“Markets have been cautious through the last period and interest rates have been rising,” Wikramanayake said. “2023 was a very challenging year and activity levels have been more subdued, so that has impacted Macquarie Capital.”

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Shares in Macquarie were down 4.4 per cent to $174.90 a share at the close.

Citi analyst Brendan Sproules said Macquarie’s update came in lower than he had expected and that the bank’s management seemed to be expecting further weakness through the 2024 financial year.

“Investment-related income expectations have been downgraded across both Macquarie Asset Management and Macquarie Capital, reflecting a tougher environment for deal flow,” Sproules said.

Deal activity – buying and selling of assets – has slowed because of a number of factors according to Wikramanayake, including the fact that private market investors have substantial amounts of cash on their hands.

“Private market investors can afford to double down,” Wikramanayake said, including pumping in more equity or refinancing assets, meaning they are not as readily putting them up for sale.

However, Wikramanayake said that would change. “All our peers globally have alluded to the fact that that will change, so at some point you’ll probably see more activity happening in private markets,” she said.

Wikramanayake said Macquarie’s asset management business contributed substantially less to the company’s first quarter profits, mostly because of lower investment-related income from its green energy investments.

She also said there were large one-off gains in the previous year, which meant that the first-quarter profits were being compared to a higher-than-usual benchmark.

Macquarie’s commodities business faced a significant downgrade, with income expected to be in-line with, rather than above, the 2022 financial year.

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This comes after a year of strong trading activity and volatility across gas and power, which has eased as storage levels have increased, and economic activity has slowed.

Wikramanayake said fixed income such as bonds had also become more attractive for investors. “People are, I think, rotating more towards fixed income from equities,” she said, noting that yields – or returns on fixed income – were increasing.

Despite mixed results in Macquarie’s banking and financial services business, Wikramanayake said that part of the company remained resilient and that earnings had improved.

Macquarie’s home loan portfolio was up 2 per cent in the June quarter compared to the March quarter, and its business banking loan portfolio was up 8 per cent.

Stevens said while last year’s record result was partly generated by unusual circumstances, the long-term trend in the company’s earnings reflected management’s efforts over the years.

UBS analyst John Storey said the commentary for Macquarie’s various divisions, except for banking and financial services, read poorly, but that based on discussions with the company, the bank expected a stronger second half of 2024 relative to the first half.

“Overall, the outlook remains uncertain and Macquarie are cautious in their views, but they appear confident the second half of 2024 should be stronger than the first half,” he said.

Over the 2023 financial year more broadly, Macquarie made nearly $5.2 billion in profit, up 10 per cent on the previous year, with a final dividend of $7.50 a share, up 20 per cent.