Total operating expenses increased 15 per cent from  $A5,252 million in the prior year to $A6,026 million for the  year ended 31 March 2014 mainly reflecting the impact of  the depreciation of the Australian dollar on offshore  expenses in addition to the following key drivers: As an Australian Prudential Regulation Authority (APRA)  authorised and regulated NOHC, MGL is required to hold  adequate regulatory capital to cover the risks for the whole  Macquarie Group, including the Non-Bank Group.  Macquarie and APRA have agreed a capital adequacy  framework for MGL, based on Macquarie’s Board-approved  Economic Capital Adequacy Model (ECAM) and APRA’s  capital standards for authorised deposit-taking institutions  (ADIs).  MGL’s capital adequacy framework requires it to maintain  minimum regulatory capital requirements calculated as the  sum of:  Income tax expense for the year ended 31 March 2014 was  $A827 million, up 55 per cent from $A533 million in the prior  year mainly due to the 50 per cent increase in operating  profit before income tax from $A1,405 million in the prior  year to $A2,106 million for the year ended 31 March 2014.  The effective tax rate for the year ended 31 March 2014 of  39.5 per cent was slightly up on the prior year reflecting the  geographic mix of income and tax uncertainties.  The Consolidated Entity has satisfied its regulatory capital  requirements throughout the year. At 31 March 2014, the  Macquarie Bank Group had a Common Equity Tier 1 Capital  Ratio of 9.6 per cent and a Tier 1 Capital Ratio of 10.6 per cent. The Consolidated Entity remains well  capitalised with $A2.7 billion of eligible capital in excess of  the minimum regulatory capital requirements$^{(1)}$.  Macquarie’s capital management strategy is outlined in Note  26 to the financial statements contained within the 2014  Financial Report.  – a 14 per cent increase in employment expenses to  $A3,736 million for the year ended 31 March 2014 from  $A3,273 million in the prior year primarily due to higher  staff compensation due to the improved performance of  the Group. Headcount increased 2 per cent from  13,663 at 31 March 2013 to 13,913 at 31 March 2014.  The compensation ratio of 43.1 per cent for the year  ended 31 March 2014 decreased from 46.1 per cent in  the prior year;  – a 29 per cent increase in brokerage, commission and  trading-related expenses from $A604 million in the prior  year to $A779 million for the year ended 31 March 2014  mainly due to growth of physical metals financing  activities;  – a 24 per cent increase in non-salary technology  expenses from $A260 million in the prior year to $A323  million for the year ended 31 March 2014 mainly driven  by an increase in information technology development  activity largely in response to increased regulatory  requirements; and  – an 11 per cent increase in other operating expenses  from $A725 million in the prior year to $A806 million for  the year ended 31 March 2014 mainly driven by an  increase in business activity. – the Bank Group’s minimum Tier 1 capital requirement,  based on a percentage of risk-weighted assets plus Tier  1 deductions using prevailing APRA ADI Prudential  Standards; and  – the Non-Bank Group's capital requirement, calculated  using Macquarie’s ECAM. Transactions internal to the  Macquarie Group are eliminated.  – an increase in net operating lease income of 27 per  cent from $A417 million in the prior year to $A529  million for the year ended 31 March 2014 driven by  the full year contribution of Corporate and Asset  Finance’s European Rail operating lease business  acquired in January 2013 and the depreciation of  the Australian dollar, which favourably impacted  earnings from the aircraft, rail and UK Energy  Leasing operating lease portfolios.  – a reduction in impairment charges on equity  investments (including investment securities  available for sale and associates and joint ventures)  of 37 per cent to $A243 million for the year ended  31 March 2014 from $A388 million in the prior  year. While mining equity markets remain subdued,  investor sentiment and confidence in these  markets appear to have stabilised in the second  half of the year, resulting in significantly lower levels  of equity impairments for Fixed Income, Currencies  and Commodities for both the year and the second  half compared to the prior year and first half;  The Consolidated Entity’s liquidity risk management  framework operated effectively throughout the year ensuring  funding requirements were met and sufficient liquidity was  maintained. Cash and liquid assets were $A19.1 billion at 31 March 2014 representing approximately 12 per cent of  the Consolidated Entity's total assets, or 21 per cent of the  Consolidated Entity’s net funded assets.  Retail deposits increased by 7 per cent from 31 March 2013  to $A33.3 billion at 31 March 2014, while total deposits  increased from $A36.2 billion at 31 March 2013 to $A36.9 billion at 31 March 2014. During the year ended 31 March 2014, $A17.4 billion of new term funding was  raised and $A3.1 billion of government guaranteed debt was  repurchased. 41  (1) Macquarie Group Regulatory Capital surplus under APRA  Basel III (at 7 per cent Bank Group risk-weighted assets). 7  per cent is the internal minimum Tier 1 ratio of the Bank  Group. 