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(Updates with CEO comments, details of operations)
By Byron Kaye
Sydney, Feb 11 (Reuters) - Macquarie Group Ltd,
In a trading update, Macquarie said its second-half profit was expected to be larger than its first half due to better market conditions and rising income from its annuities-style businesses - funds management, banking and financial services and corporate and asset finance - in the three months to December 31.
"Market conditions continued to show signs of improvement, however client activity remains subdued for some capital markets facing businesses," chief executive officer Nicholas Moore said.
Given Macquarie posted a A$501 million profit for the first half, the trading update indicated full-year earnings were on track to exceed A$1 billion for the first time since 2010.
That may give investors confidence in Macquarie's strategy of "de-risking" from its traditional investment banking operations by increasing its exposure to lower-risk, more reliable businesses such as unlisted funds, retail banking and leasing.
Analysts expect Macquarie to post a A$1.2 billion net profit for the year to March 31, according to a poll of three analysts, up from A$851 million in 2013.
Macquarie's capital-markets-facing businesses - fixed income, currencies and commodities, Macquarie Securities and Macquarie Capital - had mixed trading conditions with combined third-quarter profit down on the previous year, Moore said.
But if markets continued to improve in the fourth quarter, Macquarie said those business could post a full-year result roughly in line with the 2013 financial year
Mergers and acquisitions activity remained subdued Macquarie said. Its Australian mortgage portfolio grew by 8 percent to A$15.8 billion from the second quarter to the third quarter, giving it 1 percent of the country's home loan market. ($1 = 1.1183 Australian dollars)
(Reporting by Byron Kaye; Editing by John Mair)
((+612 9373 1815)(byron.kaye@thomsonreuters.com))
Keywords: MACQUARIE OUTLOOK/