts could play out to ensure that those are resilient investments for its investors as well as for the communities that it invests in.
The next question is from Anderson Pender Family Pty Ltd. Macquarie is the second largest physical gas marketer in North America, which contributes 32% of the net profit in the Commodities and Global Markets division. How does this role reconcile with our company's support for the Paris Agreement, given the relentless expansion of the oil and gas industry in North America?
I think it is totally consistent with the Paris Agreement on all models in relation to reduction of emissions to limit temperature rises to either 1.5% or 2%. Under any of those models, there is a general agreement that there's a role for natural gas for power generation as part of that, at least for the next decade, probably to 2035 before it starts reducing. I think that is, again, totally consistent that natural gas will be a major power generator in the world, at least for the next decade. From that point of view, I think that's totally consistent.
The next question is from Rachel Deans, Proxy Holder. Other shareholders raised your involvement in the Rio Grande project in the United States. In what capacity do you advise, and why has the Carrizo Comacuto Tribe, a sovereign nation, not been consulted? Will you commit to meeting with them to discuss this project? In your position as an advisor for the project, you can show moral leadership by denouncing the project.
Do you have any more information?
Look, all I can say is repeat what you said, which is we have an advisory role only, and that project is on hold. We've asked the organization that are running the project to engage locally with all these interested parties, but our role is only as financial advisor, and the project is on hold, as the Chairman mentioned.
Thank you, Mr. Chair. We have several questions on the teleconference. Please proceed, Jess.
Thank you. The next question is a telephone question from Juan Mencius, private investor. Please go ahead. Pardon me, Juan, your line is live. We'll move on to the next question from Josette Cruz, private investor. Please go ahead.
Hi. Earlier, you mentioned that the project was scaled back and delayed, and I know that you just mentioned that again. However, it does not mean that the project itself is canceled. Can the bank show moral leadership and denounce Rio Grande LNG so the project does not go forward? Can Macquarie Bank meet with me and other residents that have concerns about the Rio Grande LNG project?
As Shemara has just mentioned, we certainly have requested our people in the US and the promoters of this project to meet with the local people. If you could send me some information, then I will endeavor to ensure that that takes place.
Sure. We can make sure to send you some information. That works. Yes.
Thank you.
Thank you.
Thank you. The next question comes from Craig Caulfield, private investor. Please go ahead.
Oh, hello, Chair. I just wanted to confirm Stephen Main's request to have the video cast transcript put up. That'd be something wonderful. I know you said you'd only had one request, but I thought I'd just add to that to let you know other people would be interested. Thank you.
Requests.
Thank you, Mr. Chair. There are no more questions.
As there are no further questions, I now ask for a summary of the available proxy votes on the motions to be shown on the screens. Please note that all open proxies given to the chairman of the meeting will be voted by me in favor of items 2A, 2B, 4, 5, and 6, and against item 3. As you can see, the proxy votes were strongly in favor of all the proposed resolutions, with the exception of item 3, where the proxies were strongly against. If you have not yet cast your votes, I now ask you to do so. Boardroom, our share registry, will act as returning officer and determine the results of the polls. Could everyone who wishes to vote ensure that they have now done so? Thank you, ladies and gentlemen. The polls will now be closed.
The results will be announced to the ASX as soon as practical this afternoon. That concludes the business of this annual general meeting. Thank you for your attendance and your support during the year.