Macquarie Group has issued a guarded warning that its 2008 profit might be more impacted by the credit freeze and drop in stockmarkets than previously acknowledged and that achieving the previously forecast $1.8 billion record result will be “subject to market conditions which remain volatile.”

In a briefing to investors in London, released to the ASX today, deputy CEO Richard Sheppard indicated that values for some of its listed real estate funds had fallen since the bank had its operational briefing on 6 February.

CEO Allan Moss told the 6 February briefing:

… that the total market value of Macquarie’s investments in listed specialist funds and listed fund managers was $A403 million above book value at 31 January 2008. However, the market values of most positions in listed real estate funds are currently below book value. Any potential provision on investments in real estate funds would be assessed as part of the year-end reporting process.

If all current unrealised losses on these funds are recognised (approximately $A230 million) the impact on net profit would be approximately $A70 million.

The current full year guidance for the 2008 financial year takes into account any potential provision for investments in listed real estate funds.

Sheppard did not provide any information on how much bigger the provisions might be but the use of the phrase “listed REIT prices have significantly deteriorated” has an ominous ring to it.

If 2008 earnings are expected to be around $1.80 billion, then the normal yardstick used by the ASX and companies for reporting upgrades of a 15% variance to guidance, would require the impact from the fall in listed real estate trusts to be around $270 million after tax.

But there is now enough doubt over the forecast of $1.8 billion from that the ASX should query the bank for clarification.

Macquarie Group shares fell on Friday to $45.43 and could test the 52 week low of $44.20 today after the London speech and the sell off on Wall Street on Friday.