Macquarie Group issued earnings guidance yesterday, saying it expects profits for the six months to September (its interim profit) to be lower than for the September half last year.It said it expected the full year result, for the year ending next March, to be an improvement on the 2011 result "if market conditions for the remainder of the 2011/12 financial year are not worse than the prior corresponding period."The downgrade for the September half is due to difficult trading conditions affecting the group's "capital markets-facing businesses" - Macquarie Capital, Macquarie Securities Group and, most notably, Fixed Interest, Currencies and Commodities.The group was able to overcome difficult market conditions in the 2010/11 year by increasing annuity income from areas such as lending and leasing. It is hoping to do the same in the current year.The strong Australia dollar has had a negative impact. Macquarie earns 64 per cent of its income offshore and the strong dollar has had a negative impact on group income of around five per cent so far this year.Other "challenges", apart from volatile markets, include increased competition, conservative funding and capital policies, and regulatory changes.Of Macquarie's six divisions, Fixed Interest, Currencies and Commodities has the weakest outlook. Macquarie is forecasting that the division's earnings for 2011/12 will be down on 2010/11. Last year, it was the biggest contributor to group earnings, along with Corporate and Asset Finance (both contributed A$600 million to net profit).FICC suffered from reduced volumes in metals, Asian markets, agriculture, energy, foreign exchange and credit.Macquarie Securities and Macquarie Capital earnings are expected to be in line with their 2010/11 earnings.Macquarie Funds, Corporate and Asset Finance, and Banking and Financial Services are all expected to produce earnings that are higher than those of 2010/11. The group said these three divisions were "delivering superior returns".The group's assets under management have fallen from $326 billion in March last year to $310 billion in March this year and $308 billion in June. The fall was due to foreign exchange movements and not a funds outflow.The Corporate and Asset Finance loan portfolio increased by 11 per cent during the course of 2010/11. The group expanded into mining equipment leasing, which now sits alongside its established motor vehicle and technology leasing businesses.