Macquarie Group has signalled it will continue to attack the big four banks’ mortgage heartland after growing rapidly in home lending in its latest half, even as the competitive battle squeezes its lending margins.

But despite bumper growth in retail banking, Macquarie’s overall results disappointed investors, after they included a $150 million green energy impairment and weaker earnings from its commodities and markets division.

Macquarie on Friday reported a 3 per cent rise in half-year profits to almost $1.7 billion, which was weaker than analysts had expected, and the giant’s shares had plunged 7.3 per cent in afternoon trade.

As part of its results, Macquarie revealed that its banking and financial services division, which competes directly with the big four, had experienced strong growth but also “margin compression”.

Profits from the banking and financial division surged 22 per cent and Macquarie’s home loan portfolio swelled by 13 per cent, giving it a 6.5 per cent share of the domestic home loan market.

While the company said competition was fierce in home loans and there was a high level of refinancing, chief executive Shemara Wikramanayake said the pressure on margins would not temper its growth plans for the mortgage market.

“We’re still getting very good returns, well above our hurdle returns in that business, because we’re getting the benefits of scale there as our platform grows, especially with the digital offering that we have,” she said.

Macquarie’s share of the home loan market has swelled from 2 per cent in 2020 to 6.5 per cent, making it the fifth-largest mortgage lender in Australia.

Unlike the big four that dominate home loans in Australia, Macquarie relies almost entirely on mortgage brokers, and a Federal Court judge last year called it a “maverick” disrupter of the home loan market.

While the banking unit within Macquarie posted rapid growth, a source of disappointment for some in the market was its green energy investments, including a $150 million impairment caused mainly by US wind farm investments.

Chief financial officer Alex Harvey, in his last results at Macquarie, said that in general terms, green energy investments had in recent years been affected by rising construction costs, higher interest rates and the fact that competition had driven down returns.

Even so, he said the fundamental investment case for green power remained strong because renewables provided a fast way of delivering electricity to meet strong demand, including from a wave of new data centres.

“Just generally, those fundamentals are still intact,” Harvey said.

“We need more power. We need to bring that power online sooner rather than later, given the push for electrification and the data consumption of data centres and so on, and what we are seeing is an accumulation of capital interested in investing in renewables,” he said.

Opal Capital chief investment officer Omkar Joshi said Macquarie’s green investments had not delivered what the market had expected. He said the $150 million in impairments on Friday were part of a wider trend.

“It’s a sector-wide phenomenon where we are seeing some of these green assets being marked down recently,” he said

Friday’s result comes after Macquarie shares had underperformed the ASX this year after regulatory woes and underwhelming earnings reports.

In its latest half, Macquarie’s bottom line benefited from higher fee income from funds management, increased revenue from mergers and acquisitions in its deal-making unit Macquarie Capital, and strong profit growth in Australian mortgages, where it has been disrupting the local market.

Wikramanayake said: “The improved underlying performance across our operating groups in the first half reflects the ongoing benefits of our diverse business mix and our continued investment in opportunities that support long-term growth and deliver positive outcomes for our clients and communities.”

Three of its four divisions posted higher earnings: the asset management business, its banking and financial services unit, and the investment banking business Macquarie Capital all delivered growth. The exception was its commodities and global markets unit, where net profit contribution fell 15 per cent, mainly because of higher expenses.

Jarden analyst Matthew Wilson said Macquarie’s profits were 12 per cent lower than the consensus estimates from analysts. Wilson, who is “underweight” on the stock, said Macquarie was continuing to “beat up the major banks” with its offerings, and its fee income in coming financial years would also benefit from recent data centre deals involving Macquarie.

But he said it also faced challenges with compliance and regulation, in renewable energy financing, and conditions were also subdued in its commodities and global markets business.

Macquarie will pay an interim dividend of $2.80.

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