Australian banking group Macquarie, which employs hundreds of people in the City of London, today warned that its first-half profits would be down by about a quarter on the same period last year.

Deputy managing director Richard Sheppard revealed details of how much the downturn in global markets have hit the firm's equity, fixed interest, currency and commodities trading business.

Speaking in London, he said that uncertain conditions had made short-term forecasting very difficult.

Macquarie had already warned twice that it was being hurt by weak markets but today is the first time it has been specific about the damage done. Analysts have warned that the firm, once dubbed "the millionaires' factory" because of its huge bonuses, will have to cut costs and jobs.

Sheppard said he expects profits for the full year to March 2011 to be pretty much in line with last year's, assuming market activity returns to normal levels. He said: "Full-year results continue to be impacted by the cost of our continued conservative approach to funding and capital."

Corporate advisory and financial trading, Macquarie's two biggest activities, have seen a sharp fall in fees and volumes around the world this year. About half the group's revenues come from Australia, and it has been trying to expand its income from Europe and the US.