(Reuters) -Australia's biggest investment bank Macquarie Group ( MCQEF ) recorded a 3% rise in first-half profit but missed expectations after the bank's earnings were hit by a sharp drop in commodity and markets trading business earnings.

The profit miss prompted Macquarie shares to fall 5.45% in early trading on Friday, as the S&P/ASX200 was flat. The bank's shares are down 7.3% for the year, compared to a near 14% rise in the ASX'S financials index.

Macquarie said net profit was A$1.66 billion ($1.08 billion) for the six months ended September 30, higher than A$1.61 billion a year earlier. The increase was driven mainly as profit from its asset management unit rose 43% on higher performance fees from landmark data centre assets like AirTrunk and Aligned, the U.S. business sold by Macquarie last month for $40 billion.

However, the company's overall profit missed a Visible Alpha consensus estimate of A$1.86 billion as profit from its commodities and global markets unit, one of its biggest profit contributors, declined 15%.

The bank's commodities and markets business, which makes up about 28% of Macquarie's total earnings, recorded a 15% drop in net profit to A$1.11 billion.

"Looking from all our commodity peers that it's been a much more subdued external environment in terms of volatility and whether that is from other banks ... the trading houses, the hedge fund, the energy companies also said there has been a subdued environment," Macquarie Chief Executive Shemara Wikramanayake told an analyst call on Friday.

She added the commodity business's performance in the second half was expected to be in line with the first half.

Macquarie has made a concerted push into Australia's ultra-competitive mortgage market, taking share from the major "top four" banks which dominate home lending.

Profit for the banking and financial services segment jumped 22% on growth in the home loan portfolio and deposits.

Macquarie now has an A$160.3 billion mortgage book and a 6.5% market share, up from A$67 billion and a 3.5% market share five years ago.

The bank has been in the crosshairs of Australian regulators and in September agreed to repay A$321 million to investors who had bought into the now-collapsed Shield Master Fund through one of the bank's platforms.

Profit from its Macquarie Capital division surged 92%, benefiting from higher income from mergers and acquisitions and brokerage fees.

Australia's top investment bank will extend its A$2 billion of shares for the next 12 months. It said it had bought back about A$1 billion worth of stock so far.

The company declared an interim dividend of A$2.80 per share, higher than the A$2.60 declared last year.

($1 = 1.5389 Australian dollars)